Bill Text: CA SB1368 | 2009-2010 | Regular Session | Chaptered
Bill Title: Health care.
Spectrum: Slight Partisan Bill (Democrat 6-3)
Status: (Passed) 2010-09-29 - Chaptered by Secretary of State. Chapter 526, Statutes of 2010. [SB1368 Detail]
Download: California-2009-SB1368-Chaptered.html
BILL NUMBER: SB 1368 CHAPTERED
BILL TEXT
CHAPTER 526
FILED WITH SECRETARY OF STATE SEPTEMBER 29, 2010
APPROVED BY GOVERNOR SEPTEMBER 29, 2010
PASSED THE SENATE AUGUST 19, 2010
PASSED THE ASSEMBLY AUGUST 12, 2010
AMENDED IN ASSEMBLY AUGUST 2, 2010
INTRODUCED BY Committee on Health (Senators Alquist (Chair),
Aanestad, Cedillo, Cox, Leno, Negrete McLeod, Pavley, Romero, and
Strickland)
FEBRUARY 19, 2010
An act to amend Sections 129040 and 129050 of the Health and
Safety Code, and to amend Sections 12695.18 and 12705 of the
Insurance Code, relating to health, and making an appropriation
therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 1368, Committee on Health. Health care.
(1) Existing law establishes the Office of Statewide Health
Planning and Development and sets forth its powers and duties,
including, but not limited to, administration of the California
Health Facility Construction Loan Insurance Law for the purposes of
insuring health facility construction loans. Existing law establishes
the Health Facility Construction Loan Insurance Fund and
continuously appropriates the fund to the office for these purposes.
Existing law authorizes the office to charge a premium charge for the
insurance of these loans, with the premiums to be deposited in the
fund.
This bill would authorize the office to annually charge a portion
of the premium in advance not to exceed $6 per year for each $1,000
of principal of the proposed loan. The bill would make the total
dollar amount of the premium advanced nonrefundable and would require
that it be credited against the amount of the premium charged or, if
the commitment expires and the loan is not insured, the bill would
require that the advance be retained by the office to offset costs
and expenses of the office, as prescribed. By increasing the amounts
to be deposited into a continuously appropriated fund, this bill
would make an appropriation.
Existing law sets forth the conditions for loans to be eligible
for loan insurance under these provisions, including, but not limited
to, the requirement that the proceeds of the loan be guaranteed to
be used exclusively for the construction, improvement, or expansion
of the health facility, as approved by the office.
Existing law also authorizes insurance of loans to refinance
another prior loan if the prior loan would have been eligible at the
time it was made.
This bill would, instead, permit the refinancing of up to 90% of a
prior loan if the loan would otherwise be eligible, without regard
to whether the prior loan would have been eligible at the time it was
made. By expanding the purposes for which a continuously
appropriated fund may be expended, this bill would make an
appropriation.
(2) Existing law creates the Access for Infants and Mothers
Program, which is administered by the Managed Risk Medical Insurance
Board, to provide coverage for perinatal and infant care to residents
of this state meeting certain income and other eligibility
requirements and paying certain subscriber contributions.
Existing law creates the California Major Risk Medical Insurance
Program, which is also administered by the board, to provide major
risk health coverage to residents of this state who are unable to
secure adequate private health coverage because of preexisting
medical conditions and who meet other eligibility requirements and
pay certain subscriber contributions.
This bill would delete obsolete references within these
provisions.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 129040 of the Health and Safety Code is amended
to read:
129040. (a) The office shall establish a premium charge for the
insurance of loans under this chapter, and this charge shall be
deposited in the fund. A one-time nonrefundable premium charge shall
be paid at the time the loan is insured. The premium rate may vary
based upon the assessed level of relative financial risk determined
pursuant to Section 129051, but shall in no event be greater than 3
percent. The amount of premium shall be computed on the basis of the
application of the rate to the total amount of principal and interest
payable over the term of the loan.
(b) The office may annually charge a portion of the premium in
advance commencing at the time of issuing or extending the commitment
until the date the loan is insured or the commitment expires. The
amount of the advance premium shall not exceed six dollars ($6) per
year for each one thousand dollars ($1,000) of principal of the
proposed loan. The total dollar amount of the premium advanced shall
be nonrefundable and shall be credited against the amount of the
premium charged pursuant to this section, or if the commitment
expires and the loan is not insured, the advance shall be retained by
the office to offset costs and expenses of the office related to
preliminary work, underwriting the loan commitment, and monitoring
construction.
SEC. 2. Section 129050 of the Health and Safety Code is amended to
read:
129050. A loan shall be eligible for insurance under this chapter
if all of the following conditions are met:
(a) The loan shall be secured by a first mortgage, first deed of
trust, or other first priority lien on a fee interest of the borrower
or by a leasehold interest of the borrower having a term of at least
20 years, including options to renew for that duration, longer than
the term of the insured loan. The security for the loan shall be
subject only to those conditions, covenants and restrictions,
easements, taxes, and assessments of record approved by the office,
and other liens securing debt insured under this chapter. The office
may require additional agreements in security of the loan.
(b) The borrower obtains an American Land Title Association title
insurance policy with the office designated as beneficiary, with
liability equal to the amount of the loan insured under this chapter,
and with additional endorsements that the office may reasonably
require.
(c) The proceeds of the loan shall be used exclusively for the
construction, improvement, or expansion of the health facility, as
approved by the office under Section 129020. However, loans insured
pursuant to this chapter may include loans to refinance another prior
loan, whether or not state insured and without regard to the date of
the prior loan, if the office determines that the amount refinanced
does not exceed 90 percent of the original total construction costs
and is otherwise eligible for insurance under this chapter. The
office may not insure a loan for a health facility that the office
determines is not needed pursuant to subdivision (k).
(d) The loan shall have a maturity date not exceeding 30 years
from the date of the beginning of amortization of the loan, except as
authorized by subdivision (e), or 75 percent of the office's
estimate of the economic life of the health facility, whichever is
the lesser.
(e) The loan shall contain complete amortization provisions
requiring periodic payments by the borrower not in excess of its
reasonable ability to pay as determined by the office. The office
shall permit a reasonable period of time during which the first
payment to amortization may be waived on agreement by the lender and
borrower. The office may, however, waive the amortization
requirements of this subdivision and of subdivision (g) of this
section when a term loan would be in the borrower's best interest.
(f) The loan shall bear interest on the amount of the principal
obligation outstanding at any time at a rate, as negotiated by the
borrower and lender, as the office finds necessary to meet the loan
money market. As used in this chapter, "interest" does not include
premium charges for insurance and service charges if any. Where a
loan is evidenced by a bond issue of a political subdivision, the
interest thereon may be at any rate the bonds may legally bear.
(g) The loan shall provide for the application of the borrower's
periodic payments to amortization of the principal of the loan.
(h) The loan shall contain those terms and provisions with respect
to insurance, repairs, alterations, payment of taxes and
assessments, foreclosure proceedings, anticipation of maturity,
additional and secondary liens, and other matters the office may in
its discretion prescribe.
(i) The loan shall have a principal obligation not in excess of an
amount equal to 90 percent of the total construction cost.
(j) The borrower shall offer reasonable assurance that the
services of the health facility will be made available to all persons
residing or employed in the area served by the facility.
(k) The office has determined that the facility is needed by the
community to provide the specified services. In making this
determination, the office shall do all of the following:
(1) Require the applicant to describe the community needs the
facility will meet and provide data and information to substantiate
the stated needs.
(2) Require the applicant, if appropriate, to demonstrate
participation in the community needs assessment required by Section
127350.
(3) Survey appropriate local officials and organizations to
measure perceived needs and verify the applicant's needs assessment.
(4) Use any additional available data relating to existing
facilities in the community and their capacity.
(5) Contact other state and federal departments that provide
funding for the programs proposed by the applicant to obtain those
departments' perspectives regarding the need for the facility.
Additionally, the office shall evaluate the potential effect of
proposed health care reimbursement changes on the facility's
financial feasibility.
(6) Consider the facility's consistency with the Cal-Mortgage
state plan.
(l) In the case of acquisitions, a project loan shall be
guaranteed only for transactions not in excess of the fair market
value of the acquisition.
Fair market value shall be determined, for purposes of this
subdivision, pursuant to the following procedure, that shall be
utilized during the office's review of a loan guarantee application:
(1) Completion of a property appraisal by an appraisal firm
qualified to make appraisals, as determined by the office, before
closing a loan on the project.
(2) Evaluation of the appraisal in conjunction with the book value
of the acquisition by the office. When acquisitions involve
additional construction, the office shall evaluate the proposed
construction to determine that the costs are reasonable for the type
of construction proposed. In those cases where this procedure reveals
that the cost of acquisition exceeds the current value of a
facility, including improvements, then the acquisition cost shall be
deemed in excess of fair market value.
(m) Notwithstanding subdivision (i), any loan in the amount of ten
million dollars ($10,000,000) or less may be insured up to 95
percent of the total construction cost.
In determining financial feasibility of projects of counties
pursuant to this section, the office shall take into consideration
any assistance for the project to be provided under Section 14085.5
of the Welfare and Institutions Code or from other sources. It is the
intent of the Legislature that the office endeavor to assist
counties in whatever ways are possible to arrange loans that will
meet the requirements for insurance prescribed by this section.
(n) The project's level of financial risk meets the criteria in
Section 129051.
SEC. 3. Section 12695.18 of the Insurance Code is amended to read:
12695.18. "Participating health plan" means any of the following
plans that are lawfully engaged in providing, arranging, paying for,
or reimbursing the cost of personal health care services under
insurance policies or contracts, medical and hospital service
arrangements, or membership contracts, in consideration of premiums
or other periodic charges payable to it, and that contracts with the
program to provide coverage to program subscribers:
(a) A private insurer holding a valid outstanding certificate of
authority from the Insurance Commissioner.
(b) A nonprofit membership corporation lawfully operating under
the Nonprofit Corporation Law (Division 2 (commencing with Section
5000) of the Corporations Code).
(c) A health care service plan as defined under subdivision (f) of
Section 1345 of the Health and Safety Code.
(d) A county or a city and county, in which case no license or
approval from the Department of Insurance or the Department of
Managed Health Care shall be required to meet the requirements of
this part.
(e) A comprehensive primary care licensed community clinic that is
an organized outpatient freestanding health facility and is not part
of a hospital that delivers comprehensive primary care services, in
which case, no license or approval from the Department of Insurance
or the Department of Managed Health Care shall be required to meet
the requirements of this part.
SEC. 4. Section 12705 of the Insurance Code is amended to read:
12705. For the purposes of this part, the following terms have
the following meanings:
(a) "Applicant" means an individual who applies for major risk
medical coverage through the program.
(b) "Board" means the Managed Risk Medical Insurance Board.
(c) "Fund" means the Major Risk Medical Insurance Fund, from which
the program may authorize expenditures to pay for medically
necessary services which exceed subscribers' contributions, and for
administration of the program.
(d) "Major risk medical coverage" means the payment for medically
necessary services provided by institutional and professional
providers.
(e) "Participating health plan" means a private insurer (1)
holding a valid outstanding certificate of authority from the
Insurance Commissioner, a nonprofit membership corporation lawfully
operating under the Nonprofit Corporation Law (Division 2 (commencing
with Section 5000) of the Corporations Code), or a health care
service plan as defined under subdivision (f) of Section 1345 of the
Health and Safety Code, which is lawfully engaged in providing,
arranging, paying for, or reimbursing the cost of personal health
care services under insurance policies or contracts, medical and
hospital service agreements, or membership contracts, in
consideration of premiums or other periodic charges payable to it,
and (2) which contracts with the program to administer major risk
medical coverage to program subscribers.
(f) "Plan rates" means the total monthly amount charged by a
participating health plan for a category of risk.
(g) "Program" means the California Major Risk Medical Insurance
Program.
(h) "Subscriber" means an individual who is eligible for and
receives major risk medical coverage through the program, and
includes a member of a federally recognized California Indian tribe.
(i) "Subscriber contribution" means the portion of participating
health plan rates paid by the subscriber, or paid on behalf of the
subscriber by a federally recognized California Indian tribal
government. If a federally recognized California Indian tribal
government makes a contribution on behalf of a member of the tribe,
the tribal government shall ensure that the subscriber is made aware
of all the health plan options available in the county where the
member resides.
