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HomeMy WebLinkAboutBOARD STANDING COMMITTEES - 05142018 - Legislation Cte Agenda Pkt            LEGISLATION COMMITTEE May 14, 2018 10:30 A.M. 651 Pine Street, Room 101, Martinez Supervisor Karen Mitchoff, Chair Supervisor Diane Burgis, Vice Chair Agenda Items: Items may be taken out of order based on the business of the day and preference of the Committee              1.Introductions   2.Public comment on any item under the jurisdiction of the Committee and not on this agenda (speakers may be limited to three minutes).   3. APPROVE the Record of Action for the April 9, 2018 meeting of the Legislation Committee with any necessary corrections.   4. ACCEPT the reports to be presented to the Committee at the meeting regarding the Governor's Revised Budget for FY 2018-19 and provide direction to staff.   5. CONSIDER recommending to the Board of Supervisors a position of "Oppose" on AB 2293 (Reyes): Emergency Medical Services: Licensure, a bill that would limit and narrow the types of crimes and violations that can result in the denial of an application for emergency medical technician-paramedic (EMT-P) license, as recommended by Patricia Frost, Emergency Medical Services Director of Contra Costa County.   6. CONSIDER recommending to the Board of Supervisors a position of "Support, if funded" for AB 2043 (Arambula), a bill that requires the Department of Social Services to establish a statewide hotline as the entry point for a Family Urgent Response System to respond to calls from caregivers or current or former foster youth when a crisis arises; and "Support" for AB 2083 (Cooley), a bill that requires county-level Memorandums of Understanding (MOUs) between agencies directly responsible for the most-traumatized children in foster care, as recommended by the Director of the Employment and Human Services Department.   7. CONSIDER recommending to the Board of Supervisors a position of "Oppose unless amended" on AB 3087 (Kalra), a bill that creates the State Health Care Cost, Quality, and Equity Commission, an independent state agency, to control in-state health care costs and set the amounts accepted as payment by health plans, hospitals, physicians, and other health care provider and requires the Page 1 of 85 Commission to annually determine the base amounts that health care entities are required to accept as full payment for health care service, as recommended by the Chief Executive Officer of the Contra Costa Health Plan.   8. CONSIDER recommending to the Board of Supervisors a position of "Support" for SB 910 (Hernandez): Short-term Limited Duration Health Insurance, a bill that prohibits a health insurer from issuing, selling, renewing, or offering a short-term limited duration health insurance policy for health care coverage in this state, as recommended by the Chief Executive Officer of the Contra Costa Health Plan.   9. CONSIDER recommending to the Board of Supervisors a position of "Support" on SB 974 (Lara): Medi-Cal: Immigration Status: Adults, a bill that extends full-scope Medi-Cal benefits to undocumented adults age 19 and above who are otherwise eligible for those benefits but for their immigration status, as recommended by the Chief Executive Officer of the Contra Costa Health Plan .   10. CONSIDER recommending to the Board of Supervisors a position of "Support" on SB 1105 (Skinner): Vehicles: Driving Offenses: Prosecution, a bill that would extend existing laws relating to the dismissal of Vehicle Code violations pending at the time of a defendant's commitment to state prison or county jail on a jail-eligible felony to provide the same relief to persons sentenced to county jail or other alternatives to incarceration, as recommended by the Deputy Director of the Office of Reentry and Justice.   11. CONSIDER providing feedback on SB 828 (Weiner) and AB 1771 (Bloom): Planning and Zoning: Regional Housing Needs Assessment, as requested by California State Association of Counties (CSAC) staff.   12. CONSIDER recommending a position of “Support” to the Board of Supervisors for H.R. 5003 to amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds and authorize the Chair of the Board to send a letter to the County's congressional delegation requesting co-sponsorship of the bill, as recommended by the Chief Assistant County Administrator.   13.The next meeting is currently scheduled for Monday, June 11, 2018 at 10:30 a.m.   14.Adjourn   The Legislation Committee will provide reasonable accommodations for persons with disabilities planning to attend Legislation Committee meetings. Contact the staff person listed below at least 72 hours before the meeting. Any disclosable public records related to an open session item on a regular meeting agenda and distributed by the County to a majority of members of the Legislation Committee less than 96 hours prior to that meeting are available for public inspection at 651 Pine Street, 10th floor, during normal business hours. Page 2 of 85 Public comment may be submitted via electronic mail on agenda items at least one full work day prior to the published meeting time. For Additional Information Contact: Lara DeLaney, Committee Staff Phone (925) 335-1097, Fax (925) 646-1353 lara.delaney@cao.cccounty.us Page 3 of 85 LEGISLATION COMMITTEE 3. Meeting Date:05/14/2018   Subject:Record of Action for Legislation Committee Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-10   Referral Name: Record of Action  Presenter: L. DeLaney Contact: L. DeLaney, 925-335-1097 Referral History: County Ordinance (Better Government Ordinance 95-6, Article 25-205, [d]) requires that each County Body keep a record of its meetings. Though the record need not be verbatim, it must accurately reflect the agenda and the decisions made in the meeting. Any handouts or printed copies of material or testimony distributed at the meeting will be attached to the meeting record. Referral Update: Attached for the Committee's consideration is the Draft Record of Action for its April 9, 2018 meeting. Recommendation(s)/Next Step(s): APPROVE the Record of Action with any necessary corrections. Fiscal Impact (if any): None. Attachments Draft Record of Action Page 4 of 85 D R A F T LEGISLATION COMMITTEE April 9, 2018 10:30 A.M. 651 Pine Street, Room 101, Martinez   Supervisor Karen Mitchoff, Chair Supervisor Diane Burgis, Vice Chair Agenda Items:Items may be taken out of order based on the business of the day and preference of the Committee   Present: Karen Mitchoff, Chair      Diane Burgis, Vice Chair    Staff Present:Lia Bristol, Deputy Chief of Staff, District IV  Mark Goodwin, Chief of Staff, District III  Donte Blue, Deputy Director, Office of Reentry & Justice  Allison Pruitt, Policy & Planning Division, EHSD  Emlyn Struther, Clerk of the Board staff  Lara DeLaney, Senior Deputy County Administrator                   1.Introductions    The Committee members and attendees introduced themselves. Ben Palmer from Nielsen Merksamer was on a conference call line.   2.Public comment on any item under the jurisdiction of the Committee and not on this agenda (speakers may be limited to three minutes).    No public comment was made.   3.APPROVE the Record of Action with any necessary corrections.      The Committee voted unanimously to accept the Record as presented.    AYE: Chair Karen Mitchoff, Vice Chair Diane Burgis  Passed  4.      The Committee directed staff to watch AB 2043 (Arambula), a bill that requires county child welfare, Page 5 of 85  The Committee directed staff to watch AB 2043 (Arambula), a bill that requires county child welfare, probation, and behavioral health agencies to establish county-based Family Urgent Response System, and provide additional information on the fiscal impact to counties. No vote was taken.   5.CONSIDER recommending to the Board of Supervisors a position of "Support" on AB 2083 (Cooley): Foster Youth: Trauma-Informed System of Care, as recommended by the Director of Employment and Human Services, and direct staff to place the item on the Board's consent calendar for April 24, 2018.       The Committee declined to take action on the bill, requesting additional information from staff and citing concerns about any kind of state mandate, as our County has already implemented trauma-informed care through the Alliance to End Abuse.   6.CONSIDER recommending to the Board of Supervisors a position of "Support" on State Water Supply Infrastructure, Water Conveyance, Ecosystem and Watershed Protection and Restoration, and Drinking Water Protection Act of 2018.       The Committee voted unanimously to recommend support of the measure to the Board of Supervisors and directed staff to send to the Board on consent.    AYE: Chair Karen Mitchoff, Vice Chair Diane Burgis  Passed  7.CONSIDER recommending to the Board of Supervisors a position of "Support" on SB 1392 and SB 1393 and directing staff to place the bills on the Board's Consent calendar for April 24, 2018.       The Committee declined to vote on these bills, requesting further input from the County's justice system partners.   8.The next meeting is currently scheduled for May 14, 2018 at 10:30 a.m.   9.Adjourn   The Legislation Committee will provide reasonable accommodations for persons with disabilities planning to attend Legislation Committee meetings. Contact the staff person listed below at least 72 hours before the meeting. Any disclosable public records related to an open session item on a regular meeting agenda and distributed by the County to a majority of members of the Legislation Committee less than 96 hours prior to that meeting are available for public inspection at 651 Pine Street, 10th floor, during normal business hours. Public comment may be submitted via electronic mail on agenda items at least one full work day prior to the published meeting time.  For Additional Information Contact:  Lara DeLaney, Committee Staff Phone (925) 335-1097, Fax (925) 646-1353 lara.delaney@cao.cccounty.us Page 6 of 85 LEGISLATION COMMITTEE 4. Meeting Date:05/14/2018   Subject:Governor's Revised Budget Plan for FY 2018-19 Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-12   Referral Name: State Budget  Presenter: Cathy Christian & Ben Palmer Contact: L. DeLaney, 925-335-1097 Referral History: As a Governor does each year, Governor Brown is expected to release his revised budget for FY 2018-19 on Friday, May 11, 2018 at a news conference in Sacramento at 10:00 a.m. This news conference will be webcast at: http://www.calchannel.com . Referral Update: The California State Association of Counties, the Urban Counties of California, and others will be providing summaries of the budget proposal that are not available at time of publication. Our state advocates and staff will provide summary information at the meeting on May 14, 2018. Recommendation(s)/Next Step(s): ACCEPT the reports to be presented to the Committee at the meeting regarding the Governor's Revised Budget for FY 2018-19 and provide direction to staff.  Attachments No file(s) attached. Page 7 of 85 LEGISLATION COMMITTEE 5. Meeting Date:05/14/2018   Subject:AB 2293 (Reyes): Emergency Medical Services: Licensure Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-14   Referral Name: AB 2293 (Reyes): Emergency Medical Services: Licensure  Presenter: Patricia Frost Contact: Patricia Frost, 925-313-9554 Referral History: Patricia Frost, Director of Emergency Medical Services for Contra Costa County, is recommending a position of "Oppose" on AB 2293. Attachment A is a letter from EMSAAC and EMDAAC that provides the California EMS Agency Administrators' and Medical Directors' concerns associated with this bill. Author:Eloise Gomez Reyes (D-047) Title:Emergency Medical Services: Licensure Fiscal Committee: yes Urgency Clause: no Introduced:02/13/2018 Last Amend: 04/26/2018 Disposition:Pending Committee:Assembly Appropriations Committee Hearing:05/09/2018 9:00 am, State Capitol, Room 4202 Summary: Amends existing law relating to investigations and disciplinary actions against EMTs for specified conduct. Modifies the criteria related to conduct that the authority may consider in denying an EMT application. Permits the authority to consider whether an applicant demonstrates substantial rehabilitation. Extends the time for an applicant to file a notice of defense from 15 to 30 days in response to a denied EMT application. Referral Update: The text of AB 2293 is available here: Page 8 of 85 The text of AB 2293 is available here: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180AB2293 2017 CA A 2293: Bill Analysis - 05/07/2018 - Assembly Appropriations Committee, Hearing Date 05/09/2018 Date of Hearing: May 9, 2018 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez Fletcher, Chair AB 2293 (Reyes) - As Amended April 26, 2018 Policy Health Vote: 12 - 3 Committee: Urgency: No State Mandated Reimbursable: No Local Program: No SUMMARY: For purposes of an application for emergency medical technician-paramedic (EMT-P) license, this bill would limit and narrow the types of crimes and violations that can result in the denial of the application. Specifically, this bill: 1) Allows the Emergency Medical Services Authority (EMSA) to deny an EMT-paramedic application for specified reasons, which are narrower than those under existing law, unless the applicant can demonstrate substantial rehabilitation, as defined. 2) Narrows many of the potentially disqualifying acts to only those acts committed in the course of employment or those directly related to an EMT-P's qualifications, functions, and duties. 3) Allows EMSA to suspend its application review pending resolution of a criminal proceeding related to a sexual offense, as specified. 4) Prohibits EMSA from denying an application based on convictions that have been dismissed, pardoned, or expunged or for which a certificate of rehabilitation has been issued. 5) Prohibits EMSA from denying an application based on arrests, infractions, or citations, as specified, or a matter adjudicated in juvenile court. FISCAL EFFECT: Costs to EMSA in the range of $500,000 annually for at least three years to revise regulations and guidelines, process additional new applications, and information technology changes to the central EMS registry (GF, or Emergency Medical Services Personnel Fund with an estimated fee increase of $12 per license). Ongoing costs are expected to be minor once the required changes are made. COMMENTS: 1) Purpose. According to the author, recent wildfires demonstrate the need for additional firefighters and EMTs. The author contends under current law EMSA denies qualified individuals based purely on a past criminal history. This bill reduces barriers for individuals who have already served their time to have an opportunity for employment that requires an EMT-P license. Page 9 of 85 2) Background. An EMT is a trained-and-certified or licensed professional who renders immediate medical care in the pre-hospital setting to seriously ill or injured individuals. California has three levels of EMTs: EMT-I (basic), EMT-II (also known as advanced EMT), and EMT-P (paramedic). Paramedics must meet higher training requirements compared to EMT-Is and IIs, and have a broader scope of practice. There are nearly 22,000 licensed EMT-Ps in California. This Legislature, think-tanks, and advocacy groups have recently demonstrated interest in reducing barriers for formerly incarcerated persons. Occupational licensure for formerly incarcerated persons, which generally include background checks that can disqualify a person from licensure, pose a significant barrier to entry in many professions. 3) Current Process. According to the National Registry of EMTs, EMS professionals under the authority of state licensure have unsupervised, intimate, physical and emotional contact with patients at a time of maximum physical and emotional vulnerability, as well as unsupervised access to a patient's personal property. They note EMS professionals, therefore, are placed in a position of the highest public trust. Accordingly, the National Registry has adopted criminal conviction policies for issuing certifications to safeguard the public and preserve public trust. In order to work as an EMT or paramedic in California, an individual must first pass the National Registry certification test. At the state level, model disciplinary orders were developed by EMSA in consultation with emergency medical services constituent groups from across the state to provide consistent and equitable treatment for violations and denial of applications. 4) Prior Legislation. AB 1931 (Rodriguez), of the current session, would have added EMT-Ps to the provisions of law governing the procedures for investigations and disciplinary actions that are current law for EMT-Is and IIs. AB 1931 was held on the Senate Appropriations Suspense File. AB 1008 (McCarty), Chapter 789, Statutes of 2017, prohibits an employer, with certain exceptions, from inquiring about or considering a job applicant's conviction history prior to a conditional offer of employment, and sets requirements regarding the consideration of conviction histories in employment decisions 5) Staff Comment. In ongoing discussions about this bill since it passed the policy committee, concerns have been raised about conflict between this bill and conviction policy for the federal EMT certification that could render this bill's attempt to relax certification standards moot. In other words, unless federal policy changes or the state takes the dramatic step of no longer requiring federal certification, a person could be federally disqualified for many of the acts this bill would allow on a licensed EMT-P's record. Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081 Recommendation(s)/Next Step(s): Fiscal Impact (if any): CONSIDER recommending to the Board of Supervisors a position of "Oppose" on AB 2293 Page 10 of 85 CONSIDER recommending to the Board of Supervisors a position of "Oppose" on AB 2293 (Reyes), a bill that would limit and narrow the types of crimes and violations that can result in the denial of an application for emergency medical technician-paramedic (EMT-P) license and direct staff to submit to a Board agenda for consent. Attachments Attachment A: Oppose Letter Page 11 of 85 Alameda Central California Coastal Valleys Contra Costa El Dorado Imperial Inland Counties Kern Los Angeles Marin Merced Monterey Mountain-Valley Napa North Coast Northern California Orange Riverside Sacramento San Benito San Diego San Francisco San Joaquin San Luis Obispo San Mateo Santa Barbara Santa Clara Santa Cruz Sierra-Sac Valley Solano Tuolumne Ventura Yolo May 9, 2018 The Honorable Lorena Gonzalez Fletcher Chair, Assembly Appropriations Committee State Capitol, Room 2114 Sacramento, CA 95814 RE: AB 2293/Reyes – Emergency medical services: licensure As Amended April 26, 2018 – OPPOSE Set for Hearing May 4, 2018 – Assembly Appropriations Committee Dear Assembly Member Gonzalez Fletcher: The Emergency Medical Services Administrators Association of California (EMSAAC) and the Emergency Medical Directors Association of California (EMDAC) strongly oppose AB 2293 by Assembly Member Eloise Gómez Reyes, which amends Health and Safety Code Section 1798.200 by severely restricting the ability of the local EMS agency (LEMSA) medical directors and the director of the EMS Authority to protect the public’s health and safety by denying licenses to applicants or imposing disciplinary action against EMTs, EMT-IIs, and paramedics. Existing statutory standards for discipline of pre-hospital personnel were developed in collaboration with numerous EMS stakeholders to ensure both patient safety and the opportunity for individuals to not be unnecessarily excluded from certification for past criminal convictions unrelated to the duties, qualifications and functions of prehospital medical care personnel. We are extremely concerned that AB 2293 will eliminate safeguards placing patients at serious risk from individuals posing a serious threat to the public’s health and safety. Pre-hospital personnel serve on ambulances, emergency response apparatus, and remote first-aid areas providing services to vulnerable patients, many who are elderly and alone, in their homes with little direct supervision. For this reason and others we believe that standards for who is eligible for certification and licensure should remain high. Most troubling is that this bill strikes the authority of local EMS agencies and the EMS Authority to deny certification or licensure to any applicant regardless of the seriousness of past criminal history including violent sex offenders and convicted pedophiles. While this may not be the intent of the bill, it is the result. Additionally, this bill will increase costs for local EMS agencies ranging in the tens of thousands of dollars due to required revisions to policies, an expected increase in the volume of applications from individuals with serious criminal histories requiring in depth evaluation, ensuring fire department and ambulance compliance with revised standards, and the potential for more complex and more frequent administrative law proceedings and the setting of new legal precedents. The EMS Authority will likely face a similar increase in costs related to this bill. Attachment A Page 12 of 85 AB 2293/Reyes – EMSAAC - EMDAC – Oppose May 4, 2018 Page 2 EMSAAC represents the 33 local emergency medical services (EMS) agency administrators representing all of California’s 58 counties. The mission of the Emergency Medical Directors Association of California, Inc. (EMDAC) is to provide leadership and expert opinion in the medical oversight, direction and coordination of Emergency Medical Services for the people of the State of California. If you should have any questions, please contact EMSAAC’s Legislative Chair Dan Burch at (209) 468- 6818. Sincerely, Michael Petrie Kevin Mackey, MD EMSAAC President EMDAC President cc: The Honorable Eloise Gómez Reyes, Member, California State Assembly Honorable Members, Assembly Appropriations Committee Lisa Murawski, Consultant, Assembly Appropriations Committee Peter Anderson, Consultant, Assembly Republican Caucus Attachment A Page 13 of 85 LEGISLATION COMMITTEE 6. Meeting Date:05/14/2018   Subject:AB 2043 (Arambula) and AB 2083 (Cooley)--RECONSIDERATION Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-20   Referral Name: AB 2043 and AB 2083  Presenter: Maura Connell, EHSD Contact: L. DeLaney, 925-335-1097 Referral History: AB 2043 (Arambula): Foster Youth: Family Urgent Response System and AB 2083 (Cooley): Foster Youth: Trauma-Informed System of Care were considered by the Legislation Committee at their April 9, 2018 meeting. The Committee requested further information from staff; no votes were taken on the bills at that time. EHSD staff is providing the Committee additional information for the Committee's reconsideration of the bills. AB 2043 requires, by January 1, 2020, county child welfare, probation, and behavioral health agencies to establish county-based Family Urgent Response Systems for the provision of mobile crisis-response services to current or former foster youth and their caregivers, and, by that same date, requires the Department of Social Services (DSS) to establish a statewide hotline, to be available 24 hours per day, seven days per week to respond to caregiver or youth calls when a crisis arises. Disposition:Pending Location:Assembly Appropriations Committee AB 2083 requires county-level Memorandums of Understanding (MOUs) between agencies directly responsible for the most-traumatized children in foster care and requires the Secretary of California Health and Human Services and the Superintendent of Public Instruction (SPI) to implement and review aspects of the MOUs. Disposition:Pending Location:Assembly Appropriations Committee Referral Update: Page 14 of 85 Referral Update: Employment and Human Services Department (EHSD) staff offers the following additional information for the Supervisors reconsideration of the bills. Unfortunately, they were not able to confirm the funding details that were of special concern to the Supervisors, as the legislative process for these bills is still in motion. Staff recommends supporting the Bay Area regional counties for AB 2043 (Urgent Response System), “contingent upon the requisite funding being approved in the State budget.” AB 2043 (Arambula): (The text of the bill can be found at:  http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB2043 Approximately 525 organizations have signed on to support this bill vs. a normal range of 40 – 50 supporters. There is language in the bill that indicates bill will only be implemented to the extent that funding is provided. Any cost that would occur would not be attached to county (as a state-mandated program at state/federal cost). It is acknowledged that there would be a significant cost associated with implementation of AB 2043, even though not to be picked up by the county.  As a result, CWDA et al are pursuing a budget appropriation through the state budget. With respect to “county flexibility,” AB 2043 was modeled after Seneca’s mobile response. (Contra Costa County has a contract with Seneca for its Mobile Response Team, through Health Services Department.)  The bill calls for counties to develop local plans for implementation and for DSS to develop guidance to counties based on stakeholder feedback that includes counties. So counties would have some flexibility in how to structure services locally. Estimates of potential volume:  In the year 2017, there were approximately 655 calls to the Contra Costa County Mobile Response Team (Seneca).  In answer to the Supervisors’ question, there are face-to-face responses as well as phone-only. We are not able to extrapolate from this an estimate of volume under AB 2043, but the 2017 figures provide a current order of magnitude. AB 2083 (Cooley): (The text of the bill can be found at:  http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB2083 There is language in the bill (as in AB 2034) that attends to the Prop 30 protections, meaning that the bill will only be implemented to the extent that funding is provided. AB 2083 does not have a high fiscal cost, but any cost that would occur, would not be attached to county (as a state-mandated program at state/federal cost). In answer to Supervisor Mitchoff’s question: the MOU template would be provided by the State Interagency Team, modeled after what was adopted through the CCR State/County Team. Recommendation(s)/Next Step(s): CONSIDER recommending to the Board of Supervisors a position of "Support, if funded" for AB Page 15 of 85 CONSIDER recommending to the Board of Supervisors a position of "Support, if funded" for AB 2043 (Arambula): and "Support" for AB 2083 (Cooley) and sending to the Board for their consent. Fiscal Impact (if any): AB 2043: (Fiscal impact on State) 1) Estimated first-year costs of $15 million (GF) to DSS to establish the statewide hotline and implement mobile response services. 2) Estimated ongoing annual total costs of $30 million (GF) to DSS to maintain the system -- approximately $2.3 million to staff and administer the hotline, and $27.7 million for county mobile response teams. The total cost estimate assumes, once the system is established, at least 80% of county response services would be eligible for matching funds under the federal Medicaid program. 3) Costs of $159,000 (GF/federal funds) in FY 2018-19 and $225,000 (GF/federal funds) in FY 2019-20 and ongoing to the Department of Health Care Services (DHCS) for two additional positions. (The bill's author submitted a budget request for a $15 million appropriation as an initial state investment in the Family Urgent Response System described in this bill.) AB 2083: 1) Unknown onetime costs, likely less than $1 million (local funds/GF) statewide, for counties to develop and implement the required MOUs. 2) Unknown onetime costs, likely less than $1 million (GF), to the California Health and Human Services Agency and the SPI to establish the joint interagency resolution team and perform the required duties, including assisting counties with developing their MOUs, developing a multi-year plan, and reporting to the Legislature. Attachments No file(s) attached. Page 16 of 85 LEGISLATION COMMITTEE 7. Meeting Date:05/14/2018   Subject:AB 3087 (Kalra): State Health Care Cost, Quality, and Equity Commission Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-17   Referral Name: AB 3087  Presenter: Patricia Tanquary Contact: L. DeLaney, 925-335-1097 Referral History: AB 3087 (Kalra): State Health Care Cost, Quality, and Equity Commission, is a bill that establishes the Health Care Cost, Quality, and Equity Commission (Commission), to among other functions, control in-state health care costs and set the amounts accepted as payment by health plans, hospitals, physicians, physician groups, and other healthcare providers. The Chief Executive Officer of the Contra Costa Health Plan, Patricia Tanquary, recommends that the Committee consider recommending an "Oppose unless amended" position on AB 3087 to the Board of Supervisors. Author:Ash Kalra (D-027) Coauthor Stone (D)  Title:State Health Care Cost, Quality, and Equity Commission Fiscal Committee: no Urgency Clause: no Introduced:02/16/2018 Last Amend: 05/02/2018 Disposition:Pending Location:Assembly Appropriations Committee Summary:Creates the State Health Care Cost, Quality, and Equity Commission, an independent state agency, to control in state health care costs and set the amounts accepted as payment by health plans, hospitals, physicians, and other health care providers. Provides that funding for the Commission would be provided from specified funds. Requires the Commission to annually determine the base amounts that health care entities are required to accept as full payment for health care service. Provides certain exemptions. Page 17 of 85 Referral Update: The text of AB 3087 is available here: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB3087 According to the bill analysis (Attachment A), the author contends that while California has made major strides in providing access to health care and promoting quality care, the cost of health care remains unaffordable for many working Californians and is a significant burden among public and private employers. In California, health insurance premiums have continued to rise way past inflation, and the cost of which is putting a strain on state public funds being used to cover the cost of health care. Numerous reports have demonstrated that the costs health care in the U.S. are out-of-control, and hospital costs and physician services represent an overwhelming proportion of the projected premium dollar - 75% of the projected 2018 premium dollar. The author notes that the reason the U.S. spends far more on health care than other nations is because of the prices. One thing all countries with universal health care have in common is that the government sets and regulates health care prices and controls overall costs throughout the system, including the commercial market. This bill addresses skyrocketing costs in California by establishing an independent Health Care Cost, Quality and Equity Commission to set reasonable base amounts that hospitals, doctors, and other providers of health care services can collect from public and private payers. For health plans, the Commission will also determine appropriate base amounts for premiums using an adjusted Medicare Advantage rate as the benchmark. Doing so will provide needed relief as all payers will be paying less for health care through lower premiums and cost-sharing without compromising on quality. The author concludes that the high cost of health care is unsustainable and the state must take meaningful action to contain these costs. According to the Alameda-Contra Costa Medical Association, "AB 3087 (Kalra) would establish an unelected commission of nine individuals to set physician and hospital rates for commercial health care services in California, while doing nothing to address chronically low Medicare and Medi-Cal reimbursement rates. The consequence if AB 3087 becomes law will be reduced access to care for the most vulnerable patients."  Attachment B  includes letters in opposition from the East Bay Leadership Council, Kaiser, and the Alameda-Contra Costa Medical Association. Recommendation(s)/Next Step(s): CONSIDER recommending to the Board of Supervisors a position of "Oppose unless amended" on AB 3087. Attachments Attachment A: Bil Analysis Page 18 of 85 Attachment B: Oppose Letters Page 19 of 85 AB 3087 Page 1 Date of Hearing: April 24, 2018 ASSEMBLY COMMITTEE ON HEALTH Jim Wood, Chair AB 3087 (Kalra) – As Amended April 17, 2018 SUBJECT: California Health Care Cost, Quality, and Equity Commission. SUMMARY: Establishes the Health Care Cost, Quality, and Equity Commission (Commission), to among other functions, control in-state health care costs and set the amounts accepted as payment by health plans, hospitals, physicians, physician groups, and other healthcare providers. Specifically, this bill: I. COMPOSITION/STRUCTURE OF THE COMMISSION 1) Establishes the Commission as a state agency that is an independent public entity that is not affiliated with an agency or department. 2) Establishes the membership of the Commission consisting of 11 members who are residents of California, and of which: a) Three are to be appointed by the Governor; b) Three are to be appointed by the Senate Committee on Rules; c) Three are to be appointed by the Speaker of the Assembly; d) The Secretary of California Health and Human Services or his or her designee to serve as a voting, ex officio member; and, e) A California Public Employees' Retirement System (CalPERS) representative to be designated by the CalPERS Board of Administration to serve at the pleasure of CalPERS Board of Administration as a voting, ex officio member. 3) Sets up the terms of office as follows: a) Members of the Commission, other than an ex officio member, are to be appointed for a term of six years; b) Appointments made by the Governor are subject to confirmation by the Senate; c) Members of the Commission are to serve until the appointment and qualification of a successor; d) Vacancies are to be filled by appointment for the unexpired term; e) The Commission is to elect a chairperson on an annual basis; and, f) Initial appointments are to be for staggered terms. Requires the Governor to appoint one member for two years, one member for four years, and one member for six years. Requires the Senate Committee on Rules and the Speaker of the Assembly to each appoint one member for one year and one member for three years. 4) Allows an individual appointed to the Commission to have more than one of the qualifications specified below, and requires that appointees to the Commission to be made as follows: a) One individual with demonstrated expertise in health care policy; b) One individual with demonstrated expertise in health care delivery; c) One health economist; d) One consumer advocate; e) One individual with demonstrated expertise in health care financing, including alternative payment methodologies; Attachment A Page 20 of 85 AB 3087 Page 2 f) One representative of a labor union organization who serves as a trustee of a trust fund organized under state or federal law; g) One representative of an organization of employers with demonstrated expertise in health care purchasing; h) One physician; and, i) One individual with experience in hospital administration. 5) Requires each member of the Commission to have the responsibility and duty to meet the requirements of this bill and all applicable state and federal laws and regulations to serve the public interest of the public and private purchasers, payers, and providers of health care, and to protect the personal health information of health care consumers. 6) Requires the appointing authorities to consider the expertise of the current members of the Commission and make appointments to complement those members’ expertis e. Requires the appointing authorities to take into consideration the racial, ethnic, gender, and geographical diversity of the state so that the Commission’s composition reflects the communities of California. 7) Prohibits the following: a) A member of the Commission or of the staff of the Commission from being employed by, a consultant to, a member of the board of directors of, affiliated with, or otherwise a representative of, a carrier or other insurer, an agent or broker, a pharmaceutical manufacturer, a health care provider, a health care facility, or a health clinic while serving on the Commission or on the staff of the Commission; b) A member of the Commission or of the staff of the Commission from being a member, a board member, or an employee of a trade association of carriers, pharmaceutical manufacturers, health care facilities, health clinics, or health care providers while serving on the Commission or on the staff of the Commission; c) A member of the Commission or of the staff of the Commission from being a health care provider unless he or she does not receive compensation for rendering services as a health care provider and does not have an ownership interest in a professional health care practice; d) A member of the Commission from engaging in ex parte communications with an individual or organization that may appeal to the Commission; e) A member of the Commission from making, participate in making, or attempting to use his or her official position to influence the making of a decision the Commissioner knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on the Commissioner, on a member of his or her immediate family, or on either of the following: i) A source of income, other than gifts and loans by a commercial lending institution in the regular course of business on terms available to the public without regard to official status aggregating two hundred fifty dollars ($250) or more in value provided to, received by, or promised to the member within 12 months before the decision is made; or, ii) A business entity in which the member is a director, officer, partner, trustee, or employee, or holds a position of management. f) The Commission, a member of the Commission, or an officer or employee of the Commission shall from being held liable in a private capacity for, or on account of, an act performed or obligation entered into in an official capacity, when done in good faith, without intent to defraud, and in connection with the administration, management, or conduct or affairs related to the provisions of this bill. Attachment A Page 21 of 85 AB 3087 Page 3 8) Requires a member of the Commission to receive adequate compensation for his or her service on the Commission. Allows a member of the Commission to receive a per diem and reimbursement for travel and other necessary expenses while engaged in the performance of official duties of the Commission, as specified. 9) Requires the Commission to hire an executive director (ED) to organize, administer, and manage the operations of the Commission. Requires the ED to be exempt from civil service and to serve at the pleasure of the Commission. 10) Subjects the Commission to the Bagley-Keene Open Meeting Act but allows the Commission to hold closed sessions when considering matters related to litigation, personnel, and contracting. II. PURPOSE OF THE COMMISSION 11) Establishes the following purposes of the Commission: a) To set the amounts accepted as payment by health plans, hospitals, physicians, physician groups, and other health care providers; b) To determine methods for state government to reduce the cost of prescription drugs and medical devices paid for by private purchasers in the commercial market; c) To control in-state health care costs in a manner intended to improve health care quality, improve health outcomes, and reduce health disparities for all Californians; d) To reduce price discrimination by health care providers among health care purchasers and the variation in prices paid to providers by private purchasers in the commercial market; e) To ensure payments to health care providers will permit them to provide medically necessary, effective, and efficient health care services in a manner that improves health outcomes, reduces health disparities, ensures there are an adequate number of providers to provide timely access to health care services for all Californians with commercial health coverage, and ensures a fair and reasonable return on investment to providers; and, f) To measure and reduce total health care expenditures per capita in the state. 12) States that it is not the purpose of the Commission to determine rates with respect to the Medi-Cal program or any other public health program. III. ADVISORY COMMITTEE 13) Requires the Commission to convene an advisory committee composed of a diverse set of health care stakeholders with demonstrated expertise in private, commercial, or Medicare health care payments and financing, health care delivery, health care quality, health care workforce, population health, health equity, or a combination of these. 14) Requires the appointments to the advisory committee to be for a term of at least one year. 15) Requires the advisory committee to be made up of 15 members as follows: a) A representative of a health care service plan (health plan) , as specified, an insurer offering a policy of health insurance, as specified, or an association representing health plans; b) A representative of a licensed health facility, as specified; c) A representative of a clinic, as specified; d) A representative of an ambulatory surgery or other outpatient setting, as specified; e) A representative of a laboratory, radiology, or imaging center; f) A physician and surgeon who is licensed in California to deliver or furnish health care services; Attachment A Page 22 of 85 AB 3087 Page 4 g) A representative of a physician organization or medical group; h) A representative of an organization of the employees of hospital or medical group providers licensed or certified to deliver health care services; i) An expert in health information technology; j) Any other provider of a health care service that is licensed, certified, or otherwise regulated by the state; k) A representative of a self-insured or self-funded employer group health plan, multiemployer plan, or self-insured or self-funded joint labor-management trust that pays for health care services provided to beneficiaries; l) A representative of CalPERS; m) A representative of a large public sector purchaser of health care services; n) A representative of a large private sector purchaser of health care services; and, o) A representative of an organization representing health care consumers. 16) States that the purpose and duties of the advisory committee is to advise the Commission as follows: a) Provide recommendations to the Commission regarding the establishment, implementation, and ongoing administration and evaluation of the Commission; b) Advise the Commission on topics requested by the Commission; and, c) Suggest questions and agenda items to the Commission for advisory committee consideration. 17) Requires the advisory committee to hold public meetings at least once every quarter, and solicit input on agendas and topics set by the Commission. 18) Requires meetings of the advisory committee to be subject to Bagley-Keene Open Meeting Act. 19) Requires a member of the advisory committee to recuse himself or herself from any matter directly affecting his or her interests or the interests of the entity or organization represented by the member. 20) Prohibits a member of the advisory committee from receiving per diem, travel expense reimbursement, or other expense reimbursement related to his or her service on the advisory committee. IV. DUTIES OF THE COMMISSION 21) Requires the Commission to do the following: a) Convene at least quarterly, or more frequently as required to fulfill its purpose under this bill; b) Annually prepare a written report on the implementation and performance of the Commission during the preceding fiscal year, including, at a minimum, how funds were expended and the progress toward, and the achievement of, the requirements of this bill; c) Respond to requests for additional information from the Legislature, including providing testimony and commenting on proposed state legislation or policy issues; d) Maintain expenditures consistent with revenues; e) Exercise all powers reasonably necessary to carry out and comply with the duties, responsibilities, and requirements of this bill; and, f) Consult with the advisory committee stakeholders relevant to carrying out the activities of this bill. 22) Requires the report specified in 21) b) above to be publicly posted on the Commission’s Internet Website; and, annually transmitted to the Legislature and the Governor. 23) Authorizes the Commission to do the following: Attachment A Page 23 of 85 AB 3087 Page 5 a) Enter into contracts; b) Sue and be sued; c) Receive and accept gifts, grants, or donations of moneys from an agency of the United States, an agency of the state, and a municipality, county, or other political subdivision of the state; d) Receive and accept gifts, grants, or donations from individuals, associations, private foundations, and corporations, in compliance with the conflict of interest provisions to be adopted by the Commission at a public meeting; e) Adopt rules and regulations, as necessary. Authorizes adoption of emergency regulations until January 1, 2022, as specified; f) Share information with relevant state departments necessary for the administration of the Commission; and, g) Employ necessary staff. 24) Requires the Commission to hire a chief fiscal officer, a chief operations officer, a chief technology and information officer, a general counsel, and other key executive positions, who are exempt from civil service. 25) Requires the Commission to set the salaries for the exempt positions specified in 24) above and the ED in amounts that are reasonably necessary to attract and retain individuals of superior qualifications. Requires the salaries to be published by the Commission in the Commission’s annual budget. States that the positions of the ED and those described in 24) above are not to be subject to provisions of the Government Code or the Public Contract Code and, solely for the purpose of determining the salaries for those positions, the Commission is not to be considered a state agency or public entity. 26) Requires the Commission’s annual budget to be posted on the Internet Website of the Commission. 27) Requires the Commission, in determining the salaries in 24) above, to cause to be conducted, through the use of independent outside advisors, salary surveys (surveys) of both of the following: a) Other state and federal health care Commissions that are most comparable to the Commission; and, b) Other relevant labor pools. 28) Requires the salaries established by the Commission in 25) above to not exceed the highest comparable salary for a position of that type, as determined by the surveys. 29) Requires the Department of Human Resources to review the methodology used in the surveys. 30) Prohibits the Commission from being subject to licensure or regulation by the Department of Insurance (CDI) or the Department of Managed Health Care (DMHC). V. DEFINITION OF TERMS 31) Defines the following terms: a) Adjusted amount is the maximum amount of payment approved by the Commission after the final decision on an appeal pursuant to this bill that a health care entity may require from a purchaser as payment in full for health care services, in addition to applicable cost sharing; b) Applicable cost sharing is the copayments, deductibles, coinsurance, and any other share of cost for services that is permitted consistent with state law and regulations or federal law, rules, and guidance; Attachment A Page 24 of 85 AB 3087 Page 6 c) Base amount is the amount of payment for health care services as a percentage of Medicare rates that a health care entity may require from a purchaser as payment in full for health care services, in addition to any applicable cost sharing; d) Commercial health coverage is coverage that is paid for by individual consumers for their own benefit, employers for the benefit of employees and dependents, employee benefit plans for the benefit of plan participants and their dependents, or another individual or group health plan. Excludes from the definition of commercial health coverage Medicare, Medi-Cal, the Indian Health Service, the Federal Employees Health Benefit Program, or TRICARE; e) A health care entity as the following: i) A health plan or an insurer offering a policy of health insurance as specified; ii) A licensed health facility, as specified; iii) A clinic, as specified; iv) An ambulatory surgery or other outpatient setting, as specified; v) A laboratory, radiology, or imaging center that is required to be licensed or certified by the state; vi) A physician and surgeon or other professional who is licensed in California to deliver or furnish health care services and who is a member of a health profession in which some professionals bill independently for their service s; vii) A physician organization or medical group; or, viii) Any other provider of a health care service that is licensed, certified, or otherwise regulated by the state and that bills separately or independently for that service. f) A Health care provider as a health care entity as specified in e) ii) to e) viii) above; g) Health care services as covered benefits, including essential health benefits (EHBs), as specified, and any other covered benefits as provided in the evidence of coverage or plan documents provided by a health plan, insurer, or self-insured plan; h) Noncontracting physician or other noncontracting health professional as a physician or health professional who is not contracted with a state-licensed health plan or a health insurer licensed by the state; and, i) Purchasers as consumers who purchase health coverage as individuals and employers, plans, and trust funds that purchase health coverage or pay for health care benefits on the behalf of their employees, dependents, or plan members. VI. EXCEPTIONS TO THIS BILL 32) States that this bill does not apply to the following: a) A Medi-Cal managed care (MCMC) plan or an entity that enters into a contract with the State Department of Health Care Services (DHCS); nor, b) Individuals receiving coverage through the Medicare program or any other federal program, including the Indian Health Service, TRICARE, the Federal Employees Health Benefit Program, or any other federal program providing health care services. 33) States that the amounts paid for services under this bill do not constitute a health care provider’s uniform, published, prevailing, or customary charges and are not to be used for purposes of a payment limit under the federal Medicare Program, the Medi-Cal program, or any other federal or state-financed health care program. 34) States that this bill is not intended to act upon, govern, impose obligations upon, or otherwise regulate employee welfare benefit plans regulated by the Employee Retirement Income Security Act (ERISA) of 1974. Provides that this bill does not prohibit those plans from accessing the rates set by the Commission for regulated health care entities. Attachment A Page 25 of 85 AB 3087 Page 7 VII. PURCHASER PARTICIPATION PROGRAM 35) Requires the Commission, on or before July 1, 2019, to adopt regulations to establish the Purchaser Participation Program, which allows for the ED to award reasonable advocacy and witness fees to a person or organization that demonstrates that the person or organization represents the interests of purchasers and has made a substantial contribution on behalf of purchasers to the adoption of a regulation or to an order or decision made by the ED if the order or decision has the potential to impact a significant number of consumers. 36) Includes in the regulations adopted by the Commission specifications for eligibility of participation, rates of compensation, and procedures for seeking compensation. Requires the regulations to require that the person or organization demonstrate a record of advocacy on behalf of health care consumers in administrative or legislative proceedings in order to determine whether the person or organization represents the interests of purchasers. 37) Applies the above provisions to all proceedings of the Commission, including individual rate cases. 38) Requires the fees awarded to be considered costs and expenses, and to be paid from the assessments made under this bill. 39) Requires the Commission to report the following information on or before March 1, 2020, and annually thereafter: a) The amount of reasonable advocacy and witness fees awarded each fiscal year; b) The individuals or organizations to whom advocacy and witness fees were awarded; and, c) The orders, decisions, and regulations pursuant to which the advocacy and witness fees were awarded. 40) Requires the report in 39) above to be publicly posted on the Commission’s Internet Website, and annually transmitted to the appropriate policy and fiscal committees of the Legislature. VIII. FUNDING OF THE COMMISSION 41) Requires funding for the actual and necessary expenses of the Commission to be provided, from transfers of moneys from the Managed Care Fund and the Insurance Fund; 42) Requires the share of funding from the Managed Care Fund to be based on the number of covered lives in the state that are covered under plans regulated by the DMHC , including covered lives under MCMC, as determined by DMHC, in proportion to the total number of covered lives in the state. 43) Requires the share of funding from the Insurance Fund to be based on the number of covered lives in the state that are covered under health insurance policies and benefit plans regulated by CDI, including covered lives under Medicare supplement plans, as determined by CDI, in proportion to the total number of covered lives in the state. 44) Requires the allocation of the share of funding from the funds described in 41) above to be determined annually during the budget process. Attachment A Page 26 of 85 AB 3087 Page 8 IX. BASE AMOUNT 45) Requires the Commission, beginning July 1, 2019, and annually thereafter, to establish base amounts that health care entities accept as payment in full for health care services, in addition to applicable cost sharing. Requires the base amount to apply to a contract with a health care entity that was issued, amended, or renewed on or after the effective date of the base amount. Requires the Commission to determine the effective date or dates of base amounts, but no earlier than July 1, 2019. 46) Requires the Commission, on or before July 1, 2019, to adopt regulations governing the annual determination of base amounts. Requires the Commission, in its determination of the base amounts, to allow the submission of written comments and testimony by health care entities and purchasers. 47) Requires the annual determination of base amounts to be exempt from the Administrative Procedure Act. 48) Requires the Commission to annually determine the percentage of Medicare rates used to determine the base amount, as follows: a) For health care providers, the percentage determined by the Commission to be not lower than 100% of Medicare rates, and may exceed Medicare rates; requires the base amounts to be a percentage of the rate that Medicare reimburses for the same or similar services in the general geographic region in which the services were rendered, unless those services are provided on a contractual basis to a health plan or health insurer licensed by the state; and, b) For a health plan contract or a policy of health insurance, the base amount to be a percentage of the capitated rate a health plan receives for Medicare Advantage for the county where the enrollee or insured resides, adjusted for all of the following: i) Age; ii) Risk mix; iii) Differences in cost sharing between the Medicare Advantage plan and the coverage offered by the health plan or health insurer; and, iv) Other actuarial factors permissible under state and federal law. 49) Requires the Commission to take into account all of the following in determining the base amounts: a) Evidence of the financial status of hospitals, other health care providers, and Medicare Advantage plans, and the compensation of physicians and other health professionals in California. Requires the Commission to consider whether or not the health care entity is receiving a fair return on investment and avoidance of confiscatory results; b) Changes in state or federal laws that result in a change in costs; c) Reasonable increases in labor costs, including salaries and benefits, and changes in collective bargaining agreements or prevailing wage; d) Reasonable increases in capital investments, including those associated with compliance with state or federal law; and, e) Changes in the delivery of care that require adjustments in rates, such as the development of new modalities of care or new systems of care. 50) Authorizes the Commission to allow different percentages of Medicare rates to be used for different health care entities, including different percentages for Medicare Advantage than for the amounts paid to health care providers. Attachment A Page 27 of 85 AB 3087 Page 9 51) Allows a health plan or health insurer to negotiate contracted rates with contracting health providers that are not based on the Medicare rates as provided by this bill. 52) Re quires the Commission to do the following: a) Establish a process for developing base amounts for health care services not currently reimbursed by Medicare or Medicare Advantage; b) Establish a process for determining reimbursement rates for health care services infrequently reimbursed by Medicare or Medicare Advantage and to include, at a minimum, pediatrics, obstetrics, and gynecology; c) Determine whether or not to include or alter Medicare rating factors, such as Medicare disproportionate share hospital rates, graduate medical education, readmission penalties, and other added rates as Medicare may allow. States that until the Commission makes such determination, the base amount will not include those factors. d) Review and adjust overall rates or specific rates to maintain the workforce necessary to deliver quality, equitable health care throughout the state, and allows the Commission make adjustments to ensure access to underserved populations throughout the state; e) Review the base amounts annually to ensure that the amounts are sufficient to ensure all of the following: i) The financial solvency requirements under state law for each of the following: (1) Health plans; (2) Insurers offering policies of health insurance; and, (3) Risk-bearing organizations. ii) A fair return on investment for the health care entity; iii) Avoidance of confiscatory results; iv) Improvements in health outcomes; v) Improvements in health disparities and reductions in health system costs consistent with this bill; and, vi) Availability and accessibility of health care services, including compliance with state requirements regarding network adequacy, timely access, and language access. f) Separately consider the impact of the base amounts in underserved areas, including rural areas determined to be underserved in accordance with state and federal requirements. Allows the Commission, to mitigate the impact of the base amounts on the availability and accessibility of health care services in underserved areas, to adjust the base amounts for services provided in those areas. 53) Authorizes the Commission, in determining base amounts, to take into account the reliance of the category of hospital or health professional on reimbursement by the Medi-Cal program, including supplemental Medi-Cal rates, such as disproportionate share hospital payments, intergovernmental transfers, prospective payment system rates for clinics, reimbursement based on quality assurance fees, or other supplement Medi-Cal rates that the provider receives. 54) Authorizes the Commission, if it determines that the Medicare reimbursement system has substantially changed and no longer serves the interests of Californians, to make recommendations to the Governor and the Legislature to ensure that the Commission continues to fulfill its purpose. X. NONCONTRACTING PHYSICIANS/NONCONTRACTING PROVIDERS 55) Requires, to develop appropriate base amounts for noncontracting physicians and other noncontracting health professionals, health plans and health insurers to provide to the Commission the average contracted amount for the same or similar services in the general geographic regions in which the services were rendered for the three calendar years before the effective date of this bill. Attachment A Page 28 of 85 AB 3087 Page 10 56) Defines average contracted rate as the average of the contracted commercial rates paid by the health plan, delegated health entity, or health insurer for the same or similar services in the geographic region. 57) Provides that until the data submitted pursuant to 55) above is available to the Commission, the Commission shall not set a base amount for noncontracting physicians and other noncontracting health professionals. 58) Requires the Commission, to determine the base amounts for noncontracting physicians and other noncontracting health professionals, to take into account the commercial contracted rates paid in the three prior calendar years. 59) Provides that the provisions relating to noncontracting physicians do not apply to physicians and other health professionals contracting with health plans or health insurers. 60) States that until the Commission determines the base amounts for noncontracting physicians and other noncontracting health professionals, a physician or health professional who does not contract with a health plan or health insurer is not subject to the base amount. XI. INTENT REGARDING THE MEDI-CAL PROGRAM 61) States the intent of the Legislature to better align the financing of the Medi-Cal program, including both the fee-for-service (FFS) program and MCMC, with Medicare rates. 62) Specifies the intent of the Legislature that savings to the General Fund (GF) from lower health care costs for public employers as a result of this bill to be directed, upon appropriation by the Legislature, to the Steven M. Thompson Physician Corps Loan Repayment Program, the Song- Brown Healthcare Workforce Training Programs, the Health Professions Education Fund, and other programs intended to recruit and retain health professionals in underserved areas. 63) Requires, beginning October 1, 2020, and on or before October 1 annually thereafter, the Commission to estimate the savings to the GF from lower health care costs paid by public employers, including the state and local governments, as a result of this bill, and to report the estimated savings to the Department of Finance (DOF) and the Legislature. 64) Requires DOF to provide an estimate of the cost to increase reimbursement rates for physicians and other health care providers to be comparable to Medicare, taking into account the differences in populations served. Requires DOF to include in its estimate an analysis of how much of the cost would be provided through federal financial participation and how much could be paid out of the estimated savings to the GF from lower health costs for public employers. XII. APPEAL PROCESS 65) Requires the Commission, on or before July 1, 2019, to establish an appeals process for the purpose of considering adjustments to the base amounts to be paid to health care providers. 66) Requires the Commission to establish by regulation the following: a) Uniform written procedures for notice and the submission, receipt, processing, and consideration of appeals; and, b) Criteria for considering and making decisions on appeals to the base amount. Attachment A Page 29 of 85 AB 3087 Page 11 67) Requires decisions on appeals to be rendered within six months of the filing of an appeal. Specifies that a filing is not considered complete until the entity that is appealing has produced the documentation reasonably required by the Commission. 68) Requires a health care entity filing an appeal to certify that it has a good faith basis for pursuing the appeal and to identify the basis of the appeal pursuant to the specific factor/s enumerated in 69) below. 69) Requires the Commission to consider an appeal of the base amounts, filed by a health care entity, based on the following: a) The overall financial condition of the health care entity; b) A fair return on investment by a health care entity; c) Avoidance of confiscatory results; d) Risks to the ongoing operation of the health care entity and its financial solvency, if financial solvency requirements are imposed by law; e) Justifiable differences in costs among health care entities, such as providing a service not available from other providers in the region, or the need for health care services in rural areas with a shortage of health professionals or medically underserved areas and populations; f) Factors that led to increased costs for the health care entity that can reasonably be considered to be unanticipated and out of the control of the entity. Includes, but is not limited to the following factors: i) Natural disasters; ii) Outbreaks of epidemics or infectious diseases; iii) Unanticipated facility or equipment repairs purchases; iv) Unanticipated increases in a share of low-income, Medi-Cal, or uninsured populations; and, v) Significant and unanticipated increases in pharmaceutical or medical device prices. g) Changes in state or federal laws that result in a change in costs; h) Reasonable increases in labor costs, including salaries and benefits, and changes in collective bargaining agreements, prevailing wage, or local law; i) Reasonable increases in capital investments, including those associated with compliance with state or federal law; and, j) Changes in the delivery of care that require adjustments in rates, such as the development of new modalities of care or new systems of care. 70) Requires the base amount set by the Commission to be paid to the health care entity to stay in effect during the appeal process, subject to interim relief provisions. 71) Gives the Commission the power to grant interim relief based on fairness. Requires the Commission to develop regulations governing interim relief. Requires the Commission to establish uniform written procedures for the submission, processing, and consideration of an interim relief appeal by a health care entity. Requires a decision on interim relief to be granted within one month of the filing of an interim relief appeal. Requires a health care entity to certify in its interim relief appeal that the request is made on the basis that the challenged amount is arbitrary and capricious, or that the health care entity has experienced a bona fide emergency based on unanticipated costs or costs outside the control of the entity, including those in 69) f) above. 72) Authorizes the Commission to delegate the conduct of a hearing to an administrative law judge (ALJ), who will issue a proposed decision with findings of fact and conclusions of law. Attachment A Page 30 of 85 AB 3087 Page 12 73) Authorizes the ALJ to hold evidentiary hearings and requires the ALJ to issue a proposed decision with findings of fact and conclusions of law, including a recommended adjusted amount, within four months of the filing of the appeal. 74) Authorizes, within 30 days of receipt of the proposed decision by the ALJ, the Commission to approve, disapprove, or modify the decision, and requires the Commission to issue a final decision with an adjusted amount for the appealing health care entity. 75) Requires a final determination by the Commission to be subject to judicial review, as specified. XIII. DATA COLLECTION 76) Grants the Commission the power to obtain information that is necessary to its deliberations. 77) Requires the Commission to receive the following information from the following entities: a) Information regarding facilities, workforce, and prescription drug prices from the Office of Statewide Health Planning and Development (OSHPD); b) Information regarding rate review and other information relevant to timely access to care, adequacy of network, and medical surveys from DMHC and CDI; and, c) Information regarding licensed health professionals from the Department of Consumer Affairs, the Medical Board of California, and other health profession licensing boards. 78) Requires the Commission to establish protocols to receive the information specified in 77) above. 79) Authorizes the Commission to require a health care entity or entities to provide information to allow the Commission to fulfill its obligations under this bill. XIV. INFORMATION SUBMITTED TO THE COMMISSION 80) Requires all information submitted under this bill to be made publicly available by the Commission. 81) Prohibits disclosure of the following: a) The contracted rates between a health plan and a provider; b) The contracted rates between a health plan and a large group; or, c) Information provided to a large group purchaser, as specified. 82) Prohibits disclosure by the health plan of the contracted rates between a health plan and a provider to a large group purchaser, as specified. 83) Requires all information submitted to the Commission to be submitted electronically to facilitate review, as specified. 84) Requires the Commission to, at a minimum, make the following information readily available to the public on its Internet Website, in plain language and in a manner and format specified by the Commission, with the exceptions of the information specified in 81) above: a) Justifications for an appeal, including all supporting information and documentation; b) Information on pending appeals and final decisions on appeals; c) A plain language summary of the reasons for the determination regarding the appeal; and, Attachment A Page 31 of 85 AB 3087 Page 13 d) Information on the base amounts determined by the Commission, including the percentages and factors taken into account to determine the base amount. 85) Requires the information posted to the Commission’s Internet Website under 84) above to be made public for 60 days before the hearing of an appeal. XV. CONSUMER PROTECTIONS 86) Prohibits an individual from owing a health care provider an amount other than the applicable cost sharing that is otherwise permitted by law. 87) Prohibits a healthcare provider, for a service subject to this bill, from billing or collecting an amount from an individual other than the applicable cost sharing. 88) Authorizes, if a service is not a covered benefit, the health care provider to bill the individual and to collect the base amount from that individual. States that if the Commission has not determined the base amount for a particular service that is not a covered benefit, a health care provider may determine an appropriate amount for the service and bill the individual. 89) Prohibits, if an individual does not have health coverage, the individual from paying more than the base or adjusted amount determined under this bill. XVI. GLOBAL CAP 90) Requires the Commission to obtain the information necessary to determine total health care expenditures and to set a global cap for total health care expenditures based on gross state product. 91) Requires the Commission to use existing data sources to determine total health care expenditures to the extent publicly available. Specifies that if appropriate data sources do not exist, the Commission to require sufficient data to be collected to allow it to measure the cost of health care, as well as impacts on quality, equity, and workforce adequacy. 92) Requires the Commission to identify the reasons why there has been a failure to achieve the global cap and may order corrective action in order to reduce expenditures to stay above the global growth cap. 93) Requires the Commission to report at least annually on the total health care expenditures and the global growth cap. Requires the Commission to vote on that report at a regularly scheduled meeting of the Commission; and requires the report to: a) Be publicly posted on the Commission’s Internet Website; and, b) Be annually transmitted to the Legislature and the Governor. 94) Requires the Commission, in determining the global growth cap for total health care expenditures, to take into account the adequacy of funding for the Medi-Cal program, including both the FFS program and the MCMC program. Requires the Commission to consider the impact on quality and equity of the adequacy of funding the Medi-Cal program. XIV. SEVERABILITY Attachment A Page 32 of 85 AB 3087 Page 14 95) Includes a severability clause and states that if a section, subdivision, sentence, clause, or phrase of this bill, or its application to a person or circumstances, is held invalid, the validity of the remainder of bill, or the application of that provision to other persons or circumstances, is not to be affected. EXISTING LAW: 1) Establishes the federal ERISA, to among other provisions, prohibits state from enforcing laws related to private-sector employee health benefit plans. 2) Establishes the federal Patient Protection and Affordable Care Act (ACA), which enacts various health care coverage market reforms including the availability of health insurance exchanges (exchanges) and new individual and small group products offered on and off the exchanges beginning 2014. 3) Requires health plans and health insurers providing health coverage in the individual and small group markets to cover, at a minimum, EHBs, including the ten EHB benefit categories in the ACA, as specified. 4) Establishes, in state government, the California Health Benefits Exchange, referred to as Covered California, as an independent public entity not affiliated with an agency or department, and requires the Exchange to compare and make available through selective contracting health insurance for individual and small business purchasers as authorized under the ACA. Specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans though the Exchange by qualified individuals and small employers. 5) Establishes the DMHC to regulate health plans and the CDI to regulate health insurers. 6) Requires contracts between providers and health plans to be in writing and prohibits, except for applicable copayments and deductibles, a contracted provider from invoicing or balance billing a health plan’s enrollee for the difference between the provider’s billed charges and the reimbursement paid by the health plan or the health plan’s capitated provider for any covered benefit. 7) Prohibits a provider, in the event that a contract has not been reduced to writing, or does not contain the prohibition above, from collecting or attempting to collect from the subscriber or enrollee sums owed by the health plan. Prohibits a contracting provider, agent, trustee or assignee from taking action at law against a subscriber or enrollee to collect sums owed by the health plan. 5) Requires health plans and health insurers to file specified rate information with DMHC or CDI, as applicable, for health plan contracts or health insurance policies in the individual or small group markets and in the large group market. 6) Requires, for large group health plan contracts and health insurance policies, carriers to file with DMHC or CDI the weighted average rate increase for all large group benefit designs during the 12- month period ending January 1 of the following calendar year, and to also disclose specified information for the aggregate rate information for the large group market. Attachment A Page 33 of 85 AB 3087 Page 15 7) Requires DMHC to develop and adopt regulations to ensure that enrollees have access to health care services in a timely manner and consider specified indicators of timeliness of access to care. 8) Requires CDI to promulgate regulations to ensure that insureds have the opportunity to access needed health care services in a timely manner and ensure adequacy of the number and locations of facilities and providers and consider the regulations adopted by DMHC. 9) Requires DMHC to oversee the fiscal solvency of health plans and the risk-bearing organizations that contract with those plans. Requires health plans to have and maintain a tangible net equity, as specified. 10) Requires clinics such as primary care clinics, specialty clinics, chronic dialysis clinics and alternative birth centers to be licensed by the Department of Public Health (DPH). 11) Requires hospitals such as general acute care hospitals (GACHs), and clinical laboratories to be licensed by DPH. 12) Establishes OSHPD as the single state agency responsible for collecting specified health facility and clinic data for use by all agencies. Requires hospitals to make and file with OSHPD certain specified reports, including annual financial reports that includes a detailed income statement, balance sheet, statements of revenue and expenses, and supporting schedules. 13) Establishes the Medi-Cal program, administered by DHCS, under which qualified low-income persons receive health care benefits and, in part, governed and funded by federal Medicaid program provisions. 14) Makes, under federal law, Medicare data available for the evaluation of the performance of providers of services and suppliers, to qualified entities, defined as a public or private entity that is qualified as determined by the Secretary of the federal Department of Health and Human Services (HHS), to use to evaluate the performance of providers of services and suppliers on measures of quality, efficiency, effectiveness, and resource use, and applies other requirements to qualified entities as the HHS Secretary may specify, such as ensuring security of data. 15) Provides for the licensure and regulation of various healing arts professions, including, but not limited to, physicians and surgeons, by various boards within the Department of Consumer Affairs. FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee. COMMENTS: 1) PURPOSE OF THIS BILL. According to the author, while California has made major strides in providing access to health care and promoting quality care, the cost of health care remains unaffordable for many working Californians and is a significant burden among public and private employers. In California, health insurance premiums have continued to rise way past inflation, and the cost of which is putting a strain on state public funds being used to cover the cost of health care. Numerous reports have demonstrated that the costs health care in the U.S. are out-of-control, and hospital costs and physician services represent an overwhelming proportion of the projected premium dollar – 75% of the projected 2018 premium dollar. The author notes that the reason the U.S. spends far more on health care than other nations is Attachment A Page 34 of 85 AB 3087 Page 16 because of the prices. One thing all countries with universal health care have in common is that the government sets and regulates health care prices and controls overall costs throughout the system, including the commercial market. This bill addresses skyrocketing costs in California by establishing an independent Health Care Cost, Quality and Equity Commission to set reasonable base amounts that hospitals, doctors, and other providers of health care services can collect from public and private payers. For health plans, the Commission will also determine appropriate base amounts for premiums using an adjusted Medicare Advantage rate as the benchmark. Doing so will provide needed relief as all payers will be paying less for health care through lower premiums and cost-sharing without compromising on quality. The author concludes that the high cost of health care is unsustainable and the state must take meaningful action to contain these costs. This bill gets California along a path towards more equitable health care for all, not just the providers, and there are many facets of the Commission to ensure providers can still provide quality care to millions of Californians and also address serious health disparities that are allowed to unaddressed under our current system. As California continues to lead the nation in building toward a system that provides quality, affordable health care to all, prices must be controlled now. 2) BACKGROUND. a) Overview of California’s healthcare landscape . Californians obtain their health care in an array of settings. Sources of coverage impact where Californians obtain health care, as do plan contracting requirements and provider payment arrangements. i) Private insurance (employer and individual) is the largest source of coverage. Employer- sponsored coverage insures nearly 43% or about 17.5 million Californians. About 2. 3 million Californians are enrolled in the individual market. Six million Californians with employer-sponsored coverage are in self-insured arrangements subject to ERISA where states have limited regulatory oversight. Under ERISA, states cannot directly regulate private employer health insurance arrangements nor impose a requirement that private employers offer or pay for health insurance. ii) Medi-Cal is the next source of coverage insuring about 14 million residents, at a cost of $100 billion in total funds ($19.6 billion GF). Medi-Cal is the fastest growing source of coverage, and is administered by DHCS through two types of delivery systems: managed care and FFS. Approximately 79% of the 14 million Medi-Cal beneficiaries receive care through MCMC plans. There are six models of managed care: (1) The county organized health systems (COHS) is available in 22 counties and as of December 2016 there were 2.2 million Medi-Cal beneficiaries enrolled in COHS plans; (2) Under the two-plan model, 14 counties have one commercial and one county-organized local initiative covering 6.9 million beneficiaries; (3) Two counties operate in a geographic managed care (GMC) models (San Diego and Sacramento) where four or five plans participate. As of December 2016, 1.2 million Medi-Cal beneficiaries where enrolled in GMC models; (4) In 18 more rural counties, there are two commercial plans serving over 300,000 beneficiaries; (5) In Imperial county, there are two commercial plans serving over 75,000 Medi-Cal beneficiaries; and, (6) In San Benito, there is one commercial plan and beneficiaries can choose either the plan or Medi-Cal FFS, and almost 84,000 enrollees are enrolled in the commercial plan. California embraced the Medicaid expansion available under the ACA. Attachment A Page 35 of 85 AB 3087 Page 17 In 2016, the state expanded Medi-Cal to all children, regardless of immigration status, using only state funds. iii) Medicare covers about six million Californians. In 2016, 3.4 million Californians were enrolled in traditional Medicare (FFS) and 2.5 million were enrolled in Medicare Advantage plans, where beneficiaries have the option to receive their Medicare benefits through private health plans, mainly health maintenance organizations (HMOs). Under Medicare Advantage, plans are paid a capitated (per enrollee) amount to provide Part A and Part B benefits (collectively hospital inpatient services, skilled nursing, home health, physician payments, and hospital outpatient services). Medicare Advantage makes a separate payment to plans for providing prescription drug benefits (Part D). California’s implementation of the ACA cut the uninsured rate in half to 7.1% or about 3 million today. The majority of the remaining uninsured, about 1.8 million, are not eligible for coverage programs due to immigration status. b) Delivery system. California has a long history of heavy reliance on managed care arrangements, including incentives or restrictions related to provider network, in both public and private health plans. More than 60 % of insured Californians are enrolled in HMO plans, a higher share than most other states. Among California Medicare enrollees, 41% are in Medicare Advantage managed care plans, and approximately 80% of Medi-Cal enrollees are in managed care plans. i) Health plans/health insurers . Health plans are responsible for health care provider contracting and payment and, to varying extents these plan contracts can establish rules and incentives for providers to meet quality standards and achieve positive health outcomes. The state’s three largest insurance carriers by total enrollment are Kaiser, Anthem and Blue Shield of California. Other plans, including MCMC plans in many California counties, also provide coverage for millions of Californians. The share of enrollment by market segment (individual, small group, large group, Medi-Cal and Medicare and administrative services only for self-insured arrangements) varies considerably across insurers. Health insurers collect premiums from purchasers and establish contracts with providers to deliver care to enrollees. Plans differ in the composition of provider networks: Kaiser contracts exclusively with Permanente physicians and offers the same providers to all enrollees. Other plans develop networks that vary by product and market segment. Health insurers perform a variety of functions, and the functions vary significantly across channels of coverage – that is, health plan functions in the individual and small group market are different from their functions in the large group market, and different again from their functions in the Medicare and Medi-Cal markets. For individuals and small groups, a key function is the aggregation of risk. For large groups, the main functions of health plans are provider contracting and payment, member services, and working with (and sometimes against) providers to reduce the provision of low value care and increase quality and efficiency. Some California health insurance carriers reimburse providers via full or partial capitation arrangements that reduce or eliminate provider incentives to increase the volume of services. Although FFS remains the most common method of paying providers, California health plans are increasingly tying providers’ financial risk more explicitly to accountability for quality and outcomes. Attachment A Page 36 of 85 AB 3087 Page 18 ii) Physicians . At the frontline of health care delivery are health care providers, which include physicians and surgeons, and other allied healing arts practitioners. Given the size, population and geographic diversity of the state, most areas in California are experiencing provider shortages, both in primary care and specialty care, but the severity varies by region. Additionally, many areas of California are also designated as dental shortage areas. Currently, there are about 131,000 physicians and surgeons licensed by the Medical Board of California. However, only 80% of physicians with active licenses provided patient care for 20 or more hours per week. Physician supply varied by region. The Greater Bay Area was the only region that met the recommended supply of primary care physicians. The Inland Empire, San Joaquin Valley, and Northern and Sierra Counties all fell short of the recommended supply of specialists. While the recommended supply is 60 to 80 per 100,000 population, California’s statewide average is 50 per 100,000. For specialists, the recommended supply is 85 to 105 per 100,000 but California’s statewide average is 104 physicians per 100,000 population. iii) Hospitals . Hospitals serve an important role in the delivery of healthcare services. There are approximately 386 hospitals throughout the state. Urban areas generally have a higher concentration of facilities, while residents in rural areas of the state may have to travel for hours to reach the closest hospital. Most hospitals are GACHs which provide eight basic services: medical; nursing; surgical; anesthesia; laboratory; radiology; pharmacy; and, dietary services. In addition to the eight basic services, GACHs can be approved by the DPH to offer special services, including but not limited to the following: radiation therapy department; burn center; emergency center; hemodialysis center; psychiatric; intensive care newborn nursery; cardiac surgery; cardiac catheterization laboratory; renal transplant; and, other special services. More rural areas of the state lack access to specialty services. California also has 21 public health care systems, which include county-affiliated systems and five University of California academic medical centers. Public health care systems operate in 15 counties and also operate more than 200 outpatient clinics. Additionally, there are 79 healthcare districts in California that operate hospitals, and skilled nursing facilities among other facilities. iv) Clinics . Community clinics and health centers also play a critical role in assuring access to health care for Californians, especially those who are uninsured or who experience other barriers to care. Community clinics and health centers are nonprofit, tax-exempt clinics that are licensed as community or free clinics, and provide services to patients on a sliding fee scale basis or, in the case of free clinics, at no charge to the patients. These include federally designated community health centers, migrant health centers, rural health centers, and frontier health centers. California is home to nearly 1,000 community clinics serving more than 5.6 million patients (or one in seven Californians) annually through over 17 million patient encounters. More than 50% of these patients are Hispanic and 43% speak a primary language other than English. c) Healthcare Spending. According to the Centers for Medicare and Medicaid Services (CMS) National Health Expenditures Highlights, in 2016, U.S. health care spending increased 4.3% or 1.5 percentage points faster than the growth in the gross domestic product (GDP) and reached $3.3 trillion, or $10,348 per person. According to the Commonwealth Fund, the United States spends far more on health care than other high-income countries, with spending levels that rose continuously over the past three decades. However, the U.S. population has poorer health than Attachment A Page 37 of 85 AB 3087 Page 19 other countries. The Commonwealth Fund study points out that the U.S. ranks last in access, equity, and health care outcomes, and next to last in administrative efficiency, as reported by patients and providers. Only in care process does the U.S. perform better, ranking fifth among 11 industrialized countries. Total health care spending across the state of California, from all sources, totals about $400 billion. Of this total, more than half comes from public sources of which the largest shares are Medicare ($75 billion); Medi-Cal (more than $100 billion); and federal ACA subsidies through Covered California ($6 billion). Private spending is primarily through employer-sponsored insurance premiums (ESI) ($100 billion to $150 billion). In addition to the portion of the $100 billion to $150 billion in ESI premiums that is paid by employees, consumers pay $10 billion for premiums for individual insurance and $25 billion to $35 billion in out-of-pocket spending. Federal and state tax law allows payments toward ESI to be excluded from employees’ taxable income. In California, this exclusion accounts for foregone revenues between $40 billion and $50 billion. About 75% of this indirect tax benefit comes from the federal government. According to the California Health Care Foundation (CHCF) the healthcare per capita spending in California is $7,549 and reached $292 billion in 2016. From 2009 to 2014, spending growth averaged 4.9% per year in total and 4.0% per capita. This was faster than average US spending growth (3.9% total health spending, 3.1% per capita) during the same period. It also exceeded California’s average annual five-year growth in GDP (4.2%), consumer price index (1.9%), and median wages (1.0%). CHCF points out that overall per capita spending for California was about $500 per person lower than the U.S. average. Medicaid spending differences per enrollee were the most dramatic, with annual California spending per enrollee nearly $1,500 (21%) less than the U.S. In contrast, California Medicare and private health insurance spending per enrollee were both higher than the US average ($847, or 8% higher, for Medicare; $184, or 4% higher, for private health insurance). CHCF points out that overall, hospital care accounts for the largest source of healthcare spending (36%); followed by physician and clinical services (26%); prescription drugs (13%); and, nursing home care (5%). d) Variation in Provider Payments . At an informational hearing conducted by the Select Committee on Health Care Delivery Systems and Universal Coverage (Select Committee) on January 17, 2018, a description of the variation in provider payments by public and private payers was presented. The federal government sets the provider rates for Medicare and states sets physician payment rates and negotiates rates with hospitals for Medicaid. In the commercial market, payers and providers negotiate contracts to determine rates and network inclusion. According to the presentation, private insurers reimburse hospitals about 75% more than Medicare and Medicaid and can vary both within and across markets. Additionally, the basis for hospital payment varies across payers as Medicare utilizes diagnosis related groups (DRGs), Medi-Cal switched from per diem to DRG-based payments in 2013, and in the commercial market, while the basis may vary, per diem is common in Los Angeles and San Francisco. Medi-Cal hospital payment rates are similar to the national Medicaid average. For physician services, private insurers pay physicians higher rates than Medicare; for example, the US average payment for a primary care checkup is 118% of Medicare. Specialists command higher mark-ups over Medicare rates from private insurers; for example, a knee Attachment A Page 38 of 85 AB 3087 Page 20 replacement is 128% of Medicare and an emergency visit is 257% of Medicare. The presentation noted that commercial physician rates are lower than average in California; for example, 92% of Medicare in Los Angeles, and 108% of Medicare in San Francisco. For Medi-Cal, these rates are even lower as the national average in 2016 was 72% of Medicare while in California it is 52% of Medicare. In California, 77% of physicians would accept a new Medicare or privately insured patient, while only 54% would accept a new Medi-Cal patient. e) Maryland All-Payer Model. This bill regulates the rates or amounts that health care entities receive as payment for health care services. Rate regulation is not a new concept and Maryland is a state that has established a global-payer system for hospital services. Maryland’s hospital rate regulation was created in 1971 and under this payment system, hospitals receive a rate for each of their services from the state, and all payers, including Medicare, Medicaid, private and uninsured pay off the same rate. It should be noted that under the Maryland model, Medicare and Medicaid pay higher than other states and private payers and uninsured pay less. Rates are updated annually on a prospective basis and differ for each hospital. Higher cost hospitals such as academic medical centers have higher rates and claim processing and benefit coverage are determined by each payer. It should be noted that Maryland has 47 acute general hospitals that are all non-profit; 54% of the population have employer coverage, 16% are on Medicaid, and 14% are on Medicare, and according to the Kaiser Family Foundation, has a 34% HMO penetration rate. Maryland obtained a waiver (Section 1814(b) of the Social Security Act) for Medicare and Medicaid to pay 94% of the state regulated rates. The Health Services Cost Review Commission (HSCRC) oversees hospital rate regulation for all payers. HSCRC is an independent quasi-public commission, consisting of 7 volunteer Commissioners who are stakeholder representatives appointed by the Governor. The HSCRC has the authority to set the rates for inpatient and outpatient services but not physician services. According to CMS, under this model, Maryland’s hospitals have committed to achieving significant quality improvements, including reductions in Maryland hospitals’ 30 -day hospital readmissions rate and hospital acquired conditions rate. Maryland has agreed to limit all-payer per capita hospital growth, including inpatient and outpatient care, to 3.58 percent. Maryland has also agreed to limit annual Medicare per capita hospital cost growth to a rate lower than the national annual per capita growth rate per year for 2015 -2018. f) Rate setting under this bill. This bill defines base amount as the amount of payment for health care services as a percentage of Medicare rates that a health care entity may require from a purchaser as payment in full for health care services, in addition to applicable cost sharing. The base amount that the Commission will annually determine is a percentage of Medicare rates. This bill proposes the following: i) Health Care Providers (such as physicians and hospitals). The percentage determined by the Commission cannot be lower than 100% of Medicare rates, and may exceed Medicare rates. The base amount must be a percentage of the rate that Medicare reimburses for the same or similar services in the general geographic region in which the services were rendered, unless those services are provided on a contractual basis to a health plan or health insurer licensed by the state. This bill specifies that in determining the base amount for Attachment A Page 39 of 85 AB 3087 Page 21 noncontracting physicians and other noncontracting health professionals, the Commission will use the average contracted amount in the general geographic regions for the three calendar years. ii) Health Plan Contract or Health Insurance Policy. The base amount is a percentage of the capitated rate a health plan receives for Medicare Advantage for the county where an enrollee or insured resides, adjusted according to several factors including age, risk mix, and differences in cost sharing between the Medicare Advantage plan and the coverage offered by the health plan or health insurer. This bill includes factors that must be considered when setting the base amounts for health plans/health insurers, including financial solvency requirements, as specified. A health plan or health insurer is permitted to negotiate contracted rates with contracting health providers that are not based on the Medicare rates as provided in i) above. Thus, the provisions in i) above apply to services provided where there is not a contract with a state- licensed health plan or insurer. In determining the base amounts, the Commission will also consider the financial status of health care providers, including the compensation of physicians and other health professionals and whether the providers and plans/insurers are receiving a fair return on investment and avoidance of confiscatory results as well as changes in state or federal laws, reasonable increases in labor costs (including salaries and benefits), increases in capital investments, and changes in the delivery of care. The Commission also has the authority to allow different percentages of Medicare rates to be used for different health care entities. Additionally, the Commission will have to establish a process for developing base amounts for health care services not currently reimbursed by Medicare or Medicare Advantage; for services infrequently reimbursed by Medicare/Medicare Advantage. The Commission shall also determine or not to include or alter Medicare rating factors, such as Medicare disproportionate share hospital rates, graduate medical education, readmission penalties, and other added rates as Medicare allows; adjust the rates to maintain the workforce necessary to deliver quality and equitable care, availability and accessibility of health care services (such as compliance with network adequacy, timely access and language access requirements); the impact of the base amounts in underserved areas, including rural and underserved areas; and may take into account other factors such as supplemental Medi-Cal rates, quality assurance fees, and other payment arrangements that exists for hospitals, clinics and other providers. iii) Appeal Process . This bill also includes an appeal process to consider adjustments to the base amounts to be paid to health care entities. Decisions on appeals are to be rendered within six months of the appeal filing with complete documentation. The appeal must take into account several factors including the overall financial condition of the entity, fair return on investment, differences in costs among health care entities, factors such as natural disasters, outbreaks of epidemics or infectious diseases, labor costs, and changes in state or federal laws or in the delivery of care. The Commission has authority to grant interim relief based on fairness and a decision on interim relief must be granted within one month of the filing of the interim relief appeal. Attachment A Page 40 of 85 AB 3087 Page 22 g) Massachusetts Global Cap. To contain growing health care costs, Massachusetts created a statewide global cap on public and private hea lth care costs. The Massachusetts law specifies a target growth rate for overall medical spending based on the growth rate of the state’s economy. This growth rate is a target for controlling growth of total health care expenditures across all payers. Similarly, this bill requires the Commission to determine a global growth cap for total health expenditures, but not to exceed the annual growth of the gross state product. In fulfilling this function, the Commission has authority to obtain the information necessary to determine total health care expenditures in order to set the global growth cap. h) DMHC Consumer Participation Program (CCP). This bill also establishes the Purchaser Participation Program to award reasonable advocacy and witness fees to a person or organization that represents the interests of purchasers and has made a substantial contribution on behalf of purchasers to the adoption of a regulation or to an order or decision that has a potential to impact a significant number of consumers. This program is similar to the CCP within DMHC. Existing law allows the DMHC Director to award reasonable advocacy and witness fees to any person or organization that demonstrates that the person or organization represents the interests of consumers and has made a substantial contribution on behalf of consumers to the adoption of any regulation or to an order or decision made by the DMHC Director if the order or decision has the potential to impact a significant number of enrollees. CCP caps the fees awarded at $350,000 each fiscal year. SB 97 (Committee on Budget and Fiscal Review), Chapter 52, Statutes of 2017, extended until January 1, 2024, the sunset date for the DMHC CPP. The statutory authority for the CPP was scheduled to sunset on January 1, 2018. i) ERISA Plans . As specified above, under ERISA, states cannot impose requirements on self- insured plans. As specified above, about 6 million Californians obtain their coverage from self- insured plans. Under this bill, ERISA plans are permitted to access the rates set by the Commission for regulated health care entities. j) Cost-shifting. According to an article posted in the National Institutes of Health (NIH) Internet Website entitled, “How much do hospitals cost shift: a review of evidence,” hospital cost-shifting has long been part of the debate over health care policy. Under cost shifting, when government reimbursements under Medicare or Medicaid are insufficient to cover the costs of services, hospitals/facilities charge private insurance enough not only to cover the cost of their services but the shortfall created by government program reimbursements. The NIH article examined literature on cost shifting since 1996 and the author found that “most of the analyses and commentary based on descriptive, industrywide hospital payment-to -cost margins by payer provide a false impression that cost shifting is a large and pervasive phenomenon. More careful theoretical and empirical examinations suggest that cost shifting can and has occurred, but usually at a relatively low rate. Margin changes also are strongly influenced by the evolution of hospital and health plan market structures and changes in underlying costs.” During testimony at a December 2017 informational hearing conducted by the Select Committee, a speaker from Maryland indicated that Maryland’s all payer system limits cost Attachment A Page 41 of 85 AB 3087 Page 23 shifting since all payers pay their share, including uncompensated care and graduate medical education. 3) SUPPORT. The California Labor Federation (CLF), Health Access California (HAC), and SEIU California (SEIU) are the sponsors of this bill. HAC states that this bill helps rein in rising health care costs and protects consumer’s pocketbooks by establishing an independent Commission that would set reasonable base amounts that hospitals, doctors, and health plans can collect from commercial payers. While preventing inflated and unjustified rates, providers are guaranteed rates higher than Medicare, which these providers generally accept as payment in full for much of their business, and can seek higher rates based on a variety of factors. SEIU California adds that this bill provides urgently needed relief to consumers, businesses, and governments, all of whom are currently straining under the weight of high health care costs. SEIU notes that although this bill would not set one rate across all payers in that it only applies to the commercial market, the Commission would be required to consider a provider’s reliance on Medi-Cal and to make adjustments for lower Medi-Cal rates. Lastly, CLF indicates this bill is about fairness and will bring much-needed relief from the high price of health care to Californians and start to address the inequities in the health care system and that no Californian should have to go into debt to pay for basic health care. The sponsors conclude that this bill establishes a transparent process by which increases in health care costs can be kept reasonable. The League of California Cities supports this bill in concept but has concerns about the lack of city employer representatives on the Commission, and the process by which some members of the Commission are appointed and/or confirmed. 4) CONCERNS. The California Nurses Association has concerns with the concepts in this bill and among other concerns, indicates that this bill must be amended to include clear controls, such as caps on individual cost-sharing and rising healthcare premiums, providing the Commission both a mechanism and the authority to establish and enforce such limits. Additionally, language requiring consideration of profit of healthcare entities when establishing the base amount must be removed. 5) OPPOSITION. Numerous hospitals and providers are opposed to this bill. According to the California Hospital Association (CHA), among other arguments, under this bill hospitals stand to lose an estimated $18 billion annually in revenue. The payment reductions contained in this bill will lead to large cuts in hospital services, and force many hospitals, especially those in underserved areas, to close. Additionally, CHA estimates that the payment reductions in this bill will lead to an estimated 175,000 health care workers losing their jobs. CHA notes that this bill focuses exclusively on commercial insurance payments and ignores the significant shortfall in hospital payments from the Medicare and Medi-Cal programs, and the uncompensated care hospitals provide to patients. Kaiser Permanente (KP) believes that this bill undermines KP’s unique integrated delivery system and argues that cost containment deserves more thoughtful discussion and that this bill does not address the underlying cost drivers and marketplace dynamics that are driving premium increases. The California Medical Association (CMA) and the California Academy of Family Physicians points out that this bill would lower commercial rates while doing nothing to improve access within Medi-Cal. CMA opines that this bill does nothing to addres the existing inefficiencies within the system that drive health care spending growth nor does it provide any incentives to Attachment A Page 42 of 85 AB 3087 Page 24 improve health care access and quality. This bill will force solo and small group practices into extinction as the only way to deal with administrative burdens and to use the appeals process successfully is to consolidate into large group practices. This could create an access crisis for patients living in rural and underserved areas in which there are no large group practices. CMA concludes that its biggest fear is that this bill will drive physicians out of the state and make it extremely difficult to recruit the next generation to come and practice in California. 6) RELATED LEGISLATION. a) AB 2502 (Wood) requires the Secretary of the California Health and Human Services Agency (CHHSA) to establish, implement, and administer the California Health Care Payments Database. AB 2502 is pending in Assembly Health Committee. b) AB 2517 (Wood and Arambula) establishes the Advisory Panel on Health Care Delivery Systems and Universal Coverage, within CHHSA, as an independent body, to develop a plan to achieve universal coverage and a unified publicly financed health care system. AB 2517 is pending in Assembly Health Committee. c) SB 562 (Lara and Atkins) enacts the Healthy California program, which is required to provide comprehensive universal single-payer health care coverage system for all California residents. SB 562 is pending in Assembly Rules Committee. 7) AUTHOR’S AMENDMENTS. a) Purpose of the Commission. To address concerns raised by the Committee that the Commission must consider the Medi-Cal rates in setting the base amount, the author proposes to clarify that the Commission will take into account the rates set by the Medi-Cal program in setting the amounts accepted as payment by health care providers, both for those health care providers who serve a disproportionate share of Medi-Cal beneficiaries and for those who provider highly specialized services. b) Advisory Committee. The author proposes to increase the membership of the advisory committee to include a primary care physician; behavioral health provider; a representative of health professionals who are solo practitioners, as specified; and, a representative of Medicare access hospitals or other small or rural hospitals. c) Clarifying amendments. The author proposes to clarify the definitions of adjusted amount and noncontracting provider; and clarify that the appeals process applies to all healthcare entities and not just providers. d) ERISA. The author proposes to allow an employee welfare benefit plan to elect to pay the base and adjusted amounts set by the Commission for regulated health care providers. e) Purchaser Participation Program (PPP). To address concerns raised by the Committee that the PPP should be narrowed, the author proposes to delete the ability of persons to participate in PPP and makes other conforming changes; to clarify that proceedings for purposes of the PPP to include: determination of the base amounts, appeals, overall cost, quality and equity goals, and other matters as determined by the Commission. Attachment A Page 43 of 85 AB 3087 Page 25 f) Base amounts . To address concerns raised by the Committee regarding additional factors that must be considered when determining the base amount, the author proposes to amend this bill to require the Commission, on an annual basis, to review Medi-Cal reimbursement, including both FFS and managed care rates, review information regarding adequacy of networks and timely access to care, and consider Medi-Cal reimbursement in determining base amounts. The author also proposes to consider changes in Medicare rate or Medicare methodology in determining the base amount. g) Technical and conforming changes . The author also proposes to fix drafting errors. 8) POLICY COMMENTS. a) PPP. This bill establishes the PPP to award advocacy and witness fees to individuals or organizations that represent the interests of consumers, as specified. Consistent with the DMHC’s CPP which imposes a limitatio n on the amount of fees awarded, and includes a sunset date, the Committee may wish to amend this bill to apply the same limitations to the PPP. b) Medi-Cal exception. As drafted, this bill excludes Medicare and Medi-Cal programs. As stated above, about 14 million beneficiaries or one-third of California’s population are enrolled in Medi-Cal. Excluding Medi-Cal from this bill could have serious consequences, especially to providers who disproportionately serve high Medi-Cal beneficiaries. Although under this bill, the Commission may take into account the reliance of a healthcare provider on Medi-Cal reimbursement and pursuant to amendments being proposed by the author to require the Commission to review Medi-Cal reimbursement, an additional accommodation for providers who have a disproportionate share of Medi-Cal beneficiaries may be appropriate. For example, the Committee may wish to consider allowing the Commission to provide incentives to providers to accept Medi-Cal patients. Additionally, providers who have a high percentage of Medi-Cal enrollments should be allowed to have a higher base amount to ensure access for Medi-Cal beneficiaries. c) Prescription Drugs. According to a July 2017 Commonwealth Fund report, historic increases in prescription drug spending and prices are contributing to unsustainable health care costs in the United States. A 2016 CHCF issue brief points out that pharmaceutical prices in the U.S. are among the highest worldwide. For example, spending on just 10 medications alone is estimated to cost the federal government (Medicare, Medicaid, and health exchange subsidies) nearly $50 billion over a decade, and these drugs represent a small subset of the more than 5,400 medications in the drug pipeline. As the author and sponsors point out the high cost of health care is becoming unaffordable for many Californians. Although this bill gives the Commission the authority to determine methods for state government to reduce the cost of prescription drugs and medical devices paid for by private purchasers in the commercial market, the Committee may wish broaden these duties in recognition of the overall impact of escalating drug costs. For example, the Commission’s purpose or duties could include gathering information about drug prices, reviewing the impact of prescription drugs on rates, determining whether the state should pursue value-based prescription drug purchasing for state programs, and evaluate whether there is a mechanism for the state to set rates for high cost drugs. Attachment A Page 44 of 85 AB 3087 Page 26 d) Funding. As drafted, this bill would be funded by the existing Managed Care Fund and the Insurance Fund which are supported by assessments/fees from health plans and health insurers. The Committee may wish to explore the viability of using GF to support the Commission. REGISTERED SUPPORT / OPPOSITION : Support California Labor Federation (cosponsor) Health Access California (cosponsor) SEIU California (cosponsor) UNITE HERE International Union (cosponsor) Americans for Democratic Action Southern California Business Alliance for a Healthy California CA Conference Board of the Amalgamated Transit Union CA Conference of Machinists California Immigrant Policy Center California Pan-Ethnic Health Network California School Employees Association California State Council of the Service Employees International Union California Teachers Association California Teamsters Communications Workers of America District 9 Congress of California Seniors Consumers Union Engineers & Scientists of CA, IFPTE Local 20, AFL-CIO International Longshore and Warehouse Union JGlynn & Co Jockeys' Guild Professional and Technical Engineers, IFPTE Local 21, AFL-CIO San Francisco AIDS Foundation Service Employees International Union Local 1000 UDW/AFSME Local 3930 United Food and Commercial Workers Western States Council University Professional and Technical Employees-CWA Local 9119 Utility Workers Union of America Western Center on Law and Poverty Opposition Adventist Health - Feather River Adventist Health – Lodi Memorial Adventist Health - Simi Valley Adventist Health - White Memorial Adventist Health Hanford Adventist Health Howard Memorial Adventist Health Sonora Adventist Health St. Helena Adventist Health St. Helena Hospital Clear Lake Adventist Health Ukiah Valley Alliance of Catholic Health Care American Academy of Pediatrics, California American Association of Nurse Anesthetists American College of Obstetricians and Gynecologists District IX American College of Physicians – California Chapter American College of Surgeons America's Physician Groups Association of California Healthcare Districts Association of Northern California Oncologists Barton Health - Barton Memorial Hospital Brea Chamber of Commerce Building Owners and Managers Association California Academy of Eye Physicians & Surgeons California Academy of Family Physicians California Ambulance Association California Association of Health Facilities California Association of Health Plans California Association of Nurse Anesthetists California Building Industry Association California Business Properties Association California Chamber of Commerce California Chapter of the American College of Cardiology California Chapter of the American College of Emergency Physicians California Chapters of the American College of Physicians California Children's Hospital Association California Dental Association California Dental Hygienists Association California Hospital Association California Medical Association California Neurology Society California Optometric Association California Podiatric Medical Association Attachment A Page 45 of 85 AB 3087 Page 27 California Psychiatric Association California Radiological Society California Retailers Association California Rheumatology Alliance California Society of Allergy, Asthma and Immunology California Society of Dermatology & Dermatologic Surgery California Society of Pathologists California Society of Plastic Surgeons California Society for Respiratory Care Camarillo Chamber of Commerce CAPA Carlsbad Chamber of Commerce Carson Chamber of Commerce Cedars-Sinai Medical Center Centinela Hospital Medical Center Cerritos Chamber of Commerce Chinese Hospital City of Hope Coast Plaza Hospital Community Hospital of Huntington Park Community Medical Centers Community Memorial Health System, Ventura Corona Regional Medical Center Dignity Health - Sacramento Area Dignity Health Dominican Hospital Dignity Health French Hospital Medical Center Dignity Health Saint Francis Memorial Hospital District Hospital Leadership Forum Doctors Hospital of Manteca Doctors on Duty Urgent Care Clinics East Bay Leadership Council East Los Angeles Doctors Hospital Eastern Plumas Health Care District El Camino Hospital El Centro Regional Medical Center Fairchild Medical Center Folsom Chamber of Commerce Fresno Chamber of Commerce Gateway Chambers Alliance Greater Bakersfield Chamber of Commerce Greater Coachella Valley Chamber of Commerce Greater Conejo Valley Chamber of Commerce Greater West Covina Business Association Hazel Hawkins Memorial Hospital HealthSouth Bakersfield Rehabilitation Hospital Henry Mayo Newhall Hospital Hospital Corporation of America International Council of Shopping Centers Irwindale Chamber of Commerce John C. Fremont Healthcare District John Muir Health Kaiser Permanente Kaweah Delta Health Care District Keck Medicine of University of Southern California Kern Medical Kern Valley Healthcare District Kindred Healthcare - San Francisco Bay Kindred Hospital - Baldwin Park Kindred Hospital - Brea Kindred Hospital - Los Angeles Kindred Hospital - San Diego Kindred Hospital - San Gabriel Valley Kindred Hospital - Santa Ana Kindred Hospital - La Mirada Kindred Hospitals - Rancho Cucamonga Kindred Hospitals - Riverside Kindred Hospitals of Southern California Loma Linda University Health Loma Linda University Medical Center - Murrieta Lompoc Valley Medical Center Los Angeles Area Chamber of Commerce Los Robles Hospital and Medical Center Mad River Community Hospital Madera Community Hospital Marshall Medical Center Mayers Memorial Hospital District Memorial Hospital of Gardena MemorialCare Mendocino Coast District Hospital Methodist Hospital of Southern California Mission Community Hospital Modoc Medical Center Molina Healthcare Monterey Peninsula Chamber of Commerce Mountain Communities Healthcare District (Trinity Hospital) Mountain View Chamber of Commerce Mountains Community Hospital Murrieta/Wildomar Chamber of Commerce National Association of Chain Drug Stores National Association of Industrial and Office Properties of California National Federation of Independent Business North Orange County Chamber of Commerce NorthBay Healthcare Northern Inyo Hospital Orange County Business Council Osteopathic Physicians & Surgeons of California Oxnard Chamber of Commerce Palmdale Regional Medical Center Attachment A Page 46 of 85 AB 3087 Page 28 Palo Verde Hospital Paradise Valley Hospital Petaluma Area Chamber of Commerce Physical Medicine and Rehabilitation Physicians for Healthy Hospitals PIH Health Plumas District Hospital Prime Healthcare Providence Little Company of Mary Medical Center San Pedro Providence Little Company of Mary Medical Center Torrance Providence Saint John's Health Center Providence Saint Joseph Medical Center Queen of the Valley Medical Center Rady Children's Hospital San Diego Rancho Cordova Chamber of Commerce Redlands Community Hospital Redondo Beach Chamber of Commerce Salinas Valley Memorial Healthcare System San Diego Regional Chamber of Commerce San Gabriel Valley Economic Partnership San Joaquin General Hospital Santa Maria Valley Chamber of Commerce San Mateo County Economic Development Association Scripps Health Seneca Healthcare District Sharp Healthcare Shasta Regional Medical Center Sierra View Medical Center Silicon Valley Leadership Group Sonoma Valley Hospital South Bay Association of Chambers of Commerce Southern Humboldt Community Healthcare District Southwest California Legislative Council Southwest Healthcare System Southwest Healthcare System – Inland Valley Southwest Healthcare System – Rancho Springs Medical Center St. Joseph Health (Redwood Memorial and St. Joseph Hospital, Eureka) St. Joseph Health (Santa Rosa Memorial and Petaluma Valley) St. Joseph Health (Humboldt County and Sonoma County) St. Joseph Hospital of Orange St. Joseph's Behavioral Health Center St. Mary Medical Center (Apple Valley) Stanford Health Care Stanford Hospital STAT MED Urgent Care Sutter Health - Mills-Peninsula Medical Center Sutter Health - Sutter Lakeside Hospital Sutter Health California Pacific Medical Center Sutter Health Eden Medical Center Sutter Health Novato Community Hospital Sutter Health Sutter Delta Medical Center Sutter Health Sutter Maternity & Surgery Center of Santa Cruz Sutter Health Sutter Santa Rosa Regional Hospital Sutter Health Tracy Community Hospital Tahoe Forest Health System Temecula Valley Hospital Tenet Healthcare Torrance Area Chamber of Commerce Torrance Memorial Medical Center Tulare Chamber of Commerce United Chamber Advocacy Network United Hospital Association Universal Health Services Valley Children's Healthcare Valley Industry and Commerce Association VIBRA Hospital of Sacramento VICA VISTA Chamber of Commerce VSP Vision Care Watsonville Community Hospital Western Manufactured Housing Communities Yubadocs Urgent Care Center Analysis Prepared by: Rosielyn Pulmano / HEALTH / (916) 319-2097 Attachment A Page 47 of 85 April 20, 2018 The Honorable Ash Kalra California State Assembly State Capitol Room 5160 Sacramento, CA 95814 SUBJECT: OPPOSE: AB 3087, THE CALIFORNIA HEALTH CARE COST, QUALITY, AND EQUITY COMMISSION Dear Assemblymember Kalra: I write on behalf of the East Bay Leadership Council (EBLC), in opposition to AB 3087 as amended April 9, 2018, which would reduce access to care and add a counterproductive layer of additional bureaucracy. There is no question that health care costs are rising and making it more difficult for employers and their employees to afford quality accessible care. AB 3087 would likely have the short-term result of less access to health care and a long-term result of accelerating cost increases. Price controls ignore the underlying reason for the cost of services and products. Most economists believe price controls keep prices artificially low, suppressing supply and in turn resulting in unmet demand. In the case of health care, the lack of supply means fewer healt h care providers. Without an adequate supply of health care providers, consumers may pay less but not have access to the care they need. AB 3087 also establishes an appointed commission to impose price controls on health care providers and insurers and determine the amount of an individual’s copays and deductibles. While the bill contains language for a health care entity to appeal the rates, the process still leaves decisions as to what is “fair” to an appointed board, an administrative judge and judicial review. Without adequate reimbursement levels, price controls will drive providers and insurers out of the market. Further, this bill empowers the commission to decide the level of copays, deductibles, coinsurance and any other share of cost for services. Employers are active purchasers and negotiate with health plans on prices, networks, and quality measures. The ultimate price plays a key role in other facets of a health plan such as the number of doctors offered to patients or cost -sharing. Under AB 3087 those issues are delegated to the new Commission. Hospitals have already identified a loss of $18 billion if AB 3087 is enacted. For some communities, this could mean their hospital will close its doors. Simply capping the rates will not make the costs in the healthcare system disappear, but instead will limit choices, access, and increase costs for employers and their employees. For these reasons, we oppose AB 3087. Sincerely, Kristin Connelly President & CEO Cc: Honorable Jim Wood, Chair, Committee on Health, California State Assembly Chair of the Board Patricia A. Deutsche Andeavor Chair-Elect Sharon Jenkins John Muir Health Vice President – Finance Terri Montgomery Vavrinek, Trine, Day & Company, LLP Vice President – Leadership Development Bielle Moore Republic Services Vice President - Events Peggy White Diablo Regional Arts Association Vice President – Talent & Workforce Ken Mintz AT&T Vice President – Economic Development & Jobs Dennis Costanza Lennar Vice President – Communications Wendy Gutshall Safeway Vice President – Membership Jodi Avina CFOs2Go Chief Legal Counsel Horace Green Buchman Provine Brothers Smith, LLP Vice President - Infrastructure Vic Baker PG&E Immediate Past Chair Steve Van Wart Turnbridge Associates President & CEO Kristin B. Connelly 1615 Bonanza Street, Suite 324, Walnut Creek, CA 94596 | voice 925.246.1880 www.eastbayleadershipcouncil.com Attachment B Page 48 of 85 Page 49 of 85 Page 50 of 85 Page 51 of 85 Page 52 of 85 LEGISLATION COMMITTEE 8. Meeting Date:05/14/2018   Subject:SB 910 (Hernandez): Short-term Limited Duration Health Insurance Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-19   Referral Name: SB 910 (Hernandez)  Presenter: Patricia Tanquary Contact: L. DeLaney, 925-335-1097 Referral History: SB 910 (Hernandez): Short-term Limited Duration Health Insurance, is a bill that would prohibit a health insurer from issuing, selling, renewing, or offering a short-term limited duration health insurance policy for health care coverage in this state. The bill was referred to the Legislation Committee by the Chief Executive Officer of the Contra Costa Health Plan with a recommendation to "Support." Author:Ed Hernandez (D-022) Title:Short-term Limited Duration Health Insurance Fiscal Committee: yes Urgency Clause: no Introduced:01/18/2018 Last Amend: 03/05/2018 Disposition:Pending Committee:Senate Appropriations Committee Hearing:05/14/2018 10:00 am, John L. Burton Hearing Room (4203) Referral Update: The text of SB 910 is available here: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB910 The bill analysis for the Senate Health Committee is as follows: 2017 CA S 910: Bill Analysis - 03/12/2018 - Senate Health Committee, Hearing Date 03/14/2018 Page 53 of 85 SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 910 AUTHOR: Hernandez VERSION: March 5, 2018 HEARING DATE: March 14, 2018 CONSULTANT: Teri Boughton SUBJECT: Short-term limited duration health insurance SUMMARY: Prohibits a health insurer from issuing, amending, selling, renewing, or offering a policy of short-term limited duration health insurance in California commencing January 1, 2019. Existing law: 1) Exempts, under federal law, short-term limited duration policies from the definition of individual health insurance. [42 USC Section 300gg-91 (b)(5), 45 CFR Section 144.103] 2) Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurance. [HSC Section 1340, et. seq., and IC Section 106, et. seq.] 3) Defines, under state law relating to conversion coverage requirements, short-term limited duration health insurance to mean individual health insurance coverage that is offered by a licensed insurance company, intended to be used as transitional or interim coverage to remain in effect for not more than 185 days, that cannot be renewed or otherwise continued for more than one additional period of not more than 185 days, and that is not intended or marketed as health insurance coverage, a health plan, or a health maintenance organization subject to guaranteed issuance or guaranteed renewal pursuant to relevant state law. [IC Section 12671 (e)(8)] 4) Makes inoperative on January 1, 2014, a requirement on a health insurer to entitle an employee or member whose coverage under a group policy has been terminated to a converted policy issued by the insurer. [IC Section 12672] 5) Requires all individual health benefit plans, except short-term limited duration insurance, to be renewable with respect to all eligible individuals or dependents at the option of the individual, with exceptions such as for fraud and abuse or if the carrier ceases to provide coverage in the state, among other circumstances. [HSC Section 1367.29 and IC Section 10273.6] 6) Exempts short-term limited duration health insurance from existing requirements on health plans that cover mental health services, and on health insurance rate increase notifications, requirements on health insurance policies that include professional mental health services, orthotic and prosthetic devices and services, mammography, maternity services, and reproductive and sexual health care services. [HSC Section 1367.29 and Section 1368.016, IC Section 10113.9, Section 10123.7, Section 10123.81, Section 10123.865, Section 10123.866, Section 10123.198, Section 10123.199, and Section 10123.202] This bill: 1) Prohibits a health insurer, commencing January 1, 2019, from issuing, amending, selling, renewing, or offering a policy of short-term limited duration health insurance in California. Page 54 of 85 2) Defines "short-term limited duration health insurance" as health insurance coverage provided pursuant to a health insurance policy that has an expiration date that is less than 12 months after the original effective date of the coverage, including renewals. 3) Deletes all exemptions in existing law for short-term limited duration health insurance and revises the definition that is in an inoperative provision of law so that it is consistent with 2) above. FISCAL EFFECT: This bill has not been analyzed by a fiscal committee. COMMENTS: 1) Author's statement. According to the author, short-term limited duration health insurance offers very limited value in a state like California that has embraced the Affordable Care Act (ACA) and been very successful at expanding comprehensive coverage such that only 6.8% of the state's population is uninsured. Expanded access to insurance coverage is important but coverage also must be comprehensive, affordable and accessible to all. California has been enacting policies to rid the individual and small group markets of junk insurance even before the ACA. With the ACA's reforms that ensure guaranteed issue of products, prevent underwriting, and require inclusion of essential health benefits, there is no reason to allow these noncompliant products to remain in the market. These products only serve to confuse and mislead Californians into a false security that their health care needs will be covered. These products are not made available to everyone, and in addition to confusing consumers, they are destabilizing to the ACA market, resulting in increased premiums for ACA products. The Urban Institute has released an issue brief stating that average premiums in the ACA-compliant individual insurance market would increase approximately 18% in the states that do not prohibit or limit expanded short-term limited duration plans. This increase includes the impact of the elimination of the individual mandate penalties. For California, the brief indicates a 17.8% premium increase for 2019. 2) Short-term limited duration coverage. According to a December 2017 brief by the Georgetown University Health Policy Institute Center on Health Insurance Reforms, short-term limited duration insurance is health insurance that, by definition, covers someone for less than 12 months and is not renewable. It was designed to fill temporary gaps in coverage. These policies do not have to meet ACA consumer protection requirements and they are generally issued to consumers who can pass medical underwriting. These policies provide minimal financial protection for insureds who become sick or injured. According to one analysis described in the brief, these policies regularly excluded coverage for preexisting conditions, did not cover mental health and substance use services, maternity care, or prescription drugs and included out-of-pocket maximums ranging from $7,000 to $20,000 for only three months of coverage. 3) Federal regulations. Under the ACA, group and individual health insurance cannot include preexisting condition exclusions, discriminate based on health status, have lifetime and annual limits, and they are required to cover preventive health services, dependent coverage to age 26, offer guaranteed issue and renewability of coverage, and cover essential health benefits among other requirements. Under the Obama Administration, federal regulations were adopted to prohibit insurers from offering short-term limited duration policies that lasted longer than three months and required each policy to include a prominent notice that it is not minimum essential Page 55 of 85 coverage, which is coverage that individuals must have to meet ACA requirements and not be subject to a penalty. Effective in 2019, the financial penalty for not having insurance was reduced to zero by the federal Tax Cut and Jobs Act of 2017. The Obama regulations took effect January 1, 2017. However, the federal departments of Health and Human Services, Labor and Treasury indicated they would not enforce the requirement that short-term coverage be less than three months for products sold before April 1, 2017, as long as the coverage ends on or before December 31, 2017. The Trump Administration issued a proposed rule on February 20, 2018 to expand the maximum coverage duration to up to 364 days and change the notice requirement to reflect that the individual mandate penalty is no longer in effect in 2019. The notice also warns that coverage lapsing midyear may create a coverage gap until the next open enrollment period is available. Under both sets of regulations, the departments estimate that approximately 100,000 to 200,000 additional individuals would shift from the individual market to short-term limited duration insurance in 2019. The departments estimate the majority of those who switch would be young and healthy and 90% would be unsubsidized. Once finalized, the Trump regulations will take effect 60 days upon publication. 4) Short-term limited duration health plans in CA. According to DMHC, the Knox-Keene Act (California law that regulates health plans) is silent on the matter of short-term limited duration health insurance but these policies do not comply with many minimum standards required under the Knox-Keene Act. However, these policies do appear to be subject to some type of regulation under the CDI. CDI indicates that gaps in the intersection of federal and California law make some of these policies arguably permissible in California. CDI indicates that many existing state insurance mandates apply to these policies. In a December 8, 2017 Los Angeles Times article, Insurance Commissioner Dave Jones indicates that CDI estimates there are only a few thousand active short-term policies across the state. In the same article, a representative of eHealth.com, a private online health insurance marketplace, indicates that there are not many carriers willing to offer state residents short-term limited duration options. 5) Related legislation. SB 1287 (Hernandez) pending in the Senate Rules Committee, states legislative intent to enact legislation that would regulate multiple employer welfare arrangements and other types of association health plans to the extent permitted under federal law, including ensuring that those plans meet minimum financial solvency and reporting requirements. 6) Prior legislation. AB 1180 (Pan, Chapter 441, Statutes of 2013) makes inoperative several provisions in existing law that implement the health insurance laws of the federal Health Insurance Portability and Accountability Act of 1996 and additional provisions that provide former employees rights to convert their group health insurance coverage to individual market coverage without medical underwriting, because of the ACA. Establishes notification requirements informing individuals affected by AB 1180 of health insurance available in 2014 under the ACA. 7) Support. Health Access California writes that short-term insurance shortchanges consumers in two ways. First, consumers are lured to these products by cheaper premiums and secondly, short-term insurance plans lack important ACA protections. Without this bill, the pending federal rule will relegate California's individual insurance market back to the pre-ACA days when consumers were left without care because of loopholes that left those who need maternity care, chemotherapy, or prescription drugs behind. Proponents indicate that this bill would maintain the stability of California's individual market by ensuring health coverage sold in California provides comprehensive benefits and consumer protections. Short-term insurance is bad for consumers because it lacks basic protections and essential health benefits that cover prescription drugs, Page 56 of 85 because it lacks basic protections and essential health benefits that cover prescription drugs, maternity care, mental health, and other vital services. Kaiser Permanente supports this bill because short-term plans may cause healthier people to leave comprehensive coverage and choose an alternative plan in the individual or group market, which in turn will lead to market segmentation that will result in higher premiums. Kaiser writes that short-term insurance is detrimental to consumers and will destabilize the individual market in California, leading to premium increases. 8) Opposition. Anthem Blue Cross opposes a strict prohibition on short-term limited duration health insurance and supports extending the permitted duration of short-term limited duration health insurance plans to 364 days per the proposed federal rule. Anthem Blue Cross believes, when used appropriately, these policies do serve an important purpose as an affordable source of coverage for individuals who are between plans and that 364 days of coverage is necessary in some cases, such as when an individual misses the deadline for open enrollment, or is between jobs and cannot afford COBRA (COBRA is the Consolidated Omnibus Budget Reconciliation Act, which requires a health plan to offer an outgoing employee continued coverage but without the employer's premium subsidy). The California Association of Health Underwriters (CAHU) believes this bill removes a critical tool for coverage and leaves affected individuals with no option other than to utilize costly emergency services should a need arise. CAHU requests amendments making these plans available to those who are otherwise legally prohibited from purchasing comprehensive coverage and limited until the next open enrollment. SUPPORT AND OPPOSITION: Support: Health Access California (sponsor) American Cancer Society Cancer Action Network APLA Health Asian Law Alliance Blue Shield of California California Health Professional Student Alliance California Immigrant Policy Center California Labor Federation California Physicians Alliance California Rural Legal Assistance Foundation ChapCare Children's Defense Fund California Consumers Union Disability Rights California Page 57 of 85 Equality California Kaiser Permanente Latino Coalition for a Healthy California Maternal and Child Health Access National Health Law Program San Francisco AIDS Foundation Western Center on Law & Poverty Oppose: Anthem Blue Cross California Association of Health Underwriters Recommendation(s)/Next Step(s): CONSIDER recommending to the Board of Supervisors a position of "Support" for SB 910 (Hernandez), and sending to the Board of Supervisors for their consent.  Attachments No file(s) attached. Page 58 of 85 LEGISLATION COMMITTEE 9. Meeting Date:05/14/2018   Subject:SB 974 (Lara): Medi-Cal: immigration status: adults Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-18   Referral Name: SB 974 (Lara)  Presenter: Patricia Tanquary Contact: L. DeLaney, 925-335-1097 Referral History: SB 974 (Lara) was referred to the Legislation Committee by Patricia Tanquary, the CEO of the Contra Costa Health Plan with a recommendation of "Support." Author:Ricardo Lara (D-033) Coauthor Hertzberg (D) , Leyva (D) , Pan (D) , Mitchell (D) , Hueso (D) , Bradford (D) , Skinner (D) ,  Monning (D) , Hernandez (D) , Galgiani (D) , de Leon (D) , Beall (D) , Wiener (D)  Title:Medi-Cal: Immigration Status: Adults Fiscal Committee: yes Urgency Clause: no Introduced:02/01/2018 Disposition:Pending Location:Senate Appropriations Committee Summary:Extends eligibility for full-scope Medi-Cal benefits to individuals of all ages who are otherwise eligible for those benefits but for their immigration status. Referral Update: The text of the bill can be found here:  http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB974 Attachment A is the Senate Committee on Health bill analysis. CSAC's position on the bill is pending. This bill: 1) Makes undocumented adults age 19 and older who meet all of the eligibility requirements for Page 59 of 85 full-scope Medi-Cal benefits, except for their immigration status, eligible for full-scope Medi-Cal benefits. 2) Requires undocumented individuals already enrolled in limited scope Medi-Cal to be enrolled pursuant to an eligibility and enrollment plan, which includes outreach strategies developed by DHCS in consultation with interested stakeholders, including but not limited to counties, health plans, consumer advocates and the Legislature. 3) Requires undocumented individuals to enroll into Medi-Cal managed care health plans, and to pay copayments and premium contributions to the extent required of otherwise eligible Medi-Cal recipients who are similarly situated. 4) Requires DHCS to maximize federal financial participation in implementing these requirements to the extent allowable. Recommendation(s)/Next Step(s): CONSIDER recommending to the Board of Supervisors a position of "Support" on SB 974 (Lara), a bill that extends full-scope Medi-Cal benefits to undocumented adults age 19 and above who are otherwise eligible for those benefits but for their immigration status and send the bill to the Board for their consent. Fiscal Impact (if any): This bill has not been analyzed by a fiscal committee of the state legislature. Attachments Attachment A: Bill Analysis Page 60 of 85 SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 974 AUTHOR : Lara VERSION : February 1, 2018 HEARING DATE: April 4, 2017 CONSULTANT: Scott Bain SUBJECT: Medi-Cal: immigration status: adults SUMMARY: Extends eligibility for full-scope Medi-Cal benefits to undocumented adults age 19 and above who are otherwise eligible for those benefits but for their immigration status. Existing federal law: Prohibits undocumented individuals from being eligible for any state or local public benefits (including Medicaid), except for assistance for health care items and services that are necessary for the treatment of an emergency medical condition, public health assistance for immunizations, and for testing and treatment of symptoms of communicable disease. [8 U.S. Code §1621] Existing state law: 1) Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), under which low income individuals are eligible for medical coverage. [WIC §14000 et seq] 2) Makes adults and parents with incomes up to 138% of the federal poverty level (FPL) who are under age 65 eligible for Medi-Cal, and makes children with incomes up to 266% of the FPL eligible for Medi-Cal, including providing full-scope Medi-Cal benefits to undocumented children through age 18. [WIC §14005.60, 14005.64, 14005.27, 14005.64, and 14007.8] 3) Makes undocumented individuals ages 19 and above, who are otherwise eligible for Medi- Cal services, eligible only for care and services that are necessary for the treatment of an emergency medical condition and medical care directly related to the emergency, as defined in federal law. [WIC §14007.05] 4) Makes low-income undocumented individuals eligible for Medi-Cal for pregnancy coverage, breast and cervical cancer-related treatment services, family planning services and long-term care services. [WIC §24003, 14007.65, 14007.7, 14148, 14148.5, and 15832 and HS C §104162] 5) Defines, under state law, an “emergency medical condition” as a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in: a) Placing the patient’s health in serious jeopardy; b) Serious impairment to bodily functions; or, c) Serious dysfunction of any bodily organ or part. [WIC §14007.05] Attachment A Page 61 of 85 SB 974 (Lara ) Page 2 of 6 This bill: 1) Makes undocumented adults age 19 and older who meet all of the eligibility requirements for full-scope Medi-Cal benefits, except for their immigration status, eligible for full-scope Medi-Cal benefits. 2) Requires undocumented individuals already enrolled in limited scope Medi-Cal to be enrolled pursuant to an eligibility and enrollment plan, which includes outreach strategies developed by DHCS in consultation with interested stakeholders, including but not limited to counties, health plans, consumer advocates and the Legislature. 3) Requires undocumented individuals to enroll into Medi-Cal managed care health plans, and to pay copayments and premium contributions to the extent required of otherwise eligible Medi-Cal recipients who are similarly situated. 4) Requires DHCS to maximize federal financial participation in implementing these requirements to the extent allowable. FISCAL EFFECT: This bill has not been analyzed by a fiscal committee. COMMENTS: 1) Author’s statement. According to the author, over the last year, we have witnessed a barrage of attacks on health care from the federal government, including multiple efforts to repeal the Affordable Care Act (ACA), the elimination of the individual mandate penalty in the federal tax bill, and various administrative actions that undermine access to care. While California has worked to shield our state from these attacks, it is just as important to continue our progress toward universal coverage. California already provides near-universal coverage for children, thanks in large part to the Health4All Kids program, which provides publicly funded health coverage for undocumented children. SB 75 (2015) included an investment to expand full-scope Medi-Cal to all low-income children under the age of 19, regardless of immigration status. With the implementation of Health4All Kids on May 16, 2016, more than 218,000 undocumented children now receive comprehensive care. In 2017, I introduced SB 562, the Healthy California Act, to create one publicly funded healthcare system that covers all Californians regardless of their immigration status or income. Unfortunately, federal law explicitly and unjustly excludes undocumented adult immigrants from receiving full scope health coverage through Medi-Cal, and from selecting a health plan or receiving subsidies through Covered California. As a result, undocumented adults are still left without comprehensive health care. This bill removes a barrier to health access due to immigration status and brings California closer to ensuring that every Californian has comprehensive, affordable, and accessible care. 2) Current scope of Medi-Cal coverage for immigrants. In order to be Medi-Cal eligible, an individual must be a state resident and generally must be low-income. Recent legal immigrants and undocumented immigrants who meet income and residency requirements are Medi-Cal eligible, but the scope of that coverage depends on the immigration status of the immigrant and the age of the individual. Undocumented children were made eligible for full- scope Medi-Cal services pursuant to SB 75 (Committee on Budget and Fiscal Review, Chapter 18, Statutes of 2016) the health budget trailer bill. As of December 2017, a total of 218,571 undocumented children have enrolled in full-scope Medi-Cal, in two distinct populations: Attachment A Page 62 of 85 SB 974 (Lara ) Page 3 of 6 a) Restricted-scope Medi-Cal beneficiaries. As of December 2017, 120,614 undocumented children previously enrolled in restricted-scope Medi-Cal coverage transitioned into full-scope Medi-Cal coverage; and, b) Not previously enrolled. DHCS estimated 130,924 undocumented children that were eligible for, but not enrolled in, restricted-scope Medi-Cal were eligible for full-scope coverage under the expansion of eligibility. As of December 2017, 97,957 children in this category enrolled in full-scope benefits. Undocumented immigrants age 19 and above are not eligible for full scope services, and are instead eligible for “limited scope” Medi-Cal benefits. Limited scope services are long-term care, pregnancy-related benefits, and emergency services. Medi-Cal also provides coverage for undocumented individuals needing breast and cervical cancer treatment, family planning services through Family PACT, and through temporary presumptive eligibility programs. Undocumented adults are not eligible (with very few exceptions) for enrollment in Medi-Cal managed care plans. 3) The ACA and the remaining uninsured. According to data from the Centers for Disease Control and Prevention (CDC), National Health Interview Survey, the rate of Californians without insurance has declined from 17.2% in 2012 to 6.8% in the first six months of 2017. According to preliminary data from data from the UC Berkeley Center for Labor Research and Education (UC Berkeley) and the UCLA Center for Health Policy Research (UCLA) for 2017, there are over three million remaining uninsured in California as follows: California Projected Uninsured, Ages 0-64, 2017 Number Percentage Non-subsidy eligible citizens/lawfully present immigrants 550,000 18% Eligible for subsidies through Covered California 401,000 13% Eligible for Medi-Cal 322,000 11% Not eligible due to immigration status 1,787,000 58% According to the UC Berkeley and UCLA model, an estimated 1.2 to 1.3 million undocumented adults have income at or below 138% of the FPL (at or below $16,643 in 2017), including nearly one million enrolled in restricted scope Medi-Cal which covers emergency-and pregnancy-related services only. 4) Related legislation. AB 2965 (Arambula) is identical to this bill. AB 2965 is pending hearing in the Assembly Committee on Health. 5) Prior legislation. SB 10 (Lara, Chapter 22, Statutes of 2016) required Covered California (CC) to apply to the federal Department of Health and Human Services for a Section 1332 waiver to allow persons who are not otherwise able to obtain coverage through CC by reason of immigration status to obtain coverage from CC by waiving the requirement that CC offer only qualified health plans. SB 4 (Lara, Chapter 709, Statutes of 2015) required undocumented individuals under 19 years of age enrolled in Medi-Cal at the time the Director of DHCS makes the determination to be enrolled in full scope of Medi-Cal benefits, if otherwise eligible, pursuant to an eligibility and enrollment plan. Attachment A Page 63 of 85 SB 974 (Lara ) Page 4 of 6 SB 97 (Budget and Fiscal Review Committee, Chapter 11, Statutes of 2015) expanded eligibility for full-scope Medi-Cal benefits for undocumented children under the age of 19, regardless of immigration status. SB 1005 (Lara of 2014) would have extended Medi-Cal eligibility to individuals who would otherwise be eligible, except for their immigration status, and would have created a new health benefit exchange, to provide subsidized health care coverage to individuals who cannot purchase health care coverage through CC due to their immigration status. SB 1005 was held on the Senate Appropriations suspense file. AB X1 1 (Perez, Chapter 3, Statutes of 2013-14 First Extraordinary Session) implemented specified Medicaid provisions of the ACA, including the expansion of federal Medicaid coverage to low-income adults with incomes between 0-138% of the FPL. AB X1 1 also implemented a number of the Medicaid ACA provisions to simplify the eligibility, enrollment and renewal processes for Medi-Cal. 6) Support. This bill is jointly sponsored by Health Access California (Health Access) and the California Immigrant Policy Center (CIPC) and is supported by individuals, low-income, labor, consumer, health care providers, immigrant, religious, and community groups. Health Access writes this bill would bring California one step closer to universal coverage by making full-scope Medi-Cal available to all income-eligible adults regardless of immigration status. CIPC argues making Medi-Cal inclusive of all income-eligible Californians builds upon our state’s leadership to advance universal coverage and ensure that no Californian is unjustly barred from access to health care. CIPC writes that almost two-thirds of undocumented Californians have lived in the United States for more than ten years, one in six of all California children have at least one undocumented parent, and undocumented Californians play a significant role in the workforce and the state’s economy but are four times more likely to be uninsured than their US citizen counterparts. CIPC writes that despite their critical role in our society and state, undocumented and uninsured Californians are locked out of access to comprehensive health care. Health Access argues Californian’s health system and Californians in general are healthier and stronger when everyone is included, and that when every Californian has the opportunity to have affordable comprehensive health coverage, they have access to preventive, primary and ongoing care as well as financial security against medical debt and bankruptcy. SUPPORT AND OPPOSITION: Support: Health Access California (co-sponsor) California Immigrant Policy Center (co-sponsor) Alianza Alliance San Diego American Civil Liberties Union of California Center for Advocacy and Policy American Friends Service Committee's US-Mexico Border Program API Equality-LA APLA Health Asian Americans Advancing Justice Asian Law Alliance ASPIRE California Advocates for Nursing Home Reform California Asset Building Coalition California Black Health Network Attachment A Page 64 of 85 SB 974 (Lara ) Page 5 of 6 California Coverage & Health Initiatives California Food Policy Advocates CaliforniaHealth+ Advocates California Health Professional Student Alliance California Immigrant Policy Center California Labor Federation California Latinas for Reproductive Justice California OneCare California Pan-Ethnic Health Network California Partnership California Physicians Alliance California Rural Legal Assistance Foundation California Teamsters California Voices for Progress Children’s Defense Fund-California Children Now Clinica Monsenor Oscar A. Romero Community Health Centers Coalition for Humane Immigrant Rights Community Health Alliance of Pasadena (ChapCare’s) Community Health Councils Community Health Initiative or Orange County Community Health Partnership of Santa Clara and San Mateo Counties Dream Team Los Angeles Essential Access Health Friends Committee on Legislation of California Greenlining Institute Having Our Say Coalition Indivisible CA StateStrong Inland Empire Coverage and Health Collaborative Inland Empire-Immigrant Youth Collective Jus Semper Global Alliance Justice in Aging Latino Coalition for a Healthy California Law Foundation of Silicon Valley Long Beach Immigrant Rights Coalition Los Angeles Dependency Lawyers Los Angeles LGBT Center Lutheran Office of Public Policy-California Maternal and Child Health Access Merced Lao Family Community, Inc. Mixteco/Indigena Community Organizing Project Multi-faith ACTION Coalition National Council of Jewish Women National Health Law Program National Immigration Law Center PICO California San Diego Immigrant Rights Consortium San Diego Organizing Project San Francisco AIDS Foundation San Francisco Senior & Disability Action Attachment A Page 65 of 85 SB 974 (Lara ) Page 6 of 6 SEIU California Services, Immigrant Rights, and Education Network South Asian Network Southeast Asia Resource Action Center South Bay People Power Street Level Health Project St. Anthony Foundation St. John's Well Child & Family Center The Children’s Partnership TODEC Legal Center Tri-Valley Progressives for Our Revolution United Cambodian Community United Ways of California Western Center on Law and Poverty Young Invincibles Oppose: None received -- END -- Attachment A Page 66 of 85 LEGISLATION COMMITTEE 10. Meeting Date:05/14/2018   Subject:SB 1105 (Skinner): Vehicles: Driving Offenses: Prosecution Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-16   Referral Name: SB 1105  Presenter: Donte Blue Contact: L. DeLaney, 925-335-1097 Referral History: SB 1105 by Senator Nancy Skinner would extend existing laws relating to the dismissal of Vehicle Code violations pending at the time of a defendant's commitment to state prison or county jail on a jail-eligible felony to provide the same relief to persons sentenced to county jail or other alternatives to incarceration. The Deputy Director of the Office of Reentry and Justice recommends that the Committee consider recommending a position of "Support" to the Board of Supervisors on SB 1105. Author:Nancy Skinner (D-009) Title:Vehicles: Driving Offenses: Prosecution Fiscal Committee: yes Urgency Clause: no Introduced:02/13/2018 Last Amend: 04/03/2018 Disposition:Pending Location:Senate Appropriations Committee Summary:Extends a specified immunity from prosecution and the prohibitions regarding suspending a driver's license to a person who completes a certain sentence work alternative program as a condition of probation. Makes these protections applicable to an offense committed while the person is temporarily released from custody, or an parole or postrelease community supervision. Authorizes incarcerated or previously convicted persons to request relief directly through the courts. Referral Update: Page 67 of 85 The text of the bill can be found here:  http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB1105 CSAC currently has a "Watch" position on the bill. The bill analysis is included in Attachment A. Recommendation(s)/Next Step(s): CONSIDER recommending to the Board of Supervisors a position of "Support" on SB 1105 (Skinner) and directing staff to put the bill on the Board's agenda for consent. Fiscal Impact (if any): Unknown. Attachments Attachment A: Bill Analysis Page 68 of 85 SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2017 - 2018 Regular Session SB 1105 (Skinner) - Vehicles: driving offenses: prosecution Version: April 3, 2018 Policy Vote: PUB. S. 5 - 2 Urgency: No Mandate: No Hearing Date: April 23, 2018 Consultant: Shaun Naidu This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1105 would allow for the dismissal of specified non-felony offenses pending against a person who has completed a commitment to county jail, as specified, or alternative program, as specified. Fiscal Impact:  Unknown, potentially-significant foregone revenue to the extent that outstanding fines, fees, and assessments are forgiven but would have been collected. (General Fund, various special funds, local funds) Revenue loss to counties would be offset in reduced workload for district attorneys’ offices and public defenders ’ offices not having to prosecute and defend against, respectively, the dismissed charges. For example, Penal Code section 1465.7 imposes a 20 percent surcharge on every base fine resulting from a criminal conviction, with the revenue collected being allocated to the state General Fund. The default misdemeanor punishment includes a maximum base fine of $1,000. If 250 individuals who would have misdemeanor charges that are pending against them dismissed under this measure but otherwise would have been convicted and sentenced to pay the maximum base fine, the state General Fund would incur a loss of $50,000 from that one surcharge alone.  The Department of Motor Vehicles anticipates programming costs of over $150,000 to implement changes to its IT system to accommodate a six-digit code section to monitor. (Motor Vehicle Account).  Unknown loss of revenue to the court in the dismissal of civil assessments for a person who fails to pay all or a portion of a fine or fails to appear for a hearing or other proceeding. (Trial Court Trust Fund) This loss in revenue would be offset, in part, by the reduced workload to the court by not having to adjudicate the dismissed charges. Background: Under existing law, once a person is committed to incarceration for a felony offense, any prosecution for a misdemeanor or infraction offense arising out of the operation of a vehicle or violation of the Vehicle Code as a pedestrian that is pending against him or her at the time of commitment is dismissed. Similarly, the driver license of that person cannot be suspended, revoked, or application therefor denied, as a result of a non-felony offense pending against him or her at the time of commitment that occurred prior to the time of commitment or as a result of a failure to appear notice received by DMV. The Department of Motor Vehicles is required to remove from its Attachment A Page 69 of 85 SB 1105 (Skinner) Page 2 of 2 records a failure to appear notice upon receipt of satisfactory evidence that a person was committed to state prison, the Division of Juvenile Justice (DJJ), or county jail pursuant to the 2011 Realignment Legislation. Proposed Law: This bill would:  Extend the above immunity from prosecution and the prohibitions regarding suspending the person’s driver’s license to a person upon completion of a sentence of seven days or longer in a county jail, work alternative program, or other alternative to incarceration as a condition of probation.  Make the above protections applicable to an offense committed while the person is temporarily released from custody or on parole or post-release community supervision.  Make a person immune from prosecution for an outstanding infraction or failure to appear, from liability for any unpaid fine or assessments, and from having his or her driver’s license affected, once the person has been incarcerated for a cumulative thirty or more days in jail in any consecutive twelve-month period subsequent to the date of the violation.  Allow an incarcerated, previously-incarcerated, or previously-convicted person to request the above-described relief directly through DMV or the court and would prescribe the duties of the department and the court in that regard. Related Legislation: AB 877 (Skinner, 2011) would have expanded immunity from prosecution for non-felony Vehicle Code violations pending at the time of a person’s commitment to state prison and expanded the prohibition against the suspension or revocation of a driver’s license for a pending non-felony offense or as a result of a notice received for failure to appear that occurred prior to incarceration in state prison, to include an individual who has served ninety days or longer in a consecutive twelve- month period in a county jail or other county correctional facility, court or county rehabilitation facility, or involuntary in-home detention. AB 877 was held on the Suspense File of this Committee. AB 3569 (Becerra, Ch. 950, Stats. 1992) exempted pending driving-under-the-influence and reckless driving offenses from immunity from prosecution while a person is committed to state prison or what is now known as DJJ. -- END -- Attachment A Page 70 of 85 LEGISLATION COMMITTEE 11. Meeting Date:05/14/2018   Subject:Regional Housing Needs Allocation Bills SB 828 (Wiener) and AB 1771 (Bloom) Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-15   Referral Name: Regional Housing Needs Allocation Bills  Presenter: L. DeLaney & C. Christian Contact: L. DeLaney, 925-335-1097 Referral History: CSAC has been working with UCC and RCRC and a technical working group of planners from the California County Planning Directors Association to provide feedback and discuss potential amendments to two bills which both seek to recast California’s regional housing needs process. The bills would touch on both the process for determining regional housing needs and the allocation of those regional needs among individual jurisdictions. There have been recurrent policy discussions of linking state funding for various purposes to local government “compliance” with regional housing needs goals. Local governments have argued correctly that the mandate in the regional housing needs law is to plan and zone for housing, while linking funding to issuance of building permits as compared to allocations of land zoned for housing ignores many factors beyond local government control. Accordingly, CSAC is interested in ensuring that any changes to the RHNA process: 1) result in more realistic allocations of planned growth for unincorporated counties, 2) support other state policy objectives (promoting infill, etc), and 3) recognize that is fundamentally a planning and zoning requirement. Detailed information on remaining issues and requests for comments on the two RHNA-related bills, SB 828 and AB 1771, is provided below. This legislation will be discussed at the CSAC  Housing, Land Use and Transportation Policy Committee meeting on Thursday, May 17 at 8:45 AM. The presentation will include analysis by CSAC on current housing needs allocations with a focus on unincorporated county allocations. Referral Update: SB 828 (Wiener) was heard for the first time in the Senate Transportation and Housing Page 71 of 85 SB 828 (Wiener) was heard for the first time in the Senate Transportation and Housing Committee on April 26. The committee asked for three amendments, which are now in print (see: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB828): Rezoning sites for 125% of allocation by income (vs. 200%) in Sec. 1 (CSAC is interested in feedback on this change); Change “shall” to “should” in the language concerning broad purpose of RHNA in Sec. 2 (According to CSAC staff, the new language is an improvement, but is still problematic.); and Remove the reference to “filtering” in Sec. 5 (Section 65584.04(i)(5)(B)). In addition to these amendments, the author had to commit to working with the chair and stakeholders, including councils of government, counties, and cities. CSAC, RCC and UCC met with Senator Wiener’s office and the committee consultant on to reiterate CSAC concerns as well as potential shared goals (i.e. realistic allocations focused in areas with high demand for housing). A CSAC/UCC/RCRC “concerns” letter on SB 828 is available online here:  http://blob.capitoltrack.com/17blobs/5d888a9c-f8de-494e-9cf2-4fd0f5ede030. This letter outlines some of CSAC's general principals on RHNA. CSAC's future correspondence will focused on more specific language changes. Depending on the willingness of the author to address the concerns outlined below, the position may move from “concerns” to “oppose unless amended.” Remaining issues with SB 828 and Requests for Comments Clarifying RHNA intent language to ensure that RHNA remains a planning tool and recognizes that, despite zoning, there are many factors beyond local government control that contribute to whether housing is produced or not (Section 65584(a)(2)). Rezoning to Meet Adequate Sites: Appropriate standard for rezoning when adequate sites are not identified in housing element (the “125%” issue) and how this links to SB 166 (Skinner, 2017); consideration of the “developed areas” language, whether this is appropriate, and how it links to AB 1397 (Low, 2017) (Section 65583(c)(1)). HCD housing backlog “audit” – CSAC staff thinks this is highly likely to be amended out of the bill in Appropriations (or cause the bill to be held), but are seeking feedback. CSAC might like to see it removed no matter what, or perhaps limit it to metropolitan counties (Section 65584.01.1). The unappealable “deficit rollover” – The associations are arguing that this provision is entirely unworkable; that it doubles-down on current unrealistically large allocations to unincorporated areas; that it fails to account for entitled but unbuilt projects; that it Page 72 of 85 encourages zoning for sprawl, especially in jurisdictions where housing demand is low; and that it is unnecessary if broader problems with regional assessments and jurisdictional allocations are addressed (Section 65584.01.(c)(4)). This general issue was raised by several members and the Chair of the Senate Transportation and Housing Committee. Regional Assessment Factors: Ensuring that the appropriate factors are added to the criteria for regional housing needs assessment—CSAC would appreciate feedback on other factors that may need to be considered by HCD/COGs. While some of the factors included in the bill will likely promote allocations that are more realistic with unincorporated areas and better aligned with employment and the state’s infill goals, some factors seem unrealistic (e.g. 6% rental vacancy rate) (Section 65584.01(b)(1)(A-H)). Allocation Plan Factors: Ensuring that the appropriate factors are included in the criteria for the jurisdictional allocations of the region’s housing needs – again would appreciate feedback on these factors. Note that CSAC also recognizes the need for general clean up new language in this subdivision: What is a “high” allocation? How can an allocation plan “demonstrate” that it will reverse racial and wealth disparities? Etc. (Section 65584.04(i)(1-5). AB 1771 (Bloom) was also heard in policy committee this week. The most recent text is available online here: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180AB1771 CSAC, UCC and RCRC have not issued a letter on this bill yet, but are interested in your feedback on the following issues: Allocation Plan Objectives: Ensuring that the appropriate objectives are included in the criteria for the jurisdictional allocations of the region’s housing needs (Section 65584(d-f)). Factors for Allocation Methodology: Ensuring that appropriate factors are considered in the allocation methodology developed by the COGs, and the appropriate role for HCD in determining whether or not the methodology furthers, and does not undermine, the objectives in 65584(d) (Section 65584.04(d)). Appeals Process: Appropriateness of adding an opportunity for “housing groups” to appeal one or more jurisdiction’s allocation of the regional housing need and other changes to the appeals process in Section 3 of the bill (Section 65584.05(a-j)). Note: an alternative approach under consideration by some opponents of the bill would be to limit the grounds on which a local agency can appeal its allocation rather than creating a new appeals process. Recommendation(s)/Next Step(s): PROVIDE feedback to staff on SB 828 (Weiner) and AB 1771 (Bloom): Planning and Zoning: Regional Housing Needs Assessment, which will be provided to CSAC staff as requested. Page 73 of 85 Attachments No file(s) attached. Page 74 of 85 LEGISLATION COMMITTEE 12. Meeting Date:05/14/2018   Subject:Support for HR 5003, a Bill to Restore Advance Refundings of Tax-Exempt Bonds Submitted For: LEGISLATION COMMITTEE,  Department:County Administrator Referral No.: 2018-13   Referral Name: Support for HR 5003  Presenter: Timothy Ewell Contact: Timothy Ewell, (925) 335-1036 Referral History: The Board of Supervisors’ Federal Legislative Platform currently includes several items concerning tax-exempt municipal bonds. Most notably, the Board has taken a position supporting generally the preservation of municipal bonds. Recently, the Tax Cuts and Jobs Act of 2017 (the “Tax Bill”) discontinued authorization for state and local governments to issue “advance refunding” bonds, which previously allows jurisdictions to refinance current debt at reduced interest rates. This was, in part, due to the belief that such authorization essentially allowed for “double dipping” by state and local entities. This was bolstered by reports from the Joint Committee on Taxation (the “JCT”) that advance refundings are projected to by a tax expenditure to the federal government of $17.3 billion over the ten-year period 2018-2027. In Contra Costa County, advance and current refunding bonds have been used to refund existing bonds resulting in significant cost savings locally. As noted in the chart below, over the past 15 years, the County has realized $23.3 million in net present value (NPV) savings amounting to approximately $2.1 million per year. This would not have been possible, in part, but for advance refunding bonds. Therefore, the Chief Assistant County Administrator, Tim Ewell, referred this item to the Committee for its consideration of a position of "Support" to the Board of Supervisors. Referral Update: On February 13, 2018, members of the bi-partisan House Municipal Finance Caucus, Co-Chaired by Representatives Hultgren and Ruppersberger introduced H.R. 5003 (Attachment A) with the goal of reinstating advance refunding bonds. Currently, the bill has bipartisan support of ten (10) co-sponsors and has been referral to the House Ways and Means Committee. On Monday, May 7, 2018, several national organizations representing public-sector entities that issue tax-exempt debt to finance infrastructure projects, including the National Association of Counties (NACo), the National League of Cities and the U.S. Conference of Mayors, joined in a letter (Attachment B) to members of Congress offering support for H.R. 5003. The letter outlines the importance of advance refunding bonds as a tool in the municipal bond market and calls on members of Congress to sign on as co-sponsors to the bill. Page 75 of 85 Recommendation(s)/Next Step(s): CONSIDER recommending a position of “Support” to the Board of Supervisors for H.R. 5003 to amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds; authorize the Chair of the Board to send a letter to members of the House of Representatives representing Contra Costa County requesting co-sponsorship of the bill; direct staff to amend the County's adopted federal legislative platform to make conforming changes. Attachments Attachment A: HR 5003 Attachment B: Support Letter Page 76 of 85 I 115TH CONGRESS 2D SESSION H. R. 5003 To amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 13, 2018 Mr. HULTGREN (for himself, Mr. RUPPERSBERGER, Mr. MESSER, Mr. ROYCE of California, Mr. KILDEE, and Mr. CAPUANO) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to reinstate advance refunding bonds. Be it enacted by the Senate and House of Representa-1 tives of the United States of America in Congress assembled, 2 SECTION 1. TREATMENT OF ADVANCE REFUNDING BONDS. 3 (a) IN GENERAL.—Section 149(d) of the Internal 4 Revenue Code of 1986 is amended— 5 (1) in paragraph (1), by striking ‘‘to advance 6 refund another bond’’ and inserting ‘‘as part of an 7 issue described in paragraph (2), (3), or (4)’’; 8 (2) by redesignating paragraphs (2) and (3) as 9 paragraphs (6) and (7), respectively; and 10 VerDate Sep 11 2014 23:17 Feb 14, 2018 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5003.IH H5003sradovich on DSK3GMQ082PROD with BILLSPage 77 of 85 2 •HR 5003 IH (3) by inserting after paragraph (1) the fol-1 lowing new paragraphs: 2 ‘‘(2) CERTAIN PRIVATE ACTIVITY BONDS.—An 3 issue is described in this paragraph if any bond 4 (issued as part of such issue) is issued to advance 5 refund a private activity bond (other than a qualified 6 501(c)(3) bond). 7 ‘‘(3) OTHER BONDS.— 8 ‘‘(A) IN GENERAL.—An issue is described 9 in this paragraph if any bond (issued as part of 10 such issue), hereinafter in this paragraph re-11 ferred to as the ‘refunding bond’, is issued to 12 advance refund a bond unless— 13 ‘‘(i) the refunding bond is only— 14 ‘‘(I) the 1st advance refunding of 15 the original bond if the original bond 16 is issued after 1985, or 17 ‘‘(II) the 1st or 2nd advance re-18 funding of the original bond if the 19 original bond was issued before 1986, 20 ‘‘(ii) in the case of refunded bonds 21 issued before 1986, the refunded bond is 22 redeemed not later than the earliest date 23 on which such bond may be redeemed at 24 par or at a premium of 3 percent or less, 25 VerDate Sep 11 2014 23:17 Feb 14, 2018 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5003.IH H5003sradovich on DSK3GMQ082PROD with BILLSPage 78 of 85 3 •HR 5003 IH ‘‘(iii) in the case of refunded bonds 1 issued after 1985, the refunded bond is re-2 deemed not later than the earliest date on 3 which such bond may be redeemed, 4 ‘‘(iv) the initial temporary period 5 under section 148(c) ends— 6 ‘‘(I) with respect to the proceeds 7 of the refunding bond not later than 8 30 days after the date of issue of such 9 bond, and 10 ‘‘(II) with respect to the proceeds 11 of the refunded bond on the date of 12 issue of the refunding bond, and 13 ‘‘(v) in the case of refunded bonds to 14 which section 148(e) did not apply, on and 15 after the date of issue of the refunding 16 bond, the amount of proceeds of the re-17 funded bond invested in higher yielding in-18 vestments (as defined in section 148(b)) 19 which are nonpurpose investments (as de-20 fined in section 148(f)(6)(A)) does not ex-21 ceed— 22 ‘‘(I) the amount so invested as 23 part of a reasonably required reserve 24 VerDate Sep 11 2014 01:49 Feb 15, 2018 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5003.IH H5003sradovich on DSK3GMQ082PROD with BILLSPage 79 of 85 4 •HR 5003 IH or replacement fund or during an al-1 lowable temporary period, and 2 ‘‘(II) the amount which is equal 3 to the lesser of 5 percent of the pro-4 ceeds of the issue of which the re-5 funded bond is a part or $100,000 (to 6 the extent such amount is allocable to 7 the refunded bond). 8 ‘‘(B) SPECIAL RULES FOR REDEMP-9 TIONS.— 10 ‘‘(i) ISSUER MUST REDEEM ONLY IF 11 DEBT SERVICE SAVINGS.—Clause (ii) and 12 (iii) of subparagraph (A) shall apply only 13 if the issuer may realize present value debt 14 service savings (determined without regard 15 to administrative expenses) in connection 16 with the issue of which the refunding bond 17 is a part. 18 ‘‘(ii) REDEMPTIONS NOT REQUIRED 19 BEFORE 90TH DAY.—For purposes of 20 clauses (ii) and (iii) of subparagraph (A), 21 the earliest date referred to in such clauses 22 shall not be earlier than the 90th day after 23 the date of issuance of the refunding bond. 24 VerDate Sep 11 2014 23:17 Feb 14, 2018 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5003.IH H5003sradovich on DSK3GMQ082PROD with BILLSPage 80 of 85 5 •HR 5003 IH ‘‘(4) ABUSIVE TRANSACTIONS PROHIBITED.— 1 An issue is described in this paragraph if any bond 2 (issued as part of such issue) is issued to advance 3 refund another bond and a device is employed in 4 connection with the issuance of such issue to obtain 5 a material financial advantage (based on arbitrage) 6 apart from savings attributable to lower interest 7 rates. 8 ‘‘(5) SPECIAL RULES FOR PURPOSES OF PARA-9 GRAPH (3).—For purposes of paragraph (3), bonds 10 issued before the date of the enactment of this sub-11 section shall be taken into account under subpara-12 graph (A)(i) thereof except— 13 ‘‘(A) a refunding which occurred before 14 1986 shall be treated as an advance refunding 15 only if the refunding bond was issued more 16 than 180 days before the redemption of the re-17 funded bond, and 18 ‘‘(B) a bond issued before 1986, shall be 19 treated as advance refunded no more than once 20 before March 15, 1986.’’. 21 (b) CONFORMING AMENDMENT.—Section 22 148(f)(4)(C) of such Code is amended by redesignating 23 clauses (xiv) through (xvi) as clauses (xv) through (xvii) 24 VerDate Sep 11 2014 23:17 Feb 14, 2018 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5003.IH H5003sradovich on DSK3GMQ082PROD with BILLSPage 81 of 85 6 •HR 5003 IH and by inserting after clause (xiii) the following new 1 clause: 2 ‘‘(xiv) DETERMINATION OF INITIAL 3 TEMPORARY PERIOD.—For purposes of 4 this subparagraph, the end of the initial 5 temporary period shall be determined with-6 out regard to section 149(d)(3)(A)(iv).’’. 7 (c) EFFECTIVE DATE.—The amendments made by 8 this section shall apply to advance refunding bonds issued 9 after the date of the enactment of this Act. 10 Æ VerDate Sep 11 2014 23:17 Feb 14, 2018 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H5003.IH H5003sradovich on DSK3GMQ082PROD with BILLSPage 82 of 85 Government Finance Officers Association National Governors Association National Association of State Treasurers Council of State Governments National Conference of State Legislatures The United States Conference of Mayors National Association of Counties National League of Cities International City/County Management Association Airports Council International – North America National Association of Towns and Townships National Association of State Auditors, Comptrollers and Treasurers American Association of Port Authorities American Hospital Association American Planning Association American Public Power Association American Public Works Association American Society of Civil Engineers American Water Works Association Association of Public and Land-grant Universities Association of Metropolitan Water Agencies WateReuse Association National Association of Clean Water Agencies Council of Infrastructure Financing Authorities International Public Management Association for Human Resources Large Public Power Council National Association of Municipal Advisors National Association of Bond Lawyers National Association of College and University Business Officers National Association of Health and Educational Facilities Finance Authorities National Association of Regional Councils National Community Development Association National Association of Local Housing Finance Agencies May 7, 2018 VIA Electronic Mail RE: Request Co-sponsorship of HR 5003 to Amend the Internal Revenue Code of 1986 to Restore Advance Refunding Dear Member of Congress: The national organizations listed above represent hundreds of thousands of public-sector entities that issue debt to finance and build the infrastructure that contributes to strong economies at the state and local levels across the country. Our collective memberships support the need for legislation that would reinstate authority to advance refund municipal bonds. We also ask that you join as a co-sponsor of H.R. 5003, a Attachment B Page 83 of 85 bipartisan bill to restore this federal tax code provision that for decades saved local taxpayers billions in interest expense. Under previous law, governmental bonds and 501(c)(3) bonds issued by state and local governments were permitted a single advance refunding. This allowed public issuers to take advantage of reductions in interest rates to realize billions of dollars in savings, which ultimately benefits taxpayers. In fact, the Government Finance Officers Association (GFOA) best practices recommended an advance refunding should produce a minimum savings threshold on a present value basis of 3-5 percent. In the last 5 years, 2013-2017, the advance refunding of municipal securities saved taxpayers at least $12 billion, a benefit to all of our shared constituencies. It is the practice of state and local governments to measure savings on a present value basis but it is worth noting that the actual savings resulting from these advance refundings is far in excess of $12 billion in present value savings. Since tax-exempt advance refundings were prohibited, municipal bond market activity has declined significantly, creating less supply for the very strong demand that exists for municipal securities from retail and institutional investors. In Q1 2017 volume was $92 billion compared to Q1 2018 just $65 billion, a decrease in 30%. The bond market underpins the strength of state and municipal governments to provide necessary infrastructure across the United States. Thank you for considering this important legislation. We look forward to working with you and supporting the effort to help the public issuer community on this vital issue. Sincerely, Government Finance Officers Association, Emily Swenson Brock, 202-393-8467 Airports Council International – North America, Annie Russo, 202-293-4544 American Association of Port Authorities, Susan Monteverde, 703-684-5700 American Hospital Association, Mike Rock, 202-638-1100 American Planning Association, Jason Jordan, 202-349-1005 American Public Power Association, John Godfrey, 202-467-2929 American Public Works Association, Andrea Eales, 202-218-6730 American Society of Civil Engineers, Brian Pallasch, 202-789-7852 American Water Works Association, Tommy Holmes, 202-326-3128 Association of Metropolitan Water Agencies, Diane VanDe Hei, 202-331-2820 Association of Public and Land-grant Universities, Craig Lindwarm, 202-478-6032 Council of Infrastructure Financing Authorities, Rick Farrell, 202-547-1866 Council of State Governments, Andy Karellas, 202-624-5460 International City/County Management Association, Elizabeth Kellar, 202-962-5328 International Public Management Association for Human Resources, Neil Reichenberg, 703-549-7100 Large Public Power Council, Noreen Roche-Carter, 916-732-6509 National Assoc. of Health and Educational Facilities Finance Authorities, Chuck Samuels, 202-434-7311 National Association of Bond Lawyers, Jessica Giroux, 202-503-3303 National Association of Clean Water Agencies, Kristina Surfus, 202-833-4655 National Association of College and University Business Officers, Elizabeth Clark, 202-861-2553 National Association of Counties, Jack Peterson, 202-661-8805 National Association of Local Housing Finance Agencies, Heather Voorman, 202-367-2405 National Association of Municipal Advisors, Susan Gaffney, 703-395-4896 National Association of Regional Councils, Leslie Wollack, 202-618-6363 National Association of State Auditors, Comptrollers and Treasurers, Cornelia Chebinou, 202-624-5451 National Association of State Treasurers, Shaun Snyder, 202-744-6663 Attachment B Page 84 of 85 National Association of Towns and Townships, Jennifer Imo, 202-454-3947 National Community Development Association, Vicki Watson 202-656-9552 National Conference of State Legislatures, Max Behlke, 202-624-3586 National Governors Association, Caroline Sevier, 202-624-5376 National League of Cities, Brian Egan, 202-626-3107 The United States Conference of Mayors, Larry Jones, 202-861-6709 WateReuse Association, Amber Kim, 571-445-5504 Attachment B Page 85 of 85