BILL ANALYSIS SENATE HEALTH COMMITTEE ANALYSIS Senator Elaine K. Alquist, Chair BILL NO: SB 1368 S AUTHOR: Committee on Health B AMENDED: As Introduced HEARING DATE: April 21, 2010 1 CONSULTANT: 3 Tadeo/cjt 6 8 SUBJECT Health care SUMMARY Requires local emergency medical services agencies to send Maddy Emergency Medical Services Fund reports to the Emergency Medical Services Authority. Expands the authority of the Office of Statewide Health Planning and Development to insure financings that are for the purpose of refinancing short-term loans that are secured elsewhere to start a project. Deletes obsolete references to nonprofit hospital services plans in the Insurance Code. CHANGES TO EXISTING LAW Local Emergency Medical Services Agency reports Existing law: Establishes the Emergency Medical Services Authority (EMSA) within the Health and Human Services Agency to provide statewide coordination of local emergency medical services agencies (LEMSAs). Authorizes counties to develop an emergency medical services program, and requires the designation of a LEMSA Continued--- STAFF ANALYSIS OF SENATE BILL 1368 (Committee on Health) Page 2 for the purposes of its administration. Authorizes counties to establish a Maddy Emergency Medical Services Fund (Maddy EMS Fund) and to deposit specified penalties, forfeitures, and fines into the fund to reimburse physicians and hospitals for losses from providing uncompensated emergency care, and for other emergency medical services purposes as determined by the county. Requires counties, as a condition of receiving Proposition 99 (Prop 99) tobacco tax funds, to establish an EMS fund and to establish within that fund, a physician services account to reimburse physicians for losses incurred for uncompensated services provided to patients, limited to emergency services, obstetric services, and pediatric services. Requires a county with a Maddy EMS Fund to report the implementation and status of the fund to the Legislature on an annual basis. This bill: Requires a county that has established a Maddy EMS Fund to provide the annual Maddy EMS Fund report to EMSA instead of the Legislature. Requires EMSA to compile and forward a summary of each county's report to the appropriate policy and fiscal committees of the Legislature. Cal-Mortgage Program Existing law: Establishes the Office of Statewide Health Planning and Development (OSHPD) within the Health and Welfare Agency and sets forth its duties, powers, responsibilities, purposes, and jurisdictions which include, but are not limited to, the administration of the California Health Facility Construction Loan Insurance Law, known as the Cal-Mortgage Program, for the purposes of insuring health facility loans. Establishes the Health Facility Construction Loan Insurance Fund and continuously appropriates the fund for these purposes. The Cal-Mortgage Program administers the fund. STAFF ANALYSIS OF SENATE BILL 1368 (Committee on Health) Page 3 OSHPD is authorized to charge a premium charge for the insurance of these loans for deposit into the fund. Establishes the conditions for loans to be eligible for loan insurance including, but not limited to, the requirement that the proceeds of the loan be guaranteed to be used exclusively for the construction, improvement, or expansion of the health facility, as approved by the office. Authorizes insurance of loans to refinance a prior loan if the prior loan would have been eligible at the time it was made. This bill: Authorizes OSHPD to annually charge a portion of the loan insurance premium in advance, not to exceed $6 per year for each $1,000 of principal of the proposed loan. Makes the total dollar amount of the premium advanced nonrefundable and would require that it be credited against the amount of the premium charged or, if the commitment expires and the loan is not insured, requires that the advance be retained by the office to offset costs and expenses of the office, as prescribed. Allows OSHPD to insure a loan that is a refinancing of a prior loan if the amount to be refinanced does not exceed 90 percent of the original total construction costs and the loan is otherwise eligible for loan insurance. Insurance Code clean-up Existing law: Creates the Access for Infants and Mothers (AIM) Program, which is administered by the Managed Risk Medical Insurance Board, to provide coverage for perinatal and infant care to residents of this state meeting certain income and other eligibility requirements and paying certain subscriber contributions. Creates the California Major Risk Medical Insurance Program (MRMIP), which is also administered by the board, to provide major risk health coverage to residents of this state who are unable to secure adequate private health coverage because of preexisting medical conditions and who STAFF ANALYSIS OF SENATE BILL 1368 (Committee on Health) Page 4 meet other eligibility requirements and pay certain subscriber contributions. This bill: Deletes obsolete references within the AIM Program and MRMIP provisions, to nonprofit hospital services plans, as they no longer exist in state law. FISCAL IMPACT This bill has not been analyzed by a fiscal committee. BACKGROUND AND DISCUSSION LEMSA Maddy EMS Fund reports SB 1368 would make county reports, that are already required, easily available to the public through EMSA. Currently, these reports are submitted to the Senate and Assembly Health Committees and the sole means of access to them is in-person at the Capitol offices of these two committees. Requiring EMSA to both collect the reports, and post them online will afford the public better and quicker access thereto. The Maddy EMS Fund was created to provide reimbursement to physicians and hospitals for treating uninsured patients receiving emergency care in the emergency department. In 1987, the Legislature concluded that emergency medical service providers bore higher costs for their services than did providers of other medical services, but often received only partial or no payment from patients. To address this problem, the state enacted a series of bills and revenue sources to compensate physicians and medical facilities for EMS provided to patients who do not have health insurance and cannot pay for their medical care. In 1988, the voters passed Proposition 99, which imposes taxes on the distribution of cigarettes and other tobacco products. The state deposits these taxes in the state Cigarette and Tobacco Products Surtax Fund to fund a variety of programs which fund counties for indigent care. Counties have several sources of revenue for Maddy EMS Funds: a portion of county penalty assessments on certain STAFF ANALYSIS OF SENATE BILL 1368 (Committee on Health) Page 5 criminal offenses and motor vehicle violations; traffic violator school fees; revenues from taxes on tobacco products deposited in the Proposition 99 tobacco tax fund; and, redirected money from the Proposition 99 fund through an annual EMS appropriation. Approximately 50 counties have established Maddy EMS Funds to date. Each county is required to establish a physician services account within its Maddy Fund for revenues appropriated by the Legislature from Proposition 99 tobacco tax revenues. These funds can be used to reimburse physicians for emergency, obstetric, and pediatric care. Cal-Mortgage Program The Cal-Mortgage Program, administered by OSHPD, was created in 1969 to provide loan insurance for health facility construction, improvement, and expansion without cost to the state. The program objective is to stimulate the flow of private capital into health facility construction to improve access to health care for all Californians. The principal method of financing these loans is through tax exempt project revenue bonds issued by state or local agencies. According to OSHPD, the technical amendment proposed in SB 1368 will allow the Cal-Mortgage Program to provide loan insurance to nonprofit or publicly owned health facilities refinancing original construction loans, which would otherwise qualify for Cal-Mortgage loan insurance, but for the fact that their first construction loan exceeded 90 percent of the construction cost. The refinanced loan would not be for more than 90 percent of the construction cost. This technical change will allow Cal-Mortgage to provide construction loan insurance to about two or three nonprofit or publicly owned health facilities per year. Financing for the construction of nonprofit and publicly owned health care facilities is often difficult and expensive to obtain even in normal times; in the current market, it is almost impossible for the smaller nonprofit borrower to obtain. Removing this minor technical barrier in the law will assist some of these facilities in seeking financing for construction projects, which may include seismic compliance projects. STAFF ANALYSIS OF SENATE BILL 1368 (Committee on Health) Page 6 Arguments in support: American College of Emergency Physicians State Chapter of California (CAL/ACEP) states that, while the Maddy EMS Funds only reimburse a small portion of the cost of care, they are nevertheless a critical source of funding helping to preserve the emergency care safety net. CAL/ACEP adds that a time when cuts to coverage and services are happening at both the state and local level while the demand for emergency services is on the rise, it is essential to ensure that every Maddy EMS dollar is spent to preserve the emergency care safety net as it was intended to do. CAL/ACEP contends that the administrative reports completed by counties are the public's primary way to ensure Maddy EMS Funds are being administered properly. Related bills AB 2456 (Torrico) requires EMSA to include model policies, procedures, treatment protocols, and licensure and certification requirements in guidelines for local EMS systems and requires local emergency services authorities to adhere to these guidelines. This bill is currently located in Assembly Appropriations Committee. AB 2248 (Hernandez) requires each county establishing a Maddy EMS Fund to include in its annual report to the Legislature a description of each disbursement for other emergency medical services if funds were disbursed for this purpose. This bill is currently in the Assembly Appropriations Committee. Prior legislation SB 941 (Alquist), Chapter 671, Statutes of 2005, establishes the Emergency Medical Services Funding Act, which revises existing law governing administration of the Maddy EMS Fund and the Proposition 99 Physician Services Account California to make the statutes more consistent. SB 476 (Florez), Chapter 707, Statutes of 2003, authorizes each administering agency of an emergency medical services fund to maintain a reserve in specified portions of its Maddy Emergency Medical Services Fund. Changes the county reporting requirements and the date at which these are due annually to the Legislature. SB 623 (Speier), Chapter 679, Statutes of 1999, requires, STAFF ANALYSIS OF SENATE BILL 1368 (Committee on Health) Page 7 in a county that has established an EMS Fund, an amount equal to $2 for every $7 that would have been collected in traffic penalty assessments to be deposited into the fund. Requires counties with EMS Funds to add to an existing report to the Legislature the total amount of traffic fines and forfeitures collected, the total amount of penalty assessments collected, and the total amount of penalty assessments deposited into the EMS Fund. Requires each county to make this report available to the public upon request. Prior Legislation: AB 282 (Torlakson), Chapter 848, Statutes of 1999, modifies eligibility for the Cal-Mortgage health facility loan program and adjusts program fees based on risk. AB 3050 (Assembly Health Committee), Chapter 351, Statutes of 2002, makes various technical changes relating to OSHPD and permits OSHPD to accelerate bond maturities when a borrower under the Health Facility Construction Loan Insurance Program defaults on an insured loan. POSITIONS Support: American College of Emergency Physicians State Chapter of California Oppose: None received -- END -