Bill to Reimburse Practices for Costs of PPE and COVID-19 Testing Supplies Passes First Test in Senate

Sacramento, Calif. — The California State Senate Committee on Health passed a bill Wednesday that would require insurance companies to reimburse small- to medium-sized health care providers for reasonable costs incurred in the purchase of PPE and testing supplies during the pandemic. Senate Bill 242, authored by Senator Josh Newman (D-Fullerton), passed by a 8-2 vote.

“The pandemic has forced smaller California health care providers to absorb steep operational costs in order to safely provide care to their patients,” said Newman. “Under existing law, insurance providers are not required to reimburse doctors for these essential purchases and as a consequence, a great number of small- to medium-sized physician practices throughout the state have been pushed to the brink of insolvency.”

Over the past year, nearly half of medical practice owners surveyed by the American Medical Association said that spending on PPE has soared by 50% or more. As a result of these extraordinary burdens, a rising number of small- to medium-sized medical practices have been forced to reduce staff or close their operations during the pandemic, even as health insurers have experienced record profits – in some cases double their profits from the previous year.

Health care experts worry that the additional costs for PPE combined with steep drops in patient visits seen during the pandemic could result in a wave of consolidation that raises health care expenses while decreasing patient access to care in California.

A recent survey of 3,200 physicians conducted by the California Medical Association found that nearly half (49%) of medical practices in the state have had to lay off or furlough physicians or staff, and that 11% have been forced by the pandemic to shutter their practices temporarily. Another survey, by the Physicians Foundation, a national non-profit, estimated that up to 8% of all physician practices nationally — roughly 16,000 in total — have folded under the economic stress of the pandemic.

“If California continues to lose these smaller physician practices, it will further intensify the stresses on our already overburdened health care system, and make meeting the health care needs of patients even harder,” said Newman. “As we fight to eliminate the threat of COVID-19, we must also ensure that hard-working doctors can maintain their practices while preserving patient access to quality care. For the good of medical care in the long term, we can’t let the one goal come at the expense of the others.”

The premise of Newman’s bill is simple: that everyone should do their share during a public health emergency, and insurers are no exception. SB 242 will ensure that small- to medium-sized health care practices that have endured nearly a year of unanticipated costs and depressed patient visits should not be left to absorb the costs pandemic wholly on their own. In doing so, SB 242 will ensure the continued viability of small- to medium-sized practices and access to care for all Californians.

To schedule an interview with Senator Newman, contact Alina Evans at (831) 331-8468.

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State Senator Josh Newman represents the 29th Senate District, which is comprised of portions of Los Angeles County, Orange County and San Bernardino County. The 29th District includes all or parts of the cities of Anaheim, Brea, Buena Park, Chino Hills, City of Industry, Cypress, Diamond Bar, Fullerton, La Habra, La Palma, Placentia, Rowland Heights, Stanton, Walnut, West Covina and Yorba Linda. Newman is a former US Army officer, business person, and veterans’ advocate, and lives in Fullerton with his wife and daughter.