Alert

California hospitals must meet additional requirements of the Hospital Fair Pricing Act. Governor Gavin Newsom approved Assembly Bill No. 2297 (AB 2297) in September 2024 which mandates that all California hospitals comply with the additional requirements.

These changes may necessitate updates to hospitals' policies, financial assistance applications, and debt collection procedures.

If revisions were needed, hospitals must have submitted the updated documents, along with redlined versions, to the Department of Health Care Access and Information (HCAI) by January 1, 2025. Failure to have complied may result in fines for hospitals.

Requirements

These new requirements follow Assembly Bill No. 1020 (AB 1020), signed by Newsom in 2021 adding even more specificity to the regulations.

AB 1020

Key elements have been in effect since January 1, 2022.

• Revised eligibility threshold requirement for charity care or discounted care from 350% to 400% of federal poverty level
• Redefined high medical costs
• Provided specific details on notice requirements
• Prohibited credit reporting or civil action for 180 days post initial billing
• Required debt collection policy be submitted to HCAI

AB 2297

New key requirements are in effect as of January 1, 2025. Hospitals or emergency physicians will now be prohibited from:

• Taking the patients’ monetary assets into account when determining their eligibility for charity care and discount payment policies, while allowing hospitals to consider the availability of a patient’s or their family’s Health Savings Account (HSA)
• Setting deadlines for applying for charity care or discounted payments
• Denying eligibility based on when a patient submits their application
• Reporting adverse information about a patient’s hospital debt to a consumer credit reporting agency
• Using liens on any real property as a method for collecting unpaid hospital or emergency physician bill

Other changes in AB 2297 include:

• Charity care is now defined as “free care” and discount payment is “any charge that is reduced but not free.”
• A collection agency may not sell any real property, either partially or completely owned by a patient, as a way of collecting unpaid hospital or emergency physician bills.
• Emergency physicians have the option to grant eligibility for a discount payment policy to patients who have incomes over 400% of the Federal Poverty Level (FPL).
• Eligibility for charity care or discounted payments will be determined at any time the hospital receives recent pay stubs or income tax returns.
• Hospitals or emergency physicians are permitted to waive or lower Medi-Cal and Medicare cost-sharing amounts as part of their charity care or discount payment programs.
• Hospitals are allowed but not required to reimburse patients if the hospital or department concludes that the patient was eligible for financial assistance when they were initially billed and at least 5 years has passed since the last payment was received by the hospital, hospital assignee, or debt buyer.

This is not an exhaustive list of all requirements set in Assembly Bill 2297.

Why Compliance is Important  

The Hospital Fair Billing Program enforces the Hospital Fair Pricing Act. As of January 1, 2024, responsibility for enforcement transferred from California Dept of Public Health (CDPH) to HCAI. HCAI has been diligently auditing the submitted hospital policies for violations and issuing letters for noncompliance in 2024.

Due to the lag time of HCAI’s review of hospitals' policies on the HCAI website, hospitals may receive notice from HCAI significantly after the reporting deadline and should be ready to quickly respond.

Penalty assessments range from $12,500 per moderate violation to $25,000 per major violation. Multiple violations can be applied per policy as well as a $500 per day penalty for noncompliance.

Hospitals won’t be provided an estimated amount or assessed the penalty until all violations are corrected.

We’re Here to Help

To learn more about these requirements and other revenue cycle issues, contact your Moss Adams professional.

Additional Resources

• Health Care Practice
• Revenue Cycle Services