BILL ANALYSIS Ó SENATE HEALTH COMMITTEE ANALYSIS Senator Ed Hernandez, O.D., Chair BILL NO: AB 589 A AUTHOR: Perea B AMENDED: May 27, 2011 HEARING DATE: July 6, 2011 5 CONSULTANT: 8 Hansel 9 SUBJECT Medical school scholarships SUMMARY Establishes the Steven M. Thompson Medical School Scholarship Program. Provides that the program is open to persons who agree in writing, prior to entering an accredited medical or osteopathic school, to serve in an eligible practice setting, as defined, for at least three years. CHANGES TO EXISTING LAW Existing law: Establishes the Health Professions Education Foundation (Foundation) within the Office of Statewide Health Planning and Development (OSHPD). Requires the Foundation to solicit and receive funds from foundations and other private and public sources and to provide financial assistance in the form of scholarships or loans to students in the health professions who are from underrepresented groups. Provides that the Foundation is governed by a board consisting of 13 members appointed by the Governor, Speaker of the Assembly, and Senate Rules Committee. Continued--- STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 2 Establishes, under the Foundation, scholarship, loan, and loan repayment programs for registered nurses, vocational nurses, geriatric nurse practitioners, clinical nurse specialists, and mental health professionals who agree to practice for specified periods of time in underserved areas and in designated practice settings, as specified. Also establishes, under the Foundation, the Steven M. Thompson Physician Corps Loan Repayment Program (STPCLRP), which provides for the repayment of educational loans for licensed physicians and surgeons who practice in medically underserved areas of the state, as defined. The STPCLRP is supported by a $25 licensure fee paid by physicians. Requires the Foundation, in administering the STPCLRP, to use and develop guidelines for applicants that give preference to applicants who are best suited to meet the cultural and linguistic needs of patients in medically underserved populations, as specified, and who agree to practice in geriatric care settings. Also allows the Foundation to appoint a selection committee to provide policy direction and guidance to the Program. Requires funds for loan repayment under the STPCLRP to have a funding match from a foundation or other private source. Also limits loan repayment awards from exceeding $105,000 per individual physician. Establishes within OSHPD the Health Professions Education Fund (Fund), to receive funds for scholarships and loans to students from underrepresented groups who are enrolled in or accepted to schools of medicine, dentistry, nursing, and other health professions. Provides that moneys in the Fund are continuously appropriated. Establishes a Medically Underserved Account for Physicians within the Fund, the primary purpose of which is to provide funding for the STPCLRP. Establishes the Song-Brown Health Care Workforce Training Act of 1973 (Song-Brown Act), administered by OSHPD to provide financial support to family practice residency programs, nurse practitioner and physician assistant programs, and registered nurse education programs to increase the number of students and residents receiving STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 3 education and training in family practice and nursing. The Song-Brown Act also encourages universities and primary care health professionals to provide health care in medically underserved areas. This bill: Establishes within the Foundation the Steven M. Thompson Medical School Scholarship Program (Program). Provides that the Program is open to persons who agree in writing, prior to entering an accredited medical or osteopathic school, to serve in an eligible practice setting, as defined, for at least three years. Requires participants to commit to three years of full-time professional practice once they have achieved full licensure. Defines an eligible practice setting as either: (1) a community clinic or clinic owned and operated by a public hospital or hospital that contracts to provide services to county indigent patients that is located in a medically underserved area, at least 50 percent of whose patients are from a medically underserved population, as defined; or (2) a medical practice that is located in a medically underserved area, at least 50 percent of whose patients are from a medically underserved population. Limits the maximum amount per scholarship to $105,000. Requires the funds to be distributed over the course of a standard medical school curriculum, in increasing amounts over the course of the curriculum, to ensure that at least 45 percent of the total scholarship award is distributed upon commencement of the final year of school. Provides that in the event the participant does not complete the minimum three years of service, pursuant to the contractual agreement, OSHPD shall recover the funds plus maximum allowable interest. Requires the selection committee that supports the STPCLRP to use guidelines for selecting applicants that give priority to applicants who speak a Medi-Cal threshold language, come from an economically disadvantaged background, have experience working in medically underserved areas or with medically underserved STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 4 populations, and commit to practice primary care. Establishes the Steven M. Thompson Medical School Scholarship Account within the Fund for the purpose of receiving federal or private funds. Provides that funds in the account are subject to appropriation by the Legislature. Limits the costs of administering the program to five percent of total appropriations for the Program. Provides that the bill shall be implemented only to the extent that sufficient funds exist in the Account as determined by the Foundation. Directs the Foundation and OSHPD to provide the ongoing program management for the Program. FISCAL IMPACT According to the Assembly Appropriations Committee analysis, AB 589 would impose negligible direct state costs. BACKGROUND AND DISCUSSION According to the author, AB 589 seeks to address the problem of shortages of primary care physicians in over 200 regions of California that are identified as medically underserved areas. The bill also aims to make medical school more financially accessible for students who are willing to pursue careers in primary care, particularly economically disadvantaged students. The author argues that there is a growing geographical disparity in access to physicians that AB 589 would help to address. Current health workforce shortages Statewide shortages of health providers currently exist in several major health professions, such as nursing, primary care providers, and allied health. (Allied health professions are clinical health care professions distinct from medicine, dentistry, and nursing.) Health care workforce needs are projected to increase dramatically due STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 5 to the aging of the population and the state's increasing diversity. In February of 2009, the Senate Health Committee held a hearing on California's health care workforce. The background paper, prepared by the Senate Office of Research (SOR), stated that the health care worker shortage is defined in many ways, citing the following: § The state will face a shortage of up to 17,000 physicians by 2015. § The Center for California Health Workforce Studies researchers indicate that the registered nurse shortage is between 7,000 and 21,000. This shortage is expected to grow due to both the aging of the general population and the nursing workforce. § It is projected that California will need a 26.1 percent growth in the number of pharmacists from 2006 to 2016. § Fifty percent of the public health workforce and seventy percent of community clinic administrators will retire in the next five to ten years. § Seventy-six percent of clinics report a staffing shortage of allied health workers. In addition to the shortages of certain health professionals, SOR stated that California's health professions workforce does not reflect the state's demographic racial and ethnic composition and language proficiency. According to research conducted by the Public Health Institute and UC Berkeley's School of Public Health, California's emerging populations are underrepresented in all health professions and in the health professions pipeline. A recent report by the Institute of Medicine links poorer health outcomes for minorities to the shortage of minority health care providers. One reason for this is that persons of color are less likely than whites to receive needed services due to cultural or linguistic barriers between the health care provider and the patient. Current health workforce development programs The state currently operates a number of programs designed to increase the number of health care professionals practicing in medically underserved areas: Health Professions Education Foundation. The Health Professions Education Foundation, located in OSHPD, provides scholarships and loan repayments to aspiring and STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 6 practicing health professionals who agree to practice in a medically underserved area. Scholarships are offered to health professional students who are attending a California accredited college or university. Loan repayment programs are offered to graduates who are pursuing a health professional career to assist in the repayment of education debt. Scholarships are offered to students and graduates in several allied health professions, nursing, mental health, dentistry, and medicine. In exchange for financial assistance, awardees are required to provide direct patient care in a medically underserved area. Service obligations are typically one to four years, and vary depending on the program. One of the programs offered under the Foundation is the STPCLRP, which provides assistance with the repayment of educational loans for licensed physicians and surgeons who practice in medically underserved areas of the state. California State Loan Repayment Program. The California State Loan Repayment Program (CSLRP) provides educational loan repayment assistance to primary healthcare professionals who provide healthcare services in federally designated Health Professional Shortage Areas (HPSAs). Eligible health professionals include physicians specializing in primary care fields, nurse practitioners, certified nurse-midwives, general practice dentists, dental hygienists, clinical or counseling psychologists, clinical social workers, licensed counselors, psychiatric nurse specialists, and marriage and family therapists. Eligible health professionals also must be employed, or have accepted employment, at an eligible site (which includes county facilities, rural health clinics, community health clinics, and federally qualified health centers) and must commit to providing full-time primary care services in a HPSA for a minimum of two years. Health professionals may receive $60,000 in exchange for a two-year service obligation, $100,000 for a three-year service obligation, and up to $170,000 over five years, the cost of which is divided between state award amounts and matching funds from the site in which the health professional will be practicing. The CSLRP is funded through a grant from the Bureau of Health Professions, National Health Service Corps and is administered by OSHPD. STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 7 Song-Brown Program. The Song-Brown Health Care Workforce Training Act was established in 1973 to address the shortage of physicians engaged in family practice in California by providing financial support to family practice residency, nurse practitioner, physician assistant, and registered nurse education programs throughout California. It also encourages universities and primary care health professionals to provide health care in medically underserved areas. The Song-Brown program currently funds 27 California family practice residency programs, 16 physician assistant/nurse practitioner programs, and 34 registered nurse education programs. Total funding proposed for the Song-Brown program in the Governor's 2011-12 budget is $7.1 million. Related bills SB 635 (Hernandez) requires funds deposited in the Managed Care Administrative Fines and Penalties Fund in excess of $1,000,000 be transferred each year to OSHPD for the purposes of the Song-Brown Program. Currently in Assembly Health Committee. Prior legislation AB 2551 (Hernandez) of 2010 would have established the Health Workforce Development Fund, consisting of moneys received from federal and private sources, as specified. Would have authorized the Fund to be used, upon appropriation by the Legislature, for prescribed purposes relating to health workforce development, and required the California Workforce Investment Board and the Office of Statewide Health Planning and Development to report specified information to the Legislature annually as specified. Failed passage on the Senate floor. AB 657 (Hernandez) of 2009 - 2010 Session, would have required OSHPD, in collaboration with the California Workforce Investment Board, to establish the Health Professions Workforce Task Force composed of specified members, to assist in the development of a health professions workforce master plan for the state, and would prescribe the functions and duties of the task force in that regard. Vetoed by the Governor, who stated in his veto message that he thought the bill was unnecessary and STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 8 duplicative of efforts already underway. AB 2375 (Hernandez) of 2007 - 2008 Session, would have required OSHPD to establish the Health Professions Workforce Task Force, as specified, to assist in the development of a health professions workforce master plan. Held in Senate Appropriations Committee. AB 2439 (De La Torre), Chapter 640, Statutes of 2008, requires the Medical Board of California (MBC) to assess an additional $25 fee for the initial license and license renewal of a physician or surgeon to support the STPCLRP. Requires up to 15 percent of the funds collected from the additional $25 fee to be dedicated to loan assistance for physicians who agree to practice in geriatric care settings, as specified. AB 327 (De La Torre), Chapter 293, Statutes of 2005, requires the MBC to assess an applicant a $50 fee for the issuance and renewal of a physician and surgeon's certificate. Specifies that payment of the fee is voluntary and directs the fees to the Medically Underserved Account for the STPCLRP. AB 920 (Aghazarian), Chapter 317, Statutes of 2005 provides for the transfer of the STPCLRP and the Physician Volunteer Program from the MBC to the California Physician Corps Program within the Health Professions Education Foundation, effective July 1, 2006. AB 1403 (Nunez), Chapter 367, Statutes of 200, renames the California Physician Corps Loan Repayment Program of 2002 as the STPCLRP. AB 982 (Firebaugh), Chapter 1131, Statutes of 2002, creates the California Physician Corps Loan Repayment Program of 2002. This program is administered by the Division of Licensing of MBC for the purpose of granting loan repayment awards to physicians and surgeons working in medically underserved communities. Arguments in support The California Medical Association states that the most conservative projections of the need for physicians in California project a shortage of 17,000 physicians by 2015, STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 9 which does not take into account the increase in newly insured persons due to federal health care reform. Exacerbating this problem is the extremely high debt medical students incur, which now averages $150,000 for graduating medical students. AB 589 will supplement the STPCLRP and allow the state to address both the problem of insufficient numbers of physicians and the high cost of medical education. The MBC states that AB 589 will help make medical school more affordable for students willing to pursue careers in primary care, as well as help to address the geographical disparity of physician supply in California. PRIOR ACTIONS Assembly Business, Professions and Consumer Protection:6- 3 Assembly Appropriations: 12- 5 Assembly Floor: 63- 10 COMMENTS 1. Funds for loan repayment program should be preserved for that purpose. AB 589 would establish a new account to receive federal and private funds for medical school scholarships, separate from the account that currently supports the STPCLRP. A suggested amendment would be to clarify that funds for the loan repayment program shall not be used for purposes of the scholarship program. 2. Scholarships versus loan repayment. AB 589 would supplement the state's programs for primary care workforce development by creating a new scholarship program for medical school students who commit to serve in underserved areas of the state. Generally, loan repayment programs are more cost effective to administer and more able to be geographically targeted than scholarship programs. OSHPD reports that scholarship programs typically have a higher breach rate, i.e. a higher percentage of recipients fail to provide their obligated service and the must repay the loans. In addition, it is easier to ensure geographic diversity through loan repayment programs, because they apply to licensed physicians who are locating their STAFF ANALYSIS OF ASSEMBLY BILL 589 (Perea) Page 10 practice, instead of still in school. 3. Short-term impact of federal health care reform. Beginning in 2014, over 3 million additional Californians are expected to be insured, which will exacerbate the state's shortage of physicians and other primary care providers. While a medical school scholarship program could help address the state's long-term need for physicians, putting more resources into physician and other primary care provider loan repayment programs could have a greater immediate impact in helping the state meet the increase in demand that is expected to occur beginning in 2014. POSITIONS Support: California Medical Association (sponsor) Association of California Healthcare Districts California Primary Care Association Children's Hospital Central California City of Kernan Community Clinic Association of Los Angeles County Medical Board of California Oppose:None received -- END --