Healthcare Information Division

Hospital Fair Pricing Policies
General Information — Frequently Asked Questions

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.

To view the Hospital Fair Pricing Policies in California Law visit the California Law website. Follow the prompts to search for Health and Safety Code 127400-127446.

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GQ1. What is the intent of AB 774?

    A. The intent of AB 774 is to reduce the financial hardship of high medical costs on the uninsured and underinsured by regulating hospital charges and collection procedures. To meet this objective, hospitals are required to increase public awareness of the availability of charity care, payment discounts, and government-sponsored health insurance; and standardize procedures for determining charity care eligibility, and for billing and collection practices.

GQ2. Which hospitals must comply with AB 774?

    A. Each hospital licensed under Section 1250 (a), (b), and (f) of the California Health and Safety Code is required to comply with AB 774. This includes each hospital licensed as a general acute care hospital, acute psychiatric hospital, and special hospital. For general acute care hospitals licensed under Section 1250 (a), compliance with AB 774 is a condition of licensure enforceable by the State Department of Public Health.

    Exempt hospitals include those licensed as chemical dependency recovery hospitals and psychiatric health facilities, and those operated by the State of California.

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GQ3. When does AB 774 become effective?

    A. Hospitals must comply with AB 774 effective January 1, 2007. This means each hospital must have in place understandable written policies for charity care and discount payments, clearly stated eligibility criteria and procedures for those policies, a description of the review process, and written policies for debt collection practices and procedures on that date, along with several other mandated requirements regarding billing and collection procedures.

    Reporting to OSHPD will begin on January 1, 2008, as adopted by the State's regulatory process. The System for Fair Price Hospital Reporting is a web-based application being developed by OSHPD that must be used for AB 774 on-line reporting.

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GQ4. Who is eligible to apply for charity care or a payment discount under AB 774?

    A. The law states that patients who are (1) at or below 350% of the federal poverty level, and (2) are either uninsured or are insured and have high medical costs, are eligible to apply for participation in a hospital's charity care policy or discount payment policy. Patients are required to make reasonable efforts to provide the hospital with documentation of income and insurance coverage, so that the hospital can determine if the patient is eligible.

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GQ5. What information must be reported to OSHPD? When and how often?

    A. Each general acute care hospital, acute psychiatric hospital, and special hospital is required to submit the following information to OSHPD:

    • Charity Care Policy
    • Discount Payment Policy
    • Eligibility Procedures for those policies
    • Review Process
    • Application Form

    The initial submission date to OSHPD is January 1, 2008. After the initial reporting cycle in 2008, information must be submitted at least every other year on January 1 or whenever a significant change is made to any of these five items.

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GQ6. How does AB 774 affect OSHPD?

    A. OSHPD is required to collect from each hospital a copy of its charity care policy, discount payment policy, eligibility procedures for those policies, review process, and application form; and to make this information available to the public. Submitted information will be reviewed to ensure compliance with these reporting requirements. OSHPD audit staff will contact hospitals on issues of possible non-compliance to obtain clarification and/or revised information. The submitted information will be made available to the public on our web-site.

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GQ7. Are rural hospitals exempt from implementing AB 774?

    A. Hospitals designated as "rural" in accordance with Section 124840 of the California Health and Safety Code must comply with the requirements of AB 774, except as provided by Section 127405 (a) (2). This sub-section states that rural hospitals may establish eligibility levels for charity care at less than 350% of the federal poverty level as appropriate to maintain their financial and operational integrity. To view a list of rural hospitals, click here.

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Page last revised: August 8, 2012 1:57 PM