Senate Standing Committee on Health

Item number eight, Senate Bill 1334 Senator Newman Substance Abuse Disorder Treatment and item number 20, Senate Bill 1268 Senator Nguyen medical managed care plans we have 19 bills on the agenda, with three of them being on our proposed consent calendar on consent today.

Item number one, Senate Bill 908 Senator Cortese Fentanyl Child Deaths item number six, Senate Bill 1464 Senator Ashby Health facilities Cardiac catheterization item number 15, Senate Bill 1033 Senator Menjivar Health facilities congregant living health facilities with that, we will take our first batter up. First item item number two. Senator Cortese Senate Bill 999 health coverage mental health and substance abuse substance use disorders. Please proceed when ready.

Well, thank you, Chair Roth. I'm very pleased to present SB 999. The bill will ensure that California suffering from mental health and substance use disorders can receive the appropriate level of treatment and care necessary for a full and lasting recovery. Existing law requires health plans and disability insurers to use generally accepted standards of care when conducting utilization reviews. Utilization review is when a health plan or disability insurer approves, modifies, or denies treatment based on what they consider medically necessary.

However, despite existing law, some health plans and disability insurers still use inappropriate utilization review practices to avoid paying for care. As a result, medically necessary treatment days are often arbitrarily denied. Some reviewers have denial rates exceeding 95%. SB 999 will remedy this by requiring that utilization review determinations be performed by a reviewer with appropriate training and relevant experience in the clinical specialty. The bill requires reviewers to disclose their basis for a treatment denial, including a citation of the clinical guidelines that were followed.

SB 999 also codifies the standard practice for reviewers to list their names and credentials on a treatment denial. This practice has been instrumental in helping us track trends in utilization review denials. Finally, this bill requires health plans and disability insurers to maintain telephone and direct communication access for utilization review during California business hours. By applying the appropriate clinical and utilization review criteria to mental health and substance use disorder treatment, we can save lives by combating overdose deaths and suicides.

SB 999 is co-sponsored by the Kennedy Forum, the Steinberg Institute, Summit State Recovery Center, the California Consortium of Addiction Programs and Professionals, and the Santa Clara County Office of Education. With us today to testify and support is Lauren Finke with the Kennedy Forum and Amanda Thompson, who will share her own lived experience. Thank you again and I respect we ask for your aye vote.

Thank you, Senator. Please proceed when ready.

Thank you, Chair and committee members, my name is Lauren Finke, senior director of policy at the Kennedy Forum. We're proud sponsors of SB 999 we are dedicated to ensuring insurance coverage of medically necessary mental health and substance use disorder care for all Californians and are committed to seeing the full implementation of SB 855, among the country's most robust healthcare consumer protection law. SB 999 addresses a number of important plan and regulator-created barriers to fully implementing this law.

Despite robust laws, health plans are continuing the practice of utilization review based on illegal, non-clinical standards of care. Nowhere are they doing that more blatantly than through the use of third-party utilization reviewers. These reviewers do not have relevant training or certifications in the clinical specialty of the cases they are reviewing. For Californians seeking treatment for substance use disorders, that means many reviewers do not have expertise or training in addiction medicine.

Indeed, data from 38 state-licensed addiction treatment centers shows reviewers with no training in addiction medicine, despite laws mandating the exclusive use of the American Society of Addiction Medicine or ASAM criteria. That data showed reviewers not using or citing ASAM in their determinations, which are the vast majority of the time denials. This practice is common across the mental health and addiction field, including for eating disorders and autism treatment.

When enrollees who have been denied care appeal these claims, they are often called at all hours, early mornings, late at night, requesting information immediately, and threatened to have their care denied unless they immediately comply. SB 999 ensures utilization review is done by a provider with relevant clinical training and experience as the clinicians who are prescribing that care. It ensures contact with enrollees during business hours. It requires the reviewer to list their name and credentials on a denial.

Knowing all this information is what allowed our provider partners to identify these issues and is an additional tool regulators can use for identifying bad actor utilization reviewers. With these important protections, we can ensure Californians get access to the medically necessary mental health and addiction treatment they need without relying on an appeal and time and money out of pocket to secure that care. Thank you.

Thank you. Next, please.

Good afternoon. My name is Amanda and I'm here to share my journey of recovery that has been challenged by systemic barriers and wrongful deniers denials of care. When I entered treatment. I had been drinking one to two bottles of wine daily for two years, the result of a seven-year marriage to a verbally abusive narcissist in which I endured constant criticism and explosive rage. This abuse extended to our two dogs.

This marriage ultimately stripped me of my identity and self-worth, significantly impacting my emotional well-being and ability to get sober. My path to recovery, however, was blocked not just by these challenges, but by a healthcare system that did not seem to care about my needs. Despite my need for treatment, my health plan, Anthem, denied the essential last week of my care.

This denial was not based on a lack of medical necessity, but on a flawed review process conducted by a geriatric psychiatrist with no expertise in addiction medicine. In fact, my reviewer has an 87% denial rate for addiction services. The clinicians who prescribed the care that my health plan denied were using ASAMs national substance use treatment criteria. That final week of treatment was vital to giving me the support and breakthroughs necessary for me to process my trauma and focus on my recovery.

I stepped down to outpatient care in a much healthier place and later returned to school. In December, I will complete my master's degree in clinical psychology. The cost of my recovery and care that should have been covered under my health plan was instead funded by my parents, who had to take a second mortgage out on their house and dip into their retirement savings, a financial strain they bear to this day.

I am here speaking to you today not just as a survivor, but as a testament to what's at stake. Without the life-saving potential of this bill, I was fortunate to have the support of my parents, who, at great cost, were able to pay for the medically necessary care that my plan wrongfully denied. Not everyone struggling with substance and mental health challenges in California has that kind of support. Our battle with substance use is already daunting. Let's not let health plan negligence be another obstacle. I ask you to please join me in supporting this bill to safeguard the right to life-saving care for those seeking treatment for mental health and substance use disorders. Thank you.

Thank you. Thank you both for joining us. Are there any other supporters of this measure in the hearing room? If so, please step forward. Your name, affiliation, and position on the measure only, please.

Good afternoon. Sherry Daley, with the California Consortium of Addiction Programs and Professionals, proud co-sponsors, in support. Thank you.

Thank you. Next, please.

Toni Trigueiro, on behalf of the California Teachers Association, in support.

Thank you. Sir.

John Drebinger with the Steinberg Institute, proud co-sponsors of the bill, in support. Thank you.

Thank you.

Katie Van Deynze with Health Access California, in strong support. Thank you.

Thank you, ma'am. Next, please.

Kat Besse, with the California Alliance of Child and Family Services, in support.

Thank you.

Vanessa Cajina with KP Public Affairs, on behalf of the California Academy of Family Physicians, here in support.

Thank you, ma'am. Next please.

Tom Renfree with the California Association of Alcohol and Drug Program Executives, in support.

Yes. Ma'am.

Melissa Cortez, on behalf of Autism Speaks and the Council of Autism Service Providers, here in support.

Thank you for joining us, sir.

Good afternoon, Mr. Chair and members. Andrew Antwih, with Shaw Yoder Antwih Schmelzer and Lange, here today on behalf of the California Medical Association, in support. Thank you.

Good afternoon, Chair and members. Tyler Rinde, on behalf of the California Psychological Association, in support.

Thank you, sir. Yes, ma'am.

Amanda Dickey, on behalf of Santa Clara County superintendent of school, proud co-sponsor, in support.

Thank you.

Leah Barros, on behalf of California Hospital Association, in support.

Thank you. Yes, ma'am.

Jessica Moran with the California Dental Association, in support.

Thank you, ma'am.

Jennifer Snyder with Capital Advocacy on behalf of the California Life Sciences, in support.

Snyder. Yes, sir.

Bob Giroux, on behalf of the National Union of Healthcare Workers and Pinnacle Aegis Treatment Centers, in support.

Thank you. Yes, ma'am.

Joan Borsten, executive director of Summit Estate Recovery Center. We're proud to sponsor this bill.

Thank you. Are there any other support witnesses in the hearing room? Seeing none. Let's turn to opposition witnesses. First. lead opposition. Good to see you both. Please identify yourselves for the record and proceed when ready.

You just turn it on.

Good afternoon.

Happens to me too.

I should be used to this by now. So my apologies.

I don't know, it took me 12 years.

Good afternoon, Mr. Chair and members of the committee, Jedd Hampton with California Association of Health Plans, regrettably here in opposition, SB 999. We would like to thank the author's office, the sponsors, and the committee staff for the productive conversations that we've had on the bill. From our perspective, the most recent set of amendments are really positive. We think they moved the bill in in the right direction. So we're very pleased to see those recent amendments.

However, we do have some remaining concerns with the bill that we would like to work with the author on. Specifically, we are concerned that the bill would allow individuals to access the personal information and credentials of the healthcare provider who is making the utilization review determination. We are concerned that this could unnecessarily expose the provider performing that utilization review to inappropriate and potentially troubling communication from the individual should they disagree with the decision made by the provider.

Current law provides a pathway when an enrollee disagrees with the utilization review decision. An enrollee can file a grievance with the health plan regarding the decision whereby the health plan must receive, review, and resolve the grievance within 72 hours when the enrollee faces an imminent or serious threat to their health.

We believe that the existing grievance process provides the enrollee with a robust and timely process for resolving these disputed decisions in a way that also protects the personal information and the clinical determination of the determining provider. We also have some remaining questions around the requirement for determining providers to disclose to the treating provider the plan's basis for a denial.

We typically do this via a denial letter which is sent in writing to the enrollee, and that denial letter typically provides a basis for the denial and why the enrollee did not meet the clinical criteria in the denial letter to the enrollee. So we are a little unclear on this bill relative to the communication portion, whether that denial letter also needs to be communicated via email or via telephone during the telephone hours of the health plan.

So we just want to seek a little bit more clarification on that provision moving forward. But we are committed to working with the author and the sponsors to ensure that our enrollees have quality mental health care. So again, for these reasons, we are currently opposed but look forward to working with the author and the sponsors a little bit more to resolve some of these outstanding concerns.

Thank you, sir. Ma'am.

Steffanie Watkins, on behalf of the Association of California Life and Health Insurance Companies. In the interest of time, I know we have a long agenda today. I'll echo many of my colleague's comments and just highlight the issues around the privacy of the individual reviewer. We'd like to have those conversations with the author and sponsor if the bill moves forward today. Thank you.

Thank you for those comments. Appreciate your attendance. Other individuals in opposition, name, affiliation, and position on the measure, please.

Mr. Chair and members. John Wenger, on behalf of America's Health Insurance Plans to just echo the comments of CAHP and ACLHIC. Look forward to future conversations.

Thank you, sir. Any other witnesses in the hearing room in opposition to the measure? Seeing none. There's nobody to turn it back to on the dais yet. In case you all are wondering out there, we have multiple committees running at the same time today. So unfortunately, you're stuck with me and it's not my deodorant. Senator, would you like to close?

Yes. Thank you very much again, Chair. I appreciate very much this committee's analysis, your work with us on this, actually in a number of bills this session. Very much appreciated. I just want to thank all of the witnesses today on both sides for their testimony in the case of the opposition. Their willingness to continue to work with us, give us feedback to make it a better bill.

We will work and talk with them about the privacy concerns, but it is our understanding, and actually, the way we get some of the data on this bill is because the information, no contact information, I want to emphasize, but name and credentials are included currently by some of the practitioners. We just want to make that universal so we can better track. We're all too often running into a situation where not everybody is able to give us the actual data in terms of denials.

That said, my last thank you is more specifically to the support witnesses, especially Amanda, who came forward here and has every right, you know, to keep anonymous and her concerns confidential, but obviously had the fortitude and the courage to come forward today. On behalf of so many out there who are in recovery or need to be in recovery, and who need the proper care, I respectfully ask for your aye vote.

Thank you, Senator. At such times we get a quorum, we'll take a motion and we'll conduct the vote.

Appreciate that very much. Thank you.

Thank you. Our next item is Item number 3, Senate Bill 1008. Senator Bradford, Obesity Treatment Parity Act. Please proceed when ready.

Thank you, Mister Chair and Committee Members. I want to start by accepting the Committee amendments, and I thank you for your work with this issue. 1008, known as the Obesity Treatment Parity Act, would require health plans and insurers in California to provide coverage for treatment of obesity, including intensive behavioral therapy, bariatric surgery, and at least one FDA approved anti-obesity medication. Currently, one has to be morbidly Obese before most health plans will kick in. Today, over 42% of Americans are obese.

Obesity is a serious chronic medical condition with linkages to many of the top causes of death, including heart disease, stroke, diabetes, and cancer. Nearly half of all overweight or obese adults report having either no or little awareness of drugs used to manage obesity. Because, again, many of these health plans don't cover it. So they don't make it available and make patients aware. The high cost of these drugs, $1,000 or more per month for the supply, make them inaccessible for patients with lower incomes.

And it's been proven diet and exercise alone does not work. We've had many celebrities, such as Oprah Winfrey, Amy Schumer, Elon Musk, and Charles Barkley, clearly state that they're now dependent on these drugs, but they can easily afford them without a health care plan. But obesity disproportionately affects low-income Californians who can't afford the same effective treatment as the individuals I mentioned. Adults living below 200% of the federal poverty level have a higher prevalence of obesity than their higher income counterparts.

Not surprisingly, we see racial disparities in the prevalence of obesity as well. Specifically, it was found that Black and Hispanic adults with obesity were more likely to encounter financial barriers to accessing anti obesity medication compared to their caucasian counterparts. The divide in access is not limited to race and ethnicity alone, but also location and expenses. Rates of obesity are higher in rural areas, and its estimated travel time to obesity specialists is almost five times as long compared to a adults in urban areas.

The cost of obesity is high and is growing by the day. A recent study found that healthcare costs for people with obesity are about $3,500 higher each year than those with healthy weight. When the indirect costs of obesity are included, the total economic costs of obesity is a staggering, estimated at nearly $1.4 trillion.

Looking at those future avoided costs, it makes sense that Medi-Cal has chosen to cover anti obesity medication for more than a year now, and CalPERS has added coverage for anti obesity medication as of this year. Like other chronic diseases, obesity treatment sometimes requires a continuum of care, including primary and specialist care, anti obesity medication, and potential surgical intervention. SB 1008 will increase access to these life changing treatments.

Testifying in support of this measure today is Doctor Wesley Mizutani, Rheumatologist and Assistant Clinical Professor of Medicine at UC San Diego, and Estela Mata, Co-founder and President of Looms4Lupus and Vice Chair of the California Chronic Care Coalition. I respectfully ask for your aye vote.

Please proceed when ready.

Good afternoon, Mister Chair and Members of the Committee. I am Estela Mata-Carcamo, the President and Co-founder of Looms4Lupus, a nonprofit organization providing lupus fibromyalgia and mental health awareness, advocacy, and support to those living with these conditions, their loved ones and caregivers. Looms4Lupus is a Member of cHope, the Chronic Obesity Prevention and Education Alliance, and it is sponsoring SB 1008, the Obesity Treatment Parity Act. Obesity is a chronic disease.

It is recognized as such by countless professional organizations, including the American College of Physicians, the Obesity Medicine Association, and the American Medical Association. Adults impacted by obesity have an increased risk of heart disease, cancer, diabetes, COVID-19 complications, among more than 200 comorbidities. It is critical to any discussion of obesity to acknowledge the impact of the disease served populations. The prevalence of obesity in African Americans is 35.6%. In the Hispanic population, prevalence is 32.9% compared to just 23.9% caucasian population.

We believe it is past time that support is provided for everyone coping with obesity, especially these at risk groups. SB 1008 provides that support. Obesity is a complicated disease resulting from multiple factors. Those factors can be inherited, physiological and environmental. Yes, diet and exercise can contribute positively or negatively to obesity, but these contributing factors change things in the body and mind, creating brain pathways that are difficult to overcome.

Assistance, particularly in these at risk groups may have more than one factor leading to obesity. Patients with obesity may also have phase years of weight loss attempts and being told their weight is due to failure and their character. They may be depressed and be suffering from loss and rejection various ways due to their weight. This leads to mental health issues that also leaves people less incapable of changing their weight without assistance.

Other diseases, hormones and medication for other conditions may lead to obesity and unsuccessful weight loss efforts. These patients need help. Yet, due to social stigmas and the assumption that obesity is a lifestyle choice or a character deficit, people suffering from obesity are often ignored and given less than ideal treatment in life for their chronic disease. No one would send a patient with heart disease home without test, a plan, a prescription and perhaps surgery scheduled.

Yet, we debate whether patients with obesity truly require access to quality treatment. The lack of treatment for obesity needs to change. Obesity must be treated as a disease. Patients must receive access to treatment. It is urgent to create parity in the treatment of obesity and to address the unequal impact of obesity on at-risk groups. SB 1008 does just that. Please support the Obesity Treatment Parity Act.

Thank you. Sir, you're next.

Mister Chair and Members of the Committee, thank you for allowing me the opportunity to speak to you today. I am Dr. Wesley Mizutani. I'm a practicing rheumatologist in Huntington beach for over 30 years. I'm also a Board Member of the Alliance for Patient Access, a physician-driven volunteer organization that strives to improve the access to health care for all patients. I'm here to ask your support for SB 1008, the Obesity Treatment Parity Act. Obesity is a disease that affects over 40% of the US population.

However, in my practice, about 50% of my patients are coping with this disease and I will detail what I mean by coping shortly. But suffice to say, obesity has clearly been shown to increase the morbidity and mortality of most diseases, including heart disease, diabetes and yes, even arthritis. It is critical that physicians treat obesity as a devastating chronic disease, and they have all the tools necessary.

Rheumatoid arthritis, or RA, is a chronic systemic inflammatory arthritis that leads to joint destruction and is a leading cause of disability in the working population. And I thought it would be instructive to present a case from my practice that illustrates how obesity can complicate every aspect of a patient's life. Rosa is a 50 year old working mother of three. She is insured by Medi-Cal. She has had severe rheumatoid arthritis for over 10 years.

She also has a history of obesity for most of her life, and due to the severity of her rheumatoid arthritis, she was not able to exercise. As a result, she gained over 150 pounds in 10 years. This resulted, unfortunately, in her developing severe osteoarthritis at both hips and ultimately required to get a bilateral hip replacement at age 50. Her obesity also led to her develop what is commonly known as fatty liver. However, Rosa was on a medication called methotrexate for rheumatoid arthritis and responding quite well.

However, we had to stop it because of her fatty liver getting out, and her rheumatoid arthritis therefore got out of control. At the same time, her fatty liver progressed to cirrhosis. This meant that many of the biologic rheumatologic medications that you see on TV, she could not take. Most of Rose's tragic medical issues could have been prevented if obesity had been treated aggressively. Obesity increases the utilization and expense of the healthcare system.

In Rose's case, as in Rose's case, obesity is not a disease of choice or lifestyle. We must support our patients who struggle with obesity, just as we support patients with cancer or heart disease. Please help me to avoid more cases like Rosa and support SB 1008, the Obesity Treatment Parity Act. Thank you.

Thank you, sir. Are there any other witnesses in support in the hearing room, please step forward. Your name, affiliation and position on the measure only, please.

Mister Chair. Tim Madden, representing the California Rheumatology Alliance in support and also representing the California Chapter of the American College of Cardiology. We have a support if amendment position.

Thank you, sir. Next, please.

Mister Chair, Alex Khan, on behalf of the California Chronic Care Coalition and a program of the coalition, the Chronic Obesity Prevention and Education Alliance, which is proud to sponsor the Bill.

Thank you. Yes, ma'am. Hello.

Good afternoon. Whitney Francis with the Western Center on Law and Poverty in support.

Thank you.

Jennifer Snyder with Capitol Advocacy on behalf of the California Life Sciences, in support.

Thank you. Miss Snyder. Yes, ma'am.

Good afternoon, Missy Johnson with Nielsen Merksamer, here on behalf of the California Pharmacists Association in support.

Thank you for joining us. Any other witnesses in support? How about witnesses in opposition? First lead opposition witnesses followed by others. Any opposition witnesses, please step forward. You're welcome to join us at the table.

Take your time, gentlemen. Sort of. Please identify yourselves for the record.

Thank you. Mister Chair and Committee Members Preston Young from the California Chamber of Commerce here today in respectful opposition to SB 100. Eight. Obviously, I want to just make this clear from the beginning. It's a well intentioned Bill. We understand that. And it's not from a policy perspective that we're here, but rather it's the unintended consequences that have motivated the opposition today.

The reason for our opposition is the cost impact that SB 1008 will have on California's employers. We appreciate the work the author has done to reduce the cost impact from previous iterations of this Bill. However, the California Health Benefits Review program anticipates that SB 1008 will increase employer and enrollee premiums by approximately $136 million. That's a significant and preventable premium increase for California's employers.

So I know often we're in here talking about mandates, and if you look at them in isolation, the cost increases typically don't look too dramatic. But when you put it together and have context to it, it obviously takes on a bit of a new life itself. So just to give a little context to that, over the last five years, the average premium for family coverage in employer sponsored plans has increased 20%.

In 2023, the average annual premiums for California employer sponsored family health care coverage reached $23,968. Workers, on average, paid $6,575 towards the cost of coverage. So certainly appreciate the author's intentions, but we do remain concerned about the unintended cost increases. So that's the reason for our opposition here today. Thank you so much.

Thank you for joining us.

Sure. Good afternoon, Mister Chair. Members of the Committee, Jed Hampton with California Association of Health Plans, also here, regrettably, in opposition to SB 1008. Health plans currently cover a variety of weight management tools and interventions that are intended to promote sustainable, healthy lifestyle changes that lower the risk for long-term healthcare complications.

Some of these tools and interventions that health plans use can range from meal replacement, medical monitoring to intensive behavioral therapy, bariatric surgery, and, when medically appropriate, FDA approved medication. However, we would align our comments with my colleague over here at the California Chamber of Commerce.

We are also concerned about the substantial premium impact that this Bill will create. We would also note that while we appreciate the amendments, the most recent set of amendments to the Bill, you know, we are still. We are still looking at the possibility of potentially having the requirement for health plans to cover a new class of drugs of GLP one drugs, if that were to be the case, or the intent we would expect the cost impact of the Bill to be orders of magnitude greater than the 136 million that was listed in the most recent chip rip analysis.

Lastly, we would note that both the Senate and the Assembly Health Committee chairs have introduced bills this year to be in a process of reviewing California's essential health benefits for the benchmark Plan 2027 year. Conceptually, health plans are supportive of this effort and see it as more preferable to the approach than considering one off benefit mandates that inflate healthcare premiums for all Californians. So for these reasons, we are regrettably opposed to SB 1008, and thank you. We appreciate your comments.

Any other witnesses in opposition in the hearing room, please step forward.

Stephanie Watkins, on behalf of the Association of California Life and Health Insurance Companies, as well as America's Health Insurance Plans in opposition.

Thank you, ma'am. Any other opposition witnesses seeing none. And since I'm the only one on the dais, Senator, I have no questions. Would you like to close?

Yeah, I just want to thank those who came and testified in support and also challenge and appreciate the chamber and their health plan Members. I think their intentions are well intended, but they've taken a very short sighted view of this Bill. There's no doubt addressing California's obesity epidemic will take resources. It will cost money, however, a reason analysis of the financial impacts must look at both the front end cost and the far greater benefits and cost savings that will be realized on the back end.

To be clear, we're not talking about remote, vague, or speculative outcomes. We're talking about established, concrete cost savings and public health benefits that are reasonably certain to result from this Bill. In 2023, the State of New York found that obesity and overweight cost the state over $37 billion in reduced economic activity, over 5 billion in direct impact to the state budget, and led to 3 billion in higher health care costs for employers, and almost 2 billion in households with private insurance.

Moreover, obesity and overweight led to 165,000 fewer adults in the workplace. That same report recommended the approach that we are taking right now with SB 1008 coverage for a comprehensive suite of obesity interventions modeled I said. In its modeling. The report found that such coverage would drive down costs of obesity rates by 16% in the least aggressive scenario and over 70% in the most aggressive scenario.

Medical costs among the modeled population could decline by the average by average of over $20,000 per person in over $70 billion over 10 years. On the state level, these figures dwarf the initial investment while putting money back in the pockets of families and employers. Filling state coffers, rejuvenating our workforce, and, of course, allowing Californians to live a happier, healthier lives, free from stigma, pain, and mental health impacts of obesity. For those reasons, and many that are not being stated here, I respectfully ask for your aye vote.

- I vote.

Thank you, Senator. When we achieve a quorum, we'll take a motion, entertain a motion, and take a vote. Appreciate your presentation. Thank you, gentlemen. Senator Portantino, item number four, Senate Bill 1147, drinking water, bottled water, microplastics. Proceed when ready.

Thank you. Thank you, Mister Chair. I'd say committee members, but there are no committee members for letting me present SB 1147, which builds upon work from 2018 that directed the State Water Board to define microplastics and develop standards and methods to test for microplastics in our drinking water. Microplastics have been identified in rain, drinking water, soil, pretty much just about everywhere. And we need to make sure that we have clear science on what that exposure means.

And we need to have some clear metrics on the presence of mitral plastics so we can deal with it. We also know that when they're ingested by marine life, microplastics have both toxic and mechanical effects, causing reduced food intake, suffocation, behavioral changes, and genetic alterations. It's imperative that we prioritize the research and analysis of microplastics for the sake of public safety and the public health.

SB 1147 will direct the Office of Environmental Health Hazards Assessment to prioritize the study and study the health impacts of microplastics and drinking water. It will also work with the State Water Board in developing goals to address the problem. And that's what we're trying to do. We want to address the problem, and we think this is a good step forward. The Department of Health will collect microplastic data from the water bottling plants.

That's also what's important is we're including drinking bottles as well, not just our general water supply. And so 1147 is an effort to continue a commitment to identify and deal with microplastics in all aspects of our drinking water, and when appropriate, would respectfully ask for an aye vote. And we don't have any primary witnesses.

Okay. Thank you, Senator. Are there any witnesses in the hearing room in support of this measure? Senate Bill 1147? Seeing none. Are there any witnesses in opposition to this matter? Senate Bill 1147, please step forward. You're welcome to speak from there.

I'll be brief, Mister Chairman. It's not opposition. As I mentioned to Senator Portantino. Eli Garcia for the International Bottled Water Association, more here of concern, and we've expressed, I think, initially, our concerns with Senator and his staff and look forward to working with him ongoing. We are concerned that this is a bit of putting the cart before the horse. A lot of work that still has to be done from the prior legislation from 2018, having had data come in.

Do appreciate the steps that were outlined in the committee analysis that clearly indicates that there is multi year effort of information data gathering that still needs to come in.

We believe it might be the timing may not be right or appropriate to bring bottled water in when we have yet to develop primary data analysis, develop a public health standard, a lot of work over a multi-year period that still has to be done before we believe it appropriate to apply to public, to bottled water, including primary research on the human health effects of microplastics. We hope that that information will develop and continue to. The research will continue to develop going forward.

But again, we want to work with the center going forward on the timing, the applicability and the appropriateness of the timing as it relates to bottled water. Thank you very much.

Thank you for doing that. Any other witnesses in opposition? In support? please step forward. We'll take you. Thank you for coming.

I'm just adding my me too's. Is that okay now?

Okay. My name is Vanessa Forsythe and I am here saying support of Senator Porticino's Bill for these organizations. Clean Earth for Kids, North County Equity and Justice, Interfaith Council for Environmental Justice, NCCCA, ESP, Facts, and Grandparents in Action.

Thank you. Thank you for joining us. Seeing no other witnesses, and since I'm the only one on the dais and have no questions. Senator, would you like to close?

I respectfully ask for an aye vote.

When we achieve a quorum, we'll take a motion and take a vote. Thank you for your presentation. Senator Dahle. Item number 11, Senate Bill 1423, Medi Cal Critical Access Hospitals. Please proceed when ready.

Thank you, Mister chair. I would say Members, but they're not here. I want to thank you. I want to start by thanking the Committee for working with me on this Bill. And I will be accepting the Committee amendments. There are 37 critical access hospitals in California. These hospitals serve rural areas and support most vulnerable populations in our state.

To be given a critical access designation, hospitals must have 25 or fewer acute care inpatient beds, be located more than 35 miles from another hospital or more than 15 miles from another hospital. In an area with mountainous terrain and only secondary roads, maintain an average length of stay of 96 hours or less for acute care patients and provide 24 hours emergency care services.

We were first contacted in our office by Plumas County Hospital about authoring this Bill based on a Nevada State, State of Nevada Bill that required critical acts. Hospitals received cost based reimbursement for swing bed and outpatient services. Right now, many rural hospitals are losing money providing essential care to patients and are on the verge of closing. Since 2019, the percentage of rural hospitals losing money has increased from 40% to 50%.

Hospitals are faced with increased labor expenses, the expansion of Medi Cal staffing shortages, and expensive building regulations. We are trying to create a winners only financial model for these hospitals.

This Bill requires that each participating critical access hospital receives 100% of the hospital's projected costs for Medi-Cal covered inpatient, outpatient and skilled nursing facilities inpatient services or services for those who have been admitted to facilities that require a bed and at least an overnight stay at that facility. Outpatient services or non emergency health services for patients who will stay in the hospital less than 24 hours. Skilled nursing facilities provide continuous skilled nursing care to patients who require the availability of nurses on an ongoing basis.

Both fee for service and managed care plans are covered by this Bill. Hospitals are able to opt in to participate in the repayment methodologies. The opt in requirement allows the hospitals to choose what repayment methodology works best for them. If critical access hospitals are forced to close, it severely limits the options for those living in rural areas. Closures will also increase the cost of providing healthcare in the remaining hospitals due to an increase in patients and lack of availability of resources and options.

With me today, I have to testify are representatives from the Hospital Association as well as some representatives from various critical access hospitals, including Plumas district and my district.

Please proceed when ready. Identify yourselves for the record. First, though.

Good afternoon. My name is Mary Casillas. I'm a lifetime resident of San Benito County. I have been in health care for nearly 30 years and I am currently the CEO at Hazel Hawkins Memorial Hospital in Hollister. Hazel Hawkins, a part of San Benito Healthcare District, is a 25 bed critical access hospital. It is the only hospital and emergency Department in San Benito county. The district also runs six rural health clinics and two skilled nursing facilities.

The residents in our community rely on us to provide life saving services on a daily basis. Over 75% of our patients are either on Medi Cal or Medicare, and many are underserved, working in agriculture and manufacturing. Every single day, we are saving lives, whether it's treating patients in our hospital or clinics, or stabilizing patients and flying them out to tertiary care centers in the Bay Area. We save lives.

In November of 2022, our board of directors declared a fiscal emergency with a projection to be at 1.5 days, cash on hand at the end of the following month. This was a result of the effects of dealing with COVID difficulties with fair commercial contract negotiations, astronomical inflation rates, as well as other factors out of our control. We were at the point of putting together a closure plan for our hospital and the other services the district provides.

Knowing that my neighbors, friends and relatives would not have the life saving services that they need and deserve was gut wrenching. We have been able to make some cost saving changes through a bankruptcy case, but that fight is long from over and has not stabilized our organization for the long term. We are grateful to have been approved for a loan through the distressed hospital loan program from the state last year. That one time solution is not sustainable in healthcare terms.

It's like putting a band aid on a compound fracture. We need to work together to make systematic changes to cover the cost of providing care for our community. Thank you.

Thank you. Chair Roth my name is Darren Beatty. I'm the Chief Operating Officer for Plymouth District Hospital in Quincy and we are in strong support of SB 1423. Many rural hospitals are on the brink of closure, struggling to survive financially. The route cause: reimbursement fails to cover the cost of care delivery. This just isn't a rural issue. It's a statewide concern. Without these hospitals, who will care for the backbone of our state's economy? Our farmers, ranchers, miners, timber harvesters, energy workers.

Thank you, ma'am. Next, sir.

They all rely on rural healthcare. And it's not just about work, it's about life. Tourists exploring our rural treasures need and expect access to emergency services. At the height of the pandemic, critical access hospitals skillfully cared for ICU level patients and helped prevent the collapse of the healthcare system. The solution is clear, though not simple. We must increase funding for our rural hospitals, ensuring they can continue to serve their communities. This isn't charity. It's an investment in our collective well being.

It's about preserving access to care, preventing future health care crises and bolstering our rural economies. To personalize the issue, I was born at Plymouth District Hospital and so was my daughter. Nearly two years ago, I was part of the team that had to make the hard call to suspend labor and delivery services after more than 60 years of outstanding service to our community. With Low volume, increasing costs and poor reimbursement, we could not sustain the traditional in hospital labor and delivery services.

Our laboring moms now must drive more than an hour and a half over sometimes impassable mountain roads to deliver their babies in another county or even another state. This breaks my heart and we can do better. SB 1423 offers a real solution and furthers meaningful conversation to ensure adequate payment for rural critical access hospitals. The cost of inaction far outweighs the price of support.

I want to thank Senator Dahle and the California Hospital Association for their courage in elevating this issue and for providing a reasonable solution to ensure sustained access to care in rural California. And thank you for your efforts and your service to this great state. With that, I respectfully request your aye vote. Thank you for joining us today. Any other witnesses in support, name, affiliation and position on the measure, please.

Kathryn Austin Scott, Senior Vice President for State Relations and Advocacy here in support for the California Hospital Association, thank you.

Thank you, ma'am. Next please.

Vanessa Cajina, on behalf of the California Academy of Family Physicians here in support.

Thank you for joining us.

Next, Nicette Short, on behalf of Adventist Health, thank you.

Mira Morton, on behalf of the California Children's Hospital Association thank you.

I would. First of all, thank you for working with me on this Bill. I know this is not easy, but I just want to close with this. Two weeks ago, my best friend and his wife actually were on their way to the hospital with a six week...

Any other witnesses in support? Now witnesses in opposition to this measure, first lead witnesses followed by other opposition. Any opposition? Witnesses in the hearing room, please step forward. Seeing none, bring the matter back to the dais. Senator Menjavar, any questions? Well, I have no questions, Senator. And would you like to close?

Their son's wife was pregnant and the baby came six weeks early. And they were trying to get to the hospital because where we live, there's not a hospital that delivers a baby. It was 75 miles. They didn't make it. She delivered a six week old. The grandma of Reed delivered the six week old baby, a six week early baby on the side of the road with an ambulance coming, delivered it. The baby's fine, a miracle.

But that's the kind of situation we're dealt with in our communities where we don't have, can't deliver babies and we don't have care. We are just simply trying to keep the remaining hospitals that are there open so we have some service of care. So I respectfully ask for an aye vote when you get a quorum, and hopefully this Bill will get out of Committee.

Senator, I forgot to ask, maybe I missed it. Did you accept the amendment.

I did.

Thank you very much for doing so. And we got a quorum. We'll take a motion and take the vote.

Thank you.

Thank you for your presentation, Senator Ashby. Item number five, Senate Bill 1180, health care coverage, emergency medical services. Proceed when ready.

Thank you, Chairman Roth. Happy to be here this afternoon with you. I would like to start my presentation of SB 1180 by accepting this Committee's amendments. I'm here to present 1180, the Emergency Medical Services Reimbursement Act. This Bill requires Medi Cal reimbursement and that private health plans establish a process to reimburse essential services such as community paramedicine, triage to alternate destinations, and mobile integrated health for EMS providers. This would be in lieu of a trip to the emergency Department.

SB 1180 ensures EMS reimbursement for patients transported to authorized sobering centers or mental health facilities, prioritizing holistic healthcare delivery for some of our most vulnerable populations. These locations are equipped with the resources needed to support individuals facing substance use disorders and mental health crisis, and are often less costly than a trip to the emergency Department of an Acute Care Hospital. They offer specialized alternatives to busy emergency rooms. They offer tailored interventions for individuals grappling with acute needs and are a cost effective alternative.

Where these programs exist, they have already resulted in a reduction of hospital readmissions, follow up transports, and emergency room overcrowding, which all of you know is one of our big issues. However, the sustainability of these programs is jeopardized by the absence of a reimbursement program, which further enhances the strain on emergency rooms in our acute care hospitals across the State of California. SB 1180 will ensure that our EMS providers are able to recoup necessary costs for services provided outside of a traditional emergency medical services setting.

Today with me, I have a support witness in Megan Subers who is a legislative advocate for the California Professional Firefighters who are the sponsor of this Bill.

Good afternoon. Please proceed.

Thank you, Mister chair and Members, Meagan Subers, on behalf of the California Professional Firefighters, pleased to be a sponsor of this Bill and appreciate Senator Ashby for bringing it forward. Our Members have shared with many of you before. The healthcare needs of our communities have changed dramatically in recent years, and more people rely on emergency medical services, the emergency room for primary care, resulting in overcrowding that lead to delays and lots of other impacts across the emergency response system.

In response, in recent years, new models of care have emerged and been tested to connect patients to needed services, with the goal of reducing hospital readmissions and future 911 calls. Fire departments across the state have piloted and now implemented these community paramedicine and triage alternate destination programs and develop mobile, integrated health units to meet their community Members where they are needed. However, despite the willingness of departments to develop these programs, many are limited by the lack of resources available to them.

Under current law, departments may not seek reimbursement for the cost of these programs as they are not considered covered emergency services, even if they are generated by a 911 call. As public agencies, fire departments often work with strictly defined budgets, leaving little room for programs that are not sustainable.

So what we have seen in some of the instances where these programs have worked are big counties like La County or Sacramento county, where they might be able to operate at a loss for a certain period of time, but are not sustainable in the long term and many won't be an option for some of the smaller cities and counties across the state.

So SB 1180 will ensure that departments are able to recover the necessary costs for the services that they provide outside of the traditional emergency response system. And for those reasons, we ask for your support today. Thank you.

Thank you for joining us. Any other witnesses in support in the hearing room? If so, please step forward. Your name, affiliation and position on the measure only, please.

Faith Borges, on behalf of California Agents and Health Insurance Professionals in support.

Thank you. Next, please,

Thank you, sir. Next. Thank you.

Mister chair Members Tim Madden, representing the California Chapter of the American College of Emergency Physicians in support.

Tom Renfree with the California Association of Alcohol and Drug Program Executives in support.

Thank you for joining us. Any other witnesses in support? Well, let's turn to witnesses and opposition. First. Lead and then others. Please step forward. Lead, opposition. Join us at the table if you wish.

Good afternoon again, Mister Chairman, Members of the Committee. Jedd Hampton, California Association of Health Plans. We currently have an opposed position on SB 1180, but we do want to thank the author, her office, the sponsors. We've had a lot of really good conversations, thoughtful and productive conversations on this Bill, and think that we have a path forward. Just highlighting a couple of our concerns that we're working with the author in the sponsor's office around.

Just some concerns around the analysis and whether there's enough information to know how much the program would cost on a statewide level. You know, again, as the payer in the system, that is, you know, something that we're trying to work through and understand. So we have some level of predictability about what those costs will be moving forward. And additionally have a couple of concerns around the applying in network cost sharing amounts to a non contracting provider.

Thank you for joining us. Other witnesses in opposition. Name affiliation.

Steffanie Watkins, on behalf of. The Association of California Life and Health Insurance Companies. Also in opposition.

Steffanie Watkins on behalf of the Associatoin of California Life and Health Insurance Companies also in oppostion

Again, I know we've had several conversations on that provision. Things are moving in the right direction. So really, I just want to thank the author and the sponsor for working with us and we, we are looking forward to having more conversations and resolving our issue. Thank you.

Thank you, ma'am.

Next, please. Chair Members John Winger, on behalf of America's Health Insurance Plans, would echo the comments. Look forward to the future conversations. Thank you.

Thank you for joining us. Okay, let's bring the matter back to the Daisy. Senator Benjamin, any questions, comments or concerns? Okay, seeing none, Senator, I guess you may close.

I would just say that we did do the analysis, and the finding was that the estimate they estimated no measurable fiscal impact or significant utilization increase due to this Bill, which we find to be compelling enough to move forward. And I would also add that we've asked much of our EMS system and our cities and our counties to be creative and innovative in helping us address these populations that are somewhat unique but also tend to take over our emergency rooms.

If we're going to ask them to do that, we need to provide for them the mechanism for reimbursement. And by all measures, these reimbursements, both for private insurance and for medi Cal, should come in lower than having to pay for an emergency room visit. So I too am confident we have a pathway forward and at the appropriate time, when you have a quorum, I'd ask for an aye vote we will.

Entertain a motion as soon as we get a quorum, and we will take a vote. Thank you for your presentation.

Thank you very much, Senator Blakespear.

Senator Blakespear, Item Number Seven: Senate Bill 1236: Medicare Supplement coverage: open enrollment periods.

Thanks.

Proceed when ready, ma'am.

Thank you. Thank you, Chair and colleagues. I'm here today on SB 1236, and I accept the Committee's amendments. SB 1236 will provide eligible Medicare patients the right to an annual guaranteed issue period for Medicare Supplemental Insurance, otherwise known as Medigap. Essentially, my bill will improve health care access and affordability for our seniors who have serious health conditions. This is done by allowing Medigap coverage, often used to cover health care services that are not covered by Medicare Parts A and B, to allow for preexisting conditions.

The bill follows what other states like New York, Massachusetts, Kentucky, and Connecticut have already done. Last fall, one of three major hospital systems in my district, Scripps Hospital, decided not to renew its contracts with Medicare Advantage Plans. This caused a large group of my constituents who have Medicare Advantage to lose access to the health care providers they know and trust, putting them in an impossible situation.

Their options were to either pay out of pocket to stay with their established providers, change their providers, or change from a Medicare Advantage plan to a Medicare plan--or Medicare plus Medigap plan. The option to pay out of pocket was unreachable for many. For anyone who is on Medicare or who has loved ones on Medicare, they know how hard changing providers can be.

It involves disrupting care, it consumes a lot of time while relationships with new providers are established, and for patients with conditions requiring specialized care, providers and other hospital systems may not have the equivalent expertise that patients need. Constituents who wanted to change their insurance plan were faced with the risk of Medigap plans denying or setting high premium prices based on their preexisting conditions. No senior should have to be in this situation, and seniors definitely should not be penalized for issues with Medicare Advantage Plans' business practices.

My bill, SB 1236, will provide a viable option for seniors caught in this situation. Specifically, the bill will allow Medicare patients to switch onto Medigap plans without penalty for their preexisting conditions, their age, or related attributes during a 90-day period at the beginning of each year. The fact of the matter is that what happened at Scripps is not an isolated incident that's specific to my district.

Across the country, there is a growing trend of health care providers dropping their contracts with MA plans or otherwise changing the services they provide because of the MA practices. Our seniors need protection from this. SB 1236 will give them that protection and make sure they have a viable option.

My bill will also solve the problem that results when seniors who choose a Medicare Advantage Plan when they were 65 then develop a serious condition and are unable to access or afford the specialized providers that they need to see. These seniors would also have the option to change to a Medigap plan without penalty for their health condition. At its core, my bill will promote access and affordability.

The opposition has raised concerns that this will create adverse selection in the Medigap market and lead to unaffordable premium increases. My bill will undoubtedly raise some Medigap premiums for all beneficiaries, but these premium increases will be modest in comparison to the benefit of ensuring seniors with serious conditions have access to quality, affordable health care. There are national and state organizations who represent seniors who affirm this and are here today to support, many of which have made this a priority bill this year.

Before I wrap up, I want to address the Committee amendments. With the amendments, my bill will extend the extend to people with end-stage renal disease, or ESRD, the right to Medigap coverage. ESRD is an otherwise chronic condition that can only be cured through kidney transplantation. ESRD patients on Medicare must also have Medigap in most cases to access this procedure. Currently, though, statute permits Medigap plans to refuse coverage to ESRD patients. With the Committee amendments, my bill will rectify this.

I thank the ESRD advocates for bringing this to my attention and the Committee for their help in amending the bill. Now I'd like to invite my witnesses to share their testimony. With me in support, we have Adam Zarrin, Western States Regional Director of State Government Affairs for the Leukemia and Lymphoma Society, and Pat Johnstone, volunteer for the California Association for Retired Americans.

Thank you. You may proceed. Three minutes each.

Thank you, Chair Roth, Members of the Committee. My name is Adam Zarrin. I'm the Director of State Government Affairs for the Leukemia and Lymphoma Society. We're proud to co-sponsor Senate Bill 1236. SB 1236 comes down to one crucial number: 53,900. That is how many older Californians will newly enroll in Medicare Supplement Insurance or Medigap plans.

One of the best kept secrets in health care is that insurance companies, unlike every other type of major health insurance coverage, can charge more or reject Medicare beneficiaries with preexisting conditions. Before age 65, most people get to weigh their options and future needs to pick a plan, but when they turn 65, that process changes.

They can select either traditional Medicare and a Medigap or a Medicare Advantage plan, but with limited exceptions, they can't leave an MA plan without medical underwriting. Meanwhile, more and more providers are deciding not to contract with Medicare Advantage, something that CHBRP analysis does not consider. If a doctor is out of network, the beneficiary pays more. For an individual age 67 with cancer, CHBRP estimates they will see a reduction in their total annual spending by 57 percent. That is 5,430 dollars a year.

No more cutting their pills in half, skipping to see the doctor, or taking on debt. 6.6 million Californians will again have a choice about their health insurance each year that is fair. Nobody can perfectly predict their health needs years in advance.

The states that have enacted this policy continue to have robust Medigap markets, and California will remain an attractive market because of its nation-leading Medicare beneficiary population. SB 1236 means 53,900 older Californians can have comprehensive health care coverage regardless of their health conditions. We urge you to support those with preexisting conditions and vote aye when appropriate for SB 1236.

Thank you. Right on time. Ma'am, you're next.

My name is Pat Johnstone. I live in San Anselmo in Marin County. I was someone reluctant to testify today and discuss my medical conditions publicly, but since my husband died prematurely, being denied costly medication that could have prolonged his life, I have been working to repair our broken health care system, and restricted access to Medigap is part of that problem. I'm also embarrassed that someone with knowledge of how the system works could herself be placed unwittingly into a Medicare Advantage plan.

I now find myself having to choose between cost and care. I have an ailment that requires injectable medication six to seven times a year with an out-of-pocket expense of 500 to 600 dollars per treatment. Without it, I will be fully disabled. Medigap would cover that expense.

During open enrollment, I called the number given to me by my provider, held on for 12 hours, and explained that I was exploring my options and asked what similar plans they had that might be more cost-effective, but with the same coverage. I was assured this plan was better and more affordable. Again, I am totally embarrassed that I fell for that sales pitch.

I did not realize that I was in a restricted Medicare Advantage plan until I tried to make an appointment with the orthopedic office I had been visiting for 15 years and was told that I needed a referral. I have tried to get back into traditional Medicare, which I had for eight years with the Medigap Plan, but was denied due to my preexisting condition.

The list of conditions that they read as they were interviewing me was long, making it virtually impossible to revert back to traditional Medicare with the Medigap Plan. My friend in Marin is undergoing a similar treatment as mine with the same doctor and does not pay a penny out of pocket because he has Medigap. You need to give seniors options.

Open enrollment should be just that. As it is now, if you get into a Medicare Advantage plan and have a chronic condition like mine, you are locked in whether you like it or not. That is neither fair nor open. I never paid a penny out of pocket when I had traditional Medicare with a Medigap plan. That was peace of mind. I urge you to move SB 1236 forward. Thank you.

Thank you for joining us today. Any other witnesses in support, name, affiliation, and position on the measure, please.

Hello. Monica Padilla. I'm here as a blood cancer advocate, and I'm in support of this because the blood cancer survivors in my family need access to quality health care. Thank you.

Thank you. Next, please.

Amy Pine. I'm with the Leukemia and Lymphoma Society, in support.

Thank you. Yes.

Cindy Young, Vice President with the California Alliance for Retired Americans, co-sponsor.

Thank you, ma'am. Thanks for joining us. Sir.

Yes. Keith Umemoto, California Alliance for Retired Americans, Sacramento CA, in support.

Thank you. Yes, ma'am.

Bonnie Burns, California Health Advocates, in support.

Thank you.

Jo Carson, California Alliance for Retired Americans and also CTA Retired, in support.

Thank you, ma'am.

Ann Muñoz, California Alliance for Retired Americans, in support.

Thank you, ma'am. Next, please.

Susan Justine, with California Alliance for Retired Americans and with the Old Lesbians Organizing for Change, in support.

Thanks for joining us. Yes, ma'am.

Daisy Oram, California Alliance for Retired Americans, in support.

Thank you. Sir.

Rj Cervantes, here on behalf of the California Kidney Care Alliance, in strong support. Thank you.

Peter Kellison, on behalf of U.S. Renal Care, in support.

Diana Madoshi, California Alliance for Retired Americans, retired RN, Placer County, support.

Thank you, ma'am. Yes, please.

Dan Long with California Alliance for Retired Americans, and I'm in support of SB 1236.

Thank you.

Arlene Harrison, California CARA, in support.

Thank you.

Good afternoon. Linda Nguy with the Western Center on Law and Poverty, in support.

Thank you.

Christine Smith, Health Access California, in support.

Alex Khan, with the California Chronic Care Coalition, in support.

Thank you.

Daniel Sanchez, on behalf of Farmworkers Institute of Education and Leadership Development, Proteus, Inland Coalition for Immigrant Justice, First Aid Foundation, Inc., and Central Valley Opportunity Center. Thank you very much.

Thank you, sir.

Kevan Insko, Friends Committee on Legislation of California, in strong support.

Thank you, ma'am. Next, please.

Vanessa Gonzalez with the California Hospital Association, in support. Thank you.

Thank you.

Good afternoon. Beth Malinowski with SEIU California, in support.

Thank you. Dylan Elliott, on behalf of the California State Association of Psychiatrists. Support.

Pamela Zielske with Dialysis Patient Citizens, in support.

Jordan Gershman, on behalf of DaVita, in strong support.

Thank you.

Maria Garcia with Fresenius Medical Care, in support.

Hi. Kelly Goss with the ALS Association, in strong support.

Thank you. Sir.

Peter Ansel, on behalf of AARP California. Strong support.

Thank you, sir. Next, please.

Good afternoon. Alejandro Solis, on behalf of Comite Civico del Valle, Los Amigos de la Comunidad, and La Cooperativa Campesina de California, in support. Thank you.

Thank you.

Good afternoon. Maura Gibney, California Advocates for Nursing Home Reform, in support.

Thank you. Any other witnesses in support in the hearing room? Now let's turn to witnesses in opposition. First, lead opposition witnesses. Please step forward. Proceed when ready. Please identify yourselves for the record.

Mr. Chair and Members, Steffanie Watkins on behalf of the Association of California Life and Health Insurance Companies. Regrettably, we are here today in opposition to SB 1236, which, if enacted, would substantially expand the guaranteed issue and open enrollment opportunities in Medicare Supplemental market.

While we sincerely appreciate the open and thoughtful conversations we've had with the author's staff and sponsors and appreciate their intention to address a very specific consumer experience with respect to Medicare Advantage, we are concerned with the potential devastating impacts this bill could have on not only the viability of the Medicare Supplemental market, but more importantly, on the 1.1 million seniors who, by no fault of their own, would experience significant rate increases if this bill were to pass.

As many of you know, Medigap insurance helps protect people who are eligible for Medicare from high, out-of-pocket costs not covered by traditional Medicare. Medigap coverage allows seniors, many of who are on fixed incomes, to budget for medical costs and avoid the confusion and convenience of handling complex medical bills. With that in mind, all Medicare Supplemental policies are sold on a guaranteed renewable basis. This means that the insurer cannot cancel the policy or change the benefits.

This is key element to understanding as it underscores the stability and predictability of the current market. For example, in California's current market, one is generally eligible to purchase any Medicare Supplemental policy offered in the state during the initial six-month open enrollment period when they are first enrolled in Medicare Part B. During the Medicare open enrollment period, the enrollee has guaranteed issue rights and cannot be charged higher premiums based on health nor require medical underwriting.

This limited open enrollment period ensures that the risk pool includes a mix of healthy individuals and those with higher health care needs. If an enrollee later decides to change the Medicare Supplemental policy outside of the initial open enrollment, California has what we refer to as the birthday rule, which allows a current policyholder to move into a different policy or shop around for equal or greater--or equal valued products. This allows them to have flexibility and choice within the system without undermining the current risk pool.

Why this matters is because the fundamental principle of insurance involves the pooling of risk to ensure affordability for everyone in the risk pool. Premiums are kept stable when the risk pool includes balanced mix of healthy people as well as those who need more health care services. Adverse selection occurs when the risk pool becomes unbalanced with high numbers of people who need more health care services. This adverse selection results in an increase of the risk pool's average cost.

It means that everyone in the Medigap risk pool, many of whom are on fixed incomes, would pay higher premiums. To this point, according to the CHBRP analysis, the average monthly premiums for Medicare Supplemental would increase from 239 dollars to 319 per member per month, a 33 percent increase, because the average new enrollees in Medicare Supplemental would likely use more services than the average enrollee at baseline.

Further, as noted in the CHBRP analysis, the new entrants to the Medicare Supplemental market would not only be higher cost enrollees, but they will likely displace lower cost enrollees who find it advantageous to disenroll from their Medicare Supplemental rather than higher premiums to continue their coverage. Lastly, as mentioned by CHBRP and their long-term impacts, 1236 could result in fewer insurance carriers willing to participate in the Medicare Supplemental market in California.

Based on a survey done in states that have similar policies in place, we have seen this to be true as the number of carriers in those markets are substantially smaller. For those reasons, we would respectfully ask for a no vote on this measure, but do look forward to having continued conversations if the bill moves forward. Thank you.

Thank you ma'am. Next, please.

Mr. Chair and Members, Faith Borges, on behalf of California Agents and Health Insurance Professionals. California Agents help millions of seniors enroll in and use their health care coverage, and through this work they are keenly aware of the challenges that many seniors face in utilizing and paying for their Medicare coverage.

This bill, as drafted, would help some seniors, and for those reasons, we would like to thank the author's office and the sponsors for being gracious with their time to meet with us, and we hope to continue those constructive conversations as we have a shared goal of helping seniors access high quality coverage. Yet, Agents are strongly opposed to the legislation as it's before you today, since it would have a devastating health and financial impact for many seniors.

As noted in the analysis conducted by CHBRP, this bill, as drafted, would do three things that concern Agents on behalf of their clients: the bill would decrease the number of enrollees in high quality Medicare Supplement policies, since under SB 1236, individuals could enroll and disenroll in coverage when their health or financial needs need it. This would lead to adverse selection since healthy individuals will likely be the ones to exit this voluntary coverage and sicker patients would remain, which leads to the second problem.

CHBRP estimated that the new risk mix would increase premiums for seniors on Medicare Supplement coverage by 33 percent, and while statistics can land as distant figures, these dollars in application can cause a senior's monthly grocery budget or their ability to pay an electric bill to vanish. Or they forego this voluntary but needed supplemental coverage and they face the alarming reality of the opposite intent of the bill, that they no longer have access to this needed coverage due to financial constraints.

Lastly, as noted in the CHBRP analysis, this may result in insurers leaving the Medicare Supplement market. And upon introduction of this bill, our agents ran enrollment quotes for seniors in other states that have enacted similar requirements, and those rates were double the cost of those currently available in California. While we appreciate the intent of the legislation, the application of the bill as it's in front of you now would be harmful to seniors, and for those reasons, we're strongly opposed, but again, very happy to continue the dialogue as we look to protect seniors.

Thank you for joining us, and I appreciate your comments. Any other witnesses in opposition? Name, affiliation, position, please.

Mr. Chair and Members, John Wenger, on behalf of America's Health Insurance Plans. Would echo the comments of ACLHIC, appreciate the conversations with the author and the sponsors, and look forward to continuing that.

Thank you, sir. Next, please.

Good afternoon, Mr. Chair and Members of the Committee. Jedd Hampton with the California Association of Health Plans. Again, would echo the comments of ACLHIC and AHIP. Thank you.

Thank you, sir. Any other opposition witnesses in the hearing room? Seeing none, let's bring the matter back to the dais. Members, comments, questions, concerns?Senator Menjivar, you're up.

Thank you, Senator. I know you touched on this in your remarks regarding the cost, and I think you mentioned something that outweighs--the benefits outweigh the cost. Can you also speak about CHBRP analysis--and I know we talked about this earlier--speak to how we can prevent a lot of people falling off of their plans?

Yes. I'd like to ask Adam if he might address that question. Thank you for the question.

Chair--and thank you, Senator--I think there are some ways we can try to address some of people falling off of plans. You could certainly cap the premium increases in the bill. You could limit the plan type that people could enroll into. So there are some options in trying to control the premium increase, but again, I think for us, we think that better insurance costs more money.

We think that's a worthwhile situation because while 64 dollars might hurt you in paying your groceries, I think the out-of-pocket costs of thousands of dollars will put you in poverty. So I think that's an important thing I would consider. Hope that answers your question, Senator.

Thank you, Senator. Any other questions, comments, concerns? Well, I have none. Seeing none, Senator, would you like to close?

Thank you, and I respectfully ask for your aye vote.

When we are able to establish a quorum, we'll entertain a motion and we will take a vote. Appreciate the presentation.

Thank you.

Senator Allen. Item number nine, Senate Bill 1339, supportive community residences. Proceed when ready, sir.

Thank you so much, Mister Chair and Members. Let me start by thanking the Committee for its work on this Bill. And I will be accepting the committee amendments to clarify definitions and appreciate the work that was done.

Licensed residential and inpatient care facilities serving people with mental health diagnoses and substance use disorders are closing. And the number of mental health providers is projected to decline over the next decade. This has led to more people seeking support from recovery residences, sober living homes, and other facilities that are allowed to operate without a state license. Now, these homes offer valuable service, such as fellowship and peer supports, assistance for individuals in recovery.

And yet we know that there are some that have some terrible stories that have emerged from the unregulated system of fraud, abuse, and neglect. And there's one that's near and dear to my heart. A neighbor of mine, the Nelsons, my constituent, their son, Brandon Nelson, 26 years old, aerospace engineer. He entered the mental health care system following a psychotic break, and he was bounced around between various facilities.

And Brandon ended up at Sovereign Health, which was operating fraudulently at the time without the necessary state license. Now, Sovereign was ultimately shut down and the owner was convicted of racketeering. But not before Sovereign failed to provide Brandon with the care that he was promised, which ultimately led to his untimely and preventable death. Now, Brandon's case is not the only example of fraud in this sector or failed state oversight.

And there was an investigation by the Southern California news group that found that the annual number of complaints against facilities has just exploded in the past decade. There are dozens of cases of insurance fraud, sexual abuse allegations, more now that have been brought to the courts. The LA area, certain parts of LA, in particular, have been deemed Rehab Riviera. You got 1,000 licensed rehab centers and countless more recovery homes that operate without a state license.

You know, it's, I think, our strong feeling that greater oversight and accountability are really needed to safeguard vulnerable Californians from exploitation within a system that was, that was meant to help them. So, this Bill aims to enhance the regulatory framework for unlicensed mental health and substance use disorder facilities, ensuring greater accountability and safeguarding the welfare of vulnerable Californians seeking essential behavioral wellness services. Since Sovereign was operating illegally, it should never have been listed as a care option for Brandon Nelson.

They should not have been able to bill insurance for services that they weren't licensed to provide. So first, the Bill requires that any state-regulated entity that provides discharge planning or referral services or authorizes coverage of behavioral health services at least ought to verify the license or certification of residential or community care facilities and inform patients or residents of the license or certification that a facility holds.

And then secondly, the Bill tasks the Department of Healthcare Services with creating a voluntary certification program for residences operating at a level below that which currently requires state licensure. And they have to, the Department has to maintain a searchable database of these certifications. So, it's voluntary, you know, there's no consequence for those who aren't a part of it.

But at the very least, that aspect of the Bill will set some minimal standards that people can count on and create a system of oversight and enforcement for these institutions, which is currently lacking. And the hope is that it will become something that proper organizations will wear as a badge of pride. And it's a way of signaling to consumers that this is a facility that meets a baseline of standards that they can count on.

So, testifying in support today, we have Jason Robinson, who's the Chief Program Officer of Share Collaborative Housing, which is a very, very interesting and effective homeless housing model. Not just homeless housing, but it's really doing some really good work addressing homeless challenges in my neck of the woods and also throughout Los Angeles. And then Matthew Matern, who's a nonprofit founder and employee and consumer rights attorney.

Gentlemen, please proceed. Identify yourselves first, for the record.

Jason Robison, Chief Program Officer for Share. And thank you, Senator Allen. Thank you, esteemed Committee Members, for considering Senate Bill 1339, which will bring much needed community supports and housing for California's most vulnerable citizens. The National Health Institute has been emphasizing the importance of social support as a leading indicator of wellness for people experiencing mental health issues and studies have shown that the amount and quality of social supports account for 40% of whether or not people are okay.

These kind of recovery residences are essential as part of our system and peer-run recovery residences for people experiencing mental health and homelessness are an essential piece of our system. They activate SAMHSA's four pillars of recovery health, home purpose, and community, using peer support to connect people to community where they develop broad organic social networks that strengthen as people move forward in their goals.

As Senator Allen said, SB 1339 seeks to define recovery residences and situate them in the continuum of care properly so that no one is improperly referred to a residency that is not suitable to their needs. Creating distinctions for recovery residences that focus on substance use issues, mental health issues, and distinctions for those that are abstinence-based, non-abstinence-based, and those that use housing first models so that people, so that operators can distinguish the kind of services they provide and people are informed of where they're going.

And as California's peer workforce grows after the passage of SB 803, peer-run recovery residences offer a scalable solution, effective, efficient and immediate. In Los Angeles County, they've accounted for 10% of housing placements for people with mental health issues in recent years at a fraction of the cost, as the total budget for LA County peer-run recovery residences is under 2 million.

Additionally, their use of evidence-based practices produces the outcomes California seeks a 96% housing retention rate over four years, 57% employment rate, and 62% of people connected to non-subsidized market-rate housing, with 41% of people moving in within 24 hours. SB 1339 is essential to create a standard of certification process for these peer-run recovery residences for people experiencing mental health and homelessness. Thank you.

Thank you, sir. Next, please.

Hi, Matthew Matern, I'm an attorney and I have also volunteered and donated to seven nonprofits serving the needs of the homeless community in Los Angeles. Thank you, Committee Members, for your time and attention, and service to the state. The model of collaborative housing has been implemented by Share is one of the most effective and I wholeheartedly endorse this process.

The collaborative housing model with peer support is effective in getting people off the street into good homes like the ones that I've toured with Senator Allen that was immaculately clean and a place that would give dignity and respect to the people it houses. This collaborative housing model is also much more cost-effective than any other alternative.

Additionally, it allows us to house the unhoused so much more quickly because we don't have to wait for new construction that takes years to build and cost over $500,000 a unit to build. In short, the collaborative housing model combines a common-sense approach to housing the unhoused. It does so cost-effectively. It does so with services of peer mentoring that has demonstrated excellent results. And it does so with respect and compassion that helps our most vulnerable get back on their feet.

Thank you for joining us.

Thank you.

Any other witnesses in support? Name, affiliation and position on the measure only, please.

Thank you. Sherry Daley with the California Consortium of Addiction Programs and Professionals. Support in concept. Only recently met with the sponsor and staff and look forward to helping with technical issues as we move forward. Thank you.

Thank you for joining us. Next, please.

John Drebinger with the Steinberg Institute in support. Thank you.

Thank you. Any other witnesses in support? Let's move to witnesses in opposition, if any. First, lead opposition, then others. Seeing no opposition witnesses, let's bring the matter back to the dais. Senator Menjivar.

Thank you, Senator. We've been going back and forth. I guess I still have some concerns. So, help me get to this finish line. It is my understanding that sober living homes, residential recovery homes, are just a group of people coming together. They decide they're living in this home. There's no medical services provided, which is why they're not licensed or need a certification. It's just peer support. Why then do we need to certify and what are we certifying if there's no medical services being provided? I guess is my first question.

Yeah. Why? Because there have been terrible incidences of sexual abuse, fraud.

Of locations that were. Fraud be committing. Like they were pretending there was something else, not just of sober living homes, acting as sober living homes. Correct. Because your example you gave, they were in bad faith in acting. They were pretending they were something else.

Well, it's true that Sovereign, you know, was, was operating illegally and it was billing insurance for services that they weren't licensed to provide. That being said, they also were put out and listed as a care option for someone like Brandon. And there are examples of organizations, and I'm sure Jason can speak more to this, but there are institutions around that are putting themselves forward as good options for folks that need help to go to.

And there's just no standard to hold them accountable to any level of service or safety. So that's what ultimately this is about. There's no consequence associated with not. Well, the only consequence associated with not being part of the certification program is that you may lose some custom from folks that want to be part of. They might be attracted to going to a place where they know that there's a baseline standard.

And what is the baseline standard?

We've got safety standards in there.

What do we mean, safety standards? Because this is a private home.

So, the Substance Abuse Mental Health Services Administration put out a national model for best practices in recovery residences. That's the standard. In other states, there are state chapters for the National Association of Recovery Residences where operators get a certification, go through a training program, and the certification has an annual follow-up so that there's a check on whether or not they're indeed meeting those practices, which is what we're looking to establish.

They don't do that now.

Correct. Not in California. There's not a check. And we need an incentive for operators to use the best practices, which is what the incentive, which is what the certification does for the referral pathway.

But it's a voluntary certification.

Voluntary.

Okay.

Right.

And it's all, you know, DHCS would set the minimum standards based on national best practices.

And I think you've responded to me, but I still don't understand if it's voluntary, what if no one does it? And if one does it, what benefits do they get? I think I still don't clearly understand that part. And one of my other concerns is community members saying, well, this one isn't certified, so this is the one we want out of our community.

Those community members are often, because there's no licensing services happening in these, they don't go through the conditional use permit. They're often operating without the knowledge of the community members, which is fine. This does not preclude anybody from moving into anything. The incentive, as demonstrated in over two dozen states, approximately, is that the certification standard creates the incentive for people to use best practices and receive the referrals from the state systems that make successful operation possible.

Senator, has the Department approved this certification model? Have we gotten, have you gotten any TA from them saying this is an acceptable.

Well, the Department would, I'm sorry. The Department would set, the Bill calls for the Department to look at national best practices and standards.

And set their own or follow that one.

It would be to follow that one, to use that one as the baseline.

But we're certainly, you know, happy to talk to you about putting some guardrails into the Bill to ensure that local governments would be prevented from discriminating against non-certified programs or things like that.

Because I hear you. You're concerned just because someone doesn't have the wherewithal or the knowledge or the desire to go get the certification, we want to make sure they're not going to be unfairly.

Because I get the story. It's a terrible story, what happened with Jason. But I see that as.

Brandon. Brandon.

Brandon, I'm so sorry. I apologize.

This is Jason.

Okay. I was like, where did I get Jason from?

He's alive and well.

Is a lot of people need a higher level of care, and they should never be in sober living facilities or recovery because they need a higher level of care.

And I get the goal was. I think I get the goal is to ensure that if you need higher level of care, you're not being referred to these places. You should never be referred to those places. And it sounds like Brandon was referred to a place.

Right.

Well, there's that, but there's also. That's one factor. The other factor is if a. There's some just low grade, you know, facilities out there that we shouldn't, that in general, we people shouldn't be getting referred to. And I sort of see this as a kind of consumer protection issue where we provide a baseline of certification.

You can go off and do your own thing if you want to, but if you know that if you're going to one of these facilities that has met the certification that we set up under this Bill, you're going to have a baseline of safety and programmatic standards. That's really all its ultimately about.

As I say, happy to work with you on ensuring that nobody can discriminate against non-licensed or non-certified facilities. But this is such an unregulated space, and it's our belief that the consumers and families, especially many of whom are entering into this world for the first time. And it's kind of scary and frightening.

They're already dealing with a challenge with their loved one, and there's just this flood of opportunities that are out there for people to utilize, and yet we know that a lot of them just don't make the grade. And that's ultimately what we're trying to address here. I don't know, Jason, if you have any additional thoughts.

Waiting for the microphone. There we go. Yeah, I think the important element is both on all sides, information for families and people looking for these kinds of residences so they know where they're going. And there's a pathway for providers to be able to meet the basic standards and the evidence-based practices to make sure that they have successful outcomes, because using the evidence-based practices actually makes these places more effective for people receiving services and is a benefit for all the operators.

That's the thing. Right. I mean, ideally, we raise standards through this as well. And these facilities will be providing, will be putting a mind toward upping their best and having a greater use of best practices across the state.

Any other questions, Senator Menjivar?

Well, I thought we were talking about several living facilities, but maybe we were talking about something else. Any other questions, colleagues? Well, we have to establish a quorum first, but I think I may have missed someone in the audience who may want to speak on either support or opposition. And if so, I apologize.

Appreciate. Thank you, Chair. So I failed to mention that CCAP is the state affiliate for the National Alliance of Recovery Residences. So we do certify homes throughout the state, hundreds of them, and we do use a national standard. So that is happening here in California. And the reason why certification is important, not to discriminate against those who choose not to. It needs to be voluntary because people living together have a right just to live together. Right?

So what certification gives is the public to say, I choose one that's certified. But the other really important thing in this Bill is it's a ticket to be included in funding streams where you really do need legitimate operators. So, this is an ability, like in Housing First or other programs, to say this program meets a national standard, can be trusted, treats its residents well, renews every year. So, it's really important to, especially with Prop 1 coming, that we have homes that have been vetted.

So that's why we're so interested in this Bill. Thank you for your courtesy.

Thank you very much.

Senator, before you close, I think that's right, because I remember we had Senator Niello here with the same very similar Bill asking for state funding, but they're not certified. I mean, they're not.

Licensed.

Licensed. Thank you so much. So I get the intent, if we license them, and I think you were one of the witnesses that spoke about it, you'll get state funding. But this is a certification and it's voluntary. I don't know, it's annual certification or is the Department, are you asking for the Department to come and check up on them? Is there going to be an ombudsperson? Is there going to be a line where people can call now that they're certified?

I feel like if we're looking to create a licensure for these kind of entities and that's the route we should take, versus a voluntary certification, then I feel is not fully cooked.

Because this is residential living and it's not licensure. The certification is the thing that's been effective elsewhere, and that's what we're looking to replicate in California. And we're also dealing with residences. We need to distinguish because there are residences that are an abstinence-based model, residents that are a non-abstinence-based model, residents that are for substance use and residences, that are for mental health issues. And creating that distinction, that scope of practices, ensures that we get the outcomes that we want.

Any further questions? Okay, before I move on, Senator Allen, did you accept the amendments?

Yes. Yes, we did.

Perfect. We do not have a quorum yet. When we do, we'll entertain a motion to take a vote, but in the meantime, free to close.

No, I appreciate the discussion. Ultimately, this is about providing. There's some really good actors and there's some great standards out there. We want to see more folks adopt those high standards here in the state and provide better services for people and provide opportunity for families and folks looking for help to get some verification, certification that the facility they're going to, that they're going to meet a basic standard of care. And that's what this is ultimately about. And so, with that, I respectfully ask for your aye vote when the time.

Thank you, Senator Allen. Great presentation.

Thank you.

Number 10, Senator Wahab, Senate Bill 1354, long-term healthcare facilities, payment source, and resident status. Proceed when ready.

Oh, Senator Grove left, I guess, huh? Okay.

She'll be back.

Are we good?

Please proceed when ready.

Thank you, Chair, colleagues and members of the public. First, I just want to say I accept the Committee's amendments and thank the staff for their help with them. You know, your staff has also been very helpful in a number of other bills, so I really do appreciate their work. I'm here to present SB 1354, which codifies regulations regarding skilled nursing facilities and protects the rights of residents regardless of their payment source.

SB 1354 also requires facilities to inform residents being transferred or discharged that they may be eligible for the Long-Term Care Medi-Cal Program to help pay for their stay there. For decades, nursing homes have found ways of discriminating to reduce their Medi-Cal population and free beds up to make space for more private pay or Medicare residents. This discrimination forces low-income seniors to move away from family, friends, and their healthcare providers in order to access a facility that will accept Medi-Cal.

SB 1354 will strengthen and enhance the rights of residents in these facilities and protect against the discrimination based on their payment source. I have two witnesses that I'd like to introduce. Crista Barnett Nelson, Executive Director and Senior Advocacy of Senior Advocacy Services, and Maura Gibney, Executive Director of California Advocates for Nursing Home Reform, otherwise known as CANHR. So, with you, Chair.

Please proceed.

Good afternoon, Chairman Roth and Members of the Senate Health Committee. I am the Crista Barnett Nelson. And I am the long-term care ombudsman for Sonoma County. But today I'm representing the long-term care ombudsman, State Ombudsman Blanca Castro, because she's at a conference in Texas. And let me just say, it's nice to be the big cheese for even if it's only for three minutes.

On behalf of the 300,000 residents in long-term care facilities across the state and the 35 local programs in California, we're proud to co-sponsor for 1354. We applaud Senator Wahab for her leadership in carrying this critical Bill.

It is important to note that while the Office of the Long-Term Care Ombudsman is administratively located in the California Department of Aging, we do not represent the Department and the State Long-Term Care Ombudsman is an independent entity under the Old Americans Act, to take positions on state and federal legislations. So as a Long-Term Care Ombudsman representatives, there are 615 of us, and we ensure the rights of residents that they are not violated in long-term care.

In 2023, we handled over 43,000 complaints, and a significant portion of those were involuntary discharges due to Medi-Cal beneficiaries being discriminated against. Payment source discrimination is a recognized problem for decades. I've been doing this for 12 years and I can tell you every single day we have a case of Medi-Cal discrimination.

I have personally, just to give you an example, I have personally called every single facility in my county pretending that my mother needed a bed, stating that she was on Medi-Cal and finding a bed for her. Then I would switch and say, oh no, she's not on Medicare, she's on Medi Cal. And they would immediately tell me, oh, no, I'm sorry, we don't have any long-term care beds. This is absolutely a pervasive problem the existing statutes do not protect.

I have never seen anyone ever held accountable for payment discrimination. Excuse me, payment discrimination. We need to strengthen these laws around this. I'd also like to honor the fact that this Bill is addressing the asking for a census. One of the challenges is people don't even know if there are beds available. Any bed that's a Medicare bed is also a Medi-Cal bed if they accept as a payment source.

So, the ability for a consumer to access the census allows them to know if there are actually beds available. This is not an administrative burden in any way. As an ombudsman, we walk in the facilities every single day and ask for a census and they hand it to us. This is. Everyone has to operate that way. One other, I'd like to give you just one other example of why this is so important. I have a resident who lived in an assisted living.

She exhausted all her funds and we were unable to find her a bed. They were refusing because she was now a Medi-Cal person, Medi-Cal payer source in Sonoma County. This is a wonderful county to live in, but she was discharged, lawfully discharged to homelessness. So, she had exhausted all her funds and now this individual, who is a teacher in our community, has no place to live.

Some opponents claim that discrimination for people on Medi-Cal and preventing them equal access to a skilled nursing facility of their choice and in the community is already in statute. And we say that the law is not strong or enough. So please support and we ask for your aye vote on 1354.

Thank you. Next, please.

Good afternoon, Committee Members. My name is Maura Gibney. I'm the Executive Director of California Advocates for Nursing Home Reform, or CAHNR. We're a statewide nonprofit organization which advocates to improve the quality of care in California's nursing homes, and we're a proud co-sponsor of SB 1354. This Bill aims to put an end to Medi-Cal discrimination in nursing homes through minimal changes which require facilities to make information more accessible and discourage bad actors from engaging in illegal and discriminatory practices.

It is important to note that participation in the Medi-Cal program is completely voluntary. About 85% of California facilities choose to receive these payments. However, when they do sign a provider agreement and collect Medi-Cal funds, they also agree to comply with federal and state laws that prohibit discrimination against Medi-Cal participants.

My organization receives hundreds of calls annually from consumers across California who report Medi-Cal discrimination at the point of placement or when their short-term Medicare stay has ended, and they need to remain in a facility. Discrimination during the admissions process is fueled by a popular industry model built on maximizing more lucrative short-term Medicare stays and avoiding long-term Medi-Cal residents. Facilities can bill Medicare up to 1,000 or sometimes $1,400 a day, as compared to Medi-Cal rates, which average $250 to $300 a day.

Families call us reporting that they have tried reaching out to up to 20 nursing homes trying to find a bed for their loved one, all to be told the same false story, that there are short-term only or that there are no long-term beds available. This model requires that patients must be hospitalized before they can find a nursing home bed, forcing them to delay finding placement until they have a medical crisis cand unnecessarily clogging up California's hospital beds.

Another common source of discrimination is at the point when Medicare coverage ends and residents switch to much lower Medi-Cal rates. Many facilities use this switch as an opportunity to misinform residents about their rights to stay, resulting in people being forced into unsafe discharge situations, such as a recent CANHR caller who was non-ambulatory still had a need for skilled nursing, but after his Medicare days were up, he was discharged to a second story motel room that could not accommodate his wheelchair.

He was discharged without the necessary follow-up care, and he later died. Vulnerable seniors with ongoing needs for skilled nursing services routinely end up dumped into homeless shelters, motels, or homes with clearly inadequate care or supervision. The recent decertification of Laguna Honda in San Francisco exposed the rampant Medi-Cal discrimination that routinely occurs across California as part of the closure plan required during Laguna Honda's federal decertification process.

Over an 11-week period in the summer of 2022, their staff reported making over 14,000 phone calls to nursing homes across California trying to find placement for their 681 residents. Those 14,000 calls led to only 41 successful transfers of Medi-Cal residents. 35, to a single facility.

Day after day, their staff were told by hundreds of nursing homes across the state that there were no room for any Laguna Honda residents, even though nursing home census data from the time showed that hundreds of available beds, even in the City of San Francisco, were available. Those facilities wanted to hold those beds open for more lucrative patients being discharged from hospitals on Medicare.

SB 1354 codifies steps that facilities are already required to take and facilitates public access to already available information by requiring facilities to make census data more easily available, clarifying information received by residents at the point of their proposed discharge, and codifying the agreement providers sign when they accept Medi-Cal payments, it will allow victims of Medi-Cal discrimination to hold facilities accountable to the promises that they make when they sign those agreements.

For these reasons, on behalf of CANHR and thousands of seniors across California, I respectfully request your aye vote.

Thank you. Pretty close. Other witnesses in support? Name, affiliation, and position on the measure, please.

Cindy Young, California Alliance for Retired Americans, in support.

Thank you. Other witnesses in support of the measure?

Peter Hansel, advocacy volunteer here on behalf of AARP California, in support.

Thank you, sir. Other witnesses in support? Last call. Witnesses in opposition? Starting with lead opposition first. Lead opposition is welcome to join us in the well. Good afternoon. Please proceed when ready.

Thank you. Jennifer Snyder with Capital Advocacy on behalf of the California Association of Health Facilities. Just want to first acknowledge and appreciate the Committee and the author working with us on amendments. They go a long way to actually address the concerns that we have with the Bill. We also want to acknowledge and also support the concern about availability of beds in skilled nursing in California.

I think while we appreciate and support that premise, I think we, the California Association of Health Facilities, has just a slightly bit of a different concern and a solution to that. I think we have a systematic and a large statewide issue relative to availability of beds. It's important to note that skilled nursing facilities actually are one of the largest providers of Medi-Cal services to Medi-Cal patients.

Generally speaking, a Medi-Cal skilled nursing facility has at least 70% of their patients that are Medi-Cal, if not 80%. And so we already, in most cases, skilled nursing facilities have a high percentages of their patients that are Medi-Cal. What we have is a lack of availability of beds.

And I know that CAHF is very appreciative working with the Senator on another Bill, which is actually trying to find ways that we can streamline the process of making sure that we can create more availability of beds, especially in the behavioral health space. So, what we have right now is what I would say is kind of an epidemic of lack of availability of beds. And why is that? Well, we have low government reimbursement. Nursing facilities are either Medi-Cal or Medicare.

They do probably on very rare occasions have a private pay patient, low reimbursement, lack of reimbursement, slow reimbursement, lack of ability to have flexibility on reimbursement. We have staffing challenges. We have patients that are more and more complicated. And so, a nursing facility really has to take the time to try to understand what patients they can or cannot serve and be able to do that in a safe manner.

So, with that being said, and we don't have time today to solve the skilled nursing facility crisis relative to availability of beds. But with that being said, we really are very close to being just fine with the Bill as amended. We would love to work with the author on some additional concerns that we have, mainly around how the communication of the census will occur, and we feel like it needs to be very clear about how that will happen.

It says email and phone request and to make sure that that communication is clear and that facilities can be compliant in that communication. And so, we hope to continue to work with the author and the sponsors, and the Committee on that. So, I appreciate your diligence in listening to me and I appreciate your time. Thank you.

Thank you.

Thank you, Mister Chair and Members. Amber King with Leading Age California I want to echo the comments made by CAHF and also want to thank the Committee staff and the author for the amendments that will be taken. We do have a few remaining concerns, largely with the publicly available information requirement in the Bill.

We also are concerned with the point-in-time data requirement and that it doesn't tell the full story. For many of our skilled nursing facilities that are the smaller, nonprofit facilities in this state are having a really hard time staffing those beds. And so, for many of our members, they're not able to fully staff at their licensed capacity and are unable to accept additional patients. So, there's many reasons why our facilities wouldn't be able to accept all of the patients.

And we hope to continue working with the author to address our last few remaining concerns and believe that we can get there. Thank you.

Thank you. Are there any other opposition witnesses in the hearing room? If so, please step forward. Name, affiliation, and position on the measure. Opposition witnesses, if any? Seeing none. Let's bring the matter back to the dais. Members, questions, comments, concerns? Seeing none. Senator Wahab, would you like to close?

See, this is a beautiful bill to support, right? I do just want to address one of the things that the opposition witness said. Part of the amendments that we have committed to and agreed upon is one, is limit the provisions of a facility's daily census to just the current daily census and to be provided either on their website or over the phone or email. So, I do just want to highlight that, that I think that the Committee and our team kind of addressed that.

We're happy to continue conversations, of course. You know, my door is always open, and I really do, again, appreciate the committee staff for helping us with this Bill. And I respectfully ask for an aye vote.

At such time as we have a quorum, we'll entertain a motion and take a vote, Senator Wahab.

Thank you.

Thank you.

Nice presentation. Thank you.

Item number 12, Senate Bill 1432, Senator Caballero, health facilities, seismic standards. Proceed when ready.

Thank you.

Thank you, Mister Chair and Members, good afternoon. I'm very pleased to present SB 1432, which creates transparency, accountability and a viable path for health facilities to achieve seismic compliance. First, let me say that I really appreciate the Chair and Committee's collaboration on this, herculean effort, and will gladly accept the Committee's amendments. And I want to thank all of the stakeholders for meeting with my office multiple times over the past few weeks.

I really appreciate the Chair convening the first meeting, along with myself and co authors, as a way to jumpstart the process, and it's been very productive. As many of you are aware, given the distressed financial condition of California hospitals, some of which are in your districts, healthcare access for all is in jeopardy. The Alfred Alquist Hospital Seismic Safety Act requires that by January 1, 2030 all hospital buildings have the capacity to provide patient services following an earthquake.

Pursuant to current law, hospitals that do not comply with this 2030 seismic standard will be required to close their door to patient care. I want to repeat that. The solution, if they don't meet the standard, is that they close their doors to patient care or that part of the facility that's non compliant. According to a 2019 RAND Institute study, the estimated cost of upgrades and construction for all California hospitals to comply with this seismic standard, range from 34 billion to 140 billion, depending on compliance approach.

And that's whether you tear it down and start over or whether you can do a a retrofit. As you may know, Madera Community Hospital, in my district, was forced to close its doors and filed for bankruptcy, which left Madera County, home to 160,000 people, mostly Latino, and nearly a third of whom work in agriculture, without a general hospital or health clinic to obtain medical care.

The closure forced Madera residents to seek medical care outside the county, nearly an hour's drive away, compelling Madera and Fresno counties to issue emergency health care declaration. It's clear that we don't want hospitals to close. We don't want to lose their critical services. In the process of what will be a miraculous reopening of Madera Community Hospital, it became clear that some level of relief for seismic compliance would be necessary to ensure long term sustainability.

So what I did is then, because we had been working on all the hospitals, together with emergency distress loan program and the MCO tax, which should go to increase MediCal rates, started talking to the hospital Association, and what I discovered is the timeframe and cost to meet the 2030 standards are a major challenge, especially for financially distressed hospitals. That RAND study suggests the cost of upgrades would put 40% of California hospitals in severe financial distress, immediate risk of bankruptcy.

Community and public hospitals would take the most significant hit, further hindering access to care, to care for the many MediCal and Medicare patients who depend on them. 62% of hospitals statewide have at least one building that has yet to meet the 2030 structural standards, and more than 50% of the California hospitals lose money every day to care for patients. Furthermore, hospitals continue to face significant cost pressures and are forced to reduce services to keep their doors open.

I know that you're aware that many of the hospitals are discontinuing their maternity and delivery services. Hospitals are essential to our community health and well being and California must act quickly to prevent further loss of access to care.

This is the reason that SB 1432 is critical to improve seismic safety in our local hospitals expeditiously to ensure access to healthcare in our community by establishing a framework that one enhances transparency, two demands accountability and three creates a viable pathway for our hospitals to meet seismic compliance standards, according to each unique circumstance while continuing to provide critical health care to our communities.

I appreciate the concerns brought forth by the opposition and have been working closely with all stakeholders to ensure we craft a framework that is not a one size fits all approach, but recognizes regional healthcare challenges. In fact, I share the concerns expressed by the opposition, especially as we learn of excessive executive compensation and board action that results in fiscal and contractual liability.

For these reasons, I am advocating for more transparency and accountability in the process and for the ability of the public and Legislature to have important data. Each hospital and community has a unique path to become seismically compliant and ensure healthcare access. SB 1432 proposes to capture all of these distinct efforts into a process that is transparent, holds hospital executives accountable, and ensures every California community has seismically compliant healthcare facilities to uphold California's commitment to healthcare access.

With me to testify is Shelly Schlenker with Dignity Hospitals and Katherine Scott with the California Hospital Association.

Please proceed when ready.

Good afternoon, Kathryn Scott with the California Hospital Association. As you heard from the author, our hospitals have spent billions to get where we are today, which is to allow those hospitals to remain standing after an earthquake, protecting patients and workers. This Bill will preserve healthcare access while our hospitals work to meet the next mandate and includes those transparency measures that if not met, the hospitals will lose their license.

I am going to defer my time to our witness so that you can hear the several complex projects that they have to face and why this time is critical to ensure that access preservation in the communities served.

Good afternoon I'm Shelly Schlenker, Executive Vice President, President and chief advocacy officer for Dignity Health. I'm pleased to be here representing our 31 California hospitals. As the largest provider of MediCal Services in the state, Dignity considers itself a partner to the state in assuring access for MediCal beneficiaries. We see approximately 10% of the entire MediCal program. Last year alone, we provided more than 600,000 inpatient days and 1.2 million outpatient visits.

Annually, after all supplemental payments, including the provider fee, we lose a half billion at cost serving MediCal patients. We do this because it's our mission and our calling. Even with the significant losses on MediCal, we have also invested $2 billion towards seismic compliance. Our buildings are 2020 compliant and will remain standing during an earthquake to protect our patients, providers and caregivers. Perhaps the best way to understand our status is to share that Dignity Health started this journey with 87 noncompliant SPC 1 buildings.

We have taken 18 buildings out of service. The remaining are all 2020 compliant, but none of our 31 hospitals are totally 2030 compliant. For example, California Hospital and Medical center in Los Angeles is completing a 200 plus $1.0 million new patient tower and when completed this year, it will be 2030 compliant. But there are six other buildings that make up the campus still needing retrofitting, costing several 100 million more.

However, if we don't meet the 2030 deadline on any one building, the entire hospital will close as outlined in the statute. To preserve the services, this retrofit will be done room by room, affecting general surgical floors, ancillary services and the central plant. Another example is Bakersfield Memorial Hospital. Of the six buildings on the campus, we will decommission three and retrofit three. A total of 420 rooms are impacted.

In addition to the emergency Department, the central plant and all ancillary services, the pediatric building and services will have to move off site or be paused during the demolition and rebuilding process of that particular building. This will impact the entire community. Lastly, I would mention Northridge Hospital. We have spent hundreds of millions of dollars to date on projects. We have one tower that cannot be retrofitted because of the structural materials it currently includes.

That tower alone will cost $260 million and the beds will be offline during the demolition and reconstruction because there is no adjacent land to build it on. At each hospital, it is a bit like Tetris, moving around services to maintain access while advancing the seismic standards. Most projects will take beds offline to manage construction. An extension would help us minimize disruptions in care for the community. We have billions of dollars in additional investments that will be required to meet the 2030 standard across our system.

We are assessing what is possible. What we know is we can't do it all in the timeframe and finances we now face. We are going to have to make some tough decisions that will impact the communities we serve. SB 1432 and the amendments offered today help create a pathway forward where we can balance the billions of additional dollars we face, the staging of construction across 31 campuses, and the limited availability of construction companies and resources.

Dignity health strongly urges your support of SB 1432.

Thank you both very much. Are there any other supporters in the hearing room? Please step forward. Name, affiliation and position on the measure, please.

Good afternoon. Timothy Burr, on behalf of Plumas District Hospital in support. Thank you.

Thank you.

Good afternoon. Jen Chase, on behalf of the University of California, in support.

Good afternoon. Josh Gauger, on behalf of the California Association of Public Hospitals and Health Systems and Support.

Good afternoon. Alejandro Solis, on behalf of Comite Civico del Valle, Los Amigos de la Comunidad and La Cooperativa Campesina de California, in support. Thank you.

Good afternoon. Daniel Sanchez, on behalf of Farmworkers Institute of Education and Leadership Development, Firstday Foundation Inc., and Central Valley Opportunity Center in support. Thank you.

Megan Loper. On behalf of the United Hospital Association, in support.

Preston Young from the California Chamber of Commerce here today in support.

Jonathan Clay on behalf of Scripps Health in San Diego, in support.

Erin Taylor on behalf of Memorial Care in support.

Mira Morton on behalf of the California Children's Hospital Association and support.

Grace Koplin on behalf of Providence and there 17 hospitals in northern and Southern California in support. Thank you.

Nicette Short on behalf of the Alliance of Catholic Health Care, PEACH representing California's hospital safety net, Adventist Health and Loma Linda University Health and support.

Thank you.

Megan Allred on behalf of Los Robles Medical Center, Good Samaritan Hospital and Riverside Community Hospital, in support.

Thank you.

Good afternoon. Rachael Blucher with Nielsen Merksamer on behalf of the County of Contra Costa, in support. Thank you.

Theo Pahos, in support. On behalf of Tenet and in Central Valley family of hospitals. Thank you.

Thank you, sir. Next please.

Mike Villines, on behalf of Community Medical Centers at Fresno.

Thank you. Any other witnesses in support of this measure? Seeing none. Witnesses in opposition, first lead witnesses. Lead witnesses in opposition may join us in the well at the table. Depending on how many you are, divide and conquer.

Good afternoon, Senator.

Please proceed when ready.

Matt Lege. Good afternoon. Chairs and Members. Matt Lege on behalf of SEIU California here, ironically on the last week of earthquake preparedness month to talk about two seismic bills, so, fun fact to start off. We would like to thank the author, Committee Chair and staff for their work on this Bill. We appreciate the amendments and also appreciate the convening of stakeholders on this really important issue, something that we've talked about in this Legislature for multiple years.

However, although we do see progress with the amendments, we do still have serious concerns with the Bill that we appreciate the opportunity to share today. Importantly, hospital seismic safety was put in place after an earthquake that killed many people in California, and that happened in 1970. So this is a 50 year old policy that we're asking hospitals to comply with. Workers and patients in those facilities do expect to maintain operations during earthquake.

I think the general public expects that as well because people are going to go to a hospital when they're hurt or injured after a major earthquake and they expect to get care there, including the patients in the hospital expect to continue to receive care there. I can't imagine trying to evacuate a patient that may be sensitive, vulnerable and needing to move them to another facility because there's not power, oxygen or some of the other life saving services that are expected.

Seismic events are inherently unpredictable, underscoring the need to prepare. And that's why this is so important. And appreciate the conversation today. Regarding the hospital's financial health, the California Healthcare Foundation just released updated financial information, found that in 2023, hospitals made a net profit of $9 billion as an industry. And while we recognize that there are some hospitals in financial distress, this Bill does not account for that and does not tailor the extension based on the financial need of the hospital.

And so for that, we still have concerns. SEIU has always understood that due to the pandemic, construction may be delayed or plans may need to change. Because, you know, we've learned from the pandemic and where we have concerns is that the industry has, for years, dragged their feet or not come into compliance trying to amend the standard. And from our perspective, we don't think that's a rationale to get a longer extension.

We do see these efforts as making California less safe for the next earthquake, realizing that with these amendments, we're looking at essentially for the next 15 years, not having hospitals come into compliance with seismic safety standards.

So for that, we want to make sure that patients are safe during a major earthquake and particularly after the aftermath. Without true accountability and enforcement, future legislators will still be in the same place that we are today, arguing about these standards, arguing about our hospitals are going to comply or not. We know that the Legislature is taking these issues really seriously, and we hope that the hospital Association continues to do so.

I know that they are making efforts to do so, but did want to raise concerns of the fact that under previous legislation, hospital boards were required to acknowledge that the standards are coming up and about half of them have failed to do so. So really want to underscore that these are standards that are important. They're standards that are going to protect patients and workers and want to make sure that they're there when we need them.

Did also want to flag the language in the Bill and appreciate the Committee's analysis that pointed this out, around rural and critical access hospitals, and that's a particular area that needs additional work. That would give some hospitals that are part of large systems, who have the financial resources to do it time, additional time until the state bails them out.

And so, you know, we just urge consideration of, really future consideration, of needing to narrow that piece, the language to make sure that we are underscoring and appreciating the role of systems play in rural and critical access hospital. In conclusion, we look forward to continued ongoing discussions around how to create real accountability to the hospital's seismic standards as proposed in this Bill that will move forward to a greater safety for our patients, hospital workers and our community.

Unfortunately, with the Bill and the amendments that we have before us, we still believe that this is overly broad instead of measured and targeted relief. Workers and patients of California respectfully oppose this Bill.

Thank you.

Mister Chair, Members. Sara Flocks, California Labor Federation we represent both healthcare workers in hospitals, first responders who are the ones who are first on the scene at disasters like earthquakes, and the many, many union Members and their families across the state that depend on hospitals for everyday care and care after disasters. We'd like to echo my colleague from SEIU. Thank you to the chair and thank you to the author for the amendments that were taken and the stakeholder group, of course, the staff as well.

We look forward to continuing conversations as we've had over many, many years on this topic. We've seen, over the years, what happens and the devastation in communities when an earthquake hits. In the Bay Area, there were 53 people that were killed and 3,753 people injured. In Northridge, almost 9,000 people were injured. In addition to all those who were killed. All of those people needed to get to a hospital, along with many others who weren't even in those numbers.

And so evacuating a hospital that has lost functionality not only creates a barrier to all of the people who are going to that hospital. But it puts a burden on the first responders. They need to be going to the area where there's fires, there's injured, there's people trapped in houses. At the same time, they may need to be evacuating nonfunctional hospitals.

That not only is an impact on the patients who are in those hospitals, but on everybody who relies on the system of first responders, that we have to be on the scene. That is why 50 years ago, many decades ago, these goals were put into place. Back then, 2030 seemed like it was lifetimes in the future. And that that would be enough time for hospitals across the state to figure out their finances and prepare, because these are very sophisticated entities.

And we have known for decades that this rule, this law, that a hospital needs to be functional, that it needs to be able to treat the people not only coming to the hospital, the 9,000 people that were injured or more, but the people that are still giving birth, that are still recovering from surgery, from all the people who are in that hospital. We need to make sure it is functional.

And so we appreciate the work that has been done, the attention to transparency, but we still must oppose the Bill in print. Thank you.

Any other opposition witnesses in the room? Name, affiliation and position on the measure?

Good afternoon. Shane Gusman, on behalf of the Teamsters and UNITE HERE in opposition.

Thank you Mister chair Members. Meagan Subers, on behalf of the California Professional Firefighters currently opposed to the Bill in print, look forward to continuing conversations. Thank you.

Steve Baker for the Professional Engineers In California Government in opposition.

Thank you. Don Schinske, on behalf of the Structural Engineers Association of California and the Earthquake Engineering Research Institute, in opposition.

Good afternoon Chair, Members. Mari Lopez with the California Nurses Association. Appreciate the discussions that we've had with the author, but we remain respectfully in opposition.

Eric Robles, on behalf of UNAC/UHCP currently opposed. Thank you.

Good afternoon. Janice O'Malley with AFSCME California in respect to opposition. Thank you.

Any other opposition witnesses? Colleagues, any questions, comments, concerns? Senator Smallwood-Cuevas.

Thank you, Mister Chair. And this is a very, very difficult issue. And as someone that's been in the Legislature going on 18 months. Thanks. This is not what I wanted to pick up. It's a 50 year old issue that is still unresolved and threatens the lives of every healthcare worker and patient in all of our communities. We don't know when, we don't know where. That's one of the challenges of living in California.

And so when I heard about this issue first from the hospitals and most recently from the unions who were charged with the care of the workers in the building representing them. I have so many concerns. So let me start with my questions. So one just on what was presented, and thank you, Senator Caballero, for in the last minutes texting on this.

And I want to say it really is helpful that there is conversation happening because it's what we might as well say it's 2025 and this all isn't going to be done by 2030. I'm not sure how we get there, even though it's taken us 50 years to get here. But I am, why is it that half of the hospitals, as Matt just shared, half of the hospitals have not submitted their plans? Is there a sense of why that is what is happening?

I actually need to thank you. I actually need to confer with my colleague to understand that our attestations have been required for a couple of years now. And from what I understand, our hospitals have met that that may be a figure related to an NPC number. So I think I need to understand more. And the more we understand from OSHPD, I think there's some reporting discrepancies in what OSHPD has provided, frankly.

And we're digging into that because there are many instances where our hospitals will have reported that they've submitted something to OSHPD and OSHPD because they didn't submit the report in the way they wanted it done or may have left a piece off because they were still investigating, has reported, is not submitted at all.

So I think I need to understand, because from what we know our hospitals have to, and Shelly will tell you that our hospitals have to provide the attestation, post the attestation, if that's the one we're talking about. And we have not gotten a list from OSHPD that says our hospitals haven't done that.

So, and usually we know we work with OSHPD annually to understand who's not doing what they're supposed to be doing at the Association level and we pick up the phone and call those CEO's. Shelley's number.

So the other thing is that to not get in the weeds too much, but there are non structural requirements that have to do with things that are hanging on the walls and for lack of a better word, that are not the pipes and the concrete and the it's things that can move around in an earthquake. And then there are the structural things that need to be done.

And there are different stages at which you different stages to get to the final solution is the best way to put it. So you have to have engineers that prepare a report, and then you have to get crews in there to actually do the work. And so you have different stages. And so we have to be very specific when we use data about why do have 50% not comply.

Because it's not that they haven't complied, it's they haven't gotten to the point, they haven't gotten to the 2030 requirement, which is the end product. They are en route and have done some of the work. And so I think we need to go back and figure out what that is referring to so that we're specific about what we're talking about, because it's just not fair to say 50% have done nothing, because that's not true. There have been reports and requirements.

And when I say reports, it's not just, okay, we wrote up a report. It's an analysis of exactly what has to happen in order for there to be seismic compliance in that particular category. So maybe we can take a look at that data that you're referring to, or we can ask the speaker of the data to explain where that number comes from and exactly what it means.

Senator, if I may. The information that HKI provides in its seismic briefing indicated indicates that about 49% of hospitals had not provided a non structural performance category analysis and working plan that was due in January of 2024. My further understanding from the hospital Association is that there's some miscommunication and perhaps a lack of updated data as to whether that number is actually accurate. That plans apparently have been.

Some plans have been supported, have been submitted on schedule to HKI, but have not made it through the analysis phase. And so the number 49% is likely to go down. And that non performance category working plan has to do with, among other things, you know, the bones of the building are going to stand. It's not going to pancake, it's not going to be a Northridge. But are the oxygen lines, are the gas lines, are the sewer lines, is there backup power, power generators?

The other things that are the nonstructural components of a hospital that enable it to function and keep people alive in it when the earth movement incident didn't otherwise take them out. And so the working plan was to figure out what your situation is and what the plan going forward is going to be at an appropriate time. I'll review with all of you what the amendments actually do.

Because these amendments, in part, require, as a condition of an initial extension of three years, that a master seismic plan be submitted by the healthcare institution with goals, objectives, and milestones to get the three-year initial extension, milestones that can then be evaluated by HCAI for appropriateness and for completion, and then HCAI can walk a healthcare facility through the milestones as appropriate, provide additional extensions up to another five years to accomplish the milestones.

Walking a healthcare facility down the road, hopefully toward ultimate compliance with the seismic standards. Structural is already complied with, but the non-structural seismic standards that will enable the hospital to, in all likelihood, continue to function after a major earthquake. That's what this, that's what the guts of the amendments to this Bill actually do. So I don't know if that helps you.

It does, and that's why he is the General and the Chair of this Committee. Let's.

Thank you.

Amazing. Thank you. I realize the complexity, but I do, you know, have to ask, and, and please, Senator Roth, we would love to hear from the experts, too. Why the question about tailoring this to rural hospitals or hospitals that are in economic distress? I have a children's hospital that is on the verge and is in need of a similar extension. So, I'm curious, why isn't there, as stated by our lead witness, why isn't there a particular plan that's specific? Why isn't this more narrow and not all hospitals?

Well, the way it's set up is that some hospitals will achieve the 2030 requirements on time, and so those hospitals are expected to finish what they've already started, and those that are in distress are going to need more time. And so initially, it's a three-year extension, but they have, there's certain requirements that they plan, and as the Chair said, that they have good documentation of what the improvements needed to meet the rest of the seismic obligation is going to be.

And if they need more time, financially, they go to HCAI and they ask for that. But it's got to be the information they give to HCAI has to justify that they're in financial distress, and there's a public hearing process so that the local community can participate in that analysis of the need, and they can look at the documentation that's been prepared and weigh in with HCAI as well.

So initially, we started off saying till 2038, but you only get to 2038 if you can show the need along the way and you meet milestones. You don't get there just because you need it. You get there because you started to do the actual work that needs to be done.

So that's 2038, and it's many, many milestones. And I appreciate the amendments that have been taken in Committee and the discussion with all of the organizations. And I'm glad to hear that these are ongoing conversations. I just, and I know, Senator Caballero, I'm probably speaking your love language here, but it's granting extensions and not seeing any outcomes. You know, they say you do the same thing and expect a different outcome. As we think about these benchmarks, and I understand that there's a demonstrated progress.

But typically, like when I think about construction, if you don't meet a certain phase, your money gets withheld until that work gets done, and then you move to the next. Where are the accountability measures in here? I know some of the civil penalties that have been removed, but my question is, are there fines? What are the ways in which we aren't back here in 2035, you know, facing a similar conversation?

So you ask a really good question. Let me give you the frame that I was working on for this. It's that. And it was back. I want to say it was the Loma Prieta earthquake in the late eighties. The damage that was created in that earthquake was damaged because of unreinforced masonry. It was damage to downtowns that were built in the 1800s, and they were brick buildings that had no support.

And so state law passed and required that cities get their downtowns that had unreinforced masonry buildings retrofitted. And so, we did that in the City of Salinas. And we passed an ordinance that says, you have to do this. But our downtown was in terrible shape. It was, I hate to say it, but what K Street looks like now, it was empty mostly, and there were very few businesses that were open. And so, we told the businesspeople, you got to do this.

And they said, we'll close it down, and we're going to start tearing down the buildings because they're not. We can't do it. We can't afford it. We gave them extension after extension after extension. And we finally said, you know what? They don't have the money and we don't want them to tear it down. We just want it to be safe. That's really the goal. So, the goal here is we don't want them to tear down the hospitals. We want them to be safe.

So how do we get them to there? And what we ended up doing is we talked to our local community bank. Way too much information. I apologize. But they, we had all the city money there, which are millions of dollars in checks that went out to pay our employees and our debts. And we said, our money sits in your bank and earns 0% interest.

We want you to be partner with us and the downtown business owners that are making no money on these rental, the rentals that they have. And we want you to do low-interest loans and the city will back it. We were the backstop. In other words, we were the guarantors for the loans, so that if anybody defaulted, the city would step in and pay off that debt. The bank said, fine. The businesses ended up getting loans. They all were retrofit.

None had to be torn down, and not one of them defaulted on the loan. So, the city put up no money. We may have to do something in the end to those hospitals that have so many, for lack of a better word, Medi-Cal and Medicare patients that they're constantly struggling. And we'll see what the MCO tax does to alleviate that and to come up behind them and to say, we have a loan program.

One of the bills that I did a couple years ago was an increase to the vape tax, and we allocated 10% of that tax for seismic safety work. And that's generating about $2-3 million a year. And that's being used by HCAI to help some of the hospitals that need work done. It's the early work that needs to be done, getting the engineering reports and the studies that tell them what buildings have to go and what buildings can be retrofit.

So, in answer to your question, this Bill does not anticipate bailing out any hospitals. It does not anticipate putting any money in. But we may have to get there at some point, because some hospitals, Madera Hospital, for example, it's going to open up again. But there's no way that in the next five years, they're going to be able to retrofit that hospital.

They just need to get back on their feet and they won't be doing labor and delivery, which is tragic in a community that has a high immigrant population. And so, I would prefer that they focus on labor and delivery, but they're also going to need to focus on seismic safety. And I think that we're probably going to have to come up with a program that helps to create a fund for those that are really struggling.

But we want to see the financials and we want people to. We want transparency in the process.

And I appreciate that analogy, but even in the timeframe, right, your downtown, in that scenario, has been rebuilt. And here we are, 50 and we're still kind of just at the second level. So, I, you know, my main concern is ensuring that they actually meet the benchmarks.

I agree.

And eight years, 3038 is so far away. And then working back from that.

This Bill is three years.

Three years.

With the opportunity.

Yes.

With the opportunity, correct.

To go all the way to the deadline if the progress is demonstrated. I have a lot of concerns about this. The only thing that is preventing me from saying that I will not support the Bill is that there is conversation happening on both sides. I want to see this Bill move forward today, but I will not support this Bill if we don't have a way to have real accountability measures and benchmark penalties. Because my fear is just demonstrating is not enough.

And we've got to figure out a way to have real commitment, material commitment, to seeing this move forward. I agree with the opposition that we need to scale back on how much time we are allotting for these plans to be reviewed and approved.

I think that timeframe is too wide and too long and just know, nothing's cheaper if you wait, you know, another 15 years to get the work done. It only gets more and more expensive, and then we're back here. So, you know, I appreciate the opposition. I respect your position. I'm very glad to see this conversation.

But I agree that this is about protecting workers and Californians and making sure that the costs are not too great because once we start losing lives, the cost is too great. So.

Thank you.

Thank you.

Thank you, Senator. Senator Limon.

Thank you. You know, this is a complicated issue. In December of 2016, I got appointed to the Health Committee on the Assembly side, and I've served on the Health Committee. And I thought as an exercise just to kind of go back, I would look just to see how many bills pertaining, not all extensions to seismic. We would, you know, I've seen since I've been in the Legislature, and it turns out I've seen 14, and this is the 15th Bill. And they're all different.

They're all actually put together by different groups or perspectives. And I share that because one of the things that is difficult is trying to understand what solution can come forward that will actually yield the outcomes we want, which is for our hospitals not to close, that those that are in distress get more time as they make milestones. I completely agree with that. And I'm not sure through different variations. Right? Again, they've not all been just flat-out extensions. There's been different variations of bills in this space.

We've seen. We've not necessarily been able to accomplish that. So, I don't think that there is a side that is right or wrong in this situation. I actually think everyone is right and we're trying to figure out how to move this forward. As the author and from your perspective, what do you think this will be the Bill?

You know, what certainty do we have that if this Bill moves forward, this Bill will be the metrics, the standard in place, so that we see that we're making the progress we want and that we're able to achieve, like, what is different from the previous versions and attempts to do this. And again, some of. There's so many different variations. Some have been one-offs, some have been flat-out extensions, not all have been brought to us by the same kind of group, you know, the same kind of groups. Very different.

Yeah. I can't speak to the other bills because I frankly don't want to be doing healthcare. I was pulled kicking and screaming. I'm sorry. I'm really sorry for everybody here.

Sorry. That's not the answer I was expecting.

Oh, I really don't want to do this. No. This is really complicated.

It is.

And the challenge, I think, is that there is an assumption that hospitals just don't want to do this and it's just not true. There are some. Do some hospitals have the ability to do it, but just maybe didn't do it? Maybe. I don't know. I'm not in a position to say. But I think there's a really honest interest in doing the right thing. It's a question of resources and it's a question of priorities within the hospital setting.

And part of that is that things change so rapidly in medicine that you have to be buying the latest equipment to be able to do the work in the hospital that needs to get done. And those are expensive. And so, part of the challenge is that we put this obligation on, and, yes, we've created a long runway, but some are not going to get there. They're just not going to get there. So, the question becomes, rather than whose bill was the better one?

What we tried to do is to set up milestones that show that you're progressing and a review by HCAI so HCAI can take apart the numbers that you're presenting and the work that you've done so far and make some decisions about whether you're on the right track.

And at the end, to get the last three years, you have to have plans, you have to have started to get permits, you've got to have a contractor, you've got to identify a contractor, and then you have to have milestones in terms of we're going to break ground doing this, we're going to demolish the building on this date. And there were some real specific things.

So HCAI can walk them through that process and make sure that they're doing it, but they're going to need the resources, they're going to have to need the finances. And part of that will be the presentation to HCAI about where their resources are going to come from. And we're going to get a good idea of whether we're going to have to, for example, go out and do a bond that helps provide resources for hospitals to be able to upgrade.

You know, we upgrade schools, but we haven't really done a bond for hospital. We've done a bond for some new hospitals, but not for seismic, to my knowledge. So, I think that the whole idea is right now, as we sit here today, we have a choice. Hospitals, you meet the 2030 deadline or else you start tearing out your hospital or you start tearing out the pieces that are not seismically, that don't meet the 2030 deadline.

And having sat in the position of losing a hospital and then spending over a year working at trying to bring it back again and to make sure that the other hospitals that were at risk had resources as well, there's just, there is absolutely no way that we can close hospitals. We just can't. The first thing that happens a minute you give the WARN Act is that everybody leaves. And so, all the nurses and the doctors in Madera County left. They went somewhere else.

And so, now we're trying to get them back to be able to fill positions that they left. And they need to feel confident that the hospital is taking its place, has got the wherewithal to survive. So, it's a brain drain on the community. It's a devastating impact as people try to figure out how to get somewhere that takes an hour longer and they're having a heart attack or a stroke. And so, we need all the hospitals we can get.

So rather than say, let's wait and see what happens at 2030, the idea is to set up a framework that starts to create a public process so people get to show up at a public hearing and talk, a documentation that's very specific. And it gives HCAI the authority to be able to set up this framework.

Well, we set up the framework in the Bill, but to fill in the framework so that we can see who's accomplishing the tasks that they've been given with very rigorous milestones in all of that. So, that's the great thing is there's been a lot of discussion and collaboration, but language makes the difference. And so, it's easy to say, well, you need to do this, but language would be really helpful because that would allow us to write that into the Bill as well.

But we've taken into consideration everything that's been articulated. It's just that there's still bad feelings about this taking so long. And I'm sorry that it's, you know, I don't have an answer for why it's taken so long, but I can tell you that Madera, way before it closed, told me we're going to have a real hard time meeting our seismic, and they're not the only ones.

So, I think we need a pathway, and I do think we're probably at some point going to need to put up some money. But that's not what the Bill does right now. I just think we need the data and the information to be able to make that, and that'll be the Legislature down the road.

And I appreciate that, and I appreciate your honesty in how difficult this is.

Yeah, but you outed me to the whole world now.

That was not the intention, but, you know, I appreciate the honesty, but I think that your honesty also shows how difficult this is. And I share your concerns as a member who has a district that has had a hospital that has been on the verge of closing, that, you know, as some of us perceive, you know, are looking at the legislation that's in front of us. We also know that the alternative of not having a hospital is very serious.

It's very real and would be worse. Right? Than saying, can we give them more time? Because the truth is, especially in our rural communities, if they aren't given more time, they go away and they never come back. Just like the staff. Right?

That you described. So, once the physical structure goes away, the staff goes away, and it's so hard to bring back, you know, hospitals, medical centers. I mean, we've tried it all and it's very difficult. So, I absolutely relate to that.

And I think that that's one of, you know, the pieces that things I'm trying to figure out. As a Legislator, it's very hard to keep seeing the same issue come up over and over in different ways, forms, and tries or attempts to kind of get it out and kind of saying, well, which one's the right approach? But it's also reflective of the, if it's coming up that much is because it's that much of a problem. Right?

And again, this isn't about one side being right or wrong, it's just a recognition that this is very difficult issue. To that point, the amendments also talk about, you know, HCAI now having to review the milestones, what is now in the Bill, what is new to the Bill that ensures that the state agency that reviews these milestones is very clear how important these milestones are.

I think we can probably all sit here and think of an agency where you're like, hmm, I don't know that the Legislature would have gone in that direction. Maybe the Legislature would have pushed a little bit more. What's in the Bill? What kind of metrics? What kind of, you know, there's a public process.

What, how do we know that HCAI will treat this with the same urgency and concern and focus that I think this Legislature has in terms of, you can't just get a pass like, just to get a pass like, you have to figure out how to get there. I don't know if anybody can comment. Whoever.

From experience, but I defer to the Chair.

Well, let me, you know, the amendments for those. The amendments are on page 12. And may I jump in, Senator? You know, unfortunately or fortunately, I was named Chair of this Committee, but I've been on this Committee for 12 years, and I've seen these seismic extensions come through here and on onesies and twosies in terms of hospitals. And this one wants five years and this one wants six, and this one wants three, and this one wants 14.

And, you know, I have a business background, and I said, this is not a business way to run this railroad. We need to organize this operation, find out how many of these things that are out there, what the state of affairs is in terms of their seismic compliance, how much it's going to cost to fix them, who's going to pay for it and how long it's going to take.

And that's how we'd run it if we were running a business, not dealing with these hit-and-miss things with a little bit of information. And those of us sitting up here get some information and we just vote. So, the concept was, how do we organize? How do we build, develop some architecture for this process so, we bring some order to the process? And we had a few bills coming to the Committee this year.

Two of them are on the agenda today, one we've heard before in a prior session. And so, we convened this working group. You listen to me whine. I commend all of you for stepping up and participating in the conversation.

To answer the question, if we look at the amendments, the amendments require HCAI to grant a three-year extension if the hospital submit these reports, these seismic reports that are required, and then after that they permit HCAI to grant an additional five years if the hospital applies and can make the case, based on complexity, financial impact or potential loss of healthcare services, to gain additional extensions and in compliance with the milestones that the hospital sets out in the master plan that is submitted. HCAI is required and the hospital is required as a condition of getting approval, the hospital is required to submit building plans and an extension schedule timeline and to have two major milestones relating to seismic compliance that will be used as the basis for determining whether the hospital is making adequate progress.

At the suggestion, I believe it was of labor, somewhere, built into the amendments as a public process for public notice and an opportunity for public comment prior to HCAI granting any approval beyond the initial three-year extension. The hospital's extension request has to be posted alongside their seismic compliance plan, which would trigger a 45-day comment period before HCAI can even take any action based on the extension request.

And I'm sure this is a work in progress, and I'm sure this is not the end of the story when it comes to transparency and compliance. When it comes to fines, what we know with these big operators, and it's not always the big operators, a fine will put a small operator out of business if their margin is $1 million.

But how big a fine can you, can you levy against a major for-profit hospital institution that has facilities across the country where it would really make a difference and is not simply the cost of doing business. So, the goodness here, if there is any, is that HCAI is controlling the shots. It's part of the government of the State of California, and we're the Legislature with oversight authority over HCAI, and there's a public transparency process to provide oversight over us.

And I don't know what we do if all we do is we give people two-year extensions without anything else. And I'm waiting for someone to explain that to me, how that works if we don't build a process to drive healthcare facilities. This isn't my Bill. I'm taking it over. How we drive hospitals down to the finish line.

We welcome it. Yeah. I think.

I interrupted my colleague.

No, this is helpful. Please. I think. What the. I've been there for all of those bills. I've been doing this with Shelley, to your point, because the ultimate penalty is closure, is why we're here. I mean, there is no greater penalty than your license, and it's not your license for part of the campus it's not your license for part of the services, it's your license, period. So that's why we keep having to come back to the Legislature.

We have, this has been on the books for 50 years, but frankly, became enforceable in the early nineties, where we presented with our first date. We spent tens of billions of dollars, not public dollars, not General Fund dollars, hospital health care dollars, to make sure our buildings don't fall down. I often tell people, you want to know where to go in an earthquake, go to a hospital, because it's probably one of the safest buildings in your community.

We're now at a place where we are committed to and have worked with the Committee to ensure we get on a path that the services are available. We're not in a place where we've been before. We're trying to narrow the requirement. We're in a place now where saying, let's get on a path.

And to Senator Roth's, good work and the work of this Committee and the stakeholders who've brought good comments to bear, we are now looking at a structural framework we've never had in the past before, where we're providing our plan so that then OSHPD can tell us what services are at risk. Every building that has at risk will have a service labeled for that building. And OSHPD could tell us, HCAI, excuse me, can tell us, here's all the services at risk.

We can then go then to Shelley and Dignity will take every project, dissect every project, and work on a timeline related to every project. The reality is, is they can't do all 31 hospitals in the next eight years. Am I wrong? So, I think it's also an opportunity for OSHPD to hold their feet to the fire, but also plan accordingly in ways we haven't done in order to preserve services in the community.

So I think we've actually, this Bill actually accumulates the experience from 20 years, creates the transparency and the dialogue, and I think now we just have to figure out how to make sure they have the ability to push those hospitals through the process. So I think it's actually the accumulation of experience that brings us to this Bill and, you know, that framework that gets us on a path, a transparent path.

And I guess I would just add that as I shared in my testimony, we started out with 87 SPC 1 collapsible buildings. We now have all 2020-compliant buildings that will remain standing and protect our patients and our employees. So, it's not that nothing has happened. It's that this next threshold is a significantly bigger lift. And so, I just. I know that sounds defensive, but we've been working our tushies off trying to get this move forward, and it's just not possible in the time that's left.

Thank you. I mean, I think that this is. It's an important discussion, and I do believe that everyone's working to try to get it done. I do believe that this is an important issue and certainly that the alternative of having hospitals closed presents significant challenges. But there still continues to be certainly some safety issues. And I'm encouraged by the conversations that are happening, but it's still hard for all of us. Thank you.

Thank you, Senator. Senator Grove, you've got your hand up. Thank you.

Thank you, Mister Chair. You know, my good colleague to the north of me in the Central Valley. I know you didn't want to deal with healthcare. You didn't want to deal with healthcare when you're hospitalized closed abruptly. You didn't want to deal with healthcare when we were doing financially distressed hospital loan programs.

You didn't. You know, I get it. But I applaud you, admire you, and am so grateful to God that you are dealing with healthcare, because it's a very tough subject matter. And being kind of in the same boat with you or with financially distressed hospital providing the highest Medi-Cal hospital that I in the entire State of California is in my district. You know, over 80% is Medi-Cal payments. It's very difficult to stay alive.

Alive, like the hospital to stay alive, when you have get reimbursed lower dollars than what you put out. I am also the only person that had a recent earthquake in the last 10 years in Ridgecrest.

And I can tell you that all the earthquake facilities that were changed, including some of the requirements that were there, that OSHPD, they've already all approved and everything just the old building remained in standing intact and they had to move everything into the old building that wasn't earthquake approved according to the current standards, and they have to redo the new building, which was earthquake standard approved. I can tell you that I know this is a very difficult Bill to get out.

I know that our hospitals need some type of extension to address the seismic issue. I agree with the hospitals that it's not that nothing hasn't been done. The 2020 compliance stuff has been met. But I hear from my hospitals all the time this monumental task of making seismic happen at this level by 2030. They're telling me it's going to be impossible for some of the stronger hospitals that I have in my district.

Much less the ones that are coming that are still seeking ways to not be financially distressed.

So I don't think there's, and I love, I think I have deep respect for all of my colleagues, but I don't think there's anybody in this building could make this happen and bring two, several sides together and all the stakeholders together to make sure that we leave this year with a Bill that, number one, helps keep our hospitals open because that's having hospitals shut down would be the most catastrophic thing ever.

And then, you know, addressing this issue, I don't think anybody else in the building can do it. So, thank you. And I'd be glad to move the Bill when it's appropriate.

Thank you.

Thank you, Senator Grove. Senator Smallwood-Cuevas.

So, I just have a clarifying question, because I think you mentioned, Senator Caballero, that some hospitals do have the resources to move forward. So, can you explain how that financial metrics works, given the amendments, in terms of those who can Bill now. Are they able, they can do it now, but they're going to wait till?

No, they can do it now.

Where do they fit? Are they required to move forward and not take advantage of the extension that you're offering?

Yes.

How?

Well, they're--I think somebody said earlier that the cost is less if you do it now, and they've been planning. They've been planning and they've got things in motion to either retrofit or to tear down and redo. As you heard Dignity explain, they're moving on things that have been in the planning stage for a long time. They just won't get everything done. So the expectation is that people, that these hospitals are going to meet the requirements of the 2030 deadline by 2030 if they can do it.

And do we know who those hospitals are, and are they named so that they don't sort of decide that this might be a better--?

Yeah. All that information is at HCAI. They're the ones who have been dogging this up to this point. If you're asking for a list, we can ask them for a list.

Well, remember, Senator, a precondition for all of this is the production of a master seismic compliance plan, and nobody gets anything more than a three-year extension without demonstrating a need, and we're talking about construction plans, drawings, designs, identification of contractors, financing permits, milestones. All of that's built into a construction schedule, and unfortunately, when you're dealing with hospital facilities, that can cost 600 to 800 million dollars.

By the way, one of my--a hospital that I'm familiar with told me today, actually, that the cost of their construction was 800 million dollars and it was 80 percent of the capital budget for the entire corporation just to comply. So think about that. So the cost is enormous, the timeline for getting construction drawings done, even plans approved--it's not building a house. So--but that's built, that's cooked into these amendments.