Health Care Financial Management Association Sponsored by Emdeon December 22, 2014 Julie A. Simer, Esq. Donald P. Wagner, Esq. Shareholder Of Counsel Buchalter Nemer Buchalter Nemer SB 1276 What Hospitals and Emergency Physicians Need to do by Jan. 1, 2015 to Comply © 2014 Buchalter Nemer

Fair Billing Policies – SB 1276 Introduced by Senator Ed Hernandez, Chair of the Senate Committee on Health on February 21, 2014 Read for the first time on February 24, 2014 Passed Out of Senate Committee on Health on April 10, 2014 (5 Ayes, 4 Noes) Read for the first time in the Assembly on May 28, 2014 Passed Out of Assembly on June 25, 2014 (Ayes 14, Noes 4)

Fair Billing Policies – SB 1276 Read for the Third Time and Passed in the Assembly on August 11, 2014 On Senate Concurs in Assembly Amendments on August 13, 2014 (Ayes 24, Noes 11) Presented to the Governor on August 18, 2014 Approved by the Governor on September 28, 2014

Fair Billing Policies – SB 1276 Current Law – AB 774 (Chan) signed into law in 2006 Required as a condition of licensure - hospitals must establish charity care and discount billing policies, and included notices about those policies Limited the amount that uninsured patients could be charged to no more than the hospital could expect to receive for the same services from Medicare or MediCal or other government sponsored benefits Insured that patients would additionally be screened for government-subsidized programs for which they may qualify Established practices for collections on bills, including that a hospital or collection agent may not take adverse action against a consumer for at least 150 days after the initial bill

Fair Billing Policies – SB 1276 Health & Safety Code §§ Fair Pricing Policies Health & Safety Code §§ Hospital Fair Pricing Policies §§ Health & Safety Code §§ Emergency Physician Fair Pricing Policies

Fair Billing Policies – SB 1276 Hospitals- Current Law Health & Safety Code §§ The hospital shall reimburse the patient or patients any amount actually paid in excess of the amount due under this article, including interest. Interest owed by the hospital to the patient shall accrue at the rate set forth in Section of the Code of Civil Procedure, (10 percent per annum) beginning on the date payment by the patient is received by the hospital. However, a hospital is not required to reimburse the patient or pay interest if the amount due is less than five dollars ($5.00). The hospital shall give the patient a credit for the amount due for at least 60 days from the date the amount is due.

Fair Billing Policies – SB 1276 Emergency Physicians - Current Law Health & Safety Code §§ §§ An emergency physician shall limit expected payment for services provided to a patient at or below 350 percent of the federal poverty level and who is eligible under the emergency physician’s discount payment policy to an amount that is no greater than 50 percent of the median of billed charges based on a nationally recognized database of physician and surgeon charges until the nonprofit FAIR Health, Inc. creates a database that makes available the rate of payment received by physician and surgeons from commercial insurers for the same services in the same or similar geographic region.

Fair Billing Policies – SB 1276 Emergency Physicians - Current Law Health & Safety Code §§ §§ Eligibility for discounted payments may be determined at any time the emergency physician is in receipt of information specified in paragraph (1) or (2), respectively. a) Each emergency physician shall have a written policy about when and under whose authority patient debt is advanced for collection. Each emergency physician shall establish a written policy defining standards and practices for the collection of debt, and shall obtain a written agreement from any agency that collects emergency physician receivables that it will adhere to the emergency physician’s standards and scope of practice

Fair Billing Policies – SB 1276 Emergency Physicians - Current Law Health & Safety Code §§ §§ (1) For purposes of determining eligibility for discounted payment, the emergency physician may rely on the determination made by the hospital at which emergency care was provided. If the emergency physician chooses to make a separate determination of eligibility for discounted payment, documentation of income shall be limited to recent pay stubs or income tax returns. The emergency physician, at his or her discretion, may accept self-attestation by a patient, or a patient’s legal representative, but shall not request documentation of income other than that authorized in this paragraph. (2) Information obtained pursuant to paragraph (1) shall not be used for collections activities. This paragraph does not prohibit the use of information obtained by the emergency physician, collection agency, or assignee independent of the eligibility process for discounted payment. (3) Eligibility for discounted payments may be determined at any time the emergency physician is in receipt of information specified in paragraph (1) or (2), respectively.

Fair Billing Policies – SB 1276 Revises the hospital charity care programs by making individuals who meet the income requirements eligible, even if they have received a discounted rate from the hospital as a result of third-party coverage

Fair Billing Policies – SB 1276 Defines “reasonable payment formula,” for purposes of hospital and emergency physician charity care programs, as monthly payments that are not more than 10% of a patient’s family income for a month, excluding deductions for essential living expenses

Fair Billing Policies – SB 1276 Requires hospitals and emergency physicians, in addition to the existing notice requirements under the charity care programs, to also provide patients with a referral to a local consumer assistance center housed at legal services offices

Fair Billing Policies – SB 1276 Requires, rather than permits, the hospital and the patient to negotiate the terms of the payment plan, and take into consideration the patient’s family income and essential living expenses

Fair Billing Policies – SB 1276 Specifies that if the reasonable payment formula results in a payment of less than $10 a month, the subsequent extended payment plan shall be $10 per month. Stipulates that if after having defaulted on an extended payment plan, the patient has entered into another extended payment plan with payments in the amount of either the reasonable payment formula or $10/month and the patient fails to make all consecutive payments due during 90- day period, extended payment plan is inoperative

Fair Billing Policies - SB 1276 Requires hospitals/emergency physicians to revise their handouts to uninsured patients to include: Information about Covered California Referral to a local consumer assistance center housed at legal services offices Hospitals Must File Updated Policies/Procedures With OSHPD if the Changes are “Significant”

Donald P. Wagner, Esq. Julie A. Simer, Esq. Of Counsel Shareholder BuchalterNemer, A Professional Corporation Von Karman Avenue, Suite 800 | Irvine, CA (949)