Requires Community Health Clinics Spend 90% Of Revenue on Program Services
Requires covered nonprofit community health clinics to spend at least 90% of revenue on mission-directed expenses or pay a penalty.
The measure would set a statewide spending-ratio requirement for federally qualified health centers, which serve medically underserved populations. It would also create reporting, public disclosure, enforcement, and waiver processes.
What it does
- Requires covered nonprofit federally qualified health centers and FQHC look-alikes to annually report revenue and mission-directed spending to the Attorney General.
- Requires clinics to maintain a Mission Spend Ratio of at least 90%, generally calculated as mission-directed expenses divided by total revenue.
- Authorizes the Attorney General to issue binding guidance on which expenses and revenues count toward the ratio, including related-party transactions.
- Requires the Department of Public Health to assess a penalty equal to the amount a clinic would have needed to spend to reach the 90% ratio.
- Allows temporary one-year waivers or alternative ratios based on unexpected or exceptional circumstances or a clinic's economic condition.
- Holds penalties in escrow for five years and allows reimbursement if a clinic becomes compliant and agrees to use the reimbursement for mission-directed expenses.
- Makes unrefunded penalty money available for legislative appropriation to clinical-worker training, recruitment, and retention initiatives.
- Allows patients to bring specified legal actions against a nonreporting clinic or a clinic below the ratio without a waiver, and authorizes criminal penalties for knowingly false reporting or schemes to artificially raise the ratio.
Who it affects
- Private nonprofit federally qualified health centers and FQHC look-alikes, excluding federally recognized tribes, tribal organizations, urban Indian organizations, and their outpatient settings.
- Patients of covered clinics.
- The Attorney General and the Department of Public Health.
- Clinic directors, officers, agents, contractors, and related parties subject to reporting or audit.
Context
Covered clinics currently report revenue and expenses to federal and state authorities, but current law does not impose this 90% Mission Spend Ratio requirement. The Legislative Analyst reports that private nonprofit safety-net clinics report spending an average of about 80% of revenue on health care services, with spending varying among clinics.
A yes vote means
A yes vote would require covered nonprofit federally qualified health centers to meet a 90% Mission Spend Ratio, subject to waivers, and establish reporting, penalties, enforcement, and related legal consequences.
A no vote means
A no vote would keep current law, without a statewide 90% Mission Spend Ratio requirement or the measure's new penalties, reporting rules, waiver process, and enforcement provisions.
Fiscal effect
The Legislative Analyst's Office estimates:
- Increased state costs in the low tens of millions of dollars per year to enforce the new requirements on certain private nonprofit health care clinics, covered by fees charged to the affected clinics.