BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 315|
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                                   THIRD READING 


          Bill No:  SB 315
          Author:   Monning (D) and Hernandez (D), et al.
          AmendedAmended:5/5/15  
          Vote:     21  

           SENATE HEALTH COMMITTEE:  8-1, 4/29/15
           AYES:  Hernandez, Nguyen, Hall, Mitchell, Monning, Pan, Roth,  
            Wolk
           NOES:  Nielsen

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 5/28/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           SUBJECT:   Health care access demonstration project grants


          SOURCE:    State Treasurer John Chiang


          DIGEST:   This bill 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. 


          ANALYSIS:   










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          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  
            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  







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            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.

          3)Requires CHFFA to prepare and provide the report specified in  
            7) above every two years, commencing on January 1, 2017. 

          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 CHAMP, and the Investment in Mental Health  
          Wellness Grant Program - to provide funding to community  







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          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 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.
            
          1)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 the 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  







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            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.

          2)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 CHFFA'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  
            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 Chiang, 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,  







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            including a $560,000 supportive housing grant from the SFDPH.

          Comments
          
          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.

          Prior Legislation

          AB 272 (Monning, 2012) would have created CHAMP and would have  
          allowed 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.
          
          FISCAL EFFECT:   Appropriation:    Yes         Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, one-time  
          transfer of $6.5 million to fund new grants (CHFFA Fund).


          SUPPORT:   (Verified5/28/15)


          State Treasurer John Chiang (source)
          American Federation of State, County, and Municipal Employees
          California Chapter of the National Association of Social Workers
          California Hospital Association
          California Physical Therapy Association











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          OPPOSITION:   (Verified5/28/15)


          None received


          Prepared by:Melanie Moreno / HEALTH / 
          5/30/15 17:26:56


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