BILL ANALYSIS Ó
SB 1471
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Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON HEALTH
Jim Wood, Chair
SB
1471 (Hernandez) - As Amended April 21, 2016
SENATE VOTE: 39-0
SUBJECT: Health professions development: loan repayment.
SUMMARY: Requires, on and after January 1, 2017 any funds over
two million dollars in the Managed Care Administrative Fines and
Penalties Fund (MCA Fund) to annually be transferred to the
Medically Underserved Account for Physicians (MUAP) in the
Health Professions Education Fund (HPEF), to be used for the
purposes of the Steven M. Thompson Physician Corps Loan
Repayment Program (SMT Program). Specifically, this bill:
1)Clarifies the current distribution of funds deposited into the
MCA Fund as follows:
a) The first $1 million to be transferred to the MUAP to be
used for the SMT Program; and,
b) On and after January 1, 2017, any amount over the first
$1 million, including accrued interest, in the MCA Fund be
transferred to the Major Risk Medical Insurance Fund
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(MRMIF) to be used for the Major Risk Medical Insurance
Program (MRMIP).
2)Specifies that on and after January 1, 2017, and annually
thereafter, any amount over the first $2 million, including
accrued interest, in the MCA Fund be transferred to the MUAP
within the HPEF, and upon appropriation by the Legislature, be
used for the SMT Program.
3)Authorizes up to half of the amount over the first $2 million
deposited into the MUAP within HPEF to be prioritized to fund
the repayment of loans for providers of psychiatric services.
4)Deletes an obsolete reference in law to the Healthy Families
Program.
EXISTING LAW:
1)Creates the SMT Program within the 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 (MUAs) of the state.
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.
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3)Establishes the 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
MRMIF for purposes of MRMIP.
4)Requires fines and administrative penalties assessed against
health plans by DMHC to be deposited into the MCA Fund.
Requires those fines and penalties collected up to $1 million
be deposited into the MUAP in the HPEF for purposes of the SMT
Program. Requires any amount over the first $1 million to be
transferred to the MRMIF to be used, upon appropriation by the
Legislature, for use by MRMIP.
FISCAL EFFECT: According to the Senate Appropriations
Committee:
Unknown potential future cost pressure due to the reduction in
funding for MRMIP (General Fund or Proposition 99 funds). Under
current law, the cost of operating MRMIP is funded with
subscriber premiums and state funds. The state has used
Proposition 99 (Tobacco Tax) funds and transfers from MCA Fund
to subsidize the program. Enrollment in 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 MRMIF balance, estimated to be $132
million at the end of this fiscal year) should reduce the need
for additional state funds in the future. However, as long as
MRMIP is active there is a potential need for additional state
funding. It is also important to note that final reconciliation
of expenditures in MRMIP takes several years, so there is some
uncertainty about future MRMIP funding needs, even with
declining enrollment.
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COMMENTS:
1)PURPOSE OF THIS BILL. According to the author the SMT Program
was created in response to the physician shortage problem in
MUAs, 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, 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 SMT Program currently allows for up to 20% of the
available SMT Program funds to be awarded to 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 MUAs of the state for a minimum of three years,
as well as prioritizing new funds for those who provide
psychiatric services.
2)BACKGROUND.
a) Physician supply in California. California is home to
the largest number of primary care physicians (PCPs) and
nurse practitioners in the country. However, the state
ranks 23rd in the number of PCPs per resident. An August
2014 report by the California HealthCare Foundation (CHCF)
states that California has only 35 to 49 PCPs per 100,000
Medi-Cal enrollees. Federal guidelines call for the state
to have 60 to 80 doctors per 100,000 patients. The supply
of PCPs also varies substantially across California's
counties. The number of PCPs actively practicing in
California counties is, in too many cases, at the bottom
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range of, or below, the state's need. According to 2011
Health Resources and Services Administration data, 29 of
California's 58 counties fall at the lower end or below the
needed supply range for PCPs. In other words, half of
Californians live in a community where they do not have
adequate access to the health care services they need.
b) Access to mental health care in California. According
to a CHCF 2013 report, "Mental Health Care in California:
Painting a Picture," nearly one in six California adults
has a mental health need, and approximately one in 20
suffers from a serious mental illness that makes it
difficult to carry out major life activities. The rate
among children is even higher: 1 in 13 suffers from a
mental illness that limits participation in daily
activities. According to the report, the distribution of
licensed mental health providers varied considerably among
California regions. The Bay Area has the greatest
concentration of licensed mental health professionals,
exceeding the state average. The Inland Empire and San
Joaquin Valley fell well below the state average for all
mental health professions. The Northern and Sierra region
was below average in the numbers of psychiatrists and
psychologists, but above average for marriage and family
therapists.
c) SMT Program. The SMT program was created in response to
the physician-shortage problem in MUAs, 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:
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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.
d) Administrative Fines and Penalties. The purpose of the
MCA Fund 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
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each year, DMHC transfers the revenue collected in the MCA
Fund during the previous 12 month period. This amount
fluctuates from year to year, based on the amounts of fines
and penalties levied by DMHC. According to DMHC, the
current balance in the MCA Fund is just over $3 million.
e) MRMIP. MRMIP is a program originally developed to
provide health insurance for Californians who were unable
to obtain coverage in the individual insurance market due
to pre-existing conditions. The Patient Protection and
Affordable Care Act gave Californian's otherwise unable to
obtain health insurance coverage additional choices, but
according to the 2016 Application and Handbook, MRMIP will
continue to provide coverage as well. MRMIP services are
delivered through contracts with health insurance plans.
MRMIP subscribers participate in the payment for the cost
of their coverage by paying subscriber contributions, an
annual deductible and copayments. MRMIP supplements
subscriber contributions to cover the cost of care and is
funded annually by tobacco tax funds.
3)SUPPORT. The California Psychiatric Association (CPA) states
this bill will potentially increase the number of
psychiatrists serving in California's MUAs of California by
giving psychiatrists an opportunity to better access loan
repayments in the SMT Program. CPA notes that California has
339 areas designated as federal Mental HPSAs.
The Medical Board of California (MBC) states this bill would
provide much needed funding for the SMT Program to assist with
loan repayment for physicians who agree to practice in
medically underserved areas, as well as prioritize new funds
for those who are trained in, and practice psychiatry,
promoting MBC's mission of access to care.
The Association of California Healthcare Districts supports this
bill, noting that it is especially difficult for rural regions
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to attract a physician workforce and loan repayment programs
are a critical step in solving the health care workforce
shortage and ensuring access to health care services in the
most underserved areas of the state.
4)POLICY COMMENT. SB 826 (Leno) which enacts the 2016-17 Budget
redirects all monies in the MCA Fund above the first million
dedicated to the SMT Program, to the Medi-Cal program through
2019-20, based on the assumption that the existing funds in
the MRMIF will be sufficient to fund MRMIP. Since this bill
conflicts with the recently enacted budget, the author may
wish address this and identify an alternative funding source.
5)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 set to be heard in the Assembly
Health Committee on June 28, 2016.
6)PREVIOUS LEGISLATION.
a) 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.
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b) AB 860 (Perea and Bocanegra), of 2013, would have
required that, after the first $1 million, is transferred
each year from the MCA Fund to the MUAP, $600,000 be
transferred each year from the fund to the Steven M.
Thompson Medical School Scholarship Account, as specified.
AB 860 would have required that any amount remaining over
the amounts transferred to those two accounts be
transferred each year to MRMIF for purposes of MRMIP. AB
860 was held on suspense in the Assembly Appropriations
Committee.
c) 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 MCA Fund 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.
d) SB 1379 (Ducheny), Chapter 607, Statutes of 2008,
requires fines and administrative penalties levied against
health plans under Knox-Keene to be placed in the MCA Fund
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 Knox-Keene to reduce
assessments on health plans.
e) AB 2439 (De La Torre), Chapter 640, Statutes of 2008,
mandates the MBC 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
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who agree to practice in geriatric care settings or
settings that primarily serve adults over the age of 65 or
adults with disabilities.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Healthcare Districts
California Association of Marriage and Family Therapists
California Psychiatric Association
County Behavioral Health Directors Association
Medical Board of California
Opposition
None on file.
Analysis Prepared by:Lara Flynn / HEALTH / (916)
319-2097
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