BILL REQ. #:  S-0640.1 

Read first time 01/20/09.   Referred to Committee on Health & Long-Term Care.

     AN ACT Relating to hospital charity care; amending RCW 70.41.400, 70.170.020, 70.170.060, 19.16.500, 84.36.040, and 70.170.070; and adding a new section to chapter 70.170 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 70.41.400 and 2006 c 60 s 2 are each amended to read as follows:
     (1) Prior to or upon discharge, a hospital must furnish each patient receiving inpatient services a written statement providing a list of physician groups and other professional partners that commonly provide care for patients at the hospital and from whom the patient may receive a bill, along with contact phone numbers for those groups. The statement must prominently display a phone number that a patient can call for assistance if the patient has any questions about any of the bills they receive after discharge that relate to their hospital stay.
     (2) Consistent with requirements outlined in RCW 70.170.060, each hospital shall provide notice to patients of its charity care policies. At a minimum, each hospital must post prominently in locations easily accessible to and visible by patients, including its web site, and in the bill sent to patients, a notice stating that charges for services to people meeting the charity care or discount criteria may be waived or reduced, and regarding the availability of charity care and how to qualify. The department of health shall develop model language, not to exceed fifty words, and type font and style standards that hospitals must use to satisfy the requirement to provide notice in the bill sent to patients. The language may be written on the patient's actual bill if it complies with the department's type font and style requirements. A notice of charity care policies also may be provided to patients prior to discharge. The notice must use clear language that would be easily understood by individuals with limited education.
     (3) This section does not apply to any hospital owned or operated by a health maintenance organization under chapter 48.46 RCW when providing prepaid health care services to enrollees of the health maintenance organization or any of its wholly owned subsidiary carriers.

Sec. 2   RCW 70.170.020 and 1995 c 269 s 2203 are each amended to read as follows:
     ((As used in)) The definitions in this section apply throughout this chapter((:)) unless the context clearly requires otherwise.
     (1) "Department" means department of health.
     (2) "Hospital" means any health care institution which is required to qualify for a license under RCW 70.41.020(((2))) (4); or as a psychiatric hospital under chapter 71.12 RCW.
     (3) "Secretary" means secretary of health.
     (4) Except as otherwise provided in RCW 70.170.060(6), "charity care" means necessary hospital health care rendered to indigent persons, to the extent that the persons are unable to pay for the care or to pay deductibles or co-insurance amounts required by a third-party payer, as determined by the department.
     (5) "Sliding fee schedule" means a hospital-determined, publicly available schedule of discounts ((to charges)) for persons deemed eligible for charity care((;)). Such schedules shall be established after consideration of guidelines developed by the department.
     (6) "Special studies" means studies which have not been funded through the department's biennial or other legislative appropriations.
     (7) "Federal poverty guidelines" means the poverty income guidelines established annually by the federal department of health and human services.
     (8) "Hospital costs" is the number derived by multiplying hospital charges by a hospital's aggregate hospital cost-to-charge ratio calculated by the health and recovery services administration from the latest available medicare cost report. If a recalculation of the cost-to-charge ratio occurs sooner than twelve months from the last update to the hospital's discount policy, the calculation existing prior to the recalculation may be used for purposes of updating hospital discount policies. The secretary shall develop alternate means of determining hospital costs for hospitals that do not file medicare cost reports, in consultation with such hospitals.

Sec. 3   RCW 70.170.060 and 1998 c 245 s 118 are each amended to read as follows:
     (1) No hospital or its medical staff shall adopt or maintain admission practices or policies which result in:
     (a) A significant reduction in the proportion of patients who have no third-party coverage and who are unable to pay for hospital services;
     (b) A significant reduction in the proportion of individuals admitted for inpatient hospital services for which payment is, or is likely to be, less than the anticipated charges for or costs of such services; or
     (c) The refusal to admit patients who would be expected to require unusually costly or prolonged treatment for reasons other than those related to the appropriateness of the care available at the hospital.
     (2) No hospital shall adopt or maintain practices or policies which would deny access to emergency care based on ability to pay. No hospital which maintains an emergency department shall transfer a patient with an emergency medical condition or who is in active labor unless the transfer is performed at the request of the patient or is due to the limited medical resources of the transferring hospital. Hospitals must follow reasonable procedures in making transfers to other hospitals including confirmation of acceptance of the transfer by the receiving hospital.
     (3) The department shall develop definitions by rule, as appropriate, for subsection (1) of this section and, with reference to federal requirements, subsection (2) of this section. The department shall monitor hospital compliance with subsections (1) and (2) of this section. The department shall report individual instances of possible noncompliance to the state attorney general or the appropriate federal agency.
     (4) The department shall establish and maintain by rule, consistent with the definition of charity care in RCW 70.170.020, the following:
     (a) Uniform procedures, data requirements, and criteria for identifying patients receiving charity care;
     (b) A definition of residual bad debt including reasonable and uniform standards for collection procedures to be used in efforts to collect the unpaid portions of hospital charges that are the patient's responsibility.
     (5) For the purpose of providing charity care, each hospital shall develop, implement, and maintain a charity care policy which, consistent with subsection (1) of this section, shall enable people with family income below one hundred percent of the federal poverty ((level)) guidelines access to appropriate hospital-based medical services, and a sliding fee schedule for determination of discounts ((from charges)) for persons ((who qualify for such discounts by January 1, 1990)) with family income from one hundred to two hundred fifty percent of the federal poverty guidelines. Discounts under the sliding fee schedule shall be applied to the amount derived from the calculation in subsection (6) of this section. The department shall develop specific guidelines to assist hospitals in setting sliding fee schedules required by this section. All persons with family income below one hundred percent of the federal poverty ((standard)) guidelines shall be deemed charity care patients for the full amount of hospital charges, provided that such persons are not eligible for other private or public health coverage sponsorship. Persons who may be eligible for charity care shall be notified by the hospital as required in subsection (7) of this section.
     (6) For uninsured persons with family income up to four hundred percent of the federal poverty guidelines, hospitals must provide a discount for any charges for services provided in the hospital. Subsection (5) of this section determines the degree of the discount for persons with family income of up to two hundred fifty percent of the federal poverty guidelines. For persons with family income in excess of two hundred fifty percent of the federal poverty guidelines, no patient may be required to pay more than the greater of one hundred thirty percent of the hospital costs, or an amount equal to the state average percentage of hospital costs paid by private payers, as determined by the department. In addition, hospitals shall consider a catastrophic charity care standard that is triggered when hospital charges equal ten percent of the patient's annual family income.
     (7) Each hospital must provide notice to patients of its charity care policies. At a minimum, each hospital must post prominently in locations easily accessible to and visible by patients, including its web site, and in the bill sent to patients, a notice stating that charges for services to people meeting the charity care or discount criteria may be waived or reduced, and regarding the availability of charity care and how to qualify. The department shall develop model language, not to exceed fifty words, and type font and style standards that hospitals must use to satisfy the requirement to provide notice in the bill sent to patients. The language may be written on the patient's actual bill if it complies with the department's type font and style requirements. A notice of charity care policies also may be provided to patients prior to discharge. The notice must use clear language that would be easily understood by individuals with limited education.
     (8) Each hospital shall make every reasonable effort to determine the existence or nonexistence of private or public sponsorship which might cover in full or part the charges for care rendered by the hospital to a patient; the family income of the patient as classified under federal poverty income guidelines; and the eligibility of the patient for charity care as defined in this chapter and in accordance with hospital policy. An initial determination of sponsorship status shall precede collection efforts directed at the patient.
     (((7))) (9) The department shall monitor the distribution of charity care among hospitals, with reference to factors such as relative need for charity care in hospital service areas and trends in private and public health coverage. The department shall prepare reports that identify any problems in distribution which are in contradiction of the intent of this chapter. The report shall include an assessment of the effects of the provisions of this chapter on access to hospital and health care services, as well as an evaluation of the contribution of all purchasers of care to hospital charity care.
     (((8))) (10) The department shall issue a report on the subjects addressed in this section at least annually((, with the first report due on July 1, 1990)). The department shall also provide information to the public on hospital charges for the most common inpatient diagnosis-related groups, as identified under the patient discharge information collected under RCW 43.70.052, the relationship between hospital costs and charges, the cost to the uninsured for the most common inpatient procedures, and details on hospital charity care policies. The department's review of charity care provided shall include analysis of charity care as a percent of total revenue, or billed charges, for each hospital and a review of charity care in relation to operating expenses. The department shall verify that the charity care provided meets the minimum requirements established in RCW 84.36.040(4).

NEW SECTION.  Sec. 4   A new section is added to chapter 70.170 RCW to read as follows:
     (1) Before contracting with any entity to act as a hospital's designated agent, assignee, or contractor for collection of its accounts receivable, or to purchase its accounts receivable, the hospital's governing board must have notice of, and affirmatively approve, the debt collection practices of the entity. The information regarding the entity's debt collection practices must include detailed information related to:
     (a) Contacts with patients who have debts to the hospital, including written, telephonic, and electronic contacts;
     (b) Policies related to the ability of debtors to make installment payments, and interest rates charged on any remaining balances;
     (c) Circumstances under which the entity files civil actions to collect debts, and undertakes any of the following collection actions to execute a judgment in connection with a debt:
     (i) Actions to foreclose on real property;
     (ii) Actions to place a lien on any property;
     (iii) Actions to garnish wages; and
     (iv) Actions to attach or seize a bank account or any other personal property.
     (2) At least annually, the governing board of every hospital shall review a report on collection actions taken by the entity that has a contract with the hospital under subsection (1) of this section.

Sec. 5   RCW 19.16.500 and 1997 c 387 s 1 are each amended to read as follows:
     (1)(a) Agencies, departments, taxing districts, political subdivisions of the state, counties, and cities may retain, by written contract, collection agencies licensed under this chapter for the purpose of collecting public debts owed by any person, including any restitution that is being collected on behalf of a crime victim.
     (b) Any governmental entity as described in (a) of this subsection using a collection agency may add a reasonable fee, payable by the debtor, to the outstanding debt for the collection agency fee incurred or to be incurred. The amount to be paid for collection services shall be left to the agreement of the governmental entity and its collection agency or agencies, but a contingent fee of up to fifty percent of the first one hundred thousand dollars of the unpaid debt per account and up to thirty-five percent of the unpaid debt over one hundred thousand dollars per account is reasonable, and a minimum fee of the full amount of the debt up to one hundred dollars per account is reasonable. Any fee agreement entered into by a governmental entity is presumptively reasonable.
     (2) No debt may be assigned to a collection agency unless (a) there has been an attempt to advise the debtor (i) of the existence of the debt and (ii) that the debt may be assigned to a collection agency for collection if the debt is not paid, and (b) at least thirty days have elapsed from the time notice was attempted.
     (3) Collection agencies assigned debts under this section shall have only those remedies and powers which would be available to them as assignees of private creditors.
     (4) Nothing in this section applies to public hospital district duties pursuant to chapter 70.170 RCW.
     (5) For purposes of this section, the term debt shall include fines and other debts, including the fee required under subsection (1)(b) of this section.

Sec. 6   RCW 84.36.040 and 2001 c 126 s 1 are each amended to read as follows:
     (1) The real and personal property used by nonprofit (a) day care centers ((as defined pursuant to RCW 74.15.020)); (b) free public libraries; (c) orphanages and orphan asylums; (d) homes for the sick or infirm; (e) hospitals for the sick; and (f) outpatient dialysis facilities, which are used for the purposes of such organizations shall be exempt from taxation: PROVIDED, That the benefit of the exemption inures to the user.
     (2) The real and personal property leased to and used by a hospital, owned and operated by a public hospital district established under chapter 70.44 RCW, for hospital purposes is exempt from taxation. The benefit of the exemption must inure to the user.
     (3)(a) To be exempt under this section, the property must be used exclusively for the purposes for which exemption is granted, except as provided in RCW 84.36.805.
     (b) Hospitals seeking the exemption under subsections (1) and (2) of this section must also demonstrate that a minimum level of charity care, equivalent to four percent of total revenue, or billed charges, consistent with the charity care standards provided by chapter 70.170 RCW, has been provided to the community, as part of the community benefit standard required by the internal revenue service.

Sec. 7   RCW 70.170.070 and 1989 1st ex.s. c 9 s 507 are each amended to read as follows:
     (1) Every person who shall violate or knowingly aid and abet the violation of RCW 70.170.060 (5) or (((6))) (8), 70.170.080, or 70.170.100, or any valid orders or rules adopted pursuant to these sections, or who fails to perform any act which it is herein made his or her duty to perform, shall be guilty of a misdemeanor. Following official notice to the accused by the department of the existence of an alleged violation, each day of noncompliance upon which a violation occurs shall constitute a separate violation. Any person violating the provisions of this chapter may be enjoined from continuing such violation. The department has authority to levy civil penalties not exceeding one thousand dollars for violations of this chapter and determined pursuant to this section.
     (2) Every person who shall violate or knowingly aid and abet the violation of RCW 70.170.060 (1) or (2), or any valid orders or rules adopted pursuant to such section, or who fails to perform any act which it is herein made his or her duty to perform, shall be subject to the following criminal and civil penalties:
     (a) For any initial violations: The violating person shall be guilty of a misdemeanor, and the department may impose a civil penalty not to exceed one thousand dollars as determined pursuant to this section.
     (b) For a subsequent violation of RCW 70.170.060 (1) or (2) within five years following a conviction: The violating person shall be guilty of a misdemeanor, and the department may impose a penalty not to exceed three thousand dollars as determined pursuant to this section.
     (c) For a subsequent violation with intent to violate RCW 70.170.060 (1) or (2) within five years following a conviction: The criminal and civil penalties enumerated in (a) of this subsection; plus up to a three-year prohibition against the issuance of tax exempt bonds under the authority of the Washington health care facilities authority; and up to a three-year prohibition from applying for and receiving a certificate of need.
     (d) For a violation of RCW 70.170.060 (1) or (2) within five years of a conviction under (c) of this subsection: The criminal and civil penalties and prohibition enumerated in (a) and (b) of this subsection; plus up to a one-year prohibition from participation in the state medical assistance or medical care services authorized under chapter 74.09 RCW.
     (3) The provisions of chapter 34.05 RCW shall apply to all noncriminal actions undertaken by the department of health, the department of social and health services, and the Washington health care facilities authority pursuant to chapter 9, Laws of 1989 1st ex. sess.