December 14, 2022
8 minute read
Healthcare Policy

HB22-1285: Colorado Hospital Price Transparency Law

Rex H.
Rex H.
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Table of Contents
Table of Contents

On June 8, 2022, the governor of Colorado, Jared Polis, signed HB22-1285, "Prohibit Collection Hospital Not Disclosing Prices," into law.

This law was enacted shortly after the Centers for Medicare & Medicaid Services (CMS) imposed its first set of civil penalties for non-compliance with price transparency laws on two Georgia hospitals. Accordingly, it's part of a larger effort to push hospitals to comply with federal hospital price transparency laws.

Read on to learn more about Colorado's House Bill 22-1285, federal pricing requirements a hospital must follow in CO to avoid prohibitions, and billing prohibitions for hospitals failing to meet requirements. We'll also cover the legal process and requirements deadlines of the Colorado hospital price transparency law.

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What is Colorado’s House Bill 22-1285?

Colorado's House Bill 22-1285, “Prohibit Collection Hospital Not Disclosing Prices," prohibits hospitals in Colorado from starting or pursuing collection actions against patients or their guarantors for debts incurred by patients when the hospital was not materially complying with federal price transparency laws.

Although HB22-1285 does not define "material," it does refer to the compliance standards issued by the CMS for Section 2718(e) of the Public Health Service Act's price transparency law. It also refers to 45 C.F.R. Part 180's implementing rules, which have been effective since January 1, 2021. As such, courts will probably define "material" according to these rules.

This statute applies when a hospital does any of the following while collecting debt:

  1. Refers a debt to a debt collection agency, collector, or other third party retained by the hospital
  2. Sues a patient or patient guarantor
  3. Enforces a mediation or arbitration clause
  4. Directly or indirectly causes a report to be made to a consumer reporting agency

Federal pricing requirements a hospital must follow in CO to avoid prohibitions

To avoid prohibitions, hospitals must comply with federal law by providing clear and accessible pricing information in two ways:

  1. Posting a comprehensive machine-readable digital file with standard charges for all services and items
  2. Displaying shoppable services in a consumer-friendly format by publicly posting a digital file of over 300 shoppable services that a healthcare consumer can schedule in advance

Billing prohibitions for hospitals failing to meet requirements

Under HB22-1285, a hospital that does not materially comply with hospital price transparency laws cannot:

  1. Assign, refer, or sell patients' debt to collection agencies, debt collectors, or other third parties; or
  2. Sue patients to enforce their debt

Note, however, that HB22-1285 does not prohibit hospitals from billing patients or their insurers for services or items rendered.

Legal process of the “Prohibit Collection Hospital Not Disclosing Prices” Law

A patient can sue a hospital for damages if:

  • The patient believes that a hospital failed to materially comply with hospital price transparency laws, and
  • The hospital takes a collection action against them.

The court will review the case according to the following parameters:

  • Was the hospital non-compliant according to the CMS' guidance and materials?
  • Does the compliance violation relate to the service or item the patient received? For example, if a podiatric patient sued a hospital for non-compliance, the patient would not have a valid lawsuit if the court determines that the hospital's prices are for out-of-date cardiovascular treatments.
  • Was the compliance violation material?

Penalties under House Bill 22-1285

If a court rules that a hospital is at fault, it will require the hospital to:

  • Refund the payer any money they have paid
  • Pay a penalty to the patient or guarantor that is equal to the total amount of debt
  • Pay any costs incurred by the guarantor or patient that are related to the suit, including legal fees
  • Remove actions that affect the patient's credit report

HB22-1285 requirements deadline

HB22-1285 has two requirement deadlines:

August 10, 2022

HB22-1285 has been effective for Colorado hospitals other than licensed Critical Access Hospitals since August 10, 2022.

February 15, 2023

HB22-1285 will apply to licensed Critical Access Hospitals starting on February 15, 2023.

What is a Critical Access Hospital?

A Critical Access Hospital is a designation for eligible rural hospitals by the CMS.

The Critical Access Hospital designation was created by Congress through the Balanced Budget Act of 1997 in response to over 400 rural hospital closures during the 80s and 90s. The designation was designed to reduce the financial vulnerability of rural hospitals and improve healthcare access by keeping essential services in rural communities.

Hospitals must meet the following requirements to obtain Critical Access Hospital status:

  • Have 25 or fewer acute care inpatient beds
  • Maintain an annual average stay length of 96 hours or less for acute care patients
  • Be located over 35 miles from another hospital, although exceptions may apply
  • Provide 24/7 emergency care services

Critical Access Hospital status imparts multiple benefits:

  • Flexible services and staffing
  • Cost-based reimbursement from Medicare
  • Access to Flex Program technical assistance, educational resources, and grants
  • Capital improvement costs included in allowing costs for determining Medicare reimbursement

However, note that Critical Access Hospitals' benefits are not available in every state. Some states license Critical Access Hospitals under the same rules as other hospitals. If those rules are stricter than the Critical Access Hospital Conditions of Participation (CoP), your Critical Access Hospital can't benefit from the more flexible CoP for Critical Access Hospitals and the related cost savings. Additionally, the following five states don't have any Critical Access Hospitals:

  • New Jersey
  • Connecticut
  • Rhode Island
  • Delaware
  • Maryland

Follow Colorado's HB22-1285 hospital price transparency law

As you can see, Colorado's HB22-1285 law establishes strict guidelines for hospital price transparency. It also prohibits hospitals from starting and pursuing collection actions against patients or their guarantors for debts incurred by patients when the hospital did not materially comply with federal price transparency laws.

Non-Critical Access Hospitals must have been following Colorado's HB22-1285 hospital price transparency law since August 10, 2022. Meanwhile, Critical Access Hospitals have until February 15, 2023, to follow this rule. If your hospital doesn't follow the rule by the relevant deadline, you will be required to:

  • Refund the payer any money they have paid
  • Pay a penalty to the patient or guarantor that is equal to the total amount of debt
  • Pay any costs incurred by the guarantor or patient that are related to the suit, including lawyer fees
  • Remove actions that affect the patient's credit report

The best way to comply with Colorado's HB22-1285 law is to create and implement processes for providing clear and accessible pricing information. For example, you can use a program or platform to post machine-readable digital files with standard charges. You can also use programs to design and display digital files containing over 300 shoppable services that healthcare consumers can schedule in advance.

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