BILL ANALYSIS �
AB 2458
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Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
AB 2458 (Bonilla) - As Amended: April 10, 2014
SUBJECT : Medical residency training program grants.
SUMMARY : Establishes the Graduate Medical Education Fund (Fund)
to administer and fund grants to graduate medical education
(GME) residency programs. Specifically, this bill :
1)Establishes the Fund in the California State Treasury.
2)Appropriates $25 million to the Fund from the General Fund in
fiscal year 2014-15 and appropriates $2.84 million to the Fund
per year for three years from the California Health Data and
Planning Fund commencing with the 2014-15 fiscal year.
3)Requires moneys in the Fund, upon appropriation by the
Legislature, to be used only for administering and funding
grants to GME residency programs located in California
hospitals or teaching health centers.
4)Requires all interest earned on the Fund to be retained and
used for purposes consistent with the Fund. Allows costs
incurred or those that might be incurred by the Office of
Statewide Health Planning and Development (OSHPD) to come
directly from the Fund.
5)Requires the Fund to consist of all assessments, transfers,
and appropriations received pursuant to 2) above, and any
interest that accrues.
6)Requires OSHPD, in consultation with the California Healthcare
Workforce Policy Commission, to develop criteria for
distribution of available moneys in the Fund.
7)Requires moneys appropriated from the Fund to be used to fund
new GME residency positions.
8)Requires OSHPD, whenever applicable, to utilize moneys
appropriated from the Fund to provide a match for available
federal funds for GME.
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9)Provides that this bill does not affect existing funding for
the Song-Brown Health Care Workforce Training Act of 1973
(Song-Brown) for family medicine residency or physician
assistant (PA), family nurse practitioner, and registered
nurse (RN) training programs.
EXISTING LAW :
1)Establishes the Health Professions Education Foundation (HPEF)
within OSHPD to, among other functions, develop criteria for
evaluating applicants for various scholarships or loans.
2)Establishes 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 PAs, primary
care nurse practitioners (PCNPs), 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 these practitioners.
3)Establishes the California Physician Corps Program, which
consists of the Physician Loan Repayment Program and the
Physician Volunteer Program, administered by HPEF. Provides
that the Physician Loan Repayment Program provides financial
incentives, as specified, to program applicants who possess a
current valid medical or osteopathic license who practice in
medically underserved communities, as specified. Allows up to
20% of the available positions to be awarded to program
applicants from specialties outside of primary care.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill
establishes the Fund to finance additional slots in residency
programs in California hospitals and health centers; that the
average cost of a residency program slot is estimated at
$100,000. The author states that currently there is
inadequate funding for primary care residency programs in this
state for enough of our medical school graduates to complete
their primary care residencies here in California. The
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Governor's 2014-15 proposed Budget includes an allocation of
$2.84 million dollars each year, for a term of three years to
expand the Song-Brown Primary Care Residency Program. This is
a repayment from funds borrowed from the California Health
Data and Planning Fund. This bill builds on this proposed
investment by calling for an additional infusion of money from
our state's General Fund. The author argues that by creating
a dedicated Fund for such purposes and investing money into
the Fund, California can begin to address this problem.
2)BACKGROUND . According to the author, California has a
well-documented shortage of primary care physicians. The
Council on Graduate Medical Education recommends a ratio of
60-80 primary care physicians per 100,000 population.
Communities with more family physicians have been shown to
have better health outcomes, but the majority of California
counties (73%) have less than the recommended number of
primary care practitioners and only 34% of physicians
statewide practice primary care. In addition, many are
nearing retirement and one-third of California primary care
physicians are age 60 or older. We need to educate an
estimated 515 new family practitioners every year to meet this
need, but currently there are only 370 residency slots for
medical school graduates to train in the state's 49 family
practice residency programs. With the high current demand and
the low number of training slots, California can produce only
half the needed primary care providers and as more
Californians gain health care coverage, the need for primary
care physicians will increase.
In 2013, 1,416 students graduated from a California medical
school and 1,427 originally from California left to attend
medical school in other states. According to the Association
of American Medical Colleges 2013 State Physician Workforce
Data Book, California is the best in the nation in physician
retention. On average, 37.8% of medical students will
practice in the state in which they receive their degree and
for California that number is 62.4%; of those who complete
their residency 69.5% remain in California; and, of those who
complete both their medical degree and residency 80.1% stay in
California to practice.
3)GRADUATE MEDICAL EDUCATION . GME is training for medical
school graduates at more than 1,000 of the nation's hospitals.
The single largest source of funding for GME is the federal
Department of Health and Human Services through the Centers
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for Medicare and Medicaid Services. According to a 2012
Health Affairs health policy brief on GME, overall support for
GME comes out of a number of separate public and private
sources. Each year the federal government contributes about
$9.5 billion in Medicare funds, and approximately $2 billion
in Medicaid to help pay for GME. The federal government also
funds GME in children's hospitals through a program called
Teaching Health Centers Graduate Medical Education Program,
which trains residents in community-based ambulatory settings;
and through contributions from other agencies, including the
Department of Defense, the Department of Veterans Affairs, the
Health Resources and Service Administration, and the National
Institutes of Health. Additionally, the brief points out that
more than 40 states have paid about $3.78 billion through
their Medicaid programs to support GME in 2009. Since then,
many states have reduced their support for advanced medical
training. Private insurers support GME to some degree through
payments they negotiate with teaching hospitals.
The Health Affairs brief states that Medicare supports GME
through two separate methodologies when calculating payments
to hospitals: direct payments to pay the salaries of the
residents and the supervising physicians' time; and, indirect
payments to subsidize other hospital expenses associated with
running training programs, such as longer inpatient stays and
more use of tests. These payments are based, in part, on the
number of residents a hospital trains and the number of
Medicare patients it treats. Of the estimated $9.5 billion in
Medicare funds spent on GME in 2010, approximately $3 billion
went for direct payments and $6.5 billion went for indirect
payments.
4)GRADUATE MEDICAL EDUCATION AND THE ACA . On March 23, 2010,
President Obama signed the (Public Law (PL) 111-148), as
amended by the Health Care and Education Reconciliation Act of
2010 (PL 111-152). Specifically, the Patient Protection
Affordable Care Act (ACA) increases the number of GME training
positions by redistributing currently unused slots, with
priorities given to primary care and general surgery and to
states with the lowest resident physician-to-population ratios
(effective July 1, 2011); increases flexibility in laws and
regulations that govern GME funding to promote training in
outpatient settings (effective July 1, 2010); and, ensures the
availability of residency programs in rural and underserved
areas. The ACA also calls for the establishment of GME
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teaching health centers (THCs), defined as community-based,
ambulatory patient care centers, including federally qualified
health centers and other federally-funded health centers that
are eligible for payments for the expenses associated with
operating primary care residency programs. California
received eight GME THC grants for a total of over $6.6 million
resulting in six health centers providing clinical rotation to
75 residents. This five-year funding program will expire in
2015 with no additional federal funding planned.
5)SONG-BROWN . Song-Brown, administered by OSHPD, was
established in 1973 to improve access to health care for
California's low-income and uninsured population through
grants to health professions training institutions that
provide clinical training for family medicine physician
residents, PCNPs, PAs, and RN students. Family medicine is a
specialty within primary care. Other primary care specialties
include internal medicine, obstetrician-gynecologist (OB/GYN),
and pediatrics. There are 110 primary care residencies in the
state, including the 44 family practice residency programs
that are currently statutorily eligible to apply for and
receive Song-Brown funds. The remaining 66 residencies
include 31 internal medicine, 18 OB/GYN, and 17 pediatric
residency programs. OSHPD indicates that Song-Brown funds are
used to train and educate residents and students by providing
clinical training in underserved areas (Health Professional
Shortage Areas, Medically Underserved Areas, Medically
Underserved Populations, Primary Care Shortage Areas, and RN
Shortage Areas), as well as rural communities.
Since 2006, Song-Brown has provided funding to 319 health
professions training programs and supported more than 14,189
residents and trainees. Song-Brown providers deliver family
medicine services in all of the University of California's
teaching hospitals, 37 county facilities, and 46 community
health centers. In fiscal year 2011-12, Song-Brown funded
programs served approximately 1.3 million patients in
underserved communities. Family medicine resident physicians
who train in community clinic settings are nearly three times
as likely to practice in underserved settings after graduation
when compared to residents who did not train in community
health centers.
6)SUPPORT . The California Academy of Family Physicians (CAFP)
and the California Medical Association (CMA) are the sponsors
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of this bill. CMA states that GME is the hands-on training
that doctors must obtain for a medical license; GME is
financed through federal, state, and private funds,
traditionally the bulk comes from federal Medicare
contributions, about $9.5 billion annually nationwide.
According to CMA, this federal funding source has been frozen
since 1997, while California's population has grown 20% in the
same timeframe. CMA contends that our state has a trove of
primary care residents, including graduates from California
medical schools who want to train here but are forced to leave
due to limited training slots in medical residency programs.
CAFP writes that California must make increasing residency
slots a priority to ensure that every Californian has access
to a physician when and where they need one. According to
CAFP, providing this added funding for residency programs in
underserved areas will not only produce an average of 600
additional patient visits per year per physician during
training, it will increase long-term workforce in those areas
where shortages exist because a majority of physicians go on
to practice medicine in the region in which they train.
The American Congress of Obstetricians and Gynecologists,
District IX (California) writes that additional physicians,
and particularly primary care physicians, will be needed for
our growing and aging population. Given that many women see
only their OB/GYN, it can be an effective use of resources for
an OB/GYN to also be her primary care physician. This is a
low-cost investment in the future health of all Californians.
The American Osteopathic Association (AOA) and the Osteopathic
Physicians and Surgeons of California (OPSC) are also in
support of this bill and explain that while only 8% of
physicians are DOs, 40% practice in medically underserved
areas and 21% of primary care specialty DOs practice in a
rural area. AOA and OPSC state that the creation of
alternative GME funding and alignment of this funding with
state health care priorities will ensure that California has
an adequate supply of primary care training positions for
osteopathic medical graduates, a majority of which will stay
in state and provide primary care services. The California
Chapter of the American College of Emergency Physicians states
in support that with the expansion of health care coverage
under the ACA and the already-existing physician shortage in
the state, we must allocate the appropriate resources to
ensure all Californians have access to world-class health
care.
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7)RELATED LEGISLATION .
a) AB 1176 (Bocanegra and Bonta) would have established the
Medical Residency Training Program to fund GME residency
programs in California and would have required every health
insurer or health plan that provides health care coverage
in this state to pay an annual GME assessment of $5.00 for
each covered life. AB 1176 was held under submission in
the Assembly Appropriations Committee.
b) AB 565 (Salas), Chapter 378, Statutes of 2013, among
other things, revises the definition of a practice setting
for purposes of the Steven M. Thompson Physician Corps Loan
Repayment Program (STLRP)to include a physician owned and
operated medical practice setting that provides primary
care located in a medically underserved area.
c) AB 860 (Perea and Bocanegra) would have appropriated
$600,000 from the Managed Care Administrative Fines and
Penalties Fund to the Steven M. Thompson Medical School
Scholarship Program (STMSSP) Account within HPEF. AB 860
was held under submission in the Assembly Appropriations
Committee.
8)PREVIOUS LEGISLATION .
a) AB 589 (Perea), Chapter 339, Statutes of 2012,
establishes the STMSSP to promote the education of medical
doctors and doctors of osteopathy, as specified.
b) SB 635 (Ed Hernandez) of 2012 would have required funds
deposited into the Managed Care Administrative Fines and
Penalties Fund (Managed Care Fund) in excess of $1 million
to be transferred each year to OSHPD for the purpose of the
Song-Brown, as specified. SB 635 died in the Assembly
Appropriations Committee.
c) SB 606 (Ducheny), Chapter 600, Statutes of 2009,
requires the Osteopathic Medical Board of California to
assess an additional $25 fee from an osteopathic physician
and surgeon applying for initial or reciprocity licensure,
or for a biennial renewal license. Requires the funds
collected to be transferred to the Medically Underserved
Account for Physicians for STLRP. Allows osteopathic
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physicians and surgeons to be eligible to apply for the
STLRP.
d) SB 1379 (Ducheny), Chapter 607, Statutes of 2008,
requires fines and administrative penalties levied against
health plans under the Knox-Keene Health Care Service Plan
Act of 1975 to be placed in the Managed Care Fund and used,
upon appropriation by the Legislature, for STLRP and the
Major Risk Medical Insurance Program. SB 1379 also
appropriated $1 million annually for purposes of the STLRP.
e) AB 2439 (De la Torre), Chapter 640, Statutes of 2008,
requires the Medical Board of California (MBC) to charge
physicians and surgeons an additional $25 as part of their
initial license fee or renewal fee to support the STLRP.
f) AB 920 (Aghazarian), Chapter 317, Statutes of 2005,
transfers the administration of the STLRP from the MBC to
the HPEF.
g) AB 327 (De la Torre), Chapter 293, Statutes of 2005,
requires the MBC to assess a $50 voluntary donation from
physicians and surgeons at the time of licensure or
renewal.
h) AB 1403 (Nu�ez), Chapter 367, Statutes of 2004, renames
the California Physician Corps Loan Repayment Program to
STLRP effective January 1, 2005.
i) AB 982 (Firebaugh), Chapter 1131, Statutes of 2002,
establishes the California Physician Corps Loan Repayment
Program within the MBC.
REGISTERED SUPPORT / OPPOSITION :
Support
California Academy of Family Physicians (cosponsor)
California Medical Association (cosponsor)
American Academy of Pediatrics, California District IX
American Congress of Obstetricians and Gynecologists, District
IX (California)
American Federation of State, County and Municipal Employees,
AFL-CIO
American Osteopathic Association
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Association of California Healthcare Districts
California Chapter of the American College of Emergency
Physicians
California Children's Hospital Association
California Hospital Association
California Primary Care Association
Osteopathic Physicians and Surgeons of California
Opposition
None on file.
Analysis Prepared by : Patty Rodgers / HEALTH / (916) 319-2097