BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 315    
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          |AUTHOR:        |Monning and Hernandez                          |
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          |VERSION:       |April 13, 2015                                 |
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          |HEARING DATE:  |April 29, 2015 |               |               |
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          |CONSULTANT:    |Melanie Moreno                                 |
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           SUBJECT  :  Health care access demonstration project grants

         SUMMARY  :1.  Creates the California Health Access Model Program (CHAMP) Two  
          Account for purposes of administering a second competitive grant  
          selection process, in accordance with the CHAMP authorizing  
          statute, to fund one or more projects designed to demonstrate  
          specified new or enhanced cost-effective methods of delivering  
          quality health care services to improve access to care for  
          vulnerable populations or communities, or both. 
          
          Existing law:
          1.Establishes the California Health Facilities Financing  
            Authority (CHFFA), consisting of nine members, including the  
            State Treasurer who serves as chairman.  Permits CHFFA to make  
            loans from the continuously appropriated CHFFA Fund to public  
            or nonprofit health institutions for financing or refinancing  
            the acquisition, construction, or remodeling of health  
            facilities. 

          2.Creates CHAMP, and permits CHFFA, following the completion of  
            a competitive selection process, to  award one or more grants  
            that total up to $1.5 million, to one or more projects  
            designed to demonstrate specified new or enhanced  
            cost-effective methods of delivering quality health care  
            services to improve access to quality health care for  
            vulnerable populations or communities, or both, that are  
            effective at enhancing health outcomes and improving access to  
            quality health care and preventive services, as specified. 

          3.Permits a CHAMP grant to be allocated in increments to a  
            demonstration project over multiple years to ensure the  
            demonstration project's ability to complete its work, as  
            determined by CHFFA and as specified. Requires, prior to the  







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            initial allocation of funds, the project administrators to  
            provide evidence that it has or will have additional funds  
            sufficient to ensure its completion. 

          4.Prohibits a health facility that has received CHFFA funding,  
            except for a facility that qualifies as a "small and rural  
            hospital," from being eligible to receive CHAMP funds for a  
            demonstration project, as specified. 

          5.Permits CHAMP funds provided to a demonstration project to be  
            used to supplement, but not to supplant, existing financial  
            and resource commitments of the grantee or grantees or any  
            other member of a collaborative effort that has been awarded a  
            demonstration project grant.

          6.Permits CHFFA, if a demonstration project that receives a  
            CHAMP grant is successful at developing a new method of  
            delivering high-quality and cost-effective health care  
            services in community settings that result in increased access  
            to quality health care and preventive services or improved  
            health care outcomes for vulnerable populations or  
            communities, or both, to implement a second grant program that  
            awards up to $5 million, as specified, to eligible recipients.  


          7.Requires CHFFA to prepare and provide a report to the  
            Legislature and the Governor by January 1, 2014, on the  
            outcomes of CHAMP, as specified.
          
          This bill:
          1.Creates the CHAMP Two Account within the CHFFA Fund for  
            purposes of administering a second competitive grant selection  
            process, in accordance with the CHAMP authorizing statute, to  
            fund one or more projects designed to demonstrate specified  
            new or enhanced cost-effective methods of delivery quality  
            health care services to improve access to quality health care  
            for vulnerable populations or communities, or both. 

          2.Transfers an amount of up to $6.5 million from funds in the  
            CHFFA Hospital Equipment Loan Program Fund that are not  
            impressed with a trust for other purposes into the CHAMP Two  
            Account for the purpose of administering a second competitive  
            grant selection process. Requires any moneys remaining in the  
            CHAMP Two Account on January 1, 2023 to revert as of that date  
            to the CHFFA Hospital Equipment Loan Program Fund.








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           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1.Author's statement.  According to the author, SB 315 is needed  
            to provide CHFFA with the legislative authority to utilize up  
            to $6.5 million from CHFFA's Hospital Equipment Loan Program  
            Fund to support a second round of CHAMP grants for  
            demonstration projects designed to improve health outcomes and  
            advance the innovative delivery of health care to underserved  
            and vulnerable populations throughout California. The CHAMP  
            grants have the potential to increase health access, improve  
            clinical outcomes, and achieve cost savings in the health care  
            system.
            
          2.Background.  CHFFA was created to be the state's vehicle for  
            providing financial assistance to public and nonprofit health  
            care providers through loans funded by the issuance of  
            tax-exempt bonds.  To this end, CHFFA administers the Bond  
            Financing Program and the Tax-Exempt Equipment Financing  
            Program.  CHFFA also provides direct loans to small and rural  
            health facilities through the Healthcare Expansion Loan  
            Program (HELP) II Financing Program and the Medi-Cal Bridge  
            Loan Program.  Additionally, CHFFA administers four grant  
            programs, the Community Clinic Grant Program, the Children's  
            Hospital Programs, the California Health Access Model Program  
            (CHAMP) and the Investment in Mental Health Wellness Grant  
            Program to provide funding to community clinics, 13 of the  
            state's children's hospitals, a demonstration project that  
            seeks to fund innovative models of health care delivery, and  
            counties to improve access to mental health crisis services.

            By borrowing through CHFFA, health facilities can likely  
            obtain lower interest rates than they would through  
            conventional bonds.  Generally, non-profit, licensed health  
            facilities in California, including adult day health centers,  
            community clinics, skilled nursing facilities, developmentally  
            disabled centers, hospitals, and drug and alcohol  
            rehabilitation centers are eligible for CHFFA financing.   
            Proceeds from CHFFA financings may be used for project-related  
            costs, including: construction; remodeling and renovation;  
            land acquisition (as part of the proposed project);  
            acquisition of existing health facilities; purchase or lease  
            of equipment; refinancing or refunding of prior debt; working  








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            capital for start-up facilities; costs of bond issuance;  
            feasibility studies; and reimbursement of prior expenses.   
            Under statute, savings resulting from issuance of tax-exempt  
            bonds for borrowers must be transferred to the consuming  
            public through lower or contained costs for delivery of health  
            services.  In 2014, $894,100,000 in bonds was issued by CHFFA.  
             In 2010, $712,845,000 in bonds was issued by CHFFA.
            
          3.CHAMP Funding.  According to CHFFA, the original CHAMP program  
            used excess funds largely derived from the annual and initial  
            administrative fees paid by CHFFA bond borrowers.  CHFFA bond  
            fees are set competitively with those charged by competing  
            lenders and generally cover CHFFA's overhead expenses, such as  
            personnel costs, travel, legal services, financial advisors  
            and other operational expenses.  Borrowers are not charged an  
            application fee but they do pay initial fees and annual fees,  
            determined by the size of their issuances, of $500 and other  
            fees at various times, which differ depending on the type of  
            borrower and type of fee.  According to CHFFA, at the time of  
            the creation of the initial CHAMP grant program, the fund  
            balance was approximately $14 million, which had been  
            accumulated over the past 30 years.  

            The fees proposed for the CHAMP Two awards come from HELP II  
            financing program fund balance.  The current fund balance for  
            the HELP II financing program Hospital Equipment Loan Program  
            is approximately $24 million, derived in part from a 1999-2000  
            General Fund contribution of $5 million, a matching  
            contribution from CHFFA's main fund balance, and principal and  
            interest payments made by CHFFA HELP II borrowers since the  
            start of the HELP II Loan Program.  These sums have been used  
            to provide capital financing for small (defined by their  
            revenue stream) or rural health facilities and to district  
            hospitals in order to expand and improve health services.

          4.First CHAMP award.  According to CHFFA, in 2013 it informed  
            over 900 possible interested parties via email of the  
            opportunity to submit a letter of interest to participate in  
            the initial phase of CHAMP. Recipients included California's  
            health care related associations, foundations, colleges,  
            clinics, counties and the Authority's electronic distribution  
            list. Several associations passed along the notice to their  
            members in newsletters and emails. California Healthline, a  
            widely read publication of the California Healthcare  
            Foundation, published it as well.  Twenty entities submitted  








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            letters of interest in mid-April, 2013, which were reviewed  
            for applicant and project eligibility based on the criteria in  
            relevant regulations. Twelve letters of interest were deemed  
            to be from eligible entities and for eligible projects. All  
            eligible entities submitted a full grant application in  
            mid-August 2013. Two of twelve that had similar projects  
            teamed up together to submit a single collaborative project.  
            Applications were submitted by a number of organizations,  
            including health facilities, community based organizations,  
            health plans, and two universities.

            A single CHAMP grant of $1.4 million was awarded to the San  
            Francisco Health Plan (SFHP) for its Community-Based Care  
            Management pilot program.  According to a letter from State  
            Treasurer John Chaing, this program operates from a holistic,  
            patient-centered approach and functions to bridge the gap  
            between the existing health and social care systems for  
            high-risk and high-cost members. The program, known as  
            "CareSupport," serves vulnerable SFHP members who are high  
            utilizers of hospital inpatient and emergency departments and  
            who are at extremely high risk for mortality and mobility due  
            to housing instability, mental illness, and addiction.  SFHP's  
            partners in the project are the San Francisco Department of  
            Public Health (SFDPH) and San Francisco General Hospital and  
            Trauma Center.  In order to complete the project, SFHP will  
            leverage about $2 million from its own operating funds,  
            including a $560,000 supportive housing grant from the SFDPH.

          5.Prior legislation.  AB 272 (Monning), created CHAMP and allows  
            CHFFA to award grants to one or more demonstration projects up  
            to a combined total of $1.5 million.  AB 272 died on the  
            Senate inactive file.
          
            AB 1437 (Committee on Budget), Chapter 23, Statutes of 2012  
            contained language substantially similar to that contained in  
            AB 272.
          
          6.Support.  State Treasurer John Chiang writes that California's  
            health care and medical services systems have undergone  
            devastating reductions, leaving its most vulnerable and  
            underserved populations without the proper access to health  
            care needed to survive and thrive.  The Treasurer states that  
            the existing CHAMP program only furthers CHFFA's mission to  
            utilize available funds to immediately spur innovative and  
            cost-effective health care service approaches even when the  








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            available funds are relatively modest. With this same vision  
            in mind, this bill would provide another opportunity to  
            support the creation of new models for health care delivery to  
            California's most vulnerable populations and communities.  The  
            California Physical Therapy Association states that this bill  
            is highly necessary and has the potential to increase health  
            access, improve clinical outcomes, and achieve cost savings in  
            the health care system.  

          7.Suggested amendment.  This bill should be amended to add the  
            CHAMP Two activities to existing reporting requirements and to  
            make those reports to the Legislature and Governor due  
            bi-annually, as follows:

            Beginning on page 5, line 18
            (d) (1) The authority shall prepare and provide a report to  
            the Legislature and the Governor  every two years, commencing  
            on  by January 1,  2017   2014  , on  the outcomes of the  
            demonstration grant program, including   on the grants awarded  
            pursuant to (b) and (g) that includes  , but  is  not limited to,  
            the following:
            (A) The total amount of grants issued.
            (B) The amount of each grant issued.
            (C) A description of other sources of funding for each  
            project.
            (D) A description of each project awarded funding.
            (E)  If available,  a description of project outcomes that  
            demonstrate cost-effective delivery of health care services in  
            community settings, that result in improved access to quality  
            health care or improved health care outcomes.

           SUPPORT AND OPPOSITION  :
          Support:  State Treasurer John Chiang (sponsor)
                    American Federation of State, County, and Municipal  
                    Employees
                    California Chapter of the National Association of  
                    Social Workers
                    California Hospital Association
                    California Physical Therapy Association
          
          Oppose:   None received.

                                      -- END --
          
          








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