California Changes Hospital Debt Collection and Charitable Care Eligibility

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A California bill enacted this month places new limits on hospital debt collection practices and changes eligibility for charitable care.

The bill was signed by California Governor Gavin Newsom on October 4.

Eligibility for Charitable Care

The law changes eligibility for charitable care to include patients with incomes above 400% of the federal poverty line. This is an increase from the current law, which includes patients with incomes above 350% of the federal poverty line.

Additionally, California law allows patients with “high medical costs” to obtain some form of charitable care or a discounted payment policy. The new law changes the definition of high medical expenses as 10 percent of the patient’s current family income or family income in the previous 12 months, whichever is less.

In addition, hospitals are required by law to prominently post a notice of the hospital’s patient financial assistance policy on their websites.

Amendments to debt collection

Under the new law, hospitals are required to wait 180 days before reporting unpaid debts to consumer credit agencies or debt collectors. That’s a 150-day increase under the previous law.

In addition, the law prohibits hospitals from selling a patient’s debt to a debt buyer unless specified conditions are met, including the patient is not eligible for financial assistance and the patient has. not responded to billing attempts or financial aid offers.

Before assigning an invoice to the collection or sale of patient debts, hospitals will be required to send the patient a notice containing several items, including the date or services of the invoice, the name of the entity to which the invoice is transferred or sold, a statement that shows how to get an itemized invoice and an application for the hospital’s financial aid program.

The law also requires hospitals to send the California Department of Health Care Access and Information a copy of its debt collection policy. The ministry will review the compliance policy by January 2023.

The law also requires the department to impose penalties on a hospital that breaks the law, effective January 2024.


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