SENATE RULES COMMITTEE
Office of Senate Floor Analyses
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SB 396
THIRD READING
Bill No:
Author:
Amended:
Vote:
SB 396
Hill (D)
5/5/15
21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/20/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza,
Wieckowski
SENATE HEALTH COMMITTEE: 9-0, 4/29/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen, Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Health care: outpatient settings and surgical clinics: facilities:
licensure and enforcement
SOURCE: Author
DIGEST: This bill (1) allows ambulatory surgical clinics (ASC) which are
Medicare certified to have the option of being licensed by the California
Department of Public Health (DPH) regardless of physician, podiatrist, or dentist
ownership and states that they are deemed to be licensed if already Medicare
certified; (2) specifies that each licensee who performs procedures in an accredited
outpatient setting be peer reviewed, as specified, at least every two years and that
the findings of the peer review be reported to the accrediting body of the outpatient
setting; (3) requires an ASC or outpatient setting to request a report from Medical
Board of California (MBC) or state other licensing body to determine if there have
been any restrictions or changes to a licensee’s staffing privileges; (4) requires that
all subsequent inspections after the initial inspection for accreditation of the
outpatient setting be unannounced; and (5) requires an outpatient setting and
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Medicare certified clinic to report specific data to the Office of Statewide Health
Planning and Development (OSHPD)
ANALYSIS:
Existing law:
1) Defines a clinic as an organized outpatient health facility that provides direct
medical, surgical, dental, optometric, or podiatric advice, services, or treatment
to patients who remain less than 24 hours, and that may also provide diagnostic
or therapeutic services to patients in the home as incident to care provided at
the clinic facility. (Health and Safety Code (HSC) § 1200)
2) Defines an outpatient setting as any facility, clinic, unlicensed clinic, center,
office, or other setting that is not part of a general acute care facility where
anesthesia is used in compliance with the community standard of practice, in
doses that, when administered have the probability of placing a patient at risk
for loss of the patient’s life-preserving protective reflexes. (HSC § 1248
(b)(1))
3) Defines an ASC to mean any distinct entity that operates exclusively for the
purpose of providing surgical services to patients not requiring hospitalization
and in which the expected duration of services will not exceed 24 hours
following an admission. (Title 42, Code of Federal Regulations (CFR) §
416.2)
4) Specifies that an ASC means any distinct entity that operates exclusively for
the purpose of providing surgical services to patients not requiring
hospitalization and in which the expected duration of services would not
exceed 24 hours following an admission. (42 CFR § 416.2)
5) Requires that an ASC must have an agreement with the Centers for Medicare
and Medicaid Services (CMS) and must meet specified requirements to
participate in Medicare. (Id.)
6) Provides that an ASC may have the option of becoming Medicare certified on
the basis of receiving accreditation by a CMS approved accrediting
organization instead of a survey by CMS or the state as long as they are in
compliance with the coverage conditions of CMS. (42 CFR § 416.28)
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7) Provides that as a condition of Medicare coverage, an ASC must comply with
state licensure requirements and provide for specified requirements. (CFR §§
416.40 - 416.52)
This bill:
1) Includes an ambulatory surgical center certified to participate in the federal
Medicare program and an accredited outpatient setting in the facilities required
to request a report from the MBC, the Board of Psychology, the Osteopathic
Medical Board of California, or the Dental Board of California prior to
granting or renewing staff privileges for any physician and surgeon,
psychologist, podiatrist, or dentist to determine if any report has been made
indicating that the applying physician and surgeon, psychologist, podiatrist, or
dentist has been denied staff privileges, been removed from a medical staff, or
had his or her staff privileges restricted.
2) Requires an accredited outpatient setting and an ASC certified to participate in
the federal Medicare program to report specified information to the OSHPD.
3) Extends by one year, until March 1, 2016, the due date for the report regarding
the vertical enforcement and prosecution model required of the MBC, in
consultation with the Department of Justice and the Department of Consumer
Affairs.
4) Authorizes a physician, podiatrist, or dentist to, at his or her option, apply for
licensure of a surgical clinic by the DPH, and states that a surgical clinic shall
be eligible for licensure by the DPH regardless of physician, podiatrist, or
dentist ownership. States that a surgical clinic that has met the federal
certification standards and requirements for an ASC, as specified, shall be
eligible for licensure by DPH.
5) States that a surgical clinic is deemed to have met specified licensure
requirements upon presenting documentation that the surgical clinic has met the
ASC federal certification standards in the three years prior to applying for
licensure until DPH adopts regulations.
6) Requires each licensee who performs procedures in an outpatient setting that
requires accreditation to be peer reviewed at least every two years. The peer
review shall be a process in which the basic qualifications, staff privileges,
employment, medical outcomes, or professional conduct of a licensee is
reviewed to make recommendations for quality improvement and education, if
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necessary, including when the outpatient setting has only one licensee. The peer
review shall be performed by licensees who are qualified by education and
experience to perform the same types of, or similar, procedures. The findings of
the peer review shall be reported to the accrediting body who shall determine if
the licensee continues to meet the specified requirements.
7) Requires that, after the initial inspection for accreditation, all subsequent
inspections by the accreditation agency shall be unannounced.
8) Makes technical and minor clarifying changes.
Background
ASC regulation. ASCs are facilities for surgical patients who do not need to be
admitted to a hospital and remain on site for less than 24 hours. As medical care
continues to shift from inpatient (hospital) type settings to clinics, many patients
are using ASCs or “same-day” surgery centers for a wide variety of procedures.
According to a study of ASCs by the California Healthcare Foundation (CHF
Study) there are at least 750 ASCs in California. This number is likely larger
because there is no centralized source for data on ASCs due to their diffuse
regulation. Generally, ASCs which are non-physician owned are regulated by
DPH, and physician-owned ASCs are regulated by the MBC, which, in turn,
requires accreditation by one of four approved accrediting agencies.
Existing law was unclear as to the authority of DPH and MBC over ASCs until
Capen v. Shewry (2007) 147 Cal.App.4th 680, which determined that physician
owned and operated surgical clinics are not subject to licensing by DPH and are to
be regulated by the MBC. However, MBC interpreted the law as giving it only the
authority to approve accrediting agencies that are in compliance with existing state
standards.
Becoming Medicare certified either requires certification by CMS or by a CMS
approved accreditation organization. Generally, the MBC and CMS approved
accreditation organizations are the same. CMS also allows ASCs to be “deemed”
certified if they meet the requirements of accreditation and other standards as
required by CMS. Most ASCs are accredited as an outpatient setting, are Medicare
certified, or both.
This bill authorizes a physician, podiatrist, or dentist to voluntarily apply for
licensure of a surgical clinic by the DPH, regardless of ownership.
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OSHPD reporting. Existing law requires clinics licensed by the DPH, including
surgical clinics, to report aggregate data to OSHPD. This data includes number of
patients served, number of patient visits by type of service, patient charges and
other additional information. Before the Capen decision, this data was collected
for the majority of ASCs. However, since Capen, the ASCs have become
accredited through MBC instead of licensed by DPH and the reporting to OSHPD
is no longer required. This has created a serious deficiency in the collection of
important data regarding clinical care in California.
This bill requires that all accredited and Medicare certified outpatient settings are
to report specified data to OSHPD. This would provide similar data to OSHPD
that is provided by other clinics and health facilities license by DPH.
FISCAL EFFECT: Appropriation: No
Fiscal Com.:
Yes
Local: Yes
According to the Senate Appropriations Committee:
 Likely one-time costs of about $125,000 over two years for the adoption of
regulations by DPH (Licensing and Certification Fund).
 Projected initial licensing costs of about $800,000 to review license application
information and conduct initial site inspections of surgical clinics (Licensing
and Certification Fund). This cost estimate assumes that the number of licensed
surgical clinics under this bill will increase to approximately 500, the number
that were previously licensed by DPH. These costs would be incurred once
DPH completed the required regulations. After the initial increase in licensing
activity due to the new ability for surgical clinics to be licensed, the ongoing
costs should be substantially reduced.
 Unknown costs for data collection and analysis by OSHPD. Any costs incurred
by OSHPD under this bill would be reimbursed by fees paid by licensed
surgical clinics
SUPPORT: (Verified 5/29/15)
California Ambulatory Surgery Association
Medical Board of California
OPPOSITION: (Verified 6/1/15)
California Medical Association
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California Society of Plastic Surgeons
ARGUMENTS IN SUPPORT: The California Ambulatory Surgery Association
(CASA) is in support of this bill and indicates that even though existing law
provides adequate oversight for ASCs utilizing certain levels of anesthesia, the
Capen decision has prohibited DPH from issuing state licenses to physician and
surgeon owned ASCs, which make up the vast majority of ASCs in California. As
a result, accreditation and Medicare certification are the only other regulatory
oversight options for ASCs.
The Medical Board of California (MBC) is also in support of this bill. In terms of
peer review, the MBC believes that peer review is important to ensure consumer
protection, and that procedures that are being done in ASCs should be subject to
peer review, as those in hospitals are. The requirement for reporting to OSHPD for
both accredited outpatients settings and Medicare certified ASCs will ensure that
there are no serious deficiencies of important ASC data. Requiring also that initial
accreditation certificates will be valid for two years instead of three will ensure that
new outpatient settings are inspected in a more timely manner, and requiring
subsequent inspections to be unannounced will help ensure that facilities do not
have time to prepare for an inspection and will be in line with inspections on other
types of ASCs.
ARGUMENTS IN OPPOSITION: The California Society of Plastic Surgeons is
opposed to this bill and is primarily concerned with the reporting of economic data
information to OSHPD, unannounced inspections by the MBC, as well as reducing
the amount of time the initial accreditation is approved from three years to two
years. They argue that it creates additional onerous data reporting with no obvious
need or plan for use of the data, that the use of unannounced inspections would put
patient safety at risk, as staff and physician attention would be diverted from
patient care by the inspectors and their reviewing manuals, logs and patient
records. They basically believe that these requirements would not result in any
improvement of the accreditation process or enhance patient safety and only
increase costs for the accredited facility.
Prepared by: Sarah Huchel / B., P. & E.D. / (916) 651-4104
6/1/15 11:45:11
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