Amended in Senate June 17, 2014

Amended in Senate March 4, 2014

Amended in Senate June 19, 2013

Amended in Assembly May 24, 2013

Amended in Assembly April 24, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 503

Introduced by Assembly Members Wieckowski and Bonta

begin insert

(Coauthor: Senator Beall)

end insert

February 20, 2013

An act to amend Sections 127280, begin delete 127400, end delete and 129050 of, to add Chapter 2.6 (commencing with Section 127470) to Part 2 of Division 107 of, and to repeal Article 2 (commencing with Section 127340) of Chapter 2 of Part 2 of Division 107 of, the Health and Safety Code, relating to health facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 503, as amended, Wieckowski. Health facilities: community benefits.

Existing law makes certain findings and declarations regarding the social obligation of private nonprofit hospitals to provide community benefits in the public interest, and requires these hospitals, among other responsibilities, to adopt and update a community benefits plan for providing community benefits either alone, in conjunction with other health care providers, or through other organizational arrangements. Existing law requires each private nonprofit hospital, as defined, to complete a community needs assessment, as defined, and to thereafter update the community needs assessment at least once every 3 years. Existing law also requires the hospital to file a report on its community benefits plan and the activities undertaken to address community needs with the Office of Statewide Health Planning and Development. Existing law requires the statewide office to make the plans available to the public. Existing law requires that each hospital include in its community benefits plan measurable objectives and specific benefits.

This bill would declare the necessity of establishing uniform standards for reporting the amount of charity care and community benefits a facility provides to ensure that private nonprofit hospitals and nonprofit multispecialty clinics actually meet the social obligations for which they receive favorable tax treatment, among other findings and declarations.

This bill would require a private nonprofit hospital and nonprofit multispecialty clinic, as defined, to provide community benefits to the public by allocating available community benefit moneys to charity health care, as defined, and community building activities, as specified. The bill would, by January 1, 2017, require a private nonprofit hospital and nonprofit multispecialty clinic to develop, in collaboration with the community benefits planning committee, as established, a community benefits statement and a description of the process for approval of the community benefits statement by the hospital’s or clinic’s governing board, as specified. This bill would require the hospital or clinic, no later than 30 days prior to adopting a community benefits plan, to complete a community needs assessment, as provided. The bill would authorize the hospital or clinic to create a community benefits advisory committee for the purpose of soliciting community input. This bill would require the hospital or clinic to make available to the public a copy of the assessment, file the assessment with the Office of Statewide Health Planning and Development, and update the assessment at least every 3 years.

This bill would also require a private nonprofit hospital and nonprofit multispecialty clinic, by April 1, 2017, to develop a community benefits plan that includes a summary of the needs assessment and a statement of the community health care needs that will be addressed by the plan, and list the services, as provided, that the hospital or clinic intends to provide in the following year to address community health needs identified in the community health needs assessments. The bill would require the hospital or clinic to make its community health needs assessment and community benefits plan or community health plan available to the public on its Internet Web site and would require that a copy of the assessment and plan be given free of charge to any person upon request.

This bill would require a private nonprofit hospital or nonprofit multispecialty clinic, after April 1, 2017, every 2 years to submit a community benefits plan to the Office of Statewide Health Planning and Development, as specified, and would allow a hospital or clinic under the common control of a single corporation or other entity to file a consolidated plan, as provided. The bill would require that the governing board of each hospital or clinic adopt the community benefits plan and make it available to the public, as specified.

This bill would require the Office of Statewide Health Planning and Development to develop and adopt regulations to prescribe a standardized format for community benefits plans, as provided, to provide technical assistance to help private nonprofit hospitals and nonprofit multispecialty clinics exempt from licensure comply with the community benefits provisions, to make public each community health needs assessment and community benefits plan and any comments received regarding those assessments and plans, to maintain a public calendar of community benefit plan adoption meetings, and to calculate and make public the total value of community benefits provided by hospitals, as specified. This bill would authorize the Office of Statewide Health Planning and Development to assess a civil penalty, as provided, against any hospital or clinic that fails to comply with these provisions. This bill would make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 127280 of the Health and Safety Code
is amended to read:

127280.  

(a) Every health facility licensed pursuant to Chapter
2 (commencing with Section 1250) of Division 2, except a health
facility owned and operated by the state, shall each year be charged
a fee established by the office consistent with the requirements of
this section.

(b) Commencing in calendar year 2004, every freestanding
ambulatory surgery clinic, as defined in Section 128700, shall each
year be charged a fee established by the office consistent with the
requirements of this section.

(c) The fee structure shall be established each year by the office
to produce revenues equal to the appropriation made in the annual
Budget Act or another statute to pay for the functions required to
be performed by the office pursuant to this chapter, Chapter 2.6
(commencing with Section 127470), or Chapter 1 (commencing
with Section 128675) of Part 5, and to pay for any other
health-related programs administered by the office. The fee shall
be due on July 1 and delinquent on July 31 of each year.

(d) The fee for a health facility that is not a hospital, as defined
in subdivision (c) of Section 128700, shall be not more than 0.035
percent of the gross operating cost of the facility for the provision
of health care services for its last fiscal year that ended on or before
June 30 of the preceding calendar year.

(e) The fee for a hospital, as defined in subdivision (c) of Section
128700, shall be not more than 0.035 percent of the gross operating
cost of the facility for the provision of health care services for its
last fiscal year that ended on or before June 30 of the preceding
calendar year.

(f) The fee for a freestanding ambulatory surgery clinic shall
be established at an amount equal to the number of ambulatory
surgery data records submitted to the office pursuant to Section
128737 for encounters in the preceding calendar year multiplied
by not more than fifty cents ($0.50).

(g) There is hereby established the California Health Data and
Planning Fund within the office for the purpose of receiving and
expending fee revenues collected pursuant to this chapter.

(h) Any amounts raised by the collection of the special fees
provided for by subdivisions (d), (e), and (f) that are not required
to meet appropriations in the Budget Act for the current fiscal year
shall remain in the California Health Data and Planning Fund and
shall be available to the office in succeeding years when
appropriated by the Legislature in the annual Budget Act or another
statute, for expenditure under the provisions of this chapter,
Chapter 2.6 (commencing with Section 127470), and Chapter 1
(commencing with Section 128675) of Part 5, or for any other
health-related programs administered by the office, and shall reduce
the amount of the special fees that the office is authorized to
establish and charge.

(i) (1) No health facility liable for the payment of fees required
by this section shall be issued a license or have an existing license
renewed unless the fees are paid. A new, previously unlicensed,
health facility shall be charged a pro rata fee to be established by
the office during the first year of operation.

(2) The license of any health facility, against which the fees
required by this section are charged, shall be revoked, after notice
and hearing, if it is determined by the office that the fees required
were not paid within the time prescribed by subdivision (c).

SEC. 2.  

Article 2 (commencing with Section 127340) of
Chapter 2 of Part 2 of Division 107 of the Health and Safety Code
is repealed.

begin delete

SEC. 3.  

Section 127400 of the Health and Safety Code is
amended to read:

127400.  

The following definitions apply for the purposes of
this article:

(a) “Allowance for financially qualified patient” means, with
respect to services rendered to a financially qualified patient, an
allowance that is applied after the hospital’s charges are imposed
on the patient, due to the patient’s determined financial inability
to pay the charges.

(b) (1) “Charity care” means the unreimbursed cost to a private
nonprofit hospital or nonprofit multispecialty clinic of providing
services to the uninsured or underinsured, as well as providing
funding or otherwise financially supporting any of the following:

(A) Health care services or items on an inpatient or outpatient
basis to a financially qualified patient with no expectation of
payment.

(B) Health care services or items provided to a financially
qualified patient through other nonprofit or public outpatient
clinics, hospitals, or health care organizations with no expectation
of payment.

(C) Any of the following, provided that the provision, funding,
or financial support of these benefits is demonstrated to reduce
community health care costs: vaccination programs and services
for low-income families, school health centers, as defined in
Section 124174, chronic illness prevention programs and services,
nursing and caregiver training provided without assessment of fees
or payment of tuition, home-based health care programs for
low-income families, or community-based mental health and
outreach and assessment programs for low-income families. For
purposes of this subparagraph, “low-income families” means
families or individuals with income less than or equal to 350
percent of the federal poverty level.

(2) Charity care does not include any of the following:

(A) Uncollected fees or accounts written off as bad debt.

(B) Care provided to patients for which a public program or
public or private grant funds pay for any of the charges for the
care.

(C) Contractual adjustments in the provision of health care
services below the amount identified as gross charges or
“chargemaster” rates by the health care provider.

(D) Any amount over 125 percent of the Medicare rate for the
health care services or items provided on an inpatient or outpatient
basis.

(E) Any amount over 125 percent of the Medicare rate for
providing, funding, or otherwise financially supporting health care
services or items with no expectation of payment provided to
financially qualified patients through other nonprofit or public
outpatient clinics, hospitals, or health care organizations.

(F) The cost to a nonprofit hospital of paying a tax or other
governmental assessment.

(c) “Federal poverty level” means the poverty guidelines updated
periodically in the Federal Register by the United States
Department of Health and Human Services under authority of
subsection (2) of Section 9902 of Title 42 of the United States
Code.

(d) “Financially qualified patient” means a patient who is both
of the following:

(1) A patient who is a self-pay patient, as defined in
subdivision(g) or a patient with high medical costs, as defined in
subdivision (h).

(2) A patient who has a family income that does not exceed 350
percent of the federal poverty level.

(e) “Hospital” means a facility that is required to be licensed
under subdivision (a), (b), or (f) of Section 1250, except a facility
operated by the State Department of State Hospitals or the
Department of Corrections and Rehabilitation.

(f) “Office” means the Office of Statewide Health Planning and
Development.

(g) “Self-pay patient” means a patient who does not have
third-party coverage from a health insurer, health care service plan,
Medicare, or Medicaid, and whose injury is not a compensable
injury for purposes of workers’ compensation, automobile
insurance, or other insurance as determined and documented by
the hospital. Self-pay patients may include charity care patients.

(h) “A patient with high medical costs” means a person whose
family income does not exceed 350 percent of the federal poverty
level, as defined in subdivision (c), if that individual does not
receive a discounted rate from the hospital as a result of his or her
third-party coverage. For these purposes, “high medical costs,”
means any of the following:

(1) Annual out-of-pocket costs incurred by the individual at the
hospital that exceed 10 percent of the patient’s family income in
the prior 12 months.

(2) Annual out-of-pocket expenses that exceed 10 percent of
the patient’s family income, if the patient provides documentation
of the patient’s medical expenses paid by the patient or the patient’s
family in the prior 12 months.

(3) A lower level determined by the hospital in accordance with
the hospital’s charity care policy.

(i) “Patient’s family” means the following:

(1) For persons 18 years of age and older, spouse, domestic
partner, as defined in Section 297 of the Family Code, and
dependent children under 21 years of age, whether living at home
or not.

(2) For persons under 18 years of age, parent, caretaker relatives,
and other children under 21 years of age of the parent or caretaker
relative.

end delete

begin delete SEC. 4. end delete
begin insert SEC. 3. end insert   

Chapter 2.6 (commencing with Section 127470) is
added to Part 2 of Division 107 of the Health and Safety Code, to
read:

 

Chapter  2.6. Community Benefits

 

Article 1.  Hospital Community Benefits

 

127470.  

(a) The Legislature finds and declares the following:

(1) Access to health care services is of vital concern to the
people of California.

(2) Health care providers play an important role in providing
essential health care services in the communities they serve.

(3) Notwithstanding public and private efforts to increase access
to health care, the people of California continue to have significant
unmet health needs. Studies indicate that as many as 6.9 million
Californians are uninsured during a year.

(4) The state has a substantial interest in ensuring that the unmet
health needs of its residents are addressed. Health care providers
can help address these needs by providing charity care and
community benefits to the uninsured and underinsured members
of their communities.

(5) Hospitals have different roles in the community depending
on their mission, governance, tax status, and articles of
incorporation. Private hospitals that are investor owned and have
for-profit tax status pay property taxes, corporate income taxes,
and other taxes, such as unemployment insurance, on a different
basis than nonprofit, district, or public hospitals. Nonprofit health
facilities, including hospitals and multispecialty clinics, as
described in subdivision (l) of Section 1206, receive favorable tax
treatment by the government and, in exchange, assume a social
obligation to provide charity care and other community benefits
in the public interest.

(b) It is the intent of the Legislature in enacting this chapter to
provide uniform standards for reporting the amount of charity care
and community benefits provided to ensure that private nonprofit
hospitals and multispecialty clinics operated by nonprofit
corporations, as described in subdivision (l) of Section 1206,
actually meet the social obligations for which they receive
favorable tax treatment.

127472.  

The following definitions apply for the purposes of
this chapter:

(a) “Community” means the service area or patient population
for which a private nonprofit hospital or nonprofit multispecialty
clinic provides health care services. A private nonprofit hospital
or nonprofit multispecialty clinic may not define its service area
to exclude medically underserved, low-income, or minority
populations who are part of its patient populations, live in
geographic areas in which its patient populations reside, otherwise
should be included based on the method the hospital facility uses
to define its community, or populations described in subdivision
(l).

(b) (1) “Community benefits” means the unreimbursed goods,
services, activities, programs, and other resources provided by a
private nonprofit hospital or nonprofit multispecialty clinic that
addresses community-identified health needs and concerns,
particularly for people who are uninsured, underserved, or members
of a vulnerable population. Community benefits include, but are
not limited to, charity care, begin delete as defined in Section 127400, end delete begin insert the cost
of community building activities, end insert the cost of community health
improvement services and community benefit operations, the cost
of school health centers, as defined in Section 124174, and the
cost of health professions education provided without charge to
community members or participants, subsidized health services
for vulnerable populations, research, contributions to community
groups, and community building activities.

begin insert

(A) “Community benefits may include any of the following,
provided that the provision, funding, or financial support of these
benefits is demonstrated to reduce community health care costs:
vaccination programs and services for low-income families, school
health centers, as defined in Section 124174, chronic illness
prevention programs and services, nursing and caregiver training
provided without assessment of fees or payment of tuition,
home-based health care programs for low-income families, or
community-based mental health and outreach and assessment
programs for low-income families. For purposes of this
subparagraph, “low-income families” means families or
individuals with income less than or equal to 350 percent of the
federal poverty level.

end insert begin insert

(B) “Community building activities” means the cost of various
kinds of community building activities, including physical
improvements and housing, economic development, community
support, environmental improvements, community health
improvement advocacy, coalition building, workforce development,
and leadership development and training for community members.

end insert begin insert

(i) “Physical improvements and housing” include, but are not
limited to, the provision or rehabilitation of housing for vulnerable
populations, such as removing building materials that harm the
health of the residents, neighborhood improvement or revitalization
projects, provision of housing for vulnerable patients upon
discharge from an inpatient facility, housing for low-income
seniors, and the development or maintenance of parks and
playgrounds to promote physical activity.

end insert begin insert

(ii) “Economic development” may include, but is not limited
to, assisting small business development in neighborhoods with
vulnerable populations and creating new employment opportunities
in areas with high rates of joblessness.

end insert begin insert

(iii) “Community support” may include, but is not limited to,
child care and mentoring programs for vulnerable populations or
neighborhoods, neighborhood support groups, violence prevention
programs, and disaster readiness and public health emergency
activities, such as community disease surveillance or readiness
training beyond what is required by accrediting bodies or
government entities.

end insert begin insert

(iv) “Environmental improvements” include, but are not limited
to, activities to address environmental hazards that effect
community health, such as alleviation of water or air pollution,
safe removal or treatment of garbage or other waste products, and
other activities to protect the community from environmental
hazards. This does not include expenditures made to comply with
environmental laws and regulations that apply to activities of itself,
its disregarded entity or entities, a joint venture in which it has an
ownership interest, or a member of a group exemption included
in a group return of which the private nonprofit hospital or
nonprofit multispecialty clinic is also a member. This also does
not include expenditures made to reduce the environmental hazards
caused by, or the environmental impact of, its own activities, or
those of its disregarded entities, joint ventures, or group exemption
members, unless the expenditures are for an environmental
improvement activity that (I) is provided for the primary purpose
of improving community health; (II) addresses an environmental
issue known to affect community health; and (III) is subsidized by
the organization at a net loss.

end insert begin insert

(v) “Leadership development and training for community
members” includes, but is not limited to, training in conflict
resolution; civic, cultural, or language skills; and medical
interpreter skills for community residents.

end insert begin insert

(vi) “Coalition building” includes, but is not limited to,
participation in community coalitions and other collaborative
efforts with the community to address health and safety issues.

end insert begin insert

(vii) “Community health improvement advocacy” includes, but
is not limited to, efforts to support policies and programs to
safeguard or improve public health, access to health care services,
housing, the environment, and transportation.

end insert begin insert

(viii) “Workforce development” includes, but is not limited to,
recruitment of physicians and other health professionals to medical
shortage areas or other areas designated as underserved, and
collaboration with educational institutions to train and recruit
health professionals needed in the community.

end insert begin insert

(C) (1) “Charity care” means the unreimbursed cost to a
private nonprofit hospital or nonprofit multispecialty clinic of
providing services to the uninsured or underinsured, as well as
providing funding or otherwise financially supporting any of the
following:

end insert begin insert

(A)  Health care services or items on an inpatient or outpatient
basis to a financially qualified patient with no expectation of
payment.

end insert begin insert

(B) Health care services or items provided to a financially
qualified patient through other nonprofit or public outpatient
clinics, hospitals, or health care organizations with no expectation
of payment.

end insert begin insert

(2) Charity care does not include any of the following:

end insert begin insert

(A) Uncollected fees or accounts written off as bad debt.

end insert begin insert

(B) Care provided to patients for which a public program or
public or private grant funds pay for any of the charges for the
care.

end insert begin insert

(C) Contractual adjustments in the provision of health care
services below the amount identified as gross charges or
“chargemaster” rates by the health care provider.

end insert begin insert

(D) Any amount over 125 percent of the Medicare rate for the
health care services or items provided on an inpatient or outpatient
basis.

end insert begin insert

(E) Any amount over 125 percent of the Medicare rate for
providing, funding, or otherwise financially supporting health care
services or items with no expectation of payment provided to
financially qualified patients through other nonprofit or public
outpatient clinics, hospitals, or health care organizations.

end insert begin insert

(F) The cost to a nonprofit hospital of paying a tax or other
governmental assessment.

end insert begin delete

(2)

end delete

begin insert (3) end insert  “Community benefits” does not mean the unreimbursed cost
of providing services to those enrolled in Medi-Cal, Medicare,
California Childrens Services Program, or county indigent
programs or any goods, services, activities, programs, or other
resources program or activity for which there is direct offsetting
revenue.

(c) “Community benefits plan” means the written document
prepared for annual submission to the office that includes, but is
not limited to, a description of the activities that the private
nonprofit hospital or nonprofit multispecialty clinic has undertaken
to address identified community needs within its mission and
financial capacity, and the process by which the hospital or clinic
develops the plan in consultation with the community.

(d) (1) “Community benefits planning committee” means a
committee, designated by a private nonprofit hospital or nonprofit
multispecialty clinic, that oversees the community needs
assessment and the development of the community benefits plan
implementation strategy to meet the community health needs
identified through the community health needs assessment.

(2) The community benefits planning committee shall be
composed of the following:

(A) One of the following:

(i) The governing board of the hospital organization that operates
the hospital facility or a committee or other party authorized by
that governing body to the extent that the committee or other party
is permitted under state law to act on behalf of the governing body.

(ii) If the hospital facility has its own governing body and is
recognized as an entity under state law but is a disregarded entity
for federal tax purposes, the governing body of that hospital facility
or other committee or party authorized by that governing body to
the extent that the committee or other party is permitted under state
law to act on behalf of the governing body.

(B) At least one individual from the local, tribal, or regional
governmental public health department, or an equivalent
department or agency, with knowledge, information, or expertise
relevant to the health needs of that community.

(C) At least one individual from an underserved and vulnerable
population, as defined in Section 127400.

(e) “Community health needs assessment” means the process
by which the private nonprofit hospital or nonprofit multispecialty
clinic identifies, for its service area as determined by the hospital
or clinic, unmet community needs.

(f) “Discounted care” means the cost for medical care provided
consistent with Article 1 (commencing with Section 127400) of
Chapter 2.5.

(g) (1) “Direct offsetting revenue” means revenue from goods,
services, activities, programs, or other resources that offsets the
total community benefit expense of the goods, services, activities,
programs, or other resources.

(2) Direct offsetting revenue includes revenue generated by the
goods, services, activities, programs, or other resources, including,
but not limited to, payment or reimbursement for services provided
to program patients as well as restricted grants or contributions
that the private nonprofit hospital or nonprofit multispecialty clinic
uses to provide a community benefit, such as a restricted grant to
provide financial assistance or fund research.

(3) “Direct offsetting revenue” does not include unrestricted
grants or contributions that the private nonprofit hospital or
nonprofit multispecialty clinic uses to provide a community benefit.

(h) “Free care” means the unreimbursed cost for medical care
for a patient who cannot afford to pay for care provided consistent
with Article 1 (commencing with Section 127400) of Chapter 2.5.

(i) “Nonprofit multispecialty clinic” means a clinic as described
in subdivision (l) of Section 1206.

(j) “Office” means the Office of Statewide Health Planning and
Development.

(k) “Private nonprofit hospital” means a private nonprofit acute
care hospital operated or controlled by a nonprofit corporation, as
defined in Section 5046 of the Corporations Code, that has been
determined to be exempt from taxation under the Internal Revenue
Code. For purposes of this chapter, “private nonprofit hospital”
does not include any of the following:

(1) A district hospital organized and governed pursuant to the
Local Health Care District Law (Division 23 (commencing with
Section 32000)).

(2) A rural general acute care hospital, as defined in subdivision
(a) of Section 1250.

(3) A children’s hospital, as defined in Section 10727 of the
Welfare and Institutions Code.

(4) A multispecialty clinic operated by a for-profit hospital,
regardless of its net revenue.

(l) “Underserved and vulnerable population” means any of the
following:

begin delete

(1) A population that has disproportionate unmet health-related
needs, such as a high prevalence of one or more health conditions
or concerns, and that has limited access to timely, quality health
care.

(2) A population that is exposed to medical or financial risk by
virtue of being uninsured, underinsured, or eligible for Medi-Cal,
Medicare, California Childrens Services Program, or county
indigent programs.

(3) A population with concentrations of people that are of low
income, high unemployment, low levels of homeownership, high
rent burden, sensitive populations, including, but not limited to,
children under 10 years of age and elderly over 65 years of age,
and people with co-morbidities, boys and men of color, low
educational attainment as measured by percent of the population
over 25 years of age with less than a high school diploma, linguistic
isolation as measured by percentage of households in which no
one 14 years of age or older speaks English very well or speaks
English only.

(4) A population affected by environmental hazards that can
lead to negative public health effects.

end delete begin insert

(1) A population that is exposed to medical or financial risk by
virtue of being uninsured, underinsured, or eligible for Medi-Cal
or county indigent program.

end insert begin insert

(A) “Uninsured” means a self-pay patient as defined in Section
127400.

end insert begin insert

(B) “Underinsured” means a patient with high medical costs,
as defined in Section 127400.

end insert begin insert

(2) A population including, but not limited to the following:

end insert begin insert

(A) Individuals with low educational attainment as measured
by the percentage of the population over 25 years of age with less
than a high school diploma.

end insert begin insert

(B) Individuals who suffer from linguistic isolation as measured
by the percentage of households in which no one who is 14 years
of age or older speaks English very well, or as defined in Section
39711.

end insert begin insert

(C) Individuals who are 10 years of age or younger, individuals
who are over 65 years of age, and underserved minority
populations as long as the factors described in subparagraph (A)
or (B) are met.

end insert

127473.  

A private nonprofit hospital or a nonprofit
multispecialty clinic that reports community benefits to the
community shall report on those community benefits in a consistent
and comparable manner to all other private nonprofit hospitals and
nonprofit multispecialty clinics.

127474.  

A private nonprofit hospital or a nonprofit
multispecialty clinic shall make its community health needs
assessment and community benefits plan available to the public
on its Internet Web site. A copy of the assessment and plan shall
be given free of charge to any person upon request.

 

Article 2.  Community Benefits Statement, Community Needs
Assessment, and Community Benefits Plan

 

127475.  

(a) Private nonprofit hospitals and nonprofit
multispecialty clinics shall provide community benefits to the
community as follows:

(1) A minimum of 90 percent of the available community benefit
moneys shall be allocated to charity care and projects that improve
community health for underserved and vulnerable populations.

(2) A minimum of 25 percent of the available community benefit
moneys shall be allocated to community building activities
geographically located within underserved and vulnerable
populations.

(3) To meet the requirements of paragraphs (1) and (2), moneys
shall be used for projects that simultaneously meet both criteria.

(b) By January 1, 2017, each private nonprofit hospital and each
nonprofit multispecialty clinic shall develop, in collaboration with
the community benefits planning committee, all of the following:

(1) A community benefits statement that describes the hospital’s
or clinic’s commitment to developing, adopting, and implementing
a community benefits program. The hospital’s or clinic’s governing
board shall document that it has reviewed the clinic’s
organizational mission statement and considered amendments to
it that would better align that organizational mission statement
with the community benefits statement.

(2) A description of the process for approval of the community
benefits statement by the hospital’s or clinic’s governing board,
including a declaration that the board and administrators of the
hospital or clinic shall be responsible for oversight and
implementation of the community benefits plan. The board may
establish a community benefits implementation committee that
shall include members of the board, senior administrators, and
community stakeholders.

(3) A community health needs assessment pursuant to Section
127476 that evaluates the health needs and resources of the
community it serves.

(c) By April 1, 2017, a private nonprofit hospital or nonprofit
multispecialty clinic shall develop, in collaboration with the
community, a community benefits plan pursuant to Section 127477
designed to achieve all of the following outcomes:

(1) Access to health care for members of underserved and
vulnerable populations.

(2) The addressing of essential health care needs of the
community, with particular attention to the needs of members of
underserved and vulnerable populations.

(3) The creation of measurable improvements in the health of
the community, with particular attention to the needs of members
of underserved and vulnerable populations.

127476.  

(a) Prior to adopting a community benefits plan, a
private nonprofit hospital or nonprofit multispecialty clinic shall
complete a community needs assessment that evaluates the health
needs and resources of the community served by the hospital or
clinic that is designed to achieve the outcomes specified in
subdivision (c) of Section 127475.

(b) In conducting its community health needs assessment, a
private nonprofit hospital or nonprofit multispecialty clinic shall
solicit comments from and meet with local government officials,
including representatives of local public health departments. A
private nonprofit hospital or nonprofit multispecialty clinic shall
also solicit comments from and meet with health care providers,
registered nurses, community groups representing, among others,
patients, labor, seniors, and consumers, and other health-related
organizations. Particular attention shall be given to persons who
are themselves underserved and who work with underserved and
vulnerable populations. Particular attention shall also be given to
identifying local needs to address racial and ethnic disparities in
health outcomes. A private nonprofit hospital or nonprofit
multispecialty clinic may create a community benefits advisory
committee for the purpose of soliciting community input.

(c) In preparing its community health needs assessment, a private
nonprofit hospital or nonprofit multispecialty clinic shall use
available public health data. A private nonprofit hospital or
nonprofit multispecialty clinic may collaborate with other facilities
and health care institutions in conducting community health needs
assessments and may make use of existing studies in completing
their own needs assessments.

(d) Not later than 30 days prior to completing a community
health needs assessment, a private nonprofit hospital or nonprofit
multispecialty clinic shall make available to the public a copy of
the assessment for review and comment.

(e) A community health needs assessment shall be filed with
the office. A private nonprofit hospital or a nonprofit multispecialty
clinic shall update its community needs assessment at least every
three years.

127477.  

(a) By April 1, 2017, a private nonprofit hospital or
nonprofit multispecialty clinic shall develop a community benefits
plan that conforms with this chapter.

(b) In developing a community benefits plan, a private nonprofit
hospital or nonprofit multispecialty clinic shall solicit comments
from and meet with local government officials, including
representatives of local public health departments. A private
nonprofit hospital or nonprofit multispecialty clinic shall also
solicit comments from and meet with health care providers,
community groups representing, among others, patients, labor,
seniors, and consumers, and other health-related organizations.
Particular attention shall be given to persons who are themselves
underserved, who work with underserved and vulnerable
populations, and who work with populations at risk for racial and
ethnic disparities in health outcomes.

(c) A community benefits plan shall include, at a minimum, all
of the following:

(1) A summary of the needs assessment and a statement of the
community health care needs that will be addressed by the plan.

(2) A list of the services the private nonprofit hospital or
nonprofit multispecialty clinic intends to provide in the following
year to address community health needs identified in the
community health needs assessments. The list of services shall be
categorized under the following:

(A) Charity care, as defined in subdivision (b) of Section
begin delete 127400. end delete begin insert 127472. end insert

(B) Other community benefits, including community health
improvement services and community benefit operations, health
professions education, subsidized health services, research, and
contributions to community groups.

(C) Community building activities targeting underserved and
vulnerable populations.

(3) A description of the target community or communities that
the plan is intended to benefit.

(4) An estimate of the economic value of the community benefits
that the private nonprofit hospital or nonprofit multispecialty clinic
intends to provide.

(5) A summary of the process used to elicit community
participation in the community health needs assessment and
community benefits plan design, and a description of the process
for ongoing participation of community members in plan
implementation and oversight, and a description of how the
assessment and plan respond to the comments received by the
private nonprofit hospital or nonprofit multispecialty clinic from
the community.

(6) A list of individuals, organizations, and government officials
consulted during the development of the plan.

(7) A description of the intended impact on health outcomes
attributable to the plan, including short- and long-term measurable
goals and objectives.

(8) Mechanisms to evaluate the plan’s effectiveness.

(9) The name and title of the individual responsible for
implementing the plan.

(10) The names of individuals on the private nonprofit hospital’s
or nonprofit multispecialty clinic’s governing board.

(11) If applicable, a report on the community benefits efforts
of the preceding year, including the amounts and types of
community benefits provided, in a manner to be prescribed by the
office; a statement of the plan’s impact on health outcomes,
including a description of the private nonprofit hospital’s or
nonprofit multispecialty clinic’s progress toward meeting its short-
and long-term goals and objectives; and an evaluation of the plan’s
effectiveness.

(d) A private nonprofit hospital or nonprofit multispecialty clinic
may also report on bad debts, Medicare shortfalls, Medi-Cal
shortfalls, and shortfalls from any other public program. Reporting
bad debts, Medicare shortfalls, Medi-Cal shortfalls, and other
shortfalls from any other public program shall not be reported as
community benefits and shall be calculated based on hospital costs,
not charges.

(e) The governing board of a private nonprofit hospital or
nonprofit multispecialty clinic shall adopt the community benefits
plan at a meeting that is open to the public. No later than 30 days
prior to the plan’s adoption by the governing board of the private
nonprofit hospital or nonprofit multispecialty clinic, a private
nonprofit hospital or nonprofit multispecialty clinic shall make
available to the public and to the office, in a printed copy and on
its Internet Web site, both of the following:

(1) A draft of its community benefits plan.

(2) Notice of the date, time, and location of the meeting at which
the community benefits plan is to be voted on for adoption by the
governing board of the private nonprofit hospital or nonprofit
multispecialty clinic.

(f) After April 1, 2017, a private nonprofit hospital or nonprofit
multispecialty clinic shall, every two years, submit a community
benefits plan that conforms with this chapter and subdivisions (b)
to (e), inclusive, to the office, no later than 120 days after the end
of the hospital’s or clinic’s fiscal year.

(g) A person or entity may file comments on a private nonprofit
hospital’s or nonprofit multispecialty clinic’s community benefits
plan with the office.

(h) A private nonprofit hospital or nonprofit multispecialty
clinic, under the common control of a single corporation or another
entity, may file a consolidated plan if the plan addresses services
in all of the categories listed in paragraph (2) of subdivision (c) to
be provided by each hospital or clinic under common control of
the corporation or entity.

 

Article 3.  Duties of the Office of Statewide Health Planning
and Development

 

127487.  

(a) (1) The office shall develop and adopt regulations
to prescribe a standardized format for community benefits plans
pursuant to this chapter.

(2) The office shall develop a standardized methodology for
estimating the economic value of community benefits.

(3) In developing standards of reporting on community benefits,
the office shall, to the maximum extent possible, conform to
Internal Revenue Service reporting standards for those data
elements reported to the Internal Revenue Service, but shall also
include those data elements required under this chapter or other
state law, including charity care, as defined in Section 127400.

(4) A private nonprofit hospital or nonprofit multispecialty clinic
shall annually file with the office its IRS Form 990, or its successor
form, and the office shall post the form on its Internet Web site.

(b) The office shall provide technical assistance to help private
nonprofit hospitals and nonprofit multispecialty clinics comply
with this chapter.

(c) The office shall make public a community health needs
assessment and community benefits plan and any comments
received regarding those assessments and plans. The office shall
make these documents available on its Internet Web site.

(d) The office shall maintain a public calendar of community
benefit adoption meetings held by the governing board of each
private nonprofit hospital or nonprofit multispecialty clinic. Notice
that includes the Office of Statewide Health Planning and
Development (OSHPD) facility number, name, parent company,
date, time, and location of each meeting shall be posted no later
than 14 days prior to the meeting date.

(e) For begin delete each end delete begin insert every other end insert year that a community benefits plan is
submitted pursuant to subdivision (f) of Section 127477, the office
shall annually calculate and make public the total value of
community benefits provided by each private nonprofit hospital
and nonprofit multispecialty clinic that reports pursuant to this
chapter.

127488.  

The office may assess a civil penalty against begin delete any end delete begin insert a end insert
private nonprofit hospital or nonprofit multispecialty clinic that
fails to comply with this article in the same manner as specified
in Section 128770.

begin delete SEC. 5. end delete
begin insert SEC. 4. end insert   

Section 129050 of the Health and Safety Code is
amended to read:

129050.  

A loan shall be eligible for insurance under this chapter
if all of the following conditions are met:

(a) The loan shall be secured by a first mortgage, first deed of
trust, or other first priority lien on a fee interest of the borrower
or by a leasehold interest of the borrower having a term of at least
20 years, including options to renew for that duration, longer than
the term of the insured loan. The security for the loan shall be
subject only to those conditions, covenants and restrictions,
easements, taxes, and assessments of record approved by the office,
and other liens securing debt insured under this chapter. The office
may require additional agreements in security of the loan.

(b) The borrower obtains an American Land Title Association
title insurance policy with the office designated as beneficiary,
with liability equal to the amount of the loan insured under this
chapter, and with additional endorsements that the office may
reasonably require.

(c) The proceeds of the loan shall be used exclusively for the
construction, improvement, or expansion of the health facility, as
approved by the office under Section 129020. However, loans
insured pursuant to this chapter may include loans to refinance
another prior loan, whether or not state insured and without regard
to the date of the prior loan, if the office determines that the amount
refinanced does not exceed 90 percent of the original total
construction costs and is otherwise eligible for insurance under
this chapter. The office may not insure a loan for a health facility
that the office determines is not needed pursuant to subdivision
(k).

(d) The loan shall have a maturity date not exceeding 30 years
from the date of the beginning of amortization of the loan, except
as authorized by subdivision (e), or 75 percent of the office’s
estimate of the economic life of the health facility, whichever is
the lesser.

(e) The loan shall contain complete amortization provisions
requiring periodic payments by the borrower not in excess of its
reasonable ability to pay as determined by the office. The office
shall permit a reasonable period of time during which the first
payment to amortization may be waived on agreement by the lender
and borrower. The office may, however, waive the amortization
requirements of this subdivision and of subdivision (g) of this
section when a term loan would be in the borrower’s best interest.

(f) The loan shall bear interest on the amount of the principal
obligation outstanding at any time at a rate, as negotiated by the
borrower and lender, as the office finds necessary to meet the loan
money market. As used in this chapter, “interest” does not include
premium charges for insurance and service charges if any. Where
a loan is evidenced by a bond issue of a political subdivision, the
interest thereon may be at any rate the bonds may legally bear.

(g) The loan shall provide for the application of the borrower’s
periodic payments to amortization of the principal of the loan.

(h) The loan shall contain those terms and provisions with
respect to insurance, repairs, alterations, payment of taxes and
assessments, foreclosure proceedings, anticipation of maturity,
additional and secondary liens, and other matters the office may
in its discretion prescribe.

(i) The loan shall have a principal obligation not in excess of
an amount equal to 90 percent of the total construction cost.

(j) The borrower shall offer reasonable assurance that the
services of the health facility will be made available to all persons
residing or employed in the area served by the facility.

(k) The office has determined that the facility is needed by the
community to provide the specified services. In making this
determination, the office shall do all of the following:

(1) Require the applicant to describe the community needs the
facility will meet and provide data and information to substantiate
the stated needs.

(2) Require the applicant, if appropriate, to demonstrate
participation in the community needs assessment required by
Section 127476.

(3) Survey appropriate local officials and organizations to
measure perceived needs and verify the applicant’s needs
assessment.

(4) Use any additional available data relating to existing facilities
in the community and their capacity.

(5) Contact other state and federal departments that provide
funding for the programs proposed by the applicant to obtain those
departments’ perspectives regarding the need for the facility.
Additionally, the office shall evaluate the potential effect of
proposed health care reimbursement changes on the facility’s
financial feasibility.

(6) Consider the facility’s consistency with the Cal-Mortgage
state plan.

(l) In the case of acquisitions, a project loan shall be guaranteed
only for transactions not in excess of the fair market value of the
acquisition.

Fair market value shall be determined, for purposes of this
subdivision, pursuant to the following procedure, that shall be
utilized during the office’s review of a loan guarantee application:

(1) Completion of a property appraisal by an appraisal firm
qualified to make appraisals, as determined by the office, before
closing a loan on the project.

(2) Evaluation of the appraisal in conjunction with the book
value of the acquisition by the office. When acquisitions involve
additional construction, the office shall evaluate the proposed
construction to determine that the costs are reasonable for the type
of construction proposed. In those cases where this procedure
reveals that the cost of acquisition exceeds the current value of a
facility, including improvements, then the acquisition cost shall
be deemed in excess of fair market value.

(m) Notwithstanding subdivision (i), any loan in the amount of
ten million dollars ($10,000,000) or less may be insured up to 95
percent of the total construction cost.

In determining financial feasibility of projects of counties
pursuant to this section, the office shall take into consideration
any assistance for the project to be provided under Section 14085.5
of the Welfare and Institutions Code or from other sources. It is
the intent of the Legislature that the office endeavor to assist
counties in whatever ways are possible to arrange loans that will
meet the requirements for insurance prescribed by this section.

(n) The project’s level of financial risk meets the criteria in
Section 129051.