BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 346
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|AUTHOR: |Wieckowski |
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|VERSION: |April 23, 2015 |
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|HEARING DATE: |April 29, 2015 | | |
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|CONSULTANT: |Vince Marchand |
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SUBJECT : Health facilities: community benefits.
SUMMARY : Repeals the existing hospital community benefit law,
and establishes a new hospital community law to require private
non-profit hospitals to complete a community needs assessment,
followed by a community benefits plan. Defines "community
benefit" and other terms for purposes of this bill, and requires
90 percent of a private non-profit hospital's community benefit
moneys to be allocated to charity care and projects that improve
community health for underserved and vulnerable populations, as
defined.
Existing law:
1.Establishes the hospital community benefit law (existing CBL),
which establishes requirements on private non-profit hospitals
to complete a community needs assessment and adopt a community
benefits plan, to annually submit this community benefit plan
to the Office of Statewide Health Planning and Development
(OSHPD), along with a report of the economic value of
community benefits provided in furtherance of the plan.
2.Defines "community benefit plan," for purposes of the existing
CBL, as a written document prepared for annual submission to
OSHPD, that includes a description of the activities that the
hospital has undertaken in order to address identified
community needs within its mission and financial capacity, and
the process by which the hospital developed the plan in
consultation with the community.
3.Defines "community benefit," for the purposes of the existing
CBL, as a hospital's activities that are intended to address
community needs and priorities primarily through disease
prevention and improvement of health status, including, but
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not limited to, any of the following:
a. Health care services rendered to vulnerable
populations, including charity care and the
unreimbursed cost of providing services to the
uninsured, underinsured, and those eligible for
Medi-Cal, Medicare, California Children's Services
Program, or county indigent programs;
b. The unreimbursed cost of services provided
related to community-oriented wellness and health
promotion, prevention services such as health
screenings and immunizations, adult day care, child
care, medical research, medical education, nursing and
other professional training, home-delivered meals to
the homebound, sponsorship of free food and shelter to
the homeless, and outreach clinics in
socioeconomically depressed areas;
c. Financial or in-kind support of public health
programs;
d. Donation of funds, property, or other
resources that contribute to a community priority;
e. Health care cost containment;
f. Enhancement of access to health care or
related services that contribute to a healthier
community;
g. Services offered without regard to financial
return because they meet a need in the service area of
the hospital; and,
h. Food, shelter, clothing, education,
transportation, and other goods or services that help
maintain a person's health.
4.Requires private, non-profit hospitals, under the existing
CBL, to complete, either alone or in conjunction with other
health care providers, a community needs assessment evaluating
the health needs of the community serviced by the hospital,
that includes a process for consulting with community groups
and local government officials, and to update the community
needs assessment at least once every three years.
5.Requires private, non-profit hospitals, under the existing
CBL, to annually adopt and update a community benefits plan
for providing community benefits either alone, or in
conjunction with other health care providers, or through other
organizational arrangements. Requires the community benefits
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plan to include the following elements:
a. Mechanisms to evaluate the plan's
effectiveness, including a method for soliciting the
views of the community served by the hospital;
b. Measurable objectives to be achieved within
specified timeframes;
c. Community benefits categorized into the
following categories: medical care services, other
benefits for vulnerable populations, other benefits
for the broader community, health research and
training programs, and nonquantifiable benefits.
6.Requires private, non-profit hospitals, under the existing
CBL, to annually submit its community benefit plan, including
activities the hospital has undertaken in order to address
community needs, to OSHPD, and to the extent practicable,
assign and report the economic value of community benefits
provided in furtherance of its plan.
This bill:
1.Repeals the existing CBL law, and establishes a new CBL for
private non-profit hospitals and non-profit multispecialty
clinics (collectively, non-profit facilities), as these
facilities are defined. Makes the repeal of the old CBL law,
and the operative date of the new CBL law, effective as of the
date of the adoption of regulations by OSHPD prescribing a new
standardized format for community benefits plans,
2.Requires, by January 1, 2018, each private non-profit facility
to develop, in collaboration with the community benefits
planning committee, a community health needs assessment that
evaluates the health needs and resources of the community it
serves. Requires facilities, prior to completing this
assessment, to develop a community benefits statement that
describes the facility's commitment to developing, adopting,
and implementing a community benefits program. Requires
private non-profit facilities to file the community health
needs assessment with OSHPD, and to update its community needs
assessment at least every three years.
3.Requires, by April 1, 2018, each private non-profit facility
to develop, in collaboration with the community, a community
benefits plan designed to achieve all of the following
outcomes:
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a. Access to health care for members of
underserved and vulnerable populations;
b. Addressing of the essential health care needs
of the community, with particular attention to the
needs of members of underserved and vulnerable
populations;
c. Creation of measurable improvements in the
health of the community, with particular attention to
the needs of members of underserved and vulnerable
populations.
4.Defines "community" as the service area or patient population
for which a non-profit facility provides health care services.
Prohibits a non-profit facility from defining its service area
to exclude vulnerable populations, including, but not limited
to, medically underserved, low-income, or minority populations
who are part of its patient populations, live in geographic
areas in which its patient populations reside, or otherwise
should be included based on the method the hospital facility
uses to define its community.
5.Defines "community benefits" as the unreimbursed goods,
services, activities, programs, and other resources provided
by a non-profit facility that addresses community-identified
health needs and concerns, particularly for people who are
uninsured, underserved, or members of a vulnerable population,
including, but not limited to, the following:
a. Charity care;
b. Shortfalls in Medi-Cal, the California
Children's Program, or county indigent programs at a
cost up to 125 percent of the Medicare rate for the
health care services or items provided on an inpatient
basis, an outpatient basis, or through other
non-profit or public outpatient clinics, hospitals, or
healthcare organizations;
c. The cost of community building activities for
vulnerable populations;
d. The cost of community health improvement
services and community benefit operations;
e. The cost of school health centers as defined;
f. The cost of health professions education and
training provided without charge;
g. Amounts given, with no expectation of
repayment, to employees from, or working among, a
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vulnerable population, for student loan repayment;
h. Subsidized health services for vulnerable
populations;
i. Vaccination programs;
j. Chronic illness prevention programs and
services for vulnerable populations;
aa. Home-based health care programs for vulnerable
populations;
bb. Community-based mental health programs for
vulnerable populations; and,
cc. Outreach and assessment programs for
vulnerable populations.
6.Excludes the following from the definition of "community
benefits:"
a. The unreimbursed cost of providing services to
those enrolled in Medicare or any goods, services,
activities, programs, or other resources program or
activity for which there is direct offsetting revenue;
b. Uncollected fees or accounts written off as
bad debt;
c. Contractual adjustments in the provision of
health care services below the amount identified as
gross charges or "chargemaster" rates by the health
care provider.
d. Any amount over 125 percent of the Medicare
rate for the health care services or items provided on
an inpatient or outpatient basis
e. Any amount over 125 percent of the Medicare
rate for providing, funding, or otherwise financially
supporting health care services or items with no
expectation of payment provided to financially
qualified patients through other non-profit or public
outpatient clinics, hospitals, or health care
organizations.
7.Requires a private non-profit facility, beginning after April
1, 2018, to annually submit to OSHPD a community benefits plan
that conforms to this bill no later than 120 days after the
end of the facility's fiscal year. Requires the plan to
include, if applicable, a report on the community benefits
efforts of the preceding year, including the amounts and types
of benefits provided, a description of the facility's progress
toward meeting its goals and objectives, and an evaluation of
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the plan's effectiveness.
8.Defines "community building activities," for purposes of the
community benefit definition, as the cost of various kinds of
community building activities, including physical improvements
and housing, economic development, community support,
environmental improvements, community health improvement
advocacy, coalition building, workforce development, and
leadership development and training for community members.
9.Defines "charity care," for purposes of the community benefit
definition, as the unreimbursed cost to a non-profit facility
of providing services to the uninsured or underinsured, as
well as providing health care services or items on an
inpatient or outpatient basis to a financially qualified
patient, as defined, with no expectation of payment.
10.Excludes from the definition of "charity care" any of the
following:
a. Uncollected fees or accounts written off as
bad debt;
b. Care provided to patients for which a public
program or public or private grant funds pay for any
of the charges for the care;
c. Contractual adjustments in the provision of
health care services below the amount identified as
gross charges or "chargemaster" rates by the health
care provider;
d. Any amount over 125 percent of the Medicare
rate for the health care services or items provided on
an inpatient or outpatient basis; and,
e. Any amount over 125 percent of the Medicare
rate for providing, funding, or otherwise financially
supporting health care services or items with no
expectation of payment provided to financially
qualified patients through other non-profit or public
outpatient clinics, hospitals, or health care
organizations.
11.Requires the community benefits planning committee, as
defined, to be composed of the following:
a. One of either the governing board of the
hospital organization that operates the facility or
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other party authorized by that governing body, or the
governing body of the hospital facility if the
facility has its own governing body;
b. At least one individual from the local,
tribal, or regional governmental public health
department, or an equivalent department, with
knowledge, information, or expertise relevant to the
health needs of that community;
c. At least one individual from an underserved
and vulnerable population, as defined;
12.Defines "direct offsetting revenue" as the revenue from
goods, services, activities, programs, or other resources,
which offsets the total community benefit expense of the
goods, services, activities, programs, or other resources, and
excludes from this definition payments for Medi-Cal, the
California Children's Services Program, or county indigent
programs.
13.Defines "non-profit multispecialty clinic" as a clinic,
defined in existing law, that is operated by a non-profit
corporation exempt from federal income taxation, as specified,
that conducts medical research and health education and
provides health care to its patients through a group of 40 or
more physicians, who are independent contracts representing
not less than 10 board-certified specialties, and not less
than two-thirds of whom practice on a full-time basis at the
clinic.
14.Defines "private non-profit hospital" as a private non-profit
acute care hospital that has been determined to be exempt from
taxation under the Internal Revenue Code, and exempts the
following from this definition:
a. A district hospital organized and governed
pursuant to the Local Health Care District Law, as
specified, or a non-profit corporation that is
affiliated with the health care district hospital
owner by means of the district's status as the
nonprofit corporation's sole corporate member;
b. A rural general acute care hospital, as
defined;
c. A children's hospital, as defined; and,
d. A multispecialty clinic operated by a
for-profit hospital, regardless of its net revenue.
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15.Defines "underserved population" or "vulnerable population"
as any of the following:
a. A population that is exposed to medical or
financial risk by virtue of being uninsured or
underinsured, as defined, or eligible for Medi-Cal or
county indigent programs;
b. Individuals below 400 percent of the federal
poverty level, unless the hospital serves a county in
which the county has adopted an ordinance to provide
financial assistance for health care to individuals
with incomes above 400 percent of the federal poverty
level, in which case the income threshold for the
vulnerable population shall be the income threshold
adopted by the county;
c. Individuals with limited English proficiency;
or
d. A population that meets the definition of
disadvantaged community pursuant to a provision of law
that requires the California Environmental Protection
Agency to identify communities based on certain
criteria, including areas disproportionately affected
by environmental pollution and other hazards;
16.Requires a private non-profit facility, in conducting its
community health needs assessment, to solicit comments from,
and meet with, local government officials, as well as
representatives of vulnerable populations, including diverse
racial, ethnic, cultural, and LGBTQQ communities, women's
health advocates, mental health advocates, health and mental
health providers, community-based organizations and advocates,
academic institutions, low-income and vulnerable consumers,
health care providers, registered nurses, and community groups
representing specified constituencies such as patients, labor,
and seniors. Permits a facility to create a community benefits
advisory committee for the purpose of soliciting community
input.
17.Requires a private non-profit facility, in preparing its
community health needs assessment, to use available public
health data, including any health equity assessment conducted
by the Office of Health Equity, as specified, and permits the
facility to collaborate with other facilities and health care
institutions in conducting community health needs assessments
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and to make use of exiting studies.
18.Requires private non-profit facilities, not later than 30
days prior to completing a community health needs assessment,
to make a copy of the assessment available to the public for
review and comment.
19.Requires private non-profit facilities to provide community
benefits to the community as follows:
a. Requires a minimum of 90 percent of the total
economic value of community benefits to be allocated
to community benefits that improve community health
for underserved and vulnerable populations or that
address a specific need identified in the community
health needs assessment. Permits, for purposes of this
90 percent allocation, community benefits that improve
community health for underserved and vulnerable
populations to include activities, such as health
professions education and training, which are not
provided exclusively to underserved and vulnerable
populations, if the activity will improve community
health for underserved and vulnerable populations.
b. Requires a minimum of 25 percent of the total
economic value of community benefits to be allocated
to community building activities geographically
located within underserved and vulnerable populations.
c. Permits community benefits to be allocated for
projects that simultaneously meet both of the above
criteria.
20.Requires private non-profit facilities, in developing a
community benefits plan, to solicit comments from, and meet
with, local government officials, including representatives of
local public health departments, and to also solicit comments
from, and meet with, health care providers, registered nurses,
and community groups representing specified constituencies.
21.Requires a community benefits plan to include, at a minimum,
all of the following:
a. A summary of the needs assessment and a
statement of the community health care needs that will
be addressed by the plan;
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b. A list of the services the private non-profit
facility intends to provide in the following year to
address community health needs identified in the
community health needs assessments, categorized under
the following: charity care, as defined; other
community benefits, as specified; and, community
building activities;
c. A description of the target community or
communities that the plan is intended to benefit;
d. An estimate of the economic value of the
community benefits at cost that the private non-profit
facility intends to provide;
e. A summary of the process used to elicit
community participation in the community health needs
assessment and community benefits plan design, and a
description of the process for ongoing participation
of community members in plan implementation and
oversight;
f. A list of individuals, organizations, and
government official consulted during the development
of the plan;
g. A description of the intended impact on health
outcomes attributable to the plan, including short-
and long-term measurable goals and objectives;
h. Mechanisms to evaluate the plan's
effectiveness;
i. The name and title of the individual
responsible for implementing the plan; and,
j. The names of individuals on the private
non-profit facility's governing board;
22.Permits a private non-profit facility to also report on bad
debts and Medicare shortfalls, but prohibits these reports
from being reported as community benefits and to be calculated
based on hospital costs, not charges.
23.Requires the governing board of a private non-profit facility
to adopt the community benefits plan at a meeting that is open
to the public. Requires the governing board, no later than 30
days prior to the plan's adoption, to make a draft of the plan
available to the public, including on its Internet Web site,
as well as a notice of the date, time, and location of the
meeting at which the community benefits plan is to be voted on
for adoption.
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24.Requires the governing board of a private non-profit
facility, no later than 30 days prior to the plan's adoption,
to provide for a process by which individuals and groups may
provide written comment on the draft community plan.
25., local government officials, including representatives of
local public health departments, and to also solicit comments
from, and meet with, health care providers, registered nurses,
and community groups representing specified constituencies.
26.Permits a person or entity to file comments on a facility's
community benefits plan with OSHPD.
27.Requires a private non-profit facility to make its community
health needs assessment and community benefits plan available
to the public on its Internet Web site, and requires a copy of
the assessment and plan to be given free of charge to any
person upon request.
28.Permits a private non-profit facility, under the common
control of a single corporation or another entity, to file a
consolidated plan if the distinct needs of the communities
served by each hospital in the consolidated plan are
identified, and if the plan addresses services in all the
categories specified in this bill to be provided by each
hospital or clinic under common control of the corporation or
entity.
29.Requires a private non-profit facility to report community
benefits in a consistent and comparable manner to all other
private non-profit facilities.
30.Requires OSHPD to develop and adopt regulations by January 1,
2017, to prescribe a standardized format for community
benefits plans required under this bill, and requires the
director of OSHPD, immediately following the adoption of these
regulations, to certify the adoption of the regulations in
writing, post the written certification to OSHPD's Internet
Web site, and deliver it to the Secretary of State, the
Secretary of the Senate, the Chief Clerk of the Assembly, and
the Legislative Counsel.
31.Requires OSHPD to develop a standardized methodology for
estimating the economic value of community benefits based on
the cost to a private non-profit facility. Prohibits the
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economic value of community benefits to exceed the actual cost
to a private non-profit facility, nor more than 125 percent of
the Medicare rate for the health care services or items
provided on an inpatient basis, an outpatient basis, or
through other non-profit or public outpatient clinics,
hospitals, or health care organizations.
32.Requires OSHPD, in developing standards of reporting on
community benefits, to conform, to the maximum extent
possible, to Internal Revenue Service (IRS) reporting
standards for those data elements reported to the IRS, but to
also include those data elements required under this bill or
other state laws, including charity care.
33.Requires a private non-profit facility to annually file with
OSHPD its IRS Form 990, or its successor form, and requires
OSHPD to post the form on its Internet Web site.
34.Requires OSHPD to make public, including on their Internet
Web site, a community health needs assessment and community
benefits plan and any comments received regarding those
assessments and plans.
35.Requires OSHPD to maintain a public calendar of community
benefit adoption meetings held by the governing board of each
private non-profit facility, and requires notice of these
meetings to be posted no later than 14 days prior to the
meeting date.
36.Requires OSHPD to calculate and make public, for every year
that a community benefits plan is submitted, the total value
of community benefits provided by each facility.
37.Provides OSHPD the same ability to assess civil penalties for
failure to comply with the reporting provisions of this bill
as it already has for a facility's failure to file other
required reports.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1.Author's statement. In exchange for their significant tax
exemptions, California's private non-profit hospitals are
required to provide community benefits and charity care
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through programs and services aimed at improving community
health and promoting wellness such as free nutrition classes,
mobile health clinics, health screenings, and disease
counseling. However, charity care and community benefits are
not uniformly defined or measured. This ambiguity prevents
California communities from determining if these hospitals are
adequately serving their communities, a duty non-profit
hospitals are required to fulfill under state and federal law.
The Legislative Analyst's Office found that there is currently
no uniform definition or standard for "charity care" in state
or federal statute. This lack of a clear benchmark has yielded
inconsistent methodologies and incomplete reporting.
Consequently, we cannot accurately measure nonprofit
hospitals' required financial investments in our communities.
We give these hospitals favorable tax treatment, so it makes
sense that we come together to establish an appropriate and
transparent way to calculate the amount of community benefits
we are getting in return. This bill makes no changes to how
many community benefits a hospital provides, but it will
increase accountability and provide a clearer picture of the
level of community benefits invested back into our
communities.
2.Background on non-profit hospitals and community benefit
requirements. Non-profit hospitals have traditionally been
exempt from federal income taxes based on the IRS' definition
of charity, with the IRS stating that, "the promotion of
health is considered to be a charitable purpose. A non-profit
organization whose purpose and activity are providing hospital
care is promoting health and may, therefore, qualify as
organized and operated in furtherance of a charitable
purpose." For purposes of California taxes, property owned by
a non-profit organization that is used exclusively for
religious, hospital, charitable, or scientific purposes is
exempt from propriety taxes under what is known as the Welfare
Exemption. State law also allows non-profit hospitals to be
exempt from state income tax.
When the Legislature enacted the existing CBL in 1996, the
Legislature found and declared that private non-profit
hospitals meet certain needs of their communities through the
provision of essential health care and other services, and
that public recognition of their unique status has led to
favorable tax treatment by the government. In exchange, the
Legislature declared, non-profit hospitals assume a social
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obligation to provide community benefits in the public
interest. The CBL enacted in 1996 requires non-profit
hospitals to annually submit a "community benefits plan" to
OSHPD, based on a "community needs assessment" that is
required to be updated every three years. This CBL includes a
definition of "community benefit," which included charity care
and the unreimbursed cost of providing services, but does not
specifically exclude anything from the definition of community
benefit, nor does it define "charity care" itself. While the
law requires the plan to be submitted to OSHPD, it does
require OSHPD to review the plans to ensure that hospitals are
reporting data consistently, and OSHPD does not attempt to
standardize these reports.
3.Senate Office of Research Report. In a report prepared by the
Senate Office of Research (SOR) for an August 15, 2012 hearing
of the Senate Select Committee on Charity Care and Non-profit
Hospitals, about 247 of California's 387 private hospitals may
be eligible for certain tax exemptions due to their non-profit
status in exchange for providing various community benefits,
such as charity care. However, these community benefits are
not uniformly defined or measured. This ambiguity makes it
challenging to hold hospitals accountable for the special tax
benefits they receive and determine if they are providing
meaningful community benefits. Furthermore, some studies show
many investor-owned hospitals and public hospitals provide
charity care and other community benefits similar to or
greater than their non-profit counter parts. The SOR points
out that the California Legislative Analyst's Office (LAO), in
an analysis of the Charity Care Act of 2012, indicates that
there is currently no uniform definition of charity care nor a
requirement in State or federal law for non-profit hospitals
to provide a certain amount of charity care or community
benefit in order to maintain their tax exempt status.
According to the LAO, of the private hospitals in California,
about 30 percent are for-profits and about 70 percent are
non-profits. The for-profit hospitals pay corporate income
taxes to the state. Non-profit hospitals are exempt from State
corporate income taxes, local sales taxes, and property taxes.
The tax exemptions are intended to allow non-profit hospitals
to use the funds that would have been paid in taxes to provide
patient care, invest in their facilities and equipment, and
implement other measures that would be beneficial to their
delivery of healthcare services. The SOR report indicates that
controversy exists in how charity care and community benefits
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are quantified. Some hospitals use a cost accounting
methodology while others use a ratio that converts a
hospital's listed charges to the actual cost of the services
provided. SOR also reports that in 2008 the IRS revised Form
990 in an effort to provide transparency and accountability
and keep pace with changes in the law with regard to the tax
exempt sector. The new form requires non-profit hospitals to
report their bad debt expenses and Medicare shortfalls, but
separates these from community benefits.
4.ACA imposed new federal requirements on non-profit hospitals.
With the passage of the Affordable Care Act (ACA), a new
provision was added to Section 501 of the Internal Revenue
Code specific to hospitals. This new provision (subsection r),
imposed new requirements that hospitals must meet in order to
maintain their tax exempt status. Among the new requirements
(temporary guidelines have been in place since the 2012 tax
year, and the final regulations were just adopted in December
2014), are a requirement for hospitals to complete a community
health needs assessment, and a requirement to establish a
financial assistance policy. Generally speaking, the community
health needs assessment is similar to California's existing
CBL. The community health needs assessment, along with an
implementation strategy for meeting the health needs
identified in the assessment, must be completed once every
three years, and hospitals face a $50,000 federal excise tax
for failure to comply with this requirement.
5.State Auditor Reports. In December of 2007, and then again in
August of 2012, the Bureau of State Audits (BSA) published
reports concerning whether non-profit hospitals were providing
a public benefit that justifies their tax-exempt status. In
the 2007 report, BSA concluded that when taken as a percentage
of net patient revenues, the uncompensated care provided by
non-profit and for-profit hospitals were not significantly
different, both including and excluding Medi-Cal costs. BSA
noted that benefits provided to the community, which only
non-profit hospitals are required to report, differentiate
non-profit hospitals from for-profit hospitals, but the
categories of services and the associated economic value are
not consistently reported among non-profit hospitals. BSA
stated that although state law requires non-profit hospitals
to submit a community benefit plan that describes the
activities undertaken to address community needs and assign
and report economic values to those benefits, state law does
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not mandate a uniform reporting standard, and as a result,
hospitals are reporting their community benefits using
different categories and methods for calculating their
economic value. In its 2007 recommendations, BSA stated that,
"If the Legislature expects plans to contain comparable and
consistent data, it should consider enacting statutory
requirements that prescribe a mandatory format and methodology
for tax-exempt non-profit hospitals to follow when presenting
community benefits in their plans." In its 2012 report, BSA
reiterated its conclusions regarding the lack of a statutory
standard or methodology for hospitals to follow when
calculating community benefits.
6.Charity Care Act of 2012. This initiative would have required
certain non-profit hospitals to provide a minimum amount of
charity care equal to at least five percent of net patient
revenue, impose new data reporting requirements on certain
non-profit hospitals, impose new administrative
responsibilities on the Attorney General (AG) and give the AG
authority to oversee and enforce the provisions of the
measure. This measure would have gone into effect January 1,
2013, and been repealed on December 31, 2017. The initiative
would have exempted non-profit hospitals that are part of an
integrated non-profit health system or part of a safety-net
non-profit health system as defined by the measure (Dignity
Health and Kaiser Permanente) and it did not include
multispecialty clinics. According to the LAO, about 36 percent
of the State's non-profit hospitals would have been exempted
from the requirements of the initiative. On May 2, 2012, the
Los Angeles Times reported that the Service Employees
International Union dropped the initiative along with another
health care initiative as part of an agreement with California
Hospital Association.
In its analysis of the Charity Care Act of 2012, the LAO
indicated the measure could have resulted in both costs and
savings to State and local governments, depending on how the
hospitals subject to the measure responded to it. Their
analysis finds that most of the non-profit hospitals subject
to the measure would have to increase the amount of charity
care they provide in order to meet its requirements. To offset
the additional costs of providing greater amounts of charity
care, hospitals subject to the measure could employ a mix of
different strategies.
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7.Related legislation. AB 1046 (Dababneh), recasts California's
hospital community benefits law to more closely align with
federal community benefit reporting requirements. AB 1046 is
scheduled to be heard in Assembly Health Committee on April
28, 2015.
8.Prior legislation. AB 503 (Wieckowski), of 2014, was
substantially similar to this bill. AB 503 proposed to repeal
the existing hospital community benefit law, and establishes a
new hospital community law to require private non-profit
hospitals to complete a community needs assessment, followed
by a community benefits plan. Defined "community benefit" and
other terms for purposes of this bill, and requires 90 percent
of a private non-profit hospital's community benefit moneys to
be allocated to charity care and projects that improve
community health for underserved and vulnerable populations,
as defined. AB 503 was held on the Senate Appropriations
Committee suspense file.
AB 1952 (Pan), of 2014, would have required non-profit
hospitals to annually provide charity care amounting to five
percent of the hospital's net patient revenue. AB 1952 was
held on the Assembly Appropriations Committee suspense file.
SB 1276 (Hernandez), Chapter 758, Statutes of 2014, revised
the hospital fair billing program by making individuals who
meet the income requirements eligible, even if they have
received a discounted rate from the hospital as a result of
third-party coverage. Defined "reasonable payment plan," for
purposes of both the hospital and emergency physician fair
billing policies, as monthly payments that do not exceed 10
percent of a patient's family income.
AB 975 (Wieckowski), of 2013, would have revised California's
non-profit community benefits requirements to include
multispecialty clinics, narrowed the activities that
constitute community benefits, created a definition of charity
care, and required OSHPD to develop a standardized methodology
for calculating community benefits and to issue civil
penalties for noncompliance with filing requirements. AB 975
failed passage on the Assembly Floor.
AB 1503 (Lieu), Chapter 445, Statutes of 2010, required
emergency physicians who provide emergency medical services in
a hospital to provide discounts to uninsured patients,
SB 346 (Wieckowski) Page 18 of ?
established limits on the expected payment for emergency
medical services as specified, limited debt-collection
activities, and required hospitals to include a written
description of the hospital discount policy.
AB 2942 (Ma), of 2008, would have implemented the State
Auditor's 2007 recommendation for a standardized format and
methodology to be used when presenting community benefit
information, among other requirements. AB 2942 was held on the
Senate Appropriations Committee suspense file.
SB 350 (Runner), Chapter 347, Statutes of 2007, required the
submission of hospital charity care and discount-payment
policies to OSHPD.
AB 774 (Chan), Chapter 755, Statutes of 2006, established
Hospital Fair Pricing Policies, which required every hospital
to offer reduced rates to uninsured and underinsured patients
who may have low or moderate income, and to provide policies
that clearly state the qualifications for free care and
discounted payments.
AB 1045 (Frommer), Chapter 532, Statutes of 2005, revised the
Payers' Bill of Rights to require hospitals to provide
information about their financial assistance and charity care
policies, as well as contact information for a hospital
employee or office to obtain additional information.
SB 610 (Machado), of 2005, would have clarified existing law
regarding hospitals entitled to claim the welfare exemption
for property tax purposes by indicating a hospital
organization is deemed to be organized or operated for-profit
if operating revenues exceed operating expenses by more than
10 percent. SB 610 was vetoed by the Governor.
SB 24 (Ortiz), of 2005, would have established charity care
and reduced payment policies and requirements as a condition
for hospitals to maintain their tax-exempt status. SB 24 was
held on the Senate Appropriations Committee suspense file.
SB 379 (Ortiz), of 2004, would have required every hospital to
have a charity care policy and to provide that policy to
patients and would have required OSHPD to develop a uniform
charity care application to be used by all hospitals. SB 610
was vetoed by the Governor.
SB 346 (Wieckowski) Page 19 of ?
AB 1627 (Frommer), Chapter 582, Statutes of 2003, established
the Payers' Bill of Rights, which generally requires certain
hospitals to provide written or electronic copies of their
chargemaster, as specified.
SB 697 (Torres), Chapter 812, Statutes of 1994, required
non-profit hospitals to conduct community needs assessments
and develop community benefit plans and submit those plans to
OSHPD.
9.Support. This bill is co-sponsored by the California Nurses
Association (CNA), the Greenling Institute, the California
Rural Legal Assistance Foundation, and the California National
Organization for Women. According to CNA, in 2010 alone,
California's cities and counties lost revenue and racked up
expenses totaling more than $1 billion as a result of
non-profit hospital tax exemptions and direct payments to
hospitals in their geographic area for indigent care to
compensate for the non-profit hospitals' inadequate provision
of charity care. CNA states this bill is a first step in
holding non-profit hospitals accountable for the tremendous
tax benefits they receive through their non-profit status. CHA
states that this bill ensure that non-profit hospitals are
providing, and accurately reporting, the charity care and
community benefits they provide, a benefit far exceeding any
additional oversight costs to OSHPD. CNA states that the goal
of this bill is to end the questionable characterization of
certain expenditures as charity care and community benefits,
and will solve the problem of inconsistent accounting
practices regarding charity care and create a standard
definition. CNA quotes a Time Magazine article from February
2013 that stated "the 2,900 non-profit hospitals across the
country, which are exempt from income taxes, actually end up
averaging higher operating profit margins than the 1,000
for-profit hospitals after the for-profits' income tax
obligations are deducted. In health care, being non-profit
produces more profit." The Greenlining Institute states in
support that various reports have separately concluded that
the community benefit standard is vague and opaque, and that
it is unclear whether these tax-exempt institutions are
meeting their federal and state mandates to improve community
health. The Greenlining Institute argues that this bill will
create important opportunities to address issues of health
equity through community benefit spending by requiring that
SB 346 (Wieckowski) Page 20 of ?
hospitals locate a significant portion of their community
benefit activities geographically within underserved and
vulnerable communities. The California Rural Legal Assistance
Fund and the California National Organization for Women both
state in support that articles in the New England Journal of
Medicine and Time Magazine found that a very small percentage
of so-called community benefit spending actually goes to
community health improvement programs and charity care once
you deduct spending on public program shortfall from what
nonprofit hospitals are totaling as community benefit, yet
for-profit hospitals face similar shortfalls without the
benefit of tax-exempt status.
10.Support if amended. (Both Health Access California and the
California Pan-Ethnic Health Network submitted these letters
prior to the most recent set of amendments, which address some
of the issues raised in these letters. It is unknown how these
amendments have affected the positions of these
organizations.) Health Access California states that it
supports this bill if it is further amended to provide greater
clarity to the requirements for hospital community benefit
plans. Health Access states that it strongly supports the
intent of this bill that hospitals be required to spend a high
proportion of community benefit moneys on the needs of
underserved communities, and to involve the community in the
development of community benefit plans. Health Access states
that unfortunately, there are a number of drafting problems
that need to be resolved before it will be able to fully
support this bill. First, Health Access states that the way
that community benefit is defined, it could be construed to
include community benefits provided to affluent populations.
Health Access also has concerns with the definition of charity
care, and offers an alternative definition of charity care,
which it believes would better align this bill with existing
California law. Additionally, Health Access argues that the
definition of underserved and vulnerable populations is overly
broad and needs further specificity, and that by including a
definition of vulnerable population used by the Office of
Health Equity worsens the problem by counting all women as a
"vulnerable" population, even if the woman is affluent,
well-educated and of an ethnicity where women have better
health outcomes. With regard to this bill's requirement that
90 percent of community benefit moneys be allocated to serve
either underserved and vulnerable populations " or that
address a specific need identified in the community needs
SB 346 (Wieckowski) Page 21 of ?
assessment" could inadvertently allow a hospital to spend the
entire amount on a "specific need" that is not targeted to the
underserved or vulnerable. Health Access also points out that
while both this bill and existing law require a community
needs assessment every three years, this bill requires a
community benefit plan be done every two years, while existing
law requires the plan to be updated annually. Health Access
suggests that for at least the next decade, as the
transformation brought about by the ACA continues to play out,
hospitals should continue to be required to update their plan
every year. Finally, Health Access states that while it does
not object to allowing a hospital under common control of a
corporation to file a consolidated plan, the current language
should be amended to ensure that each hospital covered by the
consolidated plan identify the distinct needs of its own
community and how the community benefit plan serves those
needs.
The California Pan-Ethnic Health Network (CPEHN) also supports
this bill if amended to provide greater clarity on the
definition of underserved and vulnerable communities. CPEHN
requests that the definition of vulnerable populations applies
to those communities who are facing exposure to financial
risk, and that in addition to including the use of "linguistic
isolation," that limited English proficiency be considered.
Finally, CPEHN states that it is concerned that the bill as
drafted provides too much flexibility for participants of a
community health needs assessment to fund special projects
outside of the needs of underserved and vulnerable
populations. CPEHN states that it appreciates allowing
participants some flexibility to identify specific community
needs, but would urge the language be amended to guarantee
that projects funded would target underserved and vulnerable
populations that are facing financial risk.
11.Opposition. This bill is opposed by the California Hospital
Association (CHA), which states it is concerned about the
impact this bill would have on a hospital's ability to
determine and support organizations and community efforts to
address the needs of vulnerable populations. According to CHA,
California's CBL has been in place and working since 1994,
serves as a model for the ACA, and that this unnecessary
legislation conflicts with provisions of the ACA and will
increase costs for the state and for hospitals by creating
inconsistent federal and state reporting requirements. Dignity
SB 346 (Wieckowski) Page 22 of ?
Health states in opposition that in 2014, it provided $1.3
billion in community benefit, absorbed a Medicare shortfall of
$674 million from cost, a Medi-Cal shortfall of $864 million
(from cost even after the hospital provider fee), and provided
$176 million in charity care. According to Dignity Health, as
they are located in various communities throughout the state,
they are keenly aware of the diversity of each community and
are at the pulse of what makes each one so unique. Dignity
states that it is proud of California's leadership in the area
of community benefit requirements, but believes this bill
takes us backwards by creating inconsistent federal and state
reporting requirements, increasing costs for both the state
and for hospitals. Kaiser Permanente states in opposition that
this bill defines "community benefit" in ways that were
relevant before the ACA, but may not be now, and that the
traditional view that "community benefit" should be comprised
of free health care services to the uninsured is being
reconsidered in light of the large number of people who will
have health coverage. Kaiser also states that this bill does
nothing to increase transparency, and that it disregards
current state and federal laws that require hospitals to
report detailed planning and charitable spending. Stanford
Health Care states in opposition that hospitals work
collaboratively with communities and stakeholders to assess
local health needs and tailor services and investments to
address each community's specific needs. According to
Stanford, this bill does nothing to strengthen successful
community benefit partnerships, and could lead to program
cutbacks throughout California, impacting the diverse and
vulnerable populations they serve. In addition to numerous
hospitals and hospital systems, this bill is also opposed by
WEAVE, which states that it receives funding from its
non-profit hospital partners, which provides funding to
support their crisis stabilization programs for victims of
domestic violence and sexual assault in the community. WEAVE
states that without this funding it would be forced to turn
away families seeking safe shelter, counseling services, and
legal assistance.
SUPPORT AND OPPOSITION :
Support: California Nurses Association (co-sponsor)
Greenlining Institute (co-sponsor)
California Rural Legal Assistance Foundation (co-sponsor)
California National Organization for Women
(co-sponsor)
SB 346 (Wieckowski) Page 23 of ?
California Labor Federation
California Professional Firefighters
California School Employees Association
Campaign for a Healthy California
Congress of California Seniors
Consumer Attorneys of California
Consumer Federation of California
Guam Communications Network
National Union of Healthcare Workers
PolicyLink
Western Center on Law and Poverty
Six individuals
Oppose: Adventist Health
Alliance of Catholic Health Care
Arroyo Grande Community Hospital
Barlow Respiratory Hospital
Beverly Hospital
California Chamber of Commerce
California Hospital Association
Cedars-Sinai Medical Center
Central Valley General Hospital
Coalinga Regional Medical Center
Corona Regional Medical Center
Dignity Health
Dominican Hospital
Enloe Medical Center
Fairchild Medical Center
Family Service of Napa Valley
Feather River Hospital
French Hospital Medical Center
Health Education Council
Healthy Smiles for Kids of Orange County
Hemet Valley Medical Center
Kaiser Permanente
La Clinica de la Raza
Loma Linda University Health
Los Angeles Area Chamber of Commerce
Mad River Community Hospital
Madera Community Hospital
Maple Counseling Center
Menifee Valley Medical Center
Mercy General Hospital
Methodist Hospital of Sacramento
Methodist Hospital of Southern California
SB 346 (Wieckowski) Page 24 of ?
North Bay Healthcare
O'Connor Hospital
Petaluma Valley Hospital
Pomona Valley Hospital Medical Center
Providence Health and Services Southern California
Queen of the Valley Medical Center
Ravenswood Family Health Center
Redlands Community Hospital
Ridgecrest Regional Hospital
Santa Rosa Memorial Health
Sharp HealthCare
Simi Valley Hospital
St. Helena Hospital Napa Valley
St. Joseph Hospital in Orange
St. Louise Regional Hospital
St. Mary Medical Center in Fullerton
Stanford Health Care
Southern Mono Healthcare District dba Mammoth Hospital
Sutter Delta Medical Center
Sutter Health
Ukiah Valley Medical Center
ValleyCare Health System
WEAVE, Inc.
White Memorial Medical Center
Woodland Healthcare
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