BILL ANALYSIS Ó
SB 1471
Page 1
Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1471
(Hernandez) - As Amended April 21, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill redirects an additional portion of funds generated
from fines and penalties on managed care plans into health
professional loan repayment programs, as specified.
Specifically, this bill:
1)Limits the amount of funds redirected to the Major Risk
Medical Insurance Program (MRMIP) just to the second $1
million in the Managed Care Administrative Fines and Penalties
Fund annually (currently, loan repayment programs receive the
first $1 million and the MRMIP program receives all funds over
$1 million).
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2)Deposits any amount over $2 million in the fines and penalties
fund to the Medically Underserved Account for Physicians
(MUAP) for loan repayment programs, as specified.
3)Authorizes up to half of the amount over the first $2 million
deposited into the MUAP to be prioritized to fund the
repayment of loans for providers of psychiatric services.
FISCAL EFFECT:
1) This bill appears to conflict somewhat with a recent budget
action. The comparison of this bill to current law and to the
proposed budget action is shown below.
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As a practical matter, in absence of state funding demand for
MRMIP, funds could be redirected by statute to support other
state needs, including comprehensive health care programs that
are currently funded through the GF. Indeed, the
administration proposed trailer bill language in 2016
redirecting funds from the Managed Care Administrative Fines
and Penalties Fund to offset GF costs for the Medi-Cal program
instead of supporting MRMIP. A compromise was reached whereby
the 2016 Budget Act, pending gubernatorial approval at the
time this analysis was prepared, redirects $2.016 million in
2016-17 that otherwise would be transferred to MRMIP, to the
Department of Health Care Services to offset GF costs for
Medi-Cal. Per budget bill language in SB 826 (Leno), the
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redirection is intended to continue until fiscal year 2019-20.
However, it does not appear there are statutory modifications
currently under consideration that would effectuate the
intended redirection of funds for future years.
Due to the timing of this bill, additional loan repayment
awards could not be provided by OSHPD until 2017-18, and
technically the transfer could be effectuated July 1, 2017.
Thus, the bill certainly conflicts with the intent language
included in the budget, but it does not appear to conflict on
a technical basis, as the redirection of funds to Medi-Cal is
only for 2016-17.
2)If the budget action is not signed into law, and in years
2020-21 and beyond in any case, the bill would simply redirect
funds from support of MRMIP to loan repayment programs. Given
that long-term enrollment, long-term costs, and costs to
reconcile past expenditures for MRMIP still appear uncertain,
the reduction in funding for MRMIP could result in unknown
potential future risk to the GF, which would become
responsible for any MRMIP costs not covered by the program's
currently available fund balance.
Additionally, the Office of Statewide Health Planning and
Development would incur costs to administer the additional
awards, commensurate with the level of funds transferred to
the loan repayment program. Current law allows the fund to pay
for administrative costs of up to five percent of the total
state appropriation for the program.
COMMENTS:
1)Purpose. According to the author, the Steven M. Thompson
Physician Corps Loan Repayment Program, funded by the MUAP,
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was created in response to physician shortages in medically
underserved areas. The author notes funding for this program
has been unpredictable and insufficient, with demand exceeding
available funding every year. Additionally, the author notes
this bill will help address a shortage of psychiatric
services. This bill is author-sponsored and supported by
mental health providers, the Medical Board of California, and
local behavioral health agencies.
2)Background.
a) Managed Care Administrative Fines and Penalties Fund.
This fund is used to deposit various fines and
administrative penalties for the licensing and regulation
of health care service plans by the Department of Managed
Health Care (DMHC). Revenue accumulation to the fund is
variable based on the level and timing of enforcement
activity and fines and penalties paid in a given year, and
revenues transferred from the fund have fluctuated from
about $1 million to over $9 million annually over the last
five years.
b) Major Risk Medical Insurance Program. MRMIP is a
high-risk pool that was originally designed to provide
health insurance to Californians unable to obtain coverage
in the individual health insurance market because of a
pre?existing condition. With the implementation of the
federal Affordable Care Act, individuals may not be denied
coverage because of a pre?existing condition. MRMIP
caseload has declined from 6,570 in 2013 to 1,794 in 2015.
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c) Steven M. Thompson Physician Corps Loan Repayment
Program. This loan repayment program is administered the
Health Professions Education Foundation within the Office
of Statewide Health Planning and Development (OSHPD). It
provides for the repayment of educational loans for
physicians and surgeons who practice in medically
underserved areas (MUAs) of the state. This program would
be the beneficiary of the redirection of fine and penalty
revenue.
3)Prior Legislation.
a) SB 20 (Hernandez), of 2013, upon a finding by the
Department of Finance that MRMIP is inoperative, halted
transfers of specified revenues from the Managed Care
Administrative Fines and Penalties Fund to the MRMIP
program, and instead transfers funds to the loan repayment
program, similar to this bill. SB 20 was referred to the
Suspense File in this committee in 2013 and not heard on
suspense. It was amended to a new purpose on April 9,
2014.
b) AB 860 (Perea and Bocanegra), of 2013, required that,
after the first $1 million, is transferred each year from
the Managed Care Administrative Fines and Penalties 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 the Suspense File in this
committee.
c) SB 635 (Hernandez) of 2012 was similar to SB 20, but
transferred the funds upon a finding that MRMIP is
inoperative to a newly created Song-Brown Program Account,
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which supports training for health care professionals. SB
635 was held on the Suspense File in this 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 Managed
Care Administrative Fines and Penalties Fund and used, upon
appropriation by the Legislature, for a physician
loan-repayment program and MRMIP, instead of being
deposited into the Managed Care Fund.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081