Oregon House passes bill aimed at medical debt and increasing access

The Oregon House of Representatives passed a bill (HB 3076) Monday aimed at preventing medical debt, in part by requiring non-profit hospitals to establish financial assistance policies that are required to reduce charges to low-income patients. The measure also sets a minimum amount that those hospitals and hospital systems must spend on activities that improve their surrounding communities.

The measure passed 38-21, mostly along party lines. Crossing party lines were Democrat Rep. Caddy McKeown, who voted no, and Republican Reps. Christine Drazan and Cheri Helt, who voted yes.

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According to the latest Oregon Acute Care Hospitals Community Benefit Report, 58 of Oregon’s 60 acute care hospitals are tax-exempt, non-profit hospitals.

In order to qualify for tax-exempt status, the hospitals are currently required to meet a number of criteria (the House Committee on Rules staff measure summary provides detail on those criteria in the “Background” section).

Those criteria, at the state level, include “making reasonable efforts to determine whether an individual is eligible for assistance before engaging in extraordinary collection actions” and reporting to the Oregon Health Authority the benefits they provide to communities.

Rep. Andrea Salinas, Chief Sponsor of the bill, said in public hearing that hospitals can currently get non-profit status through charity care, free or discounted care for low-income uninsured or underinsured people, or through community benefits, a broader range of activities hospitals can take part in to improve the health of their surrounding community.

“This bill has been drafted after years of work to answer several questions,” Salinas said in the bill’s first public hearing, “Some of the key questions I’ve been interested in: Who’s eligible for Charity Care and community benefit? Where can patients receive it? How do we want health systems to deal with medical debt? And, finally, what are some basic standards that make a health system eligible for a tax-exempt, non-profit status under community benefit?”

On the charity care side of the equation, the bill attempts to make it clear who qualifies for care and protect consumers from medical debt.

“Hospitals were started as places for indigent care, and we’ve seen that change over the years, with big leaps forward in the creation, expansion of health insurance — including the last expansion of the Affordable Care Act,” Salinas said.

The bill, as it passed the House, mandates that non-profit hospitals adjust costs to different levels, depending on a patient’s household income:

  • For patients with household income less than 200% of the federal poverty level (FPL), costs would be adjusted to zero — in the first public hearing, Salinas clarified that this really applies to people between 138% FPL, when a person becomes Medicaid-eligible, and 200%;
  • For patients with household income between 200% and 300% of FPL, the bill mandates the hospitals to reduce costs by a minimum of 75%;
  • For patients with household income between 300% and 350%, hospitals would reduce costs by at least 50%; and
  • For patients with household income between 350% and 400%, hospitals would reduce costs by a minimum of 25%.

The bill in its original form would’ve required people between 200% and 400% of FPL not be charged more than 10% of the patient’s household income over the course of a year.

The hospitals’ written policies would have to be translated into several languages, and an interpreter would need to be available in case it needs to be translated to another language not required under the bill.

As for consumer protections against medical debt, the bill would put in place several safeguards, including:

  • Requiring hospitals to screen and determine if a patient qualifies for financial assistance before transferring unpaid charges to a debt collector or referring them to collections;
  • Prohibiting hospitals from charging interest on a patient’s medical debt if they qualify for assistance;
  • Prohibiting hospitals from charging high interest rates on medical debt, in part by prohibiting rates above the Federal Reserve’s rate for the week leading up to the date the patient was billed; and
  • Prohibiting hospitals from collecting a patient’s medical debt from their family members who aren’t financially responsible for it.

On the community benefit side, the bill looks to align communities’ health needs with spending. It does so by requiring hospitals to post information regarding their community health needs assessment online, including a three-year strategy to address health care needs in the community, and by requiring the Oregon Health Authority to establish a community benefit spending floor that meets several specific criteria listed in the bill every two years.

Criteria used to set the floor include needs identified in the community needs assessment, a hospital’s need to expand the health care workforce, spending on social determinants of health, demographics of the population served, and the hospital’s expenditures on community benefits.

The bill was referred to the Senate Rules Committee Tuesday — the 2019 Legislative Session is slated to end June 30.