California Hospital Fair Pricing Act Has Cut Prices for Uninsured

California’s Hospital Fair Pricing Act has helped lower costs for uninsured patients by placing limits on the fees hospitals can charge them for care, according to a study published in Health Affairs, Medscape reports.


Under the law (AB 774), passed in 2006, uninsured patients are protected from paying gross hospital charges, which are determined by a hospital’s chargemaster. Specifically, the law restricts what hospitals can charge uninsured, low- to moderate-income patients.

While some California hospitals were slow to comply with the rules, most had adopted financial assistance policies by 2011, according to Medscape.

Details of Study

For the study, Ge Bai — an assistant professor of accounting at Washington and Lee University’s Williams School of Commerce, Economics and Politics — examined hospital pricing levels in California from 2004 to 2012.

The study sample included 390 general acute care hospitals, of which:

-57% were not-for-profit;
-25% were for-profit; and
-18% were government-run.


Bai’s research found that the law had drastically reduced the net prices paid by uninsured patients.

Specifically, the study found that the net prices that uninsured patients paid decreased from 6% higher than Medicare prices to 68% lower than Medicare prices over the study period. Meanwhile, the median proportion of hospitals’ revenue that was generated from uninsured patients fell from 3.3% to 1.2% in that time. However, the proportion of services provided to uninsured patients at the hospitals increased compared with the services offered to all patients, according to the research.


Given the results in California, Bai recommended that Congress and other state Legislatures should:

-Require lower price ceilings for hospital services;
-Regulate the billing and collections methods for uninsured patients of for-profit hospitals; and
-Set eligibility criteria for discounted hospital charges (Swift, Medscape, 1/12).

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