Amended in Senate April 23, 2015

Amended in Senate April 9, 2015

Senate BillNo. 346


Introduced by Senator Wieckowski

February 24, 2015


An act to amendbegin delete Sections 127280 and 129050 of, to add and repeal Section 127361 of, andend deletebegin insert end insertbegin insertSection 129050 of, to amend, repeal, and add Section 127280 of,end insert to add Chapter 2.6 (commencing with Section 127470) to Part 2 of Division 107 of,begin insert and to add and repeal Section 127361 of,end insert the Health and Safety Code, relating to health facilities.

LEGISLATIVE COUNSEL’S DIGEST

SB 346, as amended, Wieckowski. Health facilities: community benefits.

Existing law makes certain findings and declarations regarding the social obligation of private nonprofit hospitals to provide community benefits in the public interest, and requires these hospitals, among other responsibilities, to adopt and update a community benefits plan for providing community benefits either alone, in conjunction with other health care providers, or through other organizational arrangements. Existing law requires each private nonprofit hospital, as defined, to complete a community needs assessment, as defined, and to thereafter update the community needs assessment at least once every 3 years. Existing law also requires the hospital to file a report on its community benefits plan and the activities undertaken to address community needs with the Office of Statewide Health Planning and Development. Existing law requires the statewide office to make the plans available to the public. Existing law requires that each hospital include in its community benefits plan measurable objectives and specific benefits.

This bill would declare the necessity of establishing uniform standards for reporting the amount of charity care and community benefits a facility provides to ensure that private nonprofit hospitals and nonprofit multispecialty clinics actually meet the social obligations for which they receive favorable tax treatment, among other findings and declarations.

This bill would require a private nonprofit hospital and nonprofit multispecialty clinic, as defined, to provide community benefits to the public by allocating a specified percentage of the economic value of community benefits to charity health care, as defined, and community building activities, as specified. The bill would, by January 1, 2018, require a private nonprofit hospital or nonprofit multispecialty clinic to develop, in collaboration with the community benefits planning committee, as established, a community health needs assessment that evaluates the health needs and resources of the community. The bill would also require these entities, prior to completing the needs assessment, to develop a community benefits statement and a description of the process for approval of the community benefits plan by the hospital’s or clinic’s governing board, as specified. The bill would authorize the hospital or clinic to create a community benefits advisory committee for the purpose of soliciting community input. This bill would require the hospital or clinic to make available to the public a copy of the assessment, file the assessment with the Office of Statewide Health Planning and Development, and update the assessment at least every 3 years.

This bill would also require a private nonprofit hospital and nonprofit multispecialty clinic, by April 1, 2018, to develop a community benefits plan that includes a summary of the needs assessment and a statement of the community health care needs that will be addressed by the plan, and list the services, as provided, that the hospital or clinic intends to provide in the following year to address community health needs identified in the community health needs assessments. The bill would require the hospital or clinic to make its community health needs assessment and community benefits plan or community health plan available to the public on its Internet Web site and would require that a copy of the assessment and plan be given free of charge to any person upon request.

This bill would require a private nonprofit hospital or nonprofit multispecialty clinic, after April 1, 2018,begin delete every 2 yearsend delete tobegin insert annuallyend insert submit a community benefits plan to the Office of Statewide Health Planning and Development, as specified, and would allow a hospital or clinic under the common control of a single corporation or other entity to file a consolidated plan, as provided. The bill would require that the governing board of each hospital or clinic adopt the community benefits plan and make it available to the public, as specified.

This bill would make the existing law described above inoperative, and would make the new provisions described above operative, upon the certification by the Director of Statewide Health Planning and Development of the adoption of regulations that prescribe a standardized format for community benefits plans, as provided. This bill would subsequently repeal the existing law described above.begin delete Thisend deletebegin insert Theend insert bill would require the office to develop and adopt thosebegin delete regulations,end deletebegin insert regulations by January 1, 2017,end insert to provide technical assistance to help private nonprofit hospitals and nonprofit multispecialty clinics exempt from licensure comply with the community benefits provisions, to make public each community health needs assessment and community benefits plan and any comments received regarding those assessments and plans, to maintain a public calendar of community benefit plan adoption meetings, and to calculate and make public the total value of community benefits provided by hospitals, as specified. This bill would authorize the Office of Statewide Health Planning and Development to assess a civil penalty, as provided, against any hospital or clinic that fails to comply with these provisions. This bill would make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 127280 of the Health and Safety Code
2 is amended to read:

3

127280.  

(a) Every health facility licensed pursuant to Chapter
42 (commencing with Section 1250) of Division 2, except a health
5facility owned and operated by the state, shall each year be charged
6a fee established by the office consistent with the requirements of
7this section.

8(b) Commencing in calendar year 2004, every freestanding
9ambulatory surgery clinic, as defined in Section 128700, shall each
10year be charged a fee established by the office consistent with the
11requirements of this section.

P4    1(c) The fee structure shall be established each year by the office
2to produce revenues equal to the appropriation made in the annual
3Budget Act or another statute to pay for the functions required to
4be performed by the office pursuant to this chapter,begin delete Chapter 2.6
5(commencing with Section 127470),end delete
begin insert Article 2 (commencing with
6Section 127340) of Chapter 2,end insert
or Chapter 1 (commencing with
7Section 128675) of Part 5, and to pay for any other health-related
8programs administered by the office. The fee shall be due on July
91 and delinquent on July 31 of each year.

10(d) The fee for a health facility that is not a hospital, as defined
11in subdivision (c) of Section 128700, shall be not more than 0.035
12percent of the gross operating cost of the facility for the provision
13of health care services for its last fiscal year that ended on or before
14June 30 of the preceding calendar year.

15(e) The fee for a hospital, as defined in subdivision (c) of Section
16128700, shall be not more than 0.035 percent of the gross operating
17cost of the facility for the provision of health care services for its
18last fiscal year that ended on or before June 30 of the preceding
19calendar year.

20(f) The fee for a freestanding ambulatory surgery clinic shall
21be established at an amount equal to the number of ambulatory
22surgery data records submitted to the office pursuant to Section
23128737 for encounters in the preceding calendar year multiplied
24by not more than fifty cents ($0.50).

25(g) There is hereby established the California Health Data and
26Planning Fund within the office for the purpose of receiving and
27expending fee revenues collected pursuant to this chapter.

28(h) Any amounts raised by the collection of the special fees
29provided for by subdivisions (d), (e), and (f) that are not required
30to meet appropriations in the Budget Act for the current fiscal year
31shall remain in the California Health Data and Planning Fund and
32shall be available to the office in succeeding years when
33appropriated by the Legislature in the annual Budget Act or another
34statute, for expenditure under the provisions of this chapter,
35begin delete Chapter 2.6 (commencing with Section 127470),end deletebegin insert Article 2
36(commencing with Section 127430) of Chapter 2,end insert
and Chapter 1
37(commencing with Section 128675) of Part 5, or for any other
38health-related programs administered by the office, and shall reduce
39the amount of the special fees that the office is authorized to
40establish and charge.

P5    1(i) (1) No health facility liable for the payment of fees required
2by this section shall be issued a license or have an existing license
3renewed unless the fees are paid. A new, previously unlicensed,
4health facility shall be charged a pro rata fee to be established by
5the office during the first year of operation.

6(2) The license of any health facility, against which the fees
7required by this section are charged, shall be revoked, after notice
8and hearing, if it is determined by the office that the fees required
9were not paid within the time prescribed by subdivision (c).

begin insert

10(j) This section is inoperative as of the date of the written
11certification required by paragraph (1) of subdivision (a) of Section
12127487, and is repealed on January 1 of the year after the year in
13which it becomes inoperative.

end insert
14begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 127280 is added to the end insertbegin insertHealth and Safety Codeend insertbegin insert,
15to read:end insert

begin insert
16

begin insert127280.end insert  

(a) Every health facility licensed pursuant to Chapter
172 (commencing with Section 1250) of Division 2, except a health
18facility owned and operated by the state, shall each year be
19charged a fee established by the office consistent with the
20requirements of this section.

21(b) Commencing in calendar year 2004, every freestanding
22ambulatory surgery clinic, as defined in Section 128700, shall
23each year be charged a fee established by the office consistent
24with the requirements of this section.

25(c) The fee structure shall be established each year by the office
26to produce revenues equal to the appropriation made in the annual
27Budget Act or another statute to pay for the functions required to
28be performed by the office pursuant to this chapter, Chapter 2.6
29(commencing with Section 127470), or Chapter 1 (commencing
30with Section 128675) of Part 5, and to pay for any other
31health-related programs administered by the office. The fee shall
32be due on July 1 and delinquent on July 31 of each year.

33(d) The fee for a health facility that is not a hospital, as defined
34in subdivision (c) of Section 128700, shall be not more than 0.035
35percent of the gross operating cost of the facility for the provision
36of health care services for its last fiscal year that ended on or
37before June 30 of the preceding calendar year.

38(e) The fee for a hospital, as defined in subdivision (c) of Section
39128700, shall be not more than 0.035 percent of the gross
40operating cost of the facility for the provision of health care
P6    1services for its last fiscal year that ended on or before June 30 of
2the preceding calendar year.

3(f) The fee for a freestanding ambulatory surgery clinic shall
4be established at an amount equal to the number of ambulatory
5surgery data records submitted to the office pursuant to Section
6128737 for encounters in the preceding calendar year multiplied
7by not more than fifty cents ($0.50).

8(g) There is hereby established the California Health Data and
9Planning Fund within the office for the purpose of receiving and
10expending fee revenues collected pursuant to this chapter.

11(h) Any amounts raised by the collection of the special fees
12provided for by subdivisions (d), (e), and (f) that are not required
13to meet appropriations in the Budget Act for the current fiscal year
14shall remain in the California Health Data and Planning Fund
15and shall be available to the office in succeeding years when
16appropriated by the Legislature in the annual Budget Act or
17another statute, for expenditure under the provisions of this
18chapter, Chapter 2.6 (commencing with Section 127470), and
19Chapter 1 (commencing with Section 128675) of Part 5, or for any
20other health-related programs administered by the office, and shall
21reduce the amount of the special fees that the office is authorized
22to establish and charge.

23(i) (1)   No health facility liable for the payment of fees required
24by this section shall be issued a license or have an existing license
25renewed unless the fees are paid. A new, previously unlicensed,
26health facility shall be charged a pro rata fee to be established by
27the office during the first year of operation.

28(2) The license of any health facility, against which the fees
29required by this section are charged, shall be revoked, after notice
30and hearing, if it is determined by the office that the fees required
31were not paid within the time prescribed by subdivision (c).

32(j) This section shall be operative on the date of the written
33certification required by subdivision (a) of Section 127487.

end insert
34

begin deleteSEC. 2.end delete
35begin insertSEC. 3.end insert  

Section 127361 is added to the Health and Safety Code, 36immediately following Section 127360, to read:

37

127361.  

This article is inoperative as of the date of the written
38certification required by paragraph (1) of subdivision (a) of Section
39127487, and is repealed on January 1 of the year after the year in
40which it becomes inoperative.

P7    1

begin deleteSEC. 3.end delete
2begin insertSEC. 4.end insert  

Chapter 2.6 (commencing with Section 127470) is
3added to Part 2 of Division 107 of the Health and Safety Code, to
4read:

5 

6Chapter  2.6. Community Benefits
7

7 

8Article 1.  Hospital Community Benefits
9

 

10

127470.  

(a) The Legislature finds and declares the following:

11(1) Access to health care services is of vital concern to the
12people of California.

13(2) Health care providers play an important role in providing
14essential health care services in the communities they serve.

15(3) Notwithstanding public and private efforts to increase access
16to health care, the people of California continue to have significant
17unmet health needs. Studies indicate that as many as 6.9 million
18Californians are uninsured during a year.

19(4) The state has a substantial interest in ensuring that the unmet
20health needs of its residents are addressed. Health care providers
21can help address these needs by providing charity care and
22community benefits to the uninsured and underinsured members
23of their communities.

24(5) Hospitals have different roles in the community depending
25on their mission, governance, tax status, and articles of
26incorporation. Private hospitals that are investor owned and have
27for-profit tax status pay property taxes, corporate income taxes,
28and other taxes, such as unemployment insurance, on a different
29basis than nonprofit, district, or public hospitals. Nonprofit health
30facilities, including hospitals and multispecialty clinics, as
31described in subdivision (l) of Section 1206, receive favorable tax
32treatment by the government and, in exchange, assume a social
33obligation to provide charity care and other community benefits
34in the public interest.

35(b) It is the intent of the Legislature in enacting this chapter to
36provide uniform standards for reporting the amount of charity care
37and community benefits provided to ensure that private nonprofit
38hospitals and multispecialty clinics operated by nonprofit
39corporations, as described in subdivision (l) of Section 1206,
P8    1actually meet the social obligations for which they receive
2favorable tax treatment.

3

127472.  

The following definitions apply for the purposes of
4this chapter:

5(a) “Community” means the service area or patient population
6for which a private nonprofit hospital or nonprofit multispecialty
7clinic provides health care services. A private nonprofit hospital
8or nonprofit multispecialty clinicbegin delete shall create a health equity
9assessment based on the key factors relating to health and mental
10health disparities and inequities described in paragraph (2) of
11subdivision (d) of Section 131019.5, andend delete
may not define its service
12area to exclude vulnerable populations, including, but not limited
13to, medically underserved, low-income, or minority populations
14who are part of its patient populations, live in geographic areas in
15which its patient populations reside, otherwise should be included
16based on the method the hospital facility uses to define its
17community, or populations described in subdivision (l).

18(b) (1) “Community benefits” means the unreimbursed goods,
19services, activities, programs, and other resources provided by a
20private nonprofit hospital or nonprofit multispecialty clinic that
21addresses community-identified health needs and concerns,begin delete and
22health disparities related to its healthy equity assessment,end delete

23 particularly for people who are uninsured, underserved, or members
24of a vulnerable population. Community benefits include, but are
25not limited to,begin delete charity care, shortfalls inend deletebegin insert all of the following:end insert

26begin insert(A)end insertbegin insertend insertbegin insertCharity care.end insert

27begin insert(B)end insertbegin insertend insertbegin insertShortfalls inend insert Medi-Cal, California Children’s Services
28Program, or county indigent programs at cost up to 125 percent
29of the Medicare rate for the health care services or items provided
30on an inpatient basis, an outpatient basis, or through other nonprofit
31or public outpatient clinics, hospitals, or health carebegin delete organizations,
32theend delete
begin insert organizations.end insert

33begin insert(C)end insertbegin insertend insertbegin insertTheend insert cost of community buildingbegin delete activities, theend deletebegin insert activities for
34vulnerable populations.end insert

35begin insert(D)end insertbegin insertend insertbegin insertTheend insert cost of community health improvement services and
36community benefitbegin delete operations, theend deletebegin insert operations.end insert

37begin insert(E)end insertbegin insertend insertbegin insertTheend insert cost of school health centers, as defined in Section
38begin delete 124174, theend deletebegin insert 124174.end insert

P9    1begin insert(F)end insertbegin insertend insertbegin insertTheend insert cost of health professions education and training
2provided without charge to community members orbegin delete participants,
3amountsend delete
begin insert participants.end insert

4begin insert(G)end insertbegin insertend insertbegin insertAmountsend insert given, with no expectation of reimbursement or
5repayment, to employeesbegin insert from, or working among, a vulnerable
6populationend insert
begin insert,end insert for the purpose of satisfying or paying off, in full or
7in part, preemployment student educational loanbegin delete obligations,
8subsidizedend delete
begin insert obligations.end insert

9begin insert(H)end insertbegin insertend insertbegin insertSubsidizedend insert health services for vulnerablebegin delete populations,
10research, and contributions to community groups, vaccination
11programs and services for low-income families, chronicend delete

12begin insert populations.end insert

begin insert

13(I) Vaccination programs.

end insert

14begin insert(J)end insertbegin insertend insertbegin insertChronicend insert illness prevention programs andbegin delete services,
15home-basedend delete
begin insert services for vulnerable populations.end insert

16begin insert(K)end insertbegin insertend insertbegin insertHome-basedend insert health care programs forbegin delete low-income families,
17or community-basedend delete
begin insert vulnerable populations.end insert

18begin insert(L)end insertbegin insertend insertbegin insertCommunity-based end insertmental healthbegin delete and outreach, the key
19factors described in paragraph (2) of subdivision (d) of Section
20131019.5, and assessmentend delete
begin insert programs for vulnerable populations.end insert

21begin insert(M)end insertbegin insertend insertbegin insertOutreach and assessmentend insert programs for begin delete low-income families.
22For purposes of this subdivision, “low-income families” means
23families or individuals with income less than or equal to 350
24percent of the federal poverty level.end delete
begin insert vulnerable populations.end insert

25(2) For purposes of this subdivision, “community building
26activities” means the cost of various kinds of community building
27activities, including physical improvements and housing, economic
28development, community support, environmental improvements,
29community health improvement advocacy, coalition building,
30workforce development,begin delete the key factors described in paragraph
31(2) of subdivision (d) of Section 131019.5,end delete
and leadership
32development and training for community members.

33(3) (A) For purposes of this subdivision, “charity care” means
34the unreimbursed cost to a private nonprofit hospital or nonprofit
35multispecialty clinic of providing services to the uninsured or
36underinsured, as well as providing health care services or items
37on an inpatient or outpatient basis to a financially qualified patient,
38as defined in Section 127400, with no expectation of payment.

39(B) Charity care does not include any of the following:

40(i) Uncollected fees or accounts written off as bad debt.

P10   1(ii) Care provided to patients for which a public program or
2public or private grant funds pay for any of the charges for the
3care.

4(iii) Contractual adjustments in the provision of health care
5services below the amount identified as gross charges or
6“chargemaster” rates by the health care provider.

7(iv) Any amount over 125 percent of the Medicare rate for the
8health care services or items provided on an inpatient or outpatient
9basis.

10(v) Any amount over 125 percent of the Medicare rate for
11providing, funding, or otherwise financially supporting health care
12services or items with no expectation of payment provided to
13financially qualified patients through other nonprofit or public
14outpatient clinics, hospitals, or health care organizations.

15(vi) The cost to a nonprofit hospital of paying a tax or other
16governmental assessment.

17(4) “Community benefits” does not include any of the following:

18(A) The unreimbursed cost of providing services to those
19enrolled in Medicarebegin delete or county indigent programsend delete or any goods,
20services, activities, programs, or other resources program or activity
21for which there is direct offsetting revenue.

22(B) Uncollected fees or accounts written off as bad debt.

23(C) Contractual adjustments in the provision of health care
24services below the amount identified as gross charges or
25“chargemaster” rates by the health care provider.

26(D) Any amount over 125 percent of the Medicare rate for the
27health care services or items provided on an inpatient or outpatient
28basis.

29(E) Any amount over 125 percent of the Medicare rate for
30providing, funding, or otherwise financially supporting health care
31services or items with no expectation of payment provided to
32financially qualified patients through other nonprofit or public
33outpatient clinics, hospitals, or health care organizations.

34(c) (1) “Community benefits planning committee” means a
35committee, designated by a private nonprofit hospital or nonprofit
36multispecialty clinic, that oversees the community needs
37assessment and the development of the community benefits plan
38implementation strategy to meet the community health needs
39identified through the community health needs assessment.

P11   1(2) The community benefits planning committee shall be
2composed of the following:

3(A) One of the following:

4(i) The governing board of the hospital organization that operates
5the hospital facility or a committee or other party authorized by
6that governing body to the extent that the committee or other party
7is permitted under state law to act on behalf of the governing body.

8(ii) If the hospital facility has its own governing body and is
9recognized as an entity under state law but is a disregarded entity
10for federal tax purposes, the governing body of that hospital facility
11or other committee or party authorized by that governing body to
12the extent that the committee or other party is permitted under state
13law to act on behalf of the governing body.

14(B) At least one individual from the local, tribal, or regional
15governmental public health department, or an equivalent
16department or agency, with knowledge, information, or expertise
17relevant to the health needs of that community.

18(C) At least one individual from an underserved and vulnerable
19population.

begin delete

20(d) “Discounted care” means the cost for medical care provided
21consistent with Article 1 (commencing with Section 127400) of
22Chapter 2.5.

end delete
begin delete

23(e)

end delete

24begin insert(end insertbegin insertd)end insert (1) “Direct offsetting revenue” means revenue from goods,
25services, activities, programs, or other resources that offsets the
26total community benefit expense of the goods, services, activities,
27programs, or other resources.

28(2) “Direct offsetting revenue” includes revenue generated by
29the goods, services, activities, programs, or other resources,
30including, but not limited to, payment or reimbursement for
31services provided to program patients as well as restricted grants
32or contributions that the private nonprofit hospital or nonprofit
33multispecialty clinic uses to provide a community benefit, such as
34a restricted grant to provide financial assistance or fund research.

35(3) “Direct offsetting revenue” does not include unrestricted
36grants or contributions that the private nonprofit hospital or
37 nonprofit multispecialty clinic uses to provide a community benefit,
38nor payments for Medi-Cal, the California Children’s Services
39Program, or county indigent programs.

begin delete

40(f)

end delete

P12   1begin insert(end insertbegin inserte)end insert “Nonprofit multispecialty clinic” means a clinic as described
2in subdivision (l) of Section 1206.

begin delete

3(g)

end delete

4begin insert(end insertbegin insertf)end insert “Office” means the Office of Statewide Health Planning and
5Development.

begin delete

6(h)

end delete

7begin insert(end insertbegin insertg)end insert “Private nonprofit hospital” means a private nonprofit acute
8care hospital operated or controlled by a nonprofit corporation, as
9defined in Section 5046 of the Corporations Code, that has been
10determined to be exempt from taxation under the Internal Revenue
11Code. For purposes of this chapter, “private nonprofit hospital”
12does not include any of the following:

13(1) A district hospital organized and governed pursuant to the
14Local Health Care District Law (Division 23 (commencing with
15Section 32000)) or a nonprofit corporation that is affiliated with
16the health care district hospital owner by means of the district’s
17status as the nonprofit corporation’s sole corporate member
18pursuant to subparagraph (B) of paragraph (1) of subdivision (h)
19of Section 14169.31 of the Welfare and Institutions Code.

20(2) A rural general acute care hospital, as defined in subdivision
21(a) of Section 1250.

22(3) A children’s hospital, as defined in Section 10727 of the
23Welfare and Institutions Code.

24(4) A multispecialty clinic operated by a for-profit hospital,
25regardless of its net revenue.

begin delete

26(i)

end delete

27begin insert(end insertbegin inserth)end insert “Underserved population” or “vulnerable population” means
28any of the following:

29(1) A population that is exposed to medical or financial risk by
30virtue of being uninsured, underinsured, or eligible for Medi-Cal
31or a county indigent program.

32(A) “Uninsured” means a self-pay patient as defined in Section
33127400.

34(B) “Underinsured” means a patient with high medical costs,
35as defined in Section 127400.

begin delete

36(2) A population, including, but not limited to, the following:

37(A) A vulnerable community, as defined by Section 131019.5.

38(B) Individuals with low educational attainment as measured
39by the percentage of the population over 25 years of age with less
40than a high school diploma.

P13   1(C) Individuals who suffer from linguistic isolation as measured
2by the percentage of households in which no one who is 14 years
3of age or older speaks English with greater than elementary
4 proficiency.

end delete
begin insert

5(2) Individuals below 400 percent of the federal poverty level,
6unless the hospital serves a county in which the county has adopted
7an ordinance to provide financial assistance for health care to
8individuals with incomes above 400 percent of the federal poverty
9level, in which case the income threshold for the vulnerable
10population shall be the income threshold adopted by the county.

end insert
begin insert

11(3) Individuals with limited English proficiency.

end insert
begin delete

12(3)

end delete

13begin insert(end insertbegin insert4)end insert A population that meets the definition of disadvantaged
14community pursuant to Section 39711.

begin delete

15(4) Other populations that are specifically identified in the
16community health needs assessment required pursuant to Section
17127475.

end delete
begin delete
18

127472.5.  

The provisions of this chapter, except for Section
19127487, are operative on the date of the written certification
20required by paragraph (1) of subdivision (a) of Section 127487.
21

end delete

21 

22Article 2.  Community Benefits Statement, Community Health
23Needs Assessment, and Community Benefits Plan
24

 

25

127473.  

Private nonprofit hospitals and nonprofit multispecialty
26clinics shall provide community benefits to the community as
27follows:

28(a) A minimum of 90 percent of the total economic value of
29community benefits shall be allocated to community benefits that
30improve community health for underserved and vulnerable
31populations or that address a specific need identified in the
32community health needs assessment required pursuant to Section
33127475. For purposes of this paragraph, community benefits that
34improve community health for underserved and vulnerable
35populations may include activities, including health professions
36education and training, that are not provided exclusively to
37 underserved and vulnerable populations, if the activity will improve
38community health for underserved and vulnerable populations.

39(b) A minimum of 25 percent of the total economic value of
40community benefits shall be allocated to community building
P14   1activities geographically located within underserved and vulnerable
2populations.

3(c) To meet the requirements of subdivisions (a) and (b),
4community benefits shall be allocated for projects that
5simultaneously meet both criteria.

6

127474.  

Prior to completing the community health needs
7assessment pursuant to Section 127475, a private nonprofit hospital
8or a nonprofit multispecialty clinic shall develop, in collaboration
9with the community benefits planning committee, all of the
10following:

11(a) A community benefits statement that describes the hospital’s
12or clinic’s commitment to developing, adopting, and implementing
13a community benefits program. The hospital’s or clinic’s governing
14board shall document that it has reviewed the hospital’s or clinic’s
15organizational mission statement and considered amendments to
16it that would better align that organizational mission statement
17with the community benefits statement.

18(b) A description of the process for approval of the community
19benefits plan by the hospital’s or clinic’s governing board,
20including a declaration that the board and administrators of the
21hospital or clinic shall be responsible for oversight and
22implementation of the community benefits plan. The board may
23establish a community benefits implementation committee that
24shall include members of the board, senior administrators, and
25community stakeholders.

26

127475.  

(a) By January 1, 2018, a private nonprofit hospital
27or nonprofit multispecialty clinic shall develop, in collaboration
28with the community benefits planning committee, a community
29health needs assessment that evaluates the health needs and
30resources of the community it serves.

31(b) In conducting its community health needs assessment, a
32private nonprofit hospital or nonprofit multispecialty clinic shall
33solicit comments from and meet with local government officials,
34including representatives of local public health departments. A
35private nonprofit hospital or nonprofit multispecialty clinic shall
36also solicit comments from and meet with representatives of
37vulnerable populations, including diverse racial, ethnic, cultural,
38and LGBTQQ communities, women’s health advocates, mental
39health advocates, health and mental health providers,
40community-based organizations and advocates, academic
P15   1institutions,begin delete local public health departments, local government
2entities,end delete
low-income and vulnerable consumers, health care
3providers, registered nurses, community groups representing,
4among others, patients, labor, seniors, and consumers, and other
5health-related organizations. Particular attention shall be given to
6persons who are themselves underserved and who work with
7underserved and vulnerable populations. Particular attention shall
8also be given to identifying local needs to address racial and ethnic
9disparities in health outcomes. A private nonprofit hospital or
10nonprofit multispecialty clinic may create a community benefits
11advisory committee for the purpose of soliciting community input.

12(c) In preparing its community health needs assessment, a private
13nonprofit hospital or nonprofit multispecialty clinic shall use
14available public healthbegin delete data.end deletebegin insert data, including any health equity
15assessment conducted by the Office of Health Equity pursuant to
16Section 131019.5.end insert
A private nonprofit hospital or nonprofit
17multispecialty clinic may collaborate with other facilities and health
18care institutions in conducting community health needs assessments
19and may make use of existing studies in completing their own
20needs assessments.

21(d) Not later than 30 days prior to completing a community
22health needs assessment, a private nonprofit hospital or nonprofit
23multispecialty clinic shall make available to the public a copy of
24the assessment for review and comment.

25(e) A community health needs assessment shall be filed with
26the office. A private nonprofit hospital or a nonprofit multispecialty
27clinic shall update its community needs assessment at least every
28three years.

29

127476.  

(a) By April 1, 2018, a private nonprofit hospital or
30nonprofit multispecialty clinic shall develop, in collaboration with
31the community, a community benefits plan designed to achieve
32all of the following outcomes:

33(1) Access to health care for members of underserved and
34vulnerable populations.

35(2) Addressing of the essential health care needs of the
36community, with particular attention to the needs of members of
37underserved and vulnerable populations.

38(3) Creation of measurable improvements in the health of the
39community, with particular attention to the needs of members of
40underserved and vulnerable populations.

P16   1(b) In developing a community benefits plan, a private nonprofit
2hospital or nonprofit multispecialty clinic shall solicit comments
3from and meet with local government officials, including
4representatives of local public health departments. A private
5nonprofit hospital or nonprofit multispecialty clinic shall also
6solicit comments from and meet with health care providers,
7community groups representing, among others, patients, labor,
8seniors, and consumers, and other health-related organizations.
9Particular attention shall be given to persons who are themselves
10underserved, who work with underserved and vulnerable
11populations or with populations at risk for racial and ethnic
12disparities in health outcomes.

13(c) A community benefits plan shall include, at a minimum, all
14of the following:

15(1) A summary of the needs assessment and a statement of the
16community health care needs that will be addressed by the plan.

17(2) A list of the services the private nonprofit hospital or
18nonprofit multispecialty clinic intends to provide in the following
19year to address community health needs identified in the
20community health needs assessments. The list of services shall be
21categorized under the following:

22(A) Charity care, as defined in subdivision (b) of Section
23127472.

24(B) Other community benefits, including community health
25improvement services and community benefit operations, health
26professions education, subsidized health services, research, and
27contributions to community groups.

28(C) Community building activities targeting underserved and
29vulnerable populations.

30(3) A description of the target community or communities that
31the plan is intended to benefit.

32(4) An estimate of the economic value of the community benefits
33at cost that the private nonprofit hospital or nonprofit multispecialty
34clinic intends to provide.

35(5) A summary of the process used to elicit community
36participation in the community health needs assessment and
37community benefits plan design, and a description of the process
38for ongoing participation of community members in plan
39implementation and oversight, and a description of how the
40assessment and plan respond to the comments received by the
P17   1private nonprofit hospital or nonprofit multispecialty clinic from
2the community.

3(6) A list of individuals, organizations, and government officials
4 consulted during the development of the plan.

5(7) A description of the intended impact on health outcomes
6attributable to the plan, including short- and long-term measurable
7goals and objectives.

8(8) Mechanisms to evaluate the plan’s effectiveness.

9(9) The name and title of the individual responsible for
10implementing the plan.

11(10) The names of individuals on the private nonprofit hospital’s
12or nonprofit multispecialty clinic’s governing board.

13(11) If applicable, a report on the community benefits efforts
14of the preceding year, including the amounts and types of
15community benefits provided, in a manner to be prescribed by the
16office; a statement of the plan’s impact on health outcomes,
17 including a description of the private nonprofit hospital’s or
18nonprofit multispecialty clinic’s progress toward meeting its short-
19and long-term goals and objectives; and an evaluation of the plan’s
20effectiveness.

21(d) A private nonprofit hospital or nonprofit multispecialty clinic
22may also report on bad debts and Medicare shortfalls. Reporting
23bad debts and Medicare shortfalls shall not be reported as
24community benefits and shall be calculated based on hospital costs,
25not charges.

26(e) The governing board of a private nonprofit hospital or
27nonprofit multispecialty clinic shall adopt the community benefits
28plan at a meeting that is open to the public. No later than 30 days
29prior to the plan’s adoption by the governing board of the private
30nonprofit hospital or nonprofit multispecialty clinic, a private
31nonprofit hospital or nonprofit multispecialty clinic shallbegin delete makeend deletebegin insert do
32both of the following:end insert

33begin insert(end insertbegin insert1)end insertbegin insertend insertbegin insertMakeend insert available to the public and to the office, in a printed
34copy and on its Internet Web site,begin delete both of the following:end deletebegin insert a draft
35of its community benefits plan, and end insert
begin insertnotice of the date, time, and
36location of the meeting at which the community benefits plan is to
37be voted on for adoption by the governing board of the private
38nonprofit hospital or nonprofit multispecialty clinic.end insert

begin delete

39(1) A draft of its community benefits plan.

end delete
begin delete

P18   1(2) Notice of the date, time, and location of the meeting at which
2the community benefits plan is to be voted on for adoption by the
3governing board of the private nonprofit hospital or nonprofit
4multispecialty clinic.

end delete
begin insert

5(2) Provide for a process by which the individuals and groups
6listed in subdivision (b) may provide written comment on the draft
7community benefits plan.

end insert

8(f) After April 1, 2018, a private nonprofit hospital or nonprofit
9multispecialty clinicbegin delete shall, every two years,end deletebegin insert shall annuallyend insert submit
10a community benefits plan that conforms with this chapter and
11subdivisions (b) to (e), inclusive, to the office, no later than 120
12days after the end of the hospital’s or clinic’s fiscal year.

13(g) A person or entity may file comments on a private nonprofit
14hospital’s or nonprofit multispecialty clinic’s community benefits
15plan with the office.

16(h) A private nonprofit hospital or nonprofit multispecialty
17clinic, under the common control of a single corporation or another
18entity, may file a consolidated plan ifbegin insert the distinct needs of the
19communities served by each hospital in the consolidated plan are
20identified, and ifend insert
the plan addresses services in all of the categories
21listed in paragraph (2) of subdivision (c) to be provided by each
22hospital or clinic under common control of the corporation or
23entity.

24

127477.  

A private nonprofit hospital or a nonprofit
25multispecialty clinic that reports community benefits to the
26community shall report on those community benefits in a consistent
27and comparable manner to all other private nonprofit hospitals and
28nonprofit multispecialty clinics.

29

127478.  

A private nonprofit hospital or a nonprofit
30multispecialty clinic shall make its community health needs
31assessment and community benefits plan available to the public
32on its Internet Web site. A copy of the assessment and plan shall
33be given free of charge to any person upon request.

34 

35Article 3.  Duties of the Office of Statewide Health Planning
36and Development
37

 

38

127487.  

(a) (1) begin deleteThe end deletebegin insertBy January 1, 2017, the end insertoffice shall
39develop and adopt regulations to prescribe a standardized format
40for community benefits plans pursuant to this chapter. Immediately
P19   1following the adoption of those regulations, the director of the
2office shall certify the adoption of the regulations in writing, post
3the written certification to the office’s Internet Web site and deliver
4it to the Secretary of State, the Secretary of the Senate, the Chief
5Clerk of the Assembly, and the Legislative Counsel.

6(2) The office shall develop a standardized methodology for
7estimating the economic value of community benefits based on
8the cost to a private nonprofit hospital or a nonprofit multispecialty
9clinic. In no case shall the economic value of community benefits
10exceed the actual cost to a private nonprofit hospital or a nonprofit
11multispecialty clinic, nor more than 125 percent of the Medicare
12rate for the health care services or items provided on an inpatient
13basis, an outpatient basis, or through other nonprofit or public
14outpatient clinics, hospitals, or health care organizations.

15(3) In developing standards of reporting on community benefits,
16the office shall, to the maximum extent possible, conform to
17Internal Revenue Service reporting standards for those data
18elements reported to the Internal Revenue Service, but shall also
19include those data elements required under this chapter or other
20state law, including charity care, as defined in Section 127400.

21(4) A private nonprofit hospital or nonprofit multispecialty clinic
22shall annually file with the office its IRS Form 990, or its successor
23form, and the office shall post the form on its Internet Web site.

24(b) The office shall provide technical assistance to help private
25nonprofit hospitals and nonprofit multispecialty clinics comply
26with this chapter.

27(c) The office shall make public a community health needs
28assessment and community benefits plan and any comments
29received regarding those assessments and plans. The office shall
30make these documents available on its Internet Web site.

31(d) The office shall maintain a public calendar of community
32benefit adoption meetings held by the governing board of each
33private nonprofit hospital or nonprofit multispecialty clinic. Notice
34that includes the Office of Statewide Health Planning and
35Development (OSHPD) facility number, name, parent company,
36date, time, and location of each meeting shall be posted no later
37than 14 days prior to the meeting date.

38(e) For every year that a community benefits plan is submitted
39pursuant to subdivision (f) of Section 127476, the office shall
40calculate and make public the total value of community benefits
P20   1provided by each private nonprofit hospital and nonprofit
2multispecialty clinic that reports pursuant to this chapter.

3

127488.  

The office may assess a civil penalty against a private
4nonprofit hospital or nonprofit multispecialty clinic that fails to
5comply with this article in the same manner as specified in Section
6128770.

7

127489.  

Thisbegin delete chapterend deletebegin insert chapter, except for Section 127487,end insert shall
8be operative on the date of the written certification required by
9subdivision (a) of Section 127487.

10

begin deleteSEC. 4.end delete
11begin insertSEC. 5.end insert  

Section 129050 of the Health and Safety Code is
12amended to read:

13

129050.  

A loan shall be eligible for insurance under this chapter
14if all of the following conditions are met:

15(a) The loan shall be secured by a first mortgage, first deed of
16trust, or other first priority lien on a fee interest of the borrower
17or by a leasehold interest of the borrower having a term of at least
1820 years, including options to renew for that duration, longer than
19the term of the insured loan. The security for the loan shall be
20subject only to those conditions, covenants and restrictions,
21easements, taxes, and assessments of record approved by the office,
22and other liens securing debt insured under this chapter. The office
23may require additional agreements in security of the loan.

24(b) The borrower obtains an American Land Title Association
25title insurance policy with the office designated as beneficiary,
26with liability equal to the amount of the loan insured under this
27chapter, and with additional endorsements that the office may
28reasonably require.

29(c) The proceeds of the loan shall be used exclusively for the
30construction, improvement, or expansion of the health facility, as
31approved by the office under Section 129020. However, loans
32insured pursuant to this chapter may include loans to refinance
33another prior loan, whether or not state insured and without regard
34to the date of the prior loan, if the office determines that the amount
35refinanced does not exceed 90 percent of the original total
36construction costs and is otherwise eligible for insurance under
37this chapter. The office may not insure a loan for a health facility
38that the office determines is not needed pursuant to subdivision
39(k).

P21   1(d) The loan shall have a maturity date not exceeding 30 years
2from the date of the beginning of amortization of the loan, except
3as authorized by subdivision (e), or 75 percent of the office’s
4estimate of the economic life of the health facility, whichever is
5the lesser.

6(e) The loan shall contain complete amortization provisions
7requiring periodic payments by the borrower not in excess of its
8reasonable ability to pay as determined by the office. The office
9shall permit a reasonable period of time during which the first
10payment to amortization may be waived on agreement by the lender
11and borrower. The office may, however, waive the amortization
12requirements of this subdivision and of subdivision (g) of this
13section when a term loan would be in the borrower’s best interest.

14(f) The loan shall bear interest on the amount of the principal
15obligation outstanding at any time at a rate, as negotiated by the
16borrower and lender, as the office finds necessary to meet the loan
17money market. As used in this chapter, “interest” does not include
18premium charges for insurance and service charges if any. Where
19a loan is evidenced by a bond issue of a political subdivision, the
20interest thereon may be at any rate the bonds may legally bear.

21(g) The loan shall provide for the application of the borrower’s
22periodic payments to amortization of the principal of the loan.

23(h) The loan shall contain those terms and provisions with
24respect to insurance, repairs, alterations, payment of taxes and
25assessments, foreclosure proceedings, anticipation of maturity,
26additional and secondary liens, and other matters the office may
27in its discretion prescribe.

28(i) The loan shall have a principal obligation not in excess of
29an amount equal to 90 percent of the total construction cost.

30(j) The borrower shall offer reasonable assurance that the
31services of the health facility will be made available to all persons
32residing or employed in the area served by the facility.

33(k) The office has determined that the facility is needed by the
34community to provide the specified services. In making this
35determination, the office shall do all of the following:

36(1) Require the applicant to describe the community needs the
37facility will meet and provide data and information to substantiate
38the stated needs.

P22   1(2) Require the applicant, if appropriate, to demonstrate
2participation in the community needs assessment required by
3Section 127476.

4(3) Survey appropriate local officials and organizations to
5measure perceived needs and verify the applicant’s needs
6assessment.

7(4) Use any additional available data relating to existing facilities
8in the community and their capacity.

9(5) Contact other state and federal departments that provide
10funding for the programs proposed by the applicant to obtain those
11departments’ perspectives regarding the need for the facility.
12Additionally, the office shall evaluate the potential effect of
13proposed health care reimbursement changes on the facility’s
14financial feasibility.

15(6) Consider the facility’s consistency with the Cal-Mortgage
16State Plan.

17(l) In the case of acquisitions, a project loan shall be guaranteed
18only for transactions not in excess of the fair market value of the
19acquisition.

20Fair market value shall be determined, for purposes of this
21subdivision, pursuant to the following procedure, that shall be
22utilized during the office’s review of a loan guarantee application:

23(1) Completion of a property appraisal by an appraisal firm
24qualified to make appraisals, as determined by the office, before
25closing a loan on the project.

26(2) Evaluation of the appraisal in conjunction with the book
27value of the acquisition by the office. When acquisitions involve
28additional construction, the office shall evaluate the proposed
29construction to determine that the costs are reasonable for the type
30of construction proposed. In those cases where this procedure
31reveals that the cost of acquisition exceeds the current value of a
32facility, including improvements, then the acquisition cost shall
33be deemed in excess of fair market value.

34(m) Notwithstanding subdivision (i), any loan in the amount of
35ten million dollars ($10,000,000) or less may be insured up to 95
36percent of the total construction cost.

37In determining financial feasibility of projects of counties
38pursuant to this section, the office shall take into consideration
39any assistance for the project to be provided under Section 14085.5
40of the Welfare and Institutions Code or from other sources. It is
P23   1the intent of the Legislature that the office endeavor to assist
2counties in whatever ways are possible to arrange loans that will
3meet the requirements for insurance prescribed by this section.

4(n) The project’s level of financial risk meets the criteria in
5 Section 129051.



O

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