BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 20|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 20
Author: Hernandez (D)
Amended: 2/14/13
Vote: 21
SENATE HEALTH COMMITTEE : 9-0, 4/3/13
AYES: Hernandez, Anderson, Beall, De León, DeSaulnier, Monning,
Nielsen, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Health care: workforce training
SOURCE : Author
DIGEST : This bill 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).
ANALYSIS :
Existing law:
1.Creates the SMT Program, which provides for the repayment of
educational loans for physicians and surgeons who practice in
CONTINUED
SB 20
Page
2
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 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
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:
1.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.
2.Requires the Director of Finance to notify the Joint
Legislative Budget Committee at the time MRMIP becomes
inoperative.
Background
Primary Care Physician workforce shortage. According to a
report commissioned by the California Health Care Foundation,
CONTINUED
SB 20
Page
3
the number of primary care physicians actively practicing in
California is at the very bottom range of, or below, the state's
need. The distribution of these physicians is equally as poor.
In 2008, there were 69,460 actively practicing physicians in
California (this includes Doctors of Medicine and Doctors of
Osteopathic Medicine) with only 35% of these physicians reported
practicing primary care. This equates to 63 active primary care
physicians per 100,000 persons. According to the Council on
Graduate Medical Education, a range of 60 to 80 primary care
physicians is needed per 100,000 persons to adequately meet the
needs of the population. When the same metric is applied
regionally, only 16 of California's 58 counties fall within the
needed supply range for primary care physicians.
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 in California (HPSA). 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.
Administrative fines and penalties. Existing law allows DMHC to
CONTINUED
SB 20
Page
4
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, they collect about
90% of the fines announced, usually taking two to eight weeks to
collect, unless a fine is challenged.
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% 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 Affordable Care Act (ACA), such as guaranteed
issue.
Prior Legislation
SB 635 (Hernandez, 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
fines and administrative penalty revenue of $10 million to
MRMIP, and $1 million to the loan repayment program; and
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;
CONTINUED
SB 20
Page
5
and provides that up to 15% of the funds collected shall be
dedicated to loan assistance for physicians and surgeons who
agree to practice in geriatric care settings or settings that
primarily serve adults over the age of 65 or adults with
disabilities.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, ongoing costs
in the low millions per year to support physician loan
repayments (General Fund). Over the last decade, fines and
penalties assessed by the DMHC have ranged from a low of
$640,000 to a high of $13 million, with an average of about $3.6
million per year.
SUPPORT : (Verified 5/23/13)
California Association of Physician Groups
California Communities United Institute
California Hospital Association
Hospital Corporation of America
Los Angeles Board of Supervisors
ARGUMENTS IN SUPPORT : The Los Angeles Board of Supervisors
(Board) 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 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.
JL:ej 5/23/13 Senate Floor Analyses
CONTINUED
SB 20
Page
6
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED