BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 1471 --------------------------------------------------------------- |AUTHOR: |Hernandez | |---------------+-----------------------------------------------| |VERSION: |April 14, 2016 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |April 20, 2016 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Reyes Diaz | --------------------------------------------------------------- SUBJECT : Health professions development: loan repayment. SUMMARY : Requires funds in the Managed Care Administrative Fines and Penalties Fund to be transferred each year to the Medically Underserved Account for Physicians in the Health Professions Education Fund and to the Major Risk Medical Insurance Fund, as specified. Existing law: 1)Creates the Steven M. Thompson Physician Corps Loan Repayment Program (SMT Program) within the Health Professions Education Fund (HPEF), administered by the Office of Statewide Health Planning and Development (OSHPD), which provides for the repayment of educational loans for physicians and surgeons who practice in medically underserved areas of the state, as defined. 2)Provides for the licensure and regulation of health care service plans (health plans) by the Department of Managed Health Care (DMHC) under the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene). Subjects health plans to fines and administrative penalties for failing to comply with specified provisions of Knox-Keene. Requires health plans to pay specified assessments each fiscal year as a reimbursement of their share of the costs and expenses reasonably incurred in the administration of Knox-Keene. 3)Establishes the Major Risk Medical Insurance Program (MRMIP), administered by the Managed Risk Medical Insurance Board (MRMIB), to provide major risk medical coverage to eligible persons who have been rejected for coverage by at least one private health plan. Creates the Major Risk Medical Insurance Fund for purposes of MRMIP. SB 1471 (Hernandez) PageB of? 4)Requires fines and administrative penalties assessed against health plans by DMHC to be deposited into the Managed Care Administrative Fines and Penalties Fund (MCAFPF). Requires those fines and penalties collected up to $1 million be deposited into the Medically Underserved Account for Physicians in the HPEF for purposes of the SMT Program. Requires any amount over the first $1 million to be transferred to the Major Risk Medical Insurance Fund to be used, upon appropriation by the Legislature, for use by MRMIP. This bill: 1)Requires, beginning January 1, 2017, and annually thereafter, the second $1 million to be transferred to the Major Risk Medical Insurance Fund to be used by MRMIP (after the first $1 million gets transferred to the HPEF for the SMT Program). 2)Requires, beginning January 1, 2017, and annually thereafter, any amount over the first $2 million, including accrued interest, to be transferred to the HPEF for the SMT Program. Requires one-half of these moneys to fund repayment of loans for those physicians providing psychiatric services or those physicians whose primary specialty is psychiatry, as specified. 3)Prohibits existing continually appropriated funds deposited into the Medically Underserved Account for Physicians from being made available to fund the repayment of loans under the SMT Program for those physicians providing psychiatric services or those physicians whose primary specialty is psychiatry, as specified, except as provided in 2) above. 4)Makes other conforming changes, and deletes references to inoperative programs. FISCAL EFFECT : This bill has not been analyzed by a fiscal committee. COMMENTS : 1)Author's statement. According to the author, the SMT program was created in response to the physician shortage problem in underserved areas, but funding for this program has been unpredictable and insufficient, with demand exceeding available funding every year. Additionally, through various SB 1471 (Hernandez) PageC of? stakeholder meetings and informational hearings related to the mental health workforce, mounting information, though largely anecdotal, and various media reports highlight the shrinking psychiatry workforce. Added to the lack of providers is the low numbers who are willing to treat patients with insurance-both public health system and commercial market. The current SMT Program currently allows for up to 20% of the available SMT Program funds to be awarded to program applicants from specialties outside of the primary care specialties, including psychiatry, but is annually disbursed among other specialties. This bill will provide much-needed funding for the SMT Program to assist with loan repayment for physicians who agree to practice in medically underserved areas of the state for a minimum of three years, as well as prioritizing new funds for those who provide psychiatric services. 2)Primary Care Physician and Psychiatry Workforce Shortage. According to a report commissioned by the California Health Care Foundation, the number of primary care physicians actively practicing in California is at the very bottom range of, or below, the state's need. The distribution of these physicians is equally as poor. In 2008, there were 69,460 actively practicing physicians in California (this includes Doctors of Medicine and Doctors of Osteopathic Medicine) with only 35% of these physicians reported practicing primary care. This equates to 63 active primary care physicians per 100,000 persons. According to the Council on Graduate Medical Education, a range of 60 to 80 primary care physicians is needed per 100,000 persons to adequately meet the needs of the population. When the same metric is applied regionally, only 16 of 58 California counties fall within the needed supply range for primary care physicians. Additionally, California and the rest of the nation suffer from shortages of mental health providers. The maldistribution of existing providers compounds the issue, particularly for federally designated medically underserved areas. Recent studies show that the U.S. mental health provider shortage is also made worse by the aging of the psychiatry specialty. Shortages in psychiatry may be considered even more acute than they are in primary care. <1> --------------------------- <1> http://www.modernhealthcare.com/article/20150715/NEWS/150719943 SB 1471 (Hernandez) PageD of? 3)The ACA. As a result of implementation of the Affordable Care Act (ACA), it is estimated that 3 to 7 million Californians will be newly eligible for health insurance starting in 2014. The ACA aims to change how care is delivered. It will provide incentives for expanded and improved primary care, which may affect demand for some health care professionals more than others, and create team-based models of service delivery. Research indicates that health care reform will place higher skill demands on all members of the health care workforce as systems try to improve quality while limiting costs. Studies have also found that insured persons use more health care services than uninsured persons, particularly in primary care and preventive services. This was the experience in Massachusetts, which saw a substantial increase in demand for primary care services as a result of its 2006 health reform. 4)SMT Program. The SMT program was created in response to the physician-shortage problem in underserved areas, but funding for this program has been unpredictable and insufficient, with demand exceeding available funding every year. According to OSHPD, the SMT program encourages recently licensed physicians to practice in Health Professional Shortage Areas (HPSAs) in California. The program repays up to $105,000 in educational loans in exchange for full-time service for at least three years. To be considered eligible for an award, applicants must: a) Be an allopathic or osteopathic physician; b) Be free of any contractual service obligations (i.e. the National Health Service Corps Federal Loan Repayment Program or other financial incentive programs); c) Have outstanding educational debt from a government or commercial lending institution; d) Have a valid, unrestricted license to practice medicine in California; e) Be employed or have accepted employment in a HPSA in California; and f) Commit to providing full-time direct patient care in a HPSA. Currently, up to 20% of the available SMT Program funds may be awarded to program applicants from specialties outside of the primary care specialties, including psychiatry. 5)Administrative Fines and Penalties. The purpose of the MCAFPF SB 1471 (Hernandez) PageE of? is to act as a depository for fines and administrative penalties associated with the licensing and regulation of health care service plans. In September of each year, DMHC transfers the revenue collected in the MCAFPF during the previous 12 month period. This amount fluctuates from year to year, which is illustrated in the table below. According to DMHC, the current balance in the MCAFPF is $3,016,796.10. ------------------------------------------------- | Revenue Transferred from the MCAFPF Over the | | Last Five Years | ------------------------------------------------- |---------+-------------+------------+------------| | Year | Transfer to |Transfer to | Total | | | Health | Major Risk | Revenue | | | Education | Medical |Transferred | | | Professions | Insurance | | | | Fund* | Fund* | | |---------+-------------+------------+------------| | 2011 | 1,000,000.00|2,416,138.19|3,416,138.19| | | | | | |---------+-------------+------------+------------| | 2012 | 1,000,000.00| 92,709.98|1,092,709.98| | | | | | |---------+-------------+------------+------------| | 2013 | 976,887.73| -| 976,887.73| |---------+-------------+------------+------------| | 2014 | 1,000,000.00| 727,601.79|1,727,601.79| | | | | | |---------+-------------+------------+------------| | 2015 | 1,000,000.00|8,541,412.58|9,541,412.58| | | | | | |---------+-------------+------------+------------| | Total | |11,777,862.5|16,754,750.2| | | 4,976,887.73| 4|7 | ------------------------------------------------- *Pursuant to Health and Safety Code Section 1341.45, the first $1,000,000 is deposited into the Medically Underserved Account for Physicians within the Health Professions Education Fund. Any amount over the first $1,000,000 is transferred to the Major Risk Medical Insurance Fund. 6)MRMIP. According to DHCS's Web site and the MRMIP 2016 SB 1471 (Hernandez) PageF of? Application and Handbook, MRMIP provides state-subsidized coverage through two health plans to individuals denied coverage in the individual market or whose premiums exceed MRMIP premiums. MRMIP enrollment was expected largely to no longer be necessary, beginning in 2014, due to the reforms enacted under the ACA, such as guaranteed issue. According to information from DHCS, in January 2014, MRMIP enrollment was 4,782 individuals, and by December 2015, enrollment was at 1,794. Projected enrollment figures support the expected decline, with figures estimated at: 1,579 individuals in 2016; 1,485 in 2017; and 1,441 in 2018. 7)Related legislation. SB 1139 (Lara), would deem eligible any student, including a person without lawful immigration status and/or a person who is exempt from nonresident tuition, who meets the requirements for admission to participate in a medical school program and a medical residency training program; would prohibit specified grant and loan repayment and forgiveness programs from denying an application based on an applicant's citizenship or immigration status; would require an applicant, when mandatory disclosure of a social security number is required, to provide it if one has been issued, or an individual taxpayer identification number that has been or will be submitted. SB 1139 is pending in the Senate Appropriations Committee. 8)Prior legislation. SB 20 (Hernandez, of 2013), was substantially similar to this bill. SB 20 was held on suspense in the Assembly Appropriations Committee before being amended to a new purpose on April 9, 2014. AB 860 (Perea and Bocanegra, of 2013), would have required that, after the first $1,000,000, is transferred each year from the MCAFPF to the Medically Underserved Account for Physicians, $600,000 be transferred each year from the fund to the Steven M. Thompson Medical School Scholarship Account, as specified. The bill would require that any amount remaining over the amounts transferred to those two accounts be transferred each year to the Major Risk Medical Insurance Fund for purposes of MRMIP. AB 860 was held on suspense in the Assembly Appropriations Committee. SB 635 (Hernandez, of 2012), would have, upon a finding by the Department of Finance that MRMIP is inoperative, halted transfers of specified revenues from the MCAFPF to the MRMIP SB 1471 (Hernandez) PageG of? program, and instead transferred the funds to a newly created Song-Brown Program Account, which supports training for health care professionals. SB 635 was held on suspense in the Assembly Appropriations Committee. SB 1379 (Ducheny, Chapter 607, Statutes of 2008), requires fines and administrative penalties levied against health plans under the Knox-Keene Act to be placed in the MCAFPF and used, upon appropriation by the Legislature, for a physician loan-repayment program and MRMIP, instead of being deposited into the State Managed Care Fund. Requires DMHC to make a one-time transfer of fine and administrative penalty revenue of $10 million to MRMIP and $1 million to the loan repayment program. Prohibits using the fines and administrative penalties authorized by the Knox-Keene Act to reduce assessments on health plans. AB 2439 (De La Torre, Chapter 640, Statutes of 2008), mandates the Medical Board of California assess a $25 fee to applicants for issuance or renewal of a physician and surgeon's license. Provides that up to 15% of the funds collected shall be dedicated to loan assistance for physicians and surgeons who agree to practice in geriatric care settings or settings that primarily serve adults over the age of 65 or adults with disabilities. 9)Clarifying Amendments. a) In SEC 1, Section 1341.45(c)(4)(B), clarify that up to one-half of the moneys deposited for the SMT Program may be prioritized to fund the loan repayment of those providing psychiatric services. b) In SEC 3 of the bill, page 6, in line 27, strike out "or psychiatric services" and in line 33, strike out "psychiatry," c) Strike out SEC 4. SUPPORT AND OPPOSITION : Support: None received Oppose: None received -- END -- SB 1471 (Hernandez) PageH of?