BILL ANALYSIS Ó SB 271 Page 1 Date of Hearing: July 2, 2013 ASSEMBLY COMMITTEE ON HEALTH Richard Pan, Chair SB 271 (Ed Hernandez) - As Introduced: February 14, 2013 SENATE VOTE : 38-0 SUBJECT : Associate Degree Nursing Scholarship Program. SUMMARY : Deletes the January 1, 2014 sunset date, and makes permanent the Associate Degree Nursing Scholarship Pilot Program (ADN Scholarship Program), and deletes references to the program as a pilot. EXISTING LAW : 1)Establishes, until January 1, 2014, the ADN Scholarship Program in the Office of Statewide Health Planning and Development (OSHPD) to increase the number of registered nurses RNs) and to encourage RNs to practice direct patient care in medically underserved areas (MUAs) of California. 2)Establishes the Health Professions Education Foundation (HPEF) within OSHPD, among other functions, to administer the ADN Scholarship Program. 3)Establishes the Registered Nurse Education Fund (RNEF) for purposes of the California Registered Nurse Education Program. Requires RNEF to receive money collected from assessments of RNs. 4)Establishes the Board of Registered Nursing (BRN) to regulate the practice of RNs. Requires the BRN to assess a biennial fee for the renewal of an RN license which is not to be less than $75 and no more than $150. Requires the BRN to additionally collect an assessment of $10 to be credited to the RNEF. FISCAL EFFECT : According to the Senate Appropriations Committee, there will be ongoing costs of about $700,000 per year to provide scholarships and administer grants (special fund). Over the last five years, scholarship awards (including administrative costs) have ranged from about $400,000 to $780,000 with an average of about $650,000. SB 271 Page 2 COMMENTS : 1)PURPOSE OF THIS BILL . According to the author, implementation of the Patient Protection and Affordable Care Act will bring millions of uninsured Californians into the health care delivery system in 2014, exacerbating an existing health provider shortage. Coupled with a disproportionate geographic distribution of providers and an aging workforce, this shortage has significant potential to negatively impact patient care. While the nation has been experiencing a shortage of nurses for more than a decade, the shortage has been particularly acute in California, where it is exacerbated by higher education budget cuts. The nursing shortage has also resulted in a diminished ability to educate the incoming population of nursing students. This bill will ensure that this valuable program continues to operate, providing patient access to practitioners in MUAs. 2)BACKGROUND . a) ADN Scholarship Program . The ADN Scholarship Program was established to increase the number of registered nurses and to encourage nurses to practice direct patient care in MUAs of California. Students who are currently enrolled or accepted into an Associate Degree Nursing Program and are free from any other service obligation may receive up to $10,000 for one academic year. In return for receiving the scholarship, awardees must agree to practice direct patient care for two years in a MUA of California. Specifically, the ADN Scholarship Program is available only to students in counties determined to have the most need. Need in a county is established based on all the following factors: a) Counties with a RN-to-population ratio equal or less than 500 RNs per 100,000 individuals; b) County unemployment rate; and, c) County level of poverty. The HPEF shall consider the applicant's economic need and cultural and linguistic skills and abilities. Funding for the ADN Scholarship Program comes from the Registered Nurse Education Fund which in turn is funded by $10 assessment on the biennial renewal license fees paid for by RNs to the BRN. According to OSHPD, the current demand for ADN scholarships vastly outweighs the supply of available funding for the SB 271 Page 3 program. Since May 2003 and through September 2011, HPEF has received $10.6 million in scholarship applications and $3.2 million in ADN scholarships were awarded. The table below illustrates the demand for this program in the last 10 years: ---------------------------------------------------------- | Calendar | Applications | Funds | | Year | Received | Requested | | | Awarded | Awarded | ---------------------------------------------------------- |----------+--------+-----------+-----------+--------------| | 2003 | 94 | 29 |$ | $ 103,500 | | | | | 752,000| | |----------+--------+-----------+-----------+--------------| | 2004 | 155 | 23 |$1,240,000 | $ 152,000 | |----------+--------+-----------+-----------+--------------| | 2005 | 160 | 35 |$1,120,000 | $ 214,000 | |----------+--------+-----------+-----------+--------------| | 2006 | 110 | 29 |$ | $ 152,000 | | | | | 524,000| | |----------+--------+-----------+-----------+--------------| | 2007 | 133 | 65 |$ | $ 476,000 | | | | | 824,000| | |----------+--------+-----------+-----------+--------------| | 2008 | 205 | 53 |$ | $ 343,000 | | | | | 580,000| | |----------+--------+-----------+-----------+--------------| | 2009 | 213 | 61 |$1,305,000 | $ 575,000 | |----------+--------+-----------+-----------+--------------| | 2010 | 247 | 71 |$2,215,000 | $ 615,952 | |----------+--------+-----------+-----------+--------------| | 2011 | 204 | 64 |$2,040,000 | $ 484,836 | |----------+--------+-----------+-----------+--------------| | 2012 | 203 | * |$2,030,000 | | | | | | | * | ---------------------------------------------------------- * Funding cycle is scheduled for February 2013 b)Steven M. Thompson Physician Corps Loan Repayment Program (STLRP) . STLRP was established in 2003 to encourage recently licensed physicians to practice in health professions shortage areas, as defined, in California. STLRP authorizes a plan for repaying up to $105,000 in educational loans in exchange for full-time service for a minimum of three years. In 2012, SB 271 Page 4 OSHPD submitted its annual STLRP report to the Legislature. According to the report, since inception, the STLRP has awarded $17 million to 223 individuals. In 2011, HPEF awarded more than $4.1 million to 76 physicians (out of 185 applicants requesting approximately $17.6 million in loan repayments). Award recipients include individuals practicing at federally qualified health centers or look alikes, community health centers, rural health centers, migrant health centers, public housing health centers, correctional facilities, and Indian health clinics. The report indicates that performance reviews of STLRP participants are conducted by HPEF through mandatory biannual reports which are completed and submitted by supervisors, clinic directors, or other appropriate managers of the practice settings where the participants are serving their service obligation. 3)SUPPORT . The Association of California Healthcare Districts states that this bill provides a process to increase health care services and helps increase access to care in the most underserved areas of California. According to SEIU California, scholarships are an effective means of increasing the supply of educated and trained health professionals. The HPEF's applicants and awardees for the ADN Scholarship Program represent the state's diverse populations, increasing access to quality and to culturally and linguistically appropriate practitioners in MUAs. The California Hospital Association states that while the supply of RNs is presently stable, 50% of California's RNs with active licenses are over the age of 50 and are predicted to retire or reduce hours as the economy improves. While the RN supply numbers are fairly steady, the demand-drivers for nurses for the coming decade are very uncertain, and this bill would assist in alleviating the shortage. 4)RELATED LEGISLATION . a) AB 565 (Salas) revises program criteria of the Steven M. Thompson Physician Corps Loan Repayment Program (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 MUA 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 Senate Health Committee. SB 271 Page 5 b) AB 860 (Perea and Bocanegra) appropriates $600,000 from the Managed Care Administrative Fines and Penalties Fund to the Steven M. Thompson Medical School Scholarship Program Account within HPEF. AB 860 was held in the Assembly Appropriations Committee's suspense file. c) AB 1176 (Bocanegra and Bonta) 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 for each covered life for purposes of the MRT Program. AB 1176 was held in the Assembly Appropriations Committee's suspense file. d) SB 20 (Ed Hernandez) requires, beginning on the date that the California Major Risk Medical Insurance Program becomes inoperative, all the fines and administrative penalties deposited into the Managed Care Administrative Fines and Penalties Fund to be transferred by the Department of Managed Health Care to the Medically Underserved Account for Physicians within HPEF for purposes of the STLRP, as specified. SB 20 is pending in this Committee. 5)TECHNICAL AMENDMENTS . The Health and Safety Code reference for the source of funding for the RNEF, which funds ADN Scholarships, should be updated as follows: 128400 . There is hereby established in the State Treasury the Registered Nurse Education Fund. All money in the fund shall be used for the purposes specified in the California Registered Nurse Education Program established pursuant to this article. This fund shall receive money collected pursuant to subdivision(c)(d) of Section 2815 and Section 2815.1 of the Business and Professions Code. 6)POLICY SUGGESTION . Similar to the general data that is submitted to the Legislature for purposes of the STLRP, the Committee may wish to recommend that OSHPD publish on its Website program updates and statistics about the ADN Scholarship Program. REGISTERED SUPPORT / OPPOSITION : Support SB 271 Page 6 American Federation of State, County and Municipal Employees, AFL-CIO Association of California Healthcare Districts California Association for Health Services at Home California Hospital Association California Nurses Association California Optometric Association California Primary Care Association Hospital Corporation of America Rural County Representatives of California SEIU California United Nurses Association of California/Union of Health Care Professionals Opposition None on file. Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916) 319-2097