Amended in Senate June 10, 2014

Amended in Assembly May 15, 2014

Amended in Assembly April 29, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2546

Introduced by Assembly Member Salas

February 21, 2014

An act to add Chapter 5.5 (commencing with Section 101852) to Part 4 of Division 101 of the Health and Safety Code, relating to public health.

LEGISLATIVE COUNSEL’S DIGEST

AB 2546, as amended, Salas. Kern County Hospital Authority.

Existing law authorizes the board of supervisors of certain counties to establish a hospital authority for the management, administration, and control of certain medical facilities.

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This bill would authorize the board of supervisors of the County of Kern to establish, by ordinance, the Kern County Hospital Authority to manage, administer, and control the Kern Medical Center and other health care facilities, as defined. The bill would prohibit establishing the hospital authority until the medical center affiliates or consolidates with at least one other health care facility, as specified. The bill would grant to the authority the duties, privileges, immunities, rights, liabilities, and limitations of a local unit of government within the state. The bill would specify that the transfer to the authority of the management, administration, and control of the medical center and another health facility does not affect the eligibility of the county or the governing board of another health care facility for, but authorizes the authority to participate in and receive, various sources of funding, as specified, including various Medi-Cal programs.

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This bill would provide various protections for the benefits of the permanent employees of the medical center, subject to certain conditions, and would authorize the authority to contract with the Public Employees’ Retirement System, as specified.

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This bill would authorize the board of supervisors of the County of Kern to establish, by ordinance, the Kern County Health System Authority to manage, administer, and control the Kern Medical Center and for the operation of additional programs, facilities, care organizations, physical practice plans, and delivery systems that may be affiliated or consolidated with the medical center. The bill would also authorize the establishment of the authority to manage, administer, and control the managed care plan established by Kern Health Systems in order to ensure the substantial participation of the disproportionate share hospital in the county and the safety net providers with which it is affiliated and to negotiate and enter into contracts to provide or arrange, or provide directly, health care services to specified individuals.

end insert begin insert

The bill would require the board of supervisors, in the enabling ordinance, to establish the terms and conditions of the transfers to the authority from the county and Kern Health Systems, which includes, among other things, any transfer of real and personal property. The bill would require the authority to be governed by a board of trustees, and would require the board of supervisors, in the enabling ordinance, to specify, among other things, the membership of the board trustees and the qualifications of members.

end insert begin insert

The bill would grant to the authority, among other powers, the duties, privileges, immunities, rights, liabilities, and limitations of a local unit of government within the state. The bill would specify that the transfer to the authority of the management, administration, and control of the medical center does not affect the eligibility of the county for, but authorizes the authority to participate in and receive, various sources of funding, as specified, including various Medi-Cal programs. The bill would require the board of supervisors to adopt, and the authority to implement, a personnel transition plan that requires specified actions, including ongoing communication to employees and recognized employee organizations regarding the impact of the transition on certain existing employees and employee classifications.

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The bill would authorize the board of supervisors to find and declare that the authority ceases to exist, and in that event, the bill would require the board of supervisors to provide for the disposition of the authority’s assets, obligations, and liabilities.

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Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

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This bill would make legislative findings to that effect.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Chapter 5.5 (commencing with Section 101852)
is added to Part 4 of Division 101 of the end insert begin insert Health and Safety Code end insert begin insert ,
to read: end insert

begin insert

 

Chapter   begin insert 5.5. end insert Kern County Health System Authority
Act

 

Article begin insert 1. end insert   General Provisions

 

begin insert 101852. end insert   

(a) This chapter shall be known and may be cited as
the Kern County Health System Authority Act.

(b) The Legislature finds and declares all of the following:

(1) Kern Medical Center, an acute care hospital currently
operated as a constituent department of the County of Kern, is a
designated public hospital, as defined in subdivision (d) of Section
14166.1 of the Welfare and Institutions Code, and a critical
component of the state’s health care safety net.

(2) Kern Health Systems, a separate public entity from the
County of Kern, is a special county health authority formed
pursuant to Section 14087.38 of the Welfare and Institutions Code
to address problems of delivery of publicly assisted medical care
in the County of Kern, and currently operates the local initiative,
as defined in subdivision (w) of Section 53810 of Title 22 of the
California Code of Regulations, in the county.

(3) The ongoing evolution of the healthcare environment is a
catalyst for public health care service entities to pursue innovative
health care delivery models that proactively improve the quality
of patient care services and patient experience, efficiently and
effectively increase access to needed health care services across
the care continuum, provide services in a patient-centered manner,
and moderate the rate of growth of health care expenditures.

(4) In order for the County of Kern and Kern Health Systems
to further their common mission of improving the health status of
the people of the County of Kern through providing access to
affordable, high quality health care services, and to help ensure
the viability of the health care safety net in the county, it is
necessary that they be permitted to combine resources and
consolidate efforts towards an integrated delivery system to achieve
health plan and provider alignment by enabling the operation of
both Kern Medical Center and the local initiative operated by
Kern Health Systems under a new special health system authority.

(5) Because there is no general law under which this public
health system authority could be formed for these purposes, the
adoption of this act authorizing formation of a special authority
by the Legislature is required.

begin insert 101852.1. end insert   

For purposes of this chapter, the following
definitions shall apply:

(a) “Authority” means the Kern County Health System Authority
established pursuant to this chapter.

(b) “Board of supervisors” means the board of supervisors of
the County of Kern.

(c) “Board of trustees” means the governing body of the
authority.

(d) “County” means the County of Kern.

(e) “Enabling ordinance” means the county ordinance enacted
pursuant to this chapter to establish the authority, as may be
amended from time to time.

(f) “Kern Health Systems” means the public entity that operates
the managed care plan organized by the county pursuant to Section
14087.38 of the Welfare and Institutions Code in the County of
Kern.

(g) “Managed care plan” means the health plan licensed
pursuant to the Knox-Keene Health Care Service Plan Act of 1975
(Chapter 2.2 (commencing with Section 1340) of Division 2), which
was established by Kern Health Systems and serves as the local
initiative, as defined in subdivision (w) of Section 53810 of Title
22 of the California Code of Regulations, in the County of Kern,
and includes all plan assets and operations that exist or are later
established.

(h) “Medical center” means the assets and liabilities comprising
the Kern Medical Center and related public health care programs,
facilities, care organizations, physician practice plans and delivery
systems, which may be hospital-based or nonhospital-based, that
now exist or are established in the future.

 

Article begin insert 2. end insert   Establishment of the Kern County Health System
Authority

 

begin insert 101853. end insert   

(a) Pursuant to this chapter, the board of supervisors
may establish by ordinance the Kern County Health System
Authority, which shall be a public agency that is a local unit of
government separate and apart from the county and any other
public entity for all purposes. The authority established pursuant
to this chapter shall file the statement required by Section 53051
of the Government Code, and is a public entity for purposes of
Division 3.6 (commencing with Section 810) of Title 1 of the
Government Code.

(b) The purpose of the authority shall be to do all of the
following:

(1) Provide management, administration, and other controls
consistent with this chapter for the medical center to continue to
operate as a designated public hospital, as defined in subdivision
(d) of Section 14166.1 of the Welfare and Institutions Code, and
for the operation of additional programs, facilities, care
organizations, physician practice plans, and delivery systems that
may be affiliated or consolidated with the medical center, to ensure
the viability of the health care safety net in the county in a manner
consistent with the county’s requirements under Section 17000 of
the Welfare and Institutions Code.

(2) Provide management, administration, and other controls
consistent with this chapter for the managed care plan to continue
to operate as a local initiative, as defined in subdivision (w) of
Section 53810 of Title 22 of the California Code of Regulations,
to ensure the substantial participation of the disproportionate
share hospital in the county and the safety net providers with which
it is affiliated, and to negotiate and enter into contracts to provide
or arrange, or provide directly, health care services to individuals
including, but not limited to, those covered under Subchapters
XVIII (commencing with Section 1395), XIX (commencing with
Section 1396), and XXI (commencing with Section 1397aa) of
Chapter 7 of Title 42 of the United States Code, those entitled to
coverage under private group coverage, private individual
coverage, including without limitation, coverage through Covered
California, other publicly supported programs, those employed
by public agencies or private businesses, and uninsured or indigent
individuals.

(c) Subject to the requirements of this chapter, the authority
shall be charged with the management, administration, and control
of the medical center and the managed care plan. The State
Department of Health Care Services and Department of Managed
Health Care shall take all necessary steps to ensure all of the
following:

(1) The authority is permitted to operate the medical center and
the managed care plan.

(2) The medical center continues its status as a designated public
hospital.

(3) The managed care plan continues to operate as a local
initiative.

(4) The authority may participate as a contributing public
agency for the purposes of Section 433.51 of Title 42 of the Code
of Federal Regulations.

(d) The board of supervisors, in the enabling ordinance, shall
establish the terms and conditions of the transfers to the authority
from the county and Kern Health Systems, including, but not limited
to, all of the following:

(1) Any transfer of real and personal property, assets and
liabilities, including, but not limited to, liabilities of the medical
center determined and assigned by the county for county funds
previously advanced to fund the operations of the medical center.

(2) Transfer of employees, including any necessary personnel
transition plan, as specified in Section 101853.1.

(3) Maintenance operation and management or ownership of
the medical center and managed care plan.

(4) Transfer of licenses.

(5) Any other matters as the board of supervisors deems
necessary, appropriate or convenient for the conduct of the
authority’s activities

(e) (1) Upon establishment of the authority, all assets and
liabilities comprising the managed care plan, and all operations
and governance of the managed care plan, shall be transferred to
the authority pursuant to the terms and conditions specified in the
enabling ordinance. The effective date of the transfer shall be as
prescribed in the enabling ordinance. The managed care plan
shall provide at least 30 days advance notice for change of
ownership to the Department of Managed Health Care in the form
of a notice of material modification.

(2) The notice of material modification shall describe any
changes in the governing body or higher management of the
managed care plan, and, notwithstanding any other law, shall be
deemed approved upon receipt. Any other changes to plan
operations, governance, or financial status shall be made after
the change of ownership, and shall be subject to the requirements
of the Knox-Keene Health Care Service Plan Act of 1975 (Chapter
2.2 (commencing with Section 1340) of Division 3).

(3) Upon the transfer of the maintenance, operation, and
management or ownership of the managed care plan to the
authority, the board of supervisors shall terminate Kern Health
Systems by ordinance. The board of supervisors shall notify the
State Department of Health Care Services 30 days prior to the
effective date of the termination.

(4) The provisions set forth in paragraph (5) of subdivision (t)
of, and subdivisions (v) and (x) of, Section 14087.38 of the Welfare
and Institutions Code shall not apply to the termination of Kern
Health Systems made pursuant to this chapter.

(5) Any liabilities of Kern Health Systems shall not become
obligations of the county upon termination of Kern Health Systems.

(6) With respect to the maintenance, operation, and management
or ownership of the managed care plan, the authority shall comply
with the applicable requirements of the Knox-Keene Health Care
Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 3).

(7) The board of supervisors may contract with the authority
to provide indigent care services on behalf of the county. The
contract shall specify that county policies, as may be modified
from time to time and consistent with the county’s obligations
under Section 17000 of the Welfare and Institutions Code, shall
be applicable. Notwithstanding any other provision of this chapter,
the authority shall not undertake any of the county’s obligations
under Section 17000 of the Welfare and Institutions Code, nor
shall the authority have an entitlement to receive any revenue for
the discharge of the county’s obligations, without a written
agreement with the county. Any contract executed by and between
the county and the authority shall provide for the indemnification
of the county by the authority for liabilities as specifically set forth
in the contract, except that the contract shall include a provision
that the county shall remain liable for its own negligent acts.
Indemnification by the authority shall not be construed as divesting
the county from its ultimate responsibility for compliance with
Section 17000 of the Welfare and Institutions Code.

(f) (1) A transfer of maintenance, operation, and management
or ownership or lease of the medical center to the authority may
be made with or without the payment of a purchase price by the
authority and otherwise upon the terms and conditions as found
necessary by the board of supervisors and specified in the enabling
ordinance to ensure that the transfer will constitute an ongoing
material benefit to the county and its residents.

(2) A transfer of the maintenance, operation, and management
of the medical center to the authority shall not be construed as
empowering the authority to transfer any ownership interest of
the county in the medical center except as otherwise approved by
the board of supervisors.

(3) The authority shall not transfer the maintenance, operation,
and management or ownership or lease of the medical center to
any other entity without the prior written approval of the board
of supervisors.

(4) With respect to the maintenance, operation, and management
or ownership of the medical center, the authority shall conform
to both of the following requirements:

(A) Comply with Section 14000.2 of the Welfare and Institutions
Code.

(B) Comply with any applicable requirements of Section 1442.5.

(5) The board of supervisors may retain control of the medical
center physical plant and facilities except as otherwise specifically
provided for in the enabling ordinance or other lawful agreements
entered into by the board of supervisors. Any lease agreement or
other agreement between the county and the authority may provide
that county premises shall not be sublet without the approval of
the board of supervisors.

(6) Notwithstanding any other provision of this chapter, and
whether or not accompanied by a change in licensing, the
authority’s responsibility for the maintenance, operation, and
management or ownership of the medical center does not relieve
the county of the ultimate responsibility for indigent care pursuant
to Section 17000 of the Welfare and Institutions Code.

(g) Unless otherwise agreed to by the authority and the board
of supervisors, an obligation of the authority, statutory,
contractual, or otherwise, shall be the obligation solely of the
authority and shall not be the obligation of the county or any other
entity, and any contract executed by and between the county and
the authority, or any other entity and the authority, shall contain
a provision that liabilities or obligations of the authority with
respect to its activities pursuant to the contract shall be the
liabilities or obligations of the authority and shall not be or become
the liabilities or obligations of the county or the other entity,
respectively. An obligation of the authority, statutory, contractual,
or otherwise, shall not be the obligation of the state.

(h) The authority shall not be a “person” subject to suit under
the Cartwright Act (Chapter 2 (commencing with Section 16700)
of Part 2 of Division 7 of the Business and Professions Code).

(i) The authority is not subject to the jurisdiction of a local
agency formation commission pursuant to the
Cortese-Knox-Hertzberg Local Government Reorganization Act
of 2000 (Division 3 (commencing with Section 56000) of Title 5
of the Government Code), or any successor statute.

begin insert 101853.1. end insert   

(a) In exercising its powers to employ personnel,
the authority shall implement, and the board of supervisors shall
adopt, a personnel transition plan. The personnel transition plan
shall require all of the following:

(1) Ongoing communication to employees and recognized
employee organizations regarding the impact of the transition on
existing managed care plan, medical center, county, and other
health care facility employees and employee classifications.

(2) Meeting and conferring with representatives of affected
bargaining unit employees on both of the following issues:

(A) A timeframe for which the transfer of personnel shall occur.

(B) Specified periods of time during which county or medical
center employees affected by the establishment of the authority
may elect to be considered for appointment to funded, equivalent,
vacant county positions, and exercise reinstatement rights, for
which they are qualified and eligible. An employee who first elects
to remain with the county, but who subsequently seeks employment
with the authority within 30 days of this election, shall be subject
to the requirements of this article.

(3) Acknowledgment that the authority, to the extent permitted
by federal law, shall be bound by the terms of the memoranda of
understanding executed between the county and its exclusive
employee representatives that are or will be in effect as of the date
the county adopts the enabling ordinance pursuant to this article.
Subsequent memoranda of understanding shall be subject to
approval only by the board of trustees, and not the county.

(b) The implementation of this chapter shall not be a cause for
the modification of the level of medical center, county, or Kern
Health Systems employment benefits. Upon the execution of the
enabling ordinance, employees who serve or work for the medical
center, county, or Kern Health Systems immediately prior to the
implementation of this chapter, and who become authority
employees, shall retain their existing or equivalent classifications
and job descriptions upon transfer to the authority, comparable
pension benefits, and at least their existing salaries and other
benefits that include, but are not limited to, accrued and unused
vacation, sick leave, personal leave, health care, retiree health
benefits, and deferred compensation plans.

(c) The authority shall recognize as the exclusive representatives
of those authority employees who perform functions transferred
from the county or medical center to the authority, pursuant to
this chapter, the employee organizations that represented the
employees at the county or medical center performing those
functions at the time of transfer.

(d) In order to stabilize labor and employment relations and
provide continuity of care and services to the people of the county,
and notwithstanding any other law, the authority shall do all of
the following for a period of 24 months after the effective date of
the transfer of the medical center to the authority:

(1) Continue to recognize each exclusive representative of each
bargaining unit.

(2) Continue to provide at least the same level of employee
benefits to authority employees, who were medical center, county,
or managed care plan employees, that had been provided to these
employees, whether those benefits arise out of a memorandum of
understanding, or other agreements or law.

(3) Roll over and continue to be bound by any existing medical
center or county memoranda of understanding covering the terms
and condition, including the level of wages and benefits, of
transferred employees for 24 months after the term end date of
any memoranda of agreement, unless modified by mutual
agreement with each of the employees’ exclusive representatives,
and only to the extent that continuing to provide those pension
benefits specified in any memoranda of agreement does not conflict
with any Kern County Employees’ Retirement Association
regulation or federal law. Any conflicts in the existing agreements
as to wages and other terms and conditions of employment shall
be resolved only by mutual agreement between the authority and
each of the exclusive employee representatives.

(e) Permanent employees of the medical center, county, or Kern
Health Systems on the effective date of the transfer of the medical
center and the managed care plan, as applicable, to the authority,
shall be deemed qualified for employment or retention in equivalent
positions at the authority, and no other qualifications shall be
required except as otherwise required by state or federal law.
Probationary employees on the effective date of , as set forth in
this paragraph, shall retain their probationary status and rights
and shall not be deemed to have transferred so as to require
serving a new probationary period. To the extent possible,
employees who transfer to equivalent positions at the authority
shall retain their existing classifications and job descriptions, but
to the extent there is a dispute on this issue, the authority agrees
to meet and confer with the transferred employees exclusive
authorized representative.

(f) Employees who transfer from the medical center, county, or
Kern Health Systems to the authority shall retain the seniority they
earned from their previous employers. The authority shall continue
to provide for the maintenance of any benefits that accompany
seniority, if they existed, prior to the transfer. All time served in
the same, equivalent, or higher classification shall be counted
toward classification seniority.

(g) Notwithstanding anything to the contrary contained in this
chapter, this chapter does not prohibit the authority from
determining the number of employees, the number of full-time
equivalent positions, job descriptions, the nature and extent of
classified employment positions, and salaries of employees.

 

Article begin insert 3. end insert   Board of Trustees

 

begin insert 101854. end insert   

(a) The authority established pursuant to this chapter
shall be governed by a board of trustees that is appointed, both
initially and continually, by the board of supervisors. The board
of supervisors, in the enabling ordinance, shall specify the
membership of the board of trustees, the qualifications for
individual members, the manner of appointment, selection, or
removal of board of trustees members, their terms of office, and
all other matters that the board of supervisors deems necessary
or convenient for the conduct of the board of trustees.
Notwithstanding any other law, at the board of supervisors’
discretion and as specified in the enabling ordinance, the board
of trustees may consist entirely of members of the board of
supervisors or may include any number of the members of the
board of supervisors.

(b) The board of supervisors, either during or after the formation
of the authority, may modify the number, length of terms, and
appointing authority for the board of trustees, and provisions for
all other matters pertaining to the board of trustees by subsequent
ordinance.

(c) The board of supervisors shall adopt bylaws for the authority
that, among other things, shall specify the officers of the board of
trustees, the time, place, and conduct of meetings, and other
matters that the board of supervisors deems necessary or
appropriate to conduct the authority’s activities. The bylaws shall
be operative upon approval by a majority vote of the board of
supervisors, but may be amended, from time to time, by a majority
vote of the board of supervisors.

(d) Notwithstanding any other law, a member of the board of
trustees shall not be deemed to be interested in a contract entered
into by the authority within the meaning of Article 4 (commencing
with Section 1090) of Chapter 1 of Division 4 of Title 1 of the
Government Code if either of the following apply:

(1) The member is also a member of the board of supervisors,
or is a county employee appointed to represent the interests of the
board of supervisors.

(2) All the following applies to the member:

(A) The member was appointed to represent the interests of
physicians, health care practitioners, hospitals, pharmacies, or
other health care organizations, or beneficiaries.

(B) The contract authorizes the member or the organization the
member represents to provide services to beneficiaries under the
authority’s programs.

(C) The contract contains substantially the same terms and
conditions as contracts entered into with other individuals or
organizations that the member was appointed to represent.

(D) The member does not influence or attempt to influence the
health authority or another member of the authority to enter into
the contract in which the member is interested.

(E) The member discloses the interest to the authority and
abstains from voting on the contract.

(F) The board of trustees notes the member’s disclosure and
abstention in its official records and authorizes the contract in
good faith by a vote of its membership sufficient for the purpose
without counting the vote of the interested member.

(e) Members of the board of trustees shall not be vicariously
liable for injuries caused by the act or omission of the authority
to the extent that protection applies to members of governing
boards of local public entities generally under Section 820.9 of
the Government Code.

(f) The board of trustees created and appointed pursuant to this
chapter is a duly constituted governing body as the term is used
in Section 1250 and defined in Section 70035 of Title 22 of the
California Code of Regulations.

(g) In the event of a change of license ownership, the board of
trustees shall comply with the obligations of governing bodies of
general acute care hospitals generally as set forth in Section 70701
of Title 22 of the California Code of Regulations, as currently
written or subsequently amended, as well as the terms and
conditions of the license. The authority shall be the responsible
party with respect to compliance with these obligations, terms,
and conditions.

 

Article begin insert 4. end insert   Powers and Duties of the Authority

 

begin insert 101855. end insert   

(a) The authority, in addition to any other powers
granted pursuant to this chapter, shall have the following powers:

(1) To have the duties, privileges, immunities, rights, liabilities,
and limitations of a local unit of government within the state.

(2) To have perpetual existence.

(3) To adopt, have, and use a seal, and to alter it at its pleasure.

(4) To sue and be sued in the name of the authority in all actions
and proceedings in all courts and tribunals of competent
jurisdiction.

(5) To purchase, lease, trade, exchange, or otherwise acquire,
maintain, hold, improve, mortgage, lease, sell, and dispose of real
and personal property of any kind necessary or convenient to
perform its functions and fully exercise its powers.

(6) To appoint and employ a chief executive officer and other
officers and employees that may be necessary or appropriate,
including legal counsel, to establish their compensation, provide
for their health, retirement, and other employment benefits, and
to define the power and duties of officers and employees.

(7) (A) To incur indebtedness and to borrow money and issue
bonds evidencing the same, including the authority to issue, from
time to time, notes and revenue bonds in principal amounts that
the authority determines to be necessary to provide sufficient funds
for achieving any of its purposes, including, but not limited to,
assumption or refinancing of debt service for capital projects
eligible for Medi-Cal supplemental payments pursuant to Section
14085.5 of the Welfare and Institutions Code, the payment of
interest on notes and bonds of the authority, the establishment of
reserves to secure these notes and bonds, and all other
expenditures of the authority incident to and necessary or
convenient to carry out its purposes and powers.

(B) Any notes, bonds, or other securities issued, and the income
from them, including any profit from the sale thereof, shall at all
times be free from taxation by the state or any agency, political
subdivision, or instrumentality of the state.

(C) Notwithstanding the provisions of subparagraph (A), for
any indebtedness, notes, bonds, or other securities that require
voter approval pursuant to state law, the prior approval of the
board of supervisors shall be required. Notwithstanding the
required prior approval of the board of supervisors, any
indebtedness incurred, or notes, bonds, or other securities issued
pursuant to this subparagraph shall be the indebtedness, notes,
bonds, or securities of the authority and not of the county, and the
credit of the county shall not be pledged or relied upon in any
manner in order to incur the indebtedness, or issue the notes,
bonds, or other securities, unless the board of supervisors explicitly
authorizes the use of the county’s credit. The authority shall
reimburse the county for all costs associated with the county’s
consideration of the indebtedness, notes, bonds, or securities, and
the authority shall defend, indemnify, and hold harmless the county
from any and all liability, costs, or expenses arising from or related
to the indebtedness, notes, bonds, or securities.

(D) Nothing herein shall preclude the authority from repayment
of its debts or other liabilities, using funds that are not otherwise
encumbered and do not cause the managed care plan’s tangible
net equity to drop below its required level.

(8) To pursue its own credit rating.

(9) To enter into a contract or agreement consistent with this
chapter or the laws of this state, and to authorize the chief
executive officer to enter into contracts, execute all instruments,
and do all things necessary or convenient in the exercise of the
powers granted in this chapter.

(10) To purchase supplies, equipment, materials, property, and
services.

(11) To establish policies relating to its purposes.

(12) To acquire or contract to acquire, rights-of-way, easements,
privileges, and property, and to construct, equip, maintain, and
operate any and all works or improvements wherever located that
are necessary, convenient, or proper to carry out any of the
provisions, objects, or purposes of this chapter, and to complete,
extend, add to, repair, or otherwise improve any works or
improvements acquired by it.

(13) To participate in, contract for, and to accept, gifts, grants,
and loans of funds, property, or other aid or finance opportunity
in any form from the federal government, the state, a state agency,
or other source, or combination thereof, as otherwise would be
available to a public, government, or private entity, and to comply,
subject to this chapter, with the terms and conditions thereof.

(14) To invest surplus money in its own treasury, manage
investments, and engage third-party investment managers, in
accordance with state law.

(15) To arrange for guarantees or insurance of its bonds, notes,
or other obligations by the federal or state government or by a
private insurer, and to pay the premiums thereof.

(16) To engage in managed care contracting, joint ventures,
affiliations with other health care facilities, other health care
providers and payers, management agreements, or to participate
in alliances, purchasing consortia, health insurance pools,
accountable care organizations, alternative delivery systems, or
other cooperative arrangements, with any public or private entity.

(17) To enter into joint powers agreements pursuant to Chapter
5 (commencing with Section 6500) of Division 7 of Title 1 of the
Government Code. Notwithstanding any other provision of law,
the authority may enter into a joint powers agreement as described
in Section 6523.5 of the Government Code as though that section
applied to hospitals and other health care facilities in the County
of Kern.

(18) To establish nonprofit, for profit, or other entities necessary
to carry out the duties of the authority.

(19) To elect to transfer funds to the state and incur certified
public expenditures in support of the Medi-Cal program and other
programs for which federal financial participation is available.

(20) To use a computerized management information system,
including an electronic health records system, in connection with
the administration of its facilities and Medi-Cal managed care
plans.

(21) To request that the board of supervisors levy a tax on behalf
of the authority. If the board of supervisors approves the proposal
to levy the tax, it shall call the election to seek voter approval and
place the appropriate measure on the ballot for that election. The
proceeds of these taxes shall be tax proceeds of the authority and
not of the county. The authority shall reimburse the county for all
costs associated with the county’s consideration of these taxes,
and shall defend, indemnify, and hold harmless the county from
any liability, costs, or expenses arising from or related to the
imposition of these taxes.

(22) Notwithstanding the provisions of this chapter relating to
the obligations and liabilities of the authority, or any other law,
a transfer of control or ownership of the medical center and the
managed care plan shall confer onto the authority all the rights
and duties set forth in state law with respect to hospitals, clinics
and other health facilities, health programs, care organizations,
physician practice plans, delivery systems, and health care service
plans owned or operated by a county.

(23) To engage in other activities that may be in the best
interests of the authority and the persons served by the authority,
as determined by the board of trustees, in order to respond to
changes in the health care industry.

(b) The authority shall conform to the following requirements:

(1) (A) Be a government agency that is a local unit of
government separate and apart for all purposes from the county
and any other public entity, and shall not be considered to be an
agency, division, or department of the county or any other public
entity. The authority shall not be governed by or subject to the
civil service requirements of the county. Except as otherwise
provided for in the enabling ordinance consistent with this chapter,
and as set forth in Section 101853.1, the authority shall not be
governed by, or subject to, other policies or operational rules of
the county, medical center, or any other public entity, including,
but not limited to, those relating to personnel and procurement.

(B) The board of trustees shall adopt written rules, regulations,
and procedures with regard to basic human resource functions
not inconsistent with employees’ memoranda of understanding or
the provisions of this chapter. Until the time that the board of
trustees adopts its own rules, regulations, or procedures with
regard to these functions, the existing rules, regulations, and
procedures set forth in any memoranda of understanding described
in Section 101853.1 and the enabling ordinance shall apply.

(2) Be subject to state and federal taxation laws that are
applicable to public entities generally.

(3) Except as otherwise specifically provided in this chapter,
comply with the Meyers-Milias-Brown Act (Chapter 10
(commencing with Section 3500) of Division 4 of Title 1 of the
Government Code), the Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), and the Ralph M. Brown Act (Chapter 10
(commencing with Section 3500) of Division 4 of Title 1 of the
Government Code).

(4) Be subject to the jurisdiction of the Public Employment
Relations Board. Until the authority adopts local rules pursuant
to subdivision (a) of Section 3507 of the Government Code, the
Public Employment Relations Board’s regulations apply.

(5) Carry professional and general liability insurance or
programs to the extent sufficient to cover its activities.

(6) Comply with the requirements of Sections 53260 and 53261
of the Government Code.

(7) Meet all local, state, and federal data reporting
requirements.

(c) The authority may borrow from the county, repay debt and
otherwise provide and arrange for medical services. The county
may lend the authority funds or issue revenue anticipation notes
to obtain those funds necessary to operate the medical center and
managed care plan.

(d) Open sessions of the authority shall constitute official
proceedings authorized by law within the meaning of Section 47
of the Civil Code. The privileges set forth in that section with
respect to official proceedings shall apply to open sessions of the
authority.

(e) (1) Notwithstanding any other law, the board of trustees
may order that a meeting held solely for the purpose of discussion
or taking action on authority trade secrets, as defined in
subdivision (d) of Section 3426.1 of the Civil Code, shall be held
in closed session. Trade secrets for purposes of this chapter shall
also include information for which the secrecy of the information
is necessary for the authority to initiate a new service, program,
marketing strategy, business plan, or technology, or to add a
benefit or product, and premature disclosure of the trade secret
would create a substantial probability of depriving the authority
of a substantial economic benefit or opportunity.

(2) The requirements of making a public report of actions taken
in closed session and the vote or abstention of every member
present may be limited to a brief general description devoid of the
information constituting the trade secret.

(3) Those records of the authority that reveal the authority’s
trade secrets are exempt from disclosure pursuant to the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1 of the Government Code), or any similar
local law requiring the disclosure of public records. This exemption
shall apply for a period of two years after the service, program,
marketing strategy, business plan, technology, benefit, or product
that is the subject of the trade secret is formally adopted by the
governing body of the health authority, provided that the service,
program, marketing strategy, business plan, technology, benefit,
or product continues to be a trade secret. The board of trustees
may delete the portion or portions containing trade secrets from
any documents that were finally approved in the closed session
that are provided to persons who have made the timely or standing
request.

(4) This section shall not prevent the board of trustees from
meeting in closed session as otherwise provided by law.

(f) Notwithstanding any other law, those records of the authority
and of the county that reveal the authority’s rates of payment for
health care services for the managed care plan, the rates of
payment for health care services provided by the medical center,
or the authority’s deliberative processes, discussions,
communications, or any other portion of the negotiations with
providers of health care services or Medi-Cal, health care plans
or other payors for rates of payment, shall not be required to be
disclosed pursuant to the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), or any similar local law requiring the
disclosure of public records. However, three years after a contract
or amendment to a contract is fully executed, the portion of the
contract or amendment containing the rates of payment shall be
open to inspection.

(g) The authority shall be a public agency that is a local unit
of government for purposes of eligibility with respect to grants
and other funding and loan guarantee programs. Contributions
to the authority shall be tax deductible to the extent permitted by
state and federal law. Nonproprietary income of the authority shall
be exempt from state income taxation.

(h) Unless otherwise provided by the board of supervisors by
way of resolution, the authority is empowered, or the board of
supervisors is empowered on behalf of the authority, to apply as
a public agency for one or more licenses for the provision of health
care or the operation of a health care services plan pursuant to
statutes and regulations governing licensing as currently written
or subsequently amended.

(i) The statutory authority of a board of supervisors to prescribe
rules that authorize a county hospital to integrate its services with
those of other providers into a system of community service that
offers free choice of hospitals to those requiring hospital care, as
set forth in Section 14000.2 of the Welfare and Institutions Code,
shall apply to the authority and the board of trustees.

(j) (1) Except as otherwise provided in this chapter, provisions
of the Evidence Code, the Government Code, including the Public
Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code), the Civil Code, the
Business and Professions Code, and other applicable law
pertaining to the confidentiality of peer review activities of peer
review bodies shall apply to the peer review activities of the
authority, or any peer review body, as defined in paragraph (1)
of subdivision (a) of Section 805 of the Business and Professions
Code, formed pursuant to the powers granted to the authority. The
laws pertaining to the confidentiality of peer review activities shall
be together construed as extending, to the extent permitted by law,
the maximum degree of protection of confidentiality.

(2) Notwithstanding Article 9 (commencing with Section 11120)
of Chapter 1 of Part 1 of Division 3 of Title 2 of, and Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title
5 of, the Government Code, or any other provision of law, any
peer review body formed pursuant to the powers granted to the
authority, may, at its discretion and without notice to the public,
meet in closed session, so long as the purpose of the meeting is
the peer review body’s discharge of its responsibility to evaluate
and improve the quality of care rendered by health facilities and
health practitioners. The peer review body and its members shall
receive, to the fullest extent, all immunities, privileges, and
protections available to those peer review bodies, their individual
members, and persons or entities assisting in the peer review
process, including those afforded by Section 1157 of the Evidence
Code and Section 1370. Peer review proceedings shall constitute
an official proceeding authorized by law within the meaning of
Section 47 of the Civil Code and those privileges set forth in that
section with respect to official proceedings shall apply to peer
review proceedings of the authority.

(3) Notwithstanding the California Public Records Act (Chapter
3.5 (commencing with Section 6250) of Division 7 of Title 1 of the
Government Code), or Article 9 (commencing with Section 11120)
of Chapter 1 of Part 1 of Division 3 of Title 2 of, and Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title
5 of, the Government Code, or any other provision of state or local
law requiring disclosure of public records, those records of a peer
review body formed pursuant to the powers granted to the
authority, shall not be required to be disclosed. The records and
proceedings of the peer review body and its individual members
shall receive, to the fullest extent, all immunities, privileges, and
protections available to those records and proceedings, including
those afforded by Section 1157 of the Evidence Code and Section
1370 of the Health and Safety Code.

(4) If the authority is required by law or contractual obligation
to submit to the state or federal government peer review
information or information relevant to the credentialing of a
participating provider, that submission shall not constitute a waiver
of confidentiality.

(5) Notwithstanding any other law, Section 1461 shall apply to
hearings on reports of hospital medical audit or quality assurance
committees.

(k) Except as expressly provided by other provisions of this
section, all exemptions and exclusions from disclosure as public
records pursuant to this chapter and the California Public Records
Act, including, but not limited to, those pertaining to trade secrets
and information withheld in the public interest, shall be fully
applicable for the board of supervisors, and all state and local
agencies with respect to all writings that the authority is required
to prepare, produce, or submit, and which shall not constitute a
waiver of exemption from disclosure.

(l) The authority and the county, or any combination thereof
may engage in marketing, advertising, and promotion of the
medical and health care services made available to the community
by the authority.

(m) The board of trustees shall have authority over procurement
and contracts for the authority. The board of trustees shall adopt
written rules, regulations, and procedures with regard to these
functions. Contracts by and between the authority and a public
agency, and contracts by and between the authority and providers
of health care, goods, or services, may be let on a nonbid basis
and shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code.

(n) The authority may contract with the county for services and
personnel upon mutually agreeable terms.

(o) Notwithstanding Article 4.7 (commencing with Section 1125)
of Chapter 1 of Division 4 of Title 1 of the Government Code,
related to incompatible activities, a member of the authority’s
administrative staff shall not be considered to be engaged in
activities inconsistent and incompatible with his or her duties as
a result of prior employment or affiliation with the county or Kern
Health Systems.

(p) The board of trustees and the officers and employees of the
authority are public employees for purposes of Division 3.6
(commencing with Section 810) of Title 1 of the Government Code,
relating to claims and actions against public entities and public
employees, and shall be protected by the immunities applicable to
public entities and public employees governed by Part 2
(commencing with Section 814) of Division 3.6 of Title 1 of the
Government Code, except as provided by other statutes or
regulations that apply expressly to the authority.

begin insert 101855.1. end insert   

(a) Transfer by the county to the authority of the
maintenance, operation, and management or ownership of the
medical center, whether or not the transfer includes the
surrendering by the county of the existing general acute care
hospital license and corresponding application for a change of
ownership of the license, shall not affect the eligibility of the county
to undertake, and shall authorize the authority, subject to
applicable requirements, to do any of the following:

(1) With the written consent of the county, participate in and
receive allocations pursuant to the California Health Care for
Indigents Program pursuant to Chapter 5 (commencing with
Section 16940) of Part 4.7 of Division 9 of the Welfare and
Institutions Code, or similar programs, as may be identified or
earmarked by the county for indigent health care services of the
type provided by the medical center.

(2) With the written consent of the county, participate in and
receive allocations of local revenue fund amounts provided
pursuant to Chapter 6 (commencing with Section 17600) of Part
5 of Division 9 of the Welfare and Institutions Code as may be
identified or earmarked by the county for indigent health care
services of the type provided by the medical center.

(3) Participate in the financing of and receive, Medicaid
disproportionate share hospital payments available to a county
hospital or designated public hospital, or any other successor or
modified payment or funding that is intended to assist hospitals
that serve a disproportionate share of low-income patients with
special needs. The allocation of Medicaid disproportionate share
hospital payments shall be made in consultation with the State
Department of Health Care Services and other designated safety
net hospitals.

(4) Participate in the financing of and receive, Medi-Cal
supplemental reimbursements, including, but not limited to,
payments made pursuant to Sections 14105.96, 14105.965,
14166.4, and 14182.15 of the Welfare and Institutions Code,
payments described in paragraph (4) of subdivision (b) of Section
14301.4 of, and Section 14301.5 of, the Welfare and Institutions
Code, and payments made available to a county provider or
designated public hospital, or governmental entity with which it
is affiliated, under any other successor or modified Medicaid
payment system.

(5) Participate in the financing of, and receive, safety net care
pool funding, stabilization funding, delivery system reform
incentive pool payments, and any other funding available to a
county provider or designated public hospital, or governmental
entities with which it is affiliated under the Medicaid demonstration
project authorized pursuant to Article 5.2 (commencing with
Section 14166) and Article 5.4 (commencing with Section 14180)
of Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, or under any other successor or modified Medicaid
demonstration project or Medicaid payment system. The allocation
of safety net care pool funds shall be made in consultation with
the State Department of Health Care Services and other designated
safety net hospitals.

(6) Participate in the financing, administration, and provision
of services under the Low Income Health Program authorized
pursuant to Part 3.6 (commencing with Section 15909) of Division
9 of the Welfare and Institutions Code, or under any other
successor or modified Medicaid demonstration project or Medicaid
payment system if the authority enters into an agreement with the
county concerning the provision of services by, and payment for
these services to, the county.

(7) Participate in and receive direct grant and payment
allocations pursuant to Article 5.230 (commencing with Section
14169.50) of Chapter 7 of Part 3 of Division 9 of the Welfare and
Institutions Code, or under any other successor or modified direct
grant and payment systems funded by hospital or other provider
fee assessments.

(8) Receive Medi-Cal capital supplements pursuant to Section
14085.5 of the Welfare and Institutions Code. Notwithstanding
any other law, supplemental payments shall be made to the medical
center under Section 14085.5 of the Welfare and Institutions Code
for the debt service costs incurred by the county, and, if applicable,
by the authority to the extent that debt service responsibility is
refinanced, transferred to, or otherwise assumed by, directly or
indirectly, the authority.

(9) Receive any other funds that would otherwise be available
to a county provider or designated public hospital, or governmental
entity with which it is affiliated.

(b) A transfer described in subdivision (a) shall not otherwise
disqualify the county or the board of trustees, or in the case of a
change in license ownership, the authority, from participating in
any of the following:

(1) Local, state, and federal funding sources either specific to
county or other publicly owned or operated health care service
plans, hospitals, or other health care providers including, but not
limited to, ambulatory care clinics, health systems, practices,
designated public hospitals, or government entities with which
they are affiliated, for which there are special provisions specific
to those hospitals, ambulatory care clinics, health systems,
practices, other health care providers or government entities with
which they are affiliated.

(2) Funding programs in which the county, by itself or on behalf
of the medical center, or in which Kern Health Systems had
participated prior to the creation of the authority, or would
otherwise be qualified to participate in had the authority not been
created, and the maintenance, operation, and management or
ownership of the medical center or managed care plan not been
transferred to the authority pursuant to this chapter.

 

Article begin insert 5. end insert   Termination of the Authority

 

begin insert 101856. end insert   

The board of supervisors may find and declare that
the authority shall cease to exist. In that event, the board of
supervisors shall provide for the disposition of the authority’s
assets, obligations, and liabilities. Absent written agreement, the
county shall not be obligated under any law to assume the
authority’s obligations or liabilities, or take title to, or custody or
control of the authority’s assets. Upon notification by the authority
of the disposition of the authority’s assets and liabilities, the board
of supervisors shall rescind the ordinance that established the
authority, and the authority shall cease to exist on the date set
forth in the rescinding ordinance. The board of supervisors shall
notify the State Department of Health Care Services 30 days prior
to the effective date of the termination. The notice may also include
a statement of the board of supervisors’ intent to have the medical
center and the managed care plan transferred to the county upon
the effective date of termination of the authority.

begin insert 101856.1. end insert   

In the event that the authority votes to file a petition
of bankruptcy, or the board of supervisors notifies the State
Department of Health Care Services of its intent to terminate the
authority, the provisions set forth in paragraphs (5) and (6) of
subdivision (t) of Section 14087.38 of the Welfare and Institutions
Code shall apply unless the board of supervisors has notified the
State Department of Health Care Services of its intent to have the
medical center and the managed care plan transferred to the
county.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert begin insert

The Legislature finds and declares that Section 1 of
this act, which adds Chapter 5.5 (commencing with Section
101852) to Part 4 of Division 101 of the Health and Safety Code,
imposes a limitation on the public’s right of access to the meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following findings to demonstrate the interest
protected by this limitation and the need for protecting that
interest:

end insert begin insert

In order to enable the Kern County Health System Authority to
successfully operate both the Kern Medical Center and managed
care plan as an integrated delivery system that increases access
to health care in the community and proactively improves the
quality of patient care services and patient experience, it is
imperative that the authority’s discussions, deliberative processes,
writings, and other communications pertaining to trade secrets or
other strategic planning actions, its rates of payments for providing
or arranging for health care services, and its peer review functions
by which it discharges its responsibility to evaluate and improve
the quality of care be protected as confidential information.

end insert

All matter omitted in this version of the bill appears in the bill as amended in the Assembly May 15, 2014. (JR11)