By Angela O’Hara

At its January 30, 2020 meeting [Agenda item 7], the Medical Board of California (MBC) evaluated whether to increase licensing fees to bridge the growing gap between revenues and expenses, a looming concern the Board has discussed to no avail for several years. In November 2019, the Board engaged CPS HR Consulting to perform an analysis of MBC’s projected fund depletion and to determine appropriate levels for 22 of its fees. The resulting Fee Study was provided to Board members the night before the meeting. The Report provided findings and recommendations that Board members and staff discussed for almost an hour before taking action. The report showed that since the last physician and surgeon fee increase in January 2006, MBC has experienced a significant increase in expenditures, citing the majority of costs as outside of MBC’s control. Expenses included increased Attorney General costs, an increased need for AG and Division of Investigation services, union-negotiated salary or benefit increases, and one-time expenditures to implement new systems or provide supplementary pension payments. The result is a structural imbalance of MBC’s fund with eventual insolvency unless corrected. The Report concluded that since MBC is funded entirely by licensing and regulatory fees, curing the significant deficit between MBC’s revenue stream and expenditures can only be achieved by raising its fees. The study examined each fee with the target of establishing and maintaining the current legal maximum reserve of four months for the next five fiscal years. Without action, financial projections show insufficient funds for ongoing operations by the beginning of FY 2021–22.

To prevent insolvency and achieve a mandatory reserve as required by statute, the Report recommends that MBC seek statutory fee increases in each of their fee categories. The fees reviewed in the study include Physician and Surgeon, Special Faculty, Licensed Midwife, Polysomnographic Trainee/Technician/Technologist, Research Psychoanalyst, and Fictitious Name Permit fees. The recommended fees presented in Table 13 (page 25) reflect increases from 0% to 50%, with an overall increase of 44.9% when considering the volume of applications and renewals. For example, Physician/Surgeon Renewals currently cost $783 every two years and would jump 47% to $1,150, and Midwife Renewals would increase 50% from $200 to $300, while Special Faculty Permit Applications would stay constant at $442.

During deliberation, Board members expressed many concerns about the findings and recommendations, with initial frustration at having only 12 hours to review the report before making a decision. Board members complained that only one option was presented and expressed an interest in pursuing cost containment strategies in addition to revenue generation. One member was especially concerned that MBC spends the largest portion of its budget on investigations with no cost recovery scheme to offset the expenses. He lamented spending so much money and not even being able to maintain benchmark cycle times for investigations.

Despite these concerns, Board members acknowledged that 14 years had passed without a fee increase and insolvency was not an option. President Pines reiterated the need to make a decision “now,” but said in the next Board meeting, members could discuss the costs presumed outside MBC control and evaluate whether there were a few the Board could explore for further action. In the end, the motion to approve the recommended fee level increase passed ten to one, authorizing Board staff to seek legislation to make the necessary statutory changes to the law as soon as possible. At this writing, no legislation proposing the fee increase has been introduced.