Analyzing the Impact of Fair-Pricing Regulations and Government Subsidies on the Cost of Hospital Services for the Uninsured

In 2007, California implemented the Fair Pricing Act which requires hospitals to maintain policies for charity care, discount payments, and eligibility criteria for discounts. The law, however, does not mandate specific prices and has limited enforcement mechanisms. In this study, the researchers addressed the following questions: 1) Have all California hospitals implemented formal uninsured pricing policies and what are the reported discounts to the uninsured; 2) Is there variation across hospitals in terms of formal uninsured pricing policies; and 3) How do uninsured prices vary across hospitals and what factors explain the variation? Additionally, the researchers assessed whether disproportionate share (DSH) payments result in lower hospital prices for the uninsured. The researchers supplemented an existing database with data from California’s Office of Statewide Health Planning and Development related to fair price reporting, subsidies, and DSH payments. The goal of this project was to examine how hospital pricing for the uninsured has been affected by California’s 2007 Fair Pricing Act and how hospitals nationally are likely to respond to similar requirements included in the Patient Protection and Affordable Care Act.