BILL ANALYSIS
AB 303
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 303 (Beall) - As Amended: April 16, 2009
SUBJECT: Medi-Cal: designated public hospitals: seismic
safety requirements.
SUMMARY : Allows specified county and University of California
(UC) disproportionate share hospitals (DSH) that contract with
the California Medical Assistance Commission (CMAC) to serve
Medi-Cal patients to receive supplemental Medi-Cal reimbursement
from the Construction and Renovation Reimbursement Program
(CRRP) for new capital projects to meet state seismic safety
deadlines for which plans have been submitted to the state after
January 1, 2007 and before December 31, 2011. Specifically,
this bill :
1)Allows specified county and UC hospitals to receive
supplemental reimbursement from the CRRP, in addition to the
rate of payment provided for in the CMAC contract, if the
hospital:
a) Contracts with CMAC to provide services to Medi-Cal
patients in the fee-for-service Medi-Cal program; and,
b) Has or would have satisfied the criteria to be a DSH
hospital for the three most recent years prior to
submitting final plans for an eligible project (DSH
hospitals serve a large number of uninsured and Medi-Cal
patients).
2)Requires a hospital that elects to receive reimbursement under
this bill to submit documentation to the Department of Health
Care Services (DHCS) regarding debt service on general
obligation or revenue bonds used for financing the
construction, renovation, or replacement of hospital
facilities, including buildings and fixed equipment.
3)Establishes as eligible projects those new capital projects
funded by new debt for which final plans have been submitted
to Office of Statewide Health Planning and Development (OSHPD)
after January 1, 2007, and prior to December 31, 2011.
4)Limits supplemental reimbursement under this bill to projects
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related to meeting seismic safety deadlines.
5)Requires a hospital qualifying pursuant to 1) above to remain
open for the life of the supplemental reimbursements provided
under this bill.
6)Prohibits expenditures from the General Fund (GF) from being
made for the nonfederal share of the supplemental
reimbursement provided for in this bill. Requires DHCS, to
the extent that insufficient state funds are appropriated for
the nonfederal share of the supplemental reimbursement
provided for in this bill, to claim federal expenditures
through other funding mechanisms, including the use of
certified public expenditures (CPEs) or intergovernmental
transfers (IGTs), as necessary and appropriate.
7)Requires DHCS to promptly seek any necessary, and all
available, federal approvals for the implementation of this
bill, and makes implementation of this bill contingent on
federal approval and federal financial participation being
available.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by DHCS, which
provides health benefits to low-income children, their
parents, or caretaker relatives, pregnant women, elderly,
blind or disabled persons, and other individuals who meet
specified eligibility criteria.
2)Establishes the CRRP or SB 1732 program under which DSH
hospitals may receive supplemental Medi-Cal reimbursement for
the debt service incurred on the revenue bonds for the
construction, renovation, or replacement of hospital
facilities, including building and fixed equipment, for which
final plans have been submitted to OSHPD after September 1,
1988 and prior to June 30, 1994.
3)Establishes seismic safety requirements under the Alfred E.
Alquist Hospital Facilities Seismic Safety Act (Act), and its
amendments, which:
a) Require, after January 1, 2008, any general acute care
hospital building that is determined to be a potential risk
for collapse or significant loss of life to only be used
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for nonacute care hospital purposes. Authorizes a delay to
be granted by OSHPD upon a demonstration that compliance
will result in a loss of health care capacity that may not
be provided by other general acute care hospitals within a
reasonable proximity;
b) Authorize OSHPD to permit extensions to the deadline
described in 3) a) above, if the hospital agrees that by
January 1, 2013, basic service or services will be provided
by moving into an existing conforming building, relocating
to a newly-built building, or continuing in the retrofitted
building, as specified, and permits an additional two-year
extension under certain circumstances; and,
c) Requires owners of all acute care inpatient hospitals,
no later than January 1, 2030, to either demolish, replace,
or change to nonacute care use all hospital buildings not
in substantial compliance with the seismic safety
regulations and standards developed by OSHPD, or
seismically retrofit all acute care inpatient hospital
buildings so that they are in substantial compliance with
the seismic safety regulations and standards developed by
OSHPD.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . This bill is sponsored by the Santa
Clara Board of Supervisors (Board) to allow hospitals to
access federal supplemental reimbursements for debt service
related to seismic retrofitting. The Board states the
importance of this legislation to the County's public
hospital, Santa Clara Valley Medical Center (SCVMC), and its
patients, cannot be overestimated. SCVMC's patient population
is growing dramatically, with more than a 45% increase since
2000. The demand for services continues to rise, but the
number of available beds limits the hospital's ability to meet
the growing need for care. The Board states some days, SCVMC
does not have beds available and must reschedule elective
surgeries in order to continue accepting trauma and emergency
patients.
The board argues the state's seismic safety law requires that
SCVMC replace or retrofit more than half of its 524 licensed
acute beds or close them. A loss of this number of beds would
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result in longer and unacceptable lengths of time that the
emergency facility would be on diversion due to lack of beds,
and would also leave the county with limited surge capacity to
respond to disasters-in a community that currently only has
1.7 hospital beds per 1,000 residents, compared to the
national average of 2.8 beds per 1,000.
Beyond the impact on trauma services, the Board argues a loss
of half of SCVMC's inpatient beds would severely compromise
access for Medi-Cal patients for whom SCVMC is one of a few
remaining contracting providers in the county. In meeting its
mission of providing care regardless of the patient's ability
to pay, SCVMC would be unable to provide care for insured
patients other than those admitted on an emergency basis,
which in turn would exacerbate SCVMC's current financial
losses.
The Board indicates it is committed to maintaining hospital
care in the county, and it has embarked on a two-phase project
to bring SCVMC into compliance with the seismic mandates. The
cost of this effort is approximately $1.4 billion. Locally
generated funds, including funds from a successful 2008 bond
measure, cover the first phase of the project ($949 million)
to meet the 2013 standards. However, additional funds are
required for SCVMC to undertake the second phase of the
project and meet the 2030 seismic safety deadline. This phase
would rebuild 104 patient beds and associated service
buildings, such as the hospital kitchen, at a cost of $500
million. This bill would enable Santa Clara County to work
with the state to secure federal funds for debt service
related to seismic retrofitting. Without this ability, Santa
Clara County would not be able to finance the second phase of
the project through completion, meet the seismic safety
requirement, and provide needed trauma and indigent care
services.
2)BACKGROUND . The Act, originally passed in 1973 and updated in
1983, requires all new hospital construction to meet building
standards specifically designed for hospital buildings. These
standards, however, were not originally applied to hospitals
built before March 1973, except when those existing buildings
undergo major renovation. Following the 6.7 magnitude
Northridge earthquake in January 1994, the Legislature passed
and then-Governor Wilson signed into law SB 1953 (Alquist),
Chapter 740, Statutes of 1994. Hospitals built in accordance
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with the standards of the Act resisted the 1994 Northridge
earthquake with minimal structural damage, while several
facilities built before the Act experienced major structural
damage and had to be evacuated. In addition, certain
nonstructural components of the hospitals did incur damage,
even in facilities built in accordance with the structural
provisions of the Act.
SB 1953 applies to all existing hospital buildings, and the
provisions and subsequent regulations implementing SB 1953
were developed to address the issues of survivability of both
nonstructural and structural components of hospital buildings
after an earthquake. By January 1, 2008, buildings posing a
significant risk of collapse and a danger to the public must
be brought up to the seismic performance category 2 or be
removed from acute care service. By January 1, 2030, hospital
buildings must be in substantial compliance with the
structural provisions of the Act. The public safety benefit
of SB 1953 is to have general acute care hospital buildings
that not only are capable of remaining intact after an
earthquake, but also capable of continued operation and
provision of acute medical care services after an earthquake.
3)CRRP . CRRP is also referred to as the SB 1732 program, due to
the program's authorizing legislation, SB 1732 (Presley),
Chapter 1635, Statutes of 1988. The CRRP provides
supplemental Medi-Cal reimbursement for a portion of the debt
service incurred on revenue bonds issued for the construction,
renovation, or replacement of hospital facilities including
buildings and fixed equipment. To be eligible for
reimbursements under CRRP, a hospital must:
a) Be a CMAC-contracting hospital or a hospital contracting
with a Medi-Cal county organized health system;
b) Be a DSH hospital; and,
c) Have a required plan for a new capital project funded by
new debt submitted to OSHPD after September 1, 1988 and
prior to June 30, 1994, although specific hospitals (such
as the Alameda County Medical Center, Los Angeles
County-USC Medical Center and Contra Costa Regional Medical
Center) have a later date to submit revised plans to OSHPD
and still receive CRRP supplemental payments.
A hospital's supplemental Medi-Cal reimbursement is calculated
based on the amount of debt service on revenue bonds issued to
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finance the eligible hospital's project. DHCS applies the
hospital's Medi-Cal utilization rate to determine the ratio of
the hospital's total paid Medi-Cal days to total patient days.
SB 1732 expenditures were $132.9 million in 2006-07 for 16
hospitals, and $97.9 million in 2007-08 for 20 hospitals.
4)ELIGIBLE HOSPITALS . This bill makes designated public
hospitals (as defined in existing law) which meet DSH
eligibility, eligible for CRRP funding. There are 22
designated public hospitals listed in statute, (two of which
are closed) which have 82 buildings with the worst structural
performance category rating.
5)REQUEST FOR AMENDMENT . The Private Essential Access Community
Hospitals and the California Children's Hospital Association
seek an amendment to this bill to permit private DSH hospitals
to access the supplemental reimbursement through the CRRP made
available by this bill.
6)PREVIOUS LEGISLATION . AB 1149 (Beall) of 2007 would have
authorized DSH hospitals designated as a Level 1 trauma center
that are located in Seismic Zone 4 as eligible to receive
supplemental payments from the CRRP for debt service on new
capital projects for which final plans have been submitted to
OSHPD after January 1, 2008 and prior to December 31, 2011.
AB 1149 did not contain the provision in this bill that
prohibits expenditures from the GF from being made for the
nonfederal share of the supplemental reimbursement without an
express appropriation for that purpose, or the provision that
requires DHCS, if insufficient state funds are appropriated
for the nonfederal share of the supplemental reimbursement, to
claim federal expenditures through other funding mechanisms,
including the use of CPEs or IGTs. AB 1149 was held on the
Assembly Appropriations suspense file.
REGISTERED SUPPORT / OPPOSITION :
Support
Santa Clara County Board of Supervisors (sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
State Building and Construction Trades Council of California
Opposition
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None on file.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097