Hospital Fair Pricing Discounts and Free Care
Typically, an uninsured or underinsured person who goes to a hospital is charged 3-5 times more than a big insurer would pay for exactly the same care.
California's Hospital Fair Pricing Act of 2006 limits the amount hospitals in California can charge state residents who are either uninsured or underinsured and have high medical costs, and whose income is not higher than 3.5 times the Federal Poverty Level. (Hospitals may also offer Fair Price discounts to people with higher incomes, and many do.)
The Fair Pricing Act prohibits hospitals from charging eligible patients more for care than they could charge Medicare. In most cases, this will be 65-85% less than the non-discounted price.
Many hospitals also offer free care ("charity care") to uninsured people with very low incomes, however, they are not legally obligated to offer free care, while the Fair Pricing discount is a legal requirement.
You can apply for a Fair Price discount or free care even if the bill has already been sent to a collection agency.
The Fair Pricing Act also requires all California hospitals to have a written policy about Fair Price discount payments that says who is eligible, to notify patients that they have such a policy, to post the policy and application form on their website, and to provide the policy and application form when a patient asks.
Most hospitals put their Fair Price discount and charity care policies together in one document and application form called an "Application for Financial Assistance." If you think you might be eligible for free care, be sure to ask for BOTH the Fair Price discount payment and the charity care policy and application materials.
Hospitals use a measure of income called the Federal Poverty Level (FPL) to determine who is eligible for their Fair Pricing Act discount and free care policies. Click here to estimate your household income in terms of FPL.
You should apply for a Fair Price discount if there is any chance that you might be eligible for it, even if you think your income is too high, because the law says a hospital can’t send a bill to a collection agency while a patient is making a good faith attempt to qualify for financial assistance.
How to apply for a Fair Price discount or free care if you already have a hospital bill
Step 1: Get your hospital’s Financial Assistance policy and application. You can do this by calling the hospital's billing office or downloading the materials from the hospital's website. You can also find any hospital's Financial Assistance policy on the California Fair Pricing website:
- Use the Search boxes on the upper left of the screen to find the hospital that billed you.
- Click on the hospital name to go to its Hospital Details page.
- Scroll down until you see the hospital’s Fair Pricing Policy and Application form.
- Download and print the application form. You must print and send the Application with any required proof of income; you cannot submit your application online.
The hospital may require you to give recent pay stubs or income tax returns to prove your income. However, they are not allowed to consider your assets when determining your eligibility for a Fair Pricing discount. If the hospital uses a combined application for free care and Fair Pricing Act discounted care, simply leave the Assets section blank and write a note on it that says "I am applying for a Fair Pricing discount only and not for charity care; you are not permitted to consider my assets in determining eligibility for a Fair Pricing Act discount."
Step 2:To prevent the hospital from sending your bill to a collection agency while you are applying for financial assistance, call the hospital billing office immediately to let them know you are applying for a Fair Pricing discount. Follow up by faxing a letter to the hospital billing office; click here for a sample letter. If you do not have access to a fax machine, you can send your letter via certified mail, so you have proof that they received it.Keep a copy of everything you send, and the fax delivery confirmation.
Step 3: If your application for a Fair Price discount is denied, you can appeal. Call the hospital billing office to find out who such a request should be sent to and then fax your request to that person. Click here for a sample letter.Keep a copy of anything you send, along with the fax delivery confirmation.
Step 4: eligible for an additional hospital discount. However, if you reach your insurance maximum, or if you receive services that are not covered by your insurance, then you are entitled to a discount on the undiscounted portion of your bill. This part of the law is confusing for patients and hospitals alike, so you may need help convincing the hospital that you are entitled to a discount.
Step 5: If you receive a notice of lawsuit you should seek legal advice. Depending on your income, you may qualify for free or low-cost legal assistance from your local Health Consumer Center or other local legal services.
California law also limits hospital collections practices
If you are uninsured or give the hospital information that you may have high medical costs, the hospital is not allowed to send you to collections or sue you within 150 days (5 months) of the first billing.
If you are in the process of applying for a Fair Price discount payment or charity care, AND you are trying in good faith to settle your bill by negotiating a reasonable payment plan or by making regular partial payments of a reasonable amount, the hospital is not allowed to send you to collections.
If you qualify for a Fair Pricing Act discount payment, the hospital is not allowed to:
- charge you interest as part of your payment plan,
- garnish your wages, except after a court hearing at which you are offered a chance to show you can’t pay,
- put a lien on your home.
If you are not covered for the services due to a pending appeal with a health insurance company, a disability insurance company, Medi-Cal, or Medicare, the hospital may not sue or report you to a credit agency until a final determination is made.
If the bill has gone to collections, call the collection agency informing the agency that the hospital is violating the law. Then send a follow-up fax or letter with the same information and any agreement the collection agency may have made over the phone. Call the hospital and request that all collection be stopped until a determination of financial assistance is made.
How much of a discount can I get?
The discount rate under the Hospital Fair Pricing Act is the amount that Medicare or Medi-Cal would pay. Most hospitals use the Medicare rate. This is usually 65-85% less than the Charge Master rate.
Average Medicare rates of some common hospital procedures can be found here. However, hospital billing can be nearly impossible to understand, and it takes health billing expertise to read these charts and compare them to your bill. For more information on reading and negotiating hospital bills, click here.
The easiest way to make sure you get the correct Fair Price discount is to ask the hospital to show you that they did not go over the Medicare or other government rate.
If you already paid more than you should have, request reimbursement for the amount overpaid, with interest. HFPA requires hospitals to reimburse qualified patients who paid in excess of the HFPA discount rate.
Which bills are covered by HFPA?
HFPA only covers bills from the hospital, not from doctors who may bill for services provided in the hospital, such as surgeons and anesthesiologists. However, many providers will give a discount or forgive the bill if you cannot pay it, so you should try asking. If you have been given a discount or free care from the hospital, be sure to say this when you ask the doctors. For information on efforts to limit charges of hospital-based providers in California, click here.
If you have a bill from before January 1, 2007
Hospitals were not required to have financial assistance policies until January 1, 2007. However, hospitals may have had charity care or discount payment policies before the law went into effect. You can still ask for a review of your bill under the policy that was in effect before January 1, 2007.
If a hospital doesn’t follow the law
Please report violations of the Hospital Fair Pricing Act to the California Department of Public Health, Division of Licensing and Certification.
An online and printable complaint form is available athttps://hfcis.cdph.ca.gov/LongTermCare/ConsumerComplaint.aspx.
In addtion, there are a number of things you can do to pressure a hospital to start following the law:
- Complain to your state legislators and ask them to intervene.
- File a complaint with your local district attorney.
- Call or email a local reporter who covers health care or personal finance issues, and ask him or her to investigate.
If nothing else works, you may want to talk to an attorney who specializes in health law, to find out if you have grounds to sue the hospital. For help finding and hiring an attorney who specializes in health law: