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.
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