BILL ANALYSIS �
SB 1416
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
SB 1416 (Rubio and Ed Hernandez) - As Amended: May 29, 2012
SENATE VOTE : 38-0
SUBJECT : Medical residency training program grants: grants.
SUMMARY : Establishes the Graduate Medical Education (GME) Trust
Fund (Fund), administered by the Office of Statewide Health
Planning and Development (OSHPD) for the purpose of providing
grants to graduate medical education residency programs in
California. Specifically, this bill :
1)Establishes the Fund in the State Treasury. Requires moneys
in the Fund to be used solely for the purpose of providing
grants to graduate medical education residency programs in
California. Requires all accrued interest on money in the
Fund to be retained in the Fund and used for purposes
consistent with the Fund.
2)States that the Fund shall consist of all private moneys
donated to the California Healthcare Workforce Policy
Commission (Commission) for deposit into the Fund and any
interest that accrues.
3)Prohibits the use of General Funds to implement this bill.
4)Requires OSHPD, in consultation with the California Healthcare
Workforce Policy Committee, to develop criteria for
distribution of available moneys in the Fund upon receipt of
donations sufficient to cover the costs of developing the
criteria.
5)Requires OSHPD in developing the criteria to give priority to
programs that meet the following specifications:
a) Are located in medically underserved areas (MUAs), as
specified;
b) Have a proven record of placing graduates in those MUAs;
c) Place an emphasis on training primary care providers;
SB 1416
Page 2
and,
d) Place an emphasis on training physician specialties that
are most needed in the community in which the program is
located.
6)Permits the Fund to be used to fund existing and new graduate
medical education residency slots.
7)Specifies, whenever possible, OSHPD must utilize moneys
appropriated from the Fund to provide a match for available
federal funds for graduate medical education.
EXISTING LAW :
1)Establishes OSHPD to, among other functions, collect data and
disseminate information about California's health care
infrastructure, promote equitable distribution of health care
outcomes, and publish information about health care outcomes.
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, loans, or repayments of educational 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.
Authorizes the Foundation to develop criteria for evaluating
applicants for various scholarships or loans and to implement
the Steven M. Thompson Physician Corps Loan Repayment Program
(STPCLRP) and the Volunteer Physician Program, as specified.
3)Establishes the 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 (PA) programs, and
programs that train primary care nurse practitioners (NPs);
and, review and make recommendations to OSHPD concerning the
funding of those programs that are submitted to the Health
SB 1416
Page 3
Professions Development Program for participation in the state
medical contract program.
4)Establishes the Song-Brown Health Care Workforce Training Act
of 1973 (Song-Brown) to increase the number of students and
residents receiving quality education and training in the
specialty of family practice and as primary care physician's
assistants, primary care NPs, and RNs and to maximize the
delivery of primary care family physician services to specific
areas of California where there is a recognized unmet priority
need. Provides that Song-Brown is to be implemented through
contracts with accredited medical schools, and other programs
that train the above practitioners.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)One-time costs up to $150,000 to develop criteria for making
grants (Private Funds). The development of grant making
criteria is subject to the Administrative Procedures Act
(beginning at Section 11340 of the Government Code), which
typically requires substantial staff time.
2)Unknown costs to make grants to medical residency programs
(Private Funds).
COMMENTS :
1)PURPOSE OF THIS BILL . 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 the California Medical Association (CMA), over
the past 15 years, California's population has increased by
seven 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 and Affordable Care Act (ACA). GME funding varies
SB 1416
Page 4
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)BACKGROUND .
a) GME . According to the California Academy of Family
Physicians, GME or residency training, takes place after
medical school and prepares physicians for their medical
practice. It can take anywhere from three to seven years
of residency training to instruct a physician in his or her
chosen specialty (such as family medicine, radiology, or
pediatrics). Training occurs in teaching hospitals or
community-based residency programs, both of which serve a
critical role in the nation's health care system by
delivering care, training future health care professionals,
and conducting medical research. GME is primarily funded
by Medicare payments to hospitals.
According to the Western Journal of Medicine, 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 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) fund GME through their Medicaid programs and
receive federal matching funds for this purpose.
Several states and the VA are using innovative GME financing
SB 1416
Page 5
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.
b) 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% (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, Sacramento, and Orange counties. Areas with a
pronounced under supply of primary care physicians include
the Inland Empire and the San Joaquin Valley.
c) Healthcare Workforce Shortage . On March 23, 2010,
President Obama signed into law the ACA (Public Law (PL)
111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (PL 111-152). Among other
provisions, the new law requires most US citizens and legal
residents to have health insurance; creates state-based
American Health Benefit Exchanges through which individuals
can purchase coverage, with premium and cost sharing
credits, as specified, and creates separate exchanges
through which small businesses can purchase coverage.
According to experts, implementation of the ACA will create
more pressures for an adequate healthcare workforce in
SB 1416
Page 6
California. A 2011 study by the Center for the Health
Professions of the University of California, San Francisco
entitled "California's Health Care Workforce: Readiness for
the ACA Era" indicates that with California's
implementation of the ACA, four to six million more
Californians will obtain coverage. As such, there is a
need not only for a sufficient number of providers but also
providers who can meet the needs of a diverse and changing
public. Specifically, the study points out that primary
care will be the area most immediately affected because
preventive care and chronic disease management become
increasingly important.
In March 2012, the Senate Health Committee conducted two
informational hearings relating to healthcare workforce and
the ACA. The hearings explored the supply, and expected
demand for various healing arts practitioners as part of
ACA implementation. Additionally, several options were
discussed to address workforce needs.
d) Current Workforce Development Programs . The state
currently operates a number of programs designed to
increase the number of health care professionals practicing
in MUAs:
i) Foundation . The Foundation, within OSHPD, provides
scholarships and loan repayments to aspiring and
practicing health professionals who agree to practice in
a MUA. Scholarships are offered to health professions
students who are attending a California accredited
college or university. Loan repayment programs are
offered to graduates who are pursuing a health
professions 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 MUA. 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 MUAs of the
state. The STPCLRP is supported by a $25 licensure fee
paid by physicians and limits loan repayment awards from
SB 1416
Page 7
exceeding $105,000 per individual physician.
ii) 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 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.
iii) Song-Brown . Song-Brown, administered by OSHPD, was
established in 1973 to increase the number of health
professional training slots in established medical
schools. According to OSHPD, support is provided to
institutions (not individual students) that provide
clinical training for family medicine residents, family
NPs (FNP), PAs and RNs. Song-Brown funds are used to
train and educate residents and students by providing
clinical training in underserved areas (HSPAs, MUAs,
Medically Underserved Populations, Primary Care Shortage
Areas, and RN Shortage Areas), who provide health care to
the state's underserved population. This provides
residents and students with experience and exposure,
increases access to health care, and provides health care
to the underserved. OSHPD indicates that Song-Brown
awards over $7.1 Million annually to institutions and
SB 1416
Page 8
currently funds the following: (1) thirty out of 38
family practice residency training programs; (2) seven
out of 22 FNP programs; (3) five out of 10 PA programs;
(4) one combined FNP/PA program; and, (5) thirty-two out
of 132 RN education programs in the State which includes
Associates, Baccalaureate, and Masters level programs.
The outcomes for 2010-11 are as follows: 58% of family
practice graduates practice in areas of unmet need; 62%
of FNP/PA graduates practice in areas of unmet need; 58%
of RN graduates practice in areas of unmet need; and,
745,186 patient encounters were provided by Song-Brown
funded family practice residents, FNPs, and PAs.
3)SUPPORT . The Medical Board of California (MBC) supports this
bill because it may help to create more medical residency
slots using private funding and may help to address physician
shortages, which is especially important as provisions of the
federal health care reform take effect in 2014. CMA states
that to address the current physician shortage, there is a
need to expand and strengthen the capacity of the state's
medical resident programs.
4)OPPOSITION . The California Right to Life Committee, Inc.,
states that this bill may in the future be the basis for code
amendments and expansion to include PAs under the residency
program and even NPs and nurse-midwives, and is concerned that
grants under this bill may eventually include non-physicians
who are presently performing first trimester abortions.
5)TECHNICAL AMENDMENT . On page 3 line 9 of the bill delete
"Committee" and replace with "Commission".
6)RELATED LEGISLATION . SB 635 (Ed Hernandez) would require
funds deposited in the Managed Care Administrative Fines and
Penalties Fund in excess of $1,000,000 to be transferred each
year to OSHPD for the purposes of Song-Brown. SB 635 is
pending in Assembly Appropriations 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.
SB 1416
Page 9
7)PREVIOUS LEGISLATION . AB 2551 (Hernandez) of 2010 would have
established the Health Workforce Development Fund to consist
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 died on the Senate Floor.
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 to
assist OSHPD in the development of a health professions
workforce master plan for the state. 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 was nearly identical to AB 657 and
in addition, would have required the Legislative Analyst's
Office to prepare a report on health workforce data and data
collection capacity. AB 2375 was held in the Senate
Appropriations Committee on suspense.
AB 2439 (De La Torre), Chapter 640, Statutes of 2008, requires
the 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% 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,
transferred 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
SB 1416
Page 10
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
physicians and surgeons working in MUAs.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
California Academy of Child & Adolescent Psychiatry
California Academy of Family Physicians
California Medical Association
Medical Board of California
Opposition
California Right to Life Committee, Inc.
Analysis Prepared by : Rosielyn Pulmano / HEALTH / (916)
319-2097