Existing law establishes the Steven M. Thompson Physician Corps Loan Repayment Program (program) in the California Physician Corps Program within the Health Professions Education Foundation, which provides financial incentives, including repayment of educational loans, to a physician and surgeon who practices in a medically underserved area, as defined. Existing law establishes the Medically Underserved Account for Physicians, a continuously appropriated account, within the Health Professions Education Fund, to primarily provide funding for the ongoing operations of the program. Existing law requires the foundation and the Office of Statewide Health Planning and Development to develop guidelines using specified criteria for selection and placement of applicants.

Existing law defines practice setting, for these purposes, to include a community clinic, as defined, a clinic owned or operated by a public hospital and health system, or a clinic owned and operated by a hospital that maintains the primary contract with a county government to fulfill the countys role to serve its indigent population, that is located in a medically underserved area and at least 50% of whose patients are from a medically underserved population. Existing law also defines practice setting, for these purposes, to include a physician owned and operated medical practice setting that provides primary care located in a medically underserved area and has a minimum of 50% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250% of the federal poverty level.

This bill would instead require, for purposes of this definition, only until January 1, 2021, and only for program participants who enroll in the program on or after January 1, 2019, and before January 1, 2021, that the clinic or the physician owned and operated medical practice setting have at least 30% of patients, if the area is a rural area, as defined, or at least 50% of patients, if the area is not a rural area, who are from the above-described populations. By expanding the authorization for the use of moneys in the continuously appropriated Medically Underserved Account for Physicians, this bill would make an appropriation.

The bill would require the foundation to prepare a study to determine the effect that the revised definition has on funding for loan repayment granted under the program during the calendar years 2019 and 2020. The bill would require the foundation to submit 2 reports of the study by March 1, 2020, and March 1, 2021, respectively, including program data for certain years and identifying specified information.

The bill would appropriate $120,000 from the General Fund to the office to amend regulations, as applicable, to provide technical assistance to the increased number of program applicants, and to prepare the above-described study and reports, for the purpose of implementing this bill.

The bill would also make conforming changes to related provisions.

Existing law establishes the Steven M. Thompson Physician Corps Loan Repayment Program (program) in the California Physician Corps Program within the Health Professions Education Foundation, which provides financial incentives, including repayment of educational loans, to a physician and surgeon who practices in a medically underserved area, as defined. Existing law establishes the Medically Underserved Account for Physicians, a continuously appropriated account, within the Health Professions Education Fund, to primarily provide funding for the ongoing operations of the program. Existing law requires the foundation and the Office of Statewide Health Planning and Development to develop guidelines using specified criteria for selection and placement of applicants.

Existing law defines practice setting, for these purposes, to include a community clinic, as defined, a clinic owned or operated by a public hospital and health system, or a clinic owned and operated by a hospital that maintains the primary contract with a county government to fulfill the countys role to serve its indigent population, that is located in a medically underserved area and at least 50% of whose patients are from a medically underserved population. Existing law also defines practice setting, for these purposes, to include a physician owned and operated medical practice setting that provides primary care located in a medically underserved area and has a minimum of 50% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250% of the federal poverty level.

This bill would instead require, for purposes of this definition, only until January 1, 2021, and only for program participants who enroll in the program on or after January 1, 2019, and before January 1, 2021, that the clinic or the physician owned and operated medical practice setting have at least 30% of patients, if the area is a rural area, as defined, or at least 50% of patients, if the area is not a rural area, who are from the above-described populations. By expanding the authorization for the use of moneys in the continuously appropriated Medically Underserved Account for Physicians, this bill would make an appropriation.

The bill would require the foundation to prepare a study to determine the effect that the revised definition has on funding for loan repayment granted under the program during the calendar years 2019 and 2020. The bill would require the foundation to submit 2 reports of the study by March 1, 2020, and March 1, 2021, respectively, including program data for certain years and identifying specified information.

The bill would appropriate $120,000 from the General Fund to the office to amend regulations as applicable, to provide technical assistance to the increased number of program applicants, and to prepare the above-described study and reports, for the purpose of implementing this bill.

The bill would also make conforming changes to related provisions.

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 2539 (Mathis) - California Physician Corps Program: practice setting

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

Assembly Bill 2539 expands the definition of “practice setting”, under specified dates, by including a clinic that has at least 30 percent of patients in rural areas; and, a physician owned and operated medical practice setting that provides primary care located in a medically underserved area and has at least 30 percent of patients in rural areas. The bill also appropriates $120,000 General Fund to the Office of Statewide Health Planning and Development (OSHPD) to amend regulations, provide technical assistance to the increased number of applicants, conduct the study, and prepare two evaluation reports.

Fiscal Impact:

According to OSHPD, the Health Professions Education Foundation (HPEF), which administers the Steven M. Thompson Physician Corps Loan Repayment Program (STLRP) would require additional resources from 2019-2022 to administer the provisions of this bill.

OSHPD estimates the bill would cost in the range of several hundred thousand dollars over the time period to support new regulations, changes to the online application system, the implementation of a study, two reports to the Legislature, and the review and technical support for the increased number of applications from rural physicians.  Specifically, HPEF would require one additional limited-term (2019-2022) position at a cost of $110,000 General Fund annually. The additional position would be responsible for providing technical support in analyzing program data, handling the increase in calls and emails, processing the increased number of program applicants, amending regulations, and working on the two reports.

The bill also appropriates $120,000 General Fund. According to OSHPD, the appropriation proposed by the bill would be insufficient to cover the cost of the additional workload. 

Background:

1. The STLRP was established in 2003, and offers up to $105,000 in loan repayment to physicians in exchange for three years of service in eligible practice settings, which include community clinics or physician offices in medically underserved areas. The purpose is to increase the number of linguistically and culturally competent physicians practicing in underserved areas. It is primarily funded through special funds, with most funding provided through a $25 fee at physician license renewal.

To be considered for an award, an applicant must be an allopathic or osteopathic physician or surgeon; be free of any contractual service obligations (e.g., the National Health Service Corps Federal Loan Repayment Program or other financial incentive programs); have outstanding educational debt from a government or commercial lending institution; have a valid, unrestricted MD or DO license to practice medicine in California; be currently employed or have accepted employment as a primary care doctor or as a specialist at a qualifying practice site in a Health Professional Shortage Area-Primary Care (HPSA-PC) or Primary Care Shortage Area (PCSA) in California; and commit to providing full-time medical services in a HPSA-PC or PCSA for a minimum of three years.

The Workforce Education and Training (WET) component of the 2004 Mental Health Services Act (Proposition 63, a tax on high-income earners to fund community mental health) set aside $445 million for mental health workforce development, including loan repayment programs, over the past decade. Pursuant to current law and funding plans, the current fiscal year is the final year funds are available through the WET program. A four-year, $31 million grant from the California Endowment that provided funding to the STLRP ended in July 2017.

Proposed Law:

The bill includes the following provisions:

• Appropriates $120,000 General Fund to the Office of Statewide Health Planning to amend regulations, as applicable; provide technical assistance to the increased number of applicants under the STLRP; and to prepare the study and reports.
• Expands the definition of “practice setting” to include the following:
  • A community clinic, as specified, that meets the following conditions: 
    • For program participants who enrolled in the program before January 1, 2019, and who continue to participate in the program on or after that date, the clinic has at least 50 percent of patients who are from a medically underserved population.
    • Until January 1, 2021, for program participants who enroll in the program on or after January 1, 2019, and before January 1, 2021, the clinic has at least 30 percent of patients, if the area is a rural area, or at least 50 percent of patients, if the area is not a rural area, who are from a medically underserved population.
    • Commencing January 1, 2021, for program participants who enroll in the program on or after January 1, 2021, the clinic has at least 50 percent of patients who are from a medically underserved population.
  • A physician owned and operated medical practice setting that provides primary care located in a medically underserved area and meets the following conditions:
    • For program participants who enrolled in the program before January 1, 2019, and who continue to participate in the program on or after that date, the medical practice setting has a minimum of 50 percent of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250 percent of the federal poverty level (FPL).
    • Until January 1, 2021, for program participants who enroll in the program on or after January 1, 2019, and before January 1, 2021, the medical practice setting has at least 30 percent of patients, if the area is a rural area, or at least 50 percent of patients, if the area is not a rural area, who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250 percent of FPL.
    • Commencing January 1, 2021, for program participants who enroll in the program on or after January 1, 2021, the medical practice setting has a minimum of 50 percent of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250 percent of FPL.
• Defines “rural area” to mean a medical service study area with a population density of fewer than 250 persons per square mile and no population center in excess of 50,000 within the area, as determined by the office.
• The Health Professions Education Foundation (HPEF) must prepare a study on funding for loan repayment granted during the calendar years 2019 and 2020. Specifically, by March 1, 2020, HPEF must submit a report of the study described in subdivision (a) to the Legislature, including program data for the calendar year 2019 as compared to program data for the calendar years 2017 and 2018.
• By March 1, 2021, HPEF must submit a report of the study described in subdivision (a) to the Legislature, including program data for the calendar year 2020. The report, at a minimum, must identify all of the following:
• The name and location of all practice settings with program participants, with the practice settings disaggregated by type.
• The number of patients, as specified, in a practice setting, disaggregated by type of area, including a rural area, among others, and the number of total patients in that practice setting.
• The number of awards and amount of funding for loan repayment granted under this article, disaggregated by type of program participants as described.
• Provides that the section related to legislative reporting requirements will become inoperative on March 1, 2025, and must be repealed on January 1, 2026.

Related Legislation:

• AB 2143 (Caballero) adds physician assistants who work in a psychiatric mental health setting and nurse practitioners, as specified, to those eligible for educational loan repayment grants under the Licensed Mental Health Service Provider Education Program. AB 2143 is pending consideration in the Senate Public Safety Committee.
• AB 2539 (Mathis) creates a two-year pilot program to change the definition of “practice setting” for purposes of applying to participate in the STLRP to include practice settings in rural areas with at least 30% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program. The bill is pending consideration in the Senate Appropriations Committee.

Staff Comments:

According to OSHPD’s STLRP Annual Report to the Legislature, from July 1, 2015 to November 30, 2016, HPEF received 187 STLRP applications; 63 applicants were awarded. Given the current over-subscription of the current program, the bill’s expansion of eligibility criteria would add further pressure to the program.

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SENATE COMMITTEE ON HEALTH

Senator Dr. Richard Pan, Chair

BILL NO: AB 2539

SUBJECT: California Physician Corps Program: practice setting

SUMMARY:

1. Expands eligibility for the California Physician Corps Program in rural areas, from January 1, 2019 to January 1, 2021, by revising the definition of “practice setting” to include a clinic that has at least 30% of patients in rural areas; and, a physician owned and operated medical practice setting that provides primary care located in a medically underserved area and has at least 30% of patients in rural areas.

Existing law:

1. Establishes the Health Professions Education Foundation (HPEF) within the Office of Statewide Health Planning and Development (OSHPD) to, among other functions, develop criteria for evaluating applicants for various scholarships and loans. [HSC §128335]
2. Establishes the California Physician Corps Program, which consists of the Stephen M. Thompson Loan Repayment Program (STLRP) and the Physician Volunteer Program, administered by HPEF. Requires the California Physician Corps Program to provide financial incentives, as specified, to applicants who possess a current valid medical or osteopathic license who practice in medically underserved communities, as specified. [HSC §128550, et seq.]
3. Defines medically underserved area (MUA) as consistent with the federal definition of a Health Professional Shortage Area (HPSA) or an area of the state where unmet priority needs for physicians exist as determined by the California Healthcare Workforce Policy Commission. [HSC §128552(e)]
4. Defines medically underserved populations (MUP) as those covered under the Medi-Cal and Healthy Families programs and the uninsured. [HSC §128552(f)]
5. Defines “practice setting,” for the purposes of eligibility for the California Physician Corps Program as either:
6. A community clinic, a clinic owned or operated by a public hospital and health system, or a clinic owned and operated by a hospital that maintains the primary contract with a county government to fulfill the county’s safety net role, as specified, which is located in a MUA and at least 50% of whose patients are from a MUP; or,
7. A physician owned and operated medical practice setting that provides primary care located in a MUA and has a minimum of 50% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250% of the federal poverty level (FPL). [HSC §128552(i)]

This bill:

1. Expands eligibility for the California Physician Corps Program in rural areas, from January 1, 2019 to January 1, 2021, by revising the definition of “practice setting” to include a clinic that has at least 30% of patients in rural areas; and, a physician owned and operated medical practice setting that provides primary care located in a medically underserved area and has at least 30% of patients in rural areas.
2. Defines “rural area” for purposes of this bill as a medical service study area with a population density of fewer than 250 persons per square mile and no population center in excess of 50,000 within the area, as determined by OSHPD.
3. Requires the HPEF to prepare a study to determine the effect the expanded eligibility has on funding for loan repayment granted under the STLRP during the calendar years 2019 and 2020.
4. Requires HPEF to submit a report by March 1, 2020 to the Legislature that includes program data for the calendar year 2019 as compared to program data for the calendar years 2017 and 2018. Requires HPEF to submit a report by March 1, 2021 to the Legislature that includes program data for the calendar year 2020. Requires the reports to include:
   1. The name and location of all practice settings with program participants, disaggregated by type, as specified;
   2. The number of patients in each practice setting for the expanded eligibility in years 2019 to 2021, disaggregated by type of area, including a rural area, among others, and the number of total patients in that practice setting; and,
   3. The number of awards and amount of funding for loan repayment granted under this bill, disaggregated by type of program participants.
5. Sunsets the above provisions on March 1, 2025, and repeals them on January 1, 2026.
6. Appropriates $120,000 from the General Fund (GF) to OSHPD to fund the following for the purpose of implementing this bill:
   1. Amending regulations as applicable;
   2. Providing technical assistance to the increased number of applicants under the STLRP as a result of the implementation of the expanded eligibility in years 2019 to 2021; and,
   3. Preparing the required study and reports.

FISCAL EFFECT:

1. According to the Assembly Appropriations Committee, this bill appropriates $120,000 GF for OSHPD's administrative costs. Additional administrative and program cost pressure to increase funding for awards (GF or special funds). Expanding eligibility criteria increases pressure on a program that is already oversubscribed under current criteria. Only 91 applications were awarded in 2016-17 of a total of 405 received.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, rural areas regularly struggle to incentivize quality surgeons and physicians to take up residency. This has created a void within rural areas, in terms of physician and surgeon retention, which ultimately harms many low-income regions. This measure is designed to give rural areas a greater chance to obtain the benefits of the Steven M. Thompson Loan Repayment Program, and as such incentivize quality health care throughout disadvantaged regions
2. Background. According to an August 2017 California Health Care Foundation (CHCF) Health Care Almanac, the number of licensed physicians in California has grown steadily over the past 20 years, increasing 44% between 1993 and 2013, and has outpaced the state’s 23% growth in population. Demand for physicians is expected to increase as the population ages, making access to care a concern, as one-third of the state’s physicians are over age 60. Key findings of the CHCF report include:
   1. The supply of licensed physicians does not accurately reflect their availability to provide care: only 80% of physicians with active licenses provided patient care 20 or more hours per week;
   2. The adequacy of primary care physicians (PCPs) in the state is unclear: data collected by the Association of American Medical Colleges (AAMC) for 2014 and by the Medical Board of California (MBC) for 2015 yield different conclusions about the adequacy of supply of PCPs and specialists. Based on the AAMC data, California exceeded the recommended supply for PCPs. However, the MBC data suggest that California’s supply of PCPs was almost 85% of the recommended per capita ratio (federal guidelines call for the state to have 60 to 80 doctors per 100,000 patients);
   3. Physician supply varied by region: the Greater Bay Area was the only region that met the recommended supply of PCPs. The Inland Empire, San Joaquin Valley; and, Northern and Sierra counties all fell short of the recommended supply of specialists.
   4. Latinos were underrepresented among physicians: Latinos represented 38% of California’s population, but only 5% the state’s physicians.
3. HPSAs. HPSAs are designated by HRSA as having shortages of primary medical care, dental or mental health providers and may be geographic (a county or service area), demographic (low income population), or institutional (comprehensive health center, federally qualified health center, or other public facility). MUAs/MUPs are areas or populations designated by HRSA as having: too few primary care providers, high infant mortality, high poverty, and/or high elderly populations
4. California Physician Corps Program. The California Physician Corps Program consists of two programs: the Volunteer Physicians Program and STLRP. According to OSHPD, the Volunteer Physicians Program has never been implemented. STLRP encourages recently licensed physicians to practice in HPSAs in California by repaying up to $105,000 in educational loans in exchange for full-time service for at least three years. To be considered eligible for an award, applicants must:
5. Be an allopathic or osteopathic physician;
6. Be free of any contractual service obligations (i.e. the National Health Service Corps Federal Loan Repayment Program or other financial incentive programs);
7. Have outstanding educational debt from a government or commercial lending institution;
8. Have a valid, unrestricted license to practice medicine in California;
9. Be employed or have accepted employment in a HPSA in California; and,
10. Commit to providing full-time direct patient care in a HPSA.
11. HPEF report on the STLRP. According to a June 2017 HPEF report, since its inception in 2003, the STLRP has received 1,228 applications, has awarded more than $47 million, and monitored the progress of 538 physicians providing direct patient care in 47 of the state’s 58 counties. Between July 1, 2015 and November 30, 2016, the STLRP received 187 applications representing 31 counties and more than $45 million of program applicant educational debt. Priority consideration is given to applicants best suited to meet the cultural and linguistic needs of patients by meeting such criteria as speaking a Medi-Cal threshold language, being from an economically disadvantaged background, having significant training in culturally and linguistically appropriate service delivery, and having three years of experience working in a medically underserved area or with a medically underserved population. Of the applicants, 63 (or 33.7%) were awarded grants; 92 were eligible but did not receive an award due to regulatory limits on awarded applicants with outside specialties or limited funding; and 32 were ineligible due to practice setting or part-time employment. Of the 63 recipients, seven worked in a HPSA; four worked in a Primary Care Shortage Area (PCSA); 30 worked in both a HPSA and PCSA; four worked in a PCSA and a Federally Qualified Health Center (FQHC); 15 worked in an FQHC; one worked in a site located on tribal land; one worked in a rural health center; and one worked in a designated HPSA facility. Additionally, 47 of the recipients came from an economically disadvantaged background, and 56 spoke at least one of the Medi-Cal threshold languages. STLRP recipients by county of employment from July 1, 2015 to November 30, 2016:

1. Geographic distribution of STLRP awards. Priority consideration is given to applicants from rural communities who agree to practice in a physician owned and operated medical practice setting. STLRP has limited funding for awards for awardees in all geographic regions of the state regardless of an MSSA rural or urban designation; however, rural preference occurs in the course of ensuring geographic distribution of awards. The table below shows number of applicants versus number of awards per MSSA designation for FY 2016-217 and illustrates that a higher proportion of rural applicants are successful applicants.
   

1. Related legislation. AB 2018 (Maienschein) expands the definition of “practice setting” for purposes of the STLRP to include a program or facility operated by, or contracted to, a county mental health plan. Adds to the criteria for guidelines developed by the Office of Statewide Health Planning and Development and the Health Professions Education Fund early loan repayment consideration for trainees who otherwise satisfy all application requirements of the STLRP. AB 2018 passed the Senate Health Committee by a vote of 8-0 on June 06, 2018.
2. Prior legislation. AB 148 (Mathis) was substantially similar to this bill. AB 148 was held on the Senate Appropriations Committee suspense file.

SB 1417 (Hernandez of 2016) would have required any funds over $2 million in the Managed Care Administrative Fines and Penalties Fund to annually be transferred to the MUAP in the HPEF, to be used for the purposes of the STLRP. SB 1417 was held on the Senate Appropriations Committee suspense file.

AB 565 (Salas, Chapter 378, Statutes of 2013) revises the definition of a practice setting for purposes of the STLRP to include a physician owned and operated medical practice setting that provides primary care located in an MUA.

SB 20 (Hernandez, Chapter 24, Statutes of 2014) requires, beginning on the date that the California Major Risk Medical Insurance Program becomes inoperative, all the funds in the Managed Care Administrative Fines and Penalties Fund to be transferred each year to the Medically Underserved Account for Physicians in the Health Professions Education Fund for use by STLRP.

AB 860 (Perea and Bocanegra of 2013) would have appropriated $600,000 from the MCAFP Fund to the Steven Thompson Medical School Scholarship Program within HPEF. AB 860 was held on the Assembly Appropriations Committee suspense file.

AB 1176 (Bocanegra and Bonta of 2013) would have established the Medical Residency Training Program within OSHPD to fund graduate medical education residency programs in California, as specified. AB 1176 was held on the Assembly Appropriations Committee suspense file.

SB 635 (Hernandez of 2012) was substantially similar to SB 20, but would have instead transferred the MCAFP funds to a newly created Song-Brown Program Account, which supports training for health care professionals. SB 635 was held was held on the Assembly Appropriations Committee suspense file.

SB 606 (Ducheny, Chapter 600, Statutes of 2009) requires the Osteopathic Medical Board of California to assess an additional $25 fee to 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 MUAP for STLRP and permits osteopathic physicians to be eligible to apply for the program.

SB 1379 (Ducheny, Chapter 607, Statutes of 2008) requires fines and administrative penalties levied against health plans under the Knox-Keene Act to be placed in the MCAFP Fund and used, upon appropriation by the Legislature, for a physician loan-repayment program and MRMIP. Requires DMHC to make a one-time transfer of fine and administrative penalty revenue of $10 million to MRMIP and $1 million to the loan repayment program. Prohibits using the fines and administrative penalties authorized by the Knox-Keene Act to reduce assessments on health plans.

AB 2439 (De La Torre, Chapter 640, Statutes of 2008) mandates the Medical Board of California assess a $25 fee to applicants for issuance or renewal of a physician and surgeon's license. Requires up to 15% of the funds collected be dedicated to loan assistance for physicians and surgeons who agree to practice in geriatric care settings or settings that primarily serve adults over the age of 65 or adults with disabilities.

AB 1403 (Nuñez, Chapter 367, Statutes of 2004) renames the California Physician Corps Loan Repayment Program as STLRP effective January 1, 2005.

AB 982 (Firebaugh, Chapter 1131, Statutes of 2002) establishes the California Physician Corps Loan Repayment Program within the Medical Board of California.

1. Support. The California Hospital Association writes that it supports increasing access to care in rural and medically underserved urban settings, and this bill proposes a change that would facilitate access. The Rural County Representatives of California (RCRC) states that access to high quality health care in rural areas is dependent upon an adequate supply of health care providers, and loan repayment programs are a great way to attract high quality physicians with diverse qualifications to medically underserved regions, such as the rural and remote counties that RCRC represents. The California Medical Association contends that by adjusting the patient mix threshold that clinics and physician practices must meet to participate in the STLRP, this bill may help to improve access to care in MUAs by potentially increasing the number of eligible practice settings. The Association of California Healthcare Districts writes that this bill will provide greater access to a critical tool in addressing health workforce needs in rural California
2. Policy comment. This bill expands the potential pool of applicants for STLRP awards by broadening eligibility, but it does not increase the funding available for awards. Demand for the STLRP program already exceeds supply, and this bill has the potential to exacerbate that problem.  Given that fact, and the fact that priority consideration is given to applicants from rural communities, the need for this bill is unclear.

SUPPORT AND OPPOSITION:

Support: Association of California Healthcare Districts

California Hospital Association

California Medical Association

Osteopathic Physicians and Surgeons of California

Rural County Representatives of California

Oppose: None received

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Date of Hearing: April 25, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2539

Author:(Mathis) – As Amended Ver:April 5, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill, in calendar years 2019 and 2020, relaxes the eligibility standard for a physician loan repayment program to allow rural practice settings, as defined, to participate in a physician loan repayment program if 30% of the practice’s patient population qualifies as medically underserved (as opposed to 50% under current law).

It also requires the Health Professions Education Foundation within the Office of Statewide Health Planning and Development (OSHPD) to prepare a study of the effect of these changes and appropriates $120,000 GF to OSHPD to amend regulations, provide technical assistance, and prepare the study.

FISCAL EFFECT:

1. This bill appropriates $120,000 GF for OSHPD's administrative costs.
2. Additional administrative and program cost pressure to increase funding for awards (GF or special funds). Expanding eligibility criteria increases pressure on a program that is already oversubscribed under current criteria. Only 91 applications were awarded in 2016-17 of a total of 405 received.

COMMENTS:

1. Purpose. This bill attempts to encourage a greater number of rural awardees by relaxing the standards for participation in the Steven M. Thompson Loan Repayment Program (Loan Repayment Program) for rural areas.
2. Background. Large swaths of rural California are designated as health professional shortage areas by OSHPD and struggle to attract and retain an adequate number of physicians. The Loan Repayment Program offers up to $105,000 in loan repayment to physicians in exchange for three years of service in eligible practice settings, which include community clinics or physician offices in medically underserved areas. Its purpose is to increase the number of linguistically and culturally competent physicians practicing in underserved areas. It is primarily funded through special funds, with most funding provided through a $25 fee at physician license renewal. A four-year, $31 million grant from the California Endowment that provided funding to the Loan Repayment Program ended in July 2017, reducing the number of awards available through the program.
3. Related Legislation. AB 2018 (Maienschein), also being heard today, expands the Loan Repayment Program eligible practice settings to include county mental health providers.
4. Prior Legislation. AB 148 (Mathis), of the current legislative session, relaxes eligibility standards for rural practice settings in a manner similar to this bill and was held on the Senate Appropriations Suspense File.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 3, 2018

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 2539

Author:(Mathis) – As Introduced Ver:February 14, 2018

SUBJECT: California Physician Corps Program: practice setting.

SUMMARY: Creates a two-year pilot program, from January 1, 2019 to January 1, 2021, by changing the definition of "practice setting" for purposes of applying to participate in the Steven M. Thompson Physician Corps Loan Repayment Program (STLRP) to include practice settings in rural areas with at least 30% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program. Specifically, this bill:

1. Modifies the definition of "practice setting," to include clinics and physicians' offices that have at least 30% of patients, if the area is rural, or at least 50% of patients if the area is non-rural, who are from a medically underserved population (MUP), for participants who enroll in the program from January 1, 2019 to January 1, 2021.
2. Defines "rural area" as a medical service study area (MSSA) with a population density of fewer than 250 person per square mile and no population center in excess of 50,000 within the area, as determined by the Office of Statewide Health Planning and Development (OSHPD).
3. Requires the Health Professions Education Foundation (HPEF), by March 1, 2020, to prepare a study to determine the effect of the provisions in 1) above, including program data for the calendar year 2019 as compared to program data for the calendar years 2017 and 2018. Requires an additional report with the program data for 2020 to be submitted by March 1, 2021.
4. Requires the study and reports described in 3) above, at a minimum, to identify all of the following:
   1. The name and location of all practice settings with program participants, and with the types of practice settings disaggregated by program participants, types of patients, as follows:
      1. Participants who enrolled in the program before January 1, 2019, and who continue to participate in the program on or after that date, that have at least 50% of patients who are from a medically underserved population;
      2. Participants who enroll in the program on or after January 1, 2019, and before January 1, 2021, that have at least 30% of patients, if the area is rural, or at least 50% of patient if the area is not rural, who are from a medically underserved population;
      3. Participants who enroll in the program before January 1, 2019, and who continue to participate in the program on or after that date, and have a minimum of 50% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250% of the federal poverty level (FPL);
      4. Participants who enroll in the program on or after January 1, 2019, and before January 1, 2021, and have at least 30% of patients, if the area is rural, or at least 50% if the area is not rural, who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250% of FPL;
      5. Participants who enroll in the program on or after January 1, 2021 and have a minimum of 50% of patients who are uninsured, Medi-Cal beneficiaries, or beneficiaries of another publicly funded program that serves patients who earn less than 250% of FPL.
   2. The number and amount of funding for loan repayments granted, disaggregated by types of program participants as described in 4) a) above.
5. Appropriates $120,000 from the General Fund to OSHPD to fund the following items for the purposes of implementing this act:
   1. Amending regulations as applicable;
   2. Providing technical assistance to the increased number of applicants under the STLRP pursuant to the provisions of this bill; and,
   3. Preparing the study and reports described in 3) and 4) above.

EXISTING LAW:

1. Establishes the HPEF within OSHPD to develop criteria for evaluating applicants for various scholarships and loan programs. Establishes within HPEF, the California Physician Corps Program, which consists of STLRP and the Physician Volunteer Program.
2. Establishes the Health Professions Education Fund (Fund), and the Medically Underserved Account for Physicians (MUAP) within the Fund, the primary purpose of which is being to provide funding for the operations of the STLRP. Allows HPEF to seek and receive matching funds from foundations and private sources to be placed in the MUAP.
3. Requires STLRP to provide financial incentives to applicants who possess a current valid medical or osteopathic license who practice in medically underserved areas (MUAs). Allows up to 20% of the available positions to be awarded to applicants from specialties outside of primary care and requires up to 15% of funds to be dedicated to loan assistance for physician and surgeons who agree to practice in geriatric settings.
4. Defines an MUA as a federal health professional shortage area (HPSA) or an area of the state where unmet priority needs for physicians exist as determined by the California Healthcare Workforce Policy Commission. Indicates that HPSAs are designations that indicate health care provider shortages in primary care, dental health, or mental health and these shortages may be geographic-, population-, or facility-based.
5. Defines MUP as the Medi-Cal program, Healthy Families Program, and uninsured populations.
6. Defines practice setting for purposes of the STLRP as either:
   1. A community clinic as defined, a clinic owned or operated by a public hospital and health system, or a clinic owned and operated by a hospital that maintains the primary contract with a county government to fulfill the county’s role to serve indigent population, which is located in a MUA and at least 50% of whose patients are from a MUP; or,
   2. A physician owned and operated medical practice located in a MUA and at least 50% of whose patients are from a MUP.

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, rural areas regularly struggle to incentivize quality surgeons and physicians to take up residency. The author states that this has created a void within rural areas, in terms of physician and surgeon retention, which ultimately harms many low-income regions. The author concludes this measure is designed to give rural areas a greater chance to obtain the benefits of the Steven M. Thompson Loan Repayment Program, and as such incentivize quality health care throughout disadvantaged regions.
2. BACKGROUND. The HPEF is a state non-profit established in 1987. HPEF has awarded more than 12,882 scholarships and loan repayments totaling more than $146.7 million to California health professionals serving in all 58 counties in areas of unmet need.
   
   1. STLRP. STLRP was established in 2003 to increase access to healthcare and promote the retention of primary care physicians in MUAs. The program is counseled by an advisory committee of seven members, with two members recommended by the California Medical Association. Physicians and surgeons can receive up to $105,000 every year in exchange for providing direct patient care in a MUA for a minimum of three years. To be considered for an award, an applicant must:
      
      1. Be an allopathic or osteopathic physician or surgeon;
      2. Be free of any contractual service obligations (i.e. the National Health Service Corps Federal Loan Repayment Program or other financial incentive programs);
      3. Have outstanding educational debt from a government or commercial lending institution;
      4. Have a valid, unrestricted license to practice medicine in California;
      5. Be currently employed or have accepted employment in an HPSA or Primary Care Shortage Area (PCSA) in California; and,
      6. Commit to providing full-time medical services in a HPSA or PCSA for a minimum of three years.
   2. Rural California. Rural areas are defined as an MSSA with a population density of less than 250 persons per square mile where no population center exceeds 50,000.   MSSAs are sub-city and sub-county geographical units used to organize and display population, demographic and physician data. MSSAs were developed in 1976 by the California Healthcare Workforce Policy Commission (formerly California Health Manpower Policy Commission) to respond to legislative mandates requiring it to determine "areas of unmet priority need for primary care family physicians" (Song-Brown Act of 1973) and "geographical rural areas where unmet priority need for medical services exist" (Garamendi Rural Health Services Act of 1976). MSSAs are recognized by the U.S. Health Resources and Services Administration, Bureau of Health Professions' Office of Shortage Designation as rational service areas for purposes of designating HPSAs, and MUAs and MUPs. This bill proposes to use the MSSA rural designation. The MSSA is a geography-based definition given by the state. The MSSA rural definition includes any clinic located within an area that has less than 250 inhabitants per square mile.
      
      Out of the 403 applications received for the STLRP program during the fiscal year (FY) 2017-18 application cycle, 77 applicants came from MSSA rural designated sites. 53 of these applicants with an MSSA rural designation were deemed eligible. Under the conditions of this bill, one additional applicant would have been eligible for an award.
      
      HPEF currently uses the Rural Health Clinic (RHC) designation. The RHC designation is based upon specific site characteristics and is put forth by the federal government. The vast majority of RHC’s also have a concurrent HPSA designation.
      
   3. Geographic distribution of STLRP awards. Per existing law, priority consideration is given to applicants from rural communities who agree to practice in a physician owned and operated medical practice setting. STLRP has limited funding for awards for awardees in all geographic regions of the state regardless of an MSSA rural or urban designation; however, rural preference occurs in the course of ensuring geographic distribution of awards. The table below shows number of applicants versus number of awards per MSSA designation for FY 2016-217 and illustrates that a higher proportion of rural applicants are successful applicants.
      

1. SUPPORT. The California Hospital Association (CHA) supports this bill stating that CHA supports increasing access to care in rural and medically underserved urban settings, and this bill proposes a change that would facilitate access.
   
   The Rural County Representatives of California (RCRC) supports this bill, stating that access to high quality health care in rural areas is dependent upon an adequate supply of health care providers, and loan repayment programs are a great way to attract high quality physicians with diverse qualifications to medically underserved regions, such as the rural and remote counties that RCRC represents.
2. RELATED LEGISLATION.
   1. AB 2018 (Maienschein) adds psychiatric trainees who have committed to working in county mental health plans or county mental health plan contracted services to the list of healthcare providers eligible to participate in the STLRP. AB 2018 is pending in the Assembly Health Committee.
   2. AB 2143 (Caballero) adds physician assistants who specialize in mental health services and psychiatric-mental health nurse practitioners to the list of licensed mental health service providers eligible for educational loan repayment grants under the Licensed Mental Health Service Provider Education Program. AB 2143 passed out of the Assembly Committee on Business and Professions on March 20, 2018 with a vote of 13-0, and is currently pending a hearing in the Assembly Health Committee.
3. PREVIOUS LEGISLATION.
   1. AB 148 (Mathis) of 2017 would have expanded eligibility for the California Physician Corps Program in rural areas by revising the definition of “practice setting” to include a clinic that has at least 30% of patients in rural areas; and, a physician owned and operated medical practice setting that provides primary care located in a medically underserved area and has at least 30% of patients in rural areas. AB 148 was held on the Senate Appropriations suspense file.
   2. SB 1417 (Hernandez) of 2016 would have required, on and after January 1, 2017 any funds over two million dollars in the Managed Care Administrative Fines and Penalties Fund to annually be transferred to the MUAP in the HPEF, to be used for the purposes of the STLRP. SB 1417 was held in the Senate Appropriations Committee.
   3. AB 565 (Salas), Chapter 378, Statutes of 2013, revised the definition of a practice setting for purposes of the STLRP to include a physician owned and operated medical practice setting that provides primary care located in an MUA.
   4. SB 20 (Hernandez), Chapter 24, Statutes of 2014, requires, beginning on the date that the Major Risk Medical Insurance Program (MRMIP) becomes inoperative, all the funds in the Managed Care Administrative Fines and Penalties (MCAFP) Fund to be transferred each year to the MUAP Fund for use by the STLRP.
   5. AB 860 (Perea and Bocanegra) of 2013 would have provided, beginning January 1, 2014, if the MCAFP Fund has $2 million or more, no less than $1 million shall be transferred to the STLRP Account. AB 860 was held in Assembly Appropriations.
   6. SB 635 (Hernandez) of 2012 was substantially similar to SB 20, but would have instead transferred the MCAFP funds to a newly created Song-Brown Program Account, which would have supported training for health care professionals. SB 635 was held on suspense in the Assembly Appropriations Committee.
   7. SB 606 (Ducheny), Chapter 600, Statutes of 2009, requires the Osteopathic Medical Board of California to assess an additional $25 fee to 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 MUA for Physicians for STLRP. Allows osteopathic physicians and surgeons to be eligible to apply for the STLRP.
   8. AB 2439 (De La Torre), Chapter 640, Statutes of 2008, mandates the Medical Board of California assess to a $25 fee to applicants for issuance or renewal of a physician and surgeon's license. Provides that up to 15% of the funds collected be dedicated to loan assistance for physicians and surgeons who agree to practice in geriatric care settings or settings that primarily serve adults over the age of 65 or adults with disabilities.
   9. AB 1403 (Nuñez), Chapter 367, Statutes of 2004, renamed the California Physician Corps Loan Repayment Program as the STLRP effective January 1, 2005.
   10. AB 982 (Firebaugh), Chapter 1131, Statutes of 2002, established the California Physician Corps Loan Repayment Program within the Medical Board of California.
4. POLICY COMMENT. This bill changes the potential distribution of the awards by broadening the eligibility threshold, but does not increase the number of awards or funds available. Demand for the STLRP program already exceeds supply, prior to the relaxation of standards being proposed under this bill.
5. TECHNICAL AMENDMENT. In order to clarify the parameters of the study, the Committee may wish to amend the bill to specify the report will include the number of awards and amount of funding for loan repayments.

REGISTERED SUPPORT / OPPOSITION:

Support

Association of California Healthcare Districts
California Hospital Association
California Medical Association

Rural County Representatives of California

Opposition

None on file.

Analysis Prepared by: Lara Flynn / HEALTH / (916) 319-2097