Hospital Fair Pricing Policies
AB 774 (Chapter 755, Statutes of 2006) added Hospital Fair Pricing (Charity Care) Policies to the California Health and Safety Code commencing with Section 127400. These statutes were amended by SB 350 (Chapter 347, Statutes of 2007) which became effective January 1, 2008. The replies to the following FAQs were based on our interpretation of the statutory requirements and adopted regulations.
Hospital Reporting — Frequently Asked Questions
GO TO: General Information FAQs | Public FAQs
- HQ1. Do OSHPD's accounting and reporting requirements for Charity Discounts apply to Payment Discounts?
- HQ2. What are Policy Discounts and do they apply to AB 774?
- HQ3. Will OSHPD assist hospitals in developing their charity care and discount payment policies?
- HQ4. What should be included in the charity care and discount payment policies, eligibility procedures, review process, and application form?
- HQ5. Is there a penalty for non-submission?
- HQ6. Can we send the required information to OSHPD by e-mail?
- HQ7. What are the OSHPD reporting requirements with respect to the number of documents to submit and document format?
- HQ8. What are the PC software requirements for using OSHPD's on-line reporting application?
- HQ9. Our hospital belongs to a multi-hospital health system, where most of the hospitals are separately licensed and many use the same charity care policy and eligibility procedures. How should this be reported to OSHPD?
- HQ10. What are the filing requirements when two hospitals operate under a consolidated license? What are the signage requirements if only one location has an emergency room?
- HQ11. What are the charity care policy reporting requirements when a hospital changes licensure (ownership)?
A. Yes. Section 1400 of OSHPD's Accounting and Reporting Manual for California Hospitals states that "charity care" applies to both full and partial charity care, recognizing that any portion of a patient's accounts receivable may be accounted for as charity care if the hospital has determined that the patient is unable to pay for that portion of the bill. Uncollected co-payments, deductibles, and non-covered services may be written-off to charity care.
For AB 774, OSHPD interprets "charity care" to mean full charity care (free care) and "discount payment" to mean partial charity care. As a result, both full and partial charity care are to be accounted for and reported as Charity Discounts - Other (Account 5870). Use of sub-accounts under Account 5870 to track full and partial charity care is permissible, as long as accounts are rolled-up for reporting purposes.
A. Policy Discounts (Account 5920) are revenue deductions in the form of courtesy allowances, employee discounts, professional discounts, and prompt pay discounts; where ability to pay is not used to determine eligibility. Policy discounts are not accounted for or reported as charity care, and thus, do not apply to the provisions of AB 774. For example, if a hospital provides a discount from its full-established rates to all uninsured patients without performing any financial screenings, the patient's accounts receivable is written-off to policy discounts and not charity care because there was no determination made regarding the patient's ability to pay.
A. OSHPD can provide guidance regarding what we expect to collect from hospitals and how hospitals are to meet the reporting requirements; however, we are unable to provide technical assistance in policy development. Hospitals should consult with their legal representatives with respect to specific interpretation of AB 774 when establishing their charity care/discount payment policies and procedures.
A. This information may vary by hospital. Legal advice should be obtained as necessary. Below are some general expectations of what OSHPD would collect from each hospital:
A charity care policy that describes the eligibility criteria an uninsured patient must meet in order to qualify for full charity care (free care). A typical charity care policy should indicate which patients and/or services are covered, the qualifying income level, and how income and monetary assets are used in the determination process.
A discount payment policy typically describes the eligibility criteria that an uninsured patient or underinsured patient must meet in order to qualify for partial charity care (discount payment). A discount payment policy generally includes similar information as the charity care policy, but would also indicate how expected payment amounts are determined and contain information regarding the availability of extended payment plans.
Eligibility procedures should describe the steps the patient or patient's representative must follow in order to apply for full charity care (free care) or partial charity care (discount payment). Instructions for completing the application form and required documentation would be expected to be included here.
The review process would describe the hospital's application review and financial screening process used to determine if a patient is eligible for full charity care (free care) or partial charity care (discount payment). The document would include the processes and timelines by which applications are approved, denied, and appealed; along with the notification procedures related to outside collection agencies and consumer credit reporting bureaus.
The application form would contain enough information about the patient's identification, income, and monetary assets to allow hospital personnel to determine whether the patient is eligible for full or partial charity care.
A. For general acute care hospitals, compliance with AB 774 is a condition of licensure. Licensing requirements are enforced by the Department of Public Health, Licensing and Certification Division. The $100 per day penalty applied by OSHPD to delinquent hospital annual and quarterly financial disclosure reports does not apply to AB 774 reporting.
A. No, the adopted regulations require on-line submission using the System for Fair Price Hospital Reporting, the OSHPD-developed web application. Hospitals that are unable to submit the required information on-line will be allowed to request a modification to the reporting requirements. Approval for e-mail submission would be granted only on a case-by-case basis if properly justified.
More information about the System for Fair Price Hospital Reporting will be made available after the technical and business design phases have been completed. Collecting the information on-line will allow OSHPD to efficiently collect, track, store, and publish this information over the Internet.
A. The adopted regulations require hospitals to submit two documents (files) over the Internet. OSHPD will provide each hospital with its login ID and password. After successful login, each hospital must submit the following two documents over a secure connection:
Document 1 - a file containing information about the hospital's (1) charity care policy, (2) discount payment policy, (3) eligibility procedures, and (4) review process. Each of the four components must be clearly identified. The document would be submitted in Microsoft Word (.doc) format.
Document 2 - a file containing the hospital's application form for charity care and discount payments. The application form must be submitted in Portable Document Format (.pdf) format.
The system will perform basic edits prior to accepting a submission and will not allow other file types to be submitted. After a successful submission, a confirmation web-page will be displayed and an e-mail confirmation sent to the submitter and hospital administrator. Restricting documents to these file types is necessary to allow OSHPD's web-site to comply with the requirements of the Americans with Disabilities Act (ADA), which require government-sponsored web-sties to facilitate use of assistive technology for the visually impaired.
A. For reporting purposes, hospitals must use a Microsoft Internet Explorer web browser that supports a secure internet connection utilizing the Secure Hypertext Transfer Protocol (HTTPS or https) and 128-bit cypher strength Secure Socket Layer (SSL). As noted in the previous FAQ, only certain file formats will be accepted.
HQ9. Our hospital belongs to a multi-hospital health system, where most of the hospitals are separately licensed and many use the same charity care policy and eligibility procedures. How should this be reported to OSHPD?
A. Each separately licensed hospital in your health system is expected to submit the required information, even if it's the same information.
A. For OSHDP reporting purposes, one set of documents would be submitted under the name of the "parent facility" covering both hospital locations. See reply to General Information FAQ No. 2 (GQ2) to view a list of parent and consolidated facilities. With respect to signage requirements for the single emergency room, you should contact the Department of Public Health, Licensing and Certification Division, since they will be responsible for enforcement in this area.
A. As required by AB 774, if there has been a significant change to any of the hospital's charity care policy, discount payment policy, or related procedures, the hospital must submit revised documents to OSHPD. If revised documents are not submitted by the new licensee, it will be assumed that no significant changes occurred. It is expected, however, that most new hospital licensees would review the charity care and discount payment policies and procedures of the former licensee following a change in licensure and revise these policies and procedures to meet their own mission and goals, coinciding with the effective date of licensure.