The CHI Weekly Legislative Update: February 24

A bill to increase the transparency of hospitals around such issues as financial assistance, charity care and payment policies passed a significant milestone Thursday. Members of the Senate Health and Human Services Committee unanimously approved an amended version of SB 12-134, the Hospital Payment Assistance Program.  The original version of the legislation was debated February 16, but the bill’s sponsor, Senator Irene Aguilar (D), postponed a vote in order to seek a compromise acceptable to both consumers and hospital providers.

The intent of the legislation is to provide some limits on the amount hospitals can charge low-income uninsured patients and to inform patients about the financial assistance and payment plans available to them.  Insurance plans negotiate on behalf of their members with hospitals for lower fees for services. Uninsured individuals do not have that advantage, and consumer groups argue that the uninsured are often assessed full hospital charges. The bill approved by the committee has three parts:

1. Transparency: Hospitals would be required to display information about hospital financial assistance, charity care and payment plan policies in clear and understandable language on their websites and in patient waiting areas.  In addition, hospitals would be required to provide this information to patients before they leave the hospital and on the billing statement as well.
2. Limits on hospital charges: Hospitals would be required to limit their charges for qualified low-income patients to the lowest rate they have negotiated with a private payer.  An uninsured patient qualifies if he or she has a family income of no more than 250 percent of the federal poverty level (FPL) and does not receive a discount through the Colorado Indigent Care Program. This means a patient would qualify if they were a member of a family of four with an annual income of $57,625 or less.  Nearly 800,000 Coloradans with household incomes below 250 percent FPL stayed overnight in a hospital or visited an emergency room in 2011, according to the 2011 Colorado Health Access Survey (CHAS), which is a program of The Colorado Trust. Of those nearly 800,000, about 41 percent reported having difficulty paying their medical bills. The proposed bill would require hospitals to offer patients the option to be screened to see if they qualify.
3. Payment plan policies:  Hospitals would be required to offer a reasonable payment plan before sending a bill to a collection agency for payment. The bill doesn’t include a definition of “reasonable.”

The original version would have required hospitals to charge no more than the hospital’s actual cost and would have had higher income limits for eligibility (up to 400% of the FPL). Hospitals had argued that would be too onerous, especially for rural hospitals.

The Senate Committee's approval of the legislation represents an interest among legislators, consumer advocates, and hospital representatives to address the financial challenges for vulnerable Coloradans. The proposal will go next to the Senate Appropriations Committee.