SACRAMENTO — Last week, legislation to strengthen consumer protections for hospital patients by Assemblymember Laura Friedman’s (D-Glendale) cleared its first major hurdle in the Assembly Judiciary Committee with bipartisan support. The measure, Assembly Bill 1020, builds upon existing healthcare consumer protection laws to further safeguard their rights by increasing transparency, limiting the sale of debt, and increasing the availability of financial assistance.
“It’s hard to imagine a time when a person is more vulnerable than when a patient in a hospital, yet, the system as it stands now could potentially open up patients to astonishing levels of financial devastation – all for simply seeking medical attention,” said Assemblymember Friedman. “AB 1020 will provide solid protections for consumers and real consequences for hospitals and debt collectors that fail to follow the law.”
Fifteen years ago, the Legislature passed two key reforms to protect Californians at risk of financial devastation. Both the Hospital Fair Pricing Act and the Fair Debt Collection Practices Act were designed to provide basic consumer protections in debt collection and increase patient awareness of free and discounted medical care.
Hospitals in California must provide charity care to patients who receive medical services and are uninsured or underinsured. Charity care consists of full or partial discounts of medical bills. The Hospital Fair Pricing Act the minimum guidelines that hospitals must follow in offering charity care to patients and collecting unpaid accounts. Debt collectors, too, must follow these rules.
The Hospital Fair Pricing Act also provides protections to patients throughout the collections process. These protections include a 150-day time period before a hospital or collections agency may report a patient account to a consumer credit reporting agency or commence civil action against the patient, and an opportunity for the patient to apply for charity care at any time.
However, despite these protections, patients are still not benefitting from the law.
Kaiser Health News reported in 2019 that nonprofit hospitals in California could have—but did not—provide $135 million in charity care to patients. Patients report being discharged and receiving medical bills without knowing they were actually eligible for Medi-Cal or could apply for charity care.
Worse, hospitals often sell patient accounts to collections agencies which further neglect to inform patients they could apply for charity care. Consequently, patients face negative credit reporting and, finally, collections lawsuits.
To address these issues, AB 1020 puts forward a number of solutions including: strengthening state enforcement and oversight of the Hospital Fair Pricing Act by levying penalties for noncompliance; requiring patients to be provided clear and detailed information about their bills and how to apply for charity care at the time of discharge and when a bill is sent to collections; prohibiting hospitals from selling patient debt; extending the period that adverse credit reporting can take place from 150 to 180 days after the first billing; requiring debt collectors to certify that patients have been screened for public programs and financial assistance before filing a lawsuit; and by raising the income level for financial assistance from 350% to 400% of the poverty line.
“Patients face collection agents or even lawsuits for hospital bills that should have been covered or reduced under the Hospital Fair Pricing Act. Without appropriate notice or real screening, many patients don’t even know that they don’t actually owe the entire amount they are billed, or that they can work out a payment plan based on their income,” said Jen Flory, Policy Advocate, Western Center on Law & Poverty. “You shouldn’t need a lawyer to benefit from California law.”
“Despite existing law, patients at California hospitals are routinely hit with large medical bills without being informed of their right to financial assistance. Accessing this assistance should not require an attorney. But we know that, for every client we help successfully navigate this process, there are many others who won’t realize they have options until it’s too late,” said Johanna Baumann, Directing Attorney, Bet Tzedek Legal Services. “We are excited and honored to work alongside our clients, Assemblymember Friedman, and our committed co-sponsors to make sure that all Californians know their rights and that hospitals comply with the law governing financial assistance for their patients.”
“At a time when more Californians are facing under- and unemployment, and are facing substantial income losses, they should not be discouraged from seeking medical care because they are worried about the debt they will incur. PLC is proud to work with Assemblymember Friedman, Western Center on Law & Poverty, and Bet Tzedek to ensure that medical care is available to all low-income Californians and does not push Californians into bankruptcy,” said Leigh Ferrin, Director of Litigation and Pro Bono, Public Law Center.
AB 1020 will now move to the Assembly Health Committee for a hearing later this month.
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Laura Friedman represents the 43rd Assembly District which encompasses the cities of Burbank, Glendale, and La Cañada Flintridge, as well as the communities of La Crescenta and Montrose, and the Los Angeles neighborhoods of Atwater Village, Beachwood Canyon, Los Feliz, East Hollywood, Franklin Hills, and Silver Lake.