BILL ANALYSIS �
AB 1176
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Date of Hearing: April 16, 2013
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 1176 (Bocanegra and Bonta) - As Amended: March 21, 2013
SUBJECT : Medical residency training program grants.
SUMMARY : Establishes the Medical Residency Training Program
(MRT Program) to fund graduate medical education (GME) residency
programs in California. Requires every health insurer or health
care service plan that provides health care coverage in this
state to pay an annual GME assessment of $5.00 for each covered
life for purposes of the MRT Program. Specifically, this bill :
1)Establishes the GME Fund (Fund) to, upon appropriation by the
Legislature, be used solely for the purpose of funding grants
to GME residency programs in California.
2)Requires all interest earned on the Fund to be retained and
used for purposes consistent with the Fund.
3)Requires the Fund to consist of all assessments received
pursuant to 7) below, and any interest that accrues.
4)Requires the Office of Statewide Health Planning and
Development (OSHPD), in consultation with the California
Healthcare Workforce Policy Commission (Commission), to
develop criteria for distribution of available moneys in the
Fund. Requires OSHPD to give priority to programs that meet
the following specifications:
a) Are located in medically underserved areas, as defined;
b) Have proven record of placing graduates in those
medically underserved areas;
c) Place an emphasis on training primary care providers;
and,
d) Place an emphasis on training physician specialties that
are most needed in the community in which the program is
located.
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5)Allows moneys appropriated in the Fund to fund existing and
new GME residency slots.
6)Requires OSHPD, whenever applicable, to utilize moneys
appropriated from the Fund to provide a match for available
federal funds for GME.
7)Requires every health insurer or health care service plan that
provides health care coverage in this state to pay an annual
GME assessment of $5.00 for each covered life to the
Commission for deposit into the GME Fund for purposes of this
bill.
8)Provides that this bill does not apply to dental-only,
vision-only, or Medicare supplement plans or policies or to
coverage provided under any public program, including, but not
limited to, Medi-Cal or the Healthy Families Program.
EXISTING LAW :
1)Establishes the Department of Managed Health Care (DMHC) to
regulate health plans under the Knox-Keene Health Care Service
Plan Act of 1975 (Knox-Keene). Authorizes the Director of
DMHC to take various enforcement actions for violations of
Knox-Keene, including the imposition of fines and penalties.
2)Establishes the Health Professions Education Foundation (HPEF)
within OSHPD, among other functions, to develop criteria for
evaluating applicants for various scholarships or loans.
3)Establishes the California Physician Corps Program, which
consists of the Steven M. Thompson Physician Corps Loan
Repayment Program (STLRP) and the Physician Volunteer Program,
administered by HPEF.
4)Requires STLRP to provide financial incentives, as specified,
to program applicants who possess a current valid medical or
osteopathic license who practice in medically underserved
communities, as specified. Allows up to 20% of the available
positions to be awarded to program applicants from specialties
outside of primary care.
5)Establishes the Commission, made up of 15 members, nine of
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whom are appointed by the Governor and three appointed by each
the Speaker of the Assembly and the Chairperson of the Senate
Rules Committee. Requires the Commission to, among other
functions, identify specific areas where unmet priority needs
for dentists, physicians, and registered nurses exists;
establish standards for family practice training programs, as
specified; and, review and make recommendations to the
Director of OSHPD concerning the funding of family practice
programs or departments, as specified.
FISCAL EFFECT : This bill has not yet been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, "California's
current shortage of primary care physicians is projected to
reach a crisis level by 2015. The need for physicians will
only increase as the population ages and more people become
insured through federal health reform. According to the
Council on Graduate Medical Education, 74% of California's 58
counties have an undersupply of primary care physicians.
Primary care physicians make up just 34% of California's
physician workforce. Other states, such as New York,
Michigan, and Maryland have ensured that physicians who want
to train in their states have that opportunity and that the
costs of training are spread out equally among those who most
benefit. By creating additional training slots at residency
programs in underserved areas, they have realized an immediate
return on investment, drawing physicians to practice in areas
where they are needed most and providing an average of 600
additional patient visits per physician per year during
training alone. This also significantly grows their long-term
workforce as the vast majority of physicians who train in a
region stay in that area to practice. California should take
immediate steps to address this shortage. California has a
trove of primary care physicians who want to train here,
including those who have graduated from California medical
schools, but are forced to leave the state because training
slots at medical residency programs are limited. In addition,
the way residency training programs are funded relies almost
entirely on taxpayers through Medicare."
2)BACKGROUND .
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a) Graduate Medical Education . GME is a training program
for medical school graduates that serve as residents in
more than 1,000 of the nation's hospitals. GME is funded
by the federal Department of Health and Human Services
through the Centers for Medicare and Medicaid Services.
According to a 2012 health policy brief on GME in Health
Affairs, overall support for GME comes out of a number of
separate public and private sources. Each year the federal
government contributes about $9.5 billion in Medicare
funds, and approximately $2 billion in Medicaid to help pay
for GME. The federal government also funds GME in
children's hospitals through a program called Teach Health
Centers GME, which trains residents in community-based
ambulatory settings; and through contributions from other
agencies, including the Department of Defense, the
Department of Veterans Affairs, the Health Resources and
Service Administration, and the National Institutes of
Health. Additionally, the brief points out that more than
40 states have paid about $3.78 billion through their
Medicaid programs to support GME in 2009. Since then, many
states have reduced their support for advanced medical
training. Private insurers support GME to some degree
through payments they negotiate with teaching hospitals.
The Health Affairs brief states that Medicare supports GME
through two separate methodologies when calculating
payments to hospitals: direct payments to pay the salaries
of the residents and the supervising physicians' time; and,
indirect payments to subsidize other hospital expenses
associated with running training programs, such as longer
inpatient stays and more use of tests. These payments are
based, in part, on the number of residents a hospital
trains and the number of Medicare patients it treats. Of
the estimated $9.5 billion in Medicare funds spent on GME
in 2010, approximately $3 billion went for direct payments
and $6.5 billion went for indirect payments. The indirect
medical education calculations are complicated and
controversial. The Medicare Payment Advisory Commission
(MedPAC), a group that advises Congress, estimates that
indirect payment levels may be $3.5 billion higher than
actual indirect costs. Overall, federal spending for GME
has been increasing for decades.
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b) GME and the Affordable Care Act (ACA) . On March 23,
2010, President Obama signed the (Public Law (PL) 111-148),
as amended by the Health Care and Education Reconciliation
Act of 2010 (PL 111-152). Specifically, the ACA increases
the number of GME training positions by redistributing
currently unused slots, with priorities given to primary
care and general surgery and to states with the lowest
resident physician-to-population ratios (effective July 1,
2011); increases flexibility in laws and regulations that
govern GME funding to promote training in outpatient
settings (effective July 1, 2010); and, ensures the
availability of residency programs in rural and underserved
areas. The ACA also calls for the establishment of
Teaching Health Centers, defined as community-based,
ambulatory patient care centers, including federally
qualified health centers and other federally-funded health
centers that are eligible for payments for the expenses
associated with operating primary care residency programs.
(Funds appropriated for five years beginning fiscal year
2011).
3)SUPPORT . The California Academy of Family Physicians states
that it is only through a strong funding mechanism that
California will be able to stabilize and expand its medical
residency training, helping ensure that every Californian has
access to a physician when and where they need one. The
California Medical Association states that with this bill,
California will follow the example of other states and create
a funding source for underfunded medical residency training
programs by drawing from a funding pool of private health
plans, and require emphasis on funding be placed on programs
that train primary care physicians and specialists that are
most needed in the community in which the program is located.
4)OPPOSITION . Blue Shield of California indicates that the
assessment as proposed in this bill translates to an estimated
$100 million annual premium increase for insured Californians.
Adding another tax would only further the unaffordability of
health care and could potentially price out many Californians
who are attempting to gain coverage for the first time.
The Association of California Life and Health Insurance
Companies, and the California Association of Health Plans
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state that, although they agree that primary care providers
are essential to the health care delivery system, they cannot
support this bill because it increases taxes on plans and
enrollees, creates complications for the successful launch of
the California Health Benefit Exchange (now called Covered
California), and does not guarantee that physicians
benefitting from this investment will actually stay in the
state to practice or contract with health plans that funded
their residencies.
In its letter, Anthem Blue Cross indicated that the ACA and
Covered California will place additional taxes and fees on
health plans, as listed below:
ACA Taxes/Fees
---------------------------------------------------------------
|Insurer Fee (2014) |Est. at 2.5% of premium (In a |
| |statement from the Joint |
| |Committee on taxation, Chief of |
| |Staff Thomas Barthold explains |
| |that eliminating this fee could |
| |decrease the average family |
| |premium in 2016 by up to $400.) |
|----------------------------+----------------------------------|
|Comparative Effectiveness |$1 per person per year |
|Research Fee (2012) | |
|----------------------------+----------------------------------|
|Reinsurance assessment |$5.25 per person per year (est.) |
|(2014) | |
|----------------------------+----------------------------------|
|Tax on high earners (2013) |0.9% increase on $200K |
| |single/$250K married |
|----------------------------+----------------------------------|
|Tax on unearned income |3.8% on unearned in excess $200K |
|(2013) |single/$250K married |
|----------------------------+----------------------------------|
|High-Cost insurance fee |40% on plan costs exceeding |
|(2018) |"Cadillac" thresholds |
---------------------------------------------------------------
Exchange Fees
---------------------------------------------------------------
|Participation Fee |Individual Exchange: $13.95 per |
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| |member per month (est.) |
| | |
| |(Exchange User fees, per federal |
| |rules, must be spread evenly |
| |across an issuer's entire book of |
| |individual business for 2014.) |
| |SHOP Exchange: Exchange User fees |
| |will equate to 4% of premium for |
| |SHOP QHPs sold through the |
| |Exchange. (Same rule applies for |
| |spreading the cost of User Fees |
| |across the issuer's entire small |
| |group business in 2014.) |
| | |
---------------------------------------------------------------
5)RELATED LEGISLATION .
a) AB 565 (Salas) revises program criteria of the STLRP and
revises the definition of practice setting for purposes of
the STLRP to include a private practice that provides
primary care located in a medically underserved area and
has a minimum of 30% uninsured, Medi-Cal, or other publicly
funded program that serve patients under 250% of the
federal poverty level. AB 565 is pending in this
Committee.
b) AB 860 (Perea and Bocanegra) appropriates $600,000 from
the Managed Care Administrative Fines and Penalties Fund
(Managed Care Fund) to the Steven M. Thompson Medical
School Scholarship Program (STMSS Program ) Account within
HPEF. AB 860 is pending in Assembly Appropriations
Committee.
c) SB 20 (Ed Hernandez), pending in Senate Appropriations
Committee, requires, beginning on the date that the Major
Risk Medical Insurance Program (MRMIP) becomes inoperative,
all the funds in the Managed Care Fund to be transferred
each year for purposes of the STLRP.
6)PREVIOUS LEGISLATION .
a) AB 589 (Perea), Chapter 339, Statutes of 2012,
establishes the STMSS Program to promote the education of
medical doctors and doctors of osteopathy, as specified.
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b) SB 635 (Ed Hernandez) of 2012 would have required funds
deposited into the Managed Care Fund in excess of $1
million to be transferred each year to OSHPD for the
purpose of the Song-Brown Health Care Workforce Training
Act, as specified. SB 635 died in Assembly Appropriations
Committee.
c) SB 606 (Ducheny), Chapter 600, Statutes of 2009,
requires the Osteopathic Medical Board of California to
assess an additional $25 fee from an osteopathic physician
and surgeon applying for 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 STLRP. Allows osteopathic
physicians and surgeons to be eligible to apply for the
STLRP.
d) SB 1379 (Ducheny), Chapter 607, Statutes of 2008,
requires fines and administrative penalties levied against
health plans under Knox-Keene to be placed in the Managed
Care Fund and used, upon appropriation by the Legislature,
for STLRP and the MRMIP. SB 1379 also appropriated $1
million annually for purposes of the STLRP.
e) AB 2439 (De la Torre), Chapter 640, Statutes of 2008,
requires the Medical Board of California (MBC) to charge
physicians and surgeons an additional $25 as part of their
initial license fee or renewal fee to support the STLRP.
f) AB 920 (Aghazarian), Chapter 317, Statutes of 2005,
transfers the administration of the STLRP from the MBC to
the HPEF.
g) AB 327 (De la Torre), Chapter 293, Statutes of 2005,
requires the MBC to assess a $50 voluntary donation from
physicians and surgeons at the time of licensure or
renewal.
h) AB 1403 (Nu�ez), Chapter 367, Statutes of 2004, renames
the California Physician Corps Loan Repayment Program to
STLRP effective January 1, 2005.
i) AB 982 (Firebaugh), Chapter 1131, Statutes of 2002,
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establishes the California Physician Corps Loan Repayment
Program within the MBC.
7)SUGGESTED TECHNICAL AMENDMENTS . To clarify the public
programs that are excluded from this bill, Committee staff
recommends to delete lines 32-35 on page 3, and replace it
with the following:
"A specialized health insurance policy that provides
excepted benefits as described in Section 2722 and
2791 of the federal Public Health Services Act (42
U.S.C. Sec. 300gg-21; 42 U.S.C. Sec. 300gg-91) or the
program under Part 6.4 (commencing with Section
12699.50) of Division 2, or Medicare supplement
coverage, or a specified disease or hospital indemnity
policy, subject to Section 10965.01, a specialized
health care service plan contract, a health care
service plan contract provided in the Medi-Cal program
(Chapter 7 (commencing with Section 14000) of Part 3
of Division 9 of the Welfare and Institutions Code),
the Healthy Families Program (Part 6.2 (commencing
with Section 12693) of Division 2 of the Insurance
Code), the Access for Infants and Mothers Program
(Part 6.3 (commencing with Section 12695) of Division
2 of the Insurance Code), or the program under Part
6.4 (commencing with Section 12699.50) of Division 2
of the Insurance Code, or Medicare supplement
coverage."
8)SUGGESTED SUBSTANTIVE AMENDMENTS .
a) Should a new entity be established within OSHPD to
assist in developing criteria or standards for the MRT
Program ? To ensure that there is appropriate expertise in
awarding grants to applicants of the MRT Program, the
Committee may wish to suggest the establishment of a new
workgroup/task force/commission/council within OSHPD to
assist in establishing criteria and awarding of grants for
the MRT program. This group should include many diverse
interests, including managed care organizations,
community-based training sites, private practitioners, and
others involved in providing services.
b) Should a report be submitted to the Legislature
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annually ? Similar to the STLRP, the Committee may wish to
amend this bill to require an annual report to the
Legislature on the number of program participants, the name
and location of the residency sites with program
participants, the amount expended for each residency site,
and any other information relevant to a GME program.
c) Should residency programs be accredited by the
Accreditation Council for Graduate Medical Education
(ACGME) or the American Osteopathic Association (AOA) ? The
ACGME is the entity that accredits graduate medical
training programs for physicians in the US and the AOA
accredited medical training programs for osteopathic
physicians and surgeons. Both entities improve health care
by assessing and advancing the quality of residency
education. This bill should be amended to require that
priority be given to residency programs that are ACGME or
AOA accredited.
9)POLICY CONSIDERATIONS . What are the implications of this bill
on the purchase of health coverage through Covered California,
including for those who receive federal subsidies? Does the
author intend to exclude from this bill public subsidy
programs in the Exchange?
Additionally, as the opponents pointed out, there is no
guarantee that physicians benefitting from the MRT Program
will actually stay in the state to practice or contract with
health plans that funded their residencies. The Committee may
wish to amend this bill to require that physicians and
surgeons who benefit from the MRT Program stay in California
for a number of years.
REGISTERED SUPPORT / OPPOSITION :
Support
California Academy of Family Physicians
California Medical Association
California Primary Care Association
Opposition
Anthem Blue Cross
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Association of California Life and Health Insurance Companies
Blue Shield of California
California Association of Health Plans
California Chamber of Commerce
Howard Jarvis Taxpayers Association
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097