BILL ANALYSIS Ó SJR 7 Page 1 Date of Hearing: June 23, 2015 ASSEMBLY COMMITTEE ON HEALTH Rob Bonta, Chair SJR 7 (Pan) - As Amended April 6, 2015 SENATE VOTE: 36-0 SUBJECT: Medical residency programs. SUMMARY: Urges the U.S. Congress and the President to renew funding for the Health Resources and Services Administration's (HRSA's) Teaching Health Center and Primary Care Residency Expansion Graduate Medical Education (GME) Programs set to expire this year, and lift the freeze on residency positions funded by Medicare to expand physician supply and improve access to health care. Specifically, this resolution: 1)Makes findings and declarations, including all of the following: a) According to a 2014 report by the California HealthCare Foundation (CHCF), out of 105,000 licensed physicians, only 71,000 are actively involved in providing patient care; b) There are physician shortages in certain regions and will likely be exacerbated by increases in the number insured patients and the number of physicians planning to SJR 7 Page 2 retire; c) Federal funding levels of residency training programs have been frozen since 1997, while California's population has increased by more than 10% since that time; d) California has been able to address only a minimal portion of primary care physician (PCP) residency programs' funding shortfall with state funds; e) Many PCPs, including those who have graduated from California medical schools, want to train in California, but are forced to leave the state because of the shortage in training slots at residency programs; f) California has the highest retention rate of physicians who complete their residency training in-state; and, g) Increasing funding for PCP medical residency training programs is a critical step in addressing the physician shortage problem and improving access to medical care. 2)Resolves that the Legislature call upon the U.S. Congress and President to renew funding for Primary Care Residency Expansion GME Programs, lift the freeze on residency positions funded by Medicare, encourage the development of PCP training programs in ambulatory, community, and medically underserved sites through new funding methodologies and incentives. SJR 7 Page 3 3)Resolves that the Secretary of the Senate transmit copies of this resolution to the U. S. President and the Vice President, Speaker of the House of Representatives, Majority Leader of the Senate, each Senator and Representative from California in Congress, and to the author for appropriate distribution. EXISTING LAW: 1)Establishes, under federal law, HRSA, an agency of the U.S. Department of Health and Human Services (HHS), as the primary federal agency for improving access to health care by strengthening the health care workforce, building healthy communities, and achieving health equity. 2)Enacts, in federal law, the Patient Protection and Affordable Care Act (ACA) to, among other things, make statutory changes to expand access to health care coverage for Americans including calling for health workforce needs assessment and action plans, changing Medicare GME to expand training in primary and ambulatory settings, and reauthorizing existing, and creating new, scholarship and loan repayment programs. 3)Establishes the California Healthcare Workforce Policy Commission (Commission) and requires the Commission to, among other things, identify specific areas of the state whith unmet needs for PCPs; establish standards for family practice training programs and family practice residency programs; and review and make recommendations to the Office of Statewide Health Planning and Development (OSHPD) concerning the funding of residency programs. 4)Establishes the Health Professions Education Foundation (HPEF) within OSHPD. Requires the HPEF to solicit and receive funds SJR 7 Page 4 from foundations and other private and public sources and to provide financial assistance in the form of scholarships or loans to students in the health professions who are from underrepresented groups. 5)Establishes, under HPEF, the Steven M. Thompson Physician Corps Loan Repayment Program, which provides for the repayment of educational loans for licensed physicians and surgeons who practice in medically underserved areas of the state, as defined. 6)Establishes the Song-Brown Health Care Workforce Training Act of 1973 (Song-Brown Act), administered by OSHPD to provide financial support to family practice residency programs, nurse practitioner and physician assistant programs, and registered nurse education programs to increase the number of students and residents receiving education and training in family practice and nursing. The Song-Brown Act also encourages universities and primary care health professionals to provide health care in medically underserved areas. FISCAL EFFECT: None. COMMENTS: 1)PURPOSE OF THIS RESOLUTION. According to the author, this resolution calls on the federal government to renew funding for teaching health centers that is set to expire at the end of 2015, to lift the freeze on residency positions funded by Medicare, and calls on the President and Congress to encourage the development of primary care training programs in ambulatory, community, and medically underserved sites through SJR 7 Page 5 new funding methodologies and incentives. According to the California Medical Association (CMA), sponsor of this bill, GME is the hands-on training phase of physician education that is mandatory in order for doctors to obtain a license for independent practice. Although federal, state, and private funds pay for GME, federal contributions through Medicare contribute the bulk; about $9.5 billion annually nationwide. CMA further states that unfortunately, this federal funding source has been frozen since 1997, despite California's population having grown by 20% in the same timeframe. While the ACA included nearly $50 million to expand primary care residency programs, much of that funding is set to expire at the end of 2015. 2)BACKGROUND. a) Graduate Medical Education. GME is a training program for medical school graduates that serve as residents in more than 1,000 of the nation's hospitals. GME is funded by the federal HHS through the Centers for Medicare and Medicaid Services. According to a 2012 health policy brief on GME in Health Affairs, overall support for GME comes out of a number of separate public and private sources. Each year the federal government contributes about $9.5 billion in Medicare funds, and approximately $2 billion in Medicaid to help pay for GME. The federal government also funds GME in children's hospitals through a program called Teach Health Centers GME, which trains residents in community-based ambulatory settings; and through contributions from other agencies. Additionally, the brief points out that more than 40 states have paid about $3.78 billion through their Medicaid programs to support GME in 2009. Since then, many states have reduced their support for advanced medical training. Medicare supports GME through two separate methodologies when calculating payments to hospitals: direct payments to pay SJR 7 Page 6 the salaries of the residents and the supervising physicians' time; and, indirect payments to subsidize other hospital expenses associated with running training programs, such as longer inpatient stays and more use of tests. These payments are based, in part, on the number of residents a hospital trains and the number of Medicare patients it treats. Of the estimated $9.5 billion in Medicare funds spent on GME in 2010, approximately $3 billion went for direct payments and $6.5 billion went for indirect payments. The indirect medical education calculations are complicated and controversial. The Medicare Payment Advisory Commission, a group that advises Congress, estimates that indirect payment levels may be $3.5 billion higher than actual indirect costs. b) GME and the ACA. On March 23, 2010, President Obama signed the ACA (Public Law (PL) 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (PL 111-152). Specifically, the ACA increases the number of GME training positions by redistributing currently unused slots, with priorities given to primary care and general surgery and to states with the lowest resident physician-to-population ratios (effective July 1, 2011); increases flexibility in laws and regulations that govern GME funding to promote training in outpatient settings (effective July 1, 2010); and, ensures the availability of residency programs in rural and underserved areas. c) The ACA and Physician Shortages. Under the ACA, about five million Californians have enrolled in either private insurance or Medi-Cal. There are now 12 million Medi-Cal enrollees, about one third of California's population. The newly insured will increase demand for health care from an already strained system. Furthermore, the ACA will change how care is delivered by providing incentives for expanded and improved primary care. Research indicates that health SJR 7 Page 7 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 found that persons with health insurance use more health care services than uninsured persons, particularly in primary care and preventive services. A February 2, 2015 article in the San Jose Mercury News reported that the primary care physician shortage combined with the millions of newly insured has resulted in significant delays in seeing a doctor and crowded emergency rooms. According to the Mercury News article, "?many experts say the problems are so widespread they shouldn't be ignored." d) Primary Care in California. California is home to the largest number of primary care physicians and nurse practitioners in the country. However, the state ranks 23rd in the number of primary care physicians per resident. An August 2014 report by the California HealthCare Foundation states that California has only 35 to 49 primary care physicians per 100,000 Medi-Cal enrollees. Federal guidelines call for the state to have 60 to 80 doctors per 100,000 patients. The supply of primary care physicians also varies substantially across California's counties. The number of primary care physicians actively practicing in California counties is, in too many cases, at the bottom range of, or below, the state's need. According to 2011 HRSA data, 29 of California's 58 counties fall at the lower end, or below, the needed supply range for primary care physicians. In other words, half of Californians live in a community where they may not have adequate access to the health care services they need. e) Current workforce development programs. The state currently operates a number of programs designed to increase the number of health care professionals practicing in medically underserved areas: SJR 7 Page 8 i) Health Professions Education Foundation established in 1987 and housed within OSHPD, HPEF is a non-profit foundation statutorily created to provide financial incentives to aspiring and practicing health professionals. HPEF offers six scholarships and seven loan repayment programs in several allied health professions, including nursing, mental health, dentistry, and medicine. Scholarship programs provide financial assistance to healthcare students who are attending a California accredited college or university and agree to practice in California's underserved communities upon graduation. Loan repayment programs are offered to working health professionals to assist in repayment of their education debt in exchange for a service obligation. HPEF has increased access to care in the state's underserved areas via 6,693 awards totaling more than $60 million to health practitioner awardees serving in 57 of the state's 58 counties. ii) California State Loan Repayment Program (SLRP) provides educational loan repayment assistance to primary health care professionals who provide health care services in federally designated Health Professional Shortage Areas (HPSAs). Eligible health professionals include physicians specializing in primary care fields. SLRP award amounts are matched by the site(s) in which the health professional is practicing, on a dollar-for-dollar basis, in addition to salary. The SLRP is funded through a grant from the HRSA and is administered by OSHPD. SJR 7 Page 9 iii) Song-Brown Program was established in 1973 to increase the number of family physicians in the state and increase the number of family medicine residency programs. Currently, Song-Brown provides financial support to family medicine and primary care residency (Internal Medicine, OB/GYN, and Pediatric) programs, family nurse practitioner programs, primary care physician assistant training programs, and registered nurse education programs. Funding is provided to institutions that provide clinical training and education in underserved areas, and healthcare to the state's underserved population. iv) Mini Grants Program provides grants to organizations supporting underrepresented and economically disadvantaged students in pursuit of careers in health care. Organizations receive grants of up to $15,000 to engage in health career conferences, workshops, and/or career exploration activities. Since 2005, over $2.2 million has been awarded to support organizations engaging in these activities serving nearly 56,000 students statewide. In 2014 to 2015, via partial funding from Mental Health Services Act (MHSA) Workforce Education and Training, the California Endowment, and the California State Office of Rural Health, OSHPD awarded 46 grants from the Mini Grants Program to organizations for a sum of $603,706. v) California Student/Resident Experiences and Rotations in Community Health provides grants to organizations that support student and resident rotations from primary care and mental health disciplines in community clinics, health centers, and public mental health system sites which expose students, residents, and practitioners to underserved communities. Organizations SJR 7 Page 10 awarded receive funding to administer the program and to provide students, residents, and preceptors and mentors a small stipend for completing the program. In addition to completing a rotation in an underserved area, participants are also required to complete a community project. From 2009 to 2012, 150 students and residents were supported via an American Recovery and Reinvestment Act grant. In 2014 to 2015, via funding from the MHSA Workforce Education and Training and The California Endowment, OSHPD granted 12 awards to organizations for a sum of $317,000 which will help support 92 participants statewide. 3)SUPPORT. CMA states in support of this resolution, our state has a trove of PCPs who want to train here, including those who have graduated from California medical schools, but who are forced to leave the state because training slots at medical residency programs are limited. This is despite the fact that 40% of California's counties fail to meet the recommended ratio of PCPs and likely will face a shortage as the number of insured individuals grows and physicians retire. CMA concludes this resolution calls on the federal government to renew funding for teaching health centers that is set to expire at the end of 2015, to lift the freeze on residency positions funding by Medicare, and would call on the President and Congress to encourage the development of primary care training programs in ambulatory, community, and medically underserved sites through new funding methodologies and incentives. The Medical Board of California, also writes in support that this resolution may help more physicians to receive residency training positions in California and help with those trained in California to end up practicing in California. This resolution is in line with MBC's mission of promoting access and care. 4)RELATED LEGISLATION. SB 22 (Roth) requires OSHPD to establish a non-profit public benefit corporation to be known as the California Medical Residency Training Foundation, as specified. SB 22 is currently on the Senate inactive file. SJR 7 Page 11 5)PREVIOUS LEGISLATION. a) AB 2458 (Bonilla) of 2014 would have established the Graduate Medical Education Fund (Fund) to administer and fund grants to GME residency programs and would have appropriated $25 million to the Fund from the General Fund in fiscal year 2014-15 and $2.84 million to the Fund per year for three years from the California Health Data and Planning Fund commencing with the 2014-15 fiscal year. AB 2458 was held on the Assembly Appropriations Committee Suspense File. b) AB 1176 (Bocanegra and Bonta) of 2014 would have established the Medical Residency Training Program to fund GME residency programs in California and would have required every health insurer or health plan that provides health care coverage in this state to pay an annual GME assessment of $5.00 for each covered life. AB 1176 was held under submission in the Assembly Appropriations Committee. c) SB 1416 (Rubio and Ed Hernandez) of 2012 would have created the GME Trust Fund for the purpose of funding grants to graduate medical education residency programs in California, and would have required OSHPD to develop criteria for distribution of available moneys. SB 1416 was held in the Assembly Appropriations Committee. d) AJR 13 (Lara), Resolution Chapter 85, Statutes of 2011, SJR 7 Page 12 urges the President and Congress to continue to provide resources to increase the supply of physicians in California, in order to improve access to care, particularly for Californians in rural areas and members of underrepresented ethnic groups, and to consider solutions that would increase the number of graduate medical education residency positions to keep pace with the growing numbers of medical school graduates, and the growing need for physicians in California. REGISTERED SUPPORT / OPPOSITION: Support California Medical Association (sponsor) California Primary Care Association (sponsor) American Federation of State, County and Municipal Employees, AFL-CIO Medical Board of California Opposition SJR 7 Page 13 None on file. Analysis Prepared by:Patty Rodgers / HEALTH / (916) 319-2097