BILL ANALYSIS
AB 303
Page 1
ASSEMBLY THIRD READING
AB 303 (Beall)
As Amended June 1, 2009
Majority vote
HEALTH 18-0 APPROPRIATIONS 17-0
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|Ayes:|Jones, Fletcher, Adams, |Ayes:|De Leon, Nielsen, Ammiano, |
| |Ammiano, Block, Carter, | | |
| |Conway, De Leon, | |Charles Calderon, Davis, |
| |Emmerson, Gaines, Hall, | |Duvall, Fuentes, Hall, |
| |Hayashi, Hernandez, | |Harkey, Miller, |
| |Bonnie Lowenthal, Nava, | |John A. Perez, Price, |
| |V. Manuel Perez, Salas, | |Skinner, Solorio, Audra |
| |Audra Strickland | |Strickland, Torlakson, |
| | | |Krekorian |
| | | | |
|-----+--------------------------+-----+---------------------------|
| | | | |
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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 designated public hospitals (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).
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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. Limits
supplemental reimbursement under this bill to projects related
to meeting seismic safety deadlines.
4)Requires a hospital qualifying pursuant to 1) above to remain
open for the life of the supplemental reimbursements provided
under this bill.
5)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 (CPE) or intergovernmental
transfers (IGT), as necessary and appropriate.
6)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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)This bill prohibits the use of GF for the non-federal share of
supplemental reimbursements. Annual costs of $15 million (50%
federal, 50% IGT or CPE) to $20 million (50% federal, 50% IGT
or CPE) to provide supplemental reimbursement on debt service
to five hospitals. Actual costs depend on how many hospitals
pursue supplemental funding access established by this bill.
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2)Under current law, hospitals drawing on similar supplemental
reimbursements under the CRRP receive annual reimbursement of
$95 million to $120 million. Debt service costs typically run
about $65,000 per $1 million of capital projects, assuming an
amortization over 30 years.
COMMENTS : This bill is sponsored by the Santa Clara Board of
Supervisors (Board) to allow designated public 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. 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 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.
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. 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 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 requirements, and provide
needed trauma and indigent care services.
Under existing law, the CRRP allows DSH hospitals to receive
supplemental Medi-Cal reimbursement for the debt service
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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. This
bill would reopen, on a time-limited basis, CRRP eligibility for
designated public hospitals which meet DSH eligibility for
projects to meet the state's hospital seismic safety deadlines.
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 under the state's seismic
safety law.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
FN: 0001220