Senate Bill S4215

2013-2014 Legislative Session

Authorizes the commissioner of health to establish a program to provide loans, through the dormitory authority, to hospitals to finance health care reform projects

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Archive: Last Bill Status - In Senate Committee Health Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2014	referred to health
Mar 14, 2013	referred to health

2013-S4215 (ACTIVE) - Details

Current Committee:: Senate Health
Law Section:: Public Health Law
Laws Affected:: Amd §2801-a, Pub Health L; amd §§1676 & 1680, Pub Auth L

2013-S4215 (ACTIVE) - Summary

Authorizes the commissioner of health to establish a program to provide loans, through the dormitory authority, to hospitals to finance health care reform projects.

2013-S4215 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4215

TITLE OF BILL:  An act to amend the public health law and the public
authorities law, in relation to authorizing the commissioner of health
to establish a program to provide loans, through the dormitory
authority, to hospitals to finance health care reform projects

PURPOSE:  To authorize the Department of Health and the Dormitory
Authority to establish a program offering credit enhancement to allow
access to capital for hospitals in underserved areas that are unable
to borrow money from conventional lenders to invest in necessary
health reform initiatives

SUMMARY OF PROVISIONS:

Section one adds a new subdivision (17) to Public Health Law (PHL)
2801-a. This subdivision authorizes the Commissioner of Health to
create the program and specifies that it applies only to hospitals in
underserved regions and only to hospitals unable to obtain loans from
conventional lenders. Applicants to the program must commit in writing
to use the funds for health reform projects such as downsizing,
expansion of primary care, and creation of care coordination
infrastructure. This binding commitment requires the hospital to
attain defined health reform metrics, such as specific numbers of
increased primary care visits, specific reductions in the number of
inpatient admissions, etc. The credit enhancement program shall be

administered by the Dormitory Authority, or a not-for-profit
designated by the Dormitory Authority. This section also authorizes an
optional debt service reserve fund to pre-fund potential obligations
in the event of a default. In the event of a hospital default, funds
would be drawn from health reform funding made available to New York
by the federal government under the proposed Section 1115 waiver
funds, other ACA health reform funds provided to N.Y, or other
allocated funds. This paragraph clarifies that under no circumstances
are the potential State payments to be considered a general obligation
of the State.

Sections two and three amend Public Authorities Law § 1676(b)(2) and
1680(1), respectively, to include hospitals and affiliates as are
approved for the credit enhancement program pursuant to PHL
2801-a(17).

JUSTIFICATION:  This proposal facilitates access to capital to support
these reform initiatives. It includes capital financing to providers
located in high need regions and who serve patient populations with
large government payer populations and payer mixes, that have chronic
financial challenges and consequently unsuccessful in accessing
capital to undertake reform initiatives. Those vital initiatives
include restructuring, recapitalization and regional rightsizing. The
credit enhancement is designed to improve the creditworthiness of the
applicant hospitals sufficiently so that a conventional lender would
be willing to lend to the hospital. Further, it would allow hospitals
to finance capital investments at a lower cost, therefore providing
added savings for the New York health care system.


The program would only apply to hospitals that operate in underserved
regions and meet defined criteria to advance the health reform agenda.
The program would be administered by the Dormitory Authority or a
designated not-for-profit. Applicants must receive approval from a
committee chaired by the Commissioner of Health, consisting of the CEO
of the Dormitory Authority and a small number of representatives from
the Medicaid Redesign Team. Applicants would need to commit that the
uses of the credit-enhanced loans would promote agreed-upon regional
health reform objectives. Applicants would submit a comprehensive
program and business plan and be required to execute documents
containing health reform covenants and metrics.

Funding under the program would be for the full spectrum of capital
needs including facility renovations and repurposing, medical high
tech equipment and health information technology, "soft" costs,
working capital, and care management infrastructure development. Uses
of the loan funds could extend outside the hospital to its affiliates.

The bill authorizes creation of an optional debt service reserve fund
to be drawn upon in the event of a default. In the event of a default
by a borrower on any portion of its annual debt service, the state
would pay the amount of the default to the lenders through 1115 waiver
funds allocated for this purpose, other federal health reform funds
made available to the state or other allocated funds. The bill
contains explicit provisions assuring that the potential payments by
the state are not a general obligation of the state and thus the
state's full faith and credit is not pledged to this credit
enhancement

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS:  The State obligation to pay any funds is
contingent upon a hospital's default in repayment to a lender, which
may never occur. In the event a default did occur, payments by the
State would be made to the lender solely from allocated funds from the
1115 waiver or other federal health reform funds, or other allocated
funds.

EFFECTIVE DATE:  Immediately

2013-S4215 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4215

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 14, 2013
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health

AN ACT to amend the public health law and the public authorities law, in
  relation to authorizing the commissioner  of  health  to  establish  a
  program  to  provide loans, through the dormitory authority, to hospi-
  tals to finance health care reform projects

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.    Section  2801-a  of the public health law is amended by
adding a new subdivision 17 to read as follows:
  17. (A) THE COMMISSIONER IS  AUTHORIZED  TO  ESTABLISH  A  PROGRAM  TO
ASSIST IN RESTRUCTURING HEALTH CARE DELIVERY SYSTEMS BY PROVIDING CREDIT
ENHANCEMENT SOLELY TO HOSPITALS THAT LACK THE CREDIT RESOURCES NECESSARY
TO FINANCE HEALTH REFORM PROJECTS FROM CONVENTIONAL LENDERS. THE PROGRAM
SHALL  APPLY  TO  REGIONS  DESIGNATED  BY  THE COMMISSIONER AS MEDICALLY
UNDERSERVED. SUCH PROGRAM SHALL APPLY TO HOSPITALS OPERATING PURSUANT TO
THIS ARTICLE, BUT THE FINANCING MAY ALSO INCLUDE PROJECTS UNDERTAKEN  BY
NON-HOSPITAL  AFFILIATES  OF  THE APPLICANT HOSPITAL.  PROJECTS ELIGIBLE
FOR CREDIT ENHANCEMENT INCLUDE RENOVATIONS AND  REPURPOSING  OF  FACILI-
TIES, MEDICAL HIGH TECHNOLOGY EQUIPMENT AND HEALTH INFORMATION TECHNOLO-
GY,  WORKING  CAPITAL,  CARE MANAGEMENT INFRASTRUCTURE, AND "SOFT" COSTS
NOT TYPICALLY ELIGIBLE FOR LOANS FROM COMMERCIAL LENDERS.  ALL  PROJECTS
SHALL  MEET  DEFINED REGIONAL NEEDS TO ADVANCE THE STATE'S HEALTH REFORM
AGENDA OF BETTER CARE, BETTER HEALTH FOR POPULATIONS, LOWER  COSTS,  AND
SYSTEM  RIGHT-SIZING,  AS  SET  FORTH IN "A PLAN TO TRANSFORM THE EMPIRE
STATE'S MEDICAID PROGRAM MULTI-YEAR ACTION  PLAN",  AS  ADOPTED  BY  THE
STATE'S  MEDICAID  REDESIGN TEAM. PREFERENCE WILL BE GIVEN TO APPLICANTS
THAT INCLUDE COLLABORATIONS WITH OTHER  HEALTH  CARE  PROVIDERS  IN  THE
REGION.
  (B)  APPLICANTS MUST COMMIT THAT THE USES OF THE CREDIT-ENHANCED LOANS
WILL PROMOTE AGREED UPON REGIONAL HEALTH REFORM  OBJECTIVES.  APPLICANTS

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09811-01-3

S. 4215                             2

SHALL  SUBMIT  A  COMPREHENSIVE PROGRAM AND BUSINESS PLAN, AND SUCH PLAN
MUST PROMOTE AGREED UPON REGIONAL HEALTH REFORM OBJECTIVES.  LOAN  DOCU-
MENTS SHALL CONTAIN HEALTH REFORM COVENANTS, MILESTONE DATES AND STATIS-
TICAL  TARGETS  TO  BE  ATTAINED  BY  THE  BORROWER.  SUCH COVENANTS MAY
INCLUDE, BUT ARE NOT LIMITED TO, ACUTE  CARE  DOWNSIZING,  EXPANSION  OF
PRIMARY  CARE,  EXPANSION  AND  INTEGRATION  OF  MENTAL  HEALTH OR OTHER
SERVICE CAPACITY REQUIRED IN THE  REGION,  AND  IMPLEMENTATION  OF  CARE
DELIVERY  AND  CARE  COORDINATION  MODELS  CONSISTENT WITH HEALTH REFORM
GOALS. THE APPLICATION MUST ADDRESS HOW THE APPLICANT WILL UNDERTAKE THE
IMPROVEMENTS IN FORMAL OR INFORMAL COOPERATION WITH  OTHER  HEALTH  CARE
PROVIDERS  IN  THE  REGION.   STEPS TO AVOID DUPLICATION OF SERVICES AND
HIGH COST MEDICAL RESOURCES IN  THE  REGION  SHALL  BE  A  CONDITION  OF
APPROVAL.  TO  THE  EXTENT REQUIRED TO PROVIDE LEGAL PROTECTION FOR SUCH
COOPERATIVE ENDEAVORS, THE COMMISSIONER  SHALL  EXERCISE  ALL  NECESSARY
POWERS  PURSUANT  TO  ARTICLE TWENTY-NINE-F OF THIS CHAPTER AND ANY FEES
ASSOCIATED WITH SUCH OVERSIGHT MAY BE INCLUDED IN THE PROJECT  FINANCING
COSTS.
  (C) THE CREDIT ENHANCEMENT PROGRAM SHALL BE ADMINISTERED BY THE DORMI-
TORY AUTHORITY, OR A NOT-FOR-PROFIT CORPORATION DESIGNATED BY THE DORMI-
TORY  AUTHORITY.    THE  COMMISSIONER SHALL CHAIR THE CREDIT ENHANCEMENT
APPLICATION AND APPROVAL COMMITTEE.  THE  COMMISSIONER  SHALL  DESIGNATE
THREE  OR  MORE  MEMBERS  OF  THE  MEDICAID  REDESIGN TEAM AS ADDITIONAL
MEMBERS OF THE CREDIT ENHANCEMENT APPLICATION  AND  APPROVAL  COMMITTEE.
THE CHAIR OF THE DORMITORY AUTHORITY SHALL ALSO SERVE AS A MEMBER OF THE
COMMITTEE,  AND  SHALL  DETERMINE  ALL RULES FOR REVIEWING AND APPROVING
APPLICATIONS, AND ADMINISTERING APPROVED CREDIT  ENHANCEMENTS.  NOTWITH-
STANDING  ANY  OTHER  LAW,  NO  PERSON SERVING AS A MEMBER OF THE CREDIT
ENHANCEMENT APPLICATION AND APPROVAL COMMITTEE SHALL HAVE  ANY  PERSONAL
LIABILITY,  OR  INCUR  LIABILITY  FOR THEIR EMPLOYER, BY VIRTUE OF THEIR
ROLE OR VOTE IN THE CREDIT ENHANCEMENT APPLICATION AND APPROVAL PROCESS.
  (D) THE PURPOSE OF THE CREDIT ENHANCEMENT PROGRAM SHALL BE TO  PROVIDE
ADDITIONAL  RESOURCES  SUFFICIENT  TO  ATTRACT  CONVENTIONAL  LENDERS TO
INVEST IN HEALTH REFORM PROJECTS PURSUANT TO LOANS TO QUALIFYING  HOSPI-
TALS. A DEBT SERVICE RESERVE FUND MAY BE CREATED TO FACILITATE THE CRED-
IT ENHANCEMENT.
  (E)(I) IN THE EVENT OF A DEFAULT BY A BORROWER TO A LENDER, THE AMOUNT
OF  THE DEFAULTED PAYMENT SHALL BE PAID BY THE COMMISSIONER TO THE LEND-
ER.  TO  FINANCE  THE  COMMISSIONER'S  REMITTANCE  OF  THOSE   DEFAULTED
PAYMENTS,  THE  COMMISSIONER  SHALL  FIRST DRAW UPON FUNDS ALLOCATED FOR
SUCH POTENTIAL DEFAULTS, INCLUDING BUT NOT LIMITED TO FUNDS MADE  AVAIL-
ABLE FOR THAT PURPOSE PURSUANT TO THE STATE'S AUGUST SIXTH, TWO THOUSAND
TWELVE  SECTION  1115 PARTNERSHIP PLAN WAIVER APPLICATION AND ADDITIONAL
FEDERAL FUNDS MADE  AVAILABLE  THROUGH  IMPLEMENTATION  OF  THE  FEDERAL
AFFORDABLE CARE ACT (HEALTH REFORM).
  (II)  ALL  PAYMENTS OF DEFAULTED AMOUNTS SHALL BE MADE SOLELY FROM THE
ALLOCATED FUNDS AND AS SUCH AMOUNTS  ARE  ACTUALLY  COLLECTED  AND  MADE
AVAILABLE  TO  THE  COMMISSIONER  FOR  REMITTANCE TO LENDERS PURSUANT TO
SUBPARAGRAPH (I) OF THIS PARAGRAPH.  NEITHER THE STATE, THE  COMMISSION-
ER, THE DEPARTMENT, THE DORMITORY AUTHORITY, NOR ANY OTHER INSTRUMENTAL-
ITY  OF  THE  STATE,  SHALL  BE  LEGALLY  RESPONSIBLE FOR PAYMENT OF THE
DEFAULTED AMOUNTS, OTHER THAN PURSUANT  TO  THE  PROCESS  AND  FINANCIAL
RESOURCES  DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH. NO ASSETS OR
RESOURCES OF THE STATE SHALL BE PLEDGED, OR CONSIDERED TO BE PLEDGED  OR
OBLIGATED  IN  ANY FORM, TO PAYMENT OF THE DEFAULTS, OTHER THAN PURSUANT
TO THE PROCESS AND FINANCIAL RESOURCES DESCRIBED IN SUBPARAGRAPH (I)  OF
THIS  PARAGRAPH, AS ACTUALLY COLLECTED AND MADE AVAILABLE TO THE COMMIS-

S. 4215                             3

SIONER FOR THE PURPOSES OF PAYING DEFAULTED AMOUNTS PURSUANT TO SUBPARA-
GRAPH (I) OF THIS PARAGRAPH.
  S  2.  Paragraph  (b)  of  subdivision 2 of section 1676 of the public
authorities law is amended by adding a  new  undesignated  paragraph  to
read as follows:
  SUCH  HOSPITALS AND AFFILIATES AS ARE APPROVED FOR THE CREDIT ENHANCE-
MENT PROGRAM PURSUANT TO SUBDIVISION SEVENTEEN OF  SECTION  TWENTY-EIGHT
HUNDRED ONE-A OF THE PUBLIC HEALTH LAW.
  S  3.  Subdivision  1 of section 1680 of the public authorities law is
amended by adding a new undesignated paragraph to read as follows:
  SUCH HOSPITALS AND AFFILIATES AS ARE APPROVED FOR THE CREDIT  ENHANCE-
MENT  PROGRAM  PURSUANT TO SUBDIVISION SEVENTEEN OF SECTION TWENTY-EIGHT
HUNDRED ONE-A OF THE PUBLIC HEALTH LAW.
  S 4. This act shall take effect immediately.

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Senate Bill S4215

Sponsored By

Archive: Last Bill Status - In Senate Committee Health Committee

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2013-S4215 (ACTIVE) - Details

2013-S4215 (ACTIVE) - Summary

2013-S4215 (ACTIVE) - Sponsor Memo

2013-S4215 (ACTIVE) - Bill Text download pdf

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Sponsored By

Kemp Hannon

Archive: Last Bill Status - In Senate Committee Health Committee

Actions

2013-S4215 (ACTIVE) - Details

2013-S4215 (ACTIVE) - Summary

2013-S4215 (ACTIVE) - Sponsor Memo

2013-S4215 (ACTIVE) - Bill Text download pdf

Comments