Bill Text: CA AB412 | 2023-2024 | Regular Session | Amended
Bill Title: Distressed Hospital Loan Program.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Engrossed) 2023-06-14 - Referred to Com. on HEALTH. [AB412 Detail]
Download: California-2023-AB412-Amended.html
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April 24, 2023 |
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CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 412
| Introduced by Assembly Members Soria, Garcia, (Principal coauthor: Senator Caballero) |
February 02, 2023 |
An act to amend Section 128740 of, and to add and repeal Chapter 4 (commencing with Section 129380) of Part 6 of Division 107 of, the Health and Safety Code, relating to health facilities, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 412, as amended, Soria.
Distressed Hospital Loan Program.
The California Health Facilities Financing Authority Act authorizes the California Health Facilities Financing Authority to, among other things, make loans from the continuously appropriated California Health Facilities Financing Authority Fund to participating health institutions, as defined, for financing or refinancing the acquisition, construction, or remodeling of health facilities.
This bill would create the Distressed Hospital Loan Program, until January 1, 2032, for the purpose of providing loans to not-for-profit hospitals and public hospitals, as defined, in significant financial distress distress, or to governmental entities representing a
closed hospital to prevent the closure or facilitate the reopening of a closed hospital. The bill would require, subject to an appropriation by the Legislature, the Department of Health Care Access and Information to administer the program and would require the department to enter into an interagency agreement with the authority to implement the program. The bill would require the department, in collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, to develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program, as specified. Notwithstanding that methodology, the bill would deem a hospital applying for aid to be immediately eligible for state assistance from the program if the hospital has 90 or fewer days cash on hand and has experienced a negative operating margin over the preceding 12 months. The bill would require a hospital or a closed hospital to provide
the authority and the department with financial information, in a format determined by the authority, demonstrating the hospital’s need for assistance due to financial hardship. The bill would additionally require that the department, in consultation with the authority, develop a loan forgiveness application and approval process, as specified. The bill would specify that the authority and the department may implement these provisions by information notices or other similar instructions, without taking any further regulatory action.
This bill would create the Distressed Hospital Loan Program Fund, a continuously appropriated fund, for use by the department and the authority to administer the loan program, as specified. The bill would authorize both the authority and the department to recover administrative costs from the fund, as specified. By creating a continuously appropriated fund, the bill would make an appropriation.
Existing law generally requires a health care facility to report specified data to the department, including total inpatient and outpatient revenues by payer, including Medicare and Medi-Cal. Existing law requires the department to adopt regulations regarding the identification and reporting of charity care services, and specifies various obligations to provide hard copies of hospital data reports submitted pursuant to these provisions.
This bill would additionally require data for total inpatient and outpatient revenues by payer to include commercial coverage payers. The bill would require a hospital subject to these data reporting requirements to submit a balance sheet detailing the assets, liabilities, and net worth at the end of the quarter as specified by the department. The bill would also remove the provisions regarding regulations related to charity care services and obligations to provide hard copies of hospital data
reports.
This bill would declare that it is to take effect immediately as an urgency statute.
Digest Key
Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 128740 of the Health and Safety Code is amended to read:128740.
(a) The following summary financial and utilization data shall be reported to the department by a hospital within 45 days of the end of a calendar quarter. Adjusted reports reflecting changes as a result of audited financial statements may be filed within four months of the close of the hospital’s fiscal or calendar year. The quarterly summary financial and utilization data shall conform to the uniform description of accounts as contained in the Accounting and Reporting Manual for California Hospitals and shall include all of the following:(1) Number of licensed beds.
(2) Average number of available beds.
(3) Average number of staffed beds.
(4) Number of discharges.
(5) Number of inpatient days.
(6) Number of outpatient visits.
(7) Total operating expenses.
(8) Total inpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage, other third parties, and other payers.
(9) Total outpatient gross revenues by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage,
other third parties, and other payers.
(10) Deductions from revenue in total and by component, including the following: Medicare contractual adjustments, Medi-Cal contractual adjustments, and county indigent program contractual adjustments, other contractual adjustments, bad debts, charity care, restricted donations and subsidies for indigents, support for clinical teaching, teaching allowances, and other deductions.
(11) Total capital expenditures.
(12) Total net fixed assets.
(13) Total number of inpatient days, outpatient visits, and discharges by payer, including, but not limited to, Medicare, Medi-Cal, county indigent programs, commercial coverage,
other third parties, self-pay, charity, and other payers.
(14) Total net patient revenues by payer, including Medicare, Medi-Cal, county indigent programs, other third parties, and other payers.
(15) Other operating revenue.
(16) Nonoperating revenue net of nonoperating expenses.
(17) (A) A balance sheet detailing the assets, liabilities, and net worth at the quarter as specified by the department.
(B) The department shall allow and provide for, in accordance with appropriate regulations, additions or deletions to the summary financial and utilization data to meet the purposes of this
chapter.
(b) The department may adopt regulations, including emergency regulations, necessary to implement this section.
SEC. 2.
Chapter 4 (commencing with Section 129380) is added to Part 6 of Division 107 of the Health and Safety Code, to read:CHAPTER 4. Distressed Hospital Loan Program
129380.
(a) This chapter shall be known, and may be cited, as the Distressed Hospital Loan Program.(b) The purpose of this program is to provide interest-free cashflow loans to not-for-profit hospitals and public hospitals in significant financial distress distress, or to governmental entities representing a closed hospital, except as otherwise provided, to prevent the closure of, or facilitate the reopening of, those hospitals.
129381.
For the purposes of this chapter, the following definitions apply:(a) “Authority” means the California Health Facilities Financing Authority.
(b) “Closed hospital” means a hospital that closed after January 1, 2022.
(c) “Department” means the Department of Health Care Access and Information.
(d) “Not-for-profit hospital” means the same as a general acute care hospital described in paragraph (1) of subdivision (d) of Section 15432 of the Government Code that is organized as a not-for-profit
entity.
(e) “Program” means the Distressed Hospital Loan Program.
(f) “Public Hospital” means a hospital that is licensed to a county, a city, a city and county, the University of California, a local health care district, a local health authority, or a municipal hospital established pursuant to Article 7 (commencing with Section 37600) of Chapter 5 of Part 2 of Division 3 of Title 4 of the Government Code.
129382.
(a) The department shall administer the program, subject to an appropriation for the purposes of this chapter.(b) The department shall enter into an interagency agreement with the authority to implement this chapter.
129383.
(a) In collaboration with the State Department of Health Care Services, the Department of Managed Health Care, and the State Department of Public Health, the department shall develop a methodology to evaluate an at-risk hospital’s potential eligibility for state assistance from the program.(1) (A) The methodology shall consider factors, including, but not limited to, whether the hospital is in financial distress, as solely determined by the department, whether the hospital is small, rural, a critical access hospital, a trauma center, an urban hospital providing access for an underserved area, a hospital serving a disproportionate share of Medicaid
patients, or serving a rural catchment area, whether closure of the hospital would significantly impact access to services in the region, and whether the hospital is publicly owned.
(B) The methodology for determining financial distress may consider factors such as the hospital’s prior and projected performance on financial metrics, including the amount of cash on hand and whether the hospital has, or is projected to experience, negative operating margins.
(2) The methodology shall also be used for identification and ongoing monitoring of hospitals at risk of financial distress.
(3) Notwithstanding paragraphs (1) and (2), a hospital applying for aid under this chapter shall be deemed immediately eligible for state
assistance from the program if the hospital has 90 or fewer days cash on hand and has experienced a negative operating margin over the preceding 12 months.
(b) A hospital or a closed hospital applying for aid under this program shall provide the authority and the department with financial information, in a format determined by the authority and the department, demonstrating the hospital’s need for financial assistance due to financial hardship.
(c) Before receiving state assistance under this program, an eligible hospital shall submit a plan to the authority, which it shall share with the department, with projections detailing the uses of the proposed loan and strategies proposed by the hospital’s governing body to regain financial viability and continue to operate.
(d) The department shall issue the loan award to a qualifying hospital as soon as reasonably practicable following its eligibility determination.
(e) Not-for-profit hospitals and public hospitals that belong to integrated healthcare systems with more than two separately licensed hospital facilities shall be ineligible for state assistance under the program.
(f) The department shall, in consultation with the authority, determine the application process, underwriting review, and methodology for approval and distribution of the loans under the program.
(g) The department shall have the authority to determine network adequacy and service provision
requirements in approving, and for the duration of, loans to eligible hospitals.
(h) The department shall make the methodology publicly accessible on its internet website.
129384.
(a) Notwithstanding Sections 15432 and 15451.5 of the Government Code, unless subdivision (c) applies, a hospital shall be required to begin making monthly repayments of the loan after the first 18 months and shall discharge the loan within 72 months of the date of the loan.(b) Notwithstanding any other law and to the extent permissible under federal rules, security for the cashflow loans in this chapter shall be Medi-Cal reimbursements due to the hospital from the State Department of Health Care Services. The department’s or authority’s recoupment of these cashflow loans shall not exceed 20 percent of the hospital’s respective Medi-Cal checkwrite payments
until the loan amount has been satisfied. In the event that a 20 percent withholding will not result in full repayment of the loan within 72 months, the department may extend the repayment term of the loan.
(c) (1) The department, in consultation with the authority, shall develop a loan forgiveness application and approval process that shall include, but is not limited to, eligibility criteria for an applicant for loan forgiveness, including which portion of a loan may be forgiven.
(2) The department shall provide loan forgiveness to an applicant based upon criteria determined by the department and subject to the approval of the department and the authority.
(3) The department shall also establish the
terms and conditions associated with accepting loan forgiveness.
(d) A closed hospital’s license shall be deemed to be in abeyance until December 31, 2023. If a closed hospital is awarded a loan, the hospital shall pay the State Department of Public Health any licensing fees that accrued during the period of abeyance before reopening.
129385.
(a) The Distressed Hospital Loan Program Fund is hereby established in the Treasury. The fund shall be administered by the department consistent with this chapter.(b) Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated, without regard to fiscal years, for the department and the authority to implement this chapter.
(c) The authority shall make secured loans from the Distressed Hospital Loan Program Fund to a hospital or to a governmental entity representing a closed hospital, for purposes of preventing the closure, or facilitating the reopening, of the
hospital.
(d) The department may allocate an amount not to exceed 5 percent of total program funds to administer the program, including, but not limited to, administrative costs to the authority. Any funds transferred shall be available for encumbrance or expenditure until June 30, 2026.
(e) All moneys accruing to the authority and the department under this chapter from any source shall be deposited into the fund.
(f) The Treasurer may invest moneys in the fund that are not required for its current needs in eligible securities specified in Section 16430 of the Government Code and may transfer moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of
Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code.
(g) Notwithstanding Section 16305.7 of the Government Code, all interest or other increment resulting from the investment or deposit of moneys from the fund shall be deposited in the fund.
(h) Moneys in the fund shall not be subject to transfer to any other funds pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except to the Surplus Money Investment Fund.
129386.
(a) Notwithstanding the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the authority and the department may implement, interpret, or make specific this chapter, in whole or in part, by means of information notices or other similar instructions, without taking any further regulatory action.(b) For purposes of implementing this chapter, the authority and the department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis. Contracts entered into or amended pursuant to this provision shall be
exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and the State Administrative Manual, and shall be exempt from the review or approval of any division of the Department of General Services.
129387.
This chapter shall remain in effect only until January 1, 2032, and as of that date is repealed.SEC. 3.
This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:In order to provide immediate relief to financially distressed hospitals, it is necessary for this act to take effect immediately.
