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Home Providing Consumer Protection Pass Consumer Protections Against Hospital Overcharging AB774: Uninsured and Overcharged: Consumer Protections for Hospital Patients

Fact Sheet
Send a letter of support to Assemblymember Wilma Chan (MS Word Doc)
"Give Us a Sign": A Report on California Hospitals Compliance with Their Voluntary Guidelines on the Billing Practices of Uninsured Patients
SB379: Consumer & Financial Protection for Hospital Patients (2004 Bill)

UNINSURED AND OVERCHARGED:
NEW CONSUMER PROTECTIONS FOR HOSPITAL PATIENTS

AB774 by Assemblymember Wilma Chan
Fact Sheet  
- printable version - (MS Word Doc)

AB 774 (Chapter 775, Statutes of 2006), by Assemblywoman Wilma Chan and sponsored by Health Access California, would prevent hospitals from overcharging and other unfair billing practices. This new law, which takes effect January 2007, will curb the common practice of hospitals overcharging the uninsured and underinsured, in many cases charging three to ten times what insurance companies and government programs would pay for exactly the same service.  AB 774, which was signed by Gov. Arnold Schwarzenegger, will create consumer and financial protections so that uninsured and underinsured families can get the hospital care they need without facing financial ruin.

Hospital Overcharging: The Health and Financial Consequences

While many Californians are fortunate enough to have good health insurance that covers all or most of the bills, millions of Californians without health insurance and, increasingly, those with high deductible plans (the “underinsured”), face financial ruin if they are hospitalized. 

The uninsured and underinsured face health and financial problems as a result of their status:

• Families who go to the hospital for needed care are often charged exorbitant rates, often much higher than the rate for fully insured patients.
• Large medical bills are often sent to collection agencies, ruining the family’s financial future. A Harvard study indicates that illness and medical bills cause nearly half of all personal bankruptcies. 
• Families are rarely notified of the financial options that exist, from public insurance programs to the hospitals’ own charity care policies. 
• Fearful of the financial repercussions and unaware of their rights and options, uninsured and underinsured families all too often avoid getting the care they need, resulting in devastating health impacts. A recent Urban Institute report showed that uninsured adults in California are far less likely to go to the emergency room (12.1% had at least one visit) than those on private insurance (20.8%) or public programs (32.9%).

Existing state and federal law requires hospitals to provide emergency care without regard to ability to pay until the patient is stabilized.  No law governs what the hospitals can charge those patients; in fact, the uninsured are billed for virtually all of the hospital care they receive, and they are billed at higher rates than the insured. Insured patients are charged discounted rates that have been negotiated by Medicare, Medi-Cal or their private insurers. Self-pay patients, on the other hand, are charged the full, inflated “sticker price” for hospital care. Hospitals admit that the billed charge is inflated and often has no relation to the actual cost of providing care, yet that is the bill that is sent to collections and to court

In response, New York passed a law on hospital billing and collections earlier this year. Both Sutter and Catholic Healthcare West settled class action lawsuits on the issue.

Consumer Protections for Low- and Moderate-Income Families

AB 774 (Chan) requires that:

• Uninsured and underinsured families are protected from hospital overcharging. For low- and moderate-income families, who mostly can’t afford or can’t obtain full coverage, hospitals are prevented from charging more than the public price set by Medi-Cal, Medicare or worker’s compensation. Nothing in this bill requires hospitals to provide free care to anybody; it simply ensures a fair price to uninsured families under 350% of the federal poverty level; this would cover an individual making less than $34,300, a couple making less than $46,200 or a family of three making less than $58,100. The protection is also provided to underinsured families;
• Uninsured and underinsured families be given notice about their consumer rights and financial options when seeking care at a California hospital, including the ability to apply for public health insurance or other assistance; and,
• Uninsured and underinsured families be given the opportunity to negotiate payments and payment plans for 150 days before their bill is sent to collections, which can ruin a family’s credit report and its financial future.

Hospitals Not Complying with “Voluntary Guidelines”
After several years of pressure, California hospitals adopted “voluntary guidelines” in February 2004 on their billing and collections practices for uninsured patients. Yet consumer advocates continue to get calls and stories from the “uninsured and overcharged.”

Two separate studies had “mystery shoppers” visit hospitals to ask about financial assistance policies, look for signage, and otherwise see if these guidelines were being followed. Health Access volunteers in 2004 surveyed 40 hospitals and found that only one hospital surveyed complied with all the guidelines, and over half didn’t even have a sign in any of three recommended locations (www.health-access.org/volguidereport.htm). An independent report by the California HealthCare Foundation (www.chcf.org) in 2005 produced over 600 visits and calls to hospitals, and also found that many hospitals did not have the appropriate signs, or were not able to answer questions from prospective patients about financial assistance or billing issues.

Passage of AB 774 was supported by a wide range of organizations representing health care consumers, including Consumers Union, Western Center for Law and Poverty, ACORN, Latino Coalition for a Healthy California, California Immigrant Welfare Collaborative, and many others.

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