BILL ANALYSIS Ó
AB 589
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Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 589 (Perea) - As Amended: April 11, 2011
SUBJECT : Medical school scholarships.
SUMMARY : Establishes the Steven M. Thompson Medical School
Scholarship Program (Program) to promote the education of
medical doctors and doctors of osteopathy, as specified.
Specifically, this bill :
1)Sunsets the existing requirement that any amount over the
first $1 million, including accrued interest, in the Managed
Care Administrative Fines and Penalties Fund (Managed Care
Fund), be transferred to the Major Risk Medical Insurance
Fund, and upon appropriation, be used for the Major Risk
Medical Insurance Program, as specified, on January 1, 2014.
2)Specifies that any amount over the first $1 million, including
accrued interest, in the Managed Care Fund, shall be
transferred to the Steven M. Thompson Medical School
Scholarship Account (Scholarship Account) within the Health
Professions Education Fund (Education Fund), and upon
appropriation by the Legislature, is to be used by the Office
of Statewide Health Planning and Development (Office) for the
Steven M. Thompson Medical School Scholarship Program
(Program), as specified, beginning January 1, 2014.
3)Establishes the Program within the Health Professions
Education Foundation (Foundation).
4)States intent that the Foundation and the Office provide the
ongoing program management for the Program.
5)Requires the Foundation to consult with the Selection
Committee, as specified.
6)Specifies that the Program be used only for the purpose of
promoting the education of medical doctors and doctors of
osteopathy and related administrative costs.
7)Requires Program participants to commit prior to entering an
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accredited medical or osteopathic school in writing to three
years of full-time professional practice once the participant
has achieved full licensure, and after completing an
accredited residency program, in direct patient care, in an
eligible practice setting, as specified.
8)Allows for leaves of absence, under certain circumstances.
9)Provides that the maximum allowable amount per total
scholarship is $105,000, distributed over the course of a
standard medical school curriculum, increasing to ensure that
at least 45% of the total scholarship award is distributed
upon matriculation in the final year of school.
10)Authorizes the Office to recover the funds awarded plus the
maximum allowable interest in the event the Program
participant does not complete the minimum three years of
professional service pursuant to his or her contractual
agreement with the Foundation.
11)Requires the Selection Committee to use the following
criteria when selecting scholarship recipients:
a) Provide priority consideration to applicants who are
best suited to meet the cultural and linguistic needs and
demands of patients from medically underserved populations
and who meet one or more of the following criteria:
i) Speak a Medi-Cal threshold language;
ii) Come from an economically disadvantage background;
or,
iii) Have experience working in a medically underserved
area (MUA) or with medically underserved populations.
b) Give preference to applicants who have committed to
practicing in a primary specialty;
c) Give preference to applicants who will serve in a
practice setting in a super-MUA; and,
d) Include a factor ensuring geographic distribution of
placements.
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12)Authorizes the Selection Committee to award up to 20% of the
available scholarships to Program applicants who will practice
specialties outside of a primary specialty.
13)Requires the Foundation, in consultation with the Selection
Committee, to develop a process for outreach to potentially
eligible applicants.
14)Establishes the Scholarship Account within the Education
Fund, with a primary purpose of providing funding for the
ongoing operations of the Program provided by this bill, as
specified.
15)Provides that funds in the Scholarship Account be used to
fund scholarships pursuant to agreements made with recipients
and as follows:
a) Scholarships shall not exceed $105,000 per recipient;
and,
b) Scholarships shall not exceed the amount of the
educational expenses incurred by the recipient.
16)Authorizes the Foundation to seek and receive matching funds
from foundations and private sources to be placed in the
Scholarship Account, effective January 1, 2014, as specified.
17)Provides that funds placed in the Scholarship Account be used
for the implementation of this bill upon appropriation by the
Legislature.
18)Specifies that the Scholarship Account be used to pay for the
cost of administering the Program, not exceeding 5% of the
total appropriation for the Program.
19)Requires the Office and Foundation to manage the Scholarship
Account established by this bill, prudently in accordance with
other provisions of law.
20)Defines the following terms:
a) "Account" means the Scholarship Account established
within the Education Fund;
b) "Medi-Cal threshold languages" means primary languages
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spoken by limited-English-proficient (LEP) population
groups meeting a numeric threshold of 3,000 LEP individuals
eligible for Medi-Cal residing in a county, 1,000 LEP
individuals eligible for Medi-Cal residing in a single ZIP
code, or 1,500 LEP individuals eligible for Medi-Cal
residing in two contiguous ZIP codes;
c) "MUA" means an area defined as a health professional
shortage area, as specified, or an area of the state where
unmet priority needs for physicians exist as determined by
the California Healthcare Workforce Policy Commission, as
specified;
d) "Medically underserved population" to mean the persons
served by the Medi-Cal program, the Healthy Families
Program, and uninsured populations;
e) "Practice setting" to mean either:
i) A community clinic, a clinic owned or operated by a
public hospital and health system, or a clinic owned and
operated by a hospital that maintains the primary
contract with a county government as specified, each of
which is located in a MUA and at least 50% of whose
patients are from a medically underserved population; or,
ii) A medical practice located in a MUA and at least 50%
of whose patients are from a medically underserved
population.
f) "Primary specialty" to mean family practice, internal
medicine, pediatrics, or obstetrics/gynecology;
g) "Selection Committee" to mean the advisory committee
currently established by the Foundation and the Office to
provide ongoing program management of the current programs
of the California Physician Corps Program, as specified;
and,
h) "Super-MUA" to mean an area defined as medically
underserved that also meets a heightened criteria of
physician shortage, as determined by the Foundation.
EXISTING LAW :
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1)Provides for the licensing and regulation of health care
service plans by the Department of Managed Health Care and
imposes certain requirements on health care service plans.
2)Imposes various fines and administrative penalties for certain
violations of these provisions that are deposited in the
Managed Care Fund.
3)Requires the first $1 million in the Managed Care Fund to be
transferred each year to the Medically Underserved Account for
Physicians for the purposes of the Steven M. Thompson
Physician Corps Loan Repayment Program (Loan Repayment
Program).
4)Requires all remaining funds to be transferred each year to
the Major Risk Medical Insurance Fund for purposes of the
Major Risk Medical Insurance Program.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "This
bill seeks to address shortages of physician services,
particularly primary care physician services, that exist in over
200 distinct regions of California identified as MUAs. This
bill also aims to make medical school more financially
accessible for those students willing to pursue careers in
primary care and practice medicine in MUAs. This bill is
necessary to address the growing geographical disparity of
physician supply in California, as well as the rapidly
increasing cost of a medical education, which is increasingly a
barrier to entry for students from economically disadvantaged
backgrounds."
Background . California's population is growing rapidly and
aging, increasing the demand for physicians greater than ever
before. It is also becoming more culturally and ethnically
diverse, and many areas that have traditionally been medically
underserved are expected to see the greatest population growth.
At the same time, many of California's physicians are
approaching retirement themselves, and the pipeline designed to
replace them is experiencing key bottlenecks in both medical
school and residency training. Medical school debt is also
growing faster than physician income, and is one of the primary
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reasons that the supply of primary care physicians is lagging
even further behind that of specialists.
Loan Repayment Program . The Foundation offers the Loan
Repayment Program to encourage physicians to practice MUAs of
California by authorizing a plan for repayment of their
educational loans. Physicians may receive up to $105,000 in
exchange for their service in a designated underserved area for
a minimum of three years. Loan repayment recipients are
required to sign a written contract with the Foundation
outlining the provisions which must be met in order to fulfill
the obligations under this program. Failure to comply with the
terms of the contract may result in the awardee's repayment of
funds plus interest.
Support . The California Medical Association, the sponsor of
this bill, writes in support, "This bill would help bring
physicians and surgeons to underserved communities that have
been hit the worst by California's physician shortage crisis.
AB 589 mirrors the successful Loan Repayment Program, by
providing a scholarship of up to $105,000 for medical school
tuition, as long as the scholarship recipient agrees to practice
in a MUA for at least three years upon completion of an
accredited residency program.
"It has been well documented that this nation faces a crisis
with regard to physician workforce. The Association of American
Medical Colleges Center for Workforce Studies projects that by
the year 2020 there will be a physician shortage of 91,500.
Most alarming, by the year 2025, the shortage is projected to
increase to 130,600. In California, the shortage crisis is no
less daunting. In fact, the most conservative estimates now
project a shortage of as many as 17,000 by 2015-this number does
not take into account the expected increase of 10% more insured
with federal health care implementation in 2015.
"Exacerbating this phenomenon is the extremely high debt medical
students incur while attending medical school. The average
medical student in the United States is now graduating with over
$150,000 in debt. If tuition continues to rise at the current
rate, average medical school debt will approach $750,000 by
2033. Because of the high tuition, in part, it forces students
to choose a more lucrative specialty, which prolongs this
state's dire need for primary care physicians.
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"AB 589 will effectively help address these two factors of
physician shortage and cost of medical school. As mentioned
earlier, the successful Loan Repayment Program has worked by
putting 149 physicians in MUAs since its inception in 2003. AB
589 will supplement the Loan Repayment Program and, as equally
important, help erode the financial consideration of expensive
medical school for students whose socio-economic background
often serves as a deterrent for a family's decision to send an
extremely qualified and bright-minded student to fulfill a dream
of becoming a physician."
Previous legislation . AB 327 (De La Torre) Chapter 293,
Statutes of 2005, established a $50 voluntary donation from
physicians at the time of their initial licensure and biennial
renewal to support the Loan Repayment Program.
AB 920 (Aghazarian) Chapter 317, Statutes of 2005, transferred
administration of the Loan Repayment Program from the Medical
Board of California (MBC) to the Foundation.
AB 1403 (Nunez) Chapter 367, Statutes of 2005, renamed the
California Physician Corps Loan Repayment Program as the Loan
Repayment Program.
AB 982 (Firebaugh) Chapter 1131, Statutes of 2002, established
the California Physician Corps Loan Repayment Program, which
awards loan repayments of up to $105,000 to physicians willing
to practice in MUAs, within the MBC.
REGISTERED SUPPORT / OPPOSITION :
Support
California Medical Association (sponsor)
Opposition
None on file.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301
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