BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1416
AUTHOR: Rubio and Hernandez
AMENDED: April 16, 2012
HEARING DATE: April 25, 2012
CONSULTANT: Moreno
SUBJECT : Medical residency training program grants: grants.
SUMMARY : Creates the Graduate Medical Education (GME) Trust
Fund and requires moneys in the fund to be used by the Office of
Statewide Health Planning and Development (OSHPD) to fund grants
to medical residency training programs for the creation of
additional residency positions.
Existing law:
1.Establishes the California Healthcare Workforce Policy
Commission (Commission) and requires the Commission to, among
other things, identify specific areas of the state where unmet
priority needs for primary care family physicians and
registered nurses exist; establish standards for family
practice training programs, family practice residency
programs, primary care physician assistants programs, and
programs that train primary care nurse practitioners; and
review and make recommendations to OSHPD concerning the
funding of those programs that are submitted to the Health
Professions Development Program for participation in the state
medical contract program.
2.Establishes the Health Professions Education Foundation
(Foundation) within OSHPD. Requires the Foundation to solicit
and receive funds from foundations and other private and
public sources and to provide financial assistance in the form
of scholarships or loans to students in the health professions
who are from underrepresented groups. Provides that the
Foundation is governed by a board consisting of 13 members
appointed by the Governor, Speaker of the Assembly, and Senate
Rules Committee.
3.Establishes, under the Foundation, scholarship, loan, and loan
repayment programs for registered nurses, vocational nurses,
geriatric nurse practitioners, clinical nurse specialists, and
mental health professionals who agree to practice for
specified periods of time in underserved areas and in
Continued---
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designated practice settings, as specified.
4.Establishes, under the Foundation, the Steven M. Thompson
Physician Corps Loan Repayment Program (STPCLRP), which
provides for the repayment of educational loans for licensed
physicians and surgeons who practice in medically underserved
areas of the state, as defined. Requires the Foundation, in
administering the STPCLRP, to use and develop guidelines for
applicants that give preference to applicants who are best
suited to meet the cultural and linguistic needs of patients
in medically underserved populations, as specified, and who
agree to practice in geriatric care settings. Also allows the
Foundation to appoint a selection committee to provide policy
direction and guidance to the STPCLRP. Requires funds for loan
repayment under the STPCLRP to have a funding match from a
foundation or other private source. Establishes a Medically
Underserved Account for Physicians within the Fund, the
primary purpose of which is to provide funding for the
STPCLRP.
5.Establishes within OSHPD the Health Professions Education Fund
(Fund) to receive funds for scholarships and loans to students
from underrepresented groups who are enrolled in or accepted
to schools of medicine, dentistry, nursing, and other health
professions. Provides that moneys in the Fund are
continuously appropriated.
6.Establishes the Song-Brown Health Care Workforce Training Act
of 1973 (Song-Brown Act), administered by OSHPD to provide
financial support to family practice residency programs, nurse
practitioner and physician assistant programs, and registered
nurse education programs to increase the number of students
and residents receiving education and training in family
practice and nursing. The Song-Brown Act also encourages
universities and primary care health professionals to provide
health care in medically underserved areas.
This bill:
1.Creates the GME Trust Fund and requires moneys in the fund to
be used by OSHPD to fund grants to medical residency training
programs for the creation of additional residency positions.
Requires additional residency positions funded pursuant to
this bill to be funded at the same rate as residency positions
funded through the Medicare Program.
2.Requires the GME Trust Fund to consist of all private moneys
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donated by private individuals or entities to the Commission
for deposit into the fund, any amounts appropriated to the
fund by the Legislature, and any interest that accrues on
amounts in the fund. Requires all interest earned on the
moneys in the fund to be retained in the fund and used for
purposes consistent with the fund.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. According to the authors, California
currently has statewide workforce shortages in several major
health professions and these needs will increase dramatically
due to population aging, growth, and increasing diversity.
According to California Medical Association (CMA), over the
past 15 years, California's population has increased by 7
million while the number of medical school graduates has
remained stagnant. The most conservative reports estimate a
physician shortage of 17,000 by 2015. Additionally, the
physicians we do have are not evenly distributed throughout
the state, creating pockets of remarkably underserved regions.
In Kern County, for example, the ratio of population to
primary care providers is 1206:1 compared to the statewide
average of 847:1. This problem will be further compounded in
2014 by the 4.7 million new Californians that will be eligible
for health insurance as a result of the federal Patient
Protection Affordability Care Act (ACA). GME funding varies
nationwide. The majority of the funds come from Medicare but
states may provide direct payments for residency programs or
get a federal match through Medicaid, the second-largest
funding source for GME. But with no increase in Medicare GME
funding and tightening state budgets, academic health centers
are unable to expand residency programs to meet increasing
needs. This bill will help address these workforce shortages
by laying the groundwork for a permanent fund for residency
training slots that will be targeted at meeting the needs of
underserved regions of our state.
2.GME funding. According to the Western Journal of Medicine,
Medicare is the largest source of federal funding for medical
education. Beginning in 1985, Medicare replaced its cost-based
funding formula with two types of payments: direct medical
education (DME) payments and indirect medical education (IME)
adjustments. DME payments are intended to defray the costs
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associated with program administration and salaries for
residents and teaching personnel. IME adjustments are intended
to cover the costs associated with the unnecessary procedures
that residents order and other inefficiencies of residents. In
2009, Medicare spent $9.5 billion on GME, $3 billion of which
was on DME payments and the remaining $6.5 billion was
directed towards IME adjustments. Other sources of federal
funding for medical education include Medicaid, the Department
of Veterans Affairs (VA), the Department of Defense, and the
Bureau of Health Professions. Most states (48 of 50 states)
fund GME through their Medicaid programs and receive federal
matching funds for this purpose.
Several states and the VA are using innovative GME financing
approaches to take into account state or national physician
workforce needs in their decisions on how many GME programs to
support and in which specialties. Utah has created a system to
link Medicare and Medicaid payments to meet the state's
physician workforce needs; Texas lawmakers have authorized
state-formula funding to expand GME; Minnesota is pooling
multiple payment sources to offset the costs of clinical
training and to ensure health care research; and the VA is
increasing its support of the GME enterprise with a
multi-year, 2,000-position expansion of resident positions in
specialties of greatest need to US veterans.
3.Workforce shortages. In March 2012, the Senate Health
Committee held two initial hearings in a series on
California's health care workforce. The background paper,
prepared by the Senate Office of Research (SOR), stated that
statewide shortages of health care providers currently exist
in several major health professions. Additionally, health care
workforce needs are projected to increase dramatically due to
the aging of the general population as well as health care
providers, population growth, expanding diversity and
implementation of the ACA. Recent health care workforce
research indicates that health professional shortage,
distribution, and diversity issues impact access to primary,
allied, mental, and dental health care in California today.
The demand for these health care professions is also
forecasted to grow faster than professions in other
industries. According to the SOR paper, the scale and scope of
the problem is not well understood because data on the supply
and demand of health professionals is incomplete and is not
systematically or regularly updated.
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4.Physician shortages. According to a June 2009 report
commissioned by the California HealthCare Foundation (CHCF),
California is at the lower end of the range of need for
primary care physicians, and the distribution of these
physicians is poor. According to the report, in 2008 there
were 69,460 actively practicing physicians in California (this
includes Doctors of Medicine and Doctors of Osteopathic
Medicine), and 35 percent (or 24,124) of these physicians
reported practicing primary care. This equates to 63 active
primary care physicians in patient care per 100,000
population. According to the Council on Graduate Medical
Education, a range of 60 to 80 primary care physicians are
needed per 100,000 in order to adequately meet the needs of
the population. According to OSHPD data, only 16 of
California's 58 counties fall within the needed-supply range
for primary care physicians. Those areas that meet the
recommended supply range include the Bay Area and Sacramento,
and Orange counties. Areas with a pronounced under supply of
primary care physicians include the Inland Empire and the San
Joaquin Valley.
5.ACA. The demand for primary care physicians will be further
strained; according to a February 2011 UCLA Center for Health
Policy Research brief, this existing shortage will only
intensify as about 4.7 million new Californians will be
eligible for health insurance, starting in 2014, as a result
of implementation of the ACA. Research has found that persons
who have health insurance use more health care services than
uninsured persons, particularly in the areas of primary care
and preventive services. According to a March 2009 Kaiser
Family Foundation report, this was found in Massachusetts,
which experienced a substantial increase in demand for primary
care services as a result of its 2006 health care reform.
Consequently, it is likely that there will be a substantial
increase in the demand for primary care services by these
newly insured.
6.Potential solutions. According to the March 2012 SOR paper,
there are several strategies to address the barriers that may
be limiting the supply and utilization of the health care
workforce. These options, many of which are controversial,
should be considered with the following guiding principles in
mind: improving access to care, increasing the diversity and
cultural competency of the health care workforce, and ensuring
patient safety. With regard to education-based solutions, a
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number were cited, including increasing capacity at
higher-education institutions and encouraging a three-year
medical school within the University of California system.
7.Current workforce development programs. The state currently
operates a number of programs designed to increase the number
of health care professionals practicing in medically
underserved areas:
� Health Professions Education Foundation. The
Foundation, within OSHPD, provides scholarships and loan
repayments to aspiring and practicing health professionals
who agree to practice in a medically underserved area.
Scholarships are offered to health professional students
who are attending a California accredited college or
university. Loan repayment programs are offered to
graduates who are pursuing a health professional career to
assist in the repayment of education debt. Scholarships are
offered to students and graduates in several allied health
professions, nursing, mental health, dentistry, and
medicine. In exchange for financial assistance, awardees
are required to provide direct patient care in a medically
underserved area. Service obligations are typically one to
four years, and vary depending on the program. One of the
programs offered under the Foundation is the STPCLRP, which
provides assistance with the repayment of educational loans
for licensed physicians and surgeons who practice in
medically underserved areas of the state. The STPCLRP is
supported by a $25 licensure fee paid by physicians and
limits loan repayment awards from exceeding $105,000 per
individual physician.
� California State Loan Repayment Program. The California
State Loan Repayment Program (CSLRP) provides educational
loan repayment assistance to primary health care
professionals who provide health care services in federally
designated Health Professional Shortage Areas (HPSAs).
Eligible health professionals include physicians
specializing in primary care fields, nurse practitioners,
certified nurse-midwives, general practice dentists, dental
hygienists, clinical or counseling psychologists, clinical
social workers, licensed counselors, psychiatric nurse
specialists, and marriage and family therapists. Eligible
health professionals also must be employed, or have
accepted employment, at an eligible site (which includes
county facilities, rural health clinics, community health
clinics, and federally qualified health centers) and must
commit to providing full-time primary care services in a
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HPSA for a minimum of two years. Health professionals may
receive $60,000 in exchange for a two-year service
obligation, $100,000 for a three-year service obligation,
and up to $170,000 over five years, the cost of which is
divided between state award amounts and matching funds from
the site in which the health professional will be
practicing. The CSLRP is funded through a grant from the
Bureau of Health Professions, National Health Service Corps
and is administered by OSHPD.
� Song-Brown Program. The Song-Brown Health Care
Workforce Training Act was established in 1973 to address
the shortage of physicians engaged in family practice in
California by providing financial support to family
practice residency, nurse practitioner, physician
assistant, and registered nurse education programs
throughout California. It also encourages universities and
primary care health professionals to provide health care in
medically underserved areas. The Song-Brown program
currently funds 27 California family practice residency
programs, 16 physician assistant/nurse practitioner
programs, and 34 registered nurse education programs.
1.Related legislation. SB 635 (Hernandez) would require funds
deposited in the Managed Care Administrative Fines and
Penalties Fund in excess of $1,000,000 be transferred each
year to OSHPD for the purposes of the Song-Brown Program. SB
635 is pending in the Assembly Health Committee.
AB 589 (Perea) would establish the Steven M. Thompson Medical
School Scholarship Program and would provide that the program
is open to persons who agree in writing, prior to entering an
accredited medical or osteopathic school, to serve in an
eligible practice setting, as defined, for at least three
years. AB 589 is on the Senate Appropriations Committee
suspense file.
2.Prior legislation. AB 2551 (Hernandez) of 2010 would have
established the Health Workforce Development Fund, consisting
of moneys received from federal and private sources, as
specified; would have authorized the Fund to be used, upon
appropriation by the Legislature, for prescribed purposes
relating to health workforce development, and would have
required the California Workforce Investment Board and OSHPD
to report specified information to the Legislature annually,
as specified. AB 2551 failed passage on the Senate Floor.
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AB 657 (Hernandez) of 2009 would have required OSHPD, in
collaboration with the California Workforce Investment Board,
to establish the Health Professions Workforce Task Force,
composed of specified members, to assist in the development of
a health professions workforce master plan for the state and
would have prescribed the functions and duties of the task
force in that regard. AB 657 was vetoed by the Governor, who
stated, in part, that the bill was unnecessary and duplicative
of efforts already underway.
AB 2375 (Hernandez) of 2008 would have required OSHPD to
establish the Health Professions Workforce Task Force, as
specified, to assist in the development of a health
professions workforce master plan. AB 2375 was held in the
Senate Appropriations Committee on suspense.
AB 2439 (De La Torre), Chapter 640, Statutes of 2008, requires
the Medical Board of California (MBC) to assess an additional
$25 fee for the initial license and license
renewal of a physician or surgeon to support the STPCLRP.
Requires up to 15 percent of the funds collected from the
additional $25 fee to be dedicated to loan assistance for
physicians who agree to practice in geriatric care settings,
as specified.
AB 327 (De La Torre), Chapter 293, Statutes of 2005, requires
the MBC to assess an applicant a $50 fee for the issuance and
renewal of a physician and surgeon's certificate. Specifies
that payment of the fee is voluntary and directs the fees to
the Medically Underserved Account for the STPCLRP.
AB 920 (Aghazarian), Chapter 317, Statutes of 2005, provides
for the transfer of the
STPCLRP and the Physician Volunteer Program from the MBC to
the California Physician Corps Program within the Foundation,
effective July 1, 2006.
AB 1403 (Nunez), Chapter 367, Statutes of 2004, renames the
California Physician Corps Loan Repayment Program of 2002 as
the STPCLRP.
AB 982 (Firebaugh), Chapter 1131, Statutes of 2002, creates
the California Physician Corps Loan Repayment Program of 2002.
This program is administered by the Division of Licensing of
MBC for the purpose of granting loan repayment awards to
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physicians and surgeons working in medically underserved
communities.
3.Support. CMA writes that for far too long, federal funding
for California's GME has remained stagnant and as a result,
the state has inadequately supplied the physician workforce.
CMA states that the most effective way to address this deficit
is by expanding and strengthening the capacity of California's
medical resident programs, and this bill lays the groundwork
to achieve this goal.
4.Amendments. This bill creates a GME Fund for the purposes of
providing grants to medical residency training programs for
the creation of residency positions; however, it does not
contain details on how those grants will be administered. The
authors intend to amend this bill in Committee to provide
guidance for those parameters.
SUPPORT AND OPPOSITION :
Support: California Medical Association
Oppose: None received.
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