Amended in Senate April 9, 2015

Senate Bill No. 346

Introduced by Senator Wieckowski

February 24, 2015

An act to amend Sections 127280 and 129050 of, to add begin insert and repeal Section 127361 of, and to add end insert Chapter 2.6 (commencing with Section 127470) begin delete to, and to repeal Article 2 (commencing with Section 127340) of Chapter 2 of, end delete begin insert to end insert Part 2 of Division 107 of, the Health and Safety Code, relating to health facilities.

LEGISLATIVE COUNSEL’S DIGEST

SB 346, as amended, Wieckowski. Health facilities: community benefits.

Existing law makes certain findings and declarations regarding the social obligation of private nonprofit hospitals to provide community benefits in the public interest, and requires these hospitals, among other responsibilities, to adopt and update a community benefits plan for providing community benefits either alone, in conjunction with other health care providers, or through other organizational arrangements. Existing law requires each private nonprofit hospital, as defined, to complete a community needs assessment, as defined, and to thereafter update the community needs assessment at least once every 3 years. Existing law also requires the hospital to file a report on its community benefits plan and the activities undertaken to address community needs with the Office of Statewide Health Planning and Development. Existing law requires the statewide office to make the plans available to the public. Existing law requires that each hospital include in its community benefits plan measurable objectives and specific benefits.

This bill would declare the necessity of establishing uniform standards for reporting the amount of charity care and community benefits a facility provides to ensure that private nonprofit hospitals and nonprofit multispecialty clinics actually meet the social obligations for which they receive favorable tax treatment, among other findings and declarations.

This bill would require a private nonprofit hospital and nonprofit multispecialty clinic, as defined, to provide community benefits to the public by allocating begin delete available end delete begin insert a specified percentage of the economic value of end insert community begin delete benefit moneys end delete begin insert benefits end insert to charity health care, as defined, and community building activities, as specified. The bill would, by January 1, 2018, require a private nonprofit hospital or nonprofit multispecialty clinic to develop, in collaboration with the community benefits planning committee, as established, a community health needs assessment that evaluates the health needs and resources of the community. The bill would also require these entities, prior to completing the needs assessment, to develop a community benefits statement and a description of the process for approval of the community benefits plan by the hospital’s or clinic’s governing board, as specified. The bill would authorize the hospital or clinic to create a community benefits advisory committee for the purpose of soliciting community input. This bill would require the hospital or clinic to make available to the public a copy of the assessment, file the assessment with the Office of Statewide Health Planning and Development, and update the assessment at least every 3 years.

This bill would also require a private nonprofit hospital and nonprofit multispecialty clinic, by April 1, 2018, to develop a community benefits plan that includes a summary of the needs assessment and a statement of the community health care needs that will be addressed by the plan, and list the services, as provided, that the hospital or clinic intends to provide in the following year to address community health needs identified in the community health needs assessments. The bill would require the hospital or clinic to make its community health needs assessment and community benefits plan or community health plan available to the public on its Internet Web site and would require that a copy of the assessment and plan be given free of charge to any person upon request.

This bill would require a private nonprofit hospital or nonprofit multispecialty clinic, after April 1, 2018, every 2 years to submit a community benefits plan to the Office of Statewide Health Planning and Development, as specified, and would allow a hospital or clinic under the common control of a single corporation or other entity to file a consolidated plan, as provided. The bill would require that the governing board of each hospital or clinic adopt the community benefits plan and make it available to the public, as specified.

This bill would begin delete require the Office of Statewide Health Planning and Development to develop and adopt end delete begin insert make the existing law described above inoperative, and would make the new provisions described above operative, upon the certification by the Director of Statewide Health Planning and Development of the adoption of end insert regulations begin delete to end delete begin insert that end insert prescribe a standardized format for community benefits plans, as begin delete provided, end delete begin insert provided. This bill would subsequently repeal the existing law described above. This bill would require the office to develop and adopt those regulations, end insert to provide technical assistance to help private nonprofit hospitals and nonprofit multispecialty clinics exempt from licensure comply with the community benefits provisions, to make public each community health needs assessment and community benefits plan and any comments received regarding those assessments and plans, to maintain a public calendar of community benefit plan adoption meetings, and to calculate and make public the total value of community benefits provided by hospitals, as specified. This bill would authorize the Office of Statewide Health Planning and Development to assess a civil penalty, as provided, against any hospital or clinic that fails to comply with these provisions. This bill would make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 127280 of the Health and Safety Code
is amended to read:

127280.  

(a) Every health facility licensed pursuant to Chapter
2 (commencing with Section 1250) of Division 2, except a health
facility owned and operated by the state, shall each year be charged
a fee established by the office consistent with the requirements of
this section.

(b) Commencing in calendar year 2004, every freestanding
ambulatory surgery clinic, as defined in Section 128700, shall each
year be charged a fee established by the office consistent with the
requirements of this section.

(c) The fee structure shall be established each year by the office
to produce revenues equal to the appropriation made in the annual
Budget Act or another statute to pay for the functions required to
be performed by the office pursuant to this chapter, Chapter 2.6
(commencing with Section 127470), or Chapter 1 (commencing
with Section 128675) of Part 5, and to pay for any other
health-related programs administered by the office. The fee shall
be due on July 1 and delinquent on July 31 of each year.

(d) The fee for a health facility that is not a hospital, as defined
in subdivision (c) of Section 128700, shall be not more than 0.035
percent of the gross operating cost of the facility for the provision
of health care services for its last fiscal year that ended on or before
June 30 of the preceding calendar year.

(e) The fee for a hospital, as defined in subdivision (c) of Section
128700, shall be not more than 0.035 percent of the gross operating
cost of the facility for the provision of health care services for its
last fiscal year that ended on or before June 30 of the preceding
calendar year.

(f) The fee for a freestanding ambulatory surgery clinic shall
be established at an amount equal to the number of ambulatory
surgery data records submitted to the office pursuant to Section
128737 for encounters in the preceding calendar year multiplied
by not more than fifty cents ($0.50).

(g) There is hereby established the California Health Data and
Planning Fund within the office for the purpose of receiving and
expending fee revenues collected pursuant to this chapter.

(h) Any amounts raised by the collection of the special fees
provided for by subdivisions (d), (e), and (f) that are not required
to meet appropriations in the Budget Act for the current fiscal year
shall remain in the California Health Data and Planning Fund and
shall be available to the office in succeeding years when
appropriated by the Legislature in the annual Budget Act or another
statute, for expenditure under the provisions of this chapter,
Chapter 2.6 (commencing with Section 127470), and Chapter 1
(commencing with Section 128675) of Part 5, or for any other
health-related programs administered by the office, and shall reduce
the amount of the special fees that the office is authorized to
establish and charge.

(i) (1) No health facility liable for the payment of fees required
by this section shall be issued a license or have an existing license
renewed unless the fees are paid. A new, previously unlicensed,
health facility shall be charged a pro rata fee to be established by
the office during the first year of operation.

(2) The license of any health facility, against which the fees
required by this section are charged, shall be revoked, after notice
and hearing, if it is determined by the office that the fees required
were not paid within the time prescribed by subdivision (c).

begin delete

SEC. 2.  

Article 2 (commencing with Section 127340) of
Chapter 2 of Part 2 of Division 107 of the Health and Safety Code
is repealed.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 127361 is added to the end insert begin insert Health and Safety Code end insert begin insert , end insert immediately following Section 127360 begin insert , to read: end insert

begin insert

begin insert 127361. end insert   

This article is inoperative as of the date of the written
certification required by paragraph (1) of subdivision (a) of Section
127487, and is repealed on January 1 of the year after the year in
which it becomes inoperative.

end insert

SEC. 3.  

Chapter 2.6 (commencing with Section 127470) is
added to Part 2 of Division 107 of the Health and Safety Code, to
read:

 

Chapter  2.6. Community Benefits

 

Article 1.  Hospital Community Benefits

 

127470.  

(a) The Legislature finds and declares the following:

(1) Access to health care services is of vital concern to the
people of California.

(2) Health care providers play an important role in providing
essential health care services in the communities they serve.

(3) Notwithstanding public and private efforts to increase access
to health care, the people of California continue to have significant
unmet health needs. Studies indicate that as many as 6.9 million
Californians are uninsured during a year.

(4) The state has a substantial interest in ensuring that the unmet
health needs of its residents are addressed. Health care providers
can help address these needs by providing charity care and
community benefits to the uninsured and underinsured members
of their communities.

(5) Hospitals have different roles in the community depending
on their mission, governance, tax status, and articles of
incorporation. Private hospitals that are investor owned and have
for-profit tax status pay property taxes, corporate income taxes,
and other taxes, such as unemployment insurance, on a different
basis than nonprofit, district, or public hospitals. Nonprofit health
facilities, including hospitals and multispecialty clinics, as
described in subdivision (l) of Section 1206, receive favorable tax
treatment by the government and, in exchange, assume a social
obligation to provide charity care and other community benefits
in the public interest.

(b) It is the intent of the Legislature in enacting this chapter to
provide uniform standards for reporting the amount of charity care
and community benefits provided to ensure that private nonprofit
hospitals and multispecialty clinics operated by nonprofit
corporations, as described in subdivision (l) of Section 1206,
actually meet the social obligations for which they receive
favorable tax treatment.

127472.  

The following definitions apply for the purposes of
this chapter:

(a) “Community” means the service area or patient population
for which a private nonprofit hospital or nonprofit multispecialty
clinic provides health care services. A private nonprofit hospital
or nonprofit multispecialty clinic begin insert shall create a health equity
assessment based on the key factors relating to health and mental
health disparities and inequities described in paragraph (2) of
subdivision (d) of Section 131019.5, and end insert may not define its service
area to exclude begin insert vulnerable populations, including, but not limited
to, end insert medically underserved, low-income, or minority populations
who are part of its patient populations, live in geographic areas in
which its patient populations reside, otherwise should be included
based on the method the hospital facility uses to define its
community, or populations described in subdivision (l).

(b) (1) “Community benefits” means the unreimbursed goods,
services, activities, programs, and other resources provided by a
private nonprofit hospital or nonprofit multispecialty clinic that
addresses community-identified health needs and concerns, begin insert and
health disparities related to its healthy equity assessment, end insert
particularly for people who are uninsured, underserved, or members
of a vulnerable population. Community benefits include, but are
not limited to, charity care, begin insert shortfalls in Medi-Cal, California
Children’s Services Program, or county indigent programs at cost
up to 125 percent of the Medicare rate for the health care services
or items provided on an inpatient basis, an outpatient basis, or
through other nonprofit or public outpatient clinics, hospitals, or
health care organizations, end insert the cost of community building
activities, the cost of community health improvement services and
community benefit operations, the cost of school health centers,
as defined in Section 124174, the cost of health professions
education and training provided without charge to community
members or participants, begin insert amounts given, with no expectation of
reimbursement or repayment, to employees for the purpose of
satisfying or paying off, in full or in part, preemployment student
educational loan obligations, end insert subsidized health services for
vulnerable populations, research, and contributions to community
groups, vaccination programs and services for low-income families,
chronic illness prevention programs and services, home-based
health care programs for low-income families, or community-based
mental health and begin delete outreach end delete begin insert outreach, the key factors described in
paragraph (2) of subdivision (d) of Section 131019.5, end insert and
assessment programs for low-income families. For purposes of
this begin delete subparagraph, end delete begin insert subdivision, end insert “low-income families” means
families or individuals with income less than or equal to 350
percent of the federal poverty level.

(2) For purposes of this subdivision, “community building
activities” means the cost of various kinds of community building
activities, including physical improvements and housing, economic
development, community support, environmental improvements,
community health improvement advocacy, coalition building,
workforce development, begin insert the key factors described in paragraph
(2) of subdivision (d) of Section 131019.5, end insert and leadership
development and training for community members.

(3) (A) For purposes of this subdivision, “charity care” means
the unreimbursed cost to a private nonprofit hospital or nonprofit
multispecialty clinic of providing services to the uninsured or
underinsured, as well as providing health care services or items
on an inpatient or outpatient basis to a financially qualified patient,
as defined in Section 127400, with no expectation of payment.

(B) Charity care does not include any of the following:

(i) Uncollected fees or accounts written off as bad debt.

(ii) Care provided to patients for which a public program or
public or private grant funds pay for any of the charges for the
care.

(iii) Contractual adjustments in the provision of health care
services below the amount identified as gross charges or
“chargemaster” rates by the health care provider.

(iv) Any amount over 125 percent of the Medicare rate for the
health care services or items provided on an inpatient or outpatient
basis.

(v) Any amount over 125 percent of the Medicare rate for
providing, funding, or otherwise financially supporting health care
services or items with no expectation of payment provided to
financially qualified patients through other nonprofit or public
outpatient clinics, hospitals, or health care organizations.

(vi) The cost to a nonprofit hospital of paying a tax or other
governmental assessment.

(4) “Community benefits” does not begin delete mean the end delete begin insert include any of the
following: end insert

begin insert (A end insert begin insert ) end insert begin insert   end insert begin insert The end insert unreimbursed cost of providing services to those
enrolled in begin delete Medi-Cal, Medicare, California Children’s Services
Program, end delete begin insert Medicare end insert or county indigent programs or any goods,
services, activities, programs, or other resources program or activity
for which there is direct offsetting revenue.

begin insert

(B) Uncollected fees or accounts written off as bad debt.

end insert begin insert

(C) Contractual adjustments in the provision of health care
services below the amount identified as gross charges or
“chargemaster” rates by the health care provider.

end insert begin insert

(D) Any amount over 125 percent of the Medicare rate for the
health care services or items provided on an inpatient or outpatient
basis.

end insert begin insert

(E) Any amount over 125 percent of the Medicare rate for
providing, funding, or otherwise financially supporting health care
services or items with no expectation of payment provided to
financially qualified patients through other nonprofit or public
outpatient clinics, hospitals, or health care organizations.

end insert

(c) (1) “Community benefits planning committee” means a
committee, designated by a private nonprofit hospital or nonprofit
multispecialty clinic, that oversees the community needs
assessment and the development of the community benefits plan
implementation strategy to meet the community health needs
identified through the community health needs assessment.

(2) The community benefits planning committee shall be
composed of the following:

(A) One of the following:

(i) The governing board of the hospital organization that operates
the hospital facility or a committee or other party authorized by
that governing body to the extent that the committee or other party
is permitted under state law to act on behalf of the governing body.

(ii) If the hospital facility has its own governing body and is
recognized as an entity under state law but is a disregarded entity
for federal tax purposes, the governing body of that hospital facility
or other committee or party authorized by that governing body to
the extent that the committee or other party is permitted under state
law to act on behalf of the governing body.

(B) At least one individual from the local, tribal, or regional
governmental public health department, or an equivalent
department or agency, with knowledge, information, or expertise
relevant to the health needs of that community.

(C) At least one individual from an underserved and vulnerable
population.

(d) “Discounted care” means the cost for medical care provided
consistent with Article 1 (commencing with Section 127400) of
Chapter 2.5.

(e) (1) “Direct offsetting revenue” means revenue from goods,
services, activities, programs, or other resources that offsets the
total community benefit expense of the goods, services, activities,
programs, or other resources.

(2) “Direct offsetting revenue” includes revenue generated by
the goods, services, activities, programs, or other resources,
including, but not limited to, payment or reimbursement for
services provided to program patients as well as restricted grants
or contributions that the private nonprofit hospital or nonprofit
multispecialty clinic uses to provide a community benefit, such as
a restricted grant to provide financial assistance or fund research.

(3) “Direct offsetting revenue” does not include unrestricted
grants or contributions that the private nonprofit hospital or
nonprofit multispecialty clinic uses to provide a community begin delete benefit. end delete
begin insert benefit, nor payments for Medi-Cal, the California Children’s
Services Program, or county indigent programs. end insert

(f) “Nonprofit multispecialty clinic” means a clinic as described
in subdivision (l) of Section 1206.

(g) “Office” means the Office of Statewide Health Planning and
Development.

(h) “Private nonprofit hospital” means a private nonprofit acute
care hospital operated or controlled by a nonprofit corporation, as
defined in Section 5046 of the Corporations Code, that has been
determined to be exempt from taxation under the Internal Revenue
Code. For purposes of this chapter, “private nonprofit hospital”
does not include any of the following:

(1) A district hospital organized and governed pursuant to the
Local Health Care District Law (Division 23 (commencing with
Section 32000)) or a nonprofit corporation that is affiliated with
the health care district hospital owner by means of the district’s
status as the nonprofit corporation’s sole corporate member
pursuant to subparagraph (B) of paragraph (1) of subdivision (h)
of Section 14169.31 of the Welfare and Institutions Code.

(2) A rural general acute care hospital, as defined in subdivision
(a) of Section 1250.

(3) A children’s hospital, as defined in Section 10727 of the
Welfare and Institutions Code.

(4) A multispecialty clinic operated by a for-profit hospital,
regardless of its net revenue.

(i) “Underserved begin delete and vulnerable end delete begin insert population” or “vulnerable end insert
population” means any of the following:

(1) A population that is exposed to medical or financial risk by
virtue of being uninsured, underinsured, or eligible for Medi-Cal
or a county indigent program.

(A) “Uninsured” means a self-pay patient as defined in Section
127400.

(B) “Underinsured” means a patient with high medical costs,
as defined in Section 127400.

(2) A population, including, but not limited to, the following:

begin insert

(A) A vulnerable community, as defined by Section 131019.5.

end insert begin delete

(A)

end delete

begin insert (B) end insert  Individuals with low educational attainment as measured
by the percentage of the population over 25 years of age with less
than a high school diploma.

begin delete

(B)

end delete

begin insert (C) end insert  Individuals who suffer from linguistic isolation as measured
by the percentage of households in which no one who is 14 years
of age or older speaks English with greater than elementary
proficiency.

(3) A population that meets the definition of disadvantaged
community pursuant to Section 39711.

(4) Other populations that are specifically identified in the
community health needs assessment required pursuant to Section
127475.

begin insert

begin insert 127472.5. end insert   

The provisions of this chapter, except for Section
127487, are operative on the date of the written certification
required by paragraph (1) of subdivision (a) of Section 127487.

end insert

 

Article 2.  Community Benefits Statement, Community Health
Needs Assessment, and Community Benefits Plan

 

127473.  

Private nonprofit hospitals and nonprofit multispecialty
clinics shall provide community benefits to the community as
follows:

(a) A minimum of 90 percent of the begin delete available end delete begin insert total economic
value of end insert community begin delete benefit moneys end delete begin insert benefits end insert shall be allocated to
community benefits that improve community health for
underserved and vulnerable populations or that address a specific
need identified in the community health needs assessment required
pursuant to Section 127475. For purposes of this paragraph,
community benefits that improve community health for
underserved and vulnerable populations may include activities,
including health professions education and training, that are not
provided exclusively to underserved and vulnerable populations,
if the activity will improve community health for underserved and
vulnerable populations.

(b) A minimum of 25 percent of the begin delete available end delete begin insert total economic
value of end insert community begin delete benefit moneys end delete begin insert benefits end insert shall be allocated to
community building activities geographically located within
underserved and vulnerable populations.

(c) To meet the requirements of subdivisions (a) and (b), begin delete moneys end delete
begin insert community benefits end insert shall be begin delete used end delete begin insert allocated end insert for projects that
simultaneously meet both criteria.

127474.  

Prior to completing the community health needs
assessment pursuant to Section 127475, a private nonprofit hospital
or a nonprofit multispecialty clinic shall develop, in collaboration
with the community benefits planning committee, all of the
following:

(a) A community benefits statement that describes the hospital’s
or clinic’s commitment to developing, adopting, and implementing
a community benefits program. The hospital’s or clinic’s governing
board shall document that it has reviewed the hospital’s or clinic’s
organizational mission statement and considered amendments to
it that would better align that organizational mission statement
with the community benefits statement.

(b) A description of the process for approval of the community
benefits plan by the hospital’s or clinic’s governing board,
including a declaration that the board and administrators of the
hospital or clinic shall be responsible for oversight and
implementation of the community benefits plan. The board may
establish a community benefits implementation committee that
shall include members of the board, senior administrators, and
community stakeholders.

127475.  

(a) By January 1, 2018, a private nonprofit hospital
or nonprofit multispecialty clinic shall develop, in collaboration
with the community benefits planning committee, a community
health needs assessment that evaluates the health needs and
resources of the community it serves.

(b) In conducting its community health needs assessment, a
private nonprofit hospital or nonprofit multispecialty clinic shall
solicit comments from and meet with local government officials,
including representatives of local public health departments. A
private nonprofit hospital or nonprofit multispecialty clinic shall
also solicit comments from and meet with begin insert representatives of
vulnerable populations, including diverse racial, ethnic, cultural,
and LGBTQQ communities, women’s health advocates, mental
health advocates, health and mental health providers,
community-based organizations and advocates, academic
institutions, local public health departments, local government
entities, low-income and vulnerable consumers, end insert health care
providers, registered nurses, community groups representing,
among others, patients, labor, seniors, and consumers, and other
health-related organizations. Particular attention shall be given to
persons who are themselves underserved and who work with
underserved and vulnerable populations. Particular attention shall
also be given to identifying local needs to address racial and ethnic
disparities in health outcomes. A private nonprofit hospital or
nonprofit multispecialty clinic may create a community benefits
advisory committee for the purpose of soliciting community input.

(c) In preparing its community health needs assessment, a private
nonprofit hospital or nonprofit multispecialty clinic shall use
available public health data. A private nonprofit hospital or
nonprofit multispecialty clinic may collaborate with other facilities
and health care institutions in conducting community health needs
assessments and may make use of existing studies in completing
their own needs assessments.

(d) Not later than 30 days prior to completing a community
health needs assessment, a private nonprofit hospital or nonprofit
multispecialty clinic shall make available to the public a copy of
the assessment for review and comment.

(e) A community health needs assessment shall be filed with
the office. A private nonprofit hospital or a nonprofit multispecialty
clinic shall update its community needs assessment at least every
three years.

127476.  

(a) By April 1, 2018, a private nonprofit hospital or
nonprofit multispecialty clinic shall develop, in collaboration with
the community, a community benefits plan designed to achieve
all of the following outcomes:

(1) Access to health care for members of underserved and
vulnerable populations.

(2) Addressing of the essential health care needs of the
community, with particular attention to the needs of members of
underserved and vulnerable populations.

(3) Creation of measurable improvements in the health of the
community, with particular attention to the needs of members of
underserved and vulnerable populations.

(b) In developing a community benefits plan, a private nonprofit
hospital or nonprofit multispecialty clinic shall solicit comments
from and meet with local government officials, including
representatives of local public health departments. A private
nonprofit hospital or nonprofit multispecialty clinic shall also
solicit comments from and meet with health care providers,
community groups representing, among others, patients, labor,
seniors, and consumers, and other health-related organizations.
Particular attention shall be given to persons who are themselves
underserved, who work with underserved and vulnerable
populations or with populations at risk for racial and ethnic
disparities in health outcomes.

(c) A community benefits plan shall include, at a minimum, all
of the following:

(1) A summary of the needs assessment and a statement of the
community health care needs that will be addressed by the plan.

(2) A list of the services the private nonprofit hospital or
nonprofit multispecialty clinic intends to provide in the following
year to address community health needs identified in the
community health needs assessments. The list of services shall be
categorized under the following:

(A) Charity care, as defined in subdivision (b) of Section
127472.

(B) Other community benefits, including community health
improvement services and community benefit operations, health
professions education, subsidized health services, research, and
contributions to community groups.

(C) Community building activities targeting underserved and
vulnerable populations.

(3) A description of the target community or communities that
the plan is intended to benefit.

(4) An estimate of the economic value of the community benefits
begin insert at cost end insert that the private nonprofit hospital or nonprofit multispecialty
clinic intends to provide.

(5) A summary of the process used to elicit community
participation in the community health needs assessment and
community benefits plan design, and a description of the process
for ongoing participation of community members in plan
implementation and oversight, and a description of how the
assessment and plan respond to the comments received by the
private nonprofit hospital or nonprofit multispecialty clinic from
the community.

(6) A list of individuals, organizations, and government officials
consulted during the development of the plan.

(7) A description of the intended impact on health outcomes
attributable to the plan, including short- and long-term measurable
goals and objectives.

(8) Mechanisms to evaluate the plan’s effectiveness.

(9) The name and title of the individual responsible for
implementing the plan.

(10) The names of individuals on the private nonprofit hospital’s
or nonprofit multispecialty clinic’s governing board.

(11) If applicable, a report on the community benefits efforts
of the preceding year, including the amounts and types of
community benefits provided, in a manner to be prescribed by the
office; a statement of the plan’s impact on health outcomes,
including a description of the private nonprofit hospital’s or
nonprofit multispecialty clinic’s progress toward meeting its short-
and long-term goals and objectives; and an evaluation of the plan’s
effectiveness.

(d) A private nonprofit hospital or nonprofit multispecialty clinic
may also report on bad begin delete debts, end delete begin insert debts and end insert Medicare begin delete shortfalls,
Medi-Cal shortfalls, and shortfalls from any other public program. end delete
begin insert shortfalls. end insert Reporting bad begin delete debts, end delete begin insert debts and end insert Medicare begin delete shortfalls,
Medi-Cal shortfalls, and other shortfalls from any other public
program end delete begin insert shortfalls end insert shall not be reported as community benefits
and shall be calculated based on hospital costs, not charges.

(e) The governing board of a private nonprofit hospital or
nonprofit multispecialty clinic shall adopt the community benefits
plan at a meeting that is open to the public. No later than 30 days
prior to the plan’s adoption by the governing board of the private
nonprofit hospital or nonprofit multispecialty clinic, a private
nonprofit hospital or nonprofit multispecialty clinic shall make
available to the public and to the office, in a printed copy and on
its Internet Web site, both of the following:

(1) A draft of its community benefits plan.

(2) Notice of the date, time, and location of the meeting at which
the community benefits plan is to be voted on for adoption by the
governing board of the private nonprofit hospital or nonprofit
multispecialty clinic.

(f) After April 1, 2018, a private nonprofit hospital or nonprofit
multispecialty clinic shall, every two years, submit a community
benefits plan that conforms with this chapter and subdivisions (b)
to (e), inclusive, to the office, no later than 120 days after the end
of the hospital’s or clinic’s fiscal year.

(g) A person or entity may file comments on a private nonprofit
hospital’s or nonprofit multispecialty clinic’s community benefits
plan with the office.

(h) A private nonprofit hospital or nonprofit multispecialty
clinic, under the common control of a single corporation or another
entity, may file a consolidated plan if the plan addresses services
in all of the categories listed in paragraph (2) of subdivision (c) to
be provided by each hospital or clinic under common control of
the corporation or entity.

127477.  

A private nonprofit hospital or a nonprofit
multispecialty clinic that reports community benefits to the
community shall report on those community benefits in a consistent
and comparable manner to all other private nonprofit hospitals and
nonprofit multispecialty clinics.

127478.  

A private nonprofit hospital or a nonprofit
multispecialty clinic shall make its community health needs
assessment and community benefits plan available to the public
on its Internet Web site. A copy of the assessment and plan shall
be given free of charge to any person upon request.

 

Article 3.  Duties of the Office of Statewide Health Planning
and Development

 

127487.  

(a) (1) The office shall develop and adopt regulations
to prescribe a standardized format for community benefits plans
pursuant to this chapter. begin insert Immediately following the adoption of
those regulations, the director of the office shall certify the
adoption of the regulations in writing, post the written certification
to the office’s Internet Web site and deliver it to the Secretary of
State, the Secretary of the Senate, the Chief Clerk of the Assembly,
and the Legislative Counsel. end insert

(2) The office shall develop a standardized methodology for
estimating the economic value of community begin delete benefits. end delete begin insert benefits
based on the cost to a private nonprofit hospital or a nonprofit
multispecialty clinic. In no case shall the economic value of
community benefits exceed the actual cost to a private nonprofit
hospital or a nonprofit multispecialty clinic end insert begin insert , nor more than 125
percent of the Medicare rate for the health care services or items
provided on an inpatient basis, an outpatient basis, or through
other nonprofit or public outpatient clinics, hospitals, or health
care organizations. end insert

(3) In developing standards of reporting on community benefits,
the office shall, to the maximum extent possible, conform to
Internal Revenue Service reporting standards for those data
elements reported to the Internal Revenue Service, but shall also
include those data elements required under this chapter or other
state law, including charity care, as defined in Section 127400.

(4) A private nonprofit hospital or nonprofit multispecialty clinic
shall annually file with the office its IRS Form 990, or its successor
form, and the office shall post the form on its Internet Web site.

(b) The office shall provide technical assistance to help private
nonprofit hospitals and nonprofit multispecialty clinics comply
with this chapter.

(c) The office shall make public a community health needs
assessment and community benefits plan and any comments
received regarding those assessments and plans. The office shall
make these documents available on its Internet Web site.

(d) The office shall maintain a public calendar of community
benefit adoption meetings held by the governing board of each
private nonprofit hospital or nonprofit multispecialty clinic. Notice
that includes the Office of Statewide Health Planning and
Development (OSHPD) facility number, name, parent company,
date, time, and location of each meeting shall be posted no later
than 14 days prior to the meeting date.

(e) For every year that a community benefits plan is submitted
pursuant to subdivision (f) of Section 127476, the office shall
calculate and make public the total value of community benefits
provided by each private nonprofit hospital and nonprofit
multispecialty clinic that reports pursuant to this chapter.

127488.  

The office may assess a civil penalty against a private
nonprofit hospital or nonprofit multispecialty clinic that fails to
comply with this article in the same manner as specified in Section
128770.

begin insert

begin insert 127489. end insert   

This chapter shall be operative on the date of the
written certification required by subdivision (a) of Section 127487.

end insert

SEC. 4.  

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 127476.

(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
begin delete state plan. end delete begin insert State Plan. end insert

(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.