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)    
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          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.  




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          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  




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          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  




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          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.
          




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          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,  




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          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


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