BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1471|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 1471
Author: Hernandez (D)
Amended: 4/21/16
Vote: 21
SENATE HEALTH COMMITTEE: 7-0, 4/20/16
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Pan, Roth
NO VOTE RECORDED: Nielsen, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
SUBJECT: Health professions development: loan repayment
SOURCE: Author
DIGEST: This bill 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.
ANALYSIS:
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.
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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.
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.
Allows up to one-half of these moneys to be prioritized to
fund the loan repayment of those providing psychiatric
services.
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3)Makes other conforming changes, and deletes references to
inoperative programs.
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
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
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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.
(http://www.modernhealthcare.com/article/20150715/NEWS/15071994
3)
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);
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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
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|
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| | | | |
|---------+-------------+------------+------------|
| 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
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.
Related/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,
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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 have required 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
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) required 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. Required 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. Prohibieds 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) mandated
the Medical Board of California assess a $25 fee to applicants
for issuance or renewal of a physician and surgeon's license.
Provided 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
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According to the Senate Appropriations Committee:
Unknown potential future cost pressure due to the reduction in
funding for the MRMIP (General Fund or Proposition 99 funds).
Under current law, the cost of operating the MRMIP is funded
with subscriber premiums and state funds. The state has used
Proposition 99 (Tobacco Tax) funds and transfers from the
Managed Care Administrative Fines and Penalties Fund to
subsidize the program. Enrollment in the MRMIP has declined
significantly in recent years, from 4,782 in January 2014 to a
projected enrollment of 1,400 in 2018. The declining MRMIP
enrollment (and the existing MRMIP fund balance) should reduce
the need for additional state funds in the future. However, as
long as the MRMIP is active there is a potential need for
additional state funding. It is also important to note that
final reconciliation of expenditures in the MRMIP takes
several years, so there is some uncertainty about future MRMIP
funding needs, even with declining enrollment.
SUPPORT: (Verified 5/27/16)
California Association of Marriage and Family Therapists
California Medical Association
California Psychiatric Association
County Behavioral Health Directors Association of California
Medical Board of California
OPPOSITION: (Verified 5/27/16)
None received
ARGUMENTS IN SUPPORT: Supporters argue that this bill provides
much needed funding for the SMT Program to assist with the loan
repayment of physicians who agree to practice in medically
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underserved areas of the state. The Medical Board of California
states that this bill promotes the Board's mission of access to
care.
Prepared by:Reyes Diaz / HEALTH /
5/30/16 19:37:05
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