BILL ANALYSIS Ó SB 315 Page 1 Date of Hearing: July 15, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 315 (Monning) - As Amended June 22, 2015 ----------------------------------------------------------------- |Policy |Health |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill authorizes the California Health Facilities Financing Authority (CHFFA) to transfer up to $6.5 million from its Hospital Equipment Loan Program for use in a second California Health Access Model Program (CHAMP) competitive grant selection SB 315 Page 2 process. Specifically, this bill: 1)Creates a California Health Access Model Program Two (CHAMP 2) Account within the CHFFA Fund for the purpose of administering a second competitive grant selection process, to fund one or more projects designed to demonstrate new or enhanced cost-effective methods of delivery of health care services to improve access to care for vulnerable populations or communities. 2)Requires any funds remaining in the CHAMP 2 account on January 1, 2023, to revert to the CHFFA Fund. 3)Requires CHFFA to prepare and provide a biennial report to the Legislature and the Governor, commencing on January 1, 2017, on the outcomes of CHAMP and CHAMP 2. 4)Lowers from 62 to 60 the age range used in the CHFFA definition of a residential care facility for the elderly (RCFE) to be consistent with existing statute governing RCFE licenses. FISCAL EFFECT: $6.5 million from the CHFFA Fund will be redirected to fund the CHAMP 2 effort as specified, to be allocated to eligible projects, as defined. The timing of actual expenditures is SB 315 Page 3 unclear. COMMENTS: 1)Purpose. According to the author, this bill is needed to provide CHFFA with the legislative authority to use up to $6.5 million from CHFFA's HELP Fund to support a second round of CHAMP grants. Grants will be available for demonstration projects designed to improve health outcomes and advance the innovative delivery of health care to underserved and vulnerable populations throughout California. The author notes CHAMP grants have the potential to increase health access, improve clinical outcomes, and achieve cost savings in the health care system. This bill is sponsored by California State Treasurer John Chiang. 2)Background. CHFFA provides financial assistance to public and nonprofit health care providers through loans funded by the issuance of tax-exempt 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 for project-related costs, including construction and renovation costs. One CHFFA bond financing program, the Healthcare Expansion Loan Program (HELP) II Financing Program, makes direct loans to small and rural health facilities. HELP II loans are offered at 3% interest, 3-15 year financing, and in amounts up to $1 million. SB 315 Page 4 AB 1437 (Committee on Budget), Chapter 23, Statutes of 2012 created the original CHAMP program, and allowed CHFFA to award up to $6.5 million in grants to one or more demonstration projects up to a combined total of $1.5 million for a single grantee. $5 million of this amount is contingent on demonstrating successful outcomes. 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. The program serves vulnerable SFHP members who are high utilizers of health care services and high risk for mortality. 3)Why CHAMP 2? A variety of factors have contributed to a significant fund balance in the self-sustaining HELP II Fund. Given this significant balance is likely to be maintained without action to reduce it, CHFFA has examined ways to responsibly use this balance. CHFFA recently commissioned a financial analysis of potential options to spend down the fund balance in order to improve access to financing. They modeled the effect of expanding the loan length beyond the current 15 years, extending loans to borrowers with higher credit risk, and increasing the size of loans, and also considered strategies to increase the number of loans. The CHFFA board approved extending the loan length and increasing loan amounts. In addition, another round of CHAMP grant programs was considered, which this bill implements. The financial modeling projects the fund can absorb all the proposed changes and maintain a robust balance of at least $6 million, which was adopted as the minimum floor for the program's fund balance. Analysis Prepared by:Lisa Murawski / APPR. / (916) SB 315 Page 5 319-2081