BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 20
AUTHOR: Hernandez
AMENDED: February 14, 2013
HEARING DATE: April 3, 2013
CONSULTANT: Moreno
SUBJECT : Health care: workforce training.
SUMMARY : Requires, beginning on the date that the California
Major Risk Medical Insurance Program (MRMIP) becomes
inoperative, all the funds in the Managed Care Administrative
Fines and Penalties Fund (MCAFP Fund) to be transferred each
year to the Medically Underserved Account for Physicians in the
Health Professions Education Fund for use by the Steven M.
Thompson Physician Corps Loan Repayment Program (SMT Program).
Requires the Director of Finance to notify the Joint Legislative
Budget Committee at the time MRMIP becomes inoperative.
Existing law:
1.Creates the SMT Program, which provides for the repayment of
educational loans for physicians and surgeons who practice in
medically underserved areas of the state, as defined.
2.Provides for the licensure and regulation of health care
service plans (health plans) by the Department of Managed
Health Care (DMHC) under the Knox-Keene Health Care Service
Plan Act of 1975 (Knox-Keene). Subjects health plans to fines
and administrative penalties for failing to comply with
specified provisions of Knox-Keene. Requires health plans to
pay specified assessments each fiscal year as a reimbursement
of their share of the costs and expenses reasonably incurred
in the administration of Knox-Keene.
3.Establishes MRMIP, which is administered by the Managed Risk
Medical Insurance Board (MRMIB) to provide major risk medical
coverage to eligible persons who have been rejected for
coverage by at least one private health plan. Creates the
Major Risk Medical Insurance Fund for purposes of MRMIP.
4.Requires fines and administrative penalties assessed against
health plans by DMHC to be deposited into the MCAFP Fund.
Requires those fines and penalties collected up to $1 million
be deposited into the Medically Underserved Account for
Continued---
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Physicians in the Health Professions Education Fund for
purposes of the SMT Program. Requires any amount over the
first $1 million to be transferred to the Major Risk Medical
Insurance Fund to be used, upon appropriation by the
Legislature, for MRMIP.
This bill: Requires, beginning on the date that MRMIP becomes
inoperative, all the funds in the MCAFP Fund be transferred each
year to the Medically Underserved Account for Physicians in the
Health Professions Education Fund for purposes of the SMT
Program. Requires the Director of Finance to notify the Joint
Legislative Budget Committee at the time MRMIP becomes
inoperative.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee
COMMENTS :
1.Author's statement. The SMT program was created in response
to the physician-shortage problem in underserved areas, but
funding for this program has been unpredictable and
insufficient, with demand exceeding available funding every
year. This bill will provide much-needed funding for the SMT
Program, which provides loan-repayment assistance to
physicians who agree to practice in underserved areas of the
state for a minimum of three years, by shifting monies no
longer needed for MRMIP.
2.Primary Care Physician Workforce Shortage. According to a
report commissioned by the California Health Care Foundation,
the number of primary care physicians actively practicing in
California is at the very bottom range of, or below, the
state's need. The distribution of these physicians is equally
as poor. In 2008, there were 69,460 actively practicing
physicians in California (this includes Doctors of Medicine
and Doctors of Osteopathic Medicine) with only 35 percent of
these physicians reported practicing primary care. This
equates to 63 active primary care physicians per 100,000
persons. According to the Council on Graduate Medical
Education, a range of 60 to 80 primary care physicians is
needed per 100,000 persons to adequately meet the needs of the
population. When the same metric is applied regionally, only
16 of California's 58 counties fall within the needed supply
range for primary care physicians.
3.The ACA. As a result of implementation of the Affordable Care
SB 20 | Page
3
Act (ACA), it is estimated that 3 to 7 million Californians
will be newly eligible for health insurance starting in 2014.
The ACA aims to change how care is delivered. It will provide
incentives for expanded and improved primary care, which may
affect demand for some health care professionals more than
others, and create team-based models of service delivery.
Research indicates that health care reform will place higher
skill demands on all members of the health care workforce as
systems try to improve quality while limiting costs. Studies
have also found that insured persons use more health care
services than uninsured persons, particularly in primary care
and preventive services. This was the experience in
Massachusetts, which saw a substantial increase in demand for
primary care services as a result of its 2006 health reform.
4.SMT Program. The SMT program was created in response to the
physician-shortage problem in underserved areas, but funding
for this program has been unpredictable and insufficient, with
demand exceeding available funding every year. According to
the Office of Statewide Hospital Planning and Development, the
SMT program encourages recently licensed physicians to
practice in Health Professional Shortage Areas (HPSAs) in
California. The program repays up to $105,000 in educational
loans in exchange for full-time service for at least three
years. To be considered eligible for an award, applicants
must:
a. Be an allopathic or osteopathic physician;
b. Be free of any contractual service obligations (i.e. the
National Health Service Corps Federal Loan Repayment
Program or other financial incentive programs);
c. Have outstanding educational debt from a government or
commercial lending institution;
d. Have a valid, unrestricted license to practice medicine
in California;
e. Be employed or have accepted employment in a HPSA in
California;
f. Commit to providing full-time direct patient care in a
HPSA.
1.Administrative Fines and Penalties. Existing law allows DMHC
to investigate and take enforcement action against health
plans that do not comply with specified provisions under
Knox-Keene, including charging fines and administrative
penalties. All fines collected by DMHC go into the MCAFP Fund
and can vary in amount from year to year. According to DMHC,
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they collect about 90 percent of the fines announced, usually
taking two to eight weeks to collect, unless a fine is
challenged. Below are the amounts collected under DMHC's
enforcement authority since 2001-02.
-------------------------------
|Fiscal year |Funds |
| |collected |
|------------------+------------|
|2012-13 (7/1/12 |$454,000 |
|- 1/31/13) | |
|------------------+------------|
|2011-12 |$1,147,398 |
|------------------+------------|
|2010-11 |$5,439,250 |
|------------------+------------|
|2009-10 |$3,642,500 |
|------------------+------------|
|2008-09 |$13,100,000 |
|------------------+------------|
|2007-08 |$7,018,600 |
|------------------+------------|
|2006-07 |$3,907,000 |
|------------------+------------|
|2005-06 |$965,000 |
|------------------+------------|
|2004-05 |$1,141,000 |
|------------------+------------|
|2003-04 |$779,000 |
|------------------+------------|
|2002-03 |$2,116,000 |
|------------------+------------|
|2001-02 |$640,000 |
-------------------------------
2.MRMIP. MRMIP provides state-subsidized coverage through four
health plans to individuals denied coverage in the individual
market or whose premiums exceed MRMIP premiums. Premiums paid
by individuals enrolled in MRMIP are set at 125 percent of
what the MRMIP benefit package would cost in the commercial
market. MRMIP enrollment, as of December 2012, was 5,713
individuals and the program has an enrollment cap of 7,000
individuals. In 2014, MRMIP will no longer be necessary due to
the reforms enacted under the ACA, such as guaranteed issue.
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5
3.Related legislation. AB 860 (Perea and Bocanegra) requires,
beginning January 1, 2014 and if the MCAFP Fund contains at
least $2 million, no less than $1 million be transferred each
year to the Steven M. Thompson Medical School Scholarship
Account, as specified. AB 860 requires, if the MCAFP Fund has
a balance of less than $2 million, the first $1 million be
transferred to the Medically Underserved Account for
Physicians and the remainder, if any, to the Steven M.
Thompson Medical School Scholarship Account.
4.Prior legislation. SB 635 (Hernandez) of 2012 would have,
upon a finding by the Department of Finance that MRMIP is
inoperative, halted transfers of specified revenues from the
MCAFP to the MRMIP program, and instead transferred the funds
to a newly created Song-Brown Program Account, which supports
training for health care professionals. SB 635 was held on
suspense in the Assembly Appropriations Committee.
SB 1379 (Ducheny) Chapter 607, Statutes of 2008, requires
fines and administrative penalties levied against health plans
under the Knox-Keene Act to be placed in the MCAFP Fund and
used, upon appropriation by the Legislature, for a physician
loan-repayment program and MRMIP, instead of being deposited
into the State Managed Care Fund. Requires DMHC to make a
one-time transfer of fine and administrative penalty revenue
of $10 million to MRMIP and $1 million to the loan repayment
program. Prohibits using the fines and administrative
penalties authorized by the Knox-Keene Act to reduce
assessments on health plans.
AB 2439 (De La Torre) Chapter 640, Statutes of 2008, mandates
the Medical Board of California assess a $25 fee to applicants
for issuance or renewal of a physician and surgeon's license.
Provides that up to 15 percent of the funds collected shall be
dedicated to loan assistance for physicians and surgeons who
agree to practice in geriatric care settings or settings that
primarily serve adults over the age of 65 or adults with
disabilities.
5.Support. The Los Angeles Board of Supervisors writes that
this bill would provide additional funding for health
education and would increase the number of physicians who work
in underserved communities. The Board states that access to
well-trained physicians is critical to meeting the health
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needs of the County's underserved residents as the state moves
toward implementation of the ACA. The California Hospital
Association writes that this bill meets a crucial need without
imposing any additional costs on any stakeholder including the
state, our educational institutions, or health care providers.
SUPPORT AND OPPOSITION :
Support: California Communities United Institute
California Hospital Association
Los Angeles Board of Supervisors
Oppose: None received
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