BILL ANALYSIS                                                                                                                                                                                                    Ó


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                                    THIRD READING

          Bill No:  AB 565
          Author:   Salas (D)
          Amended:  9/3/13 in Senate
          Vote:     21

           SENATE HEALTH COMMITTEE  :  9-0, 6/26/13
          AYES:  Hernandez, Anderson, Beall, De León, DeSaulnier, Monning,  
            Nielsen, Pavley, Wolk
          SENATE APPROPRIATIONS COMMITTEE  :  7-0, 8/30/13
          AYES:  De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
          ASSEMBLY FLOOR  :  70-0, 5/16/13 (Consent) - See last page for  

           SUBJECT  :    California Physician Corps Program

           SOURCE  :     California Medical Association

           DIGEST  :    This bill revises the criteria required for the  
          selection and placement of California Physician Corps Program  
          (Corps Program) applicants.  This bill also revises the criteria  
          that Corps Program participants must meet.

           ANALYSIS  :    

          Existing law:

          1. Establishes the Health Professions Education Foundation  
             (HPEF) within the Office of Statewide Health Planning and  


                                                                     AB 565

             Development (OSHPD) to, among other functions, develop  
             criteria for evaluating applicants for various scholarships  
             and loans.

          2. Establishes the Corps Program, which consists of the Stephen  
             M. Thompson Loan Repayment Program (SMT Program) and the  
             Physician Volunteer Program, administered by HPEF.  Requires  
             the Corps Program to provide financial incentives, as  
             specified, to applicants who possess a current valid medical  
             or osteopathic license who practice in medically underserved  
             communities, as specified.  

          3. Defines medically underserved area (MUA) as consistent with  
             the federal definition of a Health Professional Shortage Area  
             (HPSA) or an area of the state where unmet priority needs for  
             physicians exist as determined by the California Healthcare  
             Workforce Policy Commission.  

          4. Defines medically underserved populations (MUP) as those  
             covered under the Medi-Cal and Healthy Families programs and  
             the uninsured.

          5. Requires applicants to the Corps Program to be working  
             full-time in a practice setting or have signed an agreement  
             to work full-time in a practice setting.  Defines "practice  
             setting" as either:

             A.    A community clinic, as defined, 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 to fulfill the  
                county's role to serve indigent population, which is  
                located in a MUA and at least 50% of whose patients are  
                from a MUP; or,

             B.    A medical practice located in a MUA and at least 50% of  
                whose patients are from a MUP.

          This bill:

          1. Expands the definition of "practice setting" to include a  
             physician-owned and operated medical practice setting that  
             provides primary care located in a MUA and has a minimum of  
             50% uninsured, Medi-Cal, or other publicly funded programs  



                                                                     AB 565

             that serve patients who earn less than 250% of the federal  
             poverty level.  

          2. Revises criteria to be met by guidelines developed by the  
             HPEF and OSHPD for the selection and placement of Corps  
             Program applicants to:

             A.    Require that an applicant have three years providing  
                health care services to MUP or MUA instead of working in  
                MUAs or with MUPs;

             B.    Delete guideline criteria seeking to place the most  
                qualified applicants in the areas with the greatest need  
                and replaces it with the giving preference to applicants  
                who agree to practice in an HPSA or MUA and who agree to  
                serve an MUP; and, 

             C.    Give priority consideration to applicants from rural  
                communities who agree to practice in a physician-owned and  
                operated medical practice setting located in an MUA with  
                at least 50% of patients from an MUP.

           Primary care physician workforce shortage  .  According to a  
          report commissioned by the California Health Care Foundation,  
          the number of primary care physicians actively practicing in  
          California is at the very bottom range of, or below, the state's  
          need.  The distribution of these physicians is equally as poor.   
          In 2008, there were 69,460 actively practicing physicians in  
          California (this includes Doctors of Medicine and Doctors of  
          Osteopathic Medicine) with only 35% of these physicians reported  
          practicing primary care.  This equates to 63 active primary care  
          physicians per 100,000 persons.  According to the Council on  
          Graduate Medical Education, a range of 60 to 80 primary care  
          physicians is needed per 100,000 persons to adequately meet the  
          needs of the population.  When the same metric is applied  
          regionally, only 16 of California's 58 counties fall within the  
          needed supply range for primary care physicians.  

           Corps Program  .  The Corps Program consists of two programs:  the  
          Volunteer Physicians Program and the SMT Program.  According to  
          OSHPD, the Volunteer Physicians Program has never been  
          implemented.  The SMT Program encourages recently licensed  



                                                                     AB 565

          physicians to practice in HPSAs in California and repays up to  
          $105,000 in educational loans in exchange for full-time service  
          for at least three years.  To be considered eligible for an  
          award, applicants must: 

           1. Be an allopathic or osteopathic physician;

           2. Be free of any contractual service obligations (i.e. the  
             National Health Service Corps Federal Loan Repayment Program  
             or other financial incentive programs);

           3. Have outstanding educational debt from a government or  
             commercial lending institution;

           4. Have a valid, unrestricted license to practice medicine in  

           5. Be employed or have accepted employment in a HPSA in  
             California; and,

           6. Commit to providing full-time direct patient care in a HPSA.

           Federally designated HPSAs  .  HPSAs are designated by the Health  
          Resources and Services Administration (HRSA) as having shortages  
          of primary medical care, dental or mental health providers and  
          may be geographic (a county or service area), demographic (low  
          income population), or institutional (comprehensive health  
          center, federally qualified health center, or other public  
          facility).  MUAs/MUPs are areas or populations designated by  
          HRSA as having:  too few primary care providers, high infant  
          mortality, high poverty, and/or high elderly populations.  

           Prior Legislation  
          SB 635 (Hernandez, 2012) was substantially similar to SB 20  
          (Hernandez, 2013), but would have instead transferred the  
          Managed Care Administrative Fines and Penalties (MCAFP) funds to  
          a newly created Song-Brown Program Account, which supports  
          training for health care professionals.  The bill was held on  
          suspense in the Assembly Appropriations Committee.

          SB 606 (Ducheny, Chapter 600, Statutes of 2009) requires the  
          Osteopathic Medical Board of California to assess an additional  
          $25 fee to an osteopathic physician and surgeon applying for  



                                                                     AB 565

          initial or reciprocity licensure, or for a biennial renewal  
          license.  Requires the funds collected to be transferred to the  
          Medically Underserved Account for Physicians for SMT Program.   
          Allows osteopathic physicians and surgeons to be eligible to  
          apply for the SMT Program.

          SB 1379 (Ducheny, Chapter 607, Statutes of 2008) requires fines  
          and administrative penalties levied against health plans under  
          the Knox-Keene Act to be placed in the MCAFP Fund and used, upon  
          appropriation by the Legislature, for a physician loan-repayment  
          program and Major Risk Medical Insurance Program (MRMIP).   
          Requires the Department of Managed Health Care to make a  
          one-time transfer of fine and administrative penalty revenue of  
          $10 million to MRMIP and $1 million to the loan repayment  
          program.  Prohibits using the fines and administrative penalties  
          authorized by the Knox-Keene Act to reduce assessments on health  

          AB 2439 (De La Torre, Chapter 640, Statutes of 2008) mandates  
          the Medical Board of California (MBC) assess a $25 fee to  
          applicants for issuance or renewal of a physician and surgeon's  
          license.  Provides that up to 15% of the funds collected shall  
          be dedicated to loan assistance for physicians and surgeons who  
          agree to practice in geriatric care settings or settings that  
          primarily serve adults over the age of 65 or adults with  

          AB 1403 (Nuñez, Chapter 367, Statutes of 2004) renames the  
          California Physician Corps Loan Repayment Program as the SMT  
          Program effective January 1, 2005.

          AB 982 (Firebaugh, Chapter 1131, Statutes of 2002) establishes  
          the California Physician Corps Loan Repayment Program within the  

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee, minor impact  
          for loan repayment funds (Health Professions Education Fund).

           SUPPORT  :   (Verified  9/1/13)

          California Medical Association (source)



                                                                     AB 565

          American Academy of Pediatrics, California
          Association of California Healthcare Districts
          Board of Trustees of the Delano Joint Union High School District
          California Academy of Physician Assistants
          California Chapter of the American College of Emergency  
          California Optometric Association
          City of Hanford
          Community Action Partnership of Kern
          Community Clinic Association of Los Angeles County
          Kern Medical Center
          Medical Board of California
          Osteopathic Physicians and Surgeons of California
          Rural County Representatives of California
          Semitropic Elementary School District

           ARGUMENTS IN SUPPORT  :    According to the author's office, there  
          are many communities in California that have physician shortages  
          that put people's health at risk.  In Kern County alone, there  
          are 1,200 patients for every primary care physician-nearly  
          double the national average.  This bill ensures that physicians  
          participating in the loan repayment program are serving low  
          income populations in medically underserved communities.  This  
          bill has the potential to bring much needed physicians to some  
          of the most MUPs in the Central Valley and throughout  

          According to the Medical Board of California and Community  
          Clinic Association of Los Angeles County, this bill tightens  
          existing guidelines by which health care providers are selected  
          for the SMT Program and that it will help address the shortage  
          and poor distribution of qualified primary care providers  
          practicing in underserved areas.  The Association of California  
          Healthcare Districts states that this bill has the potential to  
          encourage physicians to remain in underserved areas, thereby  
          bringing qualified physicians to areas that may not otherwise  
          have a physician to provide care.  The California Chapter of the  
          American College of Emergency Physicians states this bill will  
          improve access to health care for patients in underserved  
          communities by changing the selection and placement guidelines  
          of the California Physician Corps Program.  The American Academy  
          of Pediatrics, California writes that by broadening the  
          definition of qualified practice sites to include private  
          practice, this bill has the potential to draw a new population  



                                                                     AB 565

          of physicians to underserved areas.

           ASSEMBLY FLOOR  :  70-0, 5/16/13
          AYES:  Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Garcia,  
            Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,  
            Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue,  
            Lowenthal, Maienschein, Mansoor, Medina, Mitchell, Mullin,  
            Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,  
            V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,  
            Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Allen, Buchanan, Eggman, Beth Gaines, Grove,  
            Holden, Melendez, Morrell, Stone, Vacancy

          JL:k  9/3/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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