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Thursday, June 26, 2014

Policy Committee Hearings

The Legislature is schedule to adjourn for it Summer Recess next Thursday, July 3 and reconvene on Monday, August 4.  This week, intent on meeting the legislative deadline for bills to pass their respective policy committees by Friday (June 27), the legislative policy committees were filled with heavy agendas and long committee hearings.  Two important bills to the health ministry were heard:

SB 1094 (Lara), sponsored by the state Attorney General (AG), would give the AG broad authority to impose conditions on a non-profit hospital transaction after the approval has already been granted if there were alleged misrepresentations made and a party to the transaction was not in compliance with a condition of the agreement. During the presentation of the bill at the Assembly Health Committee on Tuesday, Senator Lara agreed to accept, as author’s amendments, provisions that would: limit the enforcement of an existing condition to the amount of time specified in the agreement; and, give the AG three years after discovery to enforce a condition if there was an alleged misrepresentation. Neither of these proposed amendments – which will be included in the bill when it is considered by the Assembly Appropriations Committee likely sometime in early August – removes the opposition of the Alliance and the hospital coalition, since the bill still allows the AG to “reach back” and open a closed deal.

In testimony by Dignity Health and California Hospital Association representatives, concerns were raised on how this bill will increase uncertainty and make it more expensive, or even impossible, for acquiring hospitals or systems to finance these deals in the bond market because of the AG’s ability to reopen or change an approved transaction; and, limit the due process rights of a hospital to challenge the reopening, shifting the burden of proof from the AG to the hospital on any alleged misrepresentation or noncompliance made by the AG.

During the debate on the bill, Senator Lara said that he agreed with the hospitals that he did not want to do anything that would harm financially fragile facilities by creating market uncertainty.  Further and notwithstanding the fact that in letters, meetings and testimony, Senator Lara indicated he was unaware that his bill did not offer appropriate due process to hospitals and that alleged misrepresentations about an agreement or transaction could be made by persons other than the parties to the agreement.

After three attempts at a roll call vote, SB 1094 passed on an 11-6 party line vote with two Democrats not voting. Given that SB 1094 will probably not be heard in the Assembly Appropriations Committee until after the legislature returns from its Summer break in early August, the hospital coalition will have the opportunity to educate members in their district during the recess, as well as advance proposed amendments (as reported last week) that would be amenable to the hospital community that would address concerns regarding misrepresentations and non-compliance, while not allowing the AG to reopen a completed transaction.

AB 503 (Wieckowski/Bonta), jointly sponsored by the California Nurses Association, the Greenlining Institute and the California Rural Legal Assistance Foundation, attempts to limit charitable activities and community benefits provided by non-profit hospitals.  At the Senate Health Committee hearing on Wednesday, the authors accepted amendments proposed by the committee that would clarify the definition of “community benefit,” clarify the definition of “underserved and vulnerable populations,” and expand what qualifies as part of the 90 percent allocated to underserved and vulnerable populations. Other amendments included the elimination of unnecessary definitions, consolidation of code sections and other non-substantive changes.  While these amendments attempt to address some of the concerns of the hospital community, they do not remove its opposition.  Among the many troubling new requirements on how hospitals must conduct its community needs assessment and implement its community benefit plan, the bill also does not conform with, and in some circumstance conflict with, existing federal law under both the Accountable Care Act and the IRS Form 990, Schedule H reporting.

This bill passed out of the Senate Health Committee on a party line 6-2 vote, and now moves to the Senate Appropriations Committee.  Since this bill was substantially amended, if it passes the Senate it will need to return to the Assembly after the August recess for a concurrence vote.

Also of interest, next Tuesday (July 2), the Assembly and Senate Health Committees will hold a joint oversight hearing on the “Insurance Rate Public Justification and Accountability Act,” the ballot initiative to give the Insurance Commissioner the power to regulate health insurance premiums; however, the effect of the initiative on Covered California will likely be a central topic.

Friday, 13, June, 2014

Policy Committee Hearings

Policy committees are in full swing, hearing bills that made it out of their houses of origin.  With the budget agreement expected to be voted on this weekend, we fully expect the Legislature to adjourn for it Summer recess on July 3; therefore, policy and fiscal committees have just over two weeks to move as many bills through the process before their month-long recess.  Of particular interest to the Catholic health ministry are the following bills:

AB 503 (Wieckowski/Bonta) will be heard in Senate Health on June 25.  Opposed by the Alliance and the hospital community, this gut and amended bill generally contains the same provisions as last session’s defeated AB 975.  It attempts to limit charitable activities and community benefits provided by non-profit hospitals.  It does this by: 1) rewriting California's nonprofit community benefits requirements to include multispecialty clinics and narrows the activities that constitute community benefits, 2) creating a new definition of charity care and community benefits, and 3) requiring the Office of Statewide Health Planning and Development  (OSHPD) to develop a standardized methodology for calculating community benefit values, to calculate the value of community benefits for submitting entities, and to issue civil penalties for noncompliance with filing requirements.  One significant addition to AB 503 is a provision requiring nonprofit hospitals and nonprofit multispecialty clinics to provide minimum community benefits 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 (1) and (2), moneys shall be used for projects that simultaneously meet both criteria.

SB 1004 (Hernandez) will be heard in Assembly Health on June 17.  Supported by the Alliance and a diverse coalition of health care providers, this bill authorizes Medi-Cal to implement pilot projects around palliative care.  Among several important provisions, this bill would include hospice services that are provided at the same time that curative treatment is available, and are provided regardless of the estimated length of time a beneficiary may be expected to live. This bill proposes a meaningful solution to help ease the pain and suffering of patients who are seriously and terminally ill, and will support curative/life prolonging treatment concurrently with hospice services for all eligible beneficiaries.

SB 1053 (Mitchell) will be heard in the Assembly Health on June 25. The Alliance is opposed to this bill, which expands the provisions under the federal contraceptive coverage mandate, and includes these provisions under California state law. The bill does not conform the state definition of religious employer with federal regulations and does not provide an accommodation for nonprofit religious organizations.

SB 1094 (Lara), was originally scheduled to be heard next week, but has been put over and is now scheduled to be heard in Assembly Health on June 25.  Opposed by the Alliance, California Hospital Association and a coalition of nonprofit hospitals, this bill would allow the AG to reopen and amend an agreement or transaction involving a non-profit hospital after a decision of conditional approval has been issued.

Friday, 13, June, 2014

Budget Conference Committee

Thursday evening the Budget Conference Committee held their final hearing for this year.  At this hearing, the conference committee considered health items.  One of the biggest items that the committee was considering was Medi-Cal rates.  Both Budget Committees had passed versions of a rate increase.  The Senate approved eliminating the AB 97 cuts moving forward, while the Assembly had eliminated the retroactive (or “clawback”) portion of the cuts for all providers including hospital distinct-part nursing facilities, and provided a path for undoing the cuts in 2015.  Unfortunately, the Brown Administration had opposed providing any Medi-Cal rate relief, as they are concerned about the added costs due to increased utilization.  Despite objections from almost all members of the Conference Committee, the final Budget includes no additional funds for Medi-Cal rates. The Budget did include some language allowing OSHPD to provide grants for the next three years to accredited residency programs for the purposes of creating new primary care residency slots. Details about how that funding will be distributed are not yet available. Both houses of the Legislature are expected to meet Sunday afternoon to pass the Budget.  Sunday, June 15, is the Constitutional deadline for the Legislature to pass a budget.

Friday, 06, June, 2014

June Primary Election Yields Some Suprises

The June 3 Primary was California’s first statewide election under the “top-two” primary, which sends the top-two vote getters, without regard to political party preference, to face voters in the November General Election.  While political pundits continue to debate the benefits of the system, there is some agreement that it does not encourage voter participation.  The June 3 Primary set an historic low for voter turnout at only 18.3 percent.  With voters relying more and more on absentee voting, many counties are reporting that they have remaining late absentee, provisional and damaged ballots to be counted.  It is anticipated that the Secretary of State’s Office will soon post the number of uncounted ballots.

Since all statewide offices are up for election this year, here are the most recent results for three of the more hotly contested races:

Governor: Jerry Brown (D) demonstrated his continuing strength with voters by garnering 54.1 percent of the vote.  Republican candidate Neel Kashkari finished second with 19.3 percent.  As one political writer put it “there was a collective exhale” in the state’s GOP establishment after Kashkari’s win over more controversial candidate Assemblymember Tim Donnelly (R-Twin Peaks).

Secretary of State: State Senator Alex Padilla (D-Pacoima), with 30.0 percent, and Republican candidate Pete Peterson, with 29.8 percent of the vote, will meet in November.  Of some surprise was the third place finish of Senator Leland Yee (D-San Francisco) whose name appeared on the ballot despite his arrest on federal charges of alleged corruption and illegal gunrunning.

Controller: The top vote getter was Fresno Mayor Ashley Swearengin (R) with 24.6 percent, followed closely by formed Assembly Speaker John Perez (D-Los Angeles) with 21.6 percent, relatively unknown Republican candidate David Evans with 21.6 percent, and Board of Equalization Member Betty Yee (D-San Francisco) with 21.4 percent of the vote.  With ballots still being counted, this contest remains too close to call.

Friday, 06, June, 2014

Medi-Cal Hospital Fee Ballot Initiative

On June 3, the California Hospital Association (CHA) announced that the ballot initiative intended to protect the hospital provider fee would not go before the state’s voters on the November 4, 2014 General Election ballot, but would likely be on the November 8, 2016 General Election ballot instead.  The following is an excerpt from CHA’s announcement:

Plans were on schedule to qualify the CHA-sponsored initiative to protect hospitals under any hospital tax, fee or assessment program and to put into law the Medi-Cal fee program on a permanent basis.

Signatures were collected by the most respected firm in California. To our disappointment, the firm did not eliminate all duplicate signatures. Because of the duplicate rate formula for random count qualification, the counties must verify all signatures submitted through individual petition verification.

The result is that the initiative will not be certified as “qualified” by June 26, 2014, the constitutional deadline for an initiative to be qualified and placed on the November 4, 2014, general election ballot. Therefore, it will appear on the November 8, 2016, ballot.

Friday, 06, June, 2014

AG Public Hearing on Hospital Transaction Regulations

As reported in April, the California Attorney General’s office issued a Notice of Proposed Rulemaking that proposes to amend the regulations governing the AG’s review and approval of nonprofit hospital transactions.  This is on a parallel track with SB 1094 (Lara).  The text of the regulations is similar to SB 1094, with several additional provisions that make them more onerous than the bill.  Both the proposed amendments to the regulations and SB 1094 greatly expands the AG’s existing authority giving the AG almost unlimited power to change the conditions agreed to by the parties in a hospital transaction, after the acquisition of the facility is completed.  In addition, the amendments to the regulation propose a specific section on reproductive health care services reporting and data requirements. The Alliance will be submitting its comment letter by the June 13 written comment deadline.

Also, as part of the rulemaking process, the Department of Justice held a public hearing on Wednesday (June 4), in advance of the comment letter deadline, to receive public comment on the proposed regulatory action.  Representatives of the Alliance and the California Hospital Association testified in opposition to the proposed rule change.

The other witnesses were local and state reproductive rights activists who strongly supported the proposed amendments.  These individuals were highly critical of hospital transactions involving Catholic hospitals and/or their systems.  The Alliance will respond to the misrepresentations made by these activists in our written comment letter.  We will distribute our comment letter next week.


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