AB 112: Distressed Hospital Loan Program.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-05-15
Current Status:
Passed
(2023-05-15: Chaptered by Secretary of State - Chapter 6, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions, as defined, for financing or refinancing the acquisition, construction, or remodeling of health facilities.
This bill would create the Distressed Hospital Loan Program, until January 1, 2032, for the purpose of providing loans to not-for-profit hospitals and public hospitals, as defined, in significant financial distress or to governmental entities representing a closed hospital to prevent the closure or facilitate the reopening of a closed hospital. The bill would require the Department of Health Care Access and Information to administer the program and would require the department to enter into an interagency agreement with the authority to implement the program. The bill would require the department, in collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, to develop a methodology to evaluate an at-risk hospitals potential eligibility for state assistance from the program, as specified. The bill would require a hospital or a closed hospital to provide the authority and the department with financial information demonstrating the hospitals need for assistance due to financial hardship. The bill would additionally require that the department, in consultation with the authority, develop an application and approval process for loan forgiveness or modification of loan terms, as specified.
This bill would create the Distressed Hospital Loan Program Fund, a continuously appropriated fund, for use by the department and the authority to administer the loan program, as specified. The bill would authorize both the authority and the department to recover administrative costs from the fund. The bill would authorize the Department of Finance to transfer funds from the General Fund to the Distressed Hospital Loan Program Fund between state fiscal years 202223 and 202324 to implement the bill, as specified. The bill would authorize the department and the authority to require any hospital receiving a loan under the program to provide the department and the authority with an independent financial audit of the hospitals operations for any fiscal year in which a loan is outstanding. The bill would abolish the fund on December 31, 2031, and would require any remaining balance, assets, liabilities, and encumbrances of the fund to revert to the General Fund. By creating a continuously appropriated fund, the bill would make an appropriation. The bill would specify that the authority and the department may implement these provisions by information notices or other similar instructions, without taking any further regulatory action.
Existing law generally requires a health care facility to report specified data to the department, including total inpatient and outpatient revenues by payer, including Medicare and Medi-Cal. Existing law requires the department to adopt regulations regarding the identification and reporting of charity care services, and specifies various obligations to provide hard copies of hospital data reports submitted pursuant to these provisions.
This bill would additionally require data for total inpatient and outpatient revenues by payer to include commercial coverage payers. The bill would require a hospital subject to these data reporting requirements to submit a balance sheet detailing the assets, liabilities, and net worth at the end of the quarter as specified by the department. The bill would also remove the provisions regarding regulations related to charity care services and obligations to provide hard copies of hospital data reports.
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions, as defined, for financing or refinancing the acquisition, construction, or remodeling of health facilities.
This bill would create the Distressed Hospital Loan Program, until January 1, 2032, for the purpose of providing loans to not-for-profit hospitals and public hospitals, as defined, in significant financial distress or to governmental entities representing a closed hospital to prevent the closure or facilitate the reopening of a closed hospital. The bill would require the Department of Health Care Access and Information to administer the program and would require the department to enter into an interagency agreement with the authority to implement the program. The bill would require the department, in collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, to develop a methodology to evaluate an at-risk hospitals potential eligibility for state assistance from the program, as specified. The bill would require a hospital or a closed hospital to provide the authority and the department with financial information demonstrating the hospitals need for assistance due to financial hardship. The bill would additionally require that the department, in consultation with the authority, develop an application and approval process for loan forgiveness or modification of loan terms, as specified.
This bill would create the Distressed Hospital Loan Program Fund, a continuously appropriated fund, for use by the department and the authority to administer the loan program, as specified. The bill would authorize both the authority and the department to recover administrative costs from the fund. The bill would authorize the Department of Finance to transfer funds from the General Fund to the Distressed Hospital Loan Program Fund between state fiscal years 202223 and 202324 to implement the bill, as specified. The bill would authorize the department and the authority to require any hospital receiving a loan under the program to provide the department and the authority with an independent financial audit of the hospitals operations for any fiscal year in which a loan is outstanding. The bill would abolish the fund on December 31, 2031, and would require any remaining balance, assets, liabilities, and encumbrances of the fund to revert to the General Fund. By creating a continuously appropriated fund, the bill would make an appropriation. The bill would specify that the authority and the department may implement these provisions by information notices or other similar instructions, without taking any further regulatory action.
Existing law generally requires a health care facility to report specified data to the department, including total inpatient and outpatient revenues by payer, including Medicare and Medi-Cal. Existing law requires the department to adopt regulations regarding the identification and reporting of charity care services, and specifies various obligations to provide hard copies of hospital data reports submitted pursuant to these provisions.
This bill would additionally require data for total inpatient and outpatient revenues by payer to include commercial coverage payers. The bill would require a hospital subject to these data reporting requirements to submit a balance sheet detailing the assets, liabilities, and net worth at the end of the quarter as specified by the department. The bill would also remove the provisions regarding regulations related to charity care services and obligations to provide hard copies of hospital data reports.
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions, as defined, for financing or refinancing the acquisition, construction, or remodeling of health facilities.
This bill would create the Distressed Hospital Loan Program, until January 1, 2032, for the purpose of providing loans to not-for-profit hospitals and public hospitals, as defined, in significant financial distress or to governmental entities representing a closed hospital to prevent the closure or facilitate the reopening of a closed hospital. The bill would require the Department of Health Care Access and Information to administer the program and would require the department to enter into an interagency agreement with the authority to implement the program. The bill would require the department, in collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, to develop a methodology to evaluate an at-risk hospitals potential eligibility for state assistance from the program, as specified. The bill would require a hospital or a closed hospital to provide the authority and the department with financial information demonstrating the hospitals need for assistance due to financial hardship. The bill would additionally require that the department, in consultation with the authority, develop an application and approval process for loan forgiveness or modification of loan terms, as specified.
This bill would create the Distressed Hospital Loan Program Fund, a continuously appropriated fund, for use by the department and the authority to administer the loan program, as specified. The bill would authorize both the authority and the department to recover administrative costs from the fund. The bill would authorize the Department of Finance to transfer funds from the General Fund to the Distressed Hospital Loan Program Fund between state fiscal years 202223 and 202324 to implement the bill, as specified. The bill would authorize the department and the authority to require any hospital receiving a loan under the program to provide the department and the authority with an independent financial audit of the hospitals operations for any fiscal year in which a loan is outstanding. The bill would abolish the fund on December 31, 2031, and would require any remaining balance, assets, liabilities, and encumbrances of the fund to revert to the General Fund. By creating a continuously appropriated fund, the bill would make an appropriation. The bill would specify that the authority and the department may implement these provisions by information notices or other similar instructions, without taking any further regulatory action.
Existing law generally requires a health care facility to report specified data to the department, including total inpatient and outpatient revenues by payer, including Medicare and Medi-Cal. Existing law requires the department to adopt regulations regarding the identification and reporting of charity care services, and specifies various obligations to provide hard copies of hospital data reports submitted pursuant to these provisions.
This bill would additionally require data for total inpatient and outpatient revenues by payer to include commercial coverage payers. The bill would require a hospital subject to these data reporting requirements to submit a balance sheet detailing the assets, liabilities, and net worth at the end of the quarter as specified by the department. The bill would also remove the provisions regarding regulations related to charity care services and obligations to provide hard copies of hospital data reports.
This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.
This bill would express the intent of the Legislature to enact statutory changes, relating to the Budget Act of 2023.This bill would express the intent of the Legislature to enact statutory changes changes, relating to the Budget Act of 2023.
This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2023.
It is the intent of the Legislature to find offsetting statewide General Fund savings to support the costs associated with the requirements of this act.
SEC. 2.Section 128740 of the Health and Safety Code is amended to read:128740.(a)The following summary financial and utilization data shall be reported to the department by a hospital within 45 days of the end of a calendar quarter. Adjusted reports reflecting changes as a result of audited financial statements may be filed within four months of the close of the hospitals fiscal or calendar year. The quarterly summary financial and utilization data shall conform to the uniform description of accounts as contained in the Accounting and Reporting Manual for California Hospitals and shall include all of the following:
(1)Number of licensed beds.
(2)Average number of available beds.
(3)Average number of staffed beds.
(4)Number of discharges.
(5)Number of inpatient days.
(6)Number of outpatient visits.
(7)Total operating expenses.
(8)Total inpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(9)Total outpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(10)Deductions from revenue in total and by component, including the following: Medicare contractual adjustments, Medi-Cal contractual adjustments, and county indigent program contractual adjustments, other contractual adjustments, bad debts, charity care, restricted donations and subsidies for indigents, support for clinical teaching, teaching allowances, and other deductions.
(11)Total capital expenditures.
(12)Total net fixed assets.
(13)Total number of inpatient days, outpatient visits, and discharges by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, self-pay, and other payers.
(14)Total net patient revenues by payer, including Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(15)Other operating revenue.
(16)Nonoperating revenue net of nonoperating expenses.
(17)(A) A balance sheet detailing the assets, liabilities, and net worth at the end of the quarter, as specified by the department.
(B)The department shall allow and provide for, in accordance with appropriate regulations, additions, or deletions to the summary financial and utilization data to meet the purposes of this chapter.
(b)The department may adopt regulations, including emergency regulations, necessary to implement this section.
SEC. 3.Chapter 4 (commencing with Section 129380) is added to Part 6 of Division 107 of the Health and Safety Code, to read:4.Distressed Hospital Loan Program129380.(a)This program shall be known, and may be cited, as the Distressed Hospital Loan Program.
(b)The purpose of this program is to provide interest-free cashflow loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital, except as otherwise provided, to prevent the closure of, or facilitate the reopening of, those hospitals.
129381.For the purposes of this chapter, the following definitions apply:
(a)Authority means the California Health Facilities Financing Authority.
(b)Closed hospital means a hospital that closed after January 1, 2022.
(c)Department means the Department of Health Care Access and Information.
(d)Not-for-profit hospital means the same as a general acute care hospital described in paragraph (1) of subdivision (d) of Section 15432 of the Government Code that is organized as a not-for-profit entity.
(e)Program means the Distressed Hospital Loan Program.
(f)Public hospital means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital established pursuant to Article 7 (commencing with Section 37600) of Chapter 5 of Part 2 of Division 3 of Title 4 of the Government Code.
129382.(a)The department shall administer the program, subject to subdivision (d) of Section 129385, for purposes of this chapter.
(b)The department shall enter into an interagency agreement with the authority to implement this chapter.
129383.(a)In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospitals potential eligibility for state assistance from the program.
(1)(A)The methodology shall consider factors, including, but not limited to, whether the hospital is in financial distress, as solely determined by the department, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital that serves a disproportionate share of Medicaid patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned.
(B)The methodology for determining financial distress may consider such factors as the hospitals prior and projected performance on financial metrics, including the amount of cash on hand, and whether the hospital has, or is projected to experience, negative operating margins.
(2)The methodology shall also be used for identification and monitoring of hospitals at risk of financial distress.
(b)A hospital or a closed hospital applying for aid under this program shall provide the authority and the department with financial information, in a format determined by the authority and the department, demonstrating the hospitals need for financial assistance due to financial hardship.
(c)(1)Before receiving state assistance under this program, an eligible hospital shall submit a plan to the authority, which it shall share with the department, with projections detailing the uses of the proposed loan and strategies proposed by the hospitals governing body to regain financial viability and continue to operate.
(2)Before issuing a loan under this chapter, the department shall review the plan submitted by an eligible hospital and make a determination that the plan is viable and there is a reasonable likelihood that the hospital will be able to regain financial viability and continue to operate as a hospital. The department shall not issue a loan award if the department is unable to make this determination.
(d)The department shall issue the loan award to a qualifying hospital as soon as reasonably practicable following its eligibility determination.
(e)Not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities shall be ineligible for state assistance under the program.
(f)The department shall, in consultation with the authority, determine the application process, underwriting review, and methodology for approval and distribution of the loans under the program.
(g)The department shall have the authority to determine service provision requirements in approving, and for the duration of, loans to eligible hospitals. In making its determination, the department shall consider the impact of any changes to the hospitals service delivery on access to necessary medical care, particularly for beneficiaries of the Medi-Cal program.
(h)The department shall make the methodology publicly accessible on its internet website.
129384.(a)Notwithstanding Sections 15432 and 15451.5 of the Government Code, unless subdivision (c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first 18 months and shall discharge the loan within 72 months of the date of the loan.
(b)Notwithstanding any other law and to the extent permissible under federal rules, security for the cashflow loans in this chapter shall be Medi-Cal reimbursements due to the hospital from the State Department of Health Care Services. The departments or authoritys recoupment of these cashflow loans shall not exceed 20 percent of the hospitals respective Medi-Cal checkwrite payments until the loan amount has been satisfied. In the event that a 20-percent withhold will not result in full repayment of the loan within a 72-month period, the department may extend the repayment term of the loan.
(c)(1)The department, in consultation with the authority, and upon approval of the Department of Finance, shall develop an application and approval process for loan forgiveness or modification of the terms of the loan, including a delay of the beginning of the loan repayment period or an extension of the 72-month loan repayment term, or both. The process shall include, but is not limited to, eligibility criteria for an applicant for loan forgiveness or modification, including which portion of a loan may be forgiven or modified.
(2)The department shall provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority. The Department of Finance shall be authorized to approve any loan forgiveness and any modification of loan terms that would result in the extension of the payback period by more than one year.
(3)The department shall also establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance.
(4)Before any action on a request for forgiveness or modification of any loan that would result in the extension of the payback period by more than one year, and again not later than 60 days after final approval or denial of the forgiveness or modification, the department shall submit to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature notice of the request and the subsequent action, including a summary of the request and reason for the denial, approval, or modification.
129385.(a)The Distressed Hospital Loan Program Fund is hereby established in the State Treasury. The fund shall be administered by the department consistent with this chapter.
(b)Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated, without regard to fiscal years, for the department and the authority to implement this chapter.
(c)The authority shall make secured loans from the Distressed Hospital Loan Program Fund to a hospital or to a governmental entity representing a closed hospital, for purposes of preventing the closure, or facilitating the reopening, of the hospital.
(d)The department may allocate an amount not to exceed 5 percent of total program funds to administer the program, including, but not limited to, administrative costs to the authority. Any funds transferred shall be available for encumbrance or expenditure until June 30, 2026.
(e)The Department of Finance may transfer up to $150,000,000 from the General Fund to the Distressed Hospital Loan Program Fund between state fiscal years 202223 and 202324 to implement this chapter.
(f)All moneys accruing to the authority and the department under this chapter from any source shall be deposited into the fund.
(g)The Treasurer may invest moneys in the fund that are not required for its current needs in eligible securities specified in Section 16430 of the Government Code and may transfer moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code.
(h)Notwithstanding Section 16305.7 of the Government Code, all interest or other increment resulting from the investment or deposit of moneys from the fund shall be deposited in the fund.
(i)Moneys in the fund shall not be subject to transfer to any other funds pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.
(j)Effective December 31, 2031, the Distressed Hospital Loan Program Fund in the State Treasury, created pursuant to this chapter, is hereby abolished. Any remaining balance, assets, liabilities, and encumbrances of the Distressed Hospital Loan Program Fund shall revert to the General Fund. The department shall deposit all subsequent loan repayments or Medi-Cal reimbursements withheld for due cause pursuant to subdivision (b) of Section 129384 to the Treasurer, to the credit of the General Fund.
(k)The department and the authority may require any hospital receiving a loan under this chapter to provide the department and the authority with an independent financial audit of the hospitals operations for any fiscal year in which a loan is outstanding.
129386.(a)Notwithstanding the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the authority and the department may implement, interpret, or make specific this chapter, in whole or in part, by means of information notices or other similar instructions, without taking any further regulatory action.
(b)For purposes of implementing this chapter, the authority and the department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis. Contracts entered into or amended pursuant to this subdivision shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and the State Administrative Manual, and shall be exempt from the review or approval of any division of the Department of General Services.
129387.This chapter shall remain in effect only until January 1, 2032, and as of that date is repealed.
SEC. 4.This act is a bill providing for appropriations related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution, has been identified as related to the budget in the Budget Bill, and shall take effect immediately.
It is the intent of the Legislature to find offsetting statewide General Fund savings to support the costs associated with the requirements of this act.
SEC. 2.Section 128740 of the Health and Safety Code is amended to read:128740.(a)The following summary financial and utilization data shall be reported to the department by a hospital within 45 days of the end of a calendar quarter. Adjusted reports reflecting changes as a result of audited financial statements may be filed within four months of the close of the hospitals fiscal or calendar year. The quarterly summary financial and utilization data shall conform to the uniform description of accounts as contained in the Accounting and Reporting Manual for California Hospitals and shall include all of the following:
(1)Number of licensed beds.
(2)Average number of available beds.
(3)Average number of staffed beds.
(4)Number of discharges.
(5)Number of inpatient days.
(6)Number of outpatient visits.
(7)Total operating expenses.
(8)Total inpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(9)Total outpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(10)Deductions from revenue in total and by component, including the following: Medicare contractual adjustments, Medi-Cal contractual adjustments, and county indigent program contractual adjustments, other contractual adjustments, bad debts, charity care, restricted donations and subsidies for indigents, support for clinical teaching, teaching allowances, and other deductions.
(11)Total capital expenditures.
(12)Total net fixed assets.
(13)Total number of inpatient days, outpatient visits, and discharges by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, self-pay, and other payers.
(14)Total net patient revenues by payer, including Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(15)Other operating revenue.
(16)Nonoperating revenue net of nonoperating expenses.
(17)(A) A balance sheet detailing the assets, liabilities, and net worth at the end of the quarter, as specified by the department.
(B)The department shall allow and provide for, in accordance with appropriate regulations, additions, or deletions to the summary financial and utilization data to meet the purposes of this chapter.
(b)The department may adopt regulations, including emergency regulations, necessary to implement this section.
SEC. 3.Chapter 4 (commencing with Section 129380) is added to Part 6 of Division 107 of the Health and Safety Code, to read:4.Distressed Hospital Loan Program129380.(a)This program shall be known, and may be cited, as the Distressed Hospital Loan Program.
(b)The purpose of this program is to provide interest-free cashflow loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital, except as otherwise provided, to prevent the closure of, or facilitate the reopening of, those hospitals.
129381.For the purposes of this chapter, the following definitions apply:
(a)Authority means the California Health Facilities Financing Authority.
(b)Closed hospital means a hospital that closed after January 1, 2022.
(c)Department means the Department of Health Care Access and Information.
(d)Not-for-profit hospital means the same as a general acute care hospital described in paragraph (1) of subdivision (d) of Section 15432 of the Government Code that is organized as a not-for-profit entity.
(e)Program means the Distressed Hospital Loan Program.
(f)Public hospital means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital established pursuant to Article 7 (commencing with Section 37600) of Chapter 5 of Part 2 of Division 3 of Title 4 of the Government Code.
129382.(a)The department shall administer the program, subject to subdivision (d) of Section 129385, for purposes of this chapter.
(b)The department shall enter into an interagency agreement with the authority to implement this chapter.
129383.(a)In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospitals potential eligibility for state assistance from the program.
(1)(A)The methodology shall consider factors, including, but not limited to, whether the hospital is in financial distress, as solely determined by the department, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital that serves a disproportionate share of Medicaid patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned.
(B)The methodology for determining financial distress may consider such factors as the hospitals prior and projected performance on financial metrics, including the amount of cash on hand, and whether the hospital has, or is projected to experience, negative operating margins.
(2)The methodology shall also be used for identification and monitoring of hospitals at risk of financial distress.
(b)A hospital or a closed hospital applying for aid under this program shall provide the authority and the department with financial information, in a format determined by the authority and the department, demonstrating the hospitals need for financial assistance due to financial hardship.
(c)(1)Before receiving state assistance under this program, an eligible hospital shall submit a plan to the authority, which it shall share with the department, with projections detailing the uses of the proposed loan and strategies proposed by the hospitals governing body to regain financial viability and continue to operate.
(2)Before issuing a loan under this chapter, the department shall review the plan submitted by an eligible hospital and make a determination that the plan is viable and there is a reasonable likelihood that the hospital will be able to regain financial viability and continue to operate as a hospital. The department shall not issue a loan award if the department is unable to make this determination.
(d)The department shall issue the loan award to a qualifying hospital as soon as reasonably practicable following its eligibility determination.
(e)Not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities shall be ineligible for state assistance under the program.
(f)The department shall, in consultation with the authority, determine the application process, underwriting review, and methodology for approval and distribution of the loans under the program.
(g)The department shall have the authority to determine service provision requirements in approving, and for the duration of, loans to eligible hospitals. In making its determination, the department shall consider the impact of any changes to the hospitals service delivery on access to necessary medical care, particularly for beneficiaries of the Medi-Cal program.
(h)The department shall make the methodology publicly accessible on its internet website.
129384.(a)Notwithstanding Sections 15432 and 15451.5 of the Government Code, unless subdivision (c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first 18 months and shall discharge the loan within 72 months of the date of the loan.
(b)Notwithstanding any other law and to the extent permissible under federal rules, security for the cashflow loans in this chapter shall be Medi-Cal reimbursements due to the hospital from the State Department of Health Care Services. The departments or authoritys recoupment of these cashflow loans shall not exceed 20 percent of the hospitals respective Medi-Cal checkwrite payments until the loan amount has been satisfied. In the event that a 20-percent withhold will not result in full repayment of the loan within a 72-month period, the department may extend the repayment term of the loan.
(c)(1)The department, in consultation with the authority, and upon approval of the Department of Finance, shall develop an application and approval process for loan forgiveness or modification of the terms of the loan, including a delay of the beginning of the loan repayment period or an extension of the 72-month loan repayment term, or both. The process shall include, but is not limited to, eligibility criteria for an applicant for loan forgiveness or modification, including which portion of a loan may be forgiven or modified.
(2)The department shall provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority. The Department of Finance shall be authorized to approve any loan forgiveness and any modification of loan terms that would result in the extension of the payback period by more than one year.
(3)The department shall also establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance.
(4)Before any action on a request for forgiveness or modification of any loan that would result in the extension of the payback period by more than one year, and again not later than 60 days after final approval or denial of the forgiveness or modification, the department shall submit to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature notice of the request and the subsequent action, including a summary of the request and reason for the denial, approval, or modification.
129385.(a)The Distressed Hospital Loan Program Fund is hereby established in the State Treasury. The fund shall be administered by the department consistent with this chapter.
(b)Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated, without regard to fiscal years, for the department and the authority to implement this chapter.
(c)The authority shall make secured loans from the Distressed Hospital Loan Program Fund to a hospital or to a governmental entity representing a closed hospital, for purposes of preventing the closure, or facilitating the reopening, of the hospital.
(d)The department may allocate an amount not to exceed 5 percent of total program funds to administer the program, including, but not limited to, administrative costs to the authority. Any funds transferred shall be available for encumbrance or expenditure until June 30, 2026.
(e)The Department of Finance may transfer up to $150,000,000 from the General Fund to the Distressed Hospital Loan Program Fund between state fiscal years 202223 and 202324 to implement this chapter.
(f)All moneys accruing to the authority and the department under this chapter from any source shall be deposited into the fund.
(g)The Treasurer may invest moneys in the fund that are not required for its current needs in eligible securities specified in Section 16430 of the Government Code and may transfer moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code.
(h)Notwithstanding Section 16305.7 of the Government Code, all interest or other increment resulting from the investment or deposit of moneys from the fund shall be deposited in the fund.
(i)Moneys in the fund shall not be subject to transfer to any other funds pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.
(j)Effective December 31, 2031, the Distressed Hospital Loan Program Fund in the State Treasury, created pursuant to this chapter, is hereby abolished. Any remaining balance, assets, liabilities, and encumbrances of the Distressed Hospital Loan Program Fund shall revert to the General Fund. The department shall deposit all subsequent loan repayments or Medi-Cal reimbursements withheld for due cause pursuant to subdivision (b) of Section 129384 to the Treasurer, to the credit of the General Fund.
(k)The department and the authority may require any hospital receiving a loan under this chapter to provide the department and the authority with an independent financial audit of the hospitals operations for any fiscal year in which a loan is outstanding.
129386.(a)Notwithstanding the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the authority and the department may implement, interpret, or make specific this chapter, in whole or in part, by means of information notices or other similar instructions, without taking any further regulatory action.
(b)For purposes of implementing this chapter, the authority and the department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis. Contracts entered into or amended pursuant to this subdivision shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and the State Administrative Manual, and shall be exempt from the review or approval of any division of the Department of General Services.
129387.This chapter shall remain in effect only until January 1, 2032, and as of that date is repealed.
SEC. 4.This act is a bill providing for appropriations related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution, has been identified as related to the budget in the Budget Bill, and shall take effect immediately.
It is the intent of the Legislature to find offsetting statewide General Fund savings to support the costs associated with the requirements of this act.
SEC. 2.Section 128740 of the Health and Safety Code is amended to read:128740.(a)The following summary financial and utilization data shall be reported to the department by a hospital within 45 days of the end of a calendar quarter. Adjusted reports reflecting changes as a result of audited financial statements may be filed within four months of the close of the hospitals fiscal or calendar year. The quarterly summary financial and utilization data shall conform to the uniform description of accounts as contained in the Accounting and Reporting Manual for California Hospitals and shall include all of the following:
(1)Number of licensed beds.
(2)Average number of available beds.
(3)Average number of staffed beds.
(4)Number of discharges.
(5)Number of inpatient days.
(6)Number of outpatient visits.
(7)Total operating expenses.
(8)Total inpatient gross revenues by payer, including including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(9)Total outpatient gross revenues by payer, including including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(10)Deductions from revenue in total and by component, including the following: Medicare contractual adjustments, Medi-Cal contractual adjustments, and county indigent program contractual adjustments, other contractual adjustments, bad debts, charity care, restricted donations and subsidies for indigents, support for clinical teaching, teaching allowances, and other deductions.
(11)Total capital expenditures.
(12)Total net fixed assets.
(13)Total number of inpatient days, outpatient visits, and discharges by payer, including payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, self-pay, charity, and other payers.
(14)Total net patient revenues by payer payer, including Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(15)Other operating revenue.
(16)Nonoperating revenue net of nonoperating expenses.
(b)The department shall make available at cost, to any person, a hard copy of any hospital report made pursuant to this section and in addition to hard copies, shall make available at cost, a computer tape of all reports made pursuant to this section within 105 days of the end of every calendar quarter.(c)The department shall adopt by regulation guidelines for the identification, assessment, and reporting of charity care services. In establishing the guidelines, the department shall consider the principles and practices recommended by professional health care industry accounting associations for differentiating between charity services and bad debts. The department shall further conduct the onsite validations of health facility accounting and reporting procedures and records as are necessary to assure that reported data are consistent with regulatory guidelines.(17)(A) A balance sheet detailing the assets, liabilities, and net worth at the end of the quarter, as specified by the department.
(B)The department shall allow and provide for, in accordance with appropriate regulations, additions, or deletions to the summary financial and utilization data to meet the purposes of this chapter.
(b)The department may adopt regulations, including emergency regulations, necessary to implement this section.
SEC. 3.Chapter 4 (commencing with Section 129380) is added to Part 6 of Division 107 of the Health and Safety Code, to read:4.Distressed Hospital Loan Program129380.(a)This program shall be known, and may be cited, as the Distressed Hospital Loan Program.
(b)The purpose of this program is to provide interest-free cashflow loans to not-for-profit hospitals and public hospitals in significant financial distress or to governmental entities representing a closed hospital, except as otherwise provided, to prevent the closure of, or facilitate the reopening of, those hospitals.
129381.For the purposes of this chapter, the following definitions apply:
(a)Authority means the California Health Facilities Financing Authority.
(b)Closed hospital means a hospital that closed after January 1, 2022.
(c)Department means the Department of Health Care Access and Information.
(d)Not-for-profit hospital means the same as a general acute care hospital described in paragraph (1) of subdivision (d) of Section 15432 of the Government Code that is organized as a not-for-profit entity.
(e)Program means the Distressed Hospital Loan Program.
(f)Public hospital means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital established pursuant to Article 7 (commencing with Section 37600) of Chapter 5 of Part 2 of Division 3 of Title 4 of the Government Code.
129382.(a)The department shall administer the program, subject to subdivision (d) of Section 129385, for purposes of this chapter.
(b)The department shall enter into an interagency agreement with the authority to implement this chapter.
129383.(a)In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospitals potential eligibility for state assistance from the program.
(1)(A)The methodology shall consider factors, including, but not limited to, whether the hospital is in financial distress, as solely determined by the department, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital that serves a disproportionate share of Medicaid patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned.
(B)The methodology for determining financial distress may consider such factors as the hospitals prior and projected performance on financial metrics, including the amount of cash on hand, and whether the hospital has, or is projected to experience, negative operating margins.
(2)The methodology shall also be used for identification and monitoring of hospitals at risk of financial distress.
(b)A hospital or a closed hospital applying for aid under this program shall provide the authority and the department with financial information, in a format determined by the authority and the department, demonstrating the hospitals need for financial assistance due to financial hardship.
(c)(1)Before receiving state assistance under this program, an eligible hospital shall submit a plan to the authority, which it shall share with the department, with projections detailing the uses of the proposed loan and strategies proposed by the hospitals governing body to regain financial viability and continue to operate.
(2)Before issuing a loan under this chapter, the department shall review the plan submitted by an eligible hospital and make a determination that the plan is viable and there is a reasonable likelihood that the hospital will be able to regain financial viability and continue to operate as a hospital. The department shall not issue a loan award if the department is unable to make this determination.
(d)The department shall issue the loan award to a qualifying hospital as soon as reasonably practicable following its eligibility determination.
(e)Not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities shall be ineligible for state assistance under the program.
(f)The department shall, in consultation with the authority, determine the application process, underwriting review, and methodology for approval and distribution of the loans under the program.
(g)The department shall have the authority to determine service provision requirements in approving, and for the duration of, loans to eligible hospitals. In making its determination, the department shall consider the impact of any changes to the hospitals service delivery on access to necessary medical care, particularly for beneficiaries of the Medi-Cal program.
(h)The department shall make the methodology publicly accessible on its internet website.
129384.(a)Notwithstanding Sections 15432 and 15451.5 of the Government Code, unless subdivision (c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first 18 months and shall discharge the loan within 72 months of the date of the loan.
(b)Notwithstanding any other law and to the extent permissible under federal rules, security for the cashflow loans in this chapter shall be Medi-Cal reimbursements due to the hospital from the State Department of Health Care Services. The departments or authoritys recoupment of these cashflow loans shall not exceed 20 percent of the hospitals respective Medi-Cal checkwrite payments until the loan amount has been satisfied. In the event that a 20-percent withhold will not result in full repayment of the loan within a 72-month period, the department may extend the repayment term of the loan.
(c)(1)The department, in consultation with the authority, and upon approval of the Department of Finance, shall develop an application and approval process for loan forgiveness or modification of the terms of the loan, including a delay of the beginning of the loan repayment period or an extension of the 72-month loan repayment term, or both. The process shall include, but is not limited to, eligibility criteria for an applicant for loan forgiveness or modification, including which portion of a loan may be forgiven or modified.
(2)The department shall provide loan forgiveness or modification of loan terms to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority. The Department of Finance shall be authorized to approve any loan forgiveness and any modification of loan terms that would result in the extension of the payback period by more than one year.
(3)The department shall also establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance.
(4)Before any action on a request for forgiveness or modification of any loan that would result in the extension of the payback period by more than one year, and again not later than 60 days after final approval or denial of the forgiveness or modification, the department shall submit to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature notice of the request and the subsequent action, including a summary of the request and reason for the denial, approval, or modification.
129385.(a)The Distressed Hospital Loan Program Fund is hereby established in the State Treasury. The fund shall be administered by the department consistent with this chapter.
(b)Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated, without regard to fiscal years, for the department and the authority to implement this chapter.
(c)The authority shall make secured loans from the Distressed Hospital Loan Program Fund to a hospital or to a governmental entity representing a closed hospital, for purposes of preventing the closure, or facilitating the reopening, of the hospital.
(d)The department may allocate an amount not to exceed 5 percent of total program funds to administer the program, including, but not limited to, administrative costs to the authority. Any funds transferred shall be available for encumbrance or expenditure until June 30, 2026.
(e)The Department of Finance may transfer up to $150,000,000 from the General Fund to the Distressed Hospital Loan Program Fund between state fiscal years 202223 and 202324 to implement this chapter.
(f)All moneys accruing to the authority and the department under this chapter from any source shall be deposited into the fund.
(g)The Treasurer may invest moneys in the fund that are not required for its current needs in eligible securities specified in Section 16430 of the Government Code and may transfer moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code.
(h)Notwithstanding Section 16305.7 of the Government Code, all interest or other increment resulting from the investment or deposit of moneys from the fund shall be deposited in the fund.
(i)Moneys in the fund shall not be subject to transfer to any other funds pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.
(j)Effective December 31, 2031, the Distressed Hospital Loan Program Fund in the State Treasury, created pursuant to this chapter, is hereby abolished. Any remaining balance, assets, liabilities, and encumbrances of the Distressed Hospital Loan Program Fund shall revert to the General Fund. The department shall deposit all subsequent loan repayments or Medi-Cal reimbursements withheld for due cause pursuant to subdivision (b) of Section 129384 to the Treasurer, to the credit of the General Fund.
(k)The department and the authority may require any hospital receiving a loan under this chapter to provide the department and the authority with an independent financial audit of the hospitals operations for any fiscal year in which a loan is outstanding.
129386.(a)Notwithstanding the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the authority and the department may implement, interpret, or make specific this chapter, in whole or in part, by means of information notices or other similar instructions, without taking any further regulatory action.
(b)For purposes of implementing this chapter, the authority and the department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis. Contracts entered into or amended pursuant to this subdivision shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and the State Administrative Manual, and shall be exempt from the review or approval of any division of the Department of General Services.
129387.This chapter shall remain in effect only until January 1, 2032, and as of that date is repealed.
SEC. 4.This act is a bill providing for appropriations related to the Budget Bill within the meaning of subdivision (e) of Section 12 of Article IV of the California Constitution, has been identified as related to the budget in the Budget Bill, and shall take effect immediately.
SECTION 1.It is the intent of the Legislature to enact statutory changes, relating to the Budget Act of 2023.It is the intent of the Legislature to enact statutory changes changes, relating to the Budget Act of 2023.
It is the intent of the Legislature to enact statutory changes relating to the Budget Act of 2023.
|
Date
|
Status
|
|---|---|
| May 15, 2023 | Chaptered by Secretary of State - Chapter 6, Statutes of 2023. |
| May 15, 2023 | Approved by the Governor. |
| May 4, 2023 | Enrolled and presented to the Governor at 11 a.m. |
| May 4, 2023 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 77. Noes 0. Page 1458.). |
| May 4, 2023 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after May 6 pursuant to Assembly Rule 77. |
| May 4, 2023 | Assembly Rule 77 suspended. (Page 1458.) |
| May 4, 2023 | Assembly Rule 63 suspended. (Page 1458.) |
| May 4, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 998.). |
| May 3, 2023 | Read second time. Ordered to third reading. |
| May 2, 2023 | From committee: Do pass. (Ayes 18. Noes 0.) (May 2). |
| Apr 28, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.R. |
| Apr 12, 2023 | Referred to Com. on B. & F.R. |
| Mar 23, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Mar 23, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 60. Noes 14. Page 834.) |
| Mar 21, 2023 | Read second time. Ordered to third reading. |
| Mar 20, 2023 | Withdrawn from committee. |
| Mar 20, 2023 | Ordered to second reading. |
| Mar 20, 2023 | Assembly Rule 96 suspended. (Ayes 61. Noes 17. Page 732.) |
| Feb 2, 2023 | Re-referred to Com. on BUDGET. |
| Feb 1, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on BUDGET. Read second time and amended. |
| Jan 26, 2023 | Referred to Com. on BUDGET. |
| Jan 10, 2023 | From printer. May be heard in committee February 9. |
| Jan 9, 2023 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| May 4, 2023 | AB 112 BUDGET Concurrence in Senate Amendments By TING | Assembly Floor |
Passed |
|
| May 4, 2023 | Assembly 3rd Reading AB112 BUDGET (Ting) By Skinner | Senate Floor |
Passed |
|
| May 2, 2023 | Do pass | Senate Standing Committee on Budget and Fiscal Review |
Passed |
|
| Mar 23, 2023 | AB 112 Budget Assembly Third Reading By TING | Assembly Floor |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
(Without Reference to File)
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 112
Author:(Committee on Budget)
As Amended Ver:April 28, 2023
Majority vote. Budget Bill Appropriations Takes Effect Immediately
SUMMARY
This is a health trailer bill which is necessary to implement provisions of the Budget Act of 2023.
Senate Amendments
This bill establishes the Distressed Hospital Loan Program (DHLP), until January 1, 2032, which will provide interest free cashflow loans to not-for-profit hospitals and public hospitals, as defined, in significant financial distress, or to governmental entities representing closed hospitals. Requires the Department of Health Care Access and Information (HCAI) to administer the DHLP and to enter into an interagency agreement with the California Health Facilities Financing Authority (CHFFA) to implement the DHLP. Specifically, this bill:
- Establishes the DHLP, until January 1, 2032, to provide interest free cashflow loans to not-for-profit hospitals and public hospitals, as defined, that are in significant financial distress or to governmental entities representing closed hospitals, for purposes of preventing the closure of, or facilitating the reopening of, those hospitals.
- Defines the following, for purposes of this bill:
- "Closed hospital" means a hospital that closed after January 1, 2022.
- "Not-for-profit hospital" means a general acute care hospital that is a health facility having a duly constituted governing body with overall administrative and professional responsibility and an organized medical staff that provides 24-hour inpatient care, including the following basic services: medical, nursing, surgical, anesthesia, laboratory, radiology, pharmacy, and dietary services that is organized as a not-for-profit entity.
- "Public Hospital" means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital, as defined.
- Requires HCAI to enter into an interagency agreement with CHFFA to implement the DHLP.
- Requires HCAI, in collaboration with the California Department of Health Care Services (DHCS), the Department of Managed Health Care, and the California Department of Public Health, to develop a methodology to evaluate an at-risk hospital's potential eligibility for state assistance from the DHLP.
- Requires the methodology to consider factors, including but not limited to, whether the hospital is in financial distress, as solely determined by HCAI, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital that serves a disproportionate share of Medicaid patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned. Requires the methodology to also be used for identification and ongoing monitoring of hospitals at-risk of financial distress.
- Allows for the methodology for determining financial distress to consider such factors as the hospital's prior and projected performance on financial metrics, including the amount of cash on hand, and whether the hospital has, or is projected to experience, negative operating margins.
- Requires a hospital or closed hospital, applying for aid, to provide CHFFA and HCAI with financial information demonstrating the hospital's need for financial assistance.
- Requires a hospital, prior to receiving state assistance from the DHLP, to submit a plan to CHFFA, which it must share with HCAI, with projections detailing the uses of the proposed loan and strategies proposed by the hospital's governing body to regain financial viability and continue to operate.
- Prohibits HCAI, prior to issuing a loan, to review the plan submitted by a hospital and make a determination that the plan is viable and that there is a reasonable likelihood that the hospital will be able to regain financial viability and continue to operate.
- Requires HCAI to issue the loan award to a qualifying hospital as soon as is reasonably practicable following its eligibility determination.
- Prohibits not-for-profit hospitals and public hospitals that belong to integrated health care systems, with more than two separately licensed hospitals, from being eligible for state assistance under the DHLP.
- Requires HCAI, in consultation with CHFFA to determine the application process, underwriting review, and methodology for approval and distribution of the loans under DHLP. Requires HCAI to make the methodology publicly accessible on its website.
- Grants HCAI the authority to determine service provision requirements in approving, and for the duration of, loans to eligible hospitals. Requires HCAI, in making its determination, to consider the impact of any changes to the hospital's service delivery on access to necessary medical care, particularly for Medi-Cal beneficiaries.
- Requires hospitals to begin making monthly repayments of the loan after the first 18 months and to discharge the loan within 72 months of the date of the loan.
- Requires, to the extent permissible under federal rules, security for the loans to be Medi-Cal reimbursements due to the hospital from DHCS. Restricts HCAI or CHFFA's recoupment of the loans from exceeding 20% of the hospital's respective Medi-Cal checkwrite payments until the loan amount has been satisfied. Authorizes HCAI to extend the repayment term of the loan if a 20% withhold will not result in full repayment of the loan within a 72 month period.
- Requires HCAI, in consultation with CHFFA, and upon approval of the Department of Finance, to develop an application and approval process for loan forgiveness or modification of the terms of the loan, including a delay of the beginning of the loan repayment period or an extension of the 72-month loan repayment term, or both.
- Requires HCAI to establish the terms and conditions associated with accepting loan forgiveness or modification of loan terms, subject to approval of the Department of Finance.
- Requires HCAI to submit to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature notice of a request and subsequent action, including a summary of the request and reason for the denial, approval or modification, prior to any action taken on a request for forgiveness or modification of any loan, and again not later than 60 days after final approval or denial of the forgiveness or modification.
- Establishes the Distressed Hospital Loan (DHL) Fund in the Treasury, to be administered by HCAI. Requires all moneys in the fund to be continuously appropriated, without regard to fiscal years, for HCAI and CHFFA to implement the provisions of this bill.
- Requires CHFFA to make secured loans from the DHL Fund to a hospital for purposes of preventing the closure, or facilitating the reopening of the hospital.
- Authorizes HCAI to allocate an amount not to exceed 5% of the total program funds to administer the DHLP, including, but not limited to, administrative costs to CHFFA. Requires any funds transferred to be available for encumbrance or expenditure until June 30, 2026.
- Authorizes Department of Finance to transfer up to $150 million from the General Fund to the DHL Fund between fiscal years 2022-23 and 2023-24 to implement this program.
- Authorizes the Treasurer to invest moneys in the DHL Fund that are not required for its current needs in eligible securities as specified. Requires all interest or other increment resulting from the investment or deposit of moneys from the DHL Fund to be deposited in the DHL Fund.
- Prohibits moneys in the DHL Fund from being subject to transfer to any other funds, except to the Surplus Money Investment Fund.
- Authorizes HCAI and CHFFA to implement, interpret, or make specific the provisions of this bill, by means of information notices or other similar instructions, without taking any further regulatory action.
- Authorizes HCAI and CHFFA to enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis. Exempts contracts entered into or amended pursuant to this provision from existing standards for the use of personal services contracts and from the review or approval of any division of the Department of General Services.
- Requires the abolishment of the DHL Fund on December 31, 2031, and requires that any remaining balance, assets, liabilities, and encumbrances of the DHL Fund revert to the General Fund.
- Authorizes HCAI and CHFFA to require any hospital receiving a loan to provide the state with an independent financial audit of the hospital's operations for any fiscal year in which a loan is outstanding.
- Requires the provisions of this bill to remain in effect until January 1, 2032, and as of that date to be repealed.
- Adds the following requirements to hospitals' existing financial and utilization data that is reported to HCAI on a quarterly basis:
- Revenues attributable to commercial insurance coverage specific to the total amount of a hospitals inpatient gross revenues;
- Revenues attributable to commercial insurance coverage specific to the total number of inpatient days, outpatient visits, and discharges attributable to commercial insurance coverage; and,
- A balance sheet detailing the assets, liabilities, and net worth at the end of the quarter in the detail as specified by the department.
- Requires HCAI to allow and provide for, in accordance with appropriate regulations, additions or deletions to the summary financial and utilization data to meet the purposes of this bill.
- Authorizes HCAI to adopt regulations, including emergency regulations, necessary to implement this section.
- Declares this act is a bill providing for appropriations related to the Budget Bill, has been identified as related to the budget in the Budget Bill, and shall take effect immediately.
COMMENTS
This bill is a budget trailer bill to establish the Distressed Hospitals Loan Program, to provide assistance to public and not-for-profit hospitals that are at risk of closing, and to governmental entities representing closed hospitals.
According to the Author
Arguments in Support
None on file.
Arguments in Opposition
None on file
FISCAL COMMENTS
This bill authorizes the transfer of up to $150 million from the General Fund to the Distressed Hospitals Loan Fund, being created by this bill, to implement this bill.
VOTES:
ASSEMBLY FLOOR: 60-14-6
YES: Addis, Aguiar-Curry, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner Horvath, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones‑Sawyer, Kalra, Lee, Low, Lowenthal, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO: Alanis, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta
ABS, ABST OR NV: Cervantes, Chen, Maienschein, Mathis, Waldron, Wallis
UPDATED
VERSION: April 28, 2023
CONSULTANT: Andrea Margolis / BUDGET / (916) 319-2099 FN: 0000292
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 112 |
THIRD READING
Bill No: AB 112
Author: Committee on Budget
Amended: 4/28/23 in Senate
Vote: 21- Urgency
SENATE BUDGET & FISCAL REVIEW COMMITTEE: 18-0, 5/2/23
AYES: Skinner, Niello, Becker, Caballero, Dahle, Durazo, Eggman, Grove, Laird, McGuire, Menjivar, Min, Newman, Ochoa Bogh, Padilla, Roth, Seyarto, Smallwood-Cuevas
ASSEMBLY FLOOR: Not relevant
SUBJECT: Distressed Hospital Loan Program
SOURCE: Author
DIGEST:
This bill establishes the Distressed Hospital Loan Program, to provide interest free cashflow loans to not-for-profit and public hospitals in significant financial distress, or to governmental entities representing a closed hospital, and authorizes a General Fund transfer to support the program from General Fund savings to be identified in the 2022 Budget Act.
ANALYSIS: This bill establishes the Distressed Hospital Loan Program, to support not-for-profit or public hospitals in financial distress to remain in operation, or to reopen closed hospitals. Specifically, this bill:
- States the intent of the Legislature to find offsetting statewide General Fund savings to support costs associated with the Distressed Hospital Loan Program.
- Establishes the Distressed Hospital Loan Program, administered by the Department of Health Care Access and Information (HCAI) under an interagency agreement with the California Health Facilities Financing Authority (CHFFA), to provide interest free cashflow loans to not-for-profit and public hospitals in significant financial distress, or to governmental entities representing a closed hospital, to prevent the closure or facilitate the reopening of those hospitals.
- Requires HCAI to establish a methodology to evaluate a hospital’s eligibility for a loan, in collaboration with the Department of Health Care Services (DHCS), Department of Managed Health Care (DMHC), and Department of Public Health (DPH).
- Requires the methodology to consider whether the hospital is:
- in financial distress, as determined by the department;
- small, rural, or a critical access hospital;
- a trauma center;
- an urban hospital providing access for an underserved area;
- a hospital that serves a disproportionate share of Medi-Cal patients;
- a hospital that serves a rural catchment area;
- publicly owned; or
- at risk of significantly impacting access to services in the region were it to close.
- Allows the methodology to also consider a hospital’s prior and projected performance on financial metrics.
- Requires a hospital to provide a plan to CHFFA and HCAI detailing how the hospital proposes to return to financial viability and continue to operate as a hospital.
- Requires HCAI to verify the plan is likely to help the hospital regain financial viability and continue operating as a hospital, prior to issuing a loan.
- Prohibits loans to not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities.
- Authorizes HCAI to impose service provision requirements on the hospital in approving, and for the duration of, loans, which must consider the impact of changes in a hospital’s service delivery on access to necessary medical care, particularly for Medi-Cal beneficiaries.
- Requires a hospital that receives a loan to begin repayment after 18 months, and discharge the loan within 72 months of the date of the loan.
- Authorizes HCAI and CHFFA to securitize cashflow loans against Medi-Cal reimbursements to the hospital, to the extent permissible under federal rules.
- Authorizes an application and approval process for loan forgiveness or modification of the terms of the loan.
- Requires, prior to loan forgiveness or modification of loan terms, approval by the Department of Finance and notice to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature.
- Establishes the Distressed Hospital Loan Fund, continuously appropriated to support the Distressed Hospital Loan Program.
- Authorizes the Department of Finance to transfer up to $150 million of General Fund expenditure authority to the fund.
- Authorizes HCAI and CHFFA to require any hospital receiving a loan to provide an independent financial audit in any fiscal year in which a loan is outstanding.
- Expands hospital financial and utilization data submission requirements to include:
- Quarterly balance sheet reporting detailing assets, liabilities, and net worth of the hospital; and
- Revenue and utilization attributable to patients with commercial coverage, including total inpatient gross revenues, total outpatient gross revenues, total net patient revenues, total number of inpatient days, total number of outpatient visits, and total number of discharges.
- Deletes obsolete reporting and data availability requirements covered by other existing statutory authority.
- Exempts implementation of the Distressed Hospital Loan Program from state public contracting laws and regulations.
- Abolishes the Distressed Hospital Loan Fund as of December 31, 2031, and sunsets the Distressed Hospital Loan Program as of January 1, 2032.
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No
According to the Senate Budget and Fiscal Review Committee, this bill establishes the Distressed Hospital Loan Program Fund, to be continuously appropriated, without regard to fiscal years, to HCAI to administer the Distressed Hospital Loan Program. Authorizes the Department of Finance to transfer up to $150 million of General Fund expenditure authority to the fund in 2022-23 and 2023-24 to support the program.
SUPPORT: (Verified 5/1/23)
None received
OPPOSITION: (Verified 5/1/23)
None received
Prepared by: Scott Ogus / B. & F.R. / (916) 651-4103
5/3/23 14:45:26
**** END ****
SENATE COMMITTEE ON
Senator Nancy Skinner, Chair
2023 - 2024 Regular
Bill No: Hearing Date: May 2, 2023
Author: | Committee on Budget | ||
Version: | As amended | ||
Urgency: | Fiscal: | ||
Consultant: | |||
Subject:
Summary:
This bill establishes the Distressed Hospital Loan Program, to provide interest free cashflow loans to not-for-profit and public hospitals in significant financial distress, or to governmental entities representing a closed hospital, and authorizes a General Fund transfer to support the program from General Fund savings to be identified in the 2022 Budget Act.
Proposed Law:
This bill establishes the Distressed Hospital Loan Program, to support not-for-profit or public hospitals in financial distress to remain in operation, or to reopen closed hospitals. Specifically, this bill:
- States the intent of the Legislature to find offsetting statewide General Fund savings to support costs associated with the Distressed Hospital Loan Program.
- Establishes the Distressed Hospital Loan Program, administered by the Department of Health Care Access and Information (HCAI) under an interagency agreement with the California Health Facilities Financing Authority (CHFFA), to provide interest free cashflow loans to not-for-profit and public hospitals in significant financial distress, or to governmental entities representing a closed hospital, to prevent the closure or facilitate the reopening of those hospitals.
- Requires HCAI to establish a methodology to evaluate a hospital’s eligibility for a loan, in collaboration with the Department of Health Care Services (DHCS), Department of Managed Health Care (DMHC), and Department of Public Health (DPH).
- Requires the methodology to consider whether the hospital is:
- in financial distress, as determined by the department;
- small, rural, or a critical access hospital;
- a trauma center;
- an urban hospital providing access for an underserved area;
- a hospital that serves a disproportionate share of Medi-Cal patients;
- a hospital that serves a rural catchment area;
- publicly owned; or
- at risk of significantly impacting access to services in the region were it to close.
- Allows the methodology to also consider a hospital’s prior and projected performance on financial metrics.
- Requires a hospital to provide a plan to CHFFA and HCAI detailing how the hospital proposes to return to financial viability and continue to operate as a hospital.
- Requires HCAI to verify the plan is likely to help the hospital regain financial viability and continue operating as a hospital, prior to issuing a loan.
- Prohibits loans to not-for-profit hospitals and public hospitals that belong to integrated health care systems with more than two separately licensed hospital facilities.
- Authorizes HCAI to impose service provision requirements on the hospital in approving, and for the duration of, loans, which must consider the impact of changes in a hospital’s service delivery on access to necessary medical care, particularly for Medi-Cal beneficiaries.
- Requires a hospital that receives a loan to begin repayment after 18 months, and discharge the loan within 72 months of the date of the loan.
- Authorizes HCAI and CHFFA to securitize cashflow loans against Medi-Cal reimbursements to the hospital, to the extent permissible under federal rules.
- Authorizes an application and approval process for loan forgiveness or modification of the terms of the loan.
- Requires, prior to loan forgiveness or modification of loan terms, approval by the Department of Finance and notice to the Joint Legislative Budget Committee and relevant policy and fiscal committees of the Legislature.
- Establishes the Distressed Hospital Loan Fund, continuously appropriated to support the Distressed Hospital Loan Program.
- Authorizes the Department of Finance to transfer up to $150 million of General Fund expenditure authority to the fund.
- Authorizes HCAI and CHFFA to require any hospital receiving a loan to provide an independent financial audit in any fiscal year in which a loan is outstanding.
- Expands hospital financial and utilization data submission requirements to include:
- Quarterly balance sheet reporting detailing assets, liabilities, and net worth of the hospital; and
- Revenue and utilization attributable to patients with commercial coverage, including total inpatient gross revenues, total outpatient gross revenues, total net patient revenues, total number of inpatient days, total number of outpatient visits, and total number of discharges.
- Deletes obsolete reporting and data availability requirements covered by other existing statutory authority.
- Exempts implementation of the Distressed Hospital Loan Program from state public contracting laws and regulations.
- Abolishes the Distressed Hospital Loan Fund as of December 31, 2031, and sunsets the Distressed Hospital Loan Program as of January 1, 2032.
Fiscal Effect:
Establishes the Distressed Hospital Loan Program Fund, to be continuously appropriated, without regard to fiscal years, to HCAI to administer the Distressed Hospital Loan Program. Authorizes the Department of Finance to transfer up to $150 million of General Fund expenditure authority to the fund in 2022-23 and 2023-24 to support the program.
Support:
None on file.
Opposed:
None on file.
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 112
Author:(Committee on Budget)
As Amended Ver:February 1, 2023
Majority vote. Budget Bill Appropriation Takes Effect Immediately
SUMMARY
This bill expresses the intent of the Legislature to enact statutory changes relating to the Budget Act of 2023.
Major Provisions
COMMENTS
According to the Author
Arguments in Support
Arguments in Opposition
FISCAL COMMENTS
VOTES
UPDATED
VERSION: February 1, 2023
CONSULTANT: Christian Griffith / BUDGET / (916) 319-2099 FN: 0000046
Discussed in Hearing
15MIN
Assembly Floor
40MIN
Senate Floor
1H
Senate Standing Committee on Budget and Fiscal Review
Bill Author
Bill Co-Author(s):