Assembly Standing Committee on Health

Good afternoon. We'll call to order the Assembly Health Committee hearing for Tuesday, June 25. Before we begin, I would like to make a statement on providing testimony at this hearing. All witnesses will be testifying in person. We allow two main witnesses for a maximum of two minutes each. Additionally, testimony will be limited to name, position, and organization.

If you represent one. For today's hearing, only Assembly Members Wood and Jackson will substitute for Assembly Members Joan Sawyer and Maienschein, respectively. Removed from the agenda, we have SB 1033 by Menjivar and SB 1339 by Allen, who have removed this item at the author's request.

On consent proposed for consent today, any of the Members of the Committee may remove a Bill from consent, but on consent we have item one, AJR 16, Low to third reading. Item two, HR 105, Dixon to third reading. Item three, HR 107, Waldron to third reading.

Item five, SB 945 Alvarado-Gil to natural resources item 10, SB 1099, Nguyen to appropriations item 12, SB 1258 Dahle to appropriations item 13, SB 1290 Roth to appropriations item 18, SB 1511, health, with amendments to appropriations. With that, we will begin as a Subcommitee as soon as we have an author to present up.

First, we have item six, SB 954 by Menjivar. Thank you, Senator.

Madam Chair, Health Committee Members, I'm back again with a Bill that this Committee saw last year, and we just got a big huge win, including the budget. So I don't think we'll get vetoed this time. So SB 954, and I'd like to just focus on the health purview of this, of the bill.

It got out of education, and that's for the external, internal condoms to be distributed in school. But under the health purview, what we want to do is make sure, since current law right now does not require one to provide identification for purchasing contraception over the counter, non prescription contraception.

We want to make that explicit because what we're seeing is cashiers, pharmacists, so forth, are asking for an ID. Even though it's not state law, we want to put it in statute that you do not need to present an ID to purchase non prescriptive contraception over the counter.

This is at a response for what we're seeing in the increase of STI's across California, where about 50% of our new STI's are of those between the ages of 15 and 25 years old, encompassing a majority of the youth, and what the stories are telling us that they're being turned away and it's not deterring them from participating in sexual intercourse.

It's in fact, actually having them participate without being protected. And we just want to make sure once they make that personal decision, that they are safe with all the resources and tools available at their disposal. With that Madam Chair, I'd like to turn it over to my witness for testimony.

Thank you. You'll have two minutes.

Thank you, chair Members, thank you for your time today. I'm Kathy Mossberg, and I'm here today representing Essential Access Health, one of the co sponsors of this measure. Essential Access Health works to champion and promote quality sexual and reproductive health care for all.

I want to recognize and thank Senator Menjivar for her leadership on this issue. SB 954, simply stated, helps teenagers obtain condoms without the fear of harassment or social stigma. For teens who are sexually active, condoms help protect them from both pregnancy and STI's.

We know this Committee is well aware of the high incidences of STI's among our youth. Over half of STI's in California are among people between the ages of 15 and 24. We all know condoms work to reduce unwanted outcomes.

But the real problem lies in the fact that we know that condom use among sexually active teens has declined over the last decade. Teens have long reported facing multiple barriers to accessing condoms. Our youth partners on this bill have stressed how many young people today actually can be discouraged from obtaining condoms.

Very quickly, I'd like to share one of the some information from one of our student leaders from the yes for condoms campaign, Martin Urrea, who could not be here today, and what he has said about this problem. Martin states, 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 or not being able to speak with parents about sex and contraception due to stigma. One friend confided in him about a traumatic experience they had with a pregnancy scare because they didn't have access to condoms easily accessible to them.

This is a simple, straightforward Bill that will help our teens. For these reasons and on behalf of the student leaders we partner with and our co sponsors, generation up Unite for Reproductive and Gender Equality, California Black Women for Wellness Action Project, and the California School Based Health Alliance, we respectfully ask for your.

I vote thank you for your time today.

Thank you. Are there any other witnesses in support? Please come forward.

Isabella Argueta with the Health Officers Association of California in support

Abigail Alvarez with the San Francisco AIDS Foundation and APLA Health in support.

Nora Lynn with Children Now in support

Martin Radosevich on behalf of Reproductive Freedom for all California in support.

Craig Pulsipher on behalf of Equality California, in support.

Taylor Jackson with the California Primary Care Association, in support.

Rachel Bhagwat, ACLU California Action in support.

Madam Chair and Members Randy Martin, on behalf of the AIDS Healthcare foundation, in support.

Clint Hopkins, owner of Pucci's Pharmacy in Sacramento, in support.

Latizia Reyes, on behalf of California Latinas for reproductive justice in support.

Thank you. Are there any primary witnesses in opposition? Thank you. You'll have two minutes. Please put on your microphone.

Oh, can you hear me? There we go. Chair Members, my name is Greg Burt with the California Family Council. Over the past decade, this legislative body has championed the distribution of condoms and comprehensive sex education as a panacea for our use. Escalating sexually transmitted infection rates.

Yet as these rates have soared, so has your reliance on these measures accumulating in the Healthy Youth act passed in 2015. This law was supposed to protect kids from STI's and slow infection rates. Now ask yourself, did it work? Did STI rates go down over the last decade? No. The exact opposite happened.

STI rates have now reached epidemic proportions with syphilis and gonorrhea rates skyrocket rocketing over the last decade or so. So the question is, why does the author get her confidence that free condoms are the answer? Does this bill require warning labels on the condom dispensers telling teens that Latex will not protect them from the syphilis epidemic?

Condoms will also not protect teens from herpes, genital warts, monkeypox. Because these STI's are spread by skin to skin contact. Handing out free condoms gives teens a false sense of security and tells youth that condoms will protect them from diseases like syphilis. When the science says the opposite.

Ultimately you have to convince youth to stop having sex with multiple partners if you want to stop the spread of STI's. This bill promotes a hookup culture where youth have meaningless sex for fun with multiple partners. How many young people are you willing to sacrifice?

What STI rates are you willing to tolerate before you're willing to consider different options? For this reason, please vote no. Thank you.

Thank you. Are there any other witnesses in the room in opposition? Seeing none, I'll bring it back to the Committee for any questions or comments. Doctor Weber.

Thank you, chair. First off, I want to thank the author and the supporters for bringing this bill forward. You know, I think we definitely need more education and more access to certain things like condoms because they can decrease STI's.

It's very easy to say things like, you know, herpes or syphilis, but you don't really know exactly where the lesion is. It could be covered by the condom, and therefore, it would protect someone from getting something like that. So I think this is a great Bill.

I do take one issue with a part of it that has really nothing to do with your bill. It's really more of a federal mandate, and that is the ability for non prescription contraception. Non prescription contraception includes condoms, but it also includes birth control pills.

And although I am very much in favor of providing contraception to people who need it and who are at a stage in their development, one of my concerns is that when you allow for anybody to get it, they may not necessarily be a good candidate based on their medical history, and it may not be the right time for them.

You know, it's interesting. I was in clinic on Friday, this past Friday, I think I had, like, a nine or 10 year old patient, and she came in with some menstrual issues. And the nurse that was with me, this was one of her first times that she had been with me.

She was like, do you prescribe birth control pills to anybody at any age? And I said, yes, as long as they started their period.

And this is one of the flaws here with the federal ability to be able to go in and get a birth control pill over the counter is we don't even know if these individuals have started their cycle.

That is a key critical point before anyone who deals with teens prescribes someone a birth control pill, because we do know that if you have not started your period, you should not be on this kind of hormonal therapy. And I call it hormonal therapy and not necessarily birth control pills because there are certain consequences.

And additionally, it masks so many other things. You have no idea how many patients I have diagnosed with either anatomical issues or chromosomal issues or endocrine issues who come to me at 15, 16 years old because they've never started their period. And that is how we're able to really dig deep and find things.

And so if you're giving someone hormonal therapy prior to them even starting their menses, and if you can get it over the counter, nobody's asking basic things. So, you know, this is a good bill.

My issue with, with it, not the bill, it's just the fact that on a federal level, they have allowed this without any kind of protections to ensure that individuals who will be getting these birth control pills over the counter are actually ready and are medical candidates that being said, I will support it because I think providing more education and more ability for people to get things like condoms and birth control, if they have started their cycles, is a good idea.

But I do think that the Federal Government needs to fix this, because we could potentially be doing more harm than good by not requiring basic questions. Thank you.

And just to clarify, this bill is exclusively around condom.

Because it's non prescripted contraceptions. The condom piece is only for the schools. On the retailers. The language is non prescriptive contraception. So there are other items that are included in there. Currently in the state and Federal Government, there are no restrictions to ages. So we're not changing anything, we're just matching the law.

And I think the Assemblymembers just doesn't like the federal law, so I can't speak on that.

But we do have language in the bill that says, should the Federal Government change the age restriction, that would supersede my bill, my bills, and it would align it and match it, should it ever bring down restrictions on age, on ages.

Thank you, Mister Patterson.

Great, thank you for the last couple years. I've been here for now 18 months. Very long, 18 months. I used a joke that I had a full set of hair when I started this job. I've brought a bill to this Committee, and it's gotten out of this Committee, and it's gotten beyond this.

Made less progress this year than last year, unfortunately. But I'm trying to. I think the biggest challenge facing our children right now, or the biggest threat, especially people in the 9 to 12 age range these days, is potential fentanyl poisoning.

And when I look at limited school resources and the things that they would have to pay, even with inappropriation, you know, my preference would be to see naloxone in every school for those poisonings, not only for the students, but for the staff as well. And it did enjoy broad based support, but it's hard for me to.

I mean, I have other concerns with this bill, but I just think in, you know, my personal opinion of if we're going to have limited funds, I'd rather see that in school personally, than distribution of condoms. So just my two cent on that. So, thank you.

The beautiful thing about the 120 legislators here is that we all bring in unique perspectives and we get to work at an array of things. If 120 legislators only worked on one thing, we wouldn't get a lot of stuff done. And I commend you, Assemblymember, for focusing on fentanyl. I think that's a huge crisis.

I have more of a health background nowhere near the good Doctor here, the tip of the iceberg and my focus is a lot on health and I'm proud at least to say we've allocated I think $30 million to distribute naloxone to different communities. That is about to be this week.

I hope you can vote on that because that's a way more, that's a lot of money that's going to come down to different cbos that will be able to distribute and I'm proud at least for my school.

LAUSD just voted to be one of the first school districts to allow Narcan to be administered by peers or to be on school campuses and I think we can both elevate those issues as well as these simultaneously.

Seeing no other questions or comments from Committee. Do you want to use that as your close entry?

Yes I am respectfully asking for an aye vote.

Thank you. And when we have a quorum we will consider the motion. Thank you.

We are moving to after a very heated race to item number 11, SB 1238 by Eggman. Speaks.

Okay, here we go. Good afternoon, everybody. Today I am presenting SB 1238 and I wanted to thank the committee and the staff for the amendments. And I will say this is my last mental health bill that I will present in anybody's committee. And so I hope it goes smooth. That was a little Catholic guilt up front.

So SB 1238 will be amended to allow psychiatric units and mental health rehabilitation centers to treat standalone severe substance abuse disorders in addition to mental health disorders and co-occurring. It allows the Department of Healthcare Services the flexibility to authorize additional types as they come online.

We've done a lot of work on mental health and conservatorship and care court, and everything we've done and our options for where people will go has not quite kept up. So this then allows designated facilities to be able to take people on a lock hold in places that we didn't, a secure hold that we didn't necessarily think about before, and then also allow the flexibility for the Health Department to continue.

When new programs come online, new facilities come online for them to be able to say, okay, this one's appropriate for this level of care. With me today, I hope, maybe not, is Randall Hagar with the Psychiatric Physicians Alliance of California. Here he is. It's like magic.

Thank you. You'll have two minutes.

Thank you, Madam Chair. Randall Hagar for the Psychiatric Physicians Alliance in California. We were sponsors of SB 43 last year. After its enactment, one of the first things that we started hearing was, what are we going to do with the folks who are gravely disabled and have a severe substance use disorder?

And so as I started to talk to my folks, a number of whom are medical directors at different kinds of psychiatric facilities, realize that a lot of people who have co-occurring illnesses that are severe mental illness and substance use disorders are being treated in those very same facilities.

So there is a clinical capacity, is what I learned in many of the facilities out there in the community that can provide deliver substance use treatment services to individuals. What we did find even further was that a lot of those facilities were prohibited by, in regulation, by regulations that said, you can't admit somebody if they have a solo substance use disorder.

So looking for a very quick way to try to get the process kick-started, even as we have other kinds of facilities, for instance, from the BHCIP program that are coming online even as we speak, we thought that an intermediate and sort of a measure that would help us get started would be to see, to the accreditation of those facilities change those regulations, allow them to admit individuals that have the substance using disorder and grave disability at the same time. You know, kind of the backstory about how we got here today, and the bill as it is, I think does quite well in getting us down the road a little bit there.

Thank you. Are there any other witnesses in support? Please approach the microphone.

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

Madam Chair. Dylan Elliott, on behalf of the California State Association of Psychiatrists and Mayor London Breed, pleased to be co-sponsors and in strong support. Thank you.

Arjun Krishna, on behalf of the California Medical Association, we are in support.

Geoffrey Neill, representing San Diego County, also in support.

Jennifer Snyder, representing the California Association of Health Facilities, in support.

Thank you. Are there any witnesses in opposition?

Madam Chair and members. Michelle Cabrera with the County Behavioral Health Directors Association of California. And first, I want to say we were on record as opposed to the original version of the bill. The technical assistance amendments proposed by DHCS, if adopted, would very likely remove our opposition.

However, I will note that there are several comments in the analysis, which we certainly align with, which are that the proposed DHCS technical assistance amendments would limit the modification to the psychiatric health facilities and the mental health rehabilitation facilities to serving only those individuals who meet the severe substance use disorder criteria.

That's a diagnostic criteria, and we believe that that is an unfair restriction or limitation. In other words, we would like to see all psychiatric health facilities, all mental health rehabilitation facilities bring the floor up on their ability to treat all substance use disorders across the board consistent with the mental health treatment provided in these facilities and those. We would like to continue to work with the author and sponsor on moving forward. Thank you.

Prior to moving to additional opposition, I'm going to make sure that we can establish a quorum. Secretary, please call the roll.

[Roll Call]

We have a quorum at 2:31. Any other witnesses in opposition?

Good afternoon, Chair and members. Beth Malinowski, the SEIU California. We have an opposed unless amended position. Appreciate all the incredible work that continues to refine the bill and look forward to hearing conversations with the member and her staff. Thank you.

On behalf of Mental Health America of California, Disability Rights California, and Cal Voices, in opposition.

Hello. Rachel Bhagwat, ACLU California Action, in opposition.

Thank you. Seeing no other opposition, I will bring it back to the committee for a comment or question. Mr. Patterson.

Just reading through the analysis, does this give counties the control to choose the facilities they have to be first approved by the counties and then the state designate? Okay, great. Thank you.

I know that, Senator, you've had many conversations with committee on this, and know that we kind of have one outstanding issue that was raised by the opposition in terms of the limitation that this bill kind of distill employs for individuals with substance use disorders, and limiting that service for others. Would you like to make comment on that in your close?

We're happy to continue to be in conversation on those issues. I think we always need to be careful not to have the highest cost of care for everybody. I think people need to be at the appropriate level of care all the time and we're well open to those conversations about where that might be.

Thank you. I just want to acknowledge, Senator, as you mentioned, no Catholic guit here. Want to just acknowledge that this is your final bill in Assembly Health Committee. And I want to acknowledge your extensive efforts, particularly in the mental health space overall in health for this Legislature. It's something that will certainly leave an indelible legacy on California. So, thank you for your work. Moved by Rodriguez, seconded by Waldron. With that, we'll call the roll. The motion is do pass, as amended, to appropriations.

[Roll Call]

Measures nine to zero. That measures out. Thank you, Senator. Moving on to item 17, SB 1432. Caballero. Thank you, Senator. Whenever you're ready.

Thank you, Madam Chair and members, I'd like to start off by accepting the committee amendments and thank you for the opportunity to present SB 1432, which establishes a viable, transparent, and accountable pathway for health facilities to achieve seismic compliance.

As many of you are aware, healthcare access for all is in jeopardy, given the distressed financial and operational conditions of California hospitals, some of which are in your district. The Alfred E. Alquest Hospital Seismic Safety Act requires that by January 1st, 2030, all hospital buildings have the capacity to provide patient services following an earthquake.

Pursuant to current state law, hospitals that do not comply with this 2030 seismic standard will be required to close their doors to patient care because they will lose their license to operate.

And I want to emphasize that because I've had a hospital close in my district over the past year and a half, two years, and there's nothing more devastating to a community than to lose the only hospital in the county. It is on track to reopen by the end of the year.

But what I can tell you is that most of the medical staff that worked at that hospital has left to go somewhere else, and trying to recruit in a disadvantaged rural community becomes very, very difficult.

Really, the nexus of this bill is that one size doesn't fit all, and if the ultimate penalty that the hospitals face is closure because they can't operate, they don't have a license, then we need to do everything we can to figure out what are the elements we need to do to make sure that hospitals can meet their seismic safety requirements, can continue to operate in a profitable manner, can continue to meet the high demand for medical services, Medi-Cal and Medicare services in the community.

According to a 2019 Rand Institute study, the estimated cost of upgrades in construction for all California hospitals to comply with this 2030 seismic standard range from 34 billion to 140 billion, depending on compliance approach, whether retrofitting a building or constructing new ones, the timeframe and the cost to meet the 2030 standards are a major challenge, especially for financially distressed hospitals.

The Rand study suggest the cost of upgrades would put 40% of California hospitals in severe financial distress in immediate risk of bankruptcy. Community and public hospitals would take the most significant hit, further hindering access to care for the many Medi-Cal and Medicare patients who depend on them.

Hospital finances were severely impacted during the COVID-19 pandemic, causing new financial and operational challenges, leaving many hospitals in distress. From 2019 to 2020, California hospitals' total net income decreased by $4.49 billion and as you know, many had to utilize their reserves in order to carry them through the COVID period.

More than 50% of California hospitals lose money every day to care for patients. Furthermore, as hospitals continue to face significant cost pressures, many are forced to reduce services, keep their doors open. Hospitals are essential to our community's health and well-being in California must act quickly to prevent further loss while still pushing these facilities towards compliance.

This is why SB 1432 is a critical component to improve seismic safety in our local hospitals by establishing a framework that is not a one-size-fits-all approach, but recognizes regional healthcare challenges that one, enhance transparency to the local communities and workers.

Two, demands accountability with milestones and commitments and three creates a viable pathway for hospitals to meet seismic compliance standards according to each unique circumstance and at the same time provide critical health care to our communities.

I greatly appreciate the collaboration with the Assembly Chair Bonta, Senator Roth, the Senate and the Assembly Health Committees, and many stakeholders on this major effort to get the bill right. We've held meetings, extensive meetings with all the stakeholders, a number of them, to get their feedback and input, and that has been critically important.

The bill reflects a lot of the comments and the concerns that were raised. I also appreciate the great work of HCAI to provide technical assistance amendments, many of which have been accepted and are in print today. This reflects our commitment to finding a viable, workable solution.

All of us have a shared interest in keeping hospitals on the path to compliance, to keep our hospitals open, functioning in an emergency, and to keep our workers and patients safe. The cost of doing nothing is hospital closures and lack of healthcare access in communities across the state, which California simply cannot afford.

SB 1432 is a solution that allows hospital to see a viable pathway to compliance with critical transparency and accountability measures that ensure the intent of the Seismic Safety Act is met.

One of the things that I learned as, because I had one hospital that closed and two, one of which closed, and also the hospital in Hollister that filed for bankruptcy, is that there was no notice to the community, and that included the local City Council Members as well as the elected officials, myself and the Assembly Members that represent both of those hospitals.

We had no clue that the hospital was in distress and that's part of what is embodied in this transparency measure. I noted that the opponents have some other comments in regards to things that would be helpful in the bill, and I agree with those things.

I've never received any language from the opponents specific to how we can make the bill better other than through our meetings. And so, I will continue to provide opportunities to amend the bill and to bring it back to the Committee for the Chair and the committee consultant to look at.

We want this to work and the whole idea is to for those that have failed to meet their requirements and have the money resources to do so, they're going to have to get through HCAI, through that process, and explain why they're not on the path to doing the right thing.

For those that don't have the resources, the Legislature may need to put up money, either through bonds or General Fund to ensure that they have the resources through low-interest loans and those kinds of things, in order to be able to meet the compliance. That's for the future. That's not in the bill today.

But if there's one thing that I've learned in terms of seismic compliance is that one size really doesn't fit all. And sometimes there are resources that need to be available in order for the entities that just don't have the resources to do it, to get it done.

And everybody will know because there's transparency in the bill that requires it. So, with me here today, I'm very pleased to have Kelly Ash with Dignity Hospital and Tim Jacobi with Scripps Health.

Kathryn Austin Scott with the California Hospital Association. I'm going to defer our testimony to our two hospitals, but here for questions and any concerns.

Thanks. You'll each have two minutes.

Honorable Chair and Members of the Health Committee, my name is Tim Jacobi, and I am the Corporate Vice President of Construction Facilities for Scripps Health and am responsible for the design and construction at our five hospital campuses in San Diego, including all seismic compliance work. We take the state seismic mandate very seriously.

To date, we have spent over $1.7 billion on seismic compliance. Our hospitals are safe and meet the current requirements so they will not collapse in an earthquake. We estimate in today's dollars. We still have $3 billion of work left to do to meet the seismic requirements.

Like all hospitals, we lost over three years during the pandemic, we are just now recovering from the financial hardships. Additionally, our hospital, like many others, have unique and in many cases insurmountable challenges meeting the current 2030 seismic operational mandate.

For example, the final building requiring construction at our Encinitas hospital campus has been challenged with local land use delays, complexities to avoid patient disruptions and complications throughout the construction process. It took 10 years to get the master plan and building permit approvals with the city, we are now under construction.

We will not slow our work, but one delay will prevent us from meeting the 2030 deadline. As it is, we will not be completed until the end of 2029. The complexity of these projects cannot be overstated. Of our five hospitals, we face the toughest challenge at Mercy.

Scripps Mercy, a large disproportionate share hospital in the heart of downtown San Diego. The hospital saw 12,800 homeless patients last year, a staggering number. Mercy is a teaching hospital and is also a level-one trauma center. Mercy is landlocked and while it is safe, it cannot be retrofitted to meet the 2030 mandate. It must be rebuilt.

The hospital construction process is both complicated and expensive. We submitted plans for the city approval six years ago, and we just received.

Please finish your thoughts.

And we just received our conditional youth permit a few months ago and plans have been submitted to OSHPD. Thank you.

Thank you. Go ahead.

Good afternoon, members. Thank you for the time. I'm Kelly Ash. I'm the California Vice President of Public Policy for Dignity Health, and I'm here representing our 31 hospitals statewide. As the largest Medi-Cal provider of services in California, Dignity Health considers ourselves a long-term partner with the State of California, ensuring access for Medi-Cal beneficiaries.

Just last year alone, we provided over 600,000 inpatient days and 1.2 million outpatient visits. Annually, after all supplemental payments, including the provider fee, we lose about a half $1 billion a year at cost serving these Medi-Cal patients. Even with the significant losses of Medi-Cal, we have also invested over $2 billion in reaching 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, Dignity Health is starting. We started our journey with 87 noncompliant SBUC one buildings. We've had to take 18 out of commission, and the remaining are all at least 2020 compliant.

But none of our hospitals are fully 2030 compliant. For example, California Hospital and Medical Center in Los Angeles is completing an over $200 million new patient care tower. At completion, that tower will be 2030 compliant.

However, there are six other buildings on that campus that are not currently compliant, and we are trying to play Tetris in order to get these services, maintain services, while bringing these buildings up to compliance. And we know that that will take a lot of time and hundreds of millions of more dollars to get that done.

If we can't get those other buildings done, the entire hospital would have to close. At each of our hospitals, like I mentioned earlier, it is about Tetris moving around services and maintaining access while still advancing the seismic standards.

We've got billions in additional investments that we need to make, but we want to make sure we're doing this with proper access and care for our community. So, we urge your support. Thank you.

Thank you. Are there any other witnesses in support? Please come forward.

Good afternoon. Daniel Sanchez with California Advocacy here on behalf of La Coperativa Campesina de California, Farmworkers Institute of Education and Leadership Development, Calexico Wellness Center, and California Human Development, all in support. Thank you.

Sumaya Nahar, on behalf of Memorial Care Health System in support.

Good afternoon, Madam Chair and members. John Doherty, on behalf of Scion Health, Scion Health operating as Kindred Hospitals in California in support. Thanks.

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

Good afternoon, Madam Chair and members. Alfredo Medina, here on behalf of Cedars-Sinai, in support.

Good afternoon, Madam Chair. Awad Kadani on behalf of the California Children's Hospital Association, in support. Thank you.

Kelly Brooks on behalf of the California Association of Public Hospitals and Health Systems in support.

Nicole Wordelman on behalf of San Bernardino County in support.

Jen Chase on behalf of the University of California in support.

Geoff Neill on behalf of Contra Costa County in support.

Nicette Short, on behalf of St. Agnes Medical Center, PEACH, the Alliance of Catholic Healthcare and Loma Linda University Health, in support.

Fred Noteware representing Stanford Healthcare in support.

Megan Loper on behalf of the United Hospital Association in support.

Shaun Flanigan on behalf of HCA in support. Thank you.

Good afternoon. Alejandro Solis on behalf of Comites Civico del Valle and Los Amigos de lA Comunidad, in support. Thank you.

Good afternoon, Madam Chair and members. Connie Delgado, on behalf of the district hospital Leadership Forum, in support.

Thank you. Are there any primary witnesses in opposition? Thank you. You'll each have two minutes.

Thank you, Madam Chair and members, good afternoon. My name is Mari Lopez and I am with the. I'm a legislative advocate for the California Nurses Association, representing more than 100,000 registered nurses throughout California. Respectfully in opposition to SBS 1432.

We appreciate the dialogue with the author and the addition of amendments of measurable accountability, but we remain in opposition. Sorry, lost my place. We appreciate it. We remain in opposition to any further extensions for seismic compliance for California hospitals.

Hospitals have had 30 years to implement seismic safety requirements and that would ensure that they can remain open and functional in an event of a major earthquake. In the 1994 Northridge Earthquake, that I actually lived through, 11 hospitals were severely damaged and eight were forced to evacuate patients, including babies, down staircases without lighting.

Nurses and other healthcare workers at the hospitals that morning desperately tried caring for their patients in darkness, without services, without functioning equipment, electricity or water, and at risk for their own safety.

During the Northridge Earthquake, thousands were injured, and the public expects hospitals to be there when disaster hits, standing nearby, ready to treat those that will end up undoubtedly be in need of care. Circumventing seismic safety requirements now, with yet another delay, gambles with the lives of patients, nurses, and other healthcare workers.

Scientists agree that we are overdue for a magnitude stronger than Northridge. Should that happen, we could see a similar scenario to 1994. A line in the sand must be drawn for meeting site compliance. It's not additional time the hospitals need, but oversight, accountability and prioritizing compliance.

We are taking a gamble with the lives of people in the state and California must continue to hold its hospitals accountable to its high seismic standards with no extension to the 2030 compliance deadline. And we ask that you oppose SB 1432. Thank you.

Good afternoon. Matt Lege, I'm here on behalf of SEIU California. We'd like to thank the Committee Chair and the staff and the author for their work on the bill and convening stakeholders to have discussions about this really important policy and how we make sure California is prepared for the next major earthquake.

As mentioned, it is a matter of when, not if, that we're going to get a major earthquake in California. Unfortunately, by coincidence, often when we talk about this bill, we are reminded in California that there's an earthquake that happens, and it's often not the place we most expect either.

And so, for SEIU, we think it's really critical that we're coming into compliance with the 2030 seismic standards. As mentioned, this is something where hospitals have had decades to prepare for this and continue to try to kick the count down the road.

And unfortunately, as the bill currently in print before, you would ensure that hospitals are really not coming into compliance for another 15 years. And so that's just continuing to risk patients, workers, and gambling with their work. Just on some of the points that was made earlier today.

The California Healthcare Foundation recently came out with a study talking about the financial health of hospitals, saying last year that hospitals made $9 billion in profits. So pretty significant revenue bounce back from a difficult year during the pandemic.

Also, I just really want to appreciate the technical assistance that was provided by the Administration and look forward to continued dialogue on that.

We do think that that puts us on a safer path to compliance in California, making sure that hospitals can take the time that they need, if that individual facility needs some, but also doesn't grant a blanket extension for all hospitals in California.

As mentioned, there's some hospitals that can come into compliance by 2030, and we think that's critical that hospitals do so. If hospitals need more time, I think the technical assistance affords them that opportunity and a pathway to do so. So, I think that is a critical sort of step, and appreciate the technical assistance there.

So, just in conclusion, you know, while we continue to look forward to the ongoing discussion just for the bill before you today, we are still respectfully opposed.

Thank you. Any other witnesses in opposition, please come forward to the mic.

Madam Chair Members Steve Baker with Aaron Read and Associates, for the Professional Engineers in California Government, opposed unless amended. Thank you.

Good afternoon, chair Members. Janice O'Malley from AFSCME California, representing many nurses, healthcare professionals and those in emergency medical services. Also in respectful, opposed unless amended. Thank you.

Beth Capell, Teamsters and unite here on behalf of our healthcare workers and also the families who depend on these hospitals being there after an earthquake. Functional.

Thank you Madam Chair and Members Megan Subars, on behalf of the California Professional Firefighters, respectfully opposed.

Julie Nielsen for the National Union of Healthcare Workers, opposed unless amended. Thank you.

Thank you. With that, I will bring it back to the Committee for any comment or question. Doctor Wood.

Thank you, Madam Chair. And thank you, Senator Caballero, for bringing the Bill forward today. I'm happy to support your Bill today. Meeting seismic requirements has been a challenge for many years, especially for small rural hospitals like so many in your district and mine.

We know that for the benefit and protection of all patients and the hospital staff in every hospital in the state, we have to figure out how to make sure hospitals meet their obligations in this next step decade, once and for all, and certainly before we experience a significant and destructive earthquake.

And I hope Mister Leger is not correct that there will be another earthquake soon. But I'm here to keep this work moving forward so that patients can continue to get the care they need, when they need it, where they need it, and to protect the hospital staff that provides it. Thank you. Thank you.

Majority leader.

Senator, how many years have we been working on these things? I just want to scream. But obviously I'm going to support the Bill today and I would just like to see more consistency across all of our seismic bills that are out there right now. And I hope you can work together to come up with a strong Bill.

You know, when I think of 2030, I'm thinking who behind us will be here to make sure these things get implemented? And then we're not doing this whole dance again. But anyway, I would hope that we can work on something a little bit tighter and we'll look at it again when you get to the floor.

But I am truly behind these things. It's been such a long road and I think we've seen two or three of these already this year, different seismic bills. And so hopefully we can come to a fair landing on this. So thank you very much for bringing it. And again, I'll support it today. Thank you very much.

I appreciate that. Because the Bill attempts to get away from one off bills, one hospital at a time. We're granting relief and we're granting relief because none of us is willing to say, well, that hospital just needs to close because they didn't do what they're supposed to do.

So this is a way for us to set up a structure and then to say there's transparency. So now the community knows that this hospital has asked for more time and that their resources are going to be questioned where they're using them and how they're using them.

Because the other issue that I had, frankly, with my hospital that closed is that they're a private nonprofit. They don't have to tell us anything about their finances. We want state money, but they would not share their finances. And that's really frustrating for us to be able to evaluate well what's really going on.

And is the investment that the state makes, is that investment going to be managed fiscally? Right. So that's the reason that there's transparency and there's deadlines and there's reporting. Hopefully that changes so that we know what's going on with the hospitals in our region. Thank you.

Thank you very much. Thank you.

Mr. Rodriguez.

Once again, I want to thank the author for bringing this Bill forward. Obviously the last two weeks we've had a Bill regarding seismic delays or extensions. One thing I just wanted to point out with the opposition was talking about the 30 years. I think the original seismic compliance Bill, I guess was in 1994, right?

So it's been 30 years trying to catch up to make these compliances. And obviously the first one was the 20,2008 standards now went to 2020. Now we're looking 2030 and maybe beyond. Right. So is there a reason why it's been 30 years? How still hard for some hospitals to struggle? I don't know.

Maybe to the witnesses and support, why it's been a challenge if we had 30 years knowing this, that we're still in a situation where it's challenging to find the funding to address it.

That latter part is probably one of the key points. I do want to make sure we're all aware that we need to break this in two. The first deadline was to ensure our hospitals remain standing so really structurally made sure.

I often say hospitals are some of the safest buildings in your backyard because they structurally were ensured that they don't collapse. So, our hospitals 98 - 94 - 98% of our hospitals are determined to not reach that collapse standard, an expensive standard.

So back to that last point, our hospitals had to a figure out what the rules were when the Bill was passed. Took time to figure out what the rules of the road were for that. And then the rules changed again.

So we got to a place where between 2015 and 2020, we could accomplish the majority of those hospitals remaining standing. This is a new standard. So we are asking hospitals to be fully operational. So on top of those structural standards, our hospitals have to ensure the lights turn on, full power works, surgical suite works.

ER is fully capable, oxygen is running. It's a very intense standard while being landlocked, oftentimes and managing services at the same time, because the last thing our hospitals want to do is take services offline in order to manage that construction.

So it's a lot more detailed, frankly, because they're going into the actual patient rooms as opposed to wrapping the building and steel or doing other structural components. It's the non-structural. It's, you know, bracing, anchoring water, etcetera. So, it's just a very complex standard.

And we hit the first one in 2022 - 2025 for some folks who are still working on that. A few folks left to the bills you've seen. But now we've got, you know, we're bearing on 10 years to do this complexity.

And then remember, and, you know, we spent three years managing, two to three years managing Covid, which we took our buildings, rearranged them, stopped construction for the most part, and then came back online. So that three years extension, we're looking for kind of honors that request as well.

And then leading up to another question. You just talked about the compliance with buildings can be standing, right? That I think, apologize for. I didn't catch your name. But you talked about no matter what these hospitals will be standing. Is there guarantees that what's have been done, the construction of these facilities, that the buildings will stay standing?

Because, once again, we haven't been tested. Right. We haven't had a major earthquake since Northridge, and there's been a lot of complaints and changing of planning and building since then. So there are guarantees, in a sense, because you stated the buildings are going to stay standing no matter what.

So is there a guarantee, no matter what type of earthquake we get, whether it's Northern California or Southern California, that that building will stay intact?

There has been the engineering standards, you know, to meet the 2020, which is a non-collapsible standard or extensive. And there was great modeling that was done. Obviously, you don't do a, you know, a collapse test. You do the extensive modeling, and that modeling has been done, and it pretty much verifies that these buildings will stand.

So, yes, I'm very confident in that with the modeling that's been done by many different sources.

Okay. And I just had one more question on page six of the analysis, they talk about transfer plans. I don't know if anybody has a look at it. It says there requires a plan to address continuing care for hospitals, patients following a seismic event through alternative care sites on hospital campuses and transfers to other care facilities.

So that brings to mind on mobile field hospitals that we should look at some type of insurance plan. Right. That as we're looking to extend these requirements for hospitals to stay afloat, that we should start looking at maybe field hospitals. That would be a backup plan in some of these areas.

It'd be nice to have one in Northern California, Southern California, in the event something drastic happens where a hospital facility goes down, that we have a plan in place with a mobile field hospital. Right. It just seems to make sense.

But I don't know why nobody really talks about mobile field hospitals as a backup plan, because all we know, it's going to happen here in California. Earthquakes happen. That major one is way overdue.

So I would just like to see if we can start talking about that discussion about having some type of a mobile field hospital plans in place and that these counties and cities have a plan to evacuate folks if needed. Right. Because who's going to be ones doing that?

Our local police officers are firefighters there in the cities or counties and in the settings, too. Is the rural setting or the urban setting that those local areas, jurisdictions have those plans in place working together with that component of a mobile field hospital.

So I don't know if that's something I just wanted to put out there to you guys. Maybe you guys consider, and look at that.

The state actually has previously considered this, and it's a conversation for another day. But we actually, as a state, invested in some mobile field hospitals.

What we found to be, and I'll invite Tim to be as helpful, is our hospitals actually coordinate with their fellow hospitals because often these things are regional and they work with hospitals outside their region to manage those transfer plans as well because they have active doctors, active plans act, and they actively practice these plans of how we manage those disasters.

But we wanted to make sure that was transparent as well, to your good point, because frankly, in our conversations with our local firefighters, they got very concerned and want to know what's the plan? How are we going to do this? How, if three hospitals go down, are we going to manage this? They work with us.

But frankly, we also wanted to know what's the plan for construction because we will have to take beds out of service and that will impact our ERs. And what is the regional plan for that?

Because the last thing we want to do is take six of the same service out in the region and not have, whether it be complete surgical med surg, behavioral, what not. So, yes, I think we'll continue that conversation.

Okay. Well, Senator, I really want to get there. I think I can, but I'm still just having a couple issues with it. I just one last question. Are there any provisions stating that if you get the three year or five year extension, that that's it, there will be no other extensions, depending on what occurs.

So, somebody don't come back in a couple of years? Oh, we need another extension because of x, y and z.

So the extension, what's required to get an extension is that you have plans in place, and those plans are fairly specific about exactly what you need to retrofit or to tear down and rebuild. It starts to include drawings and permits and the financial plan.

So it's not just, zero, we're going to do it, and then you don't do anything. You have to start showing HKI the actual work that you're doing, and HKI will make a determination as to whether you're entitled to any extra time or not.

The whole idea is to, is to, is for those hospitals that are in a, that have the capacity that they start actually doing the work.

And the other part of it that became fairly significant is that a number of these hospitals, so those of you who live in urban centers, have a plethora of benefit because you have a number of hospitals in your region, as opposed to Madera, that has one hospital, and Merced that only has a couple hospitals.

So if you have hospitals that need to do retrofits or reconstruction in a region that HKI can figure out how not to have them all offline at the same time, because you may have to close some services as you do the retrofit or as you rebuild, as you tear down and rebuild.

And so it would be a staggered schedule, and it gives HKI the flexibility to be able to approve that so that it's not one size fits all. You get this three years, and that's all there is to it. And not everybody needs the three years except for that.

If you look at where we are today, unless they've got financing, they have the permits. You heard that it took the city close to 10 years to finish the permits for them to actually start the building. If there's that kind of delay that's outside of the control of the hospital.

And HKI will have the authority to be able to grant extra time, maybe as well to weigh in and tell the city, you better get moving on this because, because they need to be able to do this work by a certain date. So to answer your question, there's flexibility. Okay, great.

I appreciate that I may be laying off. I know you want to look at some other things to maybe get in a better place, but really, once again, thank you for your work. I think this is probably the better Bill that I've seen lately regarding seismic activities for hospitals and the extension. So thank you very much.

Thank you, Assembly Member Santiago.

Appreciate you working on this issue. Thank you very much. And I'm prepared to support it here. But I know that some of the concerns you might be working on. I'm glad to hear you say that you know, some of the cause.

There are legitimate reasons as to why I pushed off if there's a local municipality who's not moving on permits, etcetera. But I don't need an answer on this one particular piece. But there is also fair to say that in some cases, hospitals are just kind of pushing.

Not all, but some have pushed or kicked the can down the road. I remember being young staff about 20 years ago when this issue was first coming up at the beginning of the century, believe it or not, and there was a push at the time, and the arguments were pretty much the same. Right.

Which is like not enough financing this and that. And as years go by, we kind of deal with this over and over in the Legislature. I'm hoping that you could fine tune to address some of the concerns in terms of the hospitals that can potentially do it, that they actually do it.

And if there are legitimate concerns, as you have stated. Sorry. The witnesses have stated, where there was a municipality that sat on it for a number of years, I don't know how much real work we can do on that, except for maybe weigh in as state leaders to the locals, but it just has to land somewhere.

So at some point in time that concerns about a hospital not coming down are addressed during an earthquake, because this has to happen. So I know there's a little bit of work left on this, or lots of work, depending on who you ask.

But I'm hoping that you would sit down with the opposition and continue to work on some of those so that we do get this moving. And someday I'm going to retire and look back and go, hey, it got done. It didn't take another 20 years to get done.

And here we are back at the same table with different advocates pushing for another 10 years, 20 years. And that's really the only concern that I would have not necessarily addressed to your Bill, but just addressed to the General topic and issue at hand, which is beginning of the century.

I dealt with this as a young staffer and dealt with this later on as a senior staffer and then dealt with the several in the last 10 years in the Legislature.

But I'm hoping, and I trust you're the one or one of the people in the building that could actually nail this down in a way that's bonafide forced those to do the right thing when they're eligible and can financially do that. And for those who have legitimate concerns that you'd be able to balance that needle.

So I'm prepared to look at what you have as it gets to the floor, but prepared to support it today because I understand, because I trust in your work. Thank you. That if anybody can land this thing, you're going to be able to sit down with the opposition and sit down with the hospitals.

Look, I've been on the other side of the table with you. You're straight. If you tell somebody, hey, this is what you can do, this is what you wish you could do, but I'm not going to let you do it.

I trust in that and have faith in your work to be able to land that sort of work.

Thank you. I appreciate that. Thank you, Assembly Member Schiavo.

Thank you. Like my colleague, I have memories of over a decade ago working on this issue, too. And I know it was that long ago because my daughter is about to turn 12 and it was my last day of work and I was so pregnant, I had to turn sideways at the podium to be able to.

On the issue where there was a push for an extension for a hospital. And, you know, it's just been going on a long time. And it does feel like the can has been kicked down the road a lot.

And so I know in some of the conversations, I'm sorry I missed the presentation I was presenting to Bill, but in some of the conversations I've had about this, I know that there has been hopes expressed that this could be the extension to end all extensions, and that would be amazing if that were to happen.

Because I think at the end of the day, what we want is we want to make sure these hospitals are safe. They're functioning for both patients and staff. And I think it's critical we get there. As the person who represents Northridge, you know, we know all too well how important this is.

So I know there's ongoing conversations happening. I hope that, you know, that will continue. I know, sounds like you're an amazing negotiator. So I haven't got to experience it myself, but I look forward to it and, you know, and I hope that the technical assistance is incorporated and those conversations move forward as well.

So I will give a courtesy. Yes. Today and then, you know, see where things are at for the floor.

Thank you very much, Senator.

I also will be supporting this Bill. I did want to just because this is a hearing, that's why we're here. Give us an opportunity to sunlight some of the issues that I know that you will continue to work on. The first is related to ensuring that our hospitals are able to keep on track with their plans.

Given the assemblymember Rodriguez, it would be great if we could have a that's it provision in this legislation as it moves forward.

We're essentially counting on SB 1432 and the accompanying Bill that Doctor Wood is moving forward to have that be the global seismic retrofitting plan for all of us to be able to follow through because we don't want any more one offs.

So one issue I just want to just offer an opportunity for the opposition to speak to on this is the reality is that hospitals have received $9 billion in profits most recently, according to recent studies on the cost side of seismic retrofitting. We also have the issue of when a hospital is doing a retrofit.

There's also an opportunity to build a beautiful lobby and do other things that are not necessary for the purpose of ensuring that a hospital is operational past the, according to the 2030 seismic retrofitting goals that we have in place.

So my question is one, is, is there an opportunity to ensure in this legislation that we are actually calculating costs around the costs associated with having operational facility, as opposed to the additional costs that are nice to have for consumers but are not related to the specifics of the hospital?

And secondarily, is there a way for us to be able to know that we're moving forward with the actual plan that the hospital is presenting? Third issue for me is around to your Senator point of not one size fits all.

I think one of the challenges that I've heard in conversation over multiple meetings is this automatic extension through your extension and that being problematic because there are hospitals that are kind of moving towards being able to be on track and don't need that additional time. So we'd want them to keep on their status.

So I just wanted to have an opportunity for the opposition to speak to any key issues that they will be listening to having movement on over time as this continues should it get out of this Committee. But those are the concerns that I want to make sure get addressed as we consider this Bill.

So, Matt Lachey, just appreciate those questions. I think particularly the blanket extension. Once submitting a plan is one where we find the most problematic, because we do think that is going to just make California less safe because you're going to have hospitals take the additional three years and appreciate the pandemic and appreciate what hospitals went through.

And, you know, our workers are facing those challenges. But those challenges also are underscored by, you know, what workers didn't have during the pandemic and how we weren't prepared. And so I would hate to repeat that mistake by having our hospitals not be prepared again and workers not having the tools they need.

As we were talking about the structural standards, one note I wrote down is, yes, hospitals have met the structural standards, but what that really means for nurses and healthcare workers in the hospital is that they'll still be evacuating patients. They'll be evacuating patients with electrical wires.

And this was the case in Northridge and water and not being able to use the elevators, which as someone who personally has moved patients around a hospital, I will tell you that is incredibly problematic.

And to think you're doing that during an emergency where you don't have the support that you typically would have, and doing under just not ideal circumstances is going to have real impact on patient care and our vulnerable patients who maybe can't maintain and continue to care for it in the place.

So I would say the blanket extension on the first year is really for at least SEIU, one of our most problematic pieces. We do appreciate the conversation with both the author and sponsor around, trying to make sure we're getting to the real cost of the retrofit.

And we've seen, you know, sort of wild numbers out there in terms of the total cost of compliance. But when we sort of dug into it, we do realize that, you know, there's the cost of rebuilding completely. There's also the cost of the retrofitting.

But sometimes it's, it's literally putting bracing around pipes to make sure that the pipes are not going to break down. And so those can be two wildly different costs and just appreciate that there is some opportunity to get technical assistance from HCI to try to address that.

So, and then lastly, you know, we have provided a number of ideas on accountability, and happy to put that in legislative council form or, and submit that to the author as we continue to have those conversations.

Some of those could be, for example, that we've discussed, like, you know, having a monitor on the board to make sure that hospitals are prioritizing compliance with the law, and so look forward to continued conversations on those. Also, you know, building permits.

You know, hospitals often have to get building permits and realizing that in a day, oftentimes this is about prioritization and making sure that the hospital is prioritizing their ability to provide care after a major earthquake.

Marie Lopez, California Nurses Association yes, we agree with SEIU's comments. In addition to that, we just wanna highlight that some of these hospitals have State of the art equipment. They're brand speaking new, and yet they're not in compliance with the seismic requirements. So I think it is a matter of prioritization.

And so the transparency amendments that have been accepted. We appreciate that, but we're also concerned about the one offs as well. What's to prevent other hospitals to come in individually, asking for their hospitals to receive further extensions? Again, it's been 30 years.

We're gambling on our state not experiencing a major earthquake and that our hospitals are going to be prepared and ready to accept injured individuals that we know are going to be looking toward the hospitals and the emergency crews are going to be taking them there. And so they need to be prepared.

And I think our state population expects that and, you know, and are in the place where they're, they're not going to, there's no other place for them to be taken in the event of a major catastrophe.

So I think it's really, really important that we really, again, draw that line in the sand and end this once and for all.

If there's any way for you to address perhaps the question that I raised earlier.

Absolutely. Absolutely. Madam Chair, you asked about two items. As I wrote them down. I wrote it as calculate the operational costs and have an actual plan. Both of those are in the Bill, and there is no automatic three years extension. You have to produce a plan, and the plan, for example, has to have what you have decided.

Is it a retrofit or is it a tear down and rebuild? What is it going to cost? Where is your financing going to come from? What are your building plans? What do they look like? And have you submitted them to the local jurisdiction to get approval? Have you started to obtain permits?

In other words, based on where you are in the process, you have to be specific about where you are and what you're doing, and that's the only way you get extra time. Otherwise, you're expected to comply with the 2030 mandate.

And as you said, as many have said, there are some that are on that pathway now, whether they get finished or not, there are all kinds of.

For anybody that's ever done a construction project, especially a multimillion dollar construction project, there are things that happen, whether it's supply chain disruptions or lack of staff or the finishing touches to get a building operational. We hope that, as the witness stated today, they get done in 2029. Will they need extra time? Probably not.

And we expect them to finish that. But if they do, they can come into HKI and say, here's what's going on and here's what has caused the delay, and here's when we'll be finished and they will be held to those dates.

And we've given HKI the authority to be able to make that determination and then to give reports to the Legislature so we know what's going on.

The challenge right now is that I think I can say with a great deal of certainty that if someone ran a Bill that says my hospital needs extra time, that most of us will be, would be loath to vote against it. We believe desperately in hospitals. We want them to maintain their services and to stay open.

And what led me down this path to get involved in seismic was I served on the City Council when we had major earthquakes. And number one is all the cities were required to do an analysis of their old downtowns to determine whether there were risks.

And once that was done and we had that report, we had another earthquake, and it became a mandate to retrofit those downtowns. If our plans showed that there was risk, we required our small businesses in the downtown to do a retrofit of unreinforced masonry.

And after years of extending it and extending it, we finally realized we got to put up some money because they don't. It was a dilapidated downtown, a lot of homeless. The businesses didn't have the money to retrofit.

So we went to our local community bank where we had our city money, and we said, our money's in your bank. You're a community bank. We need to work together. We will provide surety if you do Low interest to no interest loans. And that's what they did. They made those loans available to the business community.

The city backstopped them, never ever had to pay out ever, because everybody retrofitted and it took care of the situation. So the issue with this is to get us set up so we know what are the hospitals that are at risk of having the most trouble retrofitting. And at some date in the future.

There may need to be a bond, there may need to be General Fund resources, or if we're really lucky, the MCO tax starts paying and doing an adequate job of doing reimbursement for healthcare costs, and the hospitals will have the money to do it themselves. And so, but one way or another, we need data. We need information.

We need to give HCi that opportunity to be able to make some decisions and to do it in a way that keeps their feet to the fire. And the plan that's envisioned in here has to be detailed enough so we know exactly what their plan is and when's the trigger.

And then if they ask for any additional time, if they ask for that three year extension, the local community and the local unions get the information of why? Why are they asking for it?

And at that point, they can lobby HKI and make public comments as part of the process and say, no, they shouldn't get any more time because they should already have done it and give good data in order to ensure that.

So what we're trying to do is to create this system where is inexorably moving towards us understanding that if someone shows up here in the future and they haven't done what their plan says and they had the resources to do it, that the Legislature has the backbone to say, no, no, you've had all this time and we're not going to give it to you.

But that's a tough call. We got to get the data before we're going to be. I think Legislature would be willing to do that. Nobody wants to see their hospital closed.

We all agree with you there. I appreciate the comments. Do you have additional closing remarks or. I'll use that as my closing. Thank you so much, Senator. Do we have a motion moved by Weber, seconded by Aguilar-Curry? Thank you.

The motion is do pass, as amended to appropriations. Please call the roll.

[Roll Call]

That measure is out 10 to zero. Thank you, Senator.

Moving on to item 15, SB 1354 Wahab. Thank you, Senator. Whenever you're ready.

Thank you very much.

Thank you. Feels like it was here just yesterday, right? All right. Chair, colleagues, and members of the public, SB 1354 codifies regulations regarding skilled nursing facilities and protects the rights of residents regardless of their payment source. SB 1354 also requires facilities to inform residents being transferred or discharged that they may be eligible for Medi-Cal's long-term care program to help pay for their stay. For decades, nursing homes have found ways of discriminating to reduce their Medi-Cal population and free beds up to make space for more private pay or Medicare residents.

This discrimination forces low-income seniors to move away from family, friends, and their healthcare providers in order to access a facility that will accept Medi-Cal. SB 1354 will strengthen and enhance the rights of residents in their facilities and protect against discrimination based on their payment source, I'd like to introduce two witnesses, Blanca Castro, state long-term care ombudsman from the Office of the State Long-Term Care Ombudsman, and Helen Halldorsson, staff attorney with the California Advocates for Nursing Home Reform, otherwise known as CANHR. Thank you.

Thank you. You'll each have two minutes. Press the button.

Can you hear me? Good afternoon, committee members. My name is Helen Halldorsson and I'm a staff attorney at California Advocates for Nursing Home Reform, a statewide nonprofit organization which advocates to improve the quality of care in California's nursing homes, and we're proud to co-sponsor SB 1354.

SB 1354 aims to put an end to Medi-Cal discrimination in nursing homes through minimal changes which require facilities to make information more accessible and discourage bad actors from engaging in illegal and discriminatory practices. It's important to note that participation in the Medi-Cal program is completely voluntary.

About 85% of California facilities choose to receive these payments, and when they do sign a provider agreement and collect Medi-Cal funds, they agree to comply with federal and state laws that prohibit discrimination against Medi-Cal participants. CANHR receives hundreds of calls annually from consumers across California who report Medi-Cal discrimination at the point of placement or when their short-term Medicare stay has ended and they need to remain in a facility.

Discrimination during the admissions process is fueled by a popular industry model built on maximizing more lucrative short-term Medicare stays and avoiding long-term Medi-Cal residents. Facilities can bill Medicare up to $1,000 or sometimes $1,400 a day, as compared to Medi-Cal rates, which average $250 to $300 a day. Families report calling up to 20 nursing homes trying to find a bed for their loved one, all to be told the same false story that they are short-term only or there are no long-term beds available.

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 of their rights to stay, resulting in people being forced into unsafe discharge situations, such as a recent CANHR caller who was non-ambulatory and still had a need for skilled nursing.

But after his Medicare days were up, he was discharged to a second-story motel room that could not accommodate his wheelchair. He was discharged to the motel without necessary follow-up care and 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 and supervision. For these reasons, we request your aye vote on SB 1354

Thank you. Two minutes.

Good afternoon, Madam Chair Bonta and esteemed members of the Assembly Health Committee. My name is Blanca Castro and I am the long-term care ombudsman for California. I represent the 35 local long-term care ombudsman programs, and we are a proud sponsor of SB 1354.

We want to applaud Senator Wahab for championing a critical problem in our state's long-term care system. I wish we didn't need this bill, but unfortunately, while the federal and state laws clearly state discrimination against Medi-Cal beneficiary is illegal, it continues to happen.

So I'm going to just share a very brief story with the committee just to demonstrate how this is impacting our elders and adults with disabilities in California. In June of just last year, one of the long-term care facilities, skilled nursing facilities in San Diego County, decided to close due to the cost of doing business.

There were 74 residents who were given 60 days to be transferred to a new nursing home. On September 7, there were 30 residents that were still unable to find placement. The kind of responses that we received are we don't accept custodial care, we only have short term, and we don't accept long term. We don't have long-term beds. On September 26, we had five remaining residents, all Medi-Cal beneficiaries. One health plan paid a facility additional money just to get their member in. I'll never forget the last person we finally were able to place. She has dementia.

Her husband is in declining health, and he was taking a bus to go see her every day. She was going to have to go to Riverside County because we were unable to secure a bed. On October 11, we finally received the news from her case manager from the health plan that she had shared with her husband. The good news? His wife would be going to a local SNF and he cried happy tears. I ask for your support of SB 1354. Thank you.

Thank you. Any other witnesses in support in the room?

Thank you for waiting. Faith Lee with Asian Americans Advancing Justice Southern California. We're in support.

Thank you. Thank you. Are there any primary witnesses in opposition?

I am not a primary witness in opposition. I did want to state that LeadingAge California has removed their opposition and wanted to thank the author for her most recent amendments. Thank you.

Thank you. With that, I'll bring it back to the committee for question or comment. Dr. Wood.

First of all, thank you, Senator Wahab, for bringing this bill forward. And I too wish it wasn't necessary. My question is, by putting this into law, are there any penalties associated with a nursing home that would be found guilty of discrimination other than legal recourse, which we know would be a challenge for someone who is in a nursing home, maybe even somebody who doesn't have someone, which is why we have an ombudsman program. So are there any remedies, say, a stick, that helps prevent this activity beyond what we would put into statute?

Currently, there are no penalties attached to this bill. We need this bill so that we can demonstrate to the regulatory agencies, the Department of Public Health, Department of Health Care Services that this is happening because that's been one of their challenges.

Unless we can prove that there was an open bed and that we were given information that was contrary to that, based on the person's payment source, they're unable to take any action. So our hope is that this will be able to build up that case and they will then be able to effectively issue penalties.

Great. Well, thank you.

Thank you, Dr. Wood.

And once again, thank you, Senator, for bringing the bill forward. And should the bill make it out of committee today, if you're entertaining co-authors, I'd like to be considered added.

Thank you.

Thank you. I don't think that there are any other comments from the committee. I want to thank Senator Wahab for bringing this forward. We continue to share very common concern with our skilled nursing facilities and the fact that we actually don't have capacity to be able to support, and we certainly don't want the ones that are available to be discriminating in this way based on income. So very thoughtful bill. Thank you for bringing it forward. With that, would you like to close?

Yes. I just want to highlight a lot of the work that I try to do is genuinely for the most vulnerable community members and our fastest-growing population is our seniors. And many of us, like myself, are struggling to either consider buying a home, paying off student debt, taking care of our agency parents, or starting our own family.

And I think that we do need to make a significant investment in safeguarding the rights of the vulnerable communities, but also investing more financially, even if it is a tough budget year. So with this bill, I do appreciate the comments, but I also want to just respectfully ask for an aye vote and hopefully looking forward to working together on other things together.

Thank you. With that, the motion. Oh, we need a motion and a second. Moved by Jackson, seconded by Santiago. Thank you. Motion is do pass to appropriations. Please call the roll.

[Roll Call]

That measure's on call. We'll move on to our next item, which is item seven, SB 966 by Wiener. While he's coming up here, I want to thank Doctors Jackson and Wood for coming to substitute today. It's great to have you here. I think this is the most docs we've had in the room. Whenever you're ready, Senator.

Thank you very much, Madam Chair. Colleagues, I'm here today to present Senate Bill 966, which will require that pharmacy benefit managers, or PBMs, be licensed under the Department of Insurance, which is not the case now. They don't have to be licensed and will also provide greater transparency and prohibit certain practices that are driving up the costs of drugs and of the healthcare system.

Colleagues, if you have not seen, just in the last few days, there were major exposes in both the New York Times and the Wall Street Journal, very damning articles about how PBMs are, in fact, driving up drug costs and are pushing community pharmacies out and are doing all of this in a way that harms consumers. And I would encourage you, if you haven't seen it, to read these articles, because they are extremely powerful. PBMs are the middlemen of the healthcare industry, and they started out decades ago as rather small administrative bodies to help health plans negotiate, put together formularies, negotiate drug prices.

They've grown over the years, particularly over the last six or eight years, into absolute corporate behemoths that own their own pharmacies, that force or strongly encourage people to use their pharmacies instead of other pharmacies that have an incentive to increase the cost of drugs and to favor more expensive drugs over lower-cost generic drugs.

And they have done all this and taken on this massive role in the healthcare system with remarkably little oversight, transparency, or regulation. I want to thank Assemblymember Wood for his work on this issue over the years in terms of transparency and we're really building on that work.

Today, there are over 60 PBMs in the US, but a large majority of prescription drug claims are processed by just three PBMs, which control over 80% of the market. PBMs engage in various practices, which are outlined in the analysis, that are not good for the healthcare system. For example, making money through rebates, a percentage of the cost of the drugs. And so they will have an incentive to have a higher price paid by the health plan, and then to negotiate that that be reduced, and then the pocket a portion of that reduction.

And so again, it's just an incentive to go with a higher cost. As I mentioned, they own their own pharmacies and engage in practices, for example, by saying that you can get a 90-day supply if you get the drug through their pharmacy, through mail order. But if you dare to insist on using your neighborhood pharmacy, you only get a 30-day supply. So making life more difficult for the patient and creating an incentive to use the PBM's pharmacy instead of the community pharmacy.

There's a practice called spread pricing, which means that they get paid a higher amount by the health plan, pay a lower amount to the community pharmacy, and pocket the difference. And again, all of these practices drive up costs, are done with very little transparency, and are harmful to the system. So, colleagues, this bill, its time has come.

It's time to put reasonable regulations on PBMs. And I respectfully ask for your aye vote. With me today to testify is Dr. Clint Hopkins, pharmacist and owner of Pucci's Pharmacy, a community pharmacy here in Sacramento. And then Pedro Del Cole, who is a patient at Pucci's Pharmacy. And then we're also joined for technical assistance if questions come up by Rachael Blucher, the legal counsel for the California Pharmacists Association, one of our co-sponsors.

Thank you. You'll have two minutes and feel free to reintroduce.

Good afternoon, Madam Chair and Members. I'm Doctor Clint Hopkins, pharmacist and owner of Pucci's Pharmacy, independently owned here in Sacramento since 1930. As Senator Wiener expressed, PBMs now dominate not only the pharmacy market but also the healthcare market at large.

They own health plans, the pharmacy down the street, the switch that processes our claims, the mail-order pharmacy to which they steer our patients, and they dictate the contracts that underpay and force pharmacies out of business. Allowing this industry to continue unregulated is a danger to all consumers and all healthcare providers.

In recent years, PBMs have begun purchasing physician practices and clinics. Contracts with PBMs are not negotiable and unprecedented in any other industry. Our requests to negotiate for fair reimbursement are denied. These take-it-or-leave-it contracts force pharmacies to turn patients away that would prefer to get their medications from a pharmacist that they know and trust than from their mailbox. For the drugs we do dispense, PBMs continue to find ways to scam pharmacies and consumers using prices such as effective rates and spread pricing.

Thanks to recent federal legislation, the PBM practice of clawbacks on Medicare claims was stopped in 2024. But now instead we are served with contracts with unsustainable rates, forcing pharmacists to again turn away patients. PBMs determine which meds are on formularies, oftentimes choosing a drug that costs the patient more.

But the PBM prefers the drug because they get a larger manufacturer rebate. This high-cost, pay-to-play strategy has resulted in skyrocketing costs of brand-new medications, making them unaffordable to many patients. I am certain no one in this room can say that they have received a rebate check from their PBM.

PBMs jack up prices and retain those rebates as profits. PBMs and their lobbying groups insist that spread pricing is important to employers. As a business owner, I am also the purchaser of healthcare for my employees. There are no benefits to maintaining spread pricing. Again, because I've never received any rebate check from a PBM or a health plan, my cost to purchase healthcare for my employees has only gone up year over year for decades.

I will be more than happy to provide you with examples of spread pricing and the harm done to it or done by it, outside of this testimony, which I must deliver in two minutes or less. Regarding PBMs pleased to maintain specialty pharmacies, I recently had a patient who needed a $ 14-a-month prescription, a bottle of generic Truvada for HIV prevention. $14. I could not fill that prescription because the PBM refused to allow him to get it at the pharmacy because it's a specialty medication. $14.

He checked with his employer and they knew nothing of this policy. Employers don't define these policies. The PBMs do. For far too long, PBMs have operated in the shadows, extremely extracting exorbitant amounts of money from the system they've designed. PBMs are the only entity in the healthcare cascade operating unlicensed by the state. Without licensure, PBMs will continue to run afoul, causing pharmacies to close, local jobs to be lost, and patients to lose access to healthcare in their communities. Thank you.

Good afternoon, Madam Chair and Committee. So I'm actually Jeffrey Cook. Doctor Jeffrey Cook. That's okay. No problem. So, Chair Bonta, Members of the committee, my name is Jeffrey Cook. I testified regarding this bill in the Senate Health Committee on April 24.

I encourage you, the Committee, to review that testimony as it was submitted to the public record and given in person. The main thing I want the committee to be aware of regarding my experience with pharmacy benefit managers is that they do harm patients. Stress is harmful. This is well-documented and studied.

According to the American Psychological Association report in 2023, financial stress is a leading cause of stress, especially now in the presence of high inflation over the last two years. As I see it, these businesses were created for the sole purpose of acting as intermediaries between pharmacies, insurers, patients, and doctors under the guise of helping patients and reducing prescription drug costs.

However, their true purpose is to extract ever more profits from the healthcare system, with patients paying this cost through ever-increasing healthcare premiums and through poorer health outcomes. They accomplish this by denying coverage of prescribed medications, delaying coverage of prescribed medications, making it less likely that patients will go through the process to get what they need, complicating and drawing out the process of reimbursement for private community pharmacies, even clawing back money for medications that have already been dispensed. The list goes on.

I think it has become clear to any reasonable person that our healthcare system is failing and that the primary reason is not the actual medical care or the availability of medications to treat medical issues. I personally have been blessed by amazing doctors, pharmacists, and drugs that work hard to keep me alive and healthy. For these, I'm grateful.

The problem is greed and profit extraction from hardworking Americans. We pay more for less healthcare than anywhere else in the world, by far. As always, we just need to follow the money and the incentives are very clear. These PBMs should not even exist at all, if you ask me. But to let them continue to operate without any oversight or regulation is simply unacceptable. Thank you for your time, and I encourage an aye vote on this bill.

Thank you. You want to introduce yourself for technical assistance?

Yes, thank you. Hi, Rachael Blucher, on behalf of the California Pharmacists Association, one of the co-sponsors, just here for technical assistance.

Thank you. Are there any other witnesses who would like to testify in support?

Dylan Elliott, on behalf of the California State Association of Psychiatrists, in support.

Alex Kahn, on behalf of the California Chronic Care Coalition, a proud co-sponsor, as well as the ALS Association, in support.

Tim Madden, representing the California Rheumatology Alliance, in support.

Jennifer Snyder with capital advocacy, on behalf of the California Life Sciences and the National Association of Chain Drug Stores, in support.

Kathy Mossburg, on behalf of both the San Francisco AIDS Foundation, a proud co-sponsor, and APLA Health, both in support.

Arjun Krishna, on behalf of the California Medical Association, we're in support.

Thank you, Madam Chair. Meagan Subers on behalf of the Los Angeles LGBT Center, co-sponsor in support.

Good afternoon. Moira Topp on behalf of Biocom California in support.

Madam Chair and members, Rand Martin on behalf of the AIDS Healthcare Foundation, which operates 14 community pharmacies across the state, in very strong support. Thank you.

Michelle Rivas, California Pharmacists Association, co-sponsor in support.

Fred Noteware representing PhRMA in support. Thank you.

Good afternoon, Madam Chair and committee members. Katie Van Deynze with Health Access California. We're in a tweener position. We had been in an opposed unless amended position, but really appreciate the author and the work of the sponsor and staff on amendments to address our concerns. We're in a reviewing our position position right now, but really appreciate the author and all of the work. Thank you.

Thank you. Are there any witnesses in opposition?

You'll each have two minutes.

Chair Banta, Members of the Committee, my name is Bill Head with PCMA here respectfully in opposition to SB 966, the State of California spends billions of dollars a year on prescription drugs. Over 300 million prescriptions are filled every year in the state. That's a lot of money and that's a lot of prescriptions.

And employers and organizations rely on PBMs to manage that, particularly manage the cost of that. PBMs are the only entity in the supply chain that exert any downward pressure whatsoever on the cost of prescription drugs. And that's why they hire us. Nobody is required to hire us.

They do so voluntarily and they do so to manage those costs. We are not opposed to the idea of being licensed by the state or transparency. We think everybody should be transparent. We shouldn't get, everybody's cards should be on the table.

We would have liked to add more time and opportunity to have been involved in the drafting of the transparency. We think we would have been able to make some significant improvements. For example, there's information that we're required to report that we simply don't have because it's information that psaos who contract on behalf of pharmacies have.

So we think we could have made improvements on that. But beyond the licensing and reporting, there are other provisions in the bill that go far beyond that. And they restrict and take away many of the tools that our clients rely on to manage their drug benefits.

We completely agree with the Committee analysis or the question raised in the Committee analysis. If you're going to require all this reporting, and there's a massive amount of it, doesn't it make sense for the state first to analyze that reporting, look at what the data tells you, and then make public policy decisions?

And finally, where's the consumer on this? I think there's an assumption that patients will benefit, but there's nothing in the bill that directly benefits patients. On the contrary, this is going to increase costs. There's one provision in the bill that will allow pharmacies to charge any price they want for dispensing drugs.

For these reasons, we respectfully ask that you not advance the bill. Thank you.

John Winger here for America's Health Insurance Plans. We're the National Trade Association for Health Plans and have been working on PBM issues both nationally and in other states. So appreciate the time to speak.

As I've stated before, health plans, other sophisticated purchasers like large businesses, self insureds, union trusts, public employers, they all hire pbms for the sole purpose of lowering their prescription drugs spend. I think Mister Head touched on that a little bit. I think from our perspective, we also agree that transparency is good, that licensing would make sense.

But I think as the bill has evolved, there continues to be issues in the bill that we, that we have. I think after the Senate hearing we saw the bill going in a more positive direction and thought we were going to be able to work off of that.

Unfortunately, a pretty significant amount of amendments have been put into the bill from technical assistance from various agencies that we think completely goes in the opposite direction as it relates to costs and our ability to keep our drug spend down. So the ban on spread pricing remains in the bill. We've continued to object to that.

A lot of purchasers prefer to use spread pricing to get a level of predictability on their drug spend throughout the year. It also protects them from new drugs coming to market in the middle of the year that could completely upend their drug spend. And so it gives them a little bit of predictability through the year.

It shifts a little bit more of the risk to the PBM through that compensation model. So we think that that's something that should be a choice for purchasers and so we've continued to object to that.

But a lot of the new amendments do eliminate a lot of the network, the ability to create networks, and we think not being able to compete on cost and quality is going to drive up our drug spends. And so we continue to have issues with that.

To Mister Head's point, we think the transparency stuff could be cleaned up as well. But unfortunately the process has been a little bit difficult so far and so we are opposed.

Thank you. I will now ask if there are any other witnesses that would like to come up to the mic to voice their opposition. Please give your name, organization and your position only.

Good afternoon, chair and Members Martin Vindiola, on behalf of the California State Association of Electrical Workers and the Western States Council of Sheet Metal Workers, in opposition. Thank you.

Good afternoon, Madam Chair. Members of the Committee. Jed Hampton with California Association of Health Plans in opposition.

Madam Chair. Members Stephanie Watkins, on behalf of the Association of California Life and Health Insurance Companies also opposed.

Anthony Butler-Torrez with the California Hispanic Chamber of Commerce opposed.

Thank you very much. I will now bring it back to Members of the Committee if anyone has any questions. Assemblymember Jackson.

Thank you very much, Madam Chair. I haven't had much time to really dive into this. I'm just a guest today. The first thing is for the sponsors. The argument from the opposition in terms of that the bill would increase cost. What do you have to say about that? Do you agree with that assessment?

No, I think we disagree with that assessment. We believe that transparency and an underlying licensing scheme would really help to spread some light on what has been thus far done in shadows. There's a lot of information that has been put out, including from CMS and other agencies, about concerns about some of the practices.

And we've seen other states realize savings from just the spread pricing ban alone, especially in the Medicaid program.

So we believe that this much of what the Bill does is create a licensing scheme that would allow transparency and ban some kind of what we would call the most problematic practices that have been banned thus far in other states.

And we believe that will help to put some perspective into what these pbms are doing, allow to shine a light on their practices and then ultimately save the State Dollars opposition.

Why would you say that this would increase cost?

I think from our perspective, we weren't speaking to the transparency aspect or the licensing aspect. What we were talking about is the prohibitions in the bill. There's a lot of prohibitions on how networks can be formed. And so from our perspective, it's basically a de facto any willing pharmacy.

And so the way we're reading the bill, you're not going to be able to set up incentive structures into where you can drive down costs. And so if you can't guarantee a certain amount of volume on certain drugs, then it gets more expensive.

Yeah, yeah. I want to be very clear, because this, in the, in Senate health, this was a topic of discussion and we were very clear, and we even made clarifying amendments that this does not override networks. This is not in any willing provider or any willing pharmacy situation. Networks are still fully in place.

But what they cannot do is what they're doing now is that saying we're going to make it hard or impossible for you to go to your neighborhood pharmacy, whether it's a community pharmacy or your neighborhood Walgreens or CVS, you have to go to our pharmacy only.

And so it does prevent them from doing that, but it doesn't take it outside of the network for your health coverage.

In addition, in terms of some of these practices, one of them is about the rebates, where they get to take a portion, they get a cut of the rebate that they negotiate for, the payer for the health plan.

And what that does is it means the higher the cost of the drug, the higher the rebate, because it's by percentage, and the higher their cut of the rebate. And that's why we see that there are situations where people are basically forced to get name brand insulin and not generic insulin.

You might ask, why on earth would that ever be? And it's because that makes the PBMs more money, because generic is a lot cheaper. So the rebates are lower and they're cut. The rebates are lower.

And that's why the bill requires that the full rebate, if there's going to be a rebate, pass it all the way through and don't get compensated via cut, because that creates an incentive to drive up drug costs. And there have been studies that have shown that.

I know, opposition still have more to say, but I also, while you're thinking about those remarks, I also have quite an issue in terms of what brings red flags to me is even last year I even visited one of my local independent pharmacies and talked about how much, how many independent pharmacies have closed down.

But yet understanding that we actually need a good amount of independent pharmacies in terms of a community resilience perspective, as larger pharmacy corporations sometimes might close down, but then while they were operational, they forced independents to close down, and now the community has no pharmacies.

Have you guys recognized the harm that independent pharmacies say that you have created for them?

No, we're certainly sensitive to that because pharmacies, all pharmacies are important because they're needed for the network. We do not want to see pharmacies close, and we wish, frankly, this would have been a discussion focusing on the plight of pharmacies. But this doesn't really get to that per se.

And if I could go back to your earlier point on the cost impact, the author makes a point about rebates and what's happening with rebates, but you have a transparency provisions in here, very comprehensive transparency and reporting that's going to give the state the data to analyze.

So doesn't that put the state in a better position to determine what is happening with the rebates? Where is the money going prior to deciding what public policy is with respect to those? And in terms of. I would point out, and this may just be a misunderstanding with the author, in terms of what was fixed.

There was one fix made in terms and conditions with respect to preferred pharmacies. Unfortunately, there's still another provision that remains, and again, this may be an oversight of some sort that says PBMs can't discriminate or apply terms and conditions to non affiliated pharmacies. So that means a pharmacy can charge whatever it wants and cannot be discriminated against.

And I don't know how that's going to result in lower cost. I just wanted to make that point. And again, it may just be a sectional oversight, but basically there are about maybe 10, 12 states that have any willing pharmacy, but they all require that those pharmacies accept the terms and conditions.

This bill specifically says we can impose terms and conditions on those pharmacies, and that's where we think the cost is going to increase.

But what if one of your term and conditions is that the pharmacist can't choose the less costly drug? Do you have terms and conditions that.

Say that terms and conditions are primarily going to be the reimbursement rate, the quality standards that the pharmacy is licensed, the pharmacist is licensed, those types of things.

So if a pharmacist says, if I'm the pharmacist and I have a lower income community and there's a, you know, popular name brand and there's a generic, you won't tell me that I can't get the use the generic for my customer.

I'm not sure I follow that exactly. It's going to be whatever is on the plan formulary. But if the, if you, as the pharmacist, have a drug that has, let's say, the cash price is $5 and if they get it through their health coverage, it's $10, the PBM is always going to say, charge the $5. Right.

I think the problem comes in. There are occasions because the PBM is always going, the PBM contractors with the plan. And so whatever the lowest net cost to the plan is, is what that PBM is driving for.

I think the rub comes in and then how plans are going to structure their co pays and deductibles, which the PBM has no involvement in. Does that make any sense? Does that help you understand it?

It does, yes. Thank you.

I think it helps me understand that we have a challenge because as you've stated, the PBMS responsibility is to the plan. I think Senator Weiner's Bill is focused on ensuring that our health care system is responsible to the individual and the person seeking health care. I'll go Wood. Sorry Wood then, Doctor Wood.

First of all, I want to thank you, Senator Wiener, for carrying on the challenges of trying to create some transparency and some responsibility around these entities. My guess is going to be we don't really even know because they aren't licensed, how many pbms are actually operating in California, who they are, who they're servicing. Is that correct? From the supporters?

Yeah, absolutely. You may know of AB 315 that required DMHC to have a list of plan of pbms. But as you know, that is only for pbms that contract with plans that are licensed by the Department of Managed Healthcare. I have been looking at that list quite often.

It seems to me it's not necessarily always up to date. So we do, it is true, we aren't entirely sure of exactly how many pbms are operating in California.

I think what's certainly 9, 10 years ago, when we were beginning to look at this, fewer plans had their own PBMs. Now we're seeing that shift back where more plans are operating their own PBMs again. And so I can, now I see why some of the plans are in opposition to the bill.

One of the concerns that I always had is that the middleman portion of this is, it reminds me a little bit of dire straits song money for nothing. Yes, you are providing a service, but it's at times feels very self serving.

I could give you numerous examples of opportunities, because oftentimes the PBM is setting the formularies or responsible in great part for how the formularies are set up. And that means that it is the PBM's incentive to have as many higher cost drugs as possible to get the highest rebate possible.

And there are numerous examples of drugs that are highly efficacious, that are lower cost, would not give the same rebate to a PBM, and therefore they don't make it on the formulary. So who loses there? The consumer loses there, and the PBM wins. And the pharmacies don't benefit from that in any way. And so I do.

Any additional transparency here, and I don't know where your reporting is going to go, but I hope some of the reporting trickles to the Office of Healthcare Affordability for data analysis and HCI as well, because I think it's really going to be critical to see how this goes. So I could go on for quite a while.

I won't. I just want to say thank you, Senator Wiener, for doing this Bill. I signed on as a co author a while back. I'm happy to support you as well. And I think this is, I think some of this is really, really long overdue.

Assemblymember Carrillo and then Doctor Weber and then Santiago.

Thank you, Madam Chair. And thank you to the author, the supporters and the opposition for the conversation. I think I've supported and have co authored various versions of this bill in my tenure in the Legislature. And I think what often comes out is just there's such a deep need to reform our healthcare industry in general. Right.

And making sure that the consumer, the patient, is the one receiving the benefit. This conversation, the PBM conversation, has reached a national level. It's something that Congress is looking at, too. And we've been trying to do something in California for quite some time.

I understand the sensitivity around the issue with the health plans and really patient care and patient advocacy. As Senator, you mentioned, insulin cost is the number one conversation across the country right now, and people having to ration receiving and obtaining insulin because they can't afford it. And so I will be supporting the bill today.

I have a slight concern in terms of the language of the bill not going directly to the patient and the rebates being passed on to the health plans.

I'm not sure the health plans are ready to look at this Bill and see how they're going to formulate it or how they're going to implement it and what the impact is going to be towards the plans currently in place. Right.

And so it's, again, I think what comes up is that it is a long time conversation in the making and that we all want to see a resolution that at the end of the day services the patients, especially the patients in lower income communities. I have several large scale pharmacies in my community that are shutting down.

These are Rite Aids. And it's related to a lot of things, some of which have to financial positions of the company, some have to do with retail crime and the constant smash and grabs in certain communities.

But it is creating, I think we have 21 that shut down, another one that is shutting down, that's creating pharmacy deserts, and that's something that we may potentially see more and more of. And so I just want to, again, just, this is an ongoing conversation. This is related to a larger conversation on our overall healthcare system.

But if there was a way to pass on the savings directly to the patient, I think that's a position that I would feel be most comfortable in.

I'm not sure that supporting the bill now, and as it moves towards policy Committee in the Assembly, you get there, but I think it's moved the needle again yet in another year on just how much reform really is needed, so that at the end of the day, it's patients that are getting those savings.

So just wanted to, again, thank you for your continued work.

Thank you. Assemblymember.

I want to echo what has been said by my colleagues and just thank you for taking on this monumental task or continuing the discussion that others have started so long ago.

It is mind boggling that we have such a huge player in the healthcare space that is not licensed that we have very little insight into and so really appreciate, you know, the licensure and the transparency portion of this bill. Kind of piggybacking on some of the things that my colleagues have mentioned.

You know, at the end of the day, what we want to see is a decrease in the cost of prescription drugs. And I'm wondering how are we going to see that with this particular bill as is?

What is it that's going to ultimately lead to a decrease in the cost for our constituents when they come and they are paying for the prescriptions that they so desperately need?

Yeah, I mean, a couple things. We've, we know that the pbms are responsible for the formularies. And as we've discussed today, there's an incentive to have higher favor, higher cost drugs because it increases the rebates and their portion of the rebates.

And just the whole way everything is structured, it creates an incentive to increase the cost so that you can have more of a rebate, so that they can get more of a cut of that rebate.

And so I'm not here to say that this is going to solve every problem with the cost of prescription drugs, but this is one aspect of the system that is helping put upward pressure on those costs. And we've seen, there have been studies showing that, especially the rebate aspect of compensation.

Does that, Miss Blucher, I don't know if you want to, I'll just add quickly.

Thank you, Senator, that one of the things that the bill does, and I would be remiss if I did not respond to the comments about the, any willing provider language, because the, the way that this bill is drafted is it really limits the restriction on conduct around contract pharmacies.

So we are not saying that plans and PBMs cannot set up networks. What we're saying if there are additional restrictions on pharmacies that are affiliated versus non affiliated. So within the chain of ownership of PBMs, part of a PBM, that the PBM cannot give those pharmacies more favorable conditions.

So that, I think is the language you were referring to. So let me just address that first, because I couldn't help myself, but second, I think that that is one aspect of the bill that we are really trying to address, understanding and getting more transparency around the contract provisions that are provided via the vertically integrated PBMs.

There is a lot of vertical integration in the market that changes some of the incentives around contracting.

And so, again, hoping that transparency and more information will help us see where there are opportunities to really do more to save consumers money, and also to help us see and compare apples to apples, what some of these contracts look like and what are the services that certain pbms are providing or not providing.

Okay, so if I'm to understand that this bill in itself isn't really going to start the process of decreasing cost, it's really just to ensure licensure and provide more transparency so that we have better direction in the future.

No, I think requiring 100% pass through of the rebate absolutely will create a good dynamic for lowering drug costs.

The way that the rebate system is set up now creates a direct incentive for pbms to favor higher cost drugs to have higher prices, make the price really high, so you can then have a really big rebate and get a portion of that rebate.

And there have been studies that have shown that the rebates do increase the cost. So I think there are aspects of this bill, particularly that one that will have an immediate impact. And that's why there's bipartisan support in Congress for addressing this issue. It's why we got a unanimous vote on this bill in the Senate.

I think a lot of different people from different political perspectives have seen that this is going to be beneficial to the system.

Right. So you're thinking that the pass through model, instead of the spread that is currently being used, would help decrease prescription cost? And is that passed through to Assemblymember Carillo's point, is that passed through going to the actual patient, or is it going back to the health plan?

So right now, if the health plan is paying for it, it would often go back to the health plan. But the bill says it has to go to either the patient or whoever's paying. And sometimes there are patients paying as well, as we know.

Another question that came up in my discussion with some people who support this, well, they talked about the issue of duty of care and that insurers have a duty of care to patients, but our pbms don't.

And I think that kind of piggybacks off of what chair was saying that at the end of the day, we should be focusing on the patient. Is there any language in here that would actually create that duty of care, that if there's a conflict, that the duty always falls to protecting the patient first?

I think so.

So as of right now, there is clear language that says the duty of care is from the PBM to the plan. And we actually work with health access to have some additional language that would make clear that it is the plan of the enrollee.

We are working on additional amendments to that duty of care to make clear that in the case, to address this issue around vertical integration, when you might have a PBM who is more aligned with the plan, how do you ensure that the incentives are there to actually protect the consumer?

And then the second thing I'll just add is we started with some very broad language around duty of care initially, and I think through the Senate, that language was limited a little bit, recognizing some of the issues around contractual provisions and limitations around duty of care.

So that was the current language is in response to those concerns from the Senate Health Committee.

So with the conflict that is potentially there and still working on language, will that be resolved prior to this Bill hitting the floor?

Yes, we absolutely would like to resolve it. As was mentioned, we are working very closely, and we're grateful to receive technical amendments from the Department of Justice and the Department of Insurance as they were looking at this.

So we certainly want to make sure we're working with those entities as well as the author, to work on that language. But that's definitely a priority. We don't want there to be any confusion about ultimately where that duty should lie.

Okay. And then my final question is, when we're talking about this pass through, are we referring to the list price of the medication or the net price?

The net price of the medication or the list price? I'm not sure

It's the formulary price. I mean, in terms of the rebates. It's what. It's the formulary price.

Do you have a different answer? I saw you smiling. Okay.

I don't have a different answer, but I think that this really illustrates that there's. It's so complicated and there's so many different situations that. And there's no transparency that in order to be able to go anywhere, you have to get more information about what's actually happening, because it's all in the shadows right now.

There is a difference between the less price.

I understand. Yeah, yeah. But I'm just. That was. That's why I was smiling, because I'm like, why is it so complicated?

All right, well, once again, Senator, thank you so much for bringing this bill forward, and thank you to everyone who's come to engage in this very engaging and important conversation.

Thank you.

A couple more comments or questions, we'll go with Santiago, then the Vice Chair and then Mister Patterson, thank you Madam Chair.

And I think I appreciate the work that you've done, because the Committee's work over the years has been to try to reduce the cost of the consumer in different ways from just every step of the process when somebody is injured or goes in the hospital or scheduled visits. And for me it's to take a look at this.

And how do you drive the cost lowest to the consumer? And certainly there is some concern when hearing that a name brand could be given, as opposed to generic brand, driving up the cost and driving up the cost because the rebate is much higher. So I got to say two quick questions.

In the interest of time, I'll speed really quickly through them. And one of them is to the opponents, explain to me how, or I think at least I heard that that spread pricing is potentially the lowest cost to the consumer. That's one.

And if that's the case, and just thoughts, I'm not saying yet, not suggesting anybody take this, but does it make sense then to maybe even entertain a conversation about having both inside of a build if the interest is to drive the lowest cost to the consumer?

Because I am a little confused on that, because everything that's been presented as bill does make a lot of sense to why the past is built, and I'm supportive today. So I want to be very clear about that, because at the end of the day you want to make the least amount, sorry.

The decrease the cost on our pharmaceuticals, no matter what they may be, and some of the stuff has been said is concerning. Absolutely.

So maybe just those two quick questions, maybe the proponents to say, okay, if price spreading, let's say, could be the lowest cost to the consumer, not suggesting this bill, but could both, or maybe in this bill, could they both coexist then in the interest of driving.

But I first want to get clarity on the spread pricing because you're saying that at least I heard saying that that's the best price for the consumer. Explain to me why you think that might be the case. Because what I'm hearing is very different.

Yeah. And if I could, Assemblymember, I just want to let my colleague talk about the spread. But in terms of the rebates, it's important to bear in mind that less than 10% of drugs have rebates. Rebates don't exist when there's a generic equivalent. And California has mandatory generic substitution, so that's not going to be the case.

But rebates aren't as prevalent as I think people assume they are.

Yeah, I think on spread pricing, what we were saying is that for the payer, they like to have that option. It's an option for compensation and how you're paying the PBM for its services.

And so with 100% pass through, the payer is taking on all the risk and all the volatility of what you're going to get in rebates throughout the year. You don't always know what that's going to be.

You could have a drug come to market halfway through the year that's astronomically high, which we continue to see with a lot of specialty drugs. And so with the spread pricing, the PBM takes on more of that risk and you have more of a predictable drug spend.

And so for certain payers, they want to know what their drug spend is and stick to that. And so it's more of a shifting of risk.

It doesn't change anything in regards to the actual rebate and the PBM trying to drive down the lowest costs, and then those rebates go back to the premium dollar and try to keep that premium dollar low. SB 17 reports show that rebates reduce our premiums by 1.7% to 2% a year.

And so that's where the savings kind of comes in there. But it's really spread is really just a choice on how you're going to pay the PBM for its services and how much risk you want to take on. A lot of the bigger payers will take on 100% pass through because they can go with that volatility.

Some of the smaller ones, they want a little bit more of that predictability.

May I follow up on that? But in terms of spread. But how does that impact the consumer, though?

So I think, no, Mister Higgins, I think for the smaller payers, it helps the consumer in the form of more stable, predictable premiums in the premium dollar, because they're choosing that model to keep their drug spend stable and predictable for the year, which keep your premium predictable for the year, and you're not subject to as much volatility.

And so it's a much better benefit design for those payers. Not everybody chooses spread. And if we want to require that, there being that you can't only offer spread, you have to offer something, another model, then that's fine, you need to offer options, but for some payers, it's going to be better.

For some payers, they'd rather take on that risk and have more rebate.

And if I could just speak to the larger issue, which is we are not opposed to licensing and transparency let me make that clear. We don't oppose those. What we are concerned is what was raised in the Committee analysis, which is you're making policy choices based on data that hasn't even been submitted, let alone analyzed.

I think it would get to your question to have DOI get the information, analyze it, and report back to you. Because don't take our word for it. Let the data speak for itself. But we're putting the cart before the horse in terms of restricting what other entities in the supply chain can do or not do.

But you haven't even received and analyzed the data yet. So I think it's a good question. So let's find out what the data tells us.

Vice Chair Waldron.

I know we've all pretty much said a lot of the same things, and we've been saying it through the years. I am a co author on this bill. It's just been kind of an ongoing challenge. And it is one of the more difficult issues we faced.

I've sat on Health Committee, I think, about six years, and it doesn't really get any more straightforward as we dive into, dive into this issue. But you know, we've seen in the PBM industry, the mergers, the acquisitions, resulting in pbms having a major impact on the healthcare marketplace in general by their large presence.

But the lack of accountability, we've all been bringing it up, you know, has been the issue we're trying to get at that. As the Senator mentioned, the current PBM compensation has created negative issues with the incentives, the way they are in the system.

And it's important that this bill will help patient access and help them to afford their medications. So that's why I'm a co author and I want to thank you for bringing it forward. I know it's challenging.

We may need to work kinks out as if it does get through the process, but we need to, you know, deal with the issues. So thank you,

Mister Patterson.

Thank you. Appreciate it. I think I said this last week in privacy, Senator, that you always bring the small topics. Last week it was regulating AI, and now it's PBM. So mentioned that working on some amendments or considering changes and things like that.

And I thought that that was good, because I'm going to see this again, I think, in just a few days in Judiciary Committee, if it passes out of this Committee, and I was wondering, will there be amendments for that Committee or will this move forward?

I think our next amendments will be in Approps. Okay. It's a little unclear right now, and I want to be clear. These amendments are, this is technical, tightening with a Bill of this complexity, you're always, from beginning to end, going to be tightening the language.

And we also, and I'm also, I want to say in terms of comment made earlier, I'm always of the view that if, if there's information being demanded in here that is physically impossible for the PBMs to provide, they need to tell us that. And we're happy to take a look at that.

And that's my style, if that's actually true, but it's more technical, tightening up kind of amendments. Okay, great. And I don't know if it'll be in privacy or in appropriate. If it gets out of privacy and if it gets out of this Committee.

I'm sorry I said privacy.

Privacy on the brain. After your comments, judiciary.

I think one thing keep in mind that I don't know if is mentioned is that I believe one of the reasons why PBMs were started in the first place was to help negotiate lower prices for people with the pharmaceutical companies and things like that. Goal is a good thing.

But when I, nobody outside of being a pharmacy or pharmacy in the pharmaceutical world has any idea what a PBM is. And I just happened to be having a drink with a friend and dinner with a friend in Roseville when I got on this Committee. And I had never heard what a PBM was.

And you learn a lot in 18 months, by the way. But I asked him, his wife happens to own an independent pharmacy. And I just asked him one day, I said, hey, can you tell me, what do you think of pbms?

And the worst thing to talk about over dinner with a friend, by the way, and I received an expletive laced response, this is a spouse, by the way, of independent pharmacists. And so that was kind of like my first, you know, like, wow.

But obviously, you learn more over time and you learn, hey, pbms, the intent of them, if we can kind of get that goal going again, is a good thing. And I think that's what we want to see happen. But I do have a couple more questions.

I had a question specifically on the Department of Insurance, why that was the avenue.

Yeah. So the original version of the bill had the board of pharmacy as the regulatory body. That did not land the best as it was moving through the Senate. I think there were members who had, who were not enthusiastic about that being the board of pharmacy being the oversight body.

And that's when we moved it to the Department of Insurance. The Department of Managed healthcare has, shall we say, a lot on its. And I really want to make sure that this law gets enforced. And so there's never a perfect agency to choose. We think under the circumstances, Department of Insurance is the best choice.

So just for consideration as this bill moves forward is, you know, my constituency is obviously a lot. I think our fair plan enrollment has gone from 9000 households to 40 some thousand households. And we have a major, as you know, insurance crisis.

And so I do get, I personally want them to focus on insurance issues, you know, so that's just my personal preference. I understand DMHC, you know, I mean, we've all had our interactions with them, so I understand your perspective. It's just I do have some concerns there. One more thing on the spread pricing.

I noticed a lot of the trades and other groups were concerned about the prohibition of spread pricing.

It's been asked a few times, but I was wondering if, I don't know if this was answered directly, but have you considered giving an offer, whoever the regulator is, giving them the option of determining if they really want to limit that.

Because I understand, on its face, spread pricing sounds terrible, like a terrible practice, and I understand wanting the prohibition, but I don't actually know without the data if that's something we should restrict right off the bat.

Personally, I think the Legislature sometimes defers too many policy choices to agencies. That's my personal opinion. And we see how that sometimes plays out in not the best ways. I think we have an issue that's before us. This is a well known issue, spread pricing.

And thank you for acknowledging that it sounds really bad, because it is really problematic when you just look at the basics of it. And I think it does make sense to, to move away from that.

So, not that I'm asking you, and maybe if the opposition wants to respond to that, but why would these groups, the trades in particular, I read their letters, but why would they support keeping spread pricing? That option there?

I don't want to speak for the trades or speculate in any way. They're entitled to their position and I respect their position. I just disagree, as does the huge coalition behind this Bill.

Okay, great. Thank you.

I think you are definitely hearing from this Committee at large that we are deeply concerned with the cost to consumer in the patient and the role that ppms have in, I believe, increasing the cost of prescription drugs for our consumers and patients. And very thankful to the author for bringing forward this bill. I think one of the.

We've talked about this more extensively. I too have some concerns about CDI being the regulatory agency at this point. And I know that you will, we hear and understand your position about why. Why you selected CDI. I know that there will be further conversations around that moving forward.

I think we do have evidence, based on the adoption of regulatory scheme in other states to be able to guide us around being able to move forward for the State of California at this point.

I know that we've looked at other models, and one of the assets of having that is that we know that other states have perhaps been a little less prescriptive, if you will, than this legislation seeks to be.

But we do need to move forward in making a change now and really appreciate you, Senator Wiener, taking on yet another incredibly important concern for the State of California. Would you like to close?

Thank you very much, Madam Chair. I very much appreciate those remarks. You know, in the end, we have a huge segment, a huge player in the healthcare industry that is very, very minimally, if at all, regulated and overseen. We have an opportunity to do that today and also to address some very problematic practices.

And I respectfully ask for an aye vote.

Thank you. The motion is due. Pass to judiciary. Let me just clear. Yes, do pass to judiciary. Moved by Arambula. Seconded by Rodriguez. Secretary, please call the roll.

[Roll Call]

That measures out nine to zero. Thank you.

Thank you very much.

We're going to move on now to item 16, SB 1423 Dahle.

Thank you, Senator. You've gotten an earful of our deliberations today. You were, please put on the mic. But you were the first person who I didn't even realize that it was. You weren't using it.

How's that? Good morning, Chair and Members. I'm here to present SB 1423. I want to thank the Chair for the work in the Committee. I will be accepting the amendments to the bill. The bill would accept the Committee Amendments to change the bill to a study bill.

The group would include various stakeholders and would look into the existing medical reimbursement methodologies and how those methodologies can improve to increase the financial viability of critical access hospitals. The study group would report back to the Legislature by March 31, 2026.

The study group does continue the necessary conversations to ensure the critical access hospitals remain open, but there is a desperate need for immediate relief. Unfortunately, the study group does not provide the immediate relief. The lack of funding and the very late, previous unknown policy concerns stalled the progress of this bill.

I just want to state, this bill came to me from a district hospital in my district, and we just want to give a little bit of history. We introduced it February 16. It was amended April 8 by the Hospital Association. Amendments passed out of Senate Health 11 to zero amended on April 29.

Added in some opt in some language. Amended May 16, Senate appropriations upon appropriations passed out of the Appropriations Committee on May 16. Then we got opposition late and some concerns submitted. So we've had to turn this bill into a study bill, unfortunately, so it is a study bill.

I have with me today, Darren Beatty, who brought the bill to me from Plumas District Hospital. He has some comments and then we'll take it. I respect we ask for an aye vote.

Thank you. You'll each have two minutes.

Thank you, Chair Bonta and Committee Members, for the opportunity to testify before you today. My name is Darren Beatty and I am the Chief Operating Officer for Plymouth District Hospital. It has become increasingly apparent that the long term financial sustainability of California's Critical Access Hospitals remains doubtful.

These hospitals serve as the sole providers of care to rural and underserved communities throughout the state. They preserve access to care amidst California's natural wonders, where large populations recreate. Additionally, they are often the largest driver of economic activity and the primary source of employment in these regions.

The introduction of SB 1423 initiated a deep dive into the complex inner workings of healthcare financing among the impacted hospitals. Unsurprisingly, we discovered that an uneven patchwork of funding mechanisms that reflect multiple previous attempts to achieve equity in the field, that status quo must change if equity is our desired outcome.

We endorse the formation of a Rural Hospital Advisory Group as outlined in the most recent amendment of this bill. This initiative is crucial for ensuring the financial viability and continued operation of critical access hospitals.

The legislative language represents a proactive and strategic approach to establishing a reliable funding framework for the most vulnerable hospitals in the state, allowing them to provide essential, life sustaining services without the perpetual fear of imminent closure clouding every decision. Again, I thank Senator Dahle and the California Hospital Association for elevating this issue on our behalf.

With that, I respectfully request your aye vote. Thank you.

Thank you.

Thank you. Good afternoon. Mark Farouk, on behalf of the California Hospital Association, proud to sponsor this bill. First, I want to thank the author of the bill for his steadfast support and engagement with rural hospitals and continuing to move this issue along.

Also, I want to thank the Chair of the Committee and your staff for your work in tightening up this language related to the stakeholder process. Critical Access Hospitals are foundational institutions in our rural communities, but they're also foundational institutions for all of California.

The closure of one of these hospitals increases the median travel distance to access inpatient services by 20 miles. For specialized services such as substance abuse treatment, that distance increases by almost 40 miles. And these distances in rural communities equal hours, not minutes.

Rural healthcare faces a crisis as these hospitals face significant financial stress as the percentage of rural hospitals that lose money every day caring for patients has increased to well over 50%. The existing structure is not sustainable and it is rural communities that will suffer.

SB 1423, as amended, will bring stakeholders to the table with DHCS to convene regular stakeholder meetings to make recommendations to improve the long term financial stability of critical access hospitals. CHA, again, is proud to sponsor this bill to protect and enhance access to rural healthcare. Thank you.

Thank you. Are there any others in support?

Madam Chair and Members. Carlos Gutierrez, here, on behalf of the California Fresh Fruit Association, in support.

Nissette Short, on behalf of Adventist Health, in support.

Connie Delgado, on behalf of the District Hospital Leadership Forum, in support.

Moved by Rodriguez, seconded by Sanchez. There any other? Are there any testimony in opposition? Seeing none. I'll bring it back to the Committee. Doctor Wood.

You might guess I might have a comment or two on this. So first of all, thank you. Senator Dahle, your district and my district have a lot of similarities with regards to this issue. I have six critical access hospitals in my district. I don't know how many you have, but it's a pretty big number.

When you look at the authors and the co-authors of this bill. It is really rural California here that is affected. I know that hospital financing is really complicated. I know that Critical Access Hospitals get different kind of financing from the Federal Government. There are enhancements there.

But I also know that even with that, there are tremendous struggles to maintain. Some of it is challenges around seismic things we're grappling with here earlier today. So I appreciate your hospital coming and bringing this idea to you, and if you have another co-author, we could get Dollywood back together and inside joke.

But I'd love to support you on this. I think it's a really important step, and I hope that the information actually leads to some changes. And I think information, I'm very data driven myself. So information I think is really important. And I'm happy to support you on this. Thank you.

Thank you. I believe that had we, the timing worked out, this would have been a consent item. Certainly really appreciate you, Senator Dahle, for bringing this forward and know that our colleague, counterpart representing the district also has been such a champion for our rural hospitals and having access for critical care hospitals is essential.

Very much appreciate you bringing forward this bill. With that, we have a motion and a second, and would you like to close?

Thank you, Chair and Members. I just want to say that I'm somewhat frustrated, to be honest with you. I've been championing for rural hospitals for a long time, and just where I live, many of you have been to our home, and in some cases, it's 100 miles to have a baby.

And it's very, in fact, my best friend, him and his wife delivered their grandchild on the side of the road because they were on their way to the hospital. And thankfully, everything was great. But we started this with, you know, trying to get some parity in medical reimbursement rates, quite frankly, is our goal.

But realized when we got over to the Assembly that there were some differences in how hospitals and district hospitals work together.

So hopefully this study will flush that out, and at some point, we can actually come back and do some legislation that actually helps drive up that medical rate and keeps these hospitals in, in service, quite frankly, that's the goal. So appreciate your work and respectfully ask for an aye vote.

Absolutely. The motion is do pass as amended to appropriations. Secretary, please call the roll.

[Roll Call]

Measure's out; nine/zero. Thank you so much. Item Four: SB 803 by Becker has been pulled. We're moving on to--by author--we're moving on to Item Nine: SB 1061 by Limon, which will be our last item for the hearing.

Good afternoon, Chair and Members. SB 1061 will remove medical debt from consumer credit reports, providing relief to millions of Californians whose credit scores are unnecessarily harmed by debt. We all know that our health is not something that any of us can take for granted.

We also know that medical debt disproportionately impacts low-income people, Black and Latino communities, and young people, all of 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 a patient, medical debt that is reported to credit agencies is often inaccurate, whether due to billing errors, mistakes, or mistakes with reimbursements or ongoing disputes with insurance plans. When a consumer discovers medical debt on their credit report, they may not know why it is there or who to contact to verify that the amount that they allegedly owe is real and accurate.

For medical debt assigned to third party collectors or sold to debt buyers, the consumer may not know the actual health care provider or medical debt services. This process of determining whether an alleged medical debt is accurately reported can be time-consuming and frustrating.