Senate Standing Committee on Health
- Richard Roth
Person
The Senate Committee on health will begin in 10 seconds. Your 10 second warning, Senate Committee on health will come to order. Good afternoon, everyone. Thank you for joining us, Members of the public. As you know, we allow six minutes of testimony per side, but we have, I don't know, almost 20 items on the agenda today. A couple of them are off, so don't feel free not to use all the time if you don't need it. Two bills were pulled from today's hearing.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Dave Cortese
Legislator
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.
- Dave Cortese
Legislator
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.
- Dave Cortese
Legislator
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.
- Dave Cortese
Legislator
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.
- Richard Roth
Person
Thank you, Senator. Please proceed when ready.
- Lauren Finke
Person
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.
- Lauren Finke
Person
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.
- Lauren Finke
Person
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.
- Lauren Finke
Person
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.
- Lauren Finke
Person
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.
- Richard Roth
Person
Thank you. Next, please.
- Amanda Thompson
Person
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.
- Amanda Thompson
Person
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.
- Amanda Thompson
Person
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.
- Amanda Thompson
Person
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.
- Amanda Thompson
Person
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.
- Richard Roth
Person
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.
- Sherry Daley
Person
Good afternoon. Sherry Daley, with the California Consortium of Addiction Programs and Professionals, proud co-sponsors, in support. Thank you.
- Richard Roth
Person
Thank you. Next, please.
- Antoinette Trigueiro
Person
Toni Trigueiro, on behalf of the California Teachers Association, in support.
- Richard Roth
Person
Thank you. Sir.
- John Drebinger Iii
Person
John Drebinger with the Steinberg Institute, proud co-sponsors of the bill, in support. Thank you.
- Richard Roth
Person
Thank you.
- Katelin Van Deynze
Person
Katie Van Deynze with Health Access California, in strong support. Thank you.
- Richard Roth
Person
Thank you, ma'am. Next, please.
- Kat Besse
Person
Kat Besse, with the California Alliance of Child and Family Services, in support.
- Richard Roth
Person
Thank you.
- Vanessa Cajina
Person
Vanessa Cajina with KP Public Affairs, on behalf of the California Academy of Family Physicians, here in support.
- Richard Roth
Person
Thank you, ma'am. Next please.
- Thomas Renfree
Person
Tom Renfree with the California Association of Alcohol and Drug Program Executives, in support.
- Richard Roth
Person
Yes. Ma'am.
- Melissa Cortez-Roth
Person
Melissa Cortez, on behalf of Autism Speaks and the Council of Autism Service Providers, here in support.
- Richard Roth
Person
Thank you for joining us, sir.
- Andrew Antwih
Person
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.
- Tyler Rinde
Person
Good afternoon, Chair and members. Tyler Rinde, on behalf of the California Psychological Association, in support.
- Richard Roth
Person
Thank you, sir. Yes, ma'am.
- Amanda Dickey
Person
Amanda Dickey, on behalf of Santa Clara County superintendent of school, proud co-sponsor, in support.
- Richard Roth
Person
Thank you.
- Leah Barros
Person
Leah Barros, on behalf of California Hospital Association, in support.
- Richard Roth
Person
Thank you. Yes, ma'am.
- Jessica Moran
Person
Jessica Moran with the California Dental Association, in support.
- Richard Roth
Person
Thank you, ma'am.
- Jennifer Snyder
Person
Jennifer Snyder with Capital Advocacy on behalf of the California Life Sciences, in support.
- Richard Roth
Person
Snyder. Yes, sir.
- Bob Giroux
Person
Bob Giroux, on behalf of the National Union of Healthcare Workers and Pinnacle Aegis Treatment Centers, in support.
- Richard Roth
Person
Thank you. Yes, ma'am.
- Joan Borsten
Person
Joan Borsten, executive director of Summit Estate Recovery Center. We're proud to sponsor this bill.
- Richard Roth
Person
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.
- Unidentified Speaker
Person
You just turn it on.
- Richard Roth
Person
Good afternoon.
- Richard Roth
Person
Happens to me too.
- Jedd Hampton
Person
I should be used to this by now. So my apologies.
- Richard Roth
Person
I don't know, it took me 12 years.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Richard Roth
Person
Thank you, sir. Ma'am.
- Steffanie Watkins
Person
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.
- Richard Roth
Person
Thank you for those comments. Appreciate your attendance. Other individuals in opposition, name, affiliation, and position on the measure, please.
- Richard Roth
Person
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.
- Richard Roth
Person
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?
- Dave Cortese
Legislator
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.
- Dave Cortese
Legislator
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.
- Dave Cortese
Legislator
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.
- Richard Roth
Person
Thank you, Senator. At such times we get a quorum, we'll take a motion and we'll conduct the vote.
- Dave Cortese
Legislator
Appreciate that very much. Thank you.
- Richard Roth
Person
Thank you. Our next item is Item number 3, Senate Bill 1008. Senator Bradford, Obesity Treatment Parity Act. Please proceed when ready.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Richard Roth
Person
Please proceed when ready.
- Estela Mata-Carcamo
Person
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.
- Estela Mata-Carcamo
Person
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.
- Estela Mata-Carcamo
Person
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.
- Estela Mata-Carcamo
Person
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.
- Estela Mata-Carcamo
Person
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.
- Estela Mata-Carcamo
Person
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.
- Richard Roth
Person
Thank you. Sir, you're next.
- Wesley Mizutani
Person
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.
- Wesley Mizutani
Person
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.
- Wesley Mizutani
Person
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.
- Wesley Mizutani
Person
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.
- Wesley Mizutani
Person
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.
- Wesley Mizutani
Person
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.
- Richard Roth
Person
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.
- Timothy Madden
Person
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.
- Richard Roth
Person
Thank you, sir. Next, please.
- Alex Khan
Person
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.
- Richard Roth
Person
Thank you. Yes, ma'am. Hello.
- Whitney Francis
Person
Good afternoon. Whitney Francis with the Western Center on Law and Poverty in support.
- Richard Roth
Person
Thank you.
- Jennifer Snyder
Person
Jennifer Snyder with Capitol Advocacy on behalf of the California Life Sciences, in support.
- Richard Roth
Person
Thank you. Miss Snyder. Yes, ma'am.
- Missy Johnson
Person
Good afternoon, Missy Johnson with Nielsen Merksamer, here on behalf of the California Pharmacists Association in support.
- Richard Roth
Person
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.
- Richard Roth
Person
Take your time, gentlemen. Sort of. Please identify yourselves for the record.
- Preston Young
Person
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.
- Preston Young
Person
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.
- Preston Young
Person
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%.
- Preston Young
Person
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.
- Richard Roth
Person
Thank you for joining us.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Richard Roth
Person
Any other witnesses in opposition in the hearing room, please step forward.
- Steffanie Watkins
Person
Stephanie Watkins, on behalf of the Association of California Life and Health Insurance Companies, as well as America's Health Insurance Plans in opposition.
- Richard Roth
Person
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?
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
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.
- Steven Bradford
Person
- I vote.
- Richard Roth
Person
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.
- Anthony Portantino
Person
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.
- Anthony Portantino
Person
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.
- Anthony Portantino
Person
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.
- Anthony Portantino
Person
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.
- Richard Roth
Person
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.
- Eli Garcia
Person
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.
- Eli Garcia
Person
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.
- Eli Garcia
Person
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.
- Eli Garcia
Person
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.
- Richard Roth
Person
Thank you for doing that. Any other witnesses in opposition? In support? please step forward. We'll take you. Thank you for coming.
- Vanessa Forsythe
Person
I'm just adding my me too's. Is that okay now?
- Vanessa Forsythe
Person
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.
- Richard Roth
Person
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?
- Anthony Portantino
Person
I respectfully ask for an aye vote.
- Richard Roth
Person
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.
- Brian Dahle
Person
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.
- Brian Dahle
Person
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.
- Brian Dahle
Person
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%.
- Brian Dahle
Person
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.
- Brian Dahle
Person
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.
- Brian Dahle
Person
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.
- Brian Dahle
Person
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.
- Richard Roth
Person
Please proceed when ready. Identify yourselves for the record. First, though.
- Mary Casillas
Person
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.
- Mary Casillas
Person
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.
- Mary Casillas
Person
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.
- Mary Casillas
Person
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.
- Mary Casillas
Person
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.
- Darren Beatty
Person
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.
- Richard Roth
Person
Thank you, ma'am. Next, sir.
- Darren Beatty
Person
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.
- Darren Beatty
Person
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.
- Darren Beatty
Person
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.
- Darren Beatty
Person
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 Scott
Person
Kathryn Austin Scott, Senior Vice President for State Relations and Advocacy here in support for the California Hospital Association, thank you.
- Richard Roth
Person
Thank you, ma'am. Next please.
- Vanessa Cajina
Person
Vanessa Cajina, on behalf of the California Academy of Family Physicians here in support.
- Richard Roth
Person
Thank you for joining us.
- Nicette Short
Person
Next, Nicette Short, on behalf of Adventist Health, thank you.
- Mira Guertin
Person
Mira Morton, on behalf of the California Children's Hospital Association thank you.
- Richard Roth
Person
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...
- Richard Roth
Person
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?
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
Senator, I forgot to ask, maybe I missed it. Did you accept the amendment.
- Brian Dahle
Person
I did.
- Richard Roth
Person
Thank you very much for doing so. And we got a quorum. We'll take a motion and take the vote.
- Brian Dahle
Person
Thank you.
- Richard Roth
Person
Thank you for your presentation, Senator Ashby. Item number five, Senate Bill 1180, health care coverage, emergency medical services. Proceed when ready.
- Angelique Ashby
Legislator
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.
- Angelique Ashby
Legislator
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.
- Angelique Ashby
Legislator
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.
- Angelique Ashby
Legislator
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.
- Richard Roth
Person
Good afternoon. Please proceed.
- Megan Subers
Person
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.
- Megan Subers
Person
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.
- Megan Subers
Person
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.
- Megan Subers
Person
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.
- Megan Subers
Person
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.
- Richard Roth
Person
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
Person
Faith Borges, on behalf of California Agents and Health Insurance Professionals in support.
- Richard Roth
Person
Thank you. Next, please,
- Richard Roth
Person
Thank you, sir. Next. Thank you.
- Timothy Madden
Person
Mister chair Members Tim Madden, representing the California Chapter of the American College of Emergency Physicians in support.
- Thomas Renfree
Person
Tom Renfree with the California Association of Alcohol and Drug Program Executives in support.
- Richard Roth
Person
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.
- Jedd Hampton
Person
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.
- Jedd Hampton
Person
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.
- Richard Roth
Person
Thank you for joining us. Other witnesses in opposition. Name affiliation.
- Steffanie Watkins
Person
Steffanie Watkins, on behalf of. The Association of California Life and Health Insurance Companies. Also in opposition.
- Steffanie Watkins
Person
Steffanie Watkins on behalf of the Associatoin of California Life and Health Insurance Companies also in oppostion
- Jedd Hampton
Person
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.
- Richard Roth
Person
Thank you, ma'am.
- John Wenger
Person
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.
- Richard Roth
Person
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.
- Angelique Ashby
Legislator
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.
- Angelique Ashby
Legislator
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.
- Richard Roth
Person
Entertain a motion as soon as we get a quorum, and we will take a vote. Thank you for your presentation.
- Richard Roth
Person
Thank you very much, Senator Blakespear.
- Richard Roth
Person
Senator Blakespear, Item Number Seven: Senate Bill 1236: Medicare Supplement coverage: open enrollment periods.
- Catherine Blakespear
Legislator
Thanks.
- Richard Roth
Person
Proceed when ready, ma'am.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Catherine Blakespear
Legislator
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.
- Richard Roth
Person
Thank you. You may proceed. Three minutes each.
- Adam Zarrin
Person
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.
- Adam Zarrin
Person
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.
- Adam Zarrin
Person
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.
- Adam Zarrin
Person
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.
- Adam Zarrin
Person
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.
- Richard Roth
Person
Thank you. Right on time. Ma'am, you're next.
- Pat Johnstone
Person
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.
- Pat Johnstone
Person
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.
- Pat Johnstone
Person
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.
- Pat Johnstone
Person
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.
- Pat Johnstone
Person
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.
- Pat Johnstone
Person
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.
- Richard Roth
Person
Thank you for joining us today. Any other witnesses in support, name, affiliation, and position on the measure, please.
- Monica Padilla
Person
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.
- Richard Roth
Person
Thank you. Next, please.
- Amy Pine
Person
Amy Pine. I'm with the Leukemia and Lymphoma Society, in support.
- Richard Roth
Person
Thank you. Yes.
- Cindy Young
Person
Cindy Young, Vice President with the California Alliance for Retired Americans, co-sponsor.
- Richard Roth
Person
Thank you, ma'am. Thanks for joining us. Sir.
- Keith Umemoto
Person
Yes. Keith Umemoto, California Alliance for Retired Americans, Sacramento CA, in support.
- Richard Roth
Person
Thank you. Yes, ma'am.
- Bonnie Burns
Person
Bonnie Burns, California Health Advocates, in support.
- Richard Roth
Person
Thank you.
- Jo Carson
Person
Jo Carson, California Alliance for Retired Americans and also CTA Retired, in support.
- Richard Roth
Person
Thank you, ma'am.
- Ann Muñoz
Person
Ann Muñoz, California Alliance for Retired Americans, in support.
- Richard Roth
Person
Thank you, ma'am. Next, please.
- Susan Justine
Person
Susan Justine, with California Alliance for Retired Americans and with the Old Lesbians Organizing for Change, in support.
- Richard Roth
Person
Thanks for joining us. Yes, ma'am.
- Daisy Oram
Person
Daisy Oram, California Alliance for Retired Americans, in support.
- Richard Roth
Person
Thank you. Sir.
- Rj Cervantes
Person
Rj Cervantes, here on behalf of the California Kidney Care Alliance, in strong support. Thank you.
- Peter Kellison
Person
Peter Kellison, on behalf of U.S. Renal Care, in support.
- Diana Madoshi
Person
Diana Madoshi, California Alliance for Retired Americans, retired RN, Placer County, support.
- Richard Roth
Person
Thank you, ma'am. Yes, please.
- Dan Long
Person
Dan Long with California Alliance for Retired Americans, and I'm in support of SB 1236.
- Richard Roth
Person
Thank you.
- Arlene Harrison
Person
Arlene Harrison, California CARA, in support.
- Richard Roth
Person
Thank you.
- Linda Nguy
Person
Good afternoon. Linda Nguy with the Western Center on Law and Poverty, in support.
- Richard Roth
Person
Thank you.
- Christine Smith
Person
Christine Smith, Health Access California, in support.
- Alexander Khan
Person
Alex Khan, with the California Chronic Care Coalition, in support.
- Richard Roth
Person
Thank you.
- Daniel Sanchez
Person
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.
- Richard Roth
Person
Thank you, sir.
- Kevan Insko
Person
Kevan Insko, Friends Committee on Legislation of California, in strong support.
- Richard Roth
Person
Thank you, ma'am. Next, please.
- Vanessa Gonzalez
Person
Vanessa Gonzalez with the California Hospital Association, in support. Thank you.
- Richard Roth
Person
Thank you.
- Beth Malinowski
Person
Good afternoon. Beth Malinowski with SEIU California, in support.
- Dylan Elliott
Person
Thank you. Dylan Elliott, on behalf of the California State Association of Psychiatrists. Support.
- Pamela Zielske
Person
Pamela Zielske with Dialysis Patient Citizens, in support.
- Jordan Gershman
Person
Jordan Gershman, on behalf of DaVita, in strong support.
- Richard Roth
Person
Thank you.
- Maria Garcia Anguiano
Person
Maria Garcia with Fresenius Medical Care, in support.
- Kelly Goss
Person
Hi. Kelly Goss with the ALS Association, in strong support.
- Richard Roth
Person
Thank you. Sir.
- Peter Ansel
Person
Peter Ansel, on behalf of AARP California. Strong support.
- Richard Roth
Person
Thank you, sir. Next, please.
- Alejandro Solis
Person
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.
- Richard Roth
Person
Thank you.
- Maura Gibney
Person
Good afternoon. Maura Gibney, California Advocates for Nursing Home Reform, in support.
- Richard Roth
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Steffanie Watkins
Person
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.
- Richard Roth
Person
Thank you ma'am. Next, please.
- Faith Borges
Person
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.
- Faith Borges
Person
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.
- Faith Borges
Person
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.
- Faith Borges
Person
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.
- Faith Borges
Person
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.
- Richard Roth
Person
Thank you for joining us, and I appreciate your comments. Any other witnesses in opposition? Name, affiliation, position, please.
- John Wenger
Person
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.
- Richard Roth
Person
Thank you, sir. Next, please.
- Jedd Hampton
Person
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.
- Richard Roth
Person
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.
- Caroline Menjivar
Legislator
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?
- Catherine Blakespear
Legislator
Yes. I'd like to ask Adam if he might address that question. Thank you for the question.
- Adam Zarrin
Person
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.
- Adam Zarrin
Person
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.
- Richard Roth
Person
Thank you, Senator. Any other questions, comments, concerns? Well, I have none. Seeing none, Senator, would you like to close?
- Catherine Blakespear
Legislator
Thank you, and I respectfully ask for your aye vote.
- Richard Roth
Person
When we are able to establish a quorum, we'll entertain a motion and we will take a vote. Appreciate the presentation.
- Catherine Blakespear
Legislator
Thank you.
- Richard Roth
Person
Senator Allen. Item number nine, Senate Bill 1339, supportive community residences. Proceed when ready, sir.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Richard Roth
Person
Gentlemen, please proceed. Identify yourselves first, for the record.
- Jason Robinson
Person
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.
- Jason Robinson
Person
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.
- Jason Robinson
Person
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.
- Jason Robinson
Person
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.
- Jason Robinson
Person
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.
- Richard Roth
Person
Thank you, sir. Next, please.
- Matthew Matern
Person
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.
- Matthew Matern
Person
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.
- Matthew Matern
Person
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.
- Richard Roth
Person
Thank you for joining us.
- Matthew Matern
Person
Thank you.
- Richard Roth
Person
Any other witnesses in support? Name, affiliation and position on the measure only, please.
- Sherry Daley
Person
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.
- Richard Roth
Person
Thank you for joining us. Next, please.
- John W. Drebinger III
Person
John Drebinger with the Steinberg Institute in support. Thank you.
- Richard Roth
Person
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.
- Caroline Menjivar
Legislator
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.
- Benjamin Allen
Legislator
Yeah. Why? Because there have been terrible incidences of sexual abuse, fraud.
- Caroline Menjivar
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Caroline Menjivar
Legislator
And what is the baseline standard?
- Benjamin Allen
Legislator
We've got safety standards in there.
- Caroline Menjivar
Legislator
What do we mean, safety standards? Because this is a private home.
- Jason Robinson
Person
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.
- Caroline Menjivar
Legislator
They don't do that now.
- Jason Robinson
Person
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.
- Caroline Menjivar
Legislator
But it's a voluntary certification.
- Jason Robinson
Person
Voluntary.
- Caroline Menjivar
Legislator
Okay.
- Benjamin Allen
Legislator
Right.
- Benjamin Allen
Legislator
And it's all, you know, DHCS would set the minimum standards based on national best practices.
- Caroline Menjivar
Legislator
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.
- Jason Robinson
Person
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.
- Caroline Menjivar
Legislator
Senator, has the Department approved this certification model? Have we gotten, have you gotten any TA from them saying this is an acceptable.
- Benjamin Allen
Legislator
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.
- Caroline Menjivar
Legislator
And set their own or follow that one.
- Jason Robinson
Person
It would be to follow that one, to use that one as the baseline.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Caroline Menjivar
Legislator
Because I get the story. It's a terrible story, what happened with Jason. But I see that as.
- Benjamin Allen
Legislator
Brandon. Brandon.
- Caroline Menjivar
Legislator
Brandon, I'm so sorry. I apologize.
- Benjamin Allen
Legislator
This is Jason.
- Caroline Menjivar
Legislator
Okay. I was like, where did I get Jason from?
- Benjamin Allen
Legislator
He's alive and well.
- Caroline Menjivar
Legislator
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.
- Caroline Menjivar
Legislator
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.
- Benjamin Allen
Legislator
Right.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Benjamin Allen
Legislator
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.
- Jason Robinson
Person
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.
- Benjamin Allen
Legislator
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.
- Richard Roth
Person
Any other questions, Senator Menjivar?
- Richard Roth
Person
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.
- Sherry Daley
Person
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?
- Sherry Daley
Person
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.
- Sherry Daley
Person
So that's why we're so interested in this Bill. Thank you for your courtesy.
- Richard Roth
Person
Thank you very much.
- Caroline Menjivar
Legislator
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.
- Unidentified Speaker
Person
Licensed.
- Caroline Menjivar
Legislator
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?
- Caroline Menjivar
Legislator
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.
- Jason Robinson
Person
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.
- Richard Roth
Person
Any further questions? Okay, before I move on, Senator Allen, did you accept the amendments?
- Benjamin Allen
Legislator
Yes. Yes, we did.
- Richard Roth
Person
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.
- Benjamin Allen
Legislator
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.
- Richard Roth
Person
Thank you, Senator Allen. Great presentation.
- Benjamin Allen
Legislator
Thank you.
- Richard Roth
Person
Number 10, Senator Wahab, Senate Bill 1354, long-term healthcare facilities, payment source, and resident status. Proceed when ready.
- Aisha Wahab
Legislator
Oh, Senator Grove left, I guess, huh? Okay.
- Richard Roth
Person
She'll be back.
- Aisha Wahab
Legislator
Are we good?
- Richard Roth
Person
Please proceed when ready.
- Aisha Wahab
Legislator
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.
- Aisha Wahab
Legislator
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.
- Aisha Wahab
Legislator
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.
- Richard Roth
Person
Please proceed.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Crista Nelson
Person
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.
- Richard Roth
Person
Thank you. Next, please.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
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.
- Maura Gibney
Person
For these reasons, on behalf of CANHR and thousands of seniors across California, I respectfully request your aye vote.
- Richard Roth
Person
Thank you. Pretty close. Other witnesses in support? Name, affiliation, and position on the measure, please.
- Cindy Young
Person
Cindy Young, California Alliance for Retired Americans, in support.
- Richard Roth
Person
Thank you. Other witnesses in support of the measure?
- Peter Ansel
Person
Peter Hansel, advocacy volunteer here on behalf of AARP California, in support.
- Richard Roth
Person
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.
- Jennifer Snyder
Person
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.
- Jennifer Snyder
Person
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.
- Jennifer Snyder
Person
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.
- Jennifer Snyder
Person
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.
- Jennifer Snyder
Person
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.
- Jennifer Snyder
Person
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.
- Jennifer Snyder
Person
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.
- Richard Roth
Person
Thank you.
- Amber King
Person
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.
- Amber King
Person
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.
- Amber King
Person
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.
- Richard Roth
Person
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?
- Aisha Wahab
Legislator
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.
- Aisha Wahab
Legislator
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.
- Richard Roth
Person
At such time as we have a quorum, we'll entertain a motion and take a vote, Senator Wahab.
- Aisha Wahab
Legislator
Thank you.
- Aisha Wahab
Legislator
Thank you.
- Richard Roth
Person
Nice presentation. Thank you.
- Richard Roth
Person
Item number 12, Senate Bill 1432, Senator Caballero, health facilities, seismic standards. Proceed when ready.
- Unidentified Speaker
Person
Thank you.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
With me to testify is Shelly Schlenker with Dignity Hospitals and Katherine Scott with the California Hospital Association.
- Richard Roth
Person
Please proceed when ready.
- Kathryn Scott
Person
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.
- Kathryn Scott
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
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.
- Shelly Schlenker
Person
Dignity health strongly urges your support of SB 1432.
- Richard Roth
Person
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.
- Timothy Burr
Person
Good afternoon. Timothy Burr, on behalf of Plumas District Hospital in support. Thank you.
- Richard Roth
Person
Thank you.
- Jennifer Chase
Person
Good afternoon. Jen Chase, on behalf of the University of California, in support.
- Joshua Gauger
Person
Good afternoon. Josh Gauger, on behalf of the California Association of Public Hospitals and Health Systems and Support.
- Alejandro Solis
Person
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.
- Daniel Sanchez
Person
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
Person
Megan Loper. On behalf of the United Hospital Association, in support.
- Preston Young
Person
Preston Young from the California Chamber of Commerce here today in support.
- Jonathan Clay
Person
Jonathan Clay on behalf of Scripps Health in San Diego, in support.
- Erin Taylor
Person
Erin Taylor on behalf of Memorial Care in support.
- Mira Morton
Person
Mira Morton on behalf of the California Children's Hospital Association and support.
- Grace Koplin
Person
Grace Koplin on behalf of Providence and there 17 hospitals in northern and Southern California in support. Thank you.
- Nicette Short
Person
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.
- Richard Roth
Person
Thank you.
- Megan Allred
Person
Megan Allred on behalf of Los Robles Medical Center, Good Samaritan Hospital and Riverside Community Hospital, in support.
- Richard Roth
Person
Thank you.
- Rachael Blucher
Person
Good afternoon. Rachael Blucher with Nielsen Merksamer on behalf of the County of Contra Costa, in support. Thank you.
- Theo Pahos
Person
Theo Pahos, in support. On behalf of Tenet and in Central Valley family of hospitals. Thank you.
- Richard Roth
Person
Thank you, sir. Next please.
- Mike Villines
Person
Mike Villines, on behalf of Community Medical Centers at Fresno.
- Richard Roth
Person
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.
- Matt Lege
Person
Good afternoon, Senator.
- Richard Roth
Person
Please proceed when ready.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
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.
- Matt Lege
Person
Thank you.
- Sara Flocks
Person
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.
- Sara Flocks
Person
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.
- Sara Flocks
Person
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.
- Sara Flocks
Person
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.
- Sara Flocks
Person
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.
- Sara Flocks
Person
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.
- Richard Roth
Person
Any other opposition witnesses in the room? Name, affiliation and position on the measure?
- Shane Gusman
Person
Good afternoon. Shane Gusman, on behalf of the Teamsters and UNITE HERE in opposition.
- Megan Subers
Person
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
Person
Steve Baker for the Professional Engineers In California Government in opposition.
- Don Schinske
Person
Thank you. Don Schinske, on behalf of the Structural Engineers Association of California and the Earthquake Engineering Research Institute, in opposition.
- Mari Lopez
Person
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
Person
Eric Robles, on behalf of UNAC/UHCP currently opposed. Thank you.
- Janice O'Malley
Person
Good afternoon. Janice O'Malley with AFSCME California in respect to opposition. Thank you.
- Richard Roth
Person
Any other opposition witnesses? Colleagues, any questions, comments, concerns? Senator Smallwood-Cuevas.
- Lola Smallwood-Cuevas
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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?
- Kathryn Scott
Person
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.
- Kathryn Scott
Person
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.
- Kathryn Scott
Person
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.
- Kathryn Scott
Person
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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?
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Lola Smallwood-Cuevas
Legislator
It does, and that's why he is the General and the Chair of this Committee. Let's.
- Unidentified Speaker
Person
Thank you.
- Lola Smallwood-Cuevas
Legislator
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?
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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?
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
But we want to see the financials and we want people to. We want transparency in the process.
- Lola Smallwood-Cuevas
Legislator
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.
- Anna Caballero
Legislator
I agree.
- Lola Smallwood-Cuevas
Legislator
And eight years, 3038 is so far away. And then working back from that.
- Anna Caballero
Legislator
This Bill is three years.
- Lola Smallwood-Cuevas
Legislator
Three years.
- Lola Smallwood-Cuevas
Legislator
With the opportunity.
- Anna Caballero
Legislator
Yes.
- Anna Caballero
Legislator
With the opportunity, correct.
- Lola Smallwood-Cuevas
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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.
- Anna Caballero
Legislator
Thank you.
- Lola Smallwood-Cuevas
Legislator
Thank you.
- Richard Roth
Person
Thank you, Senator. Senator Limon.
- Monique Limón
Legislator
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.
- Monique Limón
Legislator
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.
- Monique Limón
Legislator
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?
- Monique Limón
Legislator
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.
- Anna Caballero
Legislator
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.
- Monique Limón
Legislator
Sorry. That's not the answer I was expecting.
- Anna Caballero
Legislator
Oh, I really don't want to do this. No. This is really complicated.
- Monique Limón
Legislator
It is.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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?
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Anna Caballero
Legislator
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.
- Monique Limón
Legislator
And I appreciate that, and I appreciate your honesty in how difficult this is.
- Anna Caballero
Legislator
Yeah, but you outed me to the whole world now.
- Monique Limón
Legislator
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.
- Monique Limón
Legislator
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?
- Monique Limón
Legislator
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.
- Monique Limón
Legislator
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?
- Monique Limón
Legislator
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.
- Monique Limón
Legislator
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.
- Monique Limón
Legislator
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.
- Unidentified Speaker
Person
From experience, but I defer to the Chair.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Unidentified Speaker
Person
We welcome it. Yeah. I think.
- Richard Roth
Person
I interrupted my colleague.
- Unidentified Speaker
Person
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.
- Unidentified Speaker
Person
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.
- Unidentified Speaker
Person
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.
- Unidentified Speaker
Person
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.
- Unidentified Speaker
Person
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.
- Unidentified Speaker
Person
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.
- Unidentified Speaker
Person
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.
- Monique Limón
Legislator
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.
- Richard Roth
Person
Thank you, Senator. Senator Grove, you've got your hand up. Thank you.
- Shannon Grove
Legislator
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.
- Shannon Grove
Legislator
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.
- Shannon Grove
Legislator
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.
- Shannon Grove
Legislator
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.
- Shannon Grove
Legislator
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.
- Shannon Grove
Legislator
Much less the ones that are coming that are still seeking ways to not be financially distressed.
- Shannon Grove
Legislator
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.
- Shannon Grove
Legislator
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.
- Anna Caballero
Legislator
Thank you.
- Richard Roth
Person
Thank you, Senator Grove. Senator Smallwood-Cuevas.
- Lola Smallwood-Cuevas
Legislator
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?
- Anna Caballero
Legislator
No, they can do it now.
- Lola Smallwood-Cuevas
Legislator
Where do they fit? Are they required to move forward and not take advantage of the extension that you're offering?
- Anna Caballero
Legislator
Yes.
- Lola Smallwood-Cuevas
Legislator
How?
- Anna Caballero
Legislator
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.
- Lola Smallwood-Cuevas
Legislator
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--?
- Anna Caballero
Legislator
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.
- Richard Roth
Person
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.
- Richard Roth
Person
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.
- Richard Roth
Person
And I'm sure by the time that the stakeholders get through with this and if it gets out of the Senate and the other House gets through with it, there will be many more conditions and safeguards built into this architecture, as there should be.
- Lola Smallwood-Cuevas
Legislator
Well, I just wanted to make sure that we know who those hospitals are and that we encourage that race to 2030, that it happens. What I wouldn't want them to do is to stop because they might save or can use that money to do something else because then they can take advantage of this.
- Lola Smallwood-Cuevas
Legislator
I think that should be, there should be a track that has identified those hospitals that are ready to roll to 2030 so they can't backslide into this process. So that's one question I had. The other was on HCAI. Is the union a part of HCAI? Who is a part, who is at the HCAI table? Are you there as a stake-
- Unidentified Speaker
Person
So it's a state agency that oversees building for hospitals. It's been the State Hospital Building Department for years, and they have experts, engineers that are incredibly good at this work, and we do trust their expertise. I would say, on the public process, that's something that we would like to continue to work with the author and stakeholders on to really build that out to make sure really looking at services, make sure those are preserved.
- Unidentified Speaker
Person
You know, from the union's perspective, we could see, you know, a situation where a hospital wants to comply and not include a maternity ward, for example. And, you know, that's something that we have--when we've done one-offs, we've really had those conversations at a local level to make sure the plans came into compliance with the law but also preserved services for the area.
- Lola Smallwood-Cuevas
Legislator
I did notice a lot of engineers, but I also saw there are some community kind of members, and I'm curious how this ongoing discussion kind of formally continues, right? So it's obviously, there are discussions around this bill, but is there a table that will continue as we, you know, move forward in this conversation?
- Unidentified Speaker
Person
Yeah, there's a stakeholder process in the bill, as well as--thank you. Sorry. I've done this for years, and yet still I can't push the button. There's a stakeholder process that is included in the bill along with, like Matt said, HCAI. Particular, OSHPD has a Building Safety Board where public, the public and the experts are at the table. So I think there's a couple of formats, and we can continue to work on that public disclosure process along with, you know, how we manage the benchmark process through that as well. So I think there's several opportunities in the process.
- Unidentified Speaker
Person
HCAI is also in charge of access, and they also hold the Office of Health Care Affordability. So they care deeply as a department in relationship to access, so when we have that conversation, I think it's well-situated.
- Lola Smallwood-Cuevas
Legislator
No, I appreciate that. I just think this ongoing discussion, particularly with workers being centered in it, I think is important long-term, and I just wanted to make sure there was a space for that in this policy, so thank you.
- Unidentified Speaker
Person
And lastly, there was a bill last year that also has us, two years ago now, 1882. We actually have to notify our county supervisors, local medical authorities, as well as our labor partners. So there's been a lot of pieces, as we've done this, that really, this bill kind of culminates into all that work.
- Lola Smallwood-Cuevas
Legislator
Thank you for the clarification.
- Richard Roth
Person
Well, before we do anything else, let's establish a quorum so we can actually do something this afternoon. Please call the roll.
- Committee Secretary
Person
[Roll Call].
- Richard Roth
Person
We have a quorum. Colleagues, any other questions? Senator Gonzalez?
- Lena Gonzalez
Legislator
Yes. Thank you so much, and thank you to the author for this bill. I know this is not easy, so I don't want to belabor it. It's been difficult, and here we are yet again talking about seismic issues at our hospitals here in the state. I do want to thank the author. We spoke--I'm sorry, the Chair; it's been a long day--for the amendments and the Committee consultants. I know it's never easy finding the right balance of what this could look like.
- Lena Gonzalez
Legislator
And I appreciate the dialogue here on what more could be done, because there's going to be a lot more that's going to be needed to be done if this should get out of Committee. I will kind of align myself with some comments that have been made by my colleagues in terms of a more narrowed approach and what that could look like because it is hard to visualize how an additional three-year HCAI extension would help the situation.
- Lena Gonzalez
Legislator
Even if--you know, we're in a dire situation now. How can this three years--three years does not seem that long, right? But I know that there could be an additional five years after that. But it's just hard to envision that now with such dire situations in some of our hospitals. I am going to inherit a hospital later this year that is a rural Los Angeles hospital, 12 beds, that is in a very dire situation.
- Lena Gonzalez
Legislator
But with that said, nothing in here also includes discussions about if there--and I'm not saying that all hospitals are doing this--but if there is any financial mismanagement happening. I mean, I think that that's something that I worry about now because on page 12 of the bill, says, 'hospital owner has to demonstrate lack of financial capacity to substantially comply with the seismic safety regulations.' Okay, but if there's additional financial mismanagement happening, I just, I feel like it's just difficult to understand where that might lay.
- Lena Gonzalez
Legislator
And then secondly, the public process with HCAI, I'm wondering, a question to the author in terms of, you know, we've discussed what that looks like, who is on the boards, who's making these decisions in terms of the milestones and next steps, but I often feel in hearing back from the district that there are some locals at the city and county levels that don't, that don't hear about this public process. They don't know what the public notification is going to look like.
- Lena Gonzalez
Legislator
So is there any strengthening of that that we can do? And I think it's been alluded to that we can, but I'd like to just kick that to you as to what that could look like. There are City Council Members that seemingly tell me that there is no information going back and forth from the hospital to them about what is going on at these hospitals, which is terrifying.
- Anna Caballero
Legislator
I think that's true. My experience--and this is in the distressed hospital realm--is most of the hospitals are private, nonprofit, and so the reality of the situation is they don't need to, or they say they don't need to share their financial information with me when I ask about it. But the, I think that what--so is there an opportunity to beef up the public process? Yes. I mean, there's no question about that.
- Anna Caballero
Legislator
And in terms of the financial details, there are in their--HCAI asks, they collect a whole bunch of information and some of it is public and they post it on their website. And so you can glean information from that information that they receive.
- Anna Caballero
Legislator
There is the opportunity to ask for specific information to go to HCAI in relationship to financial ability to make, to do the seismic work. In particular, is there--and this is more prevalent or more possible when there's multiple hospitals that are owned by one health care entity. If you're a single hospital, it's different because you can't shift money to another hospital, for example. That's not what's done.
- Anna Caballero
Legislator
So there is more reporting that, more robust reporting that we could insert as part of the three-year and then the five-year extension, but we need to figure out exactly what kind of information HCAI would be interested in receiving, and we've left it to them to make the determination whether the case has been made that the extension is necessary and the fiscal is certainly some part of that analysis.
- Lena Gonzalez
Legislator
Thank you. And I think to that, to ensure that all of the financial context is put out there for the public to consume and be educated on before that 45-day public comment period is finalized because I think that's really important for local elected officials as well.
- Lena Gonzalez
Legislator
And then lastly, I know this doesn't touch on, I guess, I don't know if this matters or not, but mergers and acquisitions. As some financially dire hospitals are moving towards being acquired, what does that look like in this process? Because they may be in the midst of that in the next few years. I don't know what HCAI is considering in those processes and what that could entail.
- Anna Caballero
Legislator
So one of the things that--we've dealt with that in a different arena. The concern was hedge funds coming in and purchasing hospitals and then stripping them down and taking all their assets and selling off the property. The review is by the Attorney General. The Attorney General has a team that comes in and reviews any acquisition or sale, and I found them to be very good.
- Anna Caballero
Legislator
They came in and did an analysis of Madera Hospital, and the information I got from them was better than the information that I got from the management at Madera, which had me concerned because it wasn't just the Medi-Cal patients that were causing the problem. It was the private pay or the contract employees.
- Anna Caballero
Legislator
They were taking their insurance policies and going elsewhere so that the negotiations with the health care entities that insured them, they got--the reimbursement was worse than Medicare. Medi-Cal. And so that was part of the fiscal deterioration of the hospital.
- Lena Gonzalez
Legislator
Thank you. And I--perhaps that should be included at some point, you know, this additional, just, disclaimer on mergers and acquisitions and processes related to that. Difficult, of course. Very complex. I commend you for taking this on. Although I've asked all these questions, I know that this is still ongoing. I am inclined to support this bill. I will hear from my colleagues today on the dais, but I know you'll continue to work, and I think everybody here needs to continue to work on this.
- Lena Gonzalez
Legislator
Thank you.
- Anna Caballero
Legislator
Absolutely.
- Richard Roth
Person
Senator Menjavar. Thank you, Senator Gonzalez.
- Caroline Menjivar
Legislator
Thank you so much, and I'm so saddened that I missed the discussion. I was filled in from my staff, so I won't ask the questions, but they're very similar to the questions that you heard from Senator Limon, Senator Smallwood-Cuevas, and Senator Gonzalez. It's the transparency portion of it. It's the benchmarks. And then for me, is why up to five years? I'm not sure where we got those, those years.
- Caroline Menjivar
Legislator
And then I know from now until--it's an additional six plus three, nine, like almost 17 years from now that they'll have. That's a pretty long time to be able to meet those marks, and this Committee, a couple, maybe last week or a week ago, we heard one of our first ones of this--did I do the math correct? 13. I did not do the math correct. They said I was gifted in elementary school math, so I don't know.
- Caroline Menjivar
Legislator
So we heard one of the first seismic bills a couple weeks ago, and it was Providence, and one of them was Cedars Providence, and I'm like, Cedars, you have the ability to pay for this seismic updates. So I was a little critical of that because I do want to make sure what Senator Smallwood-Cuevas mentioned doesn't happen, that hospitals who can aren't then looking at this as, 'well this is a pass.'
- Caroline Menjivar
Legislator
But I do agree with you, Senator, that we need to do something, because even at HCAI, the reports, they show that since, like, around 2022, their margins have been falling. And in fact, when we put together the Distressed Hospital Loan Program, the people that we thought, the hospitals that we thought were going to apply for actually had to close and were no longer eligible to apply because they no longer had a hospital to apply for a loan. So we know that it's a problem.
- Caroline Menjivar
Legislator
Last year, we did see the margins grow just a tiny bit, from two percent to five percent in the first three quarters, but we don't know if that trend is going to continue. So I do recognize, and it's even more personal for people who represent rural areas that are even further being disenfranchised because their one and only hospitals are closing, and I have various hospitals who are on the cusp of closing. And so I do recognize that part.
- Caroline Menjivar
Legislator
I just want to make sure that we don't create loopholes for hospitals who are eligible and can pay for it to meet those because this was as a result of an earthquake in my district, and I saw what it caused in my district. And I want to make sure we're responding to that for the potential 'next one' should wherever that happen, but I want to support your bill because it's needed.
- Caroline Menjivar
Legislator
But I want to make sure as it continues that there are guardrails that perhaps we can look at that extension of five years. I think, I really think that's too much. I'm not sure, like Senator Gonzalez said, what more can be done from the three-year extension to then another extension. I did read the guardrails in terms of the benchmarks that need to be made. I think there was two milestones that need to be met in order to get the extension.
- Caroline Menjivar
Legislator
I have concerns with the public comment portion of it. I also know that from my district that there has never ever been a public comment for anything related to hospitals in my area. So I'm not sure how that would happen. A couple weeks ago, we also heard another bill by Senator Cortese, and the hospitals were, I think, opposed to extended public comment period or providing extra data as to the losses if they closed a psych unit or a maternal ward. And now we're on the opposite side.
- Caroline Menjivar
Legislator
And now they do want to provide all this extra data and all this information. So I just want to make sure that we're stay consistent with, can you provide this data or can you not provide this data? So that's where I'm at right now. I will be supporting your bill with the 100 footnotes attached to it that I just, that I just mentioned.
- Anna Caballero
Legislator
Appreciate that, and I do have notes.
- Richard Roth
Person
Thank you, Senator Menjivar. Any other questions, comments, or concerns? You know, let me just say it again. The problem is that we've taken these issues on one at a time and we don't know who's doing what, what they're doing, whether it's effective, what the time is, how much is it going to cost, do they have the money to do it, are they spending the money on other things?
- Richard Roth
Person
And I can almost tell you that there are hospitals in this state that over the past 30 years have spent money that they have obtained through bonds and otherwise, and instead of doing seismic retrofit, they've done--they haven't spent it on necessarily executive compensation, they've spent--because some of them are nonprofit--they've spent it on upgrading systems and equipment. And that's okay.
- Richard Roth
Person
But at some point you have to decide that maybe we shouldn't be spending on systems and equipment and we should be doing the seismic retrofit so you have some place to have the equipment operate. So it's critical to me that we set up some sort of structure so that we have an idea of who's doing what, what they're doing, when they're doing it, and when we can expect it to be completed. It's a work in progress. It's highly imperfect, I know.
- Richard Roth
Person
I'm confident that the shareholders at the table in front of me and those that are outside the room will make it more perfect, and I'm counting on that.
- Richard Roth
Person
I am going to ask the Committee Members if they can possibly do so, to vote for this measure, to move it along so we can continue to have--which I rarely do--so we can continue to have the conversation in the Assembly and try to make this a more perfect, more perfect product so we can get seismic retrofit on track in the State of California with hospitals moving down to the finish line on time and on target, and if they can't get there, we know who they are, what they need, and then make decisions as to what we're going to do about that.
- Richard Roth
Person
So I do want to thank you all again, both the representatives from labor here at the table and in the room, for all that you have done to help us try to flesh out what the issues are, and the Hospital Association and your members for coming to the table and talking to the author--because it is her bill, not mine--to the author and her team on this issue. With that, Senator Caballero, would you like to close?
- Anna Caballero
Legislator
Senator Roth, I'll adopt your statement as my closing. I couldn't say it any better. I really appreciate all the input that has been provided. Everybody has met with us numerous times and had conversations that have been really helpful. I took copious notes and I'm hoping that we can do exactly what's been suggested in terms of tightening up some of the accountability and also tightening up the--I, too, do not want to find a situation where work does not get done because there's extra time.
- Anna Caballero
Legislator
This is really important, I think, to the entire state, and so we want those retrofits done. Retrofits or rebuilding whatever needs to happen. And so with that, I would respectfully ask your aye vote. You have my commitment. I'm going to continue. This is the first hearing, this is the first time we've had an opportunity to take a look at this, and the reason you got some of the information--and I have to thank the consultant. He worked long and hard on this.
- Anna Caballero
Legislator
And the reason you got the revised analysis late is because this really has been a work in progress. We wanted to add everything in it that we had been working on, so respectfully ask for your aye vote.
- Richard Roth
Person
Thank you, Senator. There's a motion by Senator Grove. The motion is 'do pass as amended and re-refer the Committee on Appropriations.' Please call the roll.
- Committee Secretary
Person
[Roll Call].
- Anna Caballero
Legislator
Thank you very much.
- Richard Roth
Person
Vote is eight/zero. We'll hold the roll open for absent Members. Thank you, colleagues. Thank you. Senator Durazo, Senate Bill 1447: hospitals: seismic compliance: Children's Hospital Los Angeles. Please proceed when ready.
- María Elena Durazo
Legislator
Okay, I done.
- Unidentified Speaker
Person
Move the bill.
- María Elena Durazo
Legislator
I know you were. I was taking notes. Great. Well, I'm glad we're starting out with that attitude. Thank you. And thank you, Mr. Chair and Members, today I'm presenting SB 1447 to provide an extension for Children's Hospital Los Angeles to comply with additional seismic safety retrofit upgrades.
- María Elena Durazo
Legislator
Thank you, Mr. Chair. Thank the Committee. I'm accepting the Committee amendments that were proposed.
- María Elena Durazo
Legislator
That is, instead of a 10 year extension for Children's Hospital, it will be three years with the ability to request five additional years based on demonstrating need to H Chi. Children's Hospital Los Angeles is the premier pediatric hospital providing care for the most children with the most difficult pediatric cases in the region and the only children's hospital in the region.
- María Elena Durazo
Legislator
Children's Hospital and the care it provides for children has become more important to the region as other hospitals and healthcare facilities have begun closing or downsizing pediatric care units.
- María Elena Durazo
Legislator
The hospital often receives referrals from other hospitals in the region and takes those cases without regard to the ability of the family to pay. Children's Hospital does not turn anyone away. 70% of the children are insured by medical. That means they come from very low income families, yet they get the highest quality medical attention available.
- María Elena Durazo
Legislator
Children's Hospital takes its responsibility to have a safe hospital for its staff, nurses, doctors and patients very seriously. Children's Hospital has met the primary earthquake retrofit structural standards required by law to ensure that its structures can survive a major earthquake and be functional.
- María Elena Durazo
Legislator
The next set of retrofit standards applicable to Children's Hospital require facility improvements to secure the hospital and its campus have adequate sewer, water, power generation and other infrastructure to independently support operation of the hospital and its campus for a minimum of 72 hours after a major earthquake.
- María Elena Durazo
Legislator
These standards are mandated by 2030 and meeting these standards is estimated to cost approximately over $200 million.
- María Elena Durazo
Legislator
While Children's Hospital has been working to both plan for and achieve compliance with these updates, it also has had the primary role to provide acute healthcare for the regions children, regardless of the family's ability to pay or their insurance coverage.
- María Elena Durazo
Legislator
As a result, complying with the infrastructure standards by 2030 would place a severe hardship on the finances and operation of the hotel.
- María Elena Durazo
Legislator
Children's Hospital has a realistic yet aggressive plan for feasibility studies, permitting and construction to achieve those standards, as well as a plan financial plan to reach that goal. Providing the extension through SB 1447 will allow for both the financing plan and the construction to be implemented, while at the same time continue providing care for pediatric patients throughout the region.
- María Elena Durazo
Legislator
And I just want to say I heard not only in the previous remarks that were made, but also in my own meetings with stakeholders. I met with the nurses, with the healthcare workers, the hospital association, and certainly everyone has the concern of patients and staff to the highest levels of safety want to hold our hospital accountable.
- María Elena Durazo
Legislator
They are right in asking the question that they don't want a time frame which will then change again. I believe children's Hospital will come through. Our kids depend upon it.
- María Elena Durazo
Legislator
So with that, I want to ask our witnesses who are here today, Mr. Paul Viviano, CEO of Children's Hospital, and Joe Lang, who could answer any technical questions. Thank you, Members.
- Richard Roth
Person
Thank you, Senator, please proceed.
- Joe Lang
Person
And Mr. Chairman Members. Joe Lang, representing Children's Hospital of LA. Thank you Mr. chair. And to your staff for the really, really good, comprehensive work that was done to put this bill into very good shape. Thank you to Senator Durazo for willing, be willing to champion the healthcare needs of the poorest of the poor, the sick of the sick children in the Los Angeles region.
- Joe Lang
Person
In the interest of time, I'm going to just turn it over to Mr. Paul Viviano, CEO of CHLA, who will give a brief statement and we'll be ready to answer questions.
- Paul Viviano
Person
Thank you. Good afternoon, Chairman Roth and Members of the Committee. Children's Hospital Los Angeles is essential to providing care to the millions of children in Southern California and in Los Angeles County.
- Paul Viviano
Person
In fact, Children's Hospital Los Angeles is the largest provider of pediatric services in the State of California as it relates to complex care, which is defined as those most severely ill patients that suffer from the following diagnoses, liver transplants, neonatal heart surgery, bone marrow transplants, complex epilepsy, craniofacial disorders, brain tumors, Spina Bifida, and congenital heart conditions, including heart transplant. Children's Hospital Los Angeles provides more than 50% of the care for those children with those very severe diagnoses.
- Paul Viviano
Person
50% in LA County, more than 25% of all the children in Southern California, and more than 20% of all the children in the State of California with these complex diagnoses come to our hospital. As Senator Durazo outlined, 76% of our patients are beneficiaries in the medical program.
- Paul Viviano
Person
We're proud of our legacy of providing care to every single family and patient, regardless of their financial status. Children's Hospital Los Angeles is also a primary teaching facility.
- Paul Viviano
Person
We conduct the nation's third largest training program for pediatricians and pediatric subspecialists. So today I'm here to respectfully request an extension to provide Children's Hospital Los Angeles with sufficient time to meet the 2030 seismic requirements.
- Paul Viviano
Person
So I'll put this in context for how this process has evolved over the last several years. 10 years ago, we invested $1.0 billion into a new tower with 320 beds.
- Paul Viviano
Person
We closed 80 beds in older towers, thinking that that would meet the capacity and the demand in Los Angeles County since that time. Over the last 10 years, 30 hospitals in Los Angeles County have closed their pediatric services.
- Paul Viviano
Person
We reopened those 80 beds that were on our license. They were in suspense we reopened them in older buildings that aren't seismically compliant. Today, those 80 beds are filled because those 30 hospitals, for whatever reason, close their pediatric services.
- Paul Viviano
Person
They'll put this in context even more, especially last night at Children's Hospital Los Angeles. 15 other hospitals called us seeking to transfer patients from their emergency department, from their NICU, or someplace else in their community, wanting to transfer those patients to Children's Hospital Los Angeles.
- Paul Viviano
Person
We didn't have room. Every bed was literally full. 15 last night. That's a very common story. So we can't afford to close these beds in these older buildings. We need to take the extra time to make them seismically compliant.
- Paul Viviano
Person
So those old buildings, those four buildings that I referenced, are, in fact, rated SPC two. They're not in danger of collapsing, as has been pointed out by a variety of sources, including the state, HCI. So they are not a life safety risk. They are not going to collapse.
- Paul Viviano
Person
The work that we need to do is nonstructural in nature. They are infrastructure. I won't repeat that's been described here several times today. That infrastructure work we literally can't afford to do today for two reasons.
- Paul Viviano
Person
The pandemic has impacted our financial circumstances adversely. You may recall the first phase of the pandemic, children's hospitals were impacted adversely. Very few children's hospitals had the volume that they experienced.
- Paul Viviano
Person
Our revenue the first 12 months of COVID declined $300 million from the prior year. We didn't lay off one employee. On top of that, over the last five years, our medical reimbursement for the CCS program, about 60% of our revenue, medical CCS patients, has declined more than 25% per case.
- Paul Viviano
Person
Our reimbursement has declined from the state from $44,000 per discharge to $31,000 per discharge. When you multiply that by the 700,000 patients that we cared for last year, that's an $80 million per year decrease in reimbursement. That Children's Hospital Los Angeles has been impacted over the last five years.
- Paul Viviano
Person
So as much as we'd love to be in compliance, we know this is a very sensitive issue. You've had great, great testimony and discussion previously. Today, we want to be in compliance. We're committed to be in compliance.
- Paul Viviano
Person
We know we need to have safe conditions for our team members, for families, for caregivers, and for other personnel. We literally can't afford it today. This extra time that's been described in this bill allows us to take a portion of our annual capital budget, put that money aside, make the plans and make our organization compliant so that all four of those older buildings will match the seismic safety of our brand new 10 year old tower. So we don't take this lightly. We respectfully request this extension.
- Paul Viviano
Person
We're grateful for your consideration and for your support. We thank you for the opportunity to address you today.
- Richard Roth
Person
Thank you, sir. Any other witnesses in support of this measure? Name, affiliation and position, please.
- Ann-Louise Kuhns
Person
Hi, I'm Ann Kuhns, President and CEO of the California Children's Hospital Association, here in support of the bill.
- Bob Giraud
Person
Thank you, ma'am. Yes, sir.
- Bob Giraud
Person
I'm Bob Giraud. On behalf of the International Union of Painters and Allied Trades District Council 36, we have 12,000 members in the Los Angeles area that will get the work when the seismic retrofit work is done.
- Bob Giraud
Person
Although given the fact that pediatric wards all over Los Angeles are evaporating, we have members now that have children in LA children's hospitals.
- Bob Giraud
Person
We have members who have been in LA Children's hospital as patients, and we probably have members who will have children that will be in Children's Hospital of LA in the future. So, given the Hobson's choice of an extension or the work, we will wait to do the work in order to service the children. Thank you.
- Richard Roth
Person
Thank you, sir. Any other witnesses in support? Witnesses in opposition first lead witnesses, if any. Any other opposition witnesses?
- Richard Roth
Person
Yes, ma'am.
- Cathy Kennedy
Person
Okay. Did I turn that--oh, is it on? Oh. Thank you for the opportunity. My name is Catherine Kennedy. I'm President of the California Nurse Association. CNA is in opposition to SB 1437. The California Nurses Association, representing 100,000 registered nurses throughout California, respectfully opposes this bill. The tragedy of a major earthquake need not compound upon itself because our hospital infrastructure has failed us.
- Cathy Kennedy
Person
Children's Hospital LA plays a critical role in ensuring and providing pediatric care, and the Los Angeles community should expect that the hospital will be able to care for them in the event of a seismic disaster. California must continue to hold CHLA accountable to our state's high seismic safety standards with no extension of the 2030 compliance deadline. CHLA has had over 30 years to implement seismic safety requirements that would ensure the hospital can stay open and functionally in the event of a major earthquake.
- Cathy Kennedy
Person
Circumventing the seismic safety requirements now, with yet another delay in deadlines endangers patients, nurses, and other health care workers. Nurses and other health care workers who care for patients know firsthand that in the event of an earthquake, hospitals must stand ready to not only treat patients injured during the course of the earthquake, but also to ensure that no serious interruption to patient care occurs. In 1994, the Northridge Earthquake near Los Angeles killed 57 people, injured thousands, severely damaged 11 hospitals, and forced eight to evacuate.
- Cathy Kennedy
Person
Hospital workers had to evacuate patients, newborn babies down dark stairs to parking lots. But the current 2030 seismic safety deadline itself was a compromise for those who sought an immediate response after living through the Northridge Earthquake, and I remember it quite well. Delaying the seismic safety compliance deadline for Children's Hospital would place children, particularly Medi-Cal beneficiaries, at risk of losing their hospital permanently in the event of a major earthquake, even if it doesn't collapse.
- Cathy Kennedy
Person
These communities deserve to have the State of California enforce building standards that will ensure their hospital remains both standing and operational after an earthquake. I've been a nurse for 44 years. I work in a neonatal intensive care unit, and I love what I do.
- Cathy Kennedy
Person
But I also want to make sure that not only myself, my colleagues, the patients that we care for, and the community around it know that when an earthquake happens, that the hospital will be there, it will be functioning so that we can care for those patients coming in. So CNA continues and still opposes SB 1437. Thank you.
- Richard Roth
Person
Thank you for joining us. Sir.
- Matt Lege
Person
Thank you for having--Matt Lege, on behalf of SEIU California. Thank you for having me up again. Just wanted to first appreciate the author and sponsor for the important dialogue on this bill. We are respectfully opposed unless amended, unless there is an extension no longer than two years on this bill for the Children's Hospital LA. I just want to underscore one point from earlier comments.
- Matt Lege
Person
It was one of the comments that the speaker was making earlier around the 15 children transferring in. Really underscores the importance of this hospital and why it really needs to come into compliance because unfortunately not a lot of hospitals have the ability to care for children during an emergency, and so the capacity to move people from one hospital to another is very limited, and so want to make sure the hospital is coming into compliance as quickly as possible, and we think a two-year extension is warranted for those reasons. Thank you very much.
- Richard Roth
Person
Appreciate your comments. I think one of the things we may have to do is we may have to get handle on exactly how long it takes to design, develop, design construction plans and process them through the maze that is California's approval process. And I think we all might be surprised at the length--unfortunately--at the length of that time, and that might inform the conversation at some point. Any further opposition witnesses? Name, position, affiliation, and statement on the bill.
- Sara Flocks
Person
Mr. Chair and Members--sorry--Sara Flocks, California Labor Federation. We are in opposition. Thank you.
- Richard Roth
Person
Thank you.
- Megan Subers
Person
Thank you, Mr. Chair and Members. Meagan Subers, on behalf of the California Professional Firefighters. We are still opposed unless amended and request that there be no more than two year extension. Appreciate the conversation with the author and the co-sponsors, but I think we have to acknowledge that still seven years from now. So thank you for your time.
- Richard Roth
Person
Thank you. Yes, sir.
- Steve Baker
Person
Steve Baker, for the Professional Engineers in California Government. Opposed unless amended.
- Richard Roth
Person
Thank you. Any other opposition witnesses? Anyone else? Going, going, gone. Okay, back to the dais. Comments? Questions? Senator Glazer? Any other comments, questions, concerns? Okay. Bill has been moved by Senator Glazer. Please call the roll. The motion is 'do pass as amended, re-refer to the Committee on Appropriations.'
- Committee Secretary
Person
[Roll Call].
- Richard Roth
Person
Vote is nine/zero. We'll hold the roll open for absent Members. Thank you all.
- María Elena Durazo
Legislator
Thank you, Mr. Chair. Thank you, Members.
- Richard Roth
Person
Senator Menjivar, you are up. Item Number 14: Senate Bill 954: sexual health contraceptives. Proceed when ready.
- Caroline Menjivar
Legislator
Mr. Chair, could I do my second one first? 1492?
- Richard Roth
Person
You absolutely can. Item number 16, Senate Bill 1492. Senator Menjivar. medical reimbursement rates, private duty nursing.
- Caroline Menjivar
Legislator
Perfect. The reason why I wanted to switch them, because it kind of responds to what you just heard in the remarks from the CEO of Children's Health Children's Hospital. The CEO spoke about beds not having available beds.
- Caroline Menjivar
Legislator
Well, one of the reasons they don't have available beds because currently in the State of California, we have 1000 children who qualify for private duty nurses on waiting lists, either living in hospitals like you've heard, taking on a bed, a waiting a private duty nurse, or waiting at home without the necessary clinical services they need to thrive.
- Caroline Menjivar
Legislator
And how much does it cost for a child to be living in a hospital because there's no private dirty nurse to help them in a home? $7,000.
- Caroline Menjivar
Legislator
Upwards of $7,000 per day. And how much does it cost for a child to live at home with a private duty nurse? Around $662. So what is SB 1492 looking to do?
- Caroline Menjivar
Legislator
They're looking to ensure that they're considered as an eligible category for the medical reimbursement rate adjustment through the MCO, also known as the managed care organization tax. The MCO tax here was recently renegotiated to provide rate increases to a variety of providers.
- Caroline Menjivar
Legislator
Further to add to the case as to why PDN should be included in this rate is that in 2022, LA Times article took a deep look at this issue and found that California families continue to struggle to find adequate nursing care at home for medically fragile children.
- Caroline Menjivar
Legislator
Furthermore, a 2023 Commission report by Doctor David Maxwell found to further cement the numbers I gave you on savings is that here in California we could save $175 million a year if we ensure that these kids move out of hospitals, into home.
- Caroline Menjivar
Legislator
We're dealing with the budget crisis. We're looking for creative ways to save money. This is a direct way that we can save money investing for them to go home, get out of hospitals and be in the care of their homes.
- Caroline Menjivar
Legislator
To that Mr. chair and I'd like to now turn to witnesses. I have here today. First is a parent of a three year old, Mila, who has. Mila
- Annalisia Brooklaf
Person
Mila.
- Caroline Menjivar
Legislator
Mila, who has complex medical issues. Annalisia Brooklaf. I should not introduce people. I'm just going to let them introduce themselves.
- Richard Roth
Person
Thank you for. Thank you for joining us. Please proceed. Please identify yourselves for the record. First, though.
- Annalisia Brooklaf
Person
Hi, so, my name is Annalisia Brooklaf. I'm here today talking on behalf of my daughter, Mila Brooklaf. Okay. So the day Mila's Doctor told me her prognosis, I made a promise to her whatever her life was going to look like, I would be there for it. I would work hard every day to make sure she lived a full, happy life regardless of what she could and couldn't do.
- Annalisia Brooklaf
Person
What I didn't expect was just how hard it was going to be to live up to my promise and get her the assistance she needed. Mila has been on the wait list for a home health nurse for almost two years now, and we have yet to have a single nurse, let alone a consultation. Mila has over 10 active diagnoses, including spastic quad, cerebral palsy and intractable epilepsy.
- Annalisia Brooklaf
Person
She has a tracheostomy as well as being dependent on a ventilator at night and a feeding tube for all of her nutritional needs. I reposition her every 2 hours, suction her trach, prepare and administer medications, set up g tube feedings, and handle scheduling appointments with all of her specialists.
- Annalisia Brooklaf
Person
Because of the lack of home health care nursing, when I have to work, Mila goes to her grandparents house with plastic baggies full of pre drawn seizure medications.
- Annalisia Brooklaf
Person
She goes to their house with a feeding pump and a bag of formula. I love and trust my parents, but truthfully, I don't have an alternative and they are not professionals. I cannot help but feel that the system has abandoned my family and abandoned Mila.
- Annalisia Brooklaf
Person
There is absolutely no doubt that the lack of professional care has led to the continued regression of her condition. We did everything we were supposed to do as parents.
- Annalisia Brooklaf
Person
Lack of home nursing meant Mila had to regularly go into the hospital to get assessed and ended up admitted each time. My grievances with the system are not only for the sake of Mila, nor the unnecessary suffering it causes our family, but that the system is poorly designed and underfunded to the extent of being wasteful.
- Annalisia Brooklaf
Person
As home nursing programs are continually underfunded and understaffed, families like ours are forced to take our children to the emergency room to receive basic medical care.
- Annalisia Brooklaf
Person
When we couldn't help Mila, we had no choice but to take her to emergency services over and over again. The hospital became our safe place. I believe that the passing of SB 1492 has great potential to help home become our safe place again. Thank you.
- Richard Roth
Person
Thank you for joining us. Sir.
- Matt Friesen
Person
Chairman Roth and Members of the Committee. My name is Matt Friesen. I am a home health nurse with Maxim Healthcare Services. I live and provide care to patients here in Sacramento. Thank you for the opportunity to testify in support of Senate Bill 1492.
- Matt Friesen
Person
As a licensed vocational nurse, LVN for short, I provide private duty nursing care for patients within the comfort and support and security of their own homes. My patients are some of the most medically complex individuals in California.
- Matt Friesen
Person
Through medical funded PDN services, my patients are able to remain in their home and receive the necessary, sometimes ICU level care that they often need. In a single shift, I will provide life sustaining care, which includes simple nursing interventions such as helping a patient eat or use the restroom, or more complex and serious treatments such as gastroenterology, feedings, respiratory therapy, using cough cysts and ventilators and bowel and bladder training or therapy, and many others.
- Matt Friesen
Person
Recently, I was providing overnight care to a patient who could not breathe on their own, working with a ventilator. Working this night shift, I was encouraged to make suggestions and comments to the family and the patient's situation that led to a significant adjustment in the care being provided for the patient by the family.
- Matt Friesen
Person
The patient was then able to not only receive the benefits of 8 hours of uninterrupted sleep due to medical intervention, but also had far fewer medical complications.
- Matt Friesen
Person
The parents of this patient were also able to recover their sleep and their care for their patient increased. SB 1492 is critical because through medical funded PDN services, my patients are able to get the care they need in their own homes. The alternative to PDN is often a hospital room where no child or family wants to be.
- Matt Friesen
Person
Moving medically fragile kids out of the hospital and into their homes will also save the state money as the care I provide in the home, while specialized and often requiring the use of advanced technology and devices, is far less expensive than a hospital setting.
- Matt Friesen
Person
I urge you to support this important legislation and pave the way for higher medical reimbursement rates which will ultimately support nurses and caregivers and our patients. Thank you on behalf of all the PDN caregivers in California.
- Richard Roth
Person
And thank you for joining us. Are there any other supporters in the hearing room, please step forward. Your name, affiliation and position on the measure, please.
- Peter Kellison
Person
Thank you. Peter Kellison, on behalf of the California Association for Health Services at Home, please to sponsor. Happy to support. Thank you, Senator Menjivar.
- Richard Roth
Person
Thank you, sir. Next. Yes, ma'am.
- Veronica Charles
Person
Good evening. Thank you. Veronica Charles, Director of government affairs for Maxim Healthcare Services. Co-sponsor. Thank you so much, Senator Menjivar. We're happy to support.
- Richard Roth
Person
Thank you. Yes, sir.
- Rand Martin
Person
Mr. Chair Members. Rand Martin, on behalf of Aviana Healthcare, one of the largest PDM providers here in the State of California, in very strong support. Thank you.
- Richard Roth
Person
Thank you. Yes, ma'am.
- Norlin Asprick
Person
Chairman Members Norlin Asprick, representing Prime Home Health and Team Select in strong support. Thank you.
- Richard Roth
Person
Thank you. Next, any other witnesses in support of the measure? How about witnesses in opposition? Any other opposition? Any opposition? Witnesses, lead or otherwise? I see no one coming forward. Colleagues, bring the matter back to the dais. Senator Rubio.
- Susan Rubio
Legislator
Thank you, Mr. chair. Well, first, I want to just acknowledge not only you, but other parents. I mean, it happens quite often. As a former teacher, I just remember even having people come into my classroom to take care of medically fragile students.
- Susan Rubio
Legislator
And so I acknowledge just, you know, what you need to go through to take care of your child. But to the author, thank you for thinking this far ahead as well, because, you know, it appears to me that this has multiple benefits.
- Susan Rubio
Legislator
You know, we just heard that the hospitals discussed lack of beds, which is really a big issue. And so you're trying to do not only make sure that these medically fragile patients have the care they need, helping nurses like yourselves and parents that are struggling, but also alleviating the, you know, what's happening in our hospitals, which is, you know, the capacity that's not there.
- Susan Rubio
Legislator
So I think this is a great way to do both, alleviate, you know, just the overcrowding in our hospitals and take care of the people that we need to take care of. So I wholeheartedly support it and want to be at it as a co-author. Thank you.
- Caroline Menjivar
Legislator
Thank you, Senator.
- Susan Rubio
Legislator
And I'll move the bill when appropriate.
- Caroline Menjivar
Legislator
Thank you, Senator.
- Richard Roth
Person
Colleagues, any other questions, comments, concerns? Seeing none. Senator, you may close.
- Caroline Menjivar
Legislator
Thank you so much, colleagues. I appreciate it. Yes, it has multiple benefits. At the end of the day, I think about it as being equitable. Think about a parent who doesn't have access to transportation, and their child is in the one hospital and perhaps a rural area.
- Caroline Menjivar
Legislator
How many buses would they have to take? Would they have to then stop working because they want to be with their child at the only hospital that exists far away from them?
- Caroline Menjivar
Legislator
So if we're looking to ensure that we close the gap for access to healthcare, this is one of the steps we can make forward. With that I respectfully ask for an aye vote.
- Richard Roth
Person
Thank you. It's been moved by Senator Rubio. The motion is to pass and refer to the Committee on Appropriations. Please call the roll.
- Committee Secretary
Person
[Roll Call]
- Richard Roth
Person
Vote is 9-0. We'll hold the row open for absent Members. Senator Menjivar, your next item is item number 14.
- Caroline Menjivar
Legislator
Thank you so much, you two. I appreciate it.
- Richard Roth
Person
Bill 954.
- Caroline Menjivar
Legislator
All right, SB 954, Health Committee. I am back again with a very similar Bill I presented to you all last year. This time, and it made it all the way to the governor's desk, and it got vetoed due to a budget constraint issue. This year, I've introduced a. Well, not introduced. I have a budget request that is running simultaneously with this Bill to ensure we address the concerns of the Governor.
- Caroline Menjivar
Legislator
This Bill does a lot of things, but I'm going to speak to only the parts that will fall under the health and safety code under the purview of this Committee. So for that, the provision under SB 944 to this Committee is looking to prohibit pharmacies and retailers from asking for proof of age identification for condoms or contraceptive purchases.
- Caroline Menjivar
Legislator
According to the Department of Public Health, statewide data indicate over half of all STI's in the state are experienced among californian youth ages 15 to 24 years old, and youth of color are disproportionately impacted. In fact, just last year, the CDC's report came out and showed that individuals who are sexually active, their usage of condoms has decreased. For males, it went from 67% to 58%, and for females, from 54% to 47%. We're hearing from individuals who are looking to go purchase these items.
- Caroline Menjivar
Legislator
Should they make that personal decision that they're being turned away, they're being harassed and embarrassed because they're not 18 years old? In California, there is no law that requires you to be 18 or show identification to purchase this item. We want to make sure we just clarify that. I'd like to turn over to my two witnesses to testify in support of this Bill.
- Richard Roth
Person
Please proceed when ready.
- Richard Roth
Person
Great. Thank you, Senator. Good evening, Mister Chairman and Members of the Committee. My name is Amy Moy. I'm co-CEO at Essential Access Health, and our organization advances reproductive equity and champions and promotes quality sexual and reproductive healthcare for all. And in that spirit, we're proud to be co-sponsors of this Bill. And thank, Senator, for your leadership on this important issue. The Senator outlined some of the alarming statistics about the need for this Bill, so I won't repeat that.
- Amy Moy
Person
But since, you know most STI's are asymptomatic, they often remain undetected. And if not treated and undetected, they can cause serious long term health risks. But the good news is that they are preventable. We have tools in our toolbox and that condoms are a highly effective, Low-cost method of intervention that could really help increase the health and safety of our youth if we can reduce barriers to access. That's why it's critical that we remove barriers to access to condoms.
- Amy Moy
Person
And this concept for this Bill also derived directly from California youth. We heard from our youth that 68% of teens said that they don't have access to condoms in schools, but 92% agreed that schools should make condoms available, which is one piece of the Bill that we have already discussed at the education Committee. And so, I'd like to take the rest of my time to share testimony from two students from our Youth Health Equity and Safety for Condoms campaign.
- Amy Moy
Person
We have a student, Martine, from Troy High School in Fullerton, that said, as a high school senior, I can't stress enough how crucial access to condoms is for our well being. I've witnessed friends face unnecessary hurdles like being asked for ID when purchasing condoms. By eliminating cost barriers and tackling discriminatory practices, SB 954 empowers us to take control of our health and make informed choices about our bodies with confidence and dignity.
- Amy Moy
Person
And so I'll end there and let Martine speak about for the reason for this Bill as well. And on behalf of Martine and other student leaders, we are partnering with and co-sponsoring with, including youth led organizations like Generation up and voters for tomorrow, unite for Reproductive and Gender Equity California and the California school-based Alliance. I urge your aye vote.
- Richard Roth
Person
Thank you, ma'am. Please proceed, sir.
- Anell Schuller
Person
Thank you. Good evening, esteemed chair and community Members. I'm Anell Schuller, the Director of Youth program's Black Mental Wellness Action project. Our tireless commitment revolves around advancing group health justice and improving the health and wellbeing of black women and girls statewide. Today, I proudly stand as co-sponsor of SB 954, the Youth Health Equity and Safety Act. This transformative initiative holds the promise of addressing the harrowing sexual health disparities that persist among youth, especially within marginalized communities.
- Anell Schuller
Person
SB 954 is a beacon of hope, aiming to dismantle systemic barriers hindering young people's access to essential resources by combating the discriminatory practice of retailers demanding ID for condom personages. But why does this issue demand our urgent attention? As Senator mentioned, the answer lies in the staggering statistics. Far too many young people, particularly those in black and LGBTQ communities, bear the disproportionate burden of sexually transmitted infections.
- Anell Schuller
Person
Recent findings from Los Angeles County underscore the gravity of the situation with a sharp rise in STI rates over the past decade, including alarming increases in congenital Syphilis, Syphilis, gonorrhea, and chlamydia. Without equitable access to sexual health resources, these young people are left vulnerable for a myriad of risks, from STI's to unintended pregnancies and long term health complications. Discriminatory practices, such as harassment faced when attempting to purchase condoms or the judgment encountered in healthcare settings only exacerbate these challenges.
- Anell Schuller
Person
As a community-based health educator, I understand the power of comprehensive sex education. Empowering youth with knowledge and resources empowers them to advocate for their health and wellbeing. When we equip young people with tools to navigate their sexual health, we pave the way for meaningful change. The imperative to mobilize resources is clear. SB 954 represents a crucial step in our collective fight against STI epidemics in promoting health equity.
- Anell Schuller
Person
By bridging the resources to the most marginalized populations, this Bill addresses the disproportionate impact of seis on communities of color. I implore each of you to cast your vote in favor of SB 954. By doing so, you take a decisive stand in ensuring that youth have equitable access to the resources they need to make the most informed decisions about their sexual health. Thank you for your attention and consideration on this pressing issue.
- Richard Roth
Person
Thank you for joining us, sir. Any other supporters, please step forward. Name, affiliation and position on the measure.
- Kathleen Mossburg
Person
Chair Members Kathy Mossberg with the San Francisco AIDS foundation as well as APLA Health, both in strong support.
- Richard Roth
Person
Thanks for joining us. We'll fix that someday.
- Annie Chou
Person
Annie Chao at the California Teachers Association in support.
- Richard Roth
Person
Thank you.
- Karen Stout
Person
Karen Stout, on behalf of Reproductive Freedom for all California in strong support.
- Richard Roth
Person
Thank you.
- Ruth Dawson
Person
Ruth Dawson, ACLU California action and support. Thank you.
- Richard Roth
Person
Thank you.
- Rand Martin
Person
Chair Members Rand Martin, on behalf of the AIDS Healthcare foundation and its public health division, in strong support. Thank you.
- Richard Roth
Person
Next.
- Molly Robson
Person
Hello. Molly Robson with Planned Parenthood affiliates of California in support.
- Kimberly Lewis
Person
Good evening. Kim Lewis, representing Children Now and the California Coalition for Youth and support.
- Stephanie Estrada
Person
Hello. Stephanie Estrada with California Latinas and reproductive justice and support. Thank you.
- Unidentified Speaker
Person
Hi, Isabella Urghetta with the health Officers Association of California in support.
- Richard Roth
Person
Thank you, Mister chair Members. Andrew Antwee, on behalf of the California Medical Association, in support. Thanks to the author. Thank you. Any other supporters? Okay, let's turn to witnesses in opposition. First lead opposition. If there are any. Any other opposition? Witnesses in the hearing room seeing none. Let's bring the matter back to the desk. Colleagues, any questions, comments or concerns? It's been moved by Senator Smallwood-Cuevas. I see no hands up to my left. The motion is do pass. And re refer to the Committee on Appropriations.
- Richard Roth
Person
Please call the roll.
- Committee Secretary
Person
[Roll Call]
- Richard Roth
Person
Vote is 7-1. We'll hold the roll open for absent Members. We can do that. Let's call the consent calendar. We have three bills on our proposed consent calendar. Item number one, Senate Bill 908 by Senator Cortese. Fentanyl child deaths. Item number six, Senate Bill 1464 by Senator Ashby. Health facilities, cardiac catheterization, laboratory services. And item number 15, Senate Bill 1033 by Senator Menjivar. Health facilities, congregant living health facilities. Is there a motion? Okay, Senator Limone made the motion. The motion is do pass as amended. Oh the consent calendar. Okay, we have it. Please call the roll.
- Committee Secretary
Person
[Roll].
- Richard Roth
Person
Vote is 9-0. Will hold the row open for absent Members. Senator Limon, would you like to present item number 18, Senate Bill 1061, consumer debt. Medical debt. Please proceed when ready. Item number 18.
- Monique Limón
Legislator
Members, I'd like to thank the chair and the Committee staff for their work and advice on this Bill. I present to you SB 1061, which would remove medical debt from consumer credit reports and improve our understanding of the effects of medical debt collection collection litigation. We all know that our health is not something that any of us take for granted.
- Monique Limón
Legislator
Oftentimes, our need for healthcare services is driven by factors completely outside of our control, whether due to an accident or genetics, the social determinants of health, or just plain bad luck. And we live with a healthcare system in this country that is imperfect, that fails to provide comprehensive and affordable care for all Members of our society.
- Monique Limón
Legislator
We also know that medical debt disproportionately affects low income people, black and Latino communities, and young people, all whom are less likely to have savings or other wealth to absorb the financial burden of debt. In addition to being non discretionary and outside of the control of the patient, medical debt that is reported to credit agencies is often inaccurate, whether due to billing errors, mistakes with reimbursements, or ongoing disputes and conversations with insurance plans.
- Monique Limón
Legislator
When a consumer discovers medical debt on their credit report, they may not know why it is there or who to contact the process of determining whether an alleged medical debt is accurately reported can be time consuming and frustrating. On top of all these challenges, medical debt is less predictive of a consumer's willingness to pay and ability to pay future credit obligation than other forms of consumer debt.
- Monique Limón
Legislator
Some lenders and credit scoring models have come to realize that realize the false signals that medical debt can send, leading them to remove medical debt from their risk scoring system. This Bill prohibits medical debt from being reported to credit agencies. It does not forgive debt. This Bill does not relieve many burdens associated with medical debt. The Bill does not forgive debt, nor does it restrict collection practices related to medical debt.
- Monique Limón
Legislator
While this Bill does not solve all of the problems with medical debt, it is a start. Removing medical debt from credit reports will give consumers a better chance to restore their financial health. I'm fortunate to work with a great group of co sponsors on this Bill, and with me today testifying in support is Sonia Hayden, a consumer who will share her experience with medical debt, showing up on her credit report, as well as Kathy Kennedy and RN and President of the California Nurses Association.
- Richard Roth
Person
Welcome. Please identify yourselves to the record and proceed when ready.
- Sonia Hayden
Person
Okay. Hello chair and Members. My name is Sonia Hayden. Thank you for letting me tell you about my experience with medical debt. In October 2021, I was involved in a major car accident while driving on I-80 from Sacramento to Oakland. The accident happened around 10:00 p.m. In the evening and I was taken by ambulance to the ER in Fairfield. Luckily, I was okay, but they kept me there quite a while to run some tests and make sure everything was fine.
- Sonia Hayden
Person
As a state worker, I have full insurance coverage through work, so that was at least one less thing I had to worry about. Fast forward to a few years later. The summer of 2023. My partner and I made the decision to try and buy our first home while applying for a loan. I was surprised to discover my credit score had gone down significantly due to an unpaid mystery Bill. I called the credit company listed and discovered that the hospital I was taken to after the accident had correctly billed my insurance for everything except for one very expensive test they had done. I think it was a simple mistake.
- Sonia Hayden
Person
They had simply forgotten to add my insurance information to it and had billed me instead. But I somehow never received the Bill. This was incredibly stressful at the time because my credit score negatively affected our mortgage rate at a time when rates were already at an all time high. At this point, I've spent hours on the phone trying to get this fixed to no avail. Representatives at the insurance company have tried to help me, and so has the credit company. As of now, this is still showing on my credit score, and there appears to be not much that I can do about it. Again, thank you for letting me speak in front of you today.
- Richard Roth
Person
Thank you for joining us. Yes, ma'am.
- Cathy Kennedy
Person
Good afternoon, and again, thank you, chair Roth, for the ongoing conversation. Again, my name is Kathy Kennedy, President of the California Nurse Association and proud sponsor of SB 1061 with Senator Limon. Thank you. Nurses witness firsthand the impact to our patients health due to delayed medical care. When patients fear that medical debt will negatively impact their credit, they too often forego important medical treatment and the outcomes are often catastrophic. 78% of Californians with medical debt report skipping care due to cost.
- Cathy Kennedy
Person
That's twice as likely as people without any medical debt. Importantly, the problem of delayed or skipped care due to medical debt is particularly acute for people of color and working families. One in two low income Californians have medical debt. Black and Latino Californians are more likely to have medical debt than white Californians, and people living with a disability are twice as likely medical debt. Information on credit reports creates chaos for working families, access to housing, vehicle loans, and even employment opportunity, negatively affecting millions of Californians.
- Cathy Kennedy
Person
However, a patient's ability to pay for the care that they need is not and should not be an indicator of their creditworthiness. When Californians seek care in an unexpected emergency, like a broken arm, or as our young lady that just talked about it, they're going to very likely incur a medical debt. And this becomes worse because of high deductible plans have grown faster than inflation, and it has just spiraled. Medical debt simply does not belong on credit reports.
- Cathy Kennedy
Person
Even the credit reporting bureaus themselves recognize that medical debt is not a reliable predictor of creditworthiness. Removing medical debt from credit reports would additionally help prevent discriminatory barriers to housing or employment for people with disabilities as well as people of color. Other states are already implementing this type of band, and California should join the fight to provide broader access to credit and lower barriers to healthcare for our fellow residents. CNA urges the Committee to vote yes on SB 1061. Thank you.
- Richard Roth
Person
Thank you very much. Other supporters of the measure, please step forward. Name, affiliation and position on the measure, please.
- Katelin Van Deynze
Person
Katie Van-Dynes with Health Access California we're a proud co sponsor of the measure and I've also been asked to register the support of the Lutheran Office of Public Policy. Thank you.
- Richard Roth
Person
Thank you. Next, please.
- Marguerite Casillas
Person
Hi, I'm Marguerite Casillas. I'm a volunteer representing the National Multiple Sclerosis Society and we are in support.
- Richard Roth
Person
Thank you. Next, please.
- Sara Flocks
Person
Mister chairmember. Sarah Flocks, Labor Federation in support. Thank you.
- Richard Roth
Person
Thank you. Yes, ma'am.
- Janice O'Malley
Person
Good evening, chair Members. Janice O'Malley, AFSCME California in support. Thank you.
- Richard Roth
Person
Thank you. Yes, sir. Hello.
- Anthony Liu
Person
Anthony Liu for the office of Attorney General Robanta. We are one of the co sponsors of the Bill and my colleague Michael Goldsmith and I are here to answer any questions, technical questions the Committee may have. Thanks.
- Richard Roth
Person
Thank you.
- Christopher Sanchez
Person
Christopher Sanchez, representing the Consumer Federation of California, who is a sponsor and strong support.
- Richard Roth
Person
Thank you. Yes, ma'am.
- Amy Pine
Person
Amy Pine, Sacramento local advocate in support.
- Richard Roth
Person
Thank you.
- Andrea Velasquez
Person
Hi, Andrea Velasquez, on behalf of myself as a mother of a cancer patient and also Vice President of Mama Bears, fighting childhood cancer, in support.
- Richard Roth
Person
Thank you.
- Monica Padilla
Person
Hello, Monica Padilla. I'm Sacramento, California, and I'm here representing my daughter who is currently fighting cancer, in support.
- Richard Roth
Person
Thank you, ma'am.
- Kevan Insko
Person
Kevin Inscoe with the Friends Committee on legislation of California and strong support. Thank you.
- Richard Roth
Person
Thank you.
- Linda Nguy
Person
Good evening. Linda Wei with Western center on Law and poverty and support.
- Richard Roth
Person
Thanks.
- Dale Richter
Person
Dale Richter here on my own behalf, in strong support of the measure.
- Richard Roth
Person
Thank you, sir.
- Matt Lege
Person
Matt Leger, on behalf of SEIU California and support.
- Richard Roth
Person
Thanks.
- Rebecca Marcus
Person
Good evening. Rebecca Marcus. On behalf of one of the co sponsors, Calperg, as well as the Consumer Protection Policy center at the University of San Diego School of Law. Thank you.
- Richard Roth
Person
Thank you.
- Danielle Kando-Kaiser
Person
Good afternoon. Danny Kando-Kaiser. On behalf of two of the co sponsors of the Bill, the California Low Income Consumer Coalition and the National Consumer Law center.
- Richard Roth
Person
Thank you, ma'am. Sir.
- Adam Zarin
Person
Adam Zarin, leukemia Lymphoma Society and support. Thank you.
- Richard Roth
Person
Thank you.
- Tim Badin
Person
Tim Badin, and I'm pinch hitting for ALS Association in support.
- Richard Roth
Person
Thank you. Is there any other supporters in the hearing room? Let's turn to witnesses in opposition. First lead opposition witnesses step forward as they're doing so. Senator, I may have missed it. Did you accept proposed. Accepted amendments?
- Monique Limón
Legislator
Yes, I accept the proposed amendments. Thank you. Sorry, I forgot to say that. Yes, I do.
- Richard Roth
Person
Gentlemen, please identify yourselves for the record and proceed when ready.
- David Reed
Person
Thank you. Chairman Roth, the Members of the Health Committee. My name is David Reed and I serve as General counsel to the Receivables Management Association International. RMAI is a national, nonprofit trade Association which represents banks, credit unions, collection agencies, debt buying companies and collection law firms. While RMAIA appreciates the author's intent for introducing the Bill, RMAI is here today in respectful opposition to Senate Bill 1061.
- David Reed
Person
As currently drafted, RMAI's primary concern is related to the overly broad definition of medical debt and how it interrelates with the bill's prohibition on reporting medical debt to credit bureaus and the potential expungement of the debt. While the Bill exempts General purpose credit cards from the definition of medical debt due to the impossibility of knowing what goods and services being purchased are medically related, a number of other lending products will be unintentionally pulled into the definition.
- David Reed
Person
As drafted, home equity loans and banking lines of credit could be defined as medical debt based on consumer action. For example, if a consumer were to take out $100,000 home equity loan and use $5,000 for braces for her daughter, that home equity loan would now be classified as medical debt and subject to the credit reporting ban.
- David Reed
Person
Furthermore, it pulls into the definition of medical debt specialty health based credit cards that can be used to purchase various services and products, including hair implants, tummy tucks, face lifts, not to mention spa treatments, jewelry, flowers, pet insurance and bowflex athletic equipment. RMAI understands that medical debt is a unique type of debt and should be treated as such because patients do not choose to get sick or be in an accident.
- David Reed
Person
But we need to be careful not to conflate hair implants, spa treatments and athletic equipment with being admitted into an emergency room or having an appointment with your primary care physician. RMAI has had positive conversations with the author staff and we are hopeful amendments will be forthcoming to address our concerns.
- Richard Roth
Person
Thank you.
- Cliff Berg
Person
Thank you Mister Chairman Cliff Berg on behalf of the California Association of Collectors, we are opposed unless amended. I would say that we have had positive conversations with the author and her staff. I want to thank her, but those discussions have not reached the point of having any language so respectfully. I would like to draw your attention to three concerns. One is the definition of medical debt in the Bill.
- Cliff Berg
Person
We concur with David that the current definition of the Bill is over broad and has the potential consequences of dragging and all sorts of potential purchases and covering things that should not be within the definition of medical debt. Number two, the sanctions in the Bill are extreme overreach.
- Cliff Berg
Person
A violation of this Bill would result in the underlying undisputed legally owed debt being nullified for violation of a reporting prohibition that would deny payment to the provider, and the provider would, in essence, wind up unreimbursed for good for services or goods provided, legally provided, legally owed. We think that is an extreme overreach for a penalty in this kind of legislation. Number three, there are some situations where patients receive direct reimbursement from a plan or out of network services and do not pay the provider.
- Cliff Berg
Person
And we are discussing with the author's office how to deal with those situations and looking for a carve out from this Bill of those situations where the patient did receive direct reimbursement. Those issues are of concern and we think would make a significant impact of unintended consequences if this legislation was enacted in its current form. We continue to look forward to working with the author on these issues. Thank you.
- Richard Roth
Person
Thank you. Any other opposition witnesses in the hearing room please step forward. Name, affiliation and position on the measure, please.
- Unidentified Speaker
Person
Good afternoon. Stephanie Estrada with career strategies on behalf of encore capital group. We haven't opposed unless the broad definition of medical debt is amended to be narrowed in scope. Thank you.
- Unidentified Speaker
Person
Thank you. Next, please. Hi, Mark Farouk. On behalf of the California Hospital Association, we're not opposed. We have a letter of concerns that we've shared with the author and with the Committee. We appreciate the Committee's amendments that we think address part of our concern. We maintain that we still have issues related to the litigation database that's required, that we believe is outside of the scope and mission of hospitals to maintain.
- Richard Roth
Person
But we really appreciate the generosity of the author and her staff and spending time with us to talk through those concerns. Look forward to continuing the conversation. Thank you. Any other opposition witnesses seeing? None. Let's bring it back to the dais. Any questions, comments, concerns?
- Lena Gonzalez
Legislator
I moved the Bill.
- Richard Roth
Person
Senator Glazer, you have a question?
- Steven Glazer
Person
Just a comment. I just want to thank the author for bringing this Bill forward. I think she touches on an issue that could happen to any of us at any time and circumstances out of our control, and I'm pleased to support the Bill today.
- Steven Glazer
Person
I know that there's some complexity involved in it and there are details, but I'm confident that our chair of the banking Committee, who has dealt with these, these issues, we'll continue to work on it and try to resolve some of the maybe unintended consequences as the Bill moves forward. If it moves forward, I'm happy to move it at the appropriate time.
- Richard Roth
Person
Thank you, Senator Glazer, Senator Rubio.
- Susan Rubio
Legislator
Thank you. I appreciate the personal testimony of the young lady, that accident. And, of course, one little item could take down your credit. And so, I think that's important. I think no one should get bogged down by things that were out of their control. I'm just trying to understand a little bit more and to see if you can speak to some of the items that were brought up. I do appreciate the cosmetic, I think that that was removed. Right. Exclude cosmetic surgeries.
- Susan Rubio
Legislator
But can you address, like, some of the concerns that they said, what if someone gets direct reimbursement but then they fail to pay? Is there a solution for that? You know, is it possible, just like someone stated, right, that you take out an equity loan and cite medical payment or medical debt and then not necessarily use it? And I know that you've been working on a lot of the issues already, but just, you know, if you can just share a little bit more on that.
- Monique Limón
Legislator
Yeah. So, we definitely have taken the amendments. The amendments you recognized about, you know, cosmetic, medical anything is taken in this amendment. Additionally, one of the amendments we also took, and it's stated in the analysis, seeks to, to address what we've heard from stakeholders related to General purpose secured debts. And so that's along the equity line of credit that you've mentioned.
- Monique Limón
Legislator
So, we feel that that is, you know, a good step and we'll continue to work on it if there are folks who feel that the language doesn't secure that. And as far as the piece of when the reimbursement goes from the insurance company to the consumer or patient directly, we're looking to see how we address that. And so, we'll be able to hopefully address that in the future.
- Susan Rubio
Legislator
And one more question, if I may, only because I was hearing conflicting, you know, I guess, information. So I had to do my own research in terms of regular credit cards, what I understand here, a General purpose credit cards are excluded, right. But I looked up some of the items for care credit and what they can be used for.
- Susan Rubio
Legislator
And so I did go on some of, like, the websites of some of the, the stores, for example, what they can purchase at Walmart and other areas, and it appears that some of these, like, care credit cards can be used to purchase things outside of medical. So, for example, I think one of them said they can purchase anything other than, like, a lottery ticket. And so, can you show, how can you differentiate? I just want to understand the process.
- Susan Rubio
Legislator
And then there's that one's particular a medical credit card. Correct. But yet they're allowed to buy other things. Yeah.
- Monique Limón
Legislator
So since you brought up carecredit, I'm actually wondering if we can. You all have. And I'm wondering if you don't have. We passed it out. Yes, they just handed it to us. So you see there, what is there? And what you will see is that in the description on the website, on the carecredit, it actually advertised for health care purposes.
- Monique Limón
Legislator
So if someone is using a card that is being marketed at 0% interest rate and is being marketed and described as a card to secure medical debt and is not using it for that, I think that that is a different issue. But I also think that the other piece is that you will see that.
- Monique Limón
Legislator
And from the list you got that the providers outside, if you look at the top 20 providers near the capital, I don't know where you would be able to buy a lotto ticket based on those, except rite Aid. Right. So just to be clear, what the credit card should do, there is a code for medical purchases as well as something like a lotto ticket.
- Monique Limón
Legislator
And the credit card should say it should automatically do this because based on codes, and they do this all the time, just to be clear, should not actually allow a lotto ticket to be purchased on that.
- Susan Rubio
Legislator
Can I clarify for that? No, it says you can purchase anything except a lotto ticket. Like if you go to.
- Susan Rubio
Legislator
So let's just say a stereo. What do you. Whatever you want.
- Susan Rubio
Legislator
At checkout, when I went to one of the websites, it says you can purchase anything. I think it was like Walmart. You can purchase some items that are not. And I guess I'm not trying to be just, you know, just understanding the difference. I said accept a ticket, but if they go to Walmart, they could purchase some things that are not necessarily medical per se. I'm just trying to figure out how you differentiate what's really medical.
- Monique Limón
Legislator
The credit card that is advertised for medical purchase and medical needs, everything that we purchase has codes to. It should be able to. So that is not necessarily. The Bill is about reporting medical debt to a credit agency. So if someone decides to buy a stereo at Walmart, in theory, if a credit card is working as it's supposed to be a care card, right, since you've given that it shouldn't let it buy that, that would have to be paid on their own dime.
- Monique Limón
Legislator
So if the card is not working correctly, I happen to know the chair of banking and finance, and we can have a conversation about that.
- Susan Rubio
Legislator
Thank you. I just had those questions but clearly, you know, I really just. My heart goes out to the young lady. That one little incident just affected her whole life. And so I think it's important because we know so many of our constituents that tell these horror stories, and it's, you know, it's important. Again, I was just trying to differentiate medical debt, which is important.
- Richard Roth
Person
Thank you.
- Susan Rubio
Legislator
Versus, let's say, using a card to buy anything else, which I thought it may go a little too far, and just maybe looking into it, too, strengthen and tighten up some of these issues.
- Monique Limón
Legislator
Thank you. And they are important questions. So I appreciate it. Thank you, Senator.
- Richard Roth
Person
Before I go to my colleague, Senator Smallwood-Cuevas is next up to bat. My guess is that the retail service agreement that the card holder or the card provider has with the retail facility, whether it's Walmart, Rite Aid, Walgreens, Costco, whatever, you can specify what can be used, what can be purchased with the card. And between the credit card company, the bank, and the retail location, they can restrict the use of that credit card. Is that not correct?
- Monique Limón
Legislator
That is correct.
- Richard Roth
Person
Which may address the questions of my colleague to my rights, Senator Rubio. Senator Smallwood-Cuevas answered my question, too.
- Lola Smallwood-Cuevas
Legislator
Thank you.
- Richard Roth
Person
Senator Gonzalez. Oh, no questions. Any other questions to my left. I guess you've exhausted all the questions. Senator, would you like to close?
- Monique Limón
Legislator
Well, Members, I will just tell you that we are committed to continue to work on this. This is a very. We think it's an important Bill, but also we understand that there's complexities as it relates to reporting medical debt, and we're very, you know, we'll continue to work with the opposition on issues raised as appropriate.
- Richard Roth
Person
Well, the motion is by Senator Glazer, and the motion is to do pass as amended and re refer to the Committee on Appropriations. Please call the roll.
- Committee Secretary
Person
[Roll Call]
- Richard Roth
Person
Bill has seven votes. Vote seven to zero. We'll hold the row open for absent Members. And let's see. Senator Limon, you have one more item. Number 19, Senate Bill 1369, dental providers fee based payments.
- Monique Limón
Legislator
Thank you. And I'd like to start by thanking the Committee staff for their work on this bill and accepting the amendments outlined in the analysis. In August of 2023, ProPublica published an expose on insurance entities that imposed fees on doctors who accept virtual credit card payments, with processing fees costing providers anywhere from three to 5%.
- Monique Limón
Legislator
Today we see this practice in our dental offices. Dental plans will often contract with third party companies to issue provider payments to dental practices with virtual credit cards.
- Monique Limón
Legislator
However, accepting this form of payment charges the dental office processing fees of two to 5% of the total payment amount, in addition to the standard merchant transaction fee for processing the payment through their credit card terminal.
- Monique Limón
Legislator
This leaves providers with two options. Either process the virtual credit card and accept high fees, or spend administrative time continuously opting out for virtual credit cards. When accepting their payment, providers should not need to pay to get paid for their services.
- Monique Limón
Legislator
This bill requires dental plans and contracted virtual credit card companies to provide notice of any fees associated with payment along with details on alternative payment methods. SB 1369 gives providers the ability to opt in with authorized consent to receive the virtual credit cards.
- Monique Limón
Legislator
With me today, I have Doctor Kaliza Marcos, President of the California Dental Association, and Jessica Moran, legislative advocate for California Dental Association.
- Carliza Marcos
Person
Thank you, Senator Limon.
- Monique Limón
Legislator
pPlease hold on. Would you be accepting the amendments?
- Monique Limón
Legislator
Yes.
- Monique Limón
Legislator
Thank you. Go ahead. Please start.
- Carliza Marcos
Person
Sorry. Hi, good evening Chairman Roth and Members of the Committee.
- Unidentified Speaker
Person
I could look like Chairman Roth.
- Carliza Marcos
Person
Nguyen my name is Doctor Carliza Marcos and I am the as Senator Limon said, I am the President of the California Dental Association. I have co owned a dental practice with my brother in San Carlos since 2005, and prior to that we work with our mother, now a retired dentist.
- Carliza Marcos
Person
So collectively, my family of dentists has provided over 10 decades of dental care to our patients. I am here today to speak on behalf of our 27,000 CDA members throughout the state in support of SB 1369.
- Carliza Marcos
Person
In recent years, we have seen an increase of virtual credit cards. Payment method dental insurance plans contract with third party companies, often making the virtual credit cards a default form of payment.
- Carliza Marcos
Person
This essentially traps the dentist into either paying high processing fees or spending hours on the phone to request a different method and waiting for the delayed payment. Even when we think we have successfully opted out of receiving VCCs, they are often reinstated without our consent.
- Carliza Marcos
Person
Again, the fees associated with processing these virtual credit cards are significant, up to 10%, which can lead to difficult business decisions when we are trying to invest in our staff, increase office efficiency and appointment availability, all things that improve the patient experience oral health.
- Carliza Marcos
Person
Our goal as dentists is to provide quality care to our patients, and this bill will allow us to put more time and resources into treating patients rather than dealing with unnecessary administrative burdens, which adds to the already high cost of running a business in this state.
- Carliza Marcos
Person
SB 1369 will create necessary guardrails to address predatory virtual credit card fees by providing dentists with the autonomy to consent to receiving their preferred payment method. Respectfully, I ask you for an aye vote. Thank you. There you are.
- Richard Roth
Person
Thank you.
- Jessica Moran
Person
Good afternoon, Chair and Members. Jessica Moran of the California Dental Association. Here's the sponsor of SB 1369. The increased use of virtual credit cards has been a longstanding concern for our members.
- Jessica Moran
Person
When I started looking into one of the larger retro credit card companies websites, I came across a quote that they used to advertise their services. It said in large bold font, getting paid shouldn't be complicated. We agree. Getting paid shouldn't be complicated.
- Jessica Moran
Person
When dentists enter into contracts with dental plans, they agree to a certain set of terms, including reimbursement rates. The shift to electronic payments was meant to streamline and modernize the healthcare delivery system, but instead has created a space in the market where providers are paying up to 10% of processing fees just to access their contracted rates.
- Jessica Moran
Person
With SB 1369, California could set the strongest guardrails in the country for use of virtual credit card payments. And for these reasons, I urge and aye vote today. Thank you.
- Richard Roth
Person
Thank you. Witnesses in support. Name, affiliation, position on the measure, please.
- Chris Grogan
Person
Hi, Chris Grogan. On behalf of Children's Choice Dental Care in support.
- Richard Roth
Person
Thank you. Next.
- Samantha Johnson
Person
Hi there. Samantha Johnson, on behalf of the California Association of Orthodontists in support.
- Richard Roth
Person
Thank you, ma'am. Other witnesses in support. Are there any witnesses in opposition in the hearing room? Please step forward.
- Christy Weiss
Person
Good evening, Mr. Chair and Members. I'm Christy Weiss with capital advocacy outback of the California Association of Dental Plans. And we are here in an opposed position, but really want to first start by acknowledging the really solid work we've done with the Senator staff and with the sponsor and appreciate her taking the amendments that she's accepting tonight.
- Christy Weiss
Person
We're not there yet in a place to remove our opposition. From the dental plans perspective, obviously, the relationship between the plans and the providers is a very important one.
- Christy Weiss
Person
We have heard from a lot of dentists that they like the virtual credit cards because they enable the dentist to get the payment in the fastest way possible. What we've learned through our conversations with CDA is that that is not the case for many of their dentists.
- Christy Weiss
Person
As the CDA President testified, there are some issues, and so we have been in a conversation about trying to find a way to thread this needle and to resolve those.
- Christy Weiss
Person
The plans have some significant operational issues that they need to navigate as we work through the language in the bill and ensure that we're not doing anything that delays payments to providers, but that also is aligned with the prompt payment regulations that the plans have to comply with under DMHC and CDI.
- Christy Weiss
Person
So again, we've had very positive conversations. I think we are in a place of hoping we can nail down two issues. I think we might actually, actually be down to four words in the bill.
- Christy Weiss
Person
And while we are here in opposition today, our hope is that we can get to a place where we will be able to go neutral on the bill. I think if we do that, this will be one of the farthest reaching bills in the country that really kind of flips the script on how the dentists are able to determine which form of payment they receive. So we're in opposition, cautiously optimistic that we'll get there. Thank you.
- Richard Roth
Person
Thank you for working on it. Any other opposition witnesses? Seeing none. Let's bring the matter back to the dais for comments, questions by my colleagues. I see absolutely none. Is there a motion?
- Richard Roth
Person
Senator Hurtado, I'm sorry. We can flip coins. The motion is do pass as amended, and we refer to the Committee on Appropriations. Please call the roll.
- Committee Secretary
Person
[Roll Call]
- Richard Roth
Person
Vote is 9-0. We'll hold the row open for absent Members. Thank you, Senator. Senator Wiener, are you ready with item 17? Senate Bill 966, Pharmacy Benefits. Proceed when ready.
- Scott Wiener
Legislator
Thank you very much, Mister Chair. Thank you for setting the hearing. Sorry, little commotion there in the back. Okay. Thank you, Mister Chair. And I'm here today to present Senate Bill 966, which will require pharmacy benefit managers PBM's to be licensed and in the State of California, and will provide basic protections to make sure that PBM's are not engaging in behaviors that are anti-consumer, that increase costs, and so forth. Thank you for working with us on this Bill.
- Scott Wiener
Legislator
And we're happy to accept the Committee amendments as outlined in the analysis. As the analysis also notes, we have author amendments that I believe will all be crossed together. So, colleagues, PBM's are essentially the. If I may be, may gender it. The middlemen, I guess we can say middle people now of the pharmaceutical of the healthcare industry. They negotiate and buy prescription drugs in bulk from manufacturers on behalf of health plans and insurers.
- Scott Wiener
Legislator
They establish formularies and create pharmacy networks and set reimbursement rates that health plans pay through the PBM's to pharmacies. These are decisions with massive impact on healthcare costs and patient access. Yet PBM's operate with very little transparency and are able to use basically confidential information with lack of transparency frequently to the health plans, lack of transparency to the pharmaceutical companies, lack of transparency to pharmacies where only the PBM's have the full picture and that can have very negative impacts in terms of costs.
- Scott Wiener
Legislator
PBM's at times have used their market power to engage in anti-consumer and anti-competitive practices that drive up drug costs for payers and for patients. For example, they pocket pharmaceutical rebate dollars that were intended to reduce the cost of prescription drugs for payers and patients. They engage in what we call spread pricing, where they're paid one amount by the health plans and then pay a lower amount to pharmacies. These practices and others create very bad incentives and exert upward pressure on drug prices.
- Scott Wiener
Legislator
In fact, PBM's through rebates have an incentive to gravitate towards higher priced drugs instead of generics. The behavior of PBM's is concerning enough that the Federal Trade Commission and congressional committees have launched investigations into some of these business practices. In Congress there is bipartisan support on this issue. Despite playing an integral role in determining the types of medications and services that patients receive and the prices that are paid, PBM's remain almost entirely unregulated.
- Scott Wiener
Legislator
Here in California, we are far behind most states and our lack of oversight of this incredibly significant aspect of the healthcare industry. 25 other states require PBM's to be licensed. 17 states prohibit steering patients to preferred pharmacies or pharmacies owned by the PBM's, and seven states prohibit spread pricing. SB 966 implements various protections, and these are long, long overdue.
- Scott Wiener
Legislator
And I want to just also say that what we're seeing with PBM's is a real concentration where three PBM's control 90% of the market in the US, and the PBM's are increasingly either acquiring or consolidating with health plans. So we have PBM's and health plans combining PBM's, owning their own pharmacies, and then steering patients towards those pharmacies. So we're seeing this consolidation that is very, very bad for healthcare costs. These protections are long overdue, and I respectfully ask for your aye vote.
- Scott Wiener
Legislator
With me today to testify is Doctor Maria Lopez, the owner of Mission Wellness, a community pharmacy in San Francisco's Mission District. Doctor Jeff Koch, a patient. And then we are also joined for technical support if questions arise by Rachel Blucher, the legal counsel for the California Pharmacists Association.
- Richard Roth
Person
Please proceed. Identify yourselves for the record. First though.
- Mari Lopez
Person
Maria Lopez, Mission Wellness honorable Chair and Members of the Committee PBM started with pharmacy and now they dominate not only pharmacy market but also the healthcare market at large. In recent years they started to purchase physician practices and clinics and as the Senator talked about, they literally control all areas of the pharmacy market, such as they dictate the contracts that significantly underpay and force pharmacies out of business. The contracts are a take it or leave it non negotiable and unprecedented in any other industry.
- Mari Lopez
Person
In fact, Mission Wellness was forced to do a private due to a gag clauses in the contracts. Years long arbitration, our rare case has been unsealed and exists in the public record. There were millions of dollars at stake in legal fees and in recruitment and we would have definitely gone out of business had we not won. It is a pay to play game, but the fact is most pharmacies cannot undergo a five year long plus arbitration.
- Mari Lopez
Person
And we're seeing pharmacies across the state close and we hear many are forcing to turn away the very patients who would prefer to get their medications from a pharmacist who they know and trust. We, meaning Americans, pay the highest prices of medication and healthcare costs of any nation in the world. Spread pricing, effective rates, rebates, to name a few, permit this industry to hide the true cost of a drug.
- Mari Lopez
Person
These middlemen determine which drugs are on formularies, often choosing, as the Senator noted, the higher cost drug because of the better rebate for them. This results in skyrocketing medication costs and an out of control drug pricing cycle which rises year after year while PBM profits go higher and higher. The schemes utilized drive up healthcare costs. Most importantly, our patients suffer. They must be regulated as we are seeing other states do. Otherwise, we will continue to see closures, jobs lost and patients continue to suffer.
- Mari Lopez
Person
I respectfully request your aye vote on SB 966. Thank you.
- Richard Roth
Person
Thank you ma'am, sir.
- Geoffery Koch
Person
Chair Roth and Members of the Committee, my name is Geoffrey Koch. Koch is fine too.
- Geoffery Koch
Person
It's okay.
- Geoffery Koch
Person
I'm a Member of the instructional faculty at Butte College and graduate of UC Davis, a longtime resident of California and a patient at Pucci's Pharmacy here in Sacramento since April 2018. I currently reside in Chico, but choose to drive an hour and a half to receive my care at Pucci's even though there are several corporate chain pharmacies in my community. I do this because I get treated like a person and a patient and not simply a profit or cost center.
- Geoffery Koch
Person
The PBM's I have encountered and I've had to deal with several over the course of my adult life have made it incredibly difficult to receive my medication. In fact, I recently learned from my pharmacist, Clint Hopkins that they were actually losing money on my prescription every month for years.
- Geoffery Koch
Person
This is simply unacceptable and as a result of unfair and anti competitive practices that have become normalized under PBM's regime of market manipulation and unfair practices that have so far gone unregulated here in California, from increases to my out of pocket costs without notification or explanation to discontinuing coverage for my medication without notification or explanation, these PBM's have caused me significant emotional, physical and financial stress with my illness.
- Geoffery Koch
Person
Missing doses of my medication reduces its usefulness and results in high likelihood of developing drug resistance which can actually, I'm sorry, which can make that line of treatment ineffective permanently. I've managed to navigate this system because I have people like Clint and his community pharmacy making sure I have what I need. But I really can't imagine where I would be if I didn't have them or if I was not willing and able to advocate and fight for my own medical needs.
- Geoffery Koch
Person
But I know that there must be many people who just don't know who just go without because they don't know what to do when their medications get denied by a PBM or they're covered but the pharmacy can't fill the medication because they would be losing money. It's incredibly frustrating, confusing and unnecessarily complicated. This complication seems entirely intentional.
- Geoffery Koch
Person
If an insurer PBM or insurer PBM makes it complicated, cumbersome and expensive to get an expensive medication filled, fewer patients will access certain medications that are not as profitable for the PBM's, and they can negotiate higher margins on the medications that are cheap and plentiful, and claim that they are increasing access at a lower cost. In our current system, patients, community pharmacies and doctors are the losers and PBM's and insurance companies are the winners.
- Geoffery Koch
Person
The PBM lobby claims that they are lowering prescription drug costs and increasing access. Well, that has not been my experience. To the PBM's, I'm a number on a spreadsheet, an insurance ID number that either drives profit or is a cost center. To my pharmacist. I'm a friend and a patient who they have committed to providing the best possible care to.
- Geoffery Koch
Person
This Bill would do what many other states have already done, level the playing field between corporate pharmacies and community pharmacies, create transparency and fairness that will protect small businesses and patients from hidden fees, and make it illegal for PBM's and insurers to claim a prescription is covered, then claw back money later.
- Geoffery Koch
Person
It would also prohibit PBM's and insurers from negotiating backroom deals that line their pockets while patients and community pharmacies suffer, go out of business, or are forced into being acquired by insurers and their PBM's that cause them to fail in the first place. There are many issues with our current healthcare model in my humble opinion, but this is an issue with a solution.
- Geoffery Koch
Person
You can be part of that solution, Senators, and I ask you from the bottom of my heart to choose to be an advocate for patients in small businesses. To not pass this legislation would give a free pass to PBM's and insurers to continue to extract profit from our most vulnerable, and that simply is not right. I respectfully ask for a yes vote on SB 966.
- Richard Roth
Person
Thank you.
- Richard Roth
Person
Thank you, sir. Are there other witnesses in support in the hearing room? If so, please step forward. Name, affiliation and position on the Bill, please?
- Rand Martin
Person
Mister Chair and Members Rand Martin, on behalf of the AIDS Healthcare Foundation, which owns and operates pharmacies across the state, in strong support of this Bill. Thank you.
- Kathleen Mossburg
Person
Chair Members Kathy Mossburg with the San Francisco AIDS Foundation and APLA Health, both in support.
- Richard Roth
Person
Thank you.
- Richard Roth
Person
Thank you, sir.
- Frederick Noteware
Person
My name is Fred Noteware, representing Pharma in support. Thank you.
- Megan Subers
Person
Thank you. Mister Chair Meagan Subers, on behalf of the Los Angeles LGBT Center, in support.
- Richard Roth
Person
Thank you.
- Timothy Madden
Person
Tim Madden representing the California Rheumatology Alliance. We have a supportive amended position and I'm also stepping in for the ALS Association, who is in straight support. Thank you. Thank you.
- Jennifer Snyder
Person
Jennifer Snyder with Capital Advocacy, on behalf of the California Life Sciences, in support.
- Sandra Guckian
Person
Sandra Guckian, with the National Association of Chain Drug Stores, in support.
- Moira Topp
Person
Good evening, Mister Chair and Members. Moira Topp, on behalf of BioCom California, in support.
- Andrew Antwih
Person
Mister Chair Members Andrew Antwih, on behalf of the California Medical Association, in support. Thanks to the author.
- Cher Gonzalez
Person
Cher Gonzalez, on behalf of my clients, the American Diabetes Association, and support, as well as the Hemophilia Council of California, support.
- Richard Roth
Person
Thank you.
- Michelle Rivas
Person
Michelle Rivas with the California Pharmacists Association. Support. And also on behalf of the Chronic Care Coalition and support co sponsors. Thank you.
- Richard Roth
Person
Thank you, ma'am. Any other witnesses in support? Now let's turn to witnesses in opposition. First. Lead witnesses in opposition. Come on down. You can just.
- Richard Roth
Person
Everybody has a mic. Identify yourselves for the record, please, and proceed when ready.
- Bill Head
Person
Chair Roth and Members of the Committee, my name is Bill Head with PCMA. We're the national PBM trade association, respectfully in opposition to SB 966. I do want to thank the Chair in particular and the Committee staff for all the hard work that's been done on the bill. We appreciate that. Also very much appreciate the author accepting the amendments. Unfortunately, we remain opposed.
- Bill Head
Person
Our members are still evaluating the bill, but the initial feedback is we would love to meet with the author in response because we do think we have some technical changes that we don't think undermines the intent of the bill, that as this progresses, we'd like to share and go over, but there are some substantive issues as well that remain concerns for us. Among that is some of the reporting criteria, and some of it is this sort of non sequitur, I guess, if you will.
- Bill Head
Person
Some of the reporting is on the profit or the revenue generated from the sale of drugs. PBMs don't buy or sell drugs, as you described, with the middle person administering the--administering the drug benefit, and by the way, would administer the drug benefit for 30 million Californians. But that does speak to another issue which I think the author has been good about identifying. We're not the only entity in the supply chain, and while we are--we do agree that licensing makes sense--we're operating in a state--data reporting, if it's done right, makes sense.
- Bill Head
Person
We're already doing that with the clients, so they are getting all the rebate information, all the payment information under AB 315, but when it comes to like the revenue and other data, I think of an important piece that's missing is the pharmaceutical manufacturer data. The fact that we assert, and we think the data supports our claim that we do drive down the cost for the payer and the patient.
- Bill Head
Person
And I think the state having access to more than just the PBM data would help, I think, make that point or not make that point. But I think just getting PBM data is not going to give the state a complete picture of the drug supply chain. So we're willing to do our part, but we think that it's important to look at the entirety of the drug supply chain. I think substantively the other issue that remains is the ban on spread pricing.
- Bill Head
Person
And I think it would be helpful just to understand payers have two options for how they pay for the drugs of their beneficiaries. They can either do a pass through in which they simply get the invoice for whatever the negotiated price was for that drug from that pharmacy and they pay that, or the second option is to do spread pricing in which we call risk mitigation, where the PBM assumes the risk of price fluctuations for that drug.
- Bill Head
Person
If the price goes up, the PBM is going to bear the risk of that increase. So given that payers just have two options, you're eliminating one of the options for them and saying, 'you can't ask for this in your RFP, you have to do a pass through.'
- Bill Head
Person
And PBMs compete with each other by assuming more of that risk, being willing to assume more of that risk for on behalf of the payer and one-third of health plans, one-third of employers, one-third of unions choose that option as a means of having more definitive or clarity around what their drug spend is. And because of all the reporting under AB 315 that that client is getting, they know whether or not it's a bargain or not or whether or not it suits them.
- Bill Head
Person
And they commonly will ask for both models, so say, what it will look like for a pass through, what will it look like on a spread model? And then we're B2B, so at the end of the day, it's their decision. I do want to say, just in closing, on rebates, more than 95 percent of the rebate dollar goes back to the payer, to the plan sponsor. It's their rebate. They decide what they want to do with it.
- Bill Head
Person
If there's any amount kept by the PBM, it's in payment for services that the PBM is providing. It's not pocketing, making a profit. And the formula belongs to the health plan sponsor. We manage it, but the decisions are made by the health plan sponsor. For these reasons, we hope we can work with the sponsors and the author, but at this point do oppose the bill.
- Richard Roth
Person
Thank you, sir. Next.
- John Wenger
Person
Thank you, Mr. Chair and Members. John Wenger, on behalf of America's Health Insurance Plans. We're the national trade association for the Health Plans. I think just overall, sophisticated purchasers like health plans, self-insured large businesses, union trusts, public employers, they all voluntarily enter into contract agreements with PBMs for the sole purpose of lowering drug costs, so that's where we're coming from on this. I think we do continue to have an opposed position on the bill. Do want to appreciate the Committee's work on the bill and the amendments.
- John Wenger
Person
We're continuing to review them. I think the amendments are starting to go in the right direction and we certainly appreciate that. Would also like to have a conversation with the author and the sponsors on various provisions of the bill that we still have some issues with. I think one issue that's come up with the amendments is the definition of the PBMs.
- John Wenger
Person
It looks from our first review pretty broad and could capture health plans in that definition, which would mean the health plan would then be registered with CDI or licensed with CDI as a PBM and then also licensed with DMHC. I don't think that's the intent, and so we would appreciate a conversation around that. We continue to have concerns around the banning of spread pricing. As Mr. Head said, that is a form of payment. It is an option for the plan to choose.
- John Wenger
Person
Most of those plans that do choose that are usually the smaller purchasers that want some stability and some predictability in their drug spend, which stabilizes their premium as well, and so we think that option needs to continue to be allowed. We're still looking at the payment structure and the networks, changes in the amendments. I think we're still trying to review to see if that interferes with any sort of performance-based contracting that allows us to help to drive down the drug spend.
- John Wenger
Person
Obviously, prescription drugs continue to be a significant cost driver for us. It's gone from ten percent of the premium dollar to now 14.7 percent, and so trying to continue to look for tools in the toolbox to drive down that cost is obviously a sensitive issue for us. We do have some technical issues around the reporting that we want to talk through and look at. I think overall, in the aggregate, we're definitely open to transparency and reporting.
- John Wenger
Person
We just want to make sure that it's not to a granular level that would allow for some anti-competitive practices on the manufacturer side with negotiating rebates, which could potentially create kind of a ceiling on driving down rebates rather than a floor. Or I might have that backwards. I don't know. It's pretty late. But for those reasons, we are opposed to the bill today, but look forward to continuing conversations.
- Richard Roth
Person
Thank you. Any other witnesses in opposition in the room, step forward, please. Name, affiliation, and position on the measure.
- Steffanie Watkins
Person
Steffanie Watkins, on behalf of the Association of California Life and Health Insurance companies, in opposition.
- Richard Roth
Person
Thanks for staying with us.
- Katelin Van Deynze
Person
Good evening. Katie Van Deynze with Health Access California. We wanted to say we very much appreciate the amendments taking in Business and Professions and in Health today. Taken together, these amendments make significant progress to address our concerns.
- Katelin Van Deynze
Person
We're not yet ready to remove our opposition because we remain concerned about cost and we're reviewing the amendments on compensation to understand the implications for that. Thank you, and we look forward to working with the author, Committee, and sponsors moving forward as the measure progresses. Thanks.
- Richard Roth
Person
Thank you.
- Mandy Lee
Person
Mandy Isaacs-Lee. I was asked to register the opposition for the California Teamsters Public Affairs Council who couldn't be here.
- Richard Roth
Person
Thank you.
- Julian Canete
Person
Julian Canete, on behalf of the California Hispanic Chambers and as well as our 20 coalition members who are listed in our coalition letter that we submitted and opposing.
- Richard Roth
Person
Thank you.
- Jedd Hampton
Person
Good evening, Mr. Chair and Members of the Committee. Jedd Hampton with the California Association of Health Plans, in opposition. Thank you.
- Richard Roth
Person
Thank you, sir. Any other witnesses in opposition? Seeing none, I should bring the matter back to the dais and my colleagues before I check to see if there are any hands up. I was going to ask you to sort of give me a couple examples of spread pricing the way you all think it works, and who it impacts and who it doesn't, but since it's 6:35 p.m., I think I'll wait to see if any of my colleagues are interested in hearing that.
- Caroline Menjivar
Legislator
I'm actually interested in that too, Mr. Chair, because that was going to be my question. There's only two options right, for them, and why would we remove one of the options?
- Richard Roth
Person
So maybe you could sort of tell us how the spread pricing works with specifics as to a particular drug. Pick one and a price and how that sort of works down the chain because we're dealing with pharmacies and we're dealing with you and we're dealing with plans and then we got a manufacturer sitting on top.
- Bill Head
Person
Sure. And I've already missed my fight back home to LA, so I'm here for the duration.
- Richard Roth
Person
You're in trouble.
- Bill Head
Person
So spread pricing is a contract solely between the purchaser and the PBM. It doesn't involve the pharmacy. And typically what it'll do is--and not to get too technical--but it'll say average wholesale price, AWP, minus ten. And so that is what the plan will be locked in for the contract, determine the contract.
- Richard Roth
Person
90 dollars, say.
- Bill Head
Person
Say 90 dollars. So there are going to be instances where for some pharmacies, they charge 90 dollars and it's a wash. Some pharmacy, the reimbursement may be 91 dollars, in which case the PBM is on the hook for the dollar. In other cases it may be 89 dollars in which the PBM collects an extra dollar from the plan.
- Bill Head
Person
But the PBM is--because they're competing with each other--is always going to try to get as close to zero as possible in offering that to the plan because they know other PBMs are doing the same. And because of all the reporting that goes back to the plan, the plan will know if they're, well, gee, you gave me the spread pricing, but you made 100,000 dollars off this. Who's going to hire that PBM, right?
- Bill Head
Person
So they are assuming the risk, but they're more likely to error on the side of to get the business, to get the book of business. They're going to want to say, 'I'm willing to assume more of the risk.' Instead of AWP minus ten, I'm going to offer you AWP minus 15 as your benchmark, right? But it's going to fluctuate back and forth.
- Bill Head
Person
So yes, there will be times when the plan pays more than what the PBM reimburses the pharmacy, but there's going to be times that the plan pays the PBM less than what the PBM reimburses the pharmacy. But it's typically, it's always in the RFP. It's what the plan is asking to look at and evaluate compared to just a straight pass through where they're simply paying the amount that the PBM is paying the pharmacy.
- Richard Roth
Person
And do you think part of the problem here is the lack of transparency and people don't know?
- Bill Head
Person
Well, we would argue that the people who need to know do know. The plan is, the plan is getting, is getting the transparency through, and typically plans will audit the PBM in addition to getting all the reporting under 315.
- Richard Roth
Person
I understand, but you know, the problem is there are the people that--
- Bill Head
Person
That want to understand that want to--sure. They want to understand. Yeah.
- Richard Roth
Person
They need to know that are in the business deal, and then there's everybody else on the outside, the consumers and the providers.
- Bill Head
Person
And that gets into my earlier comment, Mr. Chair, is that we're not opposed to giving data to the state to evaluate, but we think the state needs to have all the data. Let's everybody put the cards on the table, right? Let's have the manufacturers, the PSAOs, the pharmacies, the hospitals. You've got to look at the complete set of data, not just one industry because at the end of the day, this all starts with the price set by the manufacturer.
- Richard Roth
Person
And then there was some language or comment in the analysis about not limiting it necessarily to an administrative fee as compensation to the PBM, but instead, some consideration given to performance-based activity. Your thoughts on that?
- Bill Head
Person
Right, and we appreciate the change made by the Committee because we're still concerned about the potential impact on value-based contracting because in addition to the rebates, PBMs often will have other agreements with the purchaser, like if we find other ways to save you and your beneficiaries money, can we share in those savings, right? And so there's an incentive for the PBM to invest time and resources and personnel into finding other ways to manage that spend while still providing quality care.
- Scott Wiener
Legislator
Mr. Chair, I don't know if, perhaps if my witnesses could also respond to that?
- Richard Roth
Person
Oh, that's fine. I don't want to take away from my colleagues either, but please.
- Scott Wiener
Legislator
So Ms. Lopez--Dr. Lopez.
- Unidentified Speaker
Person
Thank you. Senator Roth, I just want to clarify on the performance-based rebate that you're asking about--
- Richard Roth
Person
I didn't say rebate--
- Unidentified Speaker
Person
Or the performance-based incentive, yes. My case was specifically around that, and because of the lack of the transparencies, lack of transparency with the PBMs, they are the middlemen. They are not the clinician. They're not seeing the patient. They're not the prescriber. So they have none of the clinical data on the patient. They are just looking at based on their formularies.
- Unidentified Speaker
Person
And so we, my legal team showed basically that there was no performance-based payment because they don't have that on information. And that was a major part of our case. So I do want to bring up that that is one concern when they say that they went to CMS and they said, 'we're going to do performance-based payments,' but they don't actually have that information because they're just the middleman, the data aggregator.
- Scott Wiener
Legislator
But in terms of--the Chair had asked the PBMs about spread pricing, and so I don't know, Ms. Bucher, I'd like to provide our perspective on that too. And I will note that seven states have banned spread pricing. So seven states have banned it. This is not like a new thing that we're considering. This is something that other states have done because it is a problem, but Ms. Bucher.
- Unidentified Speaker
Person
Yes. If I may, I just will quickly remind everyone that PBMs are paid in a variety of different ways. They're paid via the spread pricing, they're paid via fees, they're also paid through retention of rebates, and there are lots of different contracts that I think the opposition recognizes and has stated. And one of our concerns, I think exactly as you stated, Senator Roth, is the lack of transparency around that practice.
- Unidentified Speaker
Person
And if you look at who's retaining the profit of the spread price, the spread on the spread pricing, it does appear that PBMs are retaining a large percentage of that, by some accounts, 40 percent of that spread. And in other instances, we've seen that spread pricing increases have gone up over the years. So we're not staying at the same amount but there's been an increase to the spread. And so those are the problematic practices that we're trying to address and get some transparency around.
- Richard Roth
Person
Senator Menjivar. Did you have further questions?
- Caroline Menjivar
Legislator
To be honest, sir, I think I got further confused on the matter. It's a very complicated and I think I started trying to understand this last year. I'm still understanding it, and I think I'm at the place where health access is at where I know you've made a lot of progress since B&P. You know, I heard it in there and there's a lot of amendments taken. I'm supporting the bill because there has been movement and I know he will continue--
- Scott Wiener
Legislator
You know, I--
- Caroline Menjivar
Legislator
Work on it.
- Scott Wiener
Legislator
Sorry, I don't want to interrupt you. No, and we did, actually. I can be in the meeting with Health Access and Chronic Care Coalition and the pharmacists in my office just to--we wanted to make sure everyone understood where we were coming from, and I think I never will predict the future, but I felt good coming out of that meeting that we are--I think we're going to have productive conversations with Health Access.
- Scott Wiener
Legislator
And I just, one thing, when we talk about spread pricing and rebates, et cetera, et cetera, there's a lot of complexity here. And complexity in the health care system when there doesn't need to be complexity can often lead to increased costs. When PBMs were created, it was like much smaller entities created to assist health plans and creating the formulary and engaging in these activities. They were not mega, massive corporations that owned their own pharmacies and were sort of massive actors in the health care industry.
- Scott Wiener
Legislator
They have become that, and they now play this middle person role where you have spread pricing, which I'm not saying it's terrible in every single situation, but you have situations where they are paying the pharmacies significantly less than what they're being paid to the point where the pharmacies aren't even able to make money, or the rebates, where they are, where it's very nontransparent and they have an incentive because the rebates are a percentage, to favor higher costs, because that means a higher rebate.
- Scott Wiener
Legislator
It's a percentage of the total cost. And we know that there are situations where they're supposed to pass through 95 percent of the rebate to the payer, but it's unclear what they're even defining as that rebate or not as that rebate, and so it's unclear if they're passing that 95 percent through. And I will just note that just last month, the Inspector General of the U.S. Postal Service or of the--I'm sorry.
- Scott Wiener
Legislator
The Inspector General of the U.S. Office of Personnel Management audited a PBM with respect to the postal worker union health plan and found that the PBM had overcharged the carrier 44--almost 45 million dollar by not passing through all the discounts and credits that they were supposed to. So this is an issue and there is a way of compensating through simply a fee for service, but the PBMs have a lot of leverage as well, and so it results in all of these different structured forms of compensation that do not always benefit the health care system.
- Richard Roth
Person
Thank you, Senator. Senator Smallwood-Cuevas.
- Lola Smallwood-Cuevas
Legislator
Thank you, and I remember hearing this in B&P, so--but one of the data points that came out--and it's emerging and early, is the reason why we're even in this conversation--is the savings and what the consumer is saving. And I don't know if you could share just what was some of the very earliest, because this sort of look at PBMs is relatively new, but there in some states we're seeing some results.
- Unidentified Speaker
Person
Yeah, definitely. We've seen, as I think I mentioned in B&P, but I will say again, it is difficult to kind of quantify the exact savings as these regulations have been relatively new in many states, but there have been some quantifications that--West Virginia issued a report where they saved 54 million dollars.
- Unidentified Speaker
Person
We've also, anecdotally, after B&P talked to Arkansas, which was one of the first to enact PBM regulation. They're the state that went up to the Supreme Court on the preemption case, and they have seen that their premiums have not increased as much as compared--this is anecdotal, frankly--as compared to other states that do not have the reform, and also they are looking at not as many pharmacy closures, and that's from people on the ground in Arkansas.
- Unidentified Speaker
Person
So I also, as I mentioned, there are several instances of Medicaid programs saving dollars. Some of that has to do with spread, some of it has to do with, as Senator Wiener mentioned, kind of correcting maybe dollars that weren't passed through because one of the challenges with plans and engagement with plans and PBMs is you may have--and employers--you may have very favorable contract provisions--for example, CalPERS we have talked to--in working on this legislation, they have had pass through since 2006.
- Unidentified Speaker
Person
But what they shared is that it's very difficult to confirm that the PBM is meeting the metrics of the contract without investing quite a lot in auditors' dollars to make sure that, you know, looking at exactly what the bottom line is, and so I think what we're hoping is that some of the state regulation will help level the playing field a little bit for all entities that need to contract with PBMs and will also allow for us to see some of the impact of those savings.
- Unidentified Speaker
Person
So we worked with the Committee staff, and thank you very much for your work on making sure that there were more transparency metrics. I think we're absolutely open to more if there are more pieces of information that should be included in those reports, and we'll continue to share. I think we do have some helpful graphics from the national organizations that we can share with the Committee after the hearing.
- Richard Roth
Person
Thank you. Senator Rubio.
- Susan Rubio
Legislator
Thank you, Mr. Chair, and I will concur with my colleague Menjivar that sometimes the more you hear about, the more confusing it gets, right? But at the end of the day, I mean, I think I hear both sides stating in a roundabout way that it benefits the patients and focuses on reducing health care costs. So in a short version, I like to give both sides the opportunity to give me your short version and how does it reduce cost for patients? So I'm going to start with the supporters.
- Unidentified Speaker
Person
Yes. Well, thank you very much. I think ultimately what we want to see here is direct regulation of one entity within the whole chain that is not regulated. So we have a very complex chain and pharmaceutical supply chain and all of those entities are regulated except at this time for these middlemen, as Senator Wiener said.
- Unidentified Speaker
Person
The importance of the impact to consumers and to their pharmacy partners is that they are able to have more direct dollars coming to them instead of getting locked up in this middle spot.
- Unidentified Speaker
Person
So there's a value that PBMs provide, but what we think because of lack of transparency, because of perverse incentives due to vertical integration and some of the relationships between PBMs, plans, and pharmacies that are owned by those, there has been an opportunity for those entities to take advantage of those relationships and change the incentives within the system and retain more profit than we think is appropriate given the market.
- Unidentified Speaker
Person
And so I do think that one of the values to direct regulation is ensuring that we can have transparency around the practices and allow the participants within the market really have full and complete information as to what is the best deal for their consumers because ultimately the plans are serving enrollees and beneficiaries and ultimately they want to make sure that they have the best services at the lowest cost for those enrollees.
- Susan Rubio
Legislator
Now, if I can have the opposition give us your version just so we can be clear. How does it reduce costs?
- Bill Head
Person
Yeah, and thank you for the question, Senator. And let me begin by saying drug manufacturers are not regulated by the State of California. So to say that we're the only entity not regulated, I think is a very misleading--I don't think that was intended.
- Bill Head
Person
But drug manufacturers who set the prices and manufacturers of drugs--and they're important entities--but you have little to no ability to do anything with them other than the reporting under SB 17. I would contend this bill does nothing to expand access or lower costs for patients. At the end of the day, that's really what the focus should be, is this legislation--does policy result in a lower price for the consumer?
- Bill Head
Person
So a lot of the things that are being sort of questioned or, you know, called into question or being criticized are tools used by PBMs and by plans to lower the premiums, to lower copays, to lower deductibles for the consumer, for the patient at the end of the day. And while legislation--and I think as it was stated--it's really hard to tease out what bills impact premiums and what have you.
- Bill Head
Person
But in none of the states that have passed PBM reform or what have you, has there been indications that patients have gotten lower cost drugs or that it's expanded access, so I think we sometimes lose sight of that. And I know we can be guilty as an industry and as people in this fight, and we end up pointing fingers at each other, and that's why we are open to getting data to this day, but everybody's data to this day.
- Bill Head
Person
So you can really wrap your arms around where are the pressure points? Where are the opportunities for savings for patients? Because at the end of the day, that should be all of our focus.
- Susan Rubio
Legislator
Well, thank you for that, but, you know, it still feels like I'm still struggling to see the direct benefit for patients on both ends, but do you want to add to that?
- John Wenger
Person
Oh, I would just say from the, from the plan perspective, they enter these contracts with PBMs to leverage lives to drive the cost down of prescription drugs, right? I mean, the pharmaceutical manufacturer covers or sets the price. We are obligated to cover any medically available drugs. So it's not a free market, right? We have to cover it. So you have to use tools in the toolbox to try to drive down that cost, and that's what the PBM is used for.
- John Wenger
Person
So that's ultimately a benefit to the consumer by keeping that premium dollar down. I understand that, you know, some of these contract provisions could create, you know, some sort of inconveniences of not being able to go to every pharmacy, but there has to be a balance between the access and the overall cost. And, you know, we are regulated by DMHC. We're required to have network adequacy, so we have to have pharmacies.
- John Wenger
Person
If too many pharmacies start going out of business, then we're no longer able to match our network out of these standards and then we're out of compliance. And so the PBM is essentially regulated through the plan. AB 315 made that very, very clear. There's a lot of transparency provisions in AB 315 to where the PBM has to report to the client what all is being done.
- John Wenger
Person
And so I, you know, we appreciate the sentiment that some of the stuff, we should be protected against ourselves, but I think we're sophisticated enough purchasers to know what we're getting into, and I don't think that we are, you know, being fooled by the PBMs, and somehow they're taking massive amounts of rebates from us without us noticing it. So we would disagree with that.
- Susan Rubio
Legislator
Thank you. Well, and to the author, I mean, clearly there's so much here that's happening, and such a--you said it first with your opening statement--such a complex topic to deal with and a lot of, you know, data that cannot necessarily be quantified. And so for my only ask is that these conversations continue and figure out how we strengthen this process so it's clear, but thank you.
- Scott Wiener
Legislator
Absolutely, and we'll continue to do that. I do just want to say, though, in terms of patients, two things: first of all, one piece that we haven't talked about, we mentioned it but not really talked about, is patient steering. So one of the things we're seeing is that PBMs will own their own pharmacy, and they will, essentially--sometimes it's sort of forcing you or sort of representing to you that your only option is to use their pharmacy.
- Scott Wiener
Legislator
And so you can't go to your neighborhood pharmacy, that they will require you or somehow get you to use their pharmacy. That directly harms consumers. I also note that there are times when on the formularies, for example, with insulin, generic versus name brand, and there are formularies that only have the name brand and don't have the generic, and those formulas are created by the PBMs. Why is that? That increases cost for the health care system, which harms consumers. So there are, you know, this is harmful to patients.
- Richard Roth
Person
Okay. Any other questions? We're still alive. Seeing no questions, Senator, you may close.
- Scott Wiener
Legislator
Thank you again. Thank you to the Committee for working with us. We will, of course, continue to work with all stakeholders. This is--we are not the first state, but we should be the next state, and I respectfully ask for your aye vote.
- Richard Roth
Person
Is there a motion? Senator Gonzalez makes the motion. Okay, let's call the roll. The motion is 'do pass as amended and re-refer to the Committee on Appropriations.'
- Committee Secretary
Person
[Roll Call].
- Richard Roth
Person
Vote is 10 to zero. Hold the roll open for absent Members. Ladies and gentlemen, we have one more item. It happens to be my item. Item number 21 SB 1289.
- Janet Nguyen
Person
Okay, so this bill has support, support. Hint, Hint.
- Richard Roth
Person
The bill requires DHCs to collect data and develop standards for call centers operated by the counties to assist people with their medical. Federal and state law require that people be able to apply for medical and turn in information over the phone.
- Richard Roth
Person
This bill will require counties to submit data regarding call center wait times, because the wait times faced by many medical recipients to reach their county workers by phone are far too long.
- Richard Roth
Person
So the bill require counties to submit data regarding call center wait times. It will require DACs to establish standards so that people on medical can get the assistance they need.
- Richard Roth
Person
There have been some amendments to narrow the bill, so it only involves those counties operating call centers for medical recipients and give stakeholders input into the development of the standards. With me today, we have Linda Wei of Western Center on Law and Poverty, and Kevin Aslanian of California Coalition of Welfare White Rights advocates. If I butcher your names.
- Linda Nguy
Person
Good evening. Linda Wei with Western Center on Law and Poverty, proud co-sponsors of this important measure. Considering the support on both sides, happy to answer any questions.
- Janet Nguyen
Person
Thank you.
- Kevin Aslanian
Person
Yeah, Kevin. As an coalition California welfare rights organization, we support this bill in part because we have clients who have a lot of problems. One client that comes from my mind, from LA, 83 year old woman who called me up, and her IHS was terminated because her medical was stopped.
- Kevin Aslanian
Person
And I had to call up the welfare office, and I got her benefits back, but not everybody could call me up, and I wish I could call myself, but that's not going to happen.
- Kevin Aslanian
Person
She called the renewal line several times. One time she was on hold for 1 hour and 20 minutes, and then they just dropped the call. This leads to a lot of people losing their medical and we have heard similar problems from legal services programs.
- Kevin Aslanian
Person
And when I called up the Delta airline to get a reservation, they just do the callback within 15 minutes. In California, they have 31 call centers. Only 13 of them have callback features. So there's a big problem.
- Kevin Aslanian
Person
And there was a survey done by the Department of Healthcare Services that showed in November 31% of the cases had dropped calls. In December for Christmas was 32%, in January of this year was 35% of the cases were either dropped or disconnected or no answer. So we support this bill. Urge that aye vote. Thank you.
- Janet Nguyen
Person
Thank you. Any Me Toos in support? Please come forward.
- Kathleen Mossburg
Person
Chair Members, Kathleen Mossberg with the California Association of Food Banks in support.
- Mary Christie
Person
Mary Christie on behalf of the Children's Partnership in support.
- Janet Nguyen
Person
Thank you. Any lead witnesses in opposition? Please come forward.
- Eileen Cubanski
Person
Good evening. I'm Eileen Cubanski with the County Welfare Directors Association. We really appreciate the amendments that have recently been proposed and taken. Those should address a couple of our concerns.
- Eileen Cubanski
Person
But we do still have an opposed, unless amended position on this bill. I do want to acknowledge, first off, the frustration and the difficulties with call center wait times and other technical problems with the calls.
- Eileen Cubanski
Person
We're certainly in unprecedented times with respect to the, the volume of redeterminations that we have post pandemic and the workforce crisis that counties are experiencing. I don't offer that as an excuse.
- Eileen Cubanski
Person
I do want to assure you, though, that county human services agencies are devoting all the manpower and resources that they can to ensure that clients can be helped as quickly as possible to prevent eligible recipients from losing their medical coverage.
- Eileen Cubanski
Person
Call centers emerged decades ago established by counties voluntarily to provide another service option for their clients, and as such, they've evolved differently in different places to meet different local needs at the time. Not all counties have call centers as has been established, while others handle only medical and CalFresh calls.
- Eileen Cubanski
Person
Others do handle multiple benefit programs as a one stop shop for clients, and they also have different approaches to customer services, with some designed to handle the customer's problems right there on the phone at the moment, while others route calls to eligibility workers.
- Eileen Cubanski
Person
And all of this leads to varying wait times from county to county in between programs. Again, I understand it's very frustrating.
- Eileen Cubanski
Person
We don't oppose at all creating standards for call centers, but we do want to participate in the establishment of those standards, and that's why we really appreciate the amendments to include us and other stakeholders in the development process.
- Eileen Cubanski
Person
I think that's really important to get all of the different perspectives on it. But we do need to ensure that whatever standards are imposed and put place are adequately resourced so that they can actually be achieved. Otherwise we'll not be able to meet those standards.
- Eileen Cubanski
Person
Or we'll have to do so at the expense of other customer service and workload, including in person assistance and the processing of applications and redeterminations. We also don't object at all to reporting.
- Eileen Cubanski
Person
We just want to ensure that the metrics and data elements exist and can be provided. So we continue to look forward to working on this bill. We're grateful to the author and the sponsors commitment to working on the issues.
- Eileen Cubanski
Person
We look forward to continuing to serve our customers and working towards our common goal of improving program access overall. Thank you.
- Janet Nguyen
Person
Thank you. Any individuals who would like to come forward to oppose? Seeing none? Colleagues? Questions? Comments? There's a motion by Senator Manjivar. Mister Chairman, would you like to close?
- Richard Roth
Person
Madam Chair, just want to thank the witnesses on both sides who came and stayed with us to speak on the bill. Ask for an aye vote.
- Janet Nguyen
Person
Thank you. And this is do pass as amended. And we refer to the Committee on appropriation. Madam Clerk, please call the roll.
- Committee Secretary
Person
[Roll Call] That's 11-0.
- Janet Nguyen
Person
That's 11-0. And the bill's out.
- Committee Secretary
Person
[Roll Call]
- Richard Roth
Person
Vote is 10-0. That matter is out. That concludes the Senate Health Committee hearing for today, 07:15 p.m. We are adjourned.