BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 315 --------------------------------------------------------------- |AUTHOR: |Monning and Hernandez | |---------------+-----------------------------------------------| |VERSION: |April 13, 2015 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |April 29, 2015 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Melanie Moreno | --------------------------------------------------------------- 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 SB 315 (Monning) Page 2 of ? 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. SB 315 (Monning) Page 3 of ? 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 SB 315 (Monning) Page 4 of ? 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 SB 315 (Monning) Page 5 of ? 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 SB 315 (Monning) Page 6 of ? 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, 20172014, onthe outcomes of the demonstration grant program, includingon 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 -- SB 315 (Monning) Page 7 of ?