California Legislature—2013–14 Regular Session

Assembly Bill No. 2659

Introduced by Assembly Member Brown

February 21, 2014

An act to add Chapter 12.9 (commencing with Section 7091) to Division 7 of Title 1 of the Government Code, and to add Section 17057.8 to the Revenue and Taxation Code, relating to health access zones.

LEGISLATIVE COUNSEL’S DIGEST

AB 2659, as introduced, Brown. Health Access Zones: income tax: credits.

Existing law establishes the Office of Statewide Health Planning and Development and requires the office to perform various duties, including preparing a Health Manpower Plan for California, which includes establishing appropriate standards for determining the adequacy of supply in the state of specified categories of certain health personnel. Existing law establishes the California Healthcare Workforce Policy Commission to, in part, identify areas of the state where unmet priority needs for dentists, physicians, and registered nurses exist.

This bill would require the Director of Statewide Health Planning and Development and the commission to adopt regulations relating to the designation of health access zones, as defined, for the purpose of targeting state resources to reduce health disparities, increase access to primary care for the state’s growing Medi-Cal population, improve health outcomes, and reduce health care costs and hospital admissions and readmissions in certain parts of the state. The bill would require the director and the commission to begin accepting applications by nonprofit community-based organizations and local government agencies for health access zone designation no later than July 1, 2015, and would require the director and the commission to designate areas as health access zones in accordance with specified criteria. The bill would also authorize the director and the commission to issue grants to the nonprofit community-based organizations, local government agencies, and health access zone practitioners, as defined, for specified purposes. The bill would create the Health Access Zone Reserve Fund, which would consist of moneys appropriated by the Legislature, to be used, upon appropriation of the Legislature, by the director and the commission for these purposes.

The Personal Income Tax Law authorizes various credits against the tax imposed by that law.

This bill would, for taxable years beginning on or after January 1, 2016, allow a credit against that tax in an amount equal to $5,000 for each net increase in qualified full-time health access zone employees, as defined, hired during the taxable year by a qualified health access zone employer, as defined.

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.  

The Legislature finds and declares all of the
following:

(a) Shortages of physicians and other health professionals in
underserved areas significantly affect the health of racial and ethnic
minorities.

(b) Members of racial and ethnic minority groups are
overrepresented among the 56 million people in the United States
who have inadequate access to a primary care physician.

(c) There are marked differences in social determinants, such
as poverty, low socioeconomic status, and lack of access to care,
that exist along racial and ethnic lines and these differences can
contribute to poor health outcomes.

(d) While many state and federal programs continue to attempt
to reduce racial and ethnic disparities in quality of and access to
care, significant disparities continue to persist.

(e) Strengthening California’s health and human services
infrastructure involves addressing the critical shortage of primary
care physicians, nurses, behavioral health providers, long-term
care workers, and community health workers.

SEC. 2.  

Chapter 12.9 (commencing with Section 7091) is added
to Division 7 of Title 1 of the Government Code, to read:

 

Chapter  12.9. California Health Care Access Initiative

 

7091.  

For purposes of this chapter, the following definitions
shall apply:

(a) “Area” means a contiguous geographic area that meets both
of the following:

(1) Demonstrates measurable and documented health disparities
and poor health outcomes.

(2) Is small enough to allow for the incentives offered under
this chapter to have a significant impact on improving health
outcomes, reducing health disparities, including racial and ethnic
and geographic disparities, and serving the Medi-Cal population.

(b) “Commission” means the California Healthcare Workforce
Policy Commission within the Office of Statewide Health Planning
and Development.

(c) “Director” means the Director of Statewide Health Planning
and Development.

(d) “Fund” means the Health Access Zone Reserve Fund
established in Section 7099.

(e) “Health access zone” means a contiguous geographic area
that meets all of the following:

(1) Demonstrates measurable and documented health disparities
and poor health outcomes.

(2) Is small enough to allow for the incentives offered under
this chapter to have a significant impact on improving health
outcomes, reducing health disparities, including racial and ethnic
and geographic disparities, and serving the Medi-Cal population.

(3) Is designated as a health access zone by the commission and
the director in accordance with this chapter.

(f) “Health access zone practitioner” means a person who is
licensed under Division 2 (commencing with Section 500) of the
Business and Professions Code and who provides any of the
following:

(1) Primary care, including obstetrics, gynecological services,
pediatric services, or geriatric services.

(2) Behavioral health services, including mental health and
alcohol and substance abuse services.

(3) Dental services.

7092.  

It is the intent of the Legislature in enacting this chapter
to establish health access zones to target state resources to reduce
health disparities, increase access to primary care for our state’s
growing Medi-Cal population, improve health outcomes, and
reduce health care costs and hospital admissions and readmissions
in specific areas of the state.

7093.  

(a) The director and the commission may adopt
regulations to implement this chapter and to specify eligibility
criteria, application, approval, and monitoring processes for
participants. The director and the commission shall consult with
the Office of Health Equity within the State Department of Public
Health in implementing this chapter.

(b) (1) In order for an area to be designated as a health access
zone, a nonprofit community-based organization or a local
government agency shall apply to the director on behalf of the area
to receive designation. The application shall be in the form and
manner and contain the information required as determined by the
commission and the director.

(2) The director and the commission shall begin accepting
applications for health access zone designation no later than July
1, 2015.

(c) An application submitted pursuant to subdivision (b) shall
include an effective and sustainable plan to reduce health
disparities, reduce costs or produce savings in the health care
system, and improve health outcomes that includes both of the
following:

(1) A description of the plan of the nonprofit community-based
organization or local government agency to utilize funding
available under this chapter to address health care provider
capacity, improve health services delivery, effectuate community
improvements, or conduct outreach and education efforts.

(2) A proposal to use funding available under this chapter to
provide for loan repayment incentives to induce health access zone
practitioners to practices in the area.

(d) An application submitted pursuant to subdivision (b) may
also include the use of other benefits, including, but not limited
to, any of the following:

(1) Tax credits, including, but not limited to, those available
under Section 17057.8 of the Revenue and Taxation Code to
encourage health access zone practitioners to establish or expand
health care practices in the area.

(2) A proposal to use innovative public health strategies to
reduce health disparities in the areas, including the use of
community health workers, registered dieticians, optometrists,
peer learning, and community-based disease management activities,
that could be supported by grants awarded under this chapter.

(3) A proposal to use other incentives or mechanisms to address
health disparities that focus on ways to expand access to care,
expand access to fresh produce through grocery stores and farmer’s
markets, promote hiring, and reduce costs to the health care system.

7094.  

(a) The director and the commission shall designate
areas as health access zones in accordance with this section.

(b) The director and the commission shall consider geographic
diversity, among other factors, when designing areas as health
access zones, and the commission may conduct outreach efforts
to facilitate a geographically diverse pool of applicants, including
promoting applications from rural areas.

(c) After receiving applications, the director and the commission
shall report to the Assembly Committee on Budget and the Senate
Committee on Budget and Fiscal Review the names of the
applicants and geographic areas in which the applicants are located.

(d) The director and the commission may limit the number of
areas designated as health access zones based on the amount of
money appropriated by the Legislature to the fund.

(e) The director and the commission shall give priority to
applications that demonstrate all of the following:

(1) Support from and participation of key stakeholders in the
public and private sectors, including residents of the area and local
government.

(2) A plan for long-term funding and sustainability.

(3) Inclusion of supporting funds from the private sector.

(4) A plan for evaluation of the impact of designation of the
proposed area as a health access zone.

(5) Other factors that the director and the commission determine
are appropriate to demonstrate a commitment to reduce disparities
and improve outcomes and provide access to health care to
Medi-Cal beneficiaries.

7095.  

Health access zone practitioners that practice in a health
access zone may receive both the following:

(a) A tax credit allowed under Section 17057.8 of the Revenue
and Taxation Code, for hiring other health professionals, including,
but not limited to, nurses or physician assistants, licensed or
certified under Division 2 (commencing with Section 500) of the
Business and Professions Code, if the health access zone
practitioner receives a certification of eligibility as described in
Section 7097 and meets the other requirements in Section 17057.8
of the Revenue and Taxation Code.

(b) Priority for the receipt of any state funding available for
electronic health records, if feasible and if other standards for
receipt of the funding are met.

7096.  

(a) A nonprofit community-based organization or a local
government agency that applies on behalf of an area for designation
as a health access zone may receive grants, as determined by the
director and the commission, to implement actions outlined in the
organization’s or agency’s application to improve health outcomes
and reduce health disparities in the health access zone.

(b) A health access zone practitioner may apply to the director
and the commission for a grant to defray the cost of capital or
leasehold improvements to, or medical or dental equipment to be
used in, the health access zone.

(1) To qualify for a grant under this section, a health access
zone practitioner shall meet both of the following requirements:

(A) Own or lease the health care facility.

(B) Provide health care from that facility.

(2) A grant to defray the cost of medical or dental equipment
shall not exceed the lesser of twenty-five thousand dollars
($25,000) or 50 percent of the cost of the equipment.

(3) Grants for capital or leasehold improvements shall be for
the purposes of improving or expanding the delivery of health care
in the health access zone.

7097.  

(a) A health care access practitioner may request from
the director and the commission a certification of eligibility for
the tax credits under Section 17053.8 of the Revenue and Taxation
Code.

(b) The director and the commission shall issue a certification
of eligibility of the tax credits under Section 17057.8 of the
Revenue and Taxation Code if the health access zone practitioner
meets all of the following:

(1) He or she practices in the health access zone.

(2) He or she demonstrates competency in cultural, linguistic,
and health literacy in a manner determined by the department.

(3) He or she accepts and provides care for patients who are
enrolled in Medi-Cal or are uninsured.

(4) He or she meets other factors that the director and the
commission determine are appropriate to demonstrate a
commitment to reduce health disparities and improve outcomes
and provide access to health care to Medi-Cal beneficiaries.

(c) The health access zone practitioner shall retain a copy of the
certification.

7098.  

(a) Notwithstanding Section 10231.5 of the Government
Code, and on or before December 31 of each year, the director and
the commission shall submit a report to the Governor and the
Legislature that includes all of the following:

(1) The number and types of incentives granted to each health
access zone.

(2) Evidence of the impact of the tax credits and loan repayment
incentives in attracting health access zone practitioners to health
access zones.

(3) Evidence of the impact of the incentives offered in health
access zones in reducing health disparities and improving health
outcomes.

(4) Evidence of progress in reducing health costs and hospital
admissions and readmissions in health access zones.

(b) A report submitted by the director and the commission
pursuant to subdivision (a) shall be submitted in compliance with
Section 9795 of the Government Code.

7099.  

(a) There is hereby established in the State Treasury the
Health Access Zone Reserve Fund consisting of moneys
appropriated to the fund by the Legislature.

(b) Moneys in the fund shall be used, upon appropriation of the
Legislature, by the director and the commission for purposes of
implementing this chapter.

SEC. 3.  

Section 17057.8 is added to the Revenue and Taxation
Code, to read:

17057.8.  

(a) For each taxable year beginning on or after
January 1, 2016, there shall be allowed as a credit against the “net
tax,” as defined in Section 17039, an amount equal to five thousand
dollars ($5,000) for each net increase in qualified full-time health
access zone employees hired during the taxable year by a qualified
health access zone employer.

(b) For purposes of this section:

(1) “Annual full-time equivalent” means either of the following:

(A) In the case of a full-time employee paid hourly qualified
wages, “annual full-time equivalent” means the total number of
hours worked for the qualified health access zone employer by the
employee (not to exceed 2,000 hours per employee) divided by
2,000.

(B) In the case of a salaried full-time employee, “annual
full-time equivalent” means the total number of weeks worked for
the qualified health access zone employer by the employee divided
by 52.

(2) “Health access zone” has the same meaning as that term is
defined in subdivision (g) of Section 7091 of the Government
Code.

(3) “Qualified full-time health access zone employee” means
an individual who meets all of the following requirements:

(A) Is a health professional licensed or certified under Division
2 (commencing with Section 500) of the Business and Professions
Code, such as, but not limited to, a nurse or physician assistant.

(B) Performs 100 percent of his or her services for the qualified
health access zone employer during the taxable year in a health
access zone.

(C) At least 90 percent of his or her services for the qualified
health access zone employer during the taxable year are providing
the following kinds of professional services:

(i) Primary care, including obstetrics, gynecological services,
pediatric services, or geriatric services.

(ii) Behavioral health services, including mental health and
alcohol and substance abuse services.

(iii) Dental services.

(D) Is hired by the qualified health access zone employer after
the date of original designation of the area in which services were
performed as a health access zone.

(E) Meets one of the following:

(i) Was paid qualified wages by the qualified health access zone
employer for services of not less than an average of 35 hours per
week.

(ii) Was a salaried employee and was paid compensation during
the taxable year for full-time employment, within the meaning of
Section 515 of the Labor Code, by the qualified health access zone
employer.

(4) “Qualified health access zone employer” means an individual
who is a health access zone practitioner as defined in subdivision
(h) of Section 7091 of the Government Code who has received the
certification of eligibility described in Section 7097 of the
Government Code or, in the case of a pass-thru entity, the partners
or shareholders of the pass-thru entity are all health access zone
practitioners as defined in subdivision (h) of Section 7091 of the
Government Code, who each have received the certification of
eligibility described in Section 7097 of the Government Code. For
purposes of this subdivision, the term “pass-thru entity” means a
partnership or “S” corporation.

(5) “Qualified wages” means wages subject to Division 6
(commencing with Section 13000) of the Unemployment Insurance
Code that are equal to or greater than 150 percent of the state
minimum wage.

(c) The net increase in qualified full-time employees of a
qualified health access zone employer shall be determined as
provided by this subdivision:

(1) (A) The net increase in qualified full-time employees shall
be determined on an annual full-time equivalent basis by
subtracting from the amount determined in subparagraph (C) the
amount determined in subparagraph (B).

(B) The total number of qualified full-time employees employed
in the preceding taxable year by the qualified health access zone
employer.

(C) The total number of full-time employees employed in the
current taxable year by the qualified health access zone employer.

(2) For qualified health access zone employers who first
commence doing business in the health access zone during the
taxable year, the number of full-time employees for the
immediately preceding prior taxable year shall be zero.

(d) The qualified health access zone employer shall provide the
certification of eligibility described in Section 7097 of the
Government Code upon request to the Franchise Tax Board.

(e) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and succeeding nine years if necessary,
until the credit is exhausted.

(f) (1) The Franchise Tax Board may prescribe rules, guidelines,
or procedures necessary or appropriate to carry out the purposes
of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.