BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 503 (Wieckowski and Bonta) - Health facilities: community
benefits.
Amended: July 1, 2014 Policy Vote: Health 6-2
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 503 would repeal the existing hospital
community benefit law and replace it with a new community
benefit law. The bill would require private non-profit hospitals
to complete a community benefit plan and require 90 percent of
community benefit funds to be allocated to charity care and
projects that improve community health for underserved and
vulnerable populations or that address specific community health
needs.
Fiscal Impact:
One-time costs of $1.1 million for information technology
upgrades, developing standards for reporting by hospitals,
and adopting regulations by the Office of Statewide Health
Planning and Development (California Health Data and
Planning Fund).
Ongoing costs of $975,000 per year to review submitted
reports, verify compliance by hospitals, and operate and
maintain information technology systems by the Office of
Statewide Health Planning and Development (California Health
Data and Planning Fund).
Background: Under current law, private non-profit hospitals are
exempt from paying federal or state income tax or state property
taxes. In return, private non-profit hospitals are required to
provide community benefits. Community benefits can include
charity care provided to patients without insurance or the
ability to pay themselves, community health care services or
public education, the unreimbursed cost or providing care to
enrollees in public health care programs such as Medi-Cal or
Medicare, or other programs. (However, a 2008 change by the
AB 503 (Wieckowski and Bonta)
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federal Internal Revenue Service no longer counts uncollected
debts or shortfalls on care provided to Medicare beneficiaries
as charity care, under the federal tax exemption.) There is no
requirement in state or federal law that private non-profit
hospitals provide a specified amount of community benefit.
Private non-profit hospitals are required to provide information
to the state and federal government on their community benefit
activities. Under current law, the Office of Statewide Health
Planning and Development receives community benefit plans from
hospitals, but there is no requirement that the Office analyze
those plans for compliance with the law.
Proposed Law: AB 503 would repeal the existing hospital
community benefit law and replace it with a new community
benefit law.
Specific provisions of the bill would:
Require private non-profit hospitals and non-profit
multispecialty clinics to complete a community needs
assessment and develop a community benefits plan;
Exclude district hospitals, rural hospitals, and children's
hospitals from the bill's requirements;
Require community benefits plans to be submitted to the
Office of Statewide Health Planning and Development;
Define community benefits;
Generally prohibit uncollected debts from patients and
shortfalls in reimbursements from Medi-Cal or Medicare from
being classified as community benefits;
Require non-profit hospitals and non-profit multispecialty
clinics to allocate at least 90 percent of community
benefits to projects that improve community health for
underserved and vulnerable communities or that address a
specific need identified in the needs assessment;
Require the Office of Statewide Health Planning and
Development to develop regulations for standardized
reporting on community benefits and estimating the economic
value of community benefits;
Require the Office to calculate the total value of
community benefits provided by each covered facility;
Provide the Office with the authority to assess civil
penalties for non-compliance by covered facilities.
Related Legislation:
AB 503 (Wieckowski and Bonta)
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AB 975 (Wieckowski, 2013) was substantially similar to this
bill. That bill failed passage on the Assembly Floor.
AB 1952 (Pan) would require non-profit hospitals to provide
charity care equaling 5 percent of net patient revenue. That
bill was held on the Assembly Appropriations Committee's
Suspense File.
SB 1276 (Hernandez) would revise the existing hospital fair
billing program. That bill is pending in the Assembly
Appropriations Committee.
Staff Comments: The provision in the bill that limits private
non-profit hospitals' ability to characterize the shortfall
between payments from public programs (such as Medi-Cal or
Medicare) and the charged amount for that care will reduce the
amount of charity care that hospitals can report to the state.
Whether or not hospitals will elect to increase other charity
care expenditures to offset that reduction is unknown. Since
there is no requirement in law for private non-profit hospitals
to provide a specified amount of charity care, hospitals would
not be obligated to do so.