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Friday, August 22, 2014

Status of Key Bills

On Monday, SB 1094 (Lara) was taken up on the Assembly Floor and failed passage by a large margin of 22-24 (with 33 members voting no or not voting).  The bill was granted reconsideration.  Sponsored by the California Attorney General (AG), this bill would allow the AG to impose additional conditions on a nonprofit hospital transaction, after the approval has already been granted. This unprecedented new power would introduce an unacceptable level of uncertainty into hospital transactions, and have a chilling effect on the health care marketplace. The hospital coalition has offered several rounds of amendments to address the various concerns of the AG and its supporters, but they have been rejected by the author and sponsor.

Yesterday, Senator Lara amended SB 1094 and the Assembly voted to accept the amendments today, Friday, August 22 – the legislative deadline for bills to be amended on the floor.  These new amendments change the “look back” period that the AG has to amend an approved condition from 10 years to 5 years.  This does not resolve the objection that the AG can unilaterally amend an agreement during this time - still creating uncertainty for five years that will make partner organizations and those who provide capital from being willing to rescue a failing hospital.

The amendments also allow hospitals 30 days to respond in writing to an allegation of misconduct.  After that initial period, however, the AG is then free to unilaterally change conditions, or impose new ones.  There is no legal due process, no evidence is considered, and no trier of fact is involved.  In short, even with these amendments, hospitals are guilty until proven innocent.

As part of the hospital coalition opposing SB 1094, the Alliance will continue to meet with members of the Assembly to discuss these latest amendments and to explain our continued opposition.  We expect that SB 1094 will be taken up for reconsideration early next week.

SB 1004 (Hernandez) – PENDING ASSEMBLY FLOOR. Supported by the Alliance, this bill adds a palliative care benefit under the Medi-Cal program that will be “cost neutral” to the general fund (to the extent practicable).

SB 1053 (Mitchell) – ENROLLED TO GOVERNOR.  Opposed by the Alliance, this bill would expand in California state law the contraceptive health care coverage requirements, commonly referred to as the federal contraceptive mandate, under the federal Public Health Service Act, as amended by the Affordable Care Act (ACA).  The bill also does not conform to the federal definition of religious employer.                                                                                                               

The Legislature has until next Sunday, August 31st, to conclude its business before the final recess of this legislative session.

Covered California and Prop 45

The board of Covered California met this Thursday (August 21st). Proposition 45 (health plan rate regulation) was a major discussion topic during the meeting.  There has been an ongoing divide between Insurance Commissioner Dave Jones (the proponent of the measure) and the Covered California Board about what effect the proposition will have on the state’s health exchange.  As has been reported, Covered California board members spoke out against this November ballot initiative to give rate-regulation authority to the elected insurance commissioner, with some requesting the board issue formal opposition. Both Executive Director Peter Lee and Board Chair Diana Dooley, secretary of the Health and Human Services Agency, cautioned the board about taking a position and worried that the intensity of the political campaign could damage the agency’s reputation with the public.  Commissioner Susan Kennedy requested that she be allowed to use her board title to campaign against Proposition 45; and, if the staff recommends against board members, in their official capacity, entering into the campaign opposing this initiative, that she would push for a vote of the board.  Staff analysis on the effects of Proposition 45 (Insurance Rate Public Justification and Accountability Act) on Covered California are included in the “Presentation - Executive Director’s Report” starting on page 27/slide 26: http://board.coveredca.com/meetings/2014/8-21/.

On related news, three local Medi-Cal managed care plans – Alameda Alliance for Health, Contra Costa Health Plan and Ventura County Health Plan - are all leaving the state’s health insurance exchange.  All three were attempting to cross over into the commercial market, but found that they could not compete with the larger commercial competitors.  This leaves Covered California with just 10 plans.  Although, given that the top three plans continue to dominate enrollments, the actual effect on the market should be very small.

This week, the Field Poll released the results of early polling on the November 2014 ballot measures, including to health related initiatives:

Health-Related Ballot Measures

Proposition 45, the health premium rate regulation measure, showed support from 69% of the electorate.  Notably, the measure is polling ahead among Democrats (75%) and Republicans (58%).  Only 16% of voters opposed the measure.

Proposition 46, the MICRA/doctor drug testing measure, starts with 58% support.  It also starts with much higher negatives, with 30% opposed.

It’s worth noting that it is early in the campaigns of these two initiatives (both of which will be very well-funded).  Most consultants believe that ballot propositions must start with support in the mid-to-high 60 percent to have the possibility of being approved when they face a well-funded opposition campaign.


Friday, August 15, 2014

Fate of Bills Determined by Appropriations Committees

Today marked the legislative deadline for fiscal bills to pass out of the respective Appropriations Committee.  Following is the status of the Alliance’s high priority bills:

AB 503 (Wieckowski and Bonta) – HELD ON SENATE APPROPRIATIONS SUSPENSE FILE. One of the more onerous bills challenging the tax-exempt status of not for profit hospitals was stopped in the Senate Appropriations Committee.  Sponsored by the California Nurses Association and the Greenlining Institute, this bill would have rewritten California’s community benefit laws. According to estimates provided by the Office of Statewide Health Planning and Development, which would take on additional duties under the bill, costs to the state would include one-time start up costs exceeding $1 million while ongoing annual costs would total just under $1million.  The Alliance was part of the hospital coalition opposing this measure.

SB 1004 (Hernandez) – PASSED ASSEMBLY APPROPRIATIONS COMMITTEE with AMENDMENTS.  Supported by the Alliance, and as amended, this bill removes the requirement for an adult palliative care pilot project and related federal waiver, and instead adds a palliative care benefit under the Medi-Cal program that will be “cost neutral” to the general fund (to the extent practicable). This bill now moves to the Assembly floor.

SB 1094 (Lara) - PASSED ASSEMBLY APPROPRIATIONS COMMITTEE with AMENDMENTS.  Opposed by the Alliance, a coalition of hospitals, as well as the California Chamber of Commerce, this Attorney General (AG)-sponsored bill would allow the AG to unilaterally and retroactively impose severe conditions on nonprofit hospital sales, transfer or affiliation agreements or transactions.  The bill allows a post approval reopening of a deal where alleged misrepresentation or condition non-compliance has occurred. Among other things, the bill was amended to include a 10-year window, from the date the AG gives consent to an agreement or transaction, to reopen or apply additional conditions. SB 1094 could be heard as early as next Monday on the Assembly floor.

SB 1053 (Mitchell) – PASSED ASSEMBLY APPROPRIATIONS COMMITTEE.  Opposed by the Alliance, this bill would expand in California state law the contraceptive health care coverage requirements, commonly referred to as the federal contraceptive mandate, under the federal Public Health Service Act, as amended by the Affordable Care Act (ACA).  The bill also does not conform to the federal definition of religious employer.  This bill now moves to the Assembly floor.

The Legislature has just over two weeks to conclude its work by the August 31st final recess deadline.


Friday, August 8, 2014

State Legislature Returns to Face Many Pending Bills

On Monday, August 4, the Legislature returned from its month-long Summer Recess to begin the final month of the 2014 Legislative Session.  Both Houses faced lengthy hearing agendas in their respective appropriations committees.  The Senate Appropriations Committee dealt with about 400 Assembly bills on Monday, while the Assembly Appropriations Committee acted on almost 200 Senate bills on Wednesday.

High priority bills for the Alliance and its members, which have been considered in the appropriations process include:

SB 1004 (Hernandez) - supported by the Alliance, proposes the development of a pilot project to determine whether to include a palliative care benefit under the Medi-Cal program.  While the measure was placed on the Assembly Appropriations Suspense File, because it would involve some costs to the state for start up and on-going operations, the state is also likely to recognize Medi-Cal program cost savings over time.  Because of the possible longer-term savings, there is some optimism that the measure will pass off the Suspense File and move to the Assembly Floor for a vote.

Senate Bill 1053 (Mitchell) - opposed by the Alliance, would expand in California state law the contraceptive health care coverage requirements, commonly referred to as the federal contraceptive mandate, under the federal Public Health Service Act, as amended by the Affordable Care Act (ACA).  The bill also does not conform to the federal definition of religious employer.  The ACA further specifies that if states require plans in the Exchange to offer additional benefits that go beyond the defined Essential Health Benefits, then states must pay the additional cost related to those mandates.  Because of this potential cost to the state, the Committee placed the measure on its Suspense File.

SB 1094 (Lara) - sponsored by the Attorney General (AG), the measure would allow the AG to unilaterally and retroactively impose severe conditions on nonprofit hospital sales, transfer or affiliation agreements or transactions.  The bill allows a post approval reopening of a deal where alleged misrepresentation or condition non-compliance has occurred.

When the Assembly Appropriations Committee heard the measure on Wednesday, it passed on a party line vote (11-6).  However, Assemblymember Sebastian Ridley-Thomas split from his fellow Democrats and voted “No” on the bill, after asking many questions and voicing concern over the bill’s likely negative impact on hospitals and hospital purchases.  Some other Democrats on the Committee, while not publically objecting to the B roll call (party-line) vote, indicated privately that they did not feel bound by that vote when the bill is taken up on the Assembly Floor.

Bill supporters attempted to counter opposition from the Securities Industry and Financial Markets Association (SIFMA), which is aligned with hospitals, by obtaining a letter from California state Treasurer Bill Lockyer which noted in part that the modest policy change included in SB 1094 “…will not adversely affect bondholders.”

The California Chamber of Commerce has joined in opposition to SB 1094.  In their letter they state that to their knowledge this would be the only situation in which an elected state official would have the authority to assert a contract has been breached and unilaterally change its terms, and are concerned that this would serve as a precedent for other agencies who oversee private contracts to seek similar authority.  They also argue the approach sought by the AG is apt to jeopardize arrangements that preserve affordable access to health care services.

Author’s amendments, which are not yet reflected in the bill, were taken in committee. The most significant amendment establishes a 10-year statute of limitations.  In short, the AG would have a 10-year window, from the date the AG gives consent to an agreement or transaction, to reopen or apply additional conditions.  Since the amendments fail to eliminate the bill provisions that authorize the AG to retroactively reopen previously approved agreements or transactions, the Alliance and other hospital organizations, including the California Hospital Association (CHA), remain opposed to the bill and plan to vigorously oppose it when it comes before the full Assembly for a vote.  To date, none of the amendments offered by the CHA-lead coalition of hospitals have been accepted by the bill’s author or sponsor.

It is anticipated that SB 1094, with the most recent amendments, and in keeping with the current Assembly Floor schedule could be on the Floor for a vote as soon as Thursday, August 14.

AB 503 (Wieckowski and Bonta) – sponsored by the California Nurses Association and the Greenlining Institute, would rewrite California’s community benefit laws. The Alliance opposes AB 503 because it 1) ignores decades of successful experienced-based evolution of California’s current community benefit law, 2) places burdensome new mandates and regulations on California’s nonprofit hospitals, while conflicting with federal law and regulations on many common community benefit provisions, and 3) disqualifies from counting as “community benefit” or “charity care” the unreimbursed hospital shortfalls resulting in large part from California’s notoriously inadequate Medi-Cal reimbursement rates.  On Monday, the measure was considered by the Senate Appropriations Committee, which placed it on the Committee’s Suspense File because of the bill’s likely costs to the state.  According to estimates provided by the Office of Statewide Health Planning and Development, which would take on additional duties under the bill, one-time start up costs would exceed $1 million while ongoing annual costs would total just under $1million.

Welcome news to the hospital coalition opposing the bill was an announcement by the Governor’s Department of Finance that it also opposes the measure.

According to the legislative schedule, Appropriations committees in both Houses of the Legislature must make decisions on or before August 15 as to which bills live and move to the Floor or die on a Suspense file.  Of the bills noted above, all but SB 1094 are awaiting action on a Suspense file.

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