Senate Bill 810 Chapter 3 Funding
(a) In order to support the agency effectively in the administration of this division, there is hereby established in the State Treasury the Healthcare Fund. The fund shall be administered by a director appointed by the commissioner.
(b) All moneys collected, received, and transferred pursuant to this division shall be transmitted to the State Treasury to be deposited to the credit of the Healthcare Fund for the purpose of financing the California Healthcare System.
(c) Moneys deposited in the Healthcare Fund shall be used exclusively to support this division.
(d) All claims for health care services rendered pursuant to the system shall be made to the Healthcare Fund through an electronic claims and payment system. The commissioner shall investigate the costs, benefits, and means of supporting health care providers in obtaining electronic systems for claims and payments transactions; however, alternative provisions shall be made for health care providers without electronic systems.
(e) All payments made for health care services shall be disbursed from the Healthcare Fund through an electronic claims and payments system; however, alternative provisions shall be made for health care providers without electronic systems.
(f) The director of the fund shall serve on the Healthcare Policy Board.
140201. (a) The Director of the Healthcare Fund shall establish the following accounts within the Healthcare Fund:
(1) A system account to provide for all annual state expenditures for health care.
(2) A reserve account.
(b) Premiums collected each year shall be roughly sufficient to cover that year’s projected costs.
(c) The system shall at all times hold an actuarially sound reserve that is consistent with appropriate risk-based capital standards to assure financial solvency of the system.
(d) During the transition, the commissioner shall work with the Department of Insurance, the Department of Managed Health Care, and other experts to determine an appropriate level of reserves for the system for the first year and for future years of its operation.
(e) Moneys currently held in reserve by state health programs, city and county contributions as determined by the commissioner pursuant to subdivision (c) of Section 140240, and federal moneys for health care held in reserve in federal trust accounts shall be transferred to the reserve account when the state assumes financial responsibility for health care under this division that is currently provided by those programs.
(f) The commissioner may implement arrangements to self-insure the system against unforeseen expenditures or revenue shortfalls not covered by reserves and may borrow funds to cover temporary revenue shortfalls not covered by system reserves, including the issuance of bonds for this purpose, whichever is the more cost effective.
(g) Funds held in the reserve account and other Healthcare Fund accounts may be prudently invested to increase their value according to the Department of Managed Health Care’s standards for financial solvency.
(a) The Director of the Healthcare Fund shall immediately notify the commissioner when regional or statewide revenue and expenditure trends indicate that expenditures may exceed revenues.
(b) If the commissioner determines that statewide revenue trends indicate the need for statewide cost control measures, the commissioner shall convene the Healthcare Policy Board to discuss the need for cost control measures and shall immediately report to the Legislature and the public regarding the possible need for cost control measures.
(c) Cost control measures include any or all of the following:
(1) Changes in the system or health facility administration that improve efficiency.
(2) Changes in the delivery of health care services that improve efficiency and care quality.
(3) Postponement of introduction of new benefits or benefit improvements.
(4) Seeking statutory authority for a temporary decrease in benefits.
(5) Postponement of planned capital expenditures.
(6) Adjustments of health care provider payments to correct for deficiencies in care quality and failure to meet compensation contract performance goals, pursuant to subdivisions (a) to (f), inclusive, of Section 140106, paragraph (4) of subdivision (a) of Section 140204, subdivision (a) of Section 140213, and subdivisions (c) and (d) of Section 140606.
(7) Adjustments to the compensation of managerial employees and upper level managers under contract with the system to correct for deficiencies in management and failure to meet contract performance goals.
(8) Limitations on the reimbursement budgets of the system’s providers and upper level managers whose compensation is determined by the Payments Board.
(9) Limitations on aggregate reimbursements to manufacturers of pharmaceutical and durable and nondurable medical equipment.
(10) Deferred funding of the reserve account.
(11) Imposition of copayments or deductible payments. Any copayment or deductible payments imposed under this section shall be subject to all of the following requirements:
(A) No copayment or deductible may be established when prohibited by federal law.
(B) All copayments and deductibles shall meet federal guidelines for copayments and deductible payments that may lawfully be imposed on persons with low income.
(C) The commissioner shall establish standards and procedures for waiving copayments or deductible payments and a waiver card that shall be issued to a patient or to a family to indicate the waiver. Procedures for copayment waiver may include a determination by a patient’s primary care provider that imposition of a copayment would be a financial hardship. Copayment and deductible waivers shall be reviewed annually by the regional planning director. (D) Waivers shall not affect the reimbursement of health care providers.
(E) Any copayments or deductible payments established pursuant to this section shall be transmitted to the Treasurer to be deposited to the credit of the Healthcare Fund.
(12) Imposition of an eligibility waiting period and other means if the commissioner determines that large numbers of people are immigrating to the state for the purpose of obtaining health care through the system.
(d) Nothing in this division shall be construed to diminish the benefits that an individual has under a collective bargaining agreement or statute.
(e) Nothing in this division shall preclude employees from receiving benefits available to them under a collective bargaining agreement or other employee-employer agreement or a statute that are superior to benefits under this division.
(f) Cost control measures implemented by the commissioner and the Healthcare Policy Board shall remain in place in the state until the commissioner and the Healthcare Policy Board determine that the cause of a revenue shortfall has been corrected.
(g) If the Healthcare Policy Board determines that cost control measures described in subdivision (c) will not be sufficient to meet a revenue shortfall, the commissioner shall report to the Legislature and to the public on the causes of the shortfall and the reasons for the failure of cost controls and shall recommend measures to correct the shortfall, including an increase in premium payments to the system.
(a) If the commissioner or a regional planning director determines that regional revenue and expenditure trends indicate a need for regional cost control measures, the regional planning director shall convene the regional planning board to discuss the possible need for cost control measures and to make a recommendation about appropriate measures to control costs. These may include any of the following:
(1) Changes in the administration of the system or in health facility administration that improve efficiency.
(2) Changes in the delivery of health care services and health system management that improve efficiency or care quality.
(3) Postponement of planned regional capital expenditures.
(4) Adjustment of payments to health care providers to reflect deficiencies in care quality and failure to meet compensation contract performance goals and payments to upper level managers to reflect deficiencies in management and failure to meet compensation contract performance goals.
(5) Adjustment of payments to health care providers and upper level managers above a specified amount of aggregate billing.
(6) Adjustment of payments to pharmaceutical and medical equipment manufacturers and others selling goods and services to the system above a specified amount of aggregate billing.
(b) If a regional planning board is convened to implement cost control measures, the commissioner shall participate in the regional planning board meeting.
(c) The regional planning director, in consultation with the commissioner, shall determine if cost control measures are warranted and those measures that shall be implemented.
(d) Imposition of copayments or deductibles, postponement of new benefits or benefit improvements, deferred funding of the reserve account, establishment of eligibility waiting periods, and increases in premium payments under the system may occur on a statewide basis only and with the concurrence of the commissioner and the Healthcare Policy Board.
(e) If a regional planning director and regional planning board are considering imposition of cost control measures, the regional planning director shall immediately report to the residents of the region regarding the possible need for cost control measures.
(f) Cost control measures shall remain in place in a region until the regional planning director and the commissioner determine that the cause of a revenue shortfall has been corrected.
(a) If, on June 30 of any year, the Budget Act for the fiscal year beginning on July 1 has not been enacted, all moneys in the reserve account of the Healthcare Fund shall be used to implement this division until funds are available through the Budget Act.
(b) Notwithstanding any other provision of law and without regard to fiscal year, if the annual Budget Act is not enacted by June 30 of any fiscal year preceding the fiscal year to which the budget would apply and if the commissioner determines that funds in the reserve account are depleted, the following shall occur:
(1) The Controller shall annually transfer from the General Fund, in the form of one or more loans, an amount to the Healthcare Fund for the purpose of making payments to health care providers and to persons and businesses under contract with the system or with health care providers to provide services, medical equipment, and pharmaceuticals to the system.
(2) Upon enactment of the Budget Act in any fiscal year to which paragraph (1) applies, the Controller shall transfer all expenditures and unexpected funds loaned to the Healthcare Fund to the appropriate Budget Act item.
(3) The amount of any loan made pursuant to paragraph (1) for which moneys were expended from the Healthcare Fund shall be repaid by debiting the appropriate Budget Act item in accordance with procedures prescribed by the Department of Finance.
(a) The commissioner annually shall prepare a budget for the system that includes all expenditures, specifies a limit on total annual state expenditures, and establishes allocations for each health care region that shall cover a three-year period and that shall be disbursed on a quarterly basis.
(b) The commissioner shall limit the growth of spending on a statewide and on a regional basis, by reference to average growth in state domestic product across multiple years; population growth, actuarial demographics and other demographic indicators; differences in regional costs of living; advances in technology and their anticipated adoption into the benefit plan; improvements in efficiency of administration and care delivery; improvements in the quality of care; and projected future state domestic product growth rates.
(c) The commissioner shall adjust the system’s budget so that aggregate spending in the state on health care shall not exceed spending under this division by more than 5 percent.
(d) The commissioner shall project the system’s revenues and expenditures for 3, 6, 9, and 12 years pursuant to parameters prescribed in subdivision (f). (e) The budget for the system shall include all of the following:
(1) Transition budget.
(2) Providers and managers budget.
(3) Capitated operating budgets.
(4) Noncapitated operating budgets.
(5) Capital investment budget.
(6) Purchasing budget, including prescription drugs and durable and nondurable medical equipment pursuant to Section 140220.
(7) Research and innovation budget pursuant to Section 140221.
(8) Workforce training and development budget pursuant to Section 140222.
(9) Reserve account pursuant to Section 140223.
(10) System administration budget pursuant to Section 140224.
(11) Regional budgets.
(f) In establishing budgets, the commissioner shall make adjustments based on all of the following:
(1) Costs of transition to the new system.
(2) Projections regarding the health care services anticipated to be used by California residents.
(3) Differences in cost of living between the regions, including the overhead costs of maintaining medical practices.
(4) Health risk of enrollees.
(5) Scope of services provided.
(6) Innovative programs that improve care quality, administrative efficiency, and workplace safety.
(7) Unrecovered cost of providing care to persons who are not enrollees of the system. The commissioner shall seek to recover the costs of care provided to persons who are not enrollees of the system.
(8) Costs of workforce training and development.
(9) Costs of correcting health outcome disparities and the unmet needs of previously uninsured and underinsured enrollees. (10) Relative usage of different health care providers.
(11) Needed improvements in access to care.
(12) Projected savings in administrative costs.
(13) Projected savings due to provision of primary and preventive care to the population, including savings from decreases in preventable emergency room visits and hospitalizations.
(14) Projected savings from improvements in care quality.
(15) Projected savings from decreases in medical errors.
(16) Projected savings from systemwide management of capital expenditures.
(17) Cost of incentives and bonuses to support the delivery of high quality care, including incentives and bonuses needed to recruit and retain an adequate supply of needed providers and managers and to attract health care providers to medically underserved areas.
(18) Costs of treating complex illnesses, including disease management programs.
(19) Cost of implementing standards of care, care coordination, electronic medical records, and other electronic initiatives.
(20) Costs of new technology.
(21) Technology research and development costs and costs related to the system’s use of new technologies.
(g) Moneys in the reserve account shall not be considered as available revenues for the purposes of preparing the system’s budget, except when the annual Budget Act has not been enacted by June 30 of any fiscal year.
The commissioner shall annually establish the total funds to be allocated for provider and manager compensation pursuant to this section. In establishing the provider and manager budgets, the commissioner shall allot sufficient funds to assure that California can attract and retain those providers and managers needed to meet the health care needs of the population. In establishing provider and manager budgets, the commissioner shall allocate funds for both salaries, incentives, bonuses, and benefits to be provided to officers and upper level managers of the system who are exempt from state civil service statutes.
(a) The commissioner shall establish the Payments Board and shall appoint a director and members of the board.
(b) The commissioner shall retain the authority to review, approve, reject, and modify all payment contracts and compensation plans established pursuant to this section.
(c) The Payments Board shall be composed of experts in health care finance and insurance systems, a designated representative of the commissioner, a designated representative of the Healthcare Fund, and a representative of the regional planning directors. The position of regional representative shall rotate among the directors of the regional planning boards every two years.
(d) The board shall establish and supervise a uniform payments system for health care providers and managers and shall maintain a compensation plan for all of the following health care providers and managers pursuant to the provider and manager budget established by the commissioner:
(1) Upper level managers employed by, or under contract with, private health care facilities, including, but not limited to, hospitals, integrated health care delivery systems, group and solo medical practices, and essential community facilities.
(2) Managers and officers of the system who are exempt from statutes governing civil service employment.
(3) Health care providers including, but not limited to, physicians, osteopathic physicians, dentists, podiatrists, nurse practitioners, physician assistants, chiropractors, acupuncturists, psychologists, social workers, marriage, family and child counselors, and other professional health care providers who are required by law to be licensed to practice in California and who provide services pursuant to the system.
(4) Compensation for employees of the system that was determined through employer-union negotiations before implementation of this division shall be determined by negotiations between the system and the unions after implementation of this division.
(5) Health care providers licensed and accredited to provide services in California may choose to be compensated for their services either by the system or by a person to whom they provide services.
(6) Health care providers electing to be compensated by the system shall enter into a contract with the system pursuant to provisions of this section.
(7) Health care providers electing to be compensated by persons to whom they provide services, instead of by the system, may establish charges for their services.
(8) Health care providers who accept any payment from the system under this division shall not bill a patient for any covered service, except as authorized by the commissioner.
(e) Health care providers licensed or accredited to provide services in California, who choose to be compensated by the system instead of by patients to whom they provide services, may choose how they wish to be compensated under this division, as fee-for-service providers or as providers employed by, or under contract with, health care systems that provide comprehensive, coordinated services.
(f) Notwithstanding provisions of the Business and Professions Code, nurse practitioners, physician assistants, and others who under California law must be supervised by a physician and surgeon, an osteopathic physician, a dentist, or a podiatrist, may choose fee-for-service compensation while under lawfully required supervision. However, nothing in this section shall interfere with the right of a supervising health care provider to enter into a contractual arrangement that provides for salaried compensation for employees who must be supervised under the law by a physician and surgeon, an osteopathic physician, a dentist, or a podiatrist.
(g) The compensation plan shall include all of the following:
(1) Actuarially sound payments that include a just and fair return for health care providers in the fee-for-service sector and for health care providers working in health systems where comprehensive and coordinated services are provided, including the actuarial basis for the payment.
(2) Payment schedules that shall be in effect for three years.
(3) Bonus and incentive payments, including, but not limited to, all the following:
(A) Bonus payments for health care providers and upper level managers who, in providing services and managing facilities, practices, and integrated health systems pursuant to this division, meet performance standards and outcome goals established by the system.
(B) Incentive payments for health care providers and upper level managers who provide services to the system in areas identified by the Office of Health Planning as medically underserved.
(C) Incentive payments required to achieve the ratio of generalist to specialist health care providers needed in order to meet the standards of care and health needs of the population.
(D) Incentive payments required to recruit and retain nurse practitioners and physician assistants in order to provide primary and preventive care to the population.
(E) No bonus or incentive payment may be made in excess of the total allocation for health care provider and manager incentive and bonus reimbursement established by the commissioner in the system’s budget.
(F) No incentive may adversely affect the care a patient receives or the care a health care provider recommends.
(h) Health care providers shall be paid for all services provided pursuant to this division, including care provided to persons who are subsequently determined to be ineligible for the system.
(i) Licensed health care providers who deliver services not covered under the system may establish rates and charge patients for those services.
(j) Reimbursement to health care providers and compensation to managers may not exceed the amount allocated by the commissioner to provider and manager annual budgets.
(a) Fee-for-service health care providers shall choose representatives of their specialties to negotiate reimbursement rates with the Payments Board on their behalf.
(b) The Payments Board shall establish a uniform system of payments for all services provided pursuant to this division.
(c) Payment schedules shall be available to health care providers in printed and in electronic documents.
(d) Payment schedules shall be in effect for three years, at which time payment schedules may be renegotiated. Payment adjustments may be made at the discretion of the Payments Board to meet the goals of the system.
(e) In establishing a uniform system of payments, the Payments Board shall collaborate with regional planning directors and health care providers and shall take into consideration regional differences in the cost of living and the need to recruit and retain skilled health care providers in the region.
(f) Fee-for-service health care providers shall submit claims electronically to the Healthcare Fund and shall be paid within 30 business days for claims filed in compliance with procedures established by the Healthcare Fund.
(a) Compensation for health care providers and upper level managers employed by, or under contract with, integrated health care delivery systems, group medical practices, and essential community providers that provide comprehensive, coordinated services shall be determined according to the following guidelines:
(b) Health care providers and upper level managers employed by, or under contract with, systems that provide comprehensive, coordinated health care services shall be represented by their respective employers or contractors for the purposes of negotiating reimbursement with the Payments Board.
(c) In negotiating reimbursement with systems providing comprehensive, coordinated services, the Payments Board shall take into consideration the need for comprehensive systems to have flexibility in establishing health care provider and upper level manager reimbursement.
(d) Payment schedules shall be in effect for three years. However, payment adjustments may be made at the discretion of the Payments Board to meet the goals of the system.
(e) The Payments Board shall take into consideration regional differences in the cost of living and the need to recruit and retain skilled health care providers and upper level managers to the regions.
(f) The Payments Board shall establish a timetable for reimbursement for fee-for-service health care provider’s negotiations. If an agreement on reimbursement is not reached according to the timetable established by the Payments Board, the Payments Board shall establish reimbursement rates, which shall be binding.
(g) Reimbursement negotiations shall be conducted consistent with the state action doctrine of the antitrust laws.
(a) The Payments Board shall annually report to the commissioner on the status of health care provider and upper level manager reimbursement, including satisfaction with reimbursement levels and the sufficiency of funds allocated by the commissioner for provider and upper level manager reimbursement. The Payments Board shall recommend needed adjustments in the allocation for health care provider payments.
(b) The Office of Health Care Quality shall annually report to the commissioner on the impact of the bonus payments in improving quality of care, health outcomes, and management effectiveness. The Payments Board shall recommend needed adjustments in bonus allocations.
(c) The Office of Health Planning shall annually report to the commissioner on the impact of the incentive payments in recruiting health care providers and upper level managers to underserved areas, in establishing the needed ratio of generalist to specialist health care providers and in attracting and retaining nurse practitioners and physician assistants to the state and shall recommend needed adjustments.
(a) The commissioner shall establish an allocation for each region to fund regional operating and capital budgets for a period of three years. Allocations shall be disbursed to the regions on a quarterly basis.
(b) Integrated health care delivery systems, essential community providers, and group medical practices that provide comprehensive, coordinated services may choose to be reimbursed on the basis of a capitated system operating budget or a noncapitated system operating budget that covers all costs of providing health care services.
(c) Health care providers choosing to function on the basis of a capitated or a noncapitated system operating budget shall submit three-year operating budget requests to the regional planning director, pursuant to standards and guidelines established by the commissioner.
(1) Health care providers may include in their operating budget requests reimbursement for ancillary health care or social services that were previously funded by money now received and disbursed by the Healthcare Fund.
(2) No payment may be made from a capitated or noncapitated budget for a capital expense except as provided in Section 140216.
(d) Regional planning directors shall negotiate operating budgets with regional health care entities, which shall cover a period of three years.
(e) Operating and capitated budgets shall include health care workforce labor costs other than those described in paragraphs (1), (2), and (3) of subdivision (d) of Section 140208. If unions represent employees working in systems functioning under capitated or noncapitated budgets, unions shall represent those employees in negotiations with the regional planning director and the Payments Board for the purpose of establishing their reimbursement.
(a) Health systems and medical practices functioning under capitated and noncapitated operating budgets shall immediately report any projected operating deficit to the regional planning director. The regional planning director shall determine whether projected deficits reflect appropriate increases in expenditures, in which case the director shall make an adjustment to the operating budget. If the director determines that deficits are not justifiable, no adjustment shall be made.
(b) If a regional planning director determines that adjustments to operating budgets will cause a regional revenue shortfall and that cost control measures may be required, the regional planning director shall report the possible revenue shortfall to the commissioner and take actions required pursuant to Section 140203.
(a) Margins generated by a facility operating under a system operating budget may be retained and used to meet the health care needs of the population. (b) No margin may be retained if that margin was generated through inappropriate limitations on access to health care or compromises in the quality of care or in any way that adversely affected or is likely to adversely affect the health of the persons receiving services from a facility, integrated health care delivery system, group medical practice, or essential community provider functioning under a system operating budget.
(1) The chief medical officer shall evaluate the source of margin generation and report violations of this section to the commissioner.
(2) The commissioner shall establish and enforce penalties for violations of this section. (3) Penalty payments collected pursuant to violations of this section shall be remitted to the Healthcare Fund for use in the California Healthcare System.
(c) Facilities operating under system operating budgets of the California Healthcare System may raise and expend funds from sources other than the system including, but not limited to, private or foundation donors for purposes related to the goals of this division and in accordance with provisions of this division.
(a) During the transition, the commissioner shall develop a capital management plan that shall include conflict-of-interest standards and that shall govern all capital investments and acquisitions undertaken in the system. The plan shall include a framework, standards, and guidelines for all of the following:
(1) Standards whereby the Office of Health Planning shall oversee, assist in the implementation of, and ensure that the provisions of the capital management plan are enforced.
(2) Assessment and prioritization of short- and long-term capital needs of the system on statewide and regional bases.
(3) Assessment of capital health care assets and capital health care asset shortages on a regional and statewide basis at the time this division is first implemented.
(4) Development by the commissioner of a multiyear system capital development plan that supports the system’s goals, priorities, and performance standards and meets the health care needs of the population.
(5) Development, as part of the system’s capital budget, of regional capital allocations that shall cover a period of three years.
(6) Evaluation of, and support for, noninvestment means to meet health care needs, including, but not limited to, improvements in administrative efficiency, care quality, and innovative service delivery, use, adaptation or refurbishment of existing land and property, and identification of publicly owned land or property that may be available to the system and that may meet a capital need.
(7) Development and maintenance of capital inventories on a regional basis, including the condition, utilization capacity, maintenance plan and costs, deferred maintenance of existing capital inventory, and excess capital capacity.
(8) A process whereby those intending to make capital investments or acquisitions shall prepare a business case for making the investment or acquisition, including the full life cycle costs of the project or acquisition, an environmental impact report that meets existing state standards, and a demonstration of how the investment or acquisition meets the health care needs of the population it is intended to serve. Acquisitions include, but are not limited to, the acquisition of land, operational property, or administrative office space.
(9) Standards and a process whereby the regional planning directors shall evaluate, accept, reject, or modify a business plan for a capital investment or acquisition. Decisions of a regional planning director may be appealed through a dispute resolution process established by the commissioner.
(10) Standards for binding project contracts between the system and the party developing a capital project or making a capital acquisition that shall govern all terms and conditions of capital investments and acquisitions, including terms and conditions for grants, loans, lines of credit, and lease-purchase arrangements by the system.
(11) A process and standards whereby the Director of the Healthcare Fund shall negotiate terms and conditions of the liens, grants, lines of credit, and lease-purchase arrangements for capital investments and acquisitions by the system. Terms and conditions negotiated by the Director of the Healthcare Fund shall be included in project contracts.
(12) A plan for the commissioner and for the regional planning directors to issue requests for proposals and to oversee a process of competitive bidding for the development of capital projects that meet the needs of the system and to fund, partially fund, or participate in seeking funding for, those capital projects.
(13) Responses to requests for proposals and competitive bids shall include a description of how a project meets the service needs of the region and addresses the environmental impact report and shall include the full life cycle costs of a capital asset.
(14) Requests for proposals shall address how intellectual property will be handled and shall include conflict-of-interest guidelines that meet standards established by the commissioner as part of the capital management plan.
(15) A process and standards for periodic revisions in the capital management plan, including annual meetings in each region to discuss the plan and make recommendations for improvements in the plan.
(16) Standards for determining when a violation of these provisions shall be referred to the Attorney General for investigation and possible prosecution of the violation.
(b) No registered lobbyist shall participate in or in any way attempt to influence the request for proposals or competitive bid process.
(c) Development of performance standards and a process to monitor and measure performance of those making capital health care investments and acquisitions, including those making capital investments pursuant to a state competitive bidding process.
(d) A process for earned autonomy from state capital investment oversight for those who demonstrate the ability to manage capital investment and capital assets effectively in accordance with the system’s standards, and standards for loss of earned autonomy when capital management is ineffective.
(e) Terms and conditions of capital project oversight by the system shall be based on the performance history of the project developer. Health care providers may earn autonomy from oversight if they demonstrate effective capital planning and project management, pursuant to the goals and guidelines established by the commissioner. Health care providers who do not demonstrate such proficiency shall remain subject to oversight by the regional planning director or shall lose autonomy from oversight.
(f) In general, no capital investment may be made from an operating budget. However, guidelines shall be established for the types and levels of small capital investments that may be undertaken from an operating budget without the approval of the regional planning director.
(g) Any capital investments required for compliance with federal, state, or local regulatory requirements or quality assurance standards shall be exempt from paragraph (2) of subdivision (c) of Section 140212.
(a) Regional planning directors shall develop a regional capital development plan pursuant to the system’s capital management plan established by the commissioner. In developing the regional capital development plan, the regional planning director shall do all of the following:
(1) Implement the standards and requirements of the capital management plan established by the commissioner.
(2) Develop a multiyear regional capital health management plan that supports regional goals and the state capital management plan.
(3) Assist regional health care providers to develop capital budget requests pursuant to the regional capital budget plan and the system’s capital management plan established by the commissioner.
(4) Receive and evaluate capital budget requests from regional health care providers.
(5) Establish ranking criteria to assess competing demands for capital.
(6) Participate in planning for needed earthquake retrofits. However, the cost of mandatory earthquake retrofits of health care facilities shall not be the responsibility of the system.
(7) Conduct ongoing project evaluation to assure that terms and conditions of project funding are met.
(b) Services provided as a result of capital investments or acquisitions that do not meet the terms of the regional capital development plan and the capital management plan developed by the commissioner shall not be reimbursed by the system.
(a) Assets financed by state grants, loans, lines of credit, and lease-purchase arrangements shall be owned, operated, and maintained by the recipient of the grant, loan, line of credit, or lease-purchase arrangement, according to terms established at the time of issuance of the grant, loan, line of credit, or lease-purchase arrangement.
(b) Assets financed under long-term leases with the system shall be transferred to public ownership at the end of the lease, unless the commissioner determines that an alternative disposition would be of greater benefit to the system, in which case the commissioner may authorize an alternative disposition.
(c) When an asset, which was in whole or in part financed by the system, is to be sold or transferred by a party that received financing from the system for purchase, lease, or construction of the asset, an impartial estimate of the fair market value of the asset shall be undertaken. The system shall receive a share of the fair market value of the asset at the time of its sale or transfer that is in proportion to the system’s original investment. The system may elect to postpone receipt of its share of the value of the asset if the commissioner determines that the postponement meets the needs of the system. 140219. The regional planning directors shall make financial information available to the public when the system’s contribution to a capital project is greater than twenty-five million dollars ($25,000,000). Information shall include the purpose of the project or acquisition, its relation to the system’s goals, the project budget and the timetable for completion, environmental impact reports, any terms-related conflicts of interest, and performance standards and benchmarks.
(a) The commissioner shall establish a budget for the purchase of prescription drugs and durable and nondurable medical equipment for the system.
(b) The commissioner shall use the purchasing power of the state to obtain the lowest possible prices for prescription drugs and durable and nondurable medical equipment.
(c) The commissioner shall make discounted prices available to all California residents, licensed and accredited providers and facilities under the terms of their licenses and accreditation, health care providers, prescription drug and medical equipment wholesalers, and retailers of products approved for use and included in the benefit package of the system.
(a) The commissioner shall establish a budget to support research and innovation that has been recommended by the chief medical officer, the Director of the Office of Health Planning, the patient advocates, the Partnerships for Health, and others as required by the commissioner.
(b) The research and innovation budget shall support the goals and standards of the system.
(a) The commissioner shall establish a budget to support the training, development, and continuing education of health care providers and the health care workforce needed to meet the health care needs of the population and the goals and standards of the system.
(b) During the transition, the commissioner shall determine an appropriate level and duration of spending to support the retraining and job placement of persons who have been displaced from employment as a result of the transition to the system.
(c) The commissioner shall establish guidelines for giving special consideration for employment to persons who have been displaced as a result of the transition to the system.
(a) The commissioner shall establish a reserve account pursuant to this section.
(b) The reserve budget may be used only for purposes set forth in this division.
(a) The commissioner shall establish a budget that covers all costs of administering the system.
(b) Administrative costs on a systemwide basis shall be limited to 10 percent of system costs within five years of completing the transition to the system.
(c) Administrative costs on a systemwide basis shall be limited to 5 percent of system costs within 10 years of completing the transition to the system.
(d) The commissioner shall ensure that the percentage of the budget allocated to support system administration stays within the allowable limits and shall continually seek means to lower system administrative costs.
(e) The commissioner shall report to the public, the regional planning directors, and others attending the annual system revenue and expenditure conference pursuant to Section 140206 on the costs of administering the system and the regions and shall make recommendations for reducing administrative costs and receive recommendations for reducing administrative costs.
Article 2. California Healthcare Premium Commission
(a) There is hereby created the California Healthcare Premium Commission, referred to in this division as the Premium Commission.
(b) The Premium Commission shall be composed of the following members:
(1) Three health economists with experience relevant to the functions of the Premium Commission. One shall be appointed by the Speaker of the Assembly, one shall be appointed by the Senate Committee on Rules, and one shall be appointed by the Governor.
(2) Two representatives of California’s business community, with one representing small business. One shall be appointed by the Governor, and the representative of small business shall be appointed by the Senate Committee on Rules.
(3) Two representatives from organized labor. One shall be appointed by the Senate Committee on Rules, and one shall be appointed by the Speaker of the Assembly.
(4) Two representatives of nonprofit organizations whose principal purpose includes promoting the establishment of a system of universal health care in California. One shall be appointed by the Senate Committee on Rules and one shall be appointed by the Speaker of the Assembly.
(5) One representative of a nonprofit advocacy organization with expertise in taxation policy whose principal purpose includes advocating for sustainable funding for the public infrastructure. This person shall be appointed by the Speaker of the Assembly.
(6) Two members of the Legislature. One shall be appointed by the Senate Committee on Rules and one shall be appointed by the Speaker of the Assembly. (7) The Executive Officer of the Franchise Tax Board.
(8) The Chair of the State Board of Equalization.
(9) The Director of the Employment Development Department.
(10) The Legislative Analyst. (11) The Secretary of California Health and Human Services.
(12) The Director of the Department of Finance.
(13) The Controller.
(14) The Treasurer.
(15) The Lieutenant Governor.
(c) Upon appointment, the Premium Commission shall meet at least once a month. The Premium Commission shall elect a chair from its membership during its first meeting. The Premium Commission shall receive public comments during a portion of each of its meetings, and all of its meetings shall be conducted pursuant to the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code).
(a) The Premium Commission shall perform the following functions:
(1) Determine the aggregate costs of providing health care coverage pursuant to this division.
(2) Develop an equitable and affordable premium structure that will generate adequate revenue for the Healthcare Fund established pursuant to Section 140200 and ensure stable and actuarially sound funding for the system.
(b) The Premium Commission shall perform the functions described in this section by considering existing financial simulations and analyses of universal health care proposals, including, but not limited to, the analysis completed by the Lewin Group in January 2005, of Senate Bill 921 of the 2003-04 Regular Session.
(a) The premium structure developed by the Premium Commission shall satisfy the following criteria:
(1) Be means-based and generate adequate revenue to implement this division.
(2) To the greatest extent possible, ensure that all income earners and all employers contribute a premium amount that is affordable and that is consistent with existing funding sources for health care in California.
(3) Maintain the current ratio for aggregate health care contributions among the traditional health care funding sources, including employers, individuals, government, and other sources.
(4) Provide a fair distribution of monetary savings achieved from the establishment of a universal health care system.
(5) Coordinate with existing, ongoing funding sources from federal and state programs.
(6) Be consistent with state and federal requirements governing financial contributions for persons eligible for existing public programs.
(7) Comply with federal requirements.
(8) Include an exemption for employers and employees who are subject to a collective bargaining agreement and participate in a Taft-Hartley Trust Fund that pays the employer and employee share of the premium to the Healthcare Fund.
(b) The Premium Commission shall seek expert and legal advice regarding the best method to structure premium payments consistent with existing employer-employee health care financing structures.
The Premium Commission may take all of the following actions:
(a) Obtain grants from, and contract with, individuals and private, local, state, and federal agencies, organizations, and institutions, including institutions of higher education. (b) Receive charitable contributions or any other source of income that may be lawfully received.
(a) The Premium Commission may consult with additional persons, advisory entities, governmental agencies, Members of the Legislature, and legislative staff as it deems necessary to perform its functions.
(b) The Premium Commission shall seek structured input from representatives of stakeholder organizations, policy institutes, and other persons with expertise in health care, health care financing, or universal health care models in order to ensure that it has the necessary information, expertise, and experience to perform its functions.
(c) The Premium Commission shall be supported by a reasonable amount of staff time, which shall be provided by the state agencies with membership on the Premium Commission. The Premium Commission may request data from, and utilize the technical expertise of, other state agencies.
(a) On or before January 1, 2012 2013 , the Premium Commission shall submit to the Governor and the Legislature a detailed recommendation for a premium structure.
(b) The Premium Commission shall submit a draft recommendation to the Governor, Legislature, and the public at least 90 days prior to submission of the final recommendation described in subdivision (a). The Premium Commission shall seek input from the public on the draft recommendation. 140236. The Premium Commission shall be funded upon an appropriation by the Legislature in the Budget Act of 2010 2011 .
Article 3. Governmental Payments
(a) (1) The commissioner shall seek all necessary waivers, exemptions, agreements, or legislation, so that all current federal payments to the state for health care services be paid directly to the system, which shall then assume responsibility for all benefits and services previously paid for by the federal government with those funds.
(2) In obtaining the waivers, exemptions, agreements, or legislation, the commissioner shall seek from the federal government a contribution for health care services in California that shall not decrease in relation to the contribution to other states as a result of the waivers, exemptions, agreements, or legislation. (b) (1) The commissioner shall seek all necessary waivers, exemptions, agreements, or legislation, so that all current state payments for health care services shall be paid directly to the system, which shall then assume responsibility for all benefits and services previously paid for by state government with those funds.
(2) In obtaining the waivers, exemptions, agreements, or legislation, the commissioner shall seek from the Legislature a contribution for health care services that shall not decrease in relation to state government expenditures for health care services in the year that this division was enacted, except that it may be corrected for change in state gross domestic product, the size and age of population, and the number of residents living below the federal poverty level.
(c) The commissioner shall establish formulas for equitable contributions to the system from all California counties and other local government agencies. (d) The commissioner shall seek all necessary waivers, exemptions, agreements, or legislation, so that all county or other local government agency payments shall be paid directly to the system. 140241. The system’s responsibility for providing health care services shall be secondary to existing federal, state, or local governmental programs for health care services to the extent that funding for these programs is not transferred to the Healthcare Fund or that the transfer is delayed beyond the date on which initial benefits are provided under the system. 140242. In order to minimize the administrative burden of maintaining eligibility records for programs transferred to the system, the commissioner shall strive to reach an agreement with federal, state, and local governments in which their contributions to the Healthcare Fund shall be fixed to the rate of change of the state gross domestic product, the size and age of population, and the number of residents living below the federal poverty level. 140243. If and to the extent that federal law and regulations allow the transfer of Medi-Cal program funding to the system, the commissioner shall pay from the Healthcare Fund all premiums, deductible payments, and coinsurance for qualified beneficiaries who are receiving benefits pursuant to Chapter 3 (commencing with Section 12000) of Part 3 of Division 9 of the Welfare and Institutions Code. 140244. If and to the extent that the commissioner obtains authorization to incorporate Medicare revenues into the Healthcare Fund, Medicare Part B payments that previously were made by individuals or the commissioner shall be paid by the system for all individuals eligible for both the system and the Medicare Program.
Article 4. Federal Preemption
(a) The commissioner shall pursue all reasonable means to secure a repeal or a waiver of any provision of federal law that preempts any provision of this division.
(b) If a repeal or a waiver of law or regulations cannot be secured, the commissioner shall exercise his or her powers to promulgate rules and regulations, or seek conforming state legislation, consistent with federal law, in an effort to best fulfill the purposes of this division.
(a) To the extent permitted by federal law, an employee entitled to health or related benefits under a contract or plan that, under federal law, preempts provisions of this division, shall first seek benefits under that contract or plan before receiving benefits from the system under this division.
(b) No benefits shall be denied under the system created by this division unless the employee has failed to take reasonable steps to secure like benefits from the contract or plan, if those benefits are available.
(c) Nothing in this section shall preclude a person from receiving benefits from the system under this division that are superior to benefits available to the person under an existing contract or plan.
(d) Nothing in this division is intended, nor shall this division be construed, to discourage recourse to contracts or plans that are protected by federal law. (e) To the extent permitted by federal law, a health care provider shall first seek payment from the contract or plan, before submitting bills to the system. Article 5. Subrogation
(a) It is the intent of this division to establish a single public payer for all health care services in the State of California. However, until such time as the role of all other payers for health care services has been terminated, costs for health care services shall be collected from collateral sources whenever health care services provided to an individual are, or may be, covered services under a policy of insurance, health care service plan, or other collateral source available to that individual, or for which the individual has a right of action for compensation to the extent permitted by law.
(b) As used in this article, collateral source includes all of the following:
(1) Insurance policies written by insurers, including the medical components of automobile, homeowners, and other forms of insurance.
(2) Health care service plans and pension plans.
(4) Employee benefit contracts.
(5) Government benefit programs.
(6) A judgment for damages for personal injury.
(7) Any third party who is or may be liable to an individual for health care services or costs.
(c) “Collateral source” does not include either of the following:
(1) A contract or plan that is subject to federal preemption.
(2) Any governmental unit, agency, or service, to the extent that subrogation is prohibited by law. An entity described in subdivision (b) is not excluded from the obligations imposed by this article by virtue of a contract or relationship with a governmental unit, agency, or service.
(d) The commissioner shall attempt to negotiate waivers, seek federal legislation, or make other arrangements to incorporate collateral sources in California into the system. 140303. Whenever an individual receives health care services under the system and he or she is entitled to coverage, reimbursement, indemnity, or other compensation from a collateral source, he or she shall notify the health care provider and provide information identifying the collateral source, the nature and extent of coverage or entitlement, and other relevant information. The health care provider shall forward this information to the commissioner. The individual entitled to coverage, reimbursement, indemnity, or other compensation from a collateral source shall provide additional information as requested by the commissioner.
(a) The system shall seek reimbursement from the collateral source for services provided to the individual and may institute appropriate action, including suit, to recover the reimbursement. Upon demand, the collateral source shall pay to the Healthcare Fund the sums it would have paid or expended on behalf of the individual for the health care services provided by the system.
(b) In addition to any other right to recovery provided in this article, the commissioner shall have the same right to recover the reasonable value of benefits from a collateral source as provided to the Director of Health Care Services by Article 3.5 (commencing with Section 14124.70) of Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code, in the manner so provided.
(a) If a collateral source is exempt from subrogation or the obligation to reimburse the system as provided in this article, the commissioner may require that an individual who is entitled to health care services from the source first seek those services from that source before seeking those services from the system.
(b) To the extent permitted by federal law, contractual retiree health benefits provided by employers shall be subject to the same subrogation as other contracts, allowing the system to recover the cost of health care services provided to individuals covered by the retiree benefits, unless and until arrangements are made to transfer the revenues of the benefits directly to the system.
(a) Default, underpayment, or late payment of any tax or other obligation imposed by this division shall result in the remedies and penalties provided by law, except as provided in this section.
(b) Eligibility for benefits under Chapter 4 (commencing with Section 140400) shall not be impaired by any default, underpayment, or late payment of any tax or other obligation imposed by this chapter. 140307. The agency and the commissioner shall be exempt from the regulatory oversight and review of the Office of Administrative Law pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. Actions taken by the agency, including, but not limited to, the negotiating or setting of rates, fees, or prices, and the promulgation of any and all regulations, shall be exempt from any review by the Office of Administrative Law, except for Sections 11344.1, 11344.2, 11344.3, and 11344.6 of the Government Code, addressing the publication of regulations. 140308. The agency shall adopt regulations to implement the provisions of this division. The regulations may initially be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), but those emergency regulations shall be in effect only from the effective date of this division until the conclusion of the transition period.