BILL ANALYSIS Ó
AB 975
Page 1
Date of Hearing: April 2, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 975 (Wieckowski and Bonta) - As Amended: March 21, 2013
SUBJECT : Health facilities community benefits.
SUMMARY : Revises California's nonprofit community benefits
requirements to include multispecialty clinics and narrows the
activities that constitute community benefits, creates a
definition of charity care, requires the Office of Statewide
Health Planning and Development (OSHPD) to develop a
standardized methodology for calculating community benefits,
calculate the value of community benefits for submitting
entities, and to issue civil penalties for noncompliance with
filing requirements. Provides a rebuttable presumption that
hospitals are organized as for profit if operating revenue
exceeds 10% of operating expenses during the immediate preceding
fiscal year. Specifically, this bill :
1)Expands the entities to which OSHPD charges fees to support
the California Health Data and Planning Fund to include all
licensed clinics.
2)Repeals existing hospital community benefits law, and
establishes new hospital community benefits requirements.
3)Requires private nonprofit hospitals and nonprofit
multispecialty clinics to provide community benefits to the
community. Requires, by January 1, 2015, these entities to
develop, in collaboration with the community, a community
benefits statement, a description of the process for approval
of the statement by the hospital's or clinic's governing
board, and a community health needs assessment using available
public health data. Requires by April 1, 2015 the development
of a community benefits plan to achieve specified outcomes.
Requires the community health needs assessment to be made
available to the public for review and comment prior to
approval. Requires the assessment to be filed with OSHPD and
updated at least every three years.
4)Establishes specifications for the community benefits plan
such as a list of services categorized by charity care; other
community benefits, including community health improvement
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services and community benefit operations, health professions
education, subsidized health services, research and
contributions to community groups; community
building activities targeting underserved and vulnerable
populations; an estimate of the economic value of the
community benefits that the private nonprofit hospital or
nonprofit multispecialty clinic intends to provide; a
description of the intended impact on health outcomes
attributable to the plan, including short- and long-term
measurable goals and objectives; the name and title of the
individual responsible for implementing the plan; and, the
names of individuals on the private nonprofit hospital's or
nonprofit multispecialty clinic's governing board.
5)Establishes definitions, including the following:
a) Charity care means the unreimbursed cost to a private
nonprofit hospital or nonprofit multispecialty clinic of
providing services to the uninsured, or underinsured, as
well as providing funding or otherwise financially
supporting any of the following:
i) Health care services or items on an inpatient or
outpatient basis to a financially qualified patient with
no expectation of payment;
ii) Health care services or items provided to a
financially qualified patient through other nonprofit or
public outpatient clinics, hospitals, or health care
organizations with no expectation of payment;
iii) Community benefits, provided that the provision,
funding, or financial support of those benefits is
demonstrated to reduce community health care costs.
Community benefits means vaccination programs and
services for low income families, chronic illness
prevention programs and services, nursing and caregiver
training provided without assessment of fees or payment
of tuition, home-based health care programs for
low-income families, or programs for low-income families.
Low-income families means families or individuals with
income less than or equal to 350% of the federal poverty
level (FPL).
b) Charity care does not include:
i) Uncollected fees or accounts written off as bad
debt;
ii) Care provided to patients for which public or
private grant funds pay for any of the charges for the
care;
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iii) Contractual adjustments in the provision of health
care services below the amount identified as gross
charges or "chargemaster" rates by the health care
provider;
iv) Any amount over 125% of the Medicare rate for the
health care services or items provided on an inpatient or
outpatient basis;
v) Any amount over 125% of the Medicare rate for
providing funding, or otherwise financially supporting
health care services or items with no expectation of
payment provided to financially qualified patients
through other nonprofit or public outpatient clinics,
hospitals, or health care organizations; and,
vi) The cost to a nonprofit hospital of paying a tax or
other governmental assessment.
6)Applies this bill's provisions to private nonprofit acute care
hospitals operated or controlled by a nonprofit corporation,
as defined, that has been determined exempt from taxation
under the US Internal Revenue Code (IRC), and nonprofit
multispecialty clinics, defined in existing law as clinics
operated by a nonprofit corporation exempt from federal income
taxation, as specified, under section 501 of the IRC that
conduct medical research and health education and provide
health care to its patients through a group of 40 or more
physicians and surgeons, who are independent contractors
representing not less than 10 board-certified specialties, and
not less than two-thirds of whom practice on a full-time basis
at the clinic. Exempts district hospitals and rural general
acute care hospitals.
7)Permits a private nonprofit hospital or nonprofit
multispecialty clinic to also report on bad debts and Medicare
shortfalls, although these shall not be calculated or reported
as community benefits.
8)Requires the draft community benefits plan to be available to
the public in hard copy and on the website no later than 30
days prior to its adoption by the governing board. Requires,
after April 1, 2015, every two years, a private nonprofit
hospital or nonprofit multispecialty clinic to revise and
submit its community benefit plan to OSHPD no later than 120
days after the end of the hospital's or clinic's fiscal year.
Permits a person or entity to file comments on a community
benefit plan with OSHPD.
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9)Permits a private nonprofit hospital or nonprofit
multispecialty clinic, under the common control of a single
corporation or another entity, to file a consolidated plan if
the plan addresses services in all of the categories listed in
4) above to be provided by each hospital or clinic under
common control of the corporation or entity.
10)Requires OSHPD to develop and adopt regulations to prescribe
a standardized format for community benefits plans; a
standardized methodology for estimating the economic value of
community benefits; to the maximum extent possible, conform to
Internal Revenue Service (IRS) reporting standards and other
data elements required by State law; and, post on its Internet
website annually a private nonprofit hospital or nonprofit
multispecialty clinic's IRS Form 990 or its successor form.
11)Requires OSHPD to provide technical assistance to nonprofit
hospitals and nonprofit multispecialty clinics. Requires
OSHPD to make public on its Internet Website hospital and
clinic community health needs assessments and community
benefits plans and any comments received regarding those
assessments and plans. Requires OSHPD to annually calculate
and make public the total value of community benefits provided
by private nonprofit hospitals and nonprofit multispecialty
clinics that report pursuant to this bill.
12)Authorizes OSHPD to assess a civil penalty against any
private nonprofit hospitals or nonprofit multispecialty clinic
that fails to comply with this bill in the amount of $100 a
day for delays in filing and not more than $5,000 for not
using approved accounting systems.
13)Updates Cal-Mortgage requirements to include the community
assessment required by this bill as an activity an applicant
must demonstrate participation in, if appropriate.
14)Revises the property taxation welfare exemption for hospitals
in the Revenue and Taxation Code to establish a rebuttable
presumption that during the preceding fiscal year a hospital
with operating revenues, exclusive of gifts, endowments and
grants-in-aid that exceed operating expenses by an amount
equivalent to 10% of those operating expenses is organized or
operated for profit. Presumes hospitals with operating
revenues, exclusive of gifts, endowments, and grants-in-aid,
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with operating revenues equivalent to less than 10% of
operating expenses, are organized or operated as not for
profit. Provides that this provision is declaratory of
existing law.
EXISTING LAW :
1)Establishes OSHPD, and requires each organization that
operates, conducts, or maintains a health facility to make and
file with OSHPD certain specified reports, including a
Hospital Discharge Abstract Data Record that currently
includes 19 elements of data per admission that are required
to be included.
2)Requires, under California's hospital community benefits law,
licensed health facilities, as specified, and freestanding
ambulatory surgery clinics to be charged a fee established by
OSHPD to support health data and planning purposes and any
other health related-programs administered by OSHPD.
3)Requires each not-for-profit licensed general acute care
hospital, acute psychiatric hospital, or special hospital that
is owned by a corporation that has been determined to be
exempt from taxation under the IRC to complete a community
needs assessment evaluating the health needs of the community
serviced by the hospital that includes, but is not limited to,
a process for consulting with community groups and local
government officials in the identification and prioritization
of community needs that the hospital can address directly, in
collaboration with others.
4)Requires the entities in 3) above to submit annually its
community benefits plan to OSHPD not later than 150 days after
the hospital's fiscal year ends. Exempts from the community
benefits law hospitals serving children that do not receive
direct payment and small and rural hospitals.
5)Establishes required elements for hospital community benefit
plans such as:
a) Mechanisms to evaluate the plan's effectiveness;
b) Measurable objectives to be achieved within specified
timeframes; and,
c) Community benefits categorized by medical care services,
other benefits for vulnerable populations, other benefits
for the broader community, health research, education, and
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training programs, and nonquantifiable benefits.
6)Defines, for purposes of planning and reporting under the
community benefit law, community benefits as a hospital's
activities intended to address community needs and priorities
primarily through disease prevention, and improvement of
health status including but not limited to health care
services rendered to vulnerable populations, charity care and
the unreimbursed cost of providing services to the uninsured,
underinsured, and those eligible for Medi-Cal, Medicare,
California Children's Services Program, or county indigent
programs, as well as health care cost containment and other
activities.
7)Requires under California's fair pricing policies, hospitals,
as a condition of licensure, to maintain an understandable,
written policy regarding discount payments for financially
qualified patients, as well as an understandable, written
charity care policy. Requires each hospital to provide to
OSHPD a copy biennially on January 1, or when a significant
change is made, of its discount payment policy, charity care
policy, and eligibility procedures for those policies, the
review process, and the application for charity care or
discounted payment programs. Requires OSHPD to make this
information available to the public.
8)Provides that uninsured patients or patients with inadequate
insurance with family income at or below 350% FPL are eligible
to apply for hospital's charity care or discount payment
policies.
9)Requires any extended payment plans offered by a hospital to
assist patients eligible under the hospital's charity care
policy, discount payment policy, or any other policy adopted
by the hospital for assisting low-income patients with no
insurance or high medical costs in settling outstanding past
due hospital bills, to be interest free.
10) Permits the hospital extended payment plan to be declared
no longer operative after the patient's failure to make all
consecutive payments due during a 90-day period. Requires a
reasonable attempt to be made to contact the patient by phone
and in writing that the extended payment plan may become
inoperative.
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11) Establishes emergency physician fair pricing policies for
uninsured or patients with high medical costs who are at or
below 350% FPL.
12) Exempts certain clinics from licensure including clinics
operated by a nonprofit corporation exempt from federal income
taxation, as specified, under section 501 of the IRC that
conduct medical research and health education and provide
health care to its patients through a group of 40 or more
physicians and surgeons, who are independent contractors
representing not less than 10 board-certified specialties, and
not less than two-thirds of whom practice on a full-time basis
at the clinic.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill will
create a standard definition of charity care that includes a
refined definition of community benefits for nonprofit
hospitals. This bill will clarify existing law concerning the
rebuttable presumption that a hospital with revenues in excess
of 10% of their operating expenses is operated as a for profit
institution. Further, this bill will clearly define what
constitutes charity care, which must be a direct provision of
care, not promotional activities or cost containment, as
currently provided within the guidelines of "community
benefit," and will improve reporting requirements for greater
public transparency in how hospitals meet their charity care
obligation, with rigorous financial penalties for hospitals
that fail to meet reporting requirements.
2)BACKGROUND . In a report prepared by the Senate Office of
Research (SOR) for an August 15, 2012 hearing of the Senate
Select Committee on Charity Care and Nonprofit Hospitals,
about 247 of California's 387 private hospitals may be
eligible for certain tax exemptions due to their nonprofit
status in exchange for providing various community benefits,
such as charity care. However, these community benefits are
not uniformly defined or measured. This ambiguity makes it
challenging to hold hospitals accountable for the special tax
benefits they receive and determine if they are providing
meaningful community benefits. Furthermore, some studies show
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many investor-owned hospitals and public hospitals provide
charity care and other community benefits similar to or
greater than their nonprofit counter parts. The SOR points
out that the California Legislative Analyst's Office (LAO), in
an analysis of the Charity Care Act of 2012 indicates that
there is currently no uniform definition of charity care nor a
requirement in State or federal law for nonprofit hospitals to
provide a certain amount of charity care or community benefit
in order to maintain their tax exempt status. According to
the LAO, of the private hospitals in California, about 30% are
for-profits and about 70% are nonprofits. The for-profit
hospitals pay corporate income taxes to the state. Nonprofit
hospitals are exempt from State corporate income taxes, local
sales taxes, and property taxes. The tax exemptions are
intended to allow nonprofit hospitals to use the funds that
would have been paid in taxes to provide patient care, invest
in their facilities and equipment, and implement other
measures that would be beneficial to their delivery of
healthcare services. The SOR report indicates that
controversy exists in how charity care and community benefits
are quantified. Some hospitals use a cost accounting
methodology while others use a ratio that converts a
hospital's listed charges to the actual cost of the services
provided. SOR also reports that in 2008 the IRS revised Form
990 in an effort to provide transparency and accountability
and keep pace with changes in the law with regard to the tax
exempt sector. The new form requires nonprofit hospitals to
report their bad debt expenses and Medicare shortfalls, but
excludes them from counting these as community benefits.
a) State Audits . The California State Auditor (Auditor)
has conducted two audits on the topic of tax exemption and
nonprofit hospitals: one in December of 2007 and another in
August of 2012. The 2007 report found that inconsistent
data obscured the economic value of the benefit to
communities and made recommendations to the Franchise Tax
Board, which have largely been implemented, to more closely
monitor tax exempt status. The audit recommended to the
Legislature the adoption of statutory requirements that
prescribe a mandatory format and methodology for tax-exempt
nonprofit hospitals to follow when presenting community
benefits in their plans, and an amendment in law to require
income and property tax exemptions for nonprofit hospitals
to be based upon nonprofit hospitals providing a certain
level of community benefits. Neither of those
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recommendations has been adopted.
The 2012 audit found that State agencies cannot use the
community benefits plans to justify the tax-exempt status
of nonprofit hospitals; neither federal nor State law
requires nonprofit hospitals to deliver a specific amount
of community benefits to qualify for tax exemptions; with
no standard methodology, hospitals use different methods to
calculate and report the cost of uncompensated health care
services; there are differences in the income levels used
when nonprofit hospitals determine whether patients qualify
for charity care, so a family who qualifies at one
hospitals may not qualify at another; that the impact on
prices when changes in ownership or operation of nonprofit
hospitals could not be determined but that the amount of
uncompensated care generally did not change; and that OSHPD
adequately monitors hospitals' submissions or required
data, but cannot penalize those hospitals that fail to
submit the required community benefits plans. The Auditor
recommended again that the Legislature consider amending
State law to include requirements about the amounts of
community benefits if it intends to tie the hospitals' tax
exempt status to the amount of community benefits provided;
define a methodology in state law for calculating community
benefits each hospital delivers or direct OSHPD to develop
regulations that define such a methodology; and, allow
OSHPD to assess penalties to hospitals that do not submit
required community benefits plans.
b) Other States . As reported by SOR, Texas was the first
state to pass legislation requiring a level of community
benefit relative to hospital resources, community needs,
and tax exemption benefits. Many states have definitions
of charity care, including New York, Pennsylvania,
Washington, and Wisconsin. In June 2012, Illinois approved
a law which requires hospitals to provide charity care to
low-income populations, and another law, which requires
nonprofit hospitals to provide charity care that meets or
exceeds their estimated property tax liability to maintain
their tax exempt status, and broadens the definition of
charity care beyond care to indigent. In 2012, Washington
State required tax-exempt hospitals to make their federally
required community needs assessment and implementation
strategies widely available to the public. In addition,
they must be evidence based or subject to evaluation.
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c) Charity Care Act of 2012 . This initiative would have
required certain nonprofit hospitals to provide a minimum
amount of charity care equal to at least 5% of net patient
revenue, impose new data reporting requirements on certain
nonprofit hospitals, impose new administrative
responsibilities on the Attorney General (AG) and give the
AG authority to oversee and enforce the provisions of the
measure. This measure would have gone into effect January
1, 2013, and been repealed on December 31, 2017. The
initiative would have exempted nonprofit hospitals that are
part of an integrated nonprofit health system or part of a
safety-net nonprofit health system as defined by the
measure (Dignity Health and Kaiser Permanente) and it did
not include multispecialty clinics. According to the LAO,
about 36% of the State's nonprofit hospitals would have
been exempted from the requirements of the initiative. On
May2, 2012, the Los Angeles Times reported that the Service
Employees International Union dropped the initiative along
with another health care initiative as part of an agreement
with California Hospital Association.
d) LAO Analysis . The LAO indicates that the Charity Care
Act of 2012 could have resulted in both costs and savings
to State and local governments, depending on how the
hospitals subject to the measure responded to it. Their
analysis finds that most of the nonprofit hospitals subject
to the measure would have to increase the amount of charity
care they provide in order to meet its requirements. To
offset the additional costs of providing greater amounts of
charity care, hospitals subject to the measure could employ
a mix of different strategies.
e) ACA . According to SOR, the federal Affordable Care Act
(ACA) generally mirrors much of California's existing state
requirements for nonprofit hospitals. These new provisions
require nonprofit hospitals to:
i) Conduct a community-health needs assessment at least
once every three taxable years and adopt an
implementation strategy to meet the community needs
identified through this assessment;
ii) Establish, implement, and widely publicize a
financial assistance policy that must indicate the
eligibility criteria for financial assistance and whether
such assistance includes free or discounted care. The
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policy must indicate the billing practices and
calculations for patients receiving this discounted care;
and,
iii) Limit their billing, collection activities, and
charges directed to uninsured patients and require them
to make reasonable efforts to determine eligibility for
financial assistance before engaging in extraordinary
collection efforts.
The ACA also includes new reporting requirements.
Nonprofit hospitals are required to report to the IRS the
results of the community needs assessment and if all
identified needs are not addressed, they are required to
provide the reasons why. Hospitals also must submit
audited financial statements to the IRS. These reporting
requirements are in addition to the preexisting
requirements of Form 990 and schedule H. Failure to comply
makes hospitals subject to an excise tax penalty of $50,000
and the loss of their federal tax exemption.
f) Multispecialty clinics . This bill applies to nonprofit
multispecialty clinics which this bill defines as clinics
operated by a nonprofit corporation exempt from federal
income taxation, as specified, under section 501 of the IRC
that conduct medical research and health education and
provide health care to its patients through a group of 40
or more physicians and surgeons, who are independent
contractors representing not less than 10 board-certified
specialties, and not less than two-thirds of whom practice
on a full-time basis at the clinic. This bill's sponsor,
the California Nurses Association (CNA) provided a
background paper which indicates that these clinics started
as physician owned medical foundations enacted into
existence in the 1980's and that in the 1990's more of
these organizations have become affiliated with or owned by
hospitals.
g) Welfare exemption . The welfare exemption refers to
section 214 of the Revenue and Taxation Code where property
used exclusively for religious, hospital, charitable, or
scientific purposes, which is owned and operated by
nonprofit organizations, is exempt from property taxation.
The welfare exemption is co-administered by the State Board
of Equalization (Board) and County Assessors. The Board
determines if an organization is eligible for exemption and
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issues an Organizational Clearance Certificate (OCC) to
qualifying organizations. An OCC remains valid unless
revoked by the Board. The County Assessor determines
whether the organization's property qualifies for the
exemption, but an exemption may not be granted unless the
organization holds a valid OCC. According to a March 30,
2012 review of OCC holders, conducted by the Board,
property may be considered exclusively used for hospital
purposes if it is owned and operated by a qualifying
nonprofit organization and if it is exclusively used to
provide support services for the hospital. The review
includes nonprofit multispecialty clinics.
The Board reviewed 174 hospital organizations, and of these
32 identified ownership and operation of one or more
outpatient clinics, child psychiatric service clinics
and/or multispecialty clinics. The Board's review found
that 24 organizations had surplus revenue in at least one
year from 2005 through 2008. Surplus revenue is when
operating revenue exceeds operating expenses by more than
10%. According to the Board, the percentage by which net
operating expenses exceed 10% of operating expenses for
those entities with surplus revenue ranged from less than
1% to 165%. Seven of the 24 entities have multispecialty
clinics. The Board determined that the surplus revenue was
used for acceptable purposes including debt retirement,
expansion of plant and facilities, and reserve for
operating cost contingencies.
h) Rideout Hospital Foundation v. County of Yuba (1992) 8
Cal.App.4th 24 . In this case, Yuba County denied a
nonprofit hospital with surplus revenue the welfare
exemption for two tax years. The hospital brought action
against the County to recover property taxes paid under
protest. The trial court granted summary judgment in favor
of the hospital finding that a nonprofit hospital that
earns surplus revenues in excess of 10% for a given tax
year can still qualify for the welfare exemption. The
Court of Appeal affirmed the trial court's decision. The
Court of Appeal held that the legislative history of the
provision indicates that it was not intended to deny
exemption to a nonprofit organization earning excess
revenues for debt retirement, facility expansion, or
operating cost contingencies, but merely to require a
hospital earning such excess revenue to affirmatively show
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that, in fact, it is not operated for profit and that it
meet other statutory conditions for invoking the exemption.
i) Rebuttable presumption . According to this bill's
sponsor, the rebuttable presumption is consistent with
existing law, but in the event that a local tax assessor
questioned a covered entity's continuing entitlement to a
property tax exemption (in the event that its revenues
exceeded the 10% mark), the entity would be required to
demonstrate that it is not operated for profit and meets
the other statutory conditions for invoking the exemption.
By pairing this clarification with changes to the Health &
Safety Code that would standardize definitions of "charity
care" and "community benefits," local tax assessors will be
in a position to determine whether the property in question
is being used for operation of a legitimately exempt
activity and not hanging onto revenues beyond an amount
reasonably necessary to accomplish the exempt, charitable
purpose.
3)SUPPORT . The sponsor, CNA, writes in support of this bill
that it seeks to define charity care for nonprofit hospitals
and refine what is considered "community benefits" to ensure
California's nonprofit hospitals are fulfilling their mission
statements and providing community benefits in exchange for
their tax-exempt status. CNA adds that in 2010, more than
seven million Californians lacked health insurance and that
even with so many in need of health care, California's
nonprofit hospitals benefited $1.8 billion from their
tax-exempt status. According to CNA for the most recent year
data are available, half of California's nonprofit hospitals
provided 2.46% or less of their operating costs on charity,
well below the federal standard of 5% needed to maintain tax
exempt status. Nonprofit hospitals accumulated $4.5 billion
in profits that same year, close to half of that by two of
California's largest hospital chains Sutter Health and Kaiser
Permanente. The lack of charity care provided by these
hospitals has a significant impact on many of California's
struggling cities and counties. Supporters, including CNA,
the Greenling Institute, and the California Rural Legal
Assistance Foundation all support the rebuttable presumption
where hospitals and multispecialty clinics with revenue over
10% of their operating expenses the previous year are
for-profit entities. Health Access California (HAC), Consumer
Federation of California, and Consumer Watchdog all write in
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support of the definitions in this bill for what constitutes
charity care and community benefits. The California
Professional Firefighters state that the existing property tax
exemption for health facilities bear little relationship to
the level of charity care they provide, that California's
counties, cities, and special districts, like fire districts,
rely on tax revenue to fund critical public services to the
communities they serve. HAC argues that hospitals use the
term "uncompensated care," which means bad debt where
collection agencies, some owned by nonprofit hospital systems,
pursue the uninsured to the point of bankruptcy and seizure of
their homes; therefore, defining charity care as care for
which there is no expectation of payment, hospitals would no
longer be able to claim bad debt as charity care.
4)OPPOSITION . Scripps Health writes in opposition to this bill
that it would impose a new and unrealistic definition of
charity care, creating a "guilty until proven innocent" burden
on hospitals that report an operating margin over 10%.
Scripps Health and the California Chamber of Commerce claim
this bill inappropriately changes the basis for a nonprofit
hospital's nonprofit status; that instead of deeming such
status if a hospital's margin does not exceed 10%, this bill
establishes a rebuttable presumption that a hospital is
organized for profit if it exceeds 10% in any one year.
Kaiser Permanente adds that the rebuttable presumption
provision in this bill will prove to be extremely unclear and
could have the unintended consequences of being interpreted
differently by different parties. Kaiser Permanente states
that the very narrow definition of community benefit in this
bill, could exclude critically important programs for
low-income, uninsured, and indigent Californians. The
California Right to Life Committee, Inc. (CRLC, Inc.) also in
opposition to this bill writes that "it would remove the
understanding of the corporal charitable works of mercy from
its biblical underpinnings to one of government mandated work
for the merely and presumably human good of the community
making these organizations answerable to the state and not to
their higher calling of faith and mercy." CRLC, Inc. adds
that this bill is an attempt to turn hospitals and other
health care facilities into appendages of the state, requiring
reporting and very likely invasions of privacy through data
collection on individuals' lifestyles who receive assistance
from hospitals. CRLC, Inc. writes that family planning and
abortion services would be included, as they are not
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specifically excluded.
5)RELATED LEGISLATION . AB 1382 (Committee on Health) makes
technical changes to terms used in the reporting of health
data information by specified health facilities to OSHPD.
6)PREVIOUS LEGISLATION .
a) AB 1503 (Lieu), Chapter 445, Statutes of 2010, requires
emergency physicians who provide emergency medical services
in a hospital to provide discounts to uninsured patients,
establishes limits on the expected payment for emergency
medical services as specified, limits debt-collection
activities, and requires hospitals to include a written
description of the hospital discount policy.
b) AB 2942 (Kuehl) of 2008 would have implemented the State
Auditor's 2007 recommendation for a standardized format and
methodology to be used when presenting community benefit
information, among other requirements.
c) SB 350 (Runner), Chapter 347, Statutes of 2007, requires
the submission of hospital charity care and
discount-payment policies to OSHPD.
d) AB 774 (Chan), Chapter 755, Statutes of 2006,
establishes Hospital Fair Pricing Policies, which requires
every hospital to offer reduced rates to uninsured and
underinsured patients who may have low or moderate income,
and to provide policies that clearly state the
qualifications for free care and discounted payments.
e) AB 1045 (Frommer), Chapter 532, Statutes of 2005,
revises the Payers' Bill of Rights to require hospitals to
provide information about their financial assistance and
charity care policies, as well as contact information for a
hospital employee or office to obtain additional
information.
f) SB 610 (Machado) of 2005 would have clarified existing
law regarding hospitals entitled to claim the welfare
exemption for property tax purposes by indicating a
hospital organization is deemed to be organized or operated
for profit if operating revenues exceed operating expenses
by more than 10%. Governor Schwarzenegger vetoed SB 610,
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indicating that "This bill financially penalizes non-profit
hospitals which are increasing reserves to invest in
important and necessary charitable activities including
purchasing state-of-the-art technology to improve the
quality of patient care, complying with costly seismic
safety mandates, and expanding facilities to increase
access to care for low-income uninsured Californians. This
bill provides that non-profit hospitals whose operating
revenues exceed operating expenses by more than ten percent
would be rebuttably presumed to be operated for profit for
tax purposes, regardless of whether the reinvestment of
excess dollars is for legitimate charitable activities.
Existing law provides adequate safeguards against the
inappropriate use of any excess operating revenues.
Hospitals should be encouraged to increase investment in
our communities rather than penalized for it. For this
reason, I cannot support this measure."
g) SB 24 (Ortiz) of 2005 would have established charity
care and reduced payment policies and requirements as a
condition for hospitals to maintain their tax-exempt
status.
h) AB 232 (Chan) of 2004 was substantially similar AB 774
and would have required each hospital to develop a self-pay
policy specifying how the hospital determines prices to be
paid by self-pay patients, as defined, and limits these
prices for patients below specified income levels. AB 232
would also have established limits on billing and
collection activities of hospitals and their agents. AB
232 died on the Senate Floor.
i) SB 379 (Ortiz) of 2004 would have required every
hospital to have a charity care policy and to provide that
policy to patients and would have required OSHPD to develop
a uniform charity care application to be used by all
hospitals. Governor Schwarzenegger vetoed SB 379, stating
that "the voluntary guidelines must be given time to be
implemented and reviewed" and that it was his expectation
that "all hospitals in the state uphold their important
commitment to the voluntary guidelines and that they are
applied evenly, consistently and without hesitation."
j) AB 1627 (Frommer), Chapter 582, Statutes of 2003,
establishes the Payers' Bill of Rights, which generally
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requires certain hospitals to provide written or electronic
copies of their chargemaster, as specified.
aa) SB 697 (Torres), Chapter 812, Statutes of 1994, requires
nonprofit hospitals to conduct community needs assessments
and develop community benefit plans and submit those plans
to OSHPD.
7)DOUBLE REFERRAL . This bill has been double referred. Should
this bill be approved in the Committee on Health it will be
referred to the Committee on Revenue and Taxation.
8)POLICY COMMENTS .
a) This bill adds additional clinics to those licensed
clinics subject to the OSHPD fee associated with data
submission. Presumably this provision is intended to
include nonprofit multispecialty clinics in the fee payment
process. However, nonprofit multispecialty clinics are not
licensed and based on the current provisions of this bill
would continue to be excluded from the fee requirement.
The author may wish to amend this bill to address this
issue.
b) Based on the review of OCCs conducted by the Board it
appears that community benefits requirements would apply to
nonprofit multispecialty clinics by virtue of their
relationship to the nonprofit hospital so it may not be
necessary to single them out as does this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
California Nurses Association (sponsor)
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
California Domestic Workers Coalition
California Labor Federation
California Professional Firefighters
California Rural Legal Assistance Foundation
California Tax Reform Association
California Teamsters Public Affairs Council
Consumer Federation of California
Consumer Watchdog
Engineers and Scientists of CA
Greenlining Institute
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Health Access California
Professional and Technical Engineers
United Food & Commercial Workers Western States Council
UNITE-HERE, AFL-CIO
Utility Workers Union of America
Opposition
Adventist Health
Alliance of Catholic Health Care
California Chamber of Commerce
California Right to Life Committee, Inc.
Kaiser Permanente
Scripps Health
Analysis Prepared by : Teri Boughton / HEALTH / (916) 319-2097