More Financial Assistance Requirements on California Hospitals, Effective 7/1/27

Over the last few years, the California Legislature has imposed increasingly more obligations on California hospitals with respect to their charity care and discount policies. This trend continues in 2025 with Governor Gavin Newsom signing Assembly Bill (“AB”) 1312 into law on October 7, 2025.[1] Effective July 1, 2027, this new law requires California hospitals to prescreen certain patients to determine eligibility for participation in the hospital’s Financial Assistance Policy (FAP), before they are sent their first bill.

Currently, California hospitals are required to have charity care and discount policies for uninsured patients and patients with high medical costs whose incomes fall below 400% of the Federal Poverty Level. The Department of Health Care Access and Information (HCAI) has added significant additional requirements, like specifying font types and sizes among others, through regulation. HCAI has been stringently reviewing California hospital charity care and discount policies.

Currently, most patients are required to submit a financial assistance application in order to be considered for any hospital-based assistance. Some hospitals offer “presumptive” eligibility for certain patients based on other indicia of financial eligibility.

Starting July 1, 2027, AB 1312 will require hospitals to proactively screen patients to determine if they meet criteria making them eligible for automatic application of the hospital’s FAP, and in some instances, presumptively determine eligibility.  This prescreening/presumptive eligibility process will apply to patients who are experiencing homelessness, enrolled in means-based government assistance programs, or have qualified under the hospital’s FAP during the last six months.  For these patients, the hospital must provide an alternative process to applying for financial assistance and determine eligibility without such an application. The patients’ first bill will need to reflect any financial aid from the prescreening.

Starting July 1, 2027, California hospitals will have to perform screening in lieu of a submitted application for patients who are uninsured, are enrolled in Medi-Cal with share of cost or under the hospital presumptive eligibility program, or are enrolled in a Covered California Plan. These patients must be given the opportunity to opt out.  If the hospital’s screening determines the patient is financially qualified, the hospital will determine the patient to be eligible for financial assistance without the patient completing a separate application.

This legislation doubles down on California’s policy determination seeking to require hospitals provide charity or discount care without a true determination whether the patient is eligible for Medi-Cal, which would make the patient not uninsured. This places increased financial burden on hospitals that should be borne by the Medi-Cal program. Further, AB 1312 is in tension with the requirements imposed on the State of California to ensure that Medi-Cal enrollees pay their share of cost prior to accessing Medi-Cal coverage; by continuing to push hospitals to directly pay for the share of cost, this legislation would technically increase enrollees’ incomes, thus increasing the share of cost by the amount covered by charity care or discount care.

Hospitals must amend their FAPs by the July 1, 2027, to include a written process for how the hospital intends to screen and presumptively determine eligibility for patients pursuant to AB 1312 and whether they elect to use software programs or third-party services to conduct this screening. We anticipate that HCAI will enforce AB 1312 in a similarly stringent manner that it has used to enforce other financial assistance requirements. Some of the review by HCAI would appear to exceed the scope of HCAI’s legislative authority.

California is not the only state requiring hospital prescreening. Oregon, for instance, has required such screening across hospitals since July 2024. Similar to California’s AB 1312, Oregon’s HB 3320[2] created requirements for hospitals to screen certain patients for presumptive eligibility of financial assistance and to apply that financial assistance to the patients’ first billing statement. However, Oregon hospitals have faced numerous challenges with HB 3320’s requirements. For example, we understand that pre-screening verification tools often provide inaccurate information, leading to false positives and false negatives. While hospitals who have chosen to do their own prescreening have reported improved accuracy, the process has proven to be burdensome for already inundated patient financial assistance staff.

[1] Codified in Or. Rev. Stat. § 442.615 (2023)

[2] A.B. 1312, 2025-2026 Reg. Sess. (Ca. 2025)

Athene Law, LLP counsels its clients on the ever-changing rules governing financial assistance policies and debt collection.  For more information on Assembly Bill 1312 and its impact on providers, please contact Felicia Sze or Rawan Khalili.