BILL ANALYSIS Ó
SB 20
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Date of Hearing: August 14, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 20 (Hernández) - As Amended: February 14, 2013
Policy Committee: HealthVote:19-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill redirects penalty revenue currently earmarked for the
Major Risk Medical Insurance Program (MRMIP) to the Steven M.
Thompson Physician Corps Loan Repayment Program (STLRP), upon a
declaration from the Department of Finance that MRMIP is
inoperative and transfers to support MRMIP have ceased.
FISCAL EFFECT
Annual SF/GF costs in the range of less than $1 million to
several million dollars annually, depending upon the amount of
penalty revenue generated.
If this penalty revenue is no longer needed for MRMIP, and is
not allocated to the STLRP pursuant to this bill, it could
instead be redirected to offset GF costs for other programs.
The size of the Managed Care Administrative Fines and Penalties
Fund (Penalty Fund) varies based on Department of Managed Health
Care (DMHC) enforcement actions. Penalty Fund transfers to MRMIP
have been as high as $10 million (2008-09) and as low as $93,000
(2012-13).
COMMENTS
1)Rationale . The author intends to address California's
undersupply of primary care services and asserts funding for
MRMIP will no longer be necessary as a result of federal
health reform, freeing up money in the Penalty Fund for other
uses. Supporters argue this bill will improve access to care
in underserved areas.
2)Managed Care Administrative Fines and Penalties Fund. This
SB 20
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fund receives revenues from penalties assessed on health care
service plans for violation of the Knox-Keene Act. Currently,
the first million collected annually is transferred to the
Medically Underserved Account for Physicians within the Health
Professionals Education Fund and is, upon appropriation by the
Legislature, used for the Steven J. Thompson Physician Corps
Loan Repayment Program. Moneys over the first million are
transferred to the Major Risk Medical Insurance Fund, which is
used to fund the Major Risk Medical Insurance Program (MRMIP),
the state's high-risk pool program for individuals who have
been denied coverage on the individual market. Penalty
revenues are unpredictable and depend on administrative
actions taken against health plans.
3)MRMIP Background . MRMIP is a high-risk insurance pool
operated by the Managed Risk Medical Insurance Board (MRMIB)
since 1991 to provide coverage to individuals unable to buy
coverage in the individual insurance market due to
pre-existing conditions. Most of MRMIP's funding comes from
the Proposition 99 Cigarette and Tobacco Products Surtax. The
Governor's proposed 2013-14 budget indicates MRMIP will
phase-out with implementation of federal health reform, but it
is unclear exactly when this will occur. MRMIB uses the money
it receives from the Penalty Fund for amounts owed to health
plans for reconciliation of prior year services.
4)Federal Health Care Reform Implementation . The federal Patient
Protection and Affordable Care Act (ACA) contains a variety of
far-reaching provisions that will significantly change the
health care market in California. The ACA's requirement that
health plans accept anyone who applies for coverage regardless
of preexisting conditions is likely to reduce or eliminate the
demand for health care coverage through MRMIP, resulting in
cost savings to the state. At the same time, the California
Health and Human Services Agency has also identified
significant new state costs associated with other aspects of
federal health care reform implementation.
5)Previous Legislation
a) AB 589 (Perea), Chapter 339, Statutes of 2012,
establishes the Steven M. Thompson Scholarship Program, and
provides that its funding consist of private moneys and
interest on those funds.
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b) SB 635 (Ed Hernandez) of 2012 redirected funds deposited
into the Penalty Fund in excess of $1 million to be
transferred each year to for the purpose of the Song-Brown
program, a workforce training program. SB 635 was held on
the Suspense File of this committee.
1)Related Legislation .
a) AB 565 (Salas) revises program criteria of the STLRP and
revises the definition of practice setting for purposes of
the STLRP. AB 565 is pending in Senate Appropriations
Committee.
b) AB 860 (Perea and Bocanegra) appropriates $600,000 from
the Managed Care Fund to the Steven M. Thompson Medical
School Scholarship Program. AB 860 was held on the
Suspense File of this committee.
c) AB 1176 (Bocanegra and Bonta) establishes the Medical
Residency Training Program to fund graduate medical
education (GME) residency programs in California, and
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 for each covered life for
purposes of the MRT Program. AB 1176 was held on the
Suspense File of this committee.
d) SB 271 (Hernandez) deletes the January 1, 2014, sunset
date on the Association Degree Nursing Scholarship Pilot
Program within OSHPD, and deletes references to program as
a pilot. SB 271 is being heard today in this committee.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081