The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which include, among others, an ambulatory surgical clinic that is certified to participate in the Medicare Program, a surgical clinic licensed by the State Department of Public Health, or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided.

This bill would authorize the accrediting agency to conduct unannounced inspections subsequent to the initial inspection for accreditation, if the accreditation agency provides specified notice of the unannounced routine inspection to the outpatient setting.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting. A willful violation of these provisions is a crime.

This bill would additionally require that each licensee who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed, as specified, at least every 2 years, by licensees who are qualified by education and experience to perform the same types of, or similar, procedures. The bill would require the findings of the peer review to be reported to the governing body, which shall determine if the licensee continues to be professionally qualified and appropriately credentialed for the performance of privileges granted. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare Program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law establishes a vertical enforcement and prosecution model for cases before the Medical Board of California, and requires the board to report to the Governor and the Legislature on that model by March 1, 2015.

This bill would extend the date that report is due to March 1, 2016.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which include, among others, an ambulatory surgical clinic that is certified to participate in the Medicare Program, a surgical clinic licensed by the State Department of Public Health, or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided.

This bill would authorize the accrediting agency to conduct unannounced inspections subsequent to the initial inspection for accreditation, if the accreditation agency provides specified notice of the unannounced routine inspection to the outpatient setting.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting. A willful violation of these provisions is a crime.

This bill would additionally require that each licensee who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed, as specified, at least every 2 years, by licensees who are qualified by education and experience to perform the same types of, or similar, procedures. The bill would require the findings of the peer review to be reported to the governing body, which shall determine if the licensee continues to be professionally qualified and appropriately credentialed for the performance of privileges granted. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare Program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law establishes a vertical enforcement and prosecution model for cases before the Medical Board of California, and requires the board to report to the Governor and the Legislature on that model by March 1, 2015.

This bill would extend the date that report is due to March 1, 2016.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which includes include, among others, an ambulatory surgical clinic that is certified to participate in the Medicare program, a surgical clinic licensed by the State Department of Public Health, or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting. A willful violation of these provisions is a crime.

This bill would additionally require that each licensee who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed, as specified, at least every 2 years, by licensees who are qualified by education and experience to perform the same types of, or similar, procedures. The bill would require the findings of the peer review to be reported to the accrediting governing body who, which shall determine if the licensee continues to be professionally qualified and appropriately credentialed for the performance of privileges granted. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law establishes a vertical enforcement and prosecution model for cases before the Medical Board of California, and requires the board to report to the Governor and the Legislature on that model by March 1, 2015.

This bill would extend the date that report is due to March 1, 2016.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law provides for the licensure and regulation of clinics by the State Department of Public Health. A violation of those provisions is a misdemeanor. Existing law provides that certain types of specialty clinics, including surgical clinics, as defined, are eligible for licensure. Existing law excludes from the definition of surgical clinic any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual or group practice. Existing law requires a surgical clinic that is licensed or seeking licensure to comply with federal certification standards for an ambulatory surgical clinic until the department adopts regulations relating to the provision of services by a surgical clinic.

This bill would provide that a surgical clinic that has met the federal certification standards and requirements for an ambulatory surgical clinic is eligible for licensure by the department regardless of physician, podiatrist, or dentist ownership. The bill would provide that a surgical clinic is deemed to have met the licensure requirements under the chapter upon presenting documentation, within a 3-year period, documentation that the surgical clinic has met the federal certification requirements for an ambulatory surgical clinic. clinic in the 3 years prior to applying for licensure.

The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which includes, among others, an ambulatory surgical clinic that is certified to participate in the Medicare program, a surgical clinic licensed by the State Department of Public Health, or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided.

This bill would require that all subsequent inspections after the initial inspection for accreditation be unannounced. This bill would require an outpatient setting accredited by the division and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to pay certain fees and to comply with certain data submission requirements.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting.

This bill would additionally require that each licensee who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed, as specified, at least every 2 years, by licensees who are qualified by education and experience to perform the same types of, or similar, procedures. The bill would require the findings of the peer review to be reported to the accrediting body who shall determine if the licensee continues to be professionally qualified and appropriately credentialed for the performance of privileges granted. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law establishes a vertical enforcement and prosecution model for cases before the Medical Board of California, and requires the board to report to the Governor and the Legislature on that model by March 1, 2015.

This bill would extend the date that report is due to March 1, 2016.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law provides for the licensure and regulation of clinics by the State Department of Public Health. A violation of those provisions is a misdemeanor. Existing law provides that certain types of specialty clinics, including surgical clinics, as defined, are eligible for licensure. Existing law excludes from the definition of surgical clinic any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual or group practice. Existing law requires a surgical clinic that is licensed or seeking licensure to comply with federal certification standards for an ambulatory surgical clinic until the department adopts regulations relating to the provision of services by a surgical clinic.

This bill would provide that a surgical clinic that has met the federal certification standards and requirements for an ambulatory surgical clinic is eligible for licensure by the department regardless of physician, podiatrist, or dentist ownership. The bill would provide that a surgical clinic is deemed to have met the licensure requirements under the chapter upon presenting documentation, within a 3-year period, that the surgical clinic has met the federal certification requirements for an ambulatory surgical clinic.

The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which includes, among others, an ambulatory surgical clinic that is certified to participate in the Medicare program, a surgical clinic licensed by the State Department of Public Health, or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided. Existing law requires that certificates for accreditation issued to outpatient settings by an accreditation agency shall be valid for not more than 3 years.

This bill would require that all subsequent inspections after the initial inspection for accreditation be unannounced. This bill would require an outpatient setting accredited by the division and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to pay certain fees and to comply with certain data submission requirements. The bill would also instead require that an initial certificate of accreditation by an accreditation agency be valid for not more than 2 years and that a renewal certificate be valid for not more than 3 years.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting.

This bill would additionally require that each licensee who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed, as specified, at least every 2 years, by licensees who are qualified by education and experience to perform the same types of, or similar similar, procedures. The bill would require the findings of the peer review to be reported to the accrediting body who shall determine if the licensee continues to be professionally qualified and appropriately credentialed for the performance of privileges granted. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law establishes a vertical enforcement and prosecution model for cases before the Medical Board of California, and requires the board to report to the Governor and the Legislature on that model by March 1, 2015.

This bill would extend the date that report is due to March 1, 2016.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law provides for the licensure and regulation of clinics by the State Department of Public Health. A violation of those provisions is a misdemeanor. Existing law provides that certain types of specialty clinics, including surgical clinics, as defined, are eligible for licensure. Existing law excludes from the definition of surgical clinic any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual or group practice. Existing law requires a surgical clinic that is licensed or seeking licensure to comply with federal certification standards for an ambulatory surgical clinic until the department adopts regulations relating to the provision of services by a surgical clinic.

This bill would clarify provide that a surgical clinic that has met the federal certification standards and requirements for an ambulatory surgical clinic is eligible for licensure by the department regardless of physician, podiatrist, or dentist ownership. The bill would provide that a surgical clinic is deemed to have met the licensure requirements under the chapter upon presenting documentation, within a 3-year period, that the surgical clinic has met the federal certification requirements for an ambulatory surgical clinic.

The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which includes, among others, an ambulatory surgical clinic that is certified to participate in the Medicare program, a surgical clinic licensed by the State Department of Public Health Health, or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided. Existing law requires that certificates for accreditation issued to outpatient settings by an accreditation agency shall be valid for not more than 3 years.

This bill would require that all subsequent inspections after the initial inspection for accreditation be unannounced. This bill would require an outpatient setting accredited by the division and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to pay certain fees and to comply with certain data submission requirements. The bill would also instead require that an initial certificate of accreditation by an accreditation agency be valid for not more than 2 years and that a renewal certificate be valid for not more than 3 years.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting.

This bill would additionally require that each physician and surgeon licensee who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed, at least every 2 years, by California licensed physicians licensees who are qualified by education and experience to perform the same types of, or similar procedures. The bill would require the findings of the peer review to be reported to the accrediting body who shall determine if the licensee continues to be professionally qualified and appropriately credentialed for the performance of privileges granted. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law provides for the licensure and regulation of clinics by the State Department of Public Health. A violation of those provisions is a misdemeanor. Existing law provides that certain types of specialty clinics, including surgical clinics, as defined, are eligible for licensure.

This bill would clarify that a surgical clinic is eligible for licensure by the department regardless of physician or dentist ownership.

The Medical Practice Act provides for the licensure and regulation of physicians and surgeons by the Medical Board of California. Existing law provides that it is unprofessional conduct for a physician and surgeon to perform procedures in any outpatient setting except in compliance with specified provisions. Existing law prohibits an association, corporation, firm, partnership, or person from operating, managing, conducting, or maintaining an outpatient setting in the state unless the setting is one of the specified settings, which includes, among others, a surgical clinic licensed by the State Department of Public Health or an outpatient setting accredited by an accreditation agency approved by the Division of Licensing of the Medical Board of California.

Existing law provides that an outpatient setting that is accredited shall be inspected by the accreditation agency and may be inspected by the Medical Board of California. Existing law requires that the inspections be conducted no less often than once every 3 years by the accreditation agency and as often as necessary by the Medical Board of California to ensure quality of care provided. Existing law requires that certificates for accreditation issued to outpatient settings by an accreditation agency shall be valid for not more than 3 years.

This bill would require that all subsequent inspections after the initial inspection for accreditation be unannounced. This bill would require an outpatient setting accredited by the division to pay certain fees and to comply with certain data submission requirements. The bill would also instead require that an initial certificate of accreditation by an accreditation agency be valid for not more than 2 years and that a renewal certificate be valid for not more than 3 years.

Existing law requires members of the medical staff and other practitioners who are granted clinical privileges in an outpatient setting to be professionally qualified and appropriately credentialed for the performance of privileges granted and requires the outpatient setting to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting.

This bill would additionally require that each physician and surgeon who performs procedures in an outpatient setting that requires the outpatient setting to be accredited be peer reviewed by California licensed physicians who are qualified by education experience to perform the same types of procedures. By expanding the scope of a crime, this bill would impose a state-mandated local program.

Existing law requires specified entities, including any health care service plan or medical care foundation, to request a report from the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California, prior to granting or renewing staff privileges, to determine if a certain 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.

This bill would also require an outpatient setting and a facility certified to participate in the federal Medicare program as an ambulatory surgical center to request that report. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 UNFINISHED BUSINESS  

Bill No: SB 396

Author: Hill (D)

Amended: 6/29/15

Vote: 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

SENATE FLOOR: 40-0, 6/1/15

AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk

ASSEMBLY FLOOR: 79-0, 8/20/15 (Consent) - See last page for vote

SUBJECT: Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement

SOURCE: Author

DIGEST: This bill requires a Medicare-certified clinic and an accredited outpatient setting, as specified, to request a report from the appropriate healthcare regulatory board regarding the filing of a peer review report; requires licensees who perform procedures in outpatient settings to be subject to peer review every two years and that the governing body review the findings of those reports; and, specifies that inspections of accredited outpatient surgical centers may be unannounced with a 60-day warning of the pending inspection.

Assembly Amendments:

1. Strike requirements that an outpatient setting and a facility certified to participate in the federal Medicare Program as an ambulatory surgical center are required to report specified information and a fee to the Office of Statewide Health Planning and Development.

2. Strike provisions permitting a physician, podiatrist, or dentist to apply for licensure by the Department of Public Health (DPH) and strike provisions stating that a surgical clinic shall be eligible for licensure by the DPH regardless of physician, podiatrist, or dentist ownership.

3. Require that the findings of the peer review be reported to the governing body instead of the accrediting agency. Require that the peer review process that results in the findings be reviewed by the accrediting agency at the next survey to determine if the outpatient setting meets applicable accreditation standards.

4. Permit, rather than require, that visits subsequent to the initial accreditation inspection be unannounced. Require the accrediting agency to notify the outpatient setting that such inspections will occur within 60 days.

ANALYSIS:

Existing law:

1. Defines an "outpatient setting" to mean any facility, clinic, unlicensed clinic, center, office, or other setting that is not part of a general acute care facility, as specified, and where anesthesia or peripheral nerve blocks, or both, is used when 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; and, specifies that "outpatient setting" also means facilities that include in vitro fertilization. (Health and Safety Code (HSC) § 1248(b).

2. Defines an "accreditation agency" to mean a public or private organization that is approved to issue certificates of accreditation to outpatient settings by the Medical Board of California (MBC), as specified. (HSC § 1248(c))

3. Requires the MBC to adopt standards for accreditation and, in approving accreditation agencies to perform accreditation of outpatient settings, must ensure that the certification program meet specified standards and requirements. (HSC § 1248.15)

4. Defines "peer review" to mean a process in which a peer review body reviews the basic qualifications, staff privileges, employment, medical outcomes, or professional conduct of licentiates to make recommendations for quality improvement and education, if necessary, in order to determine whether a licentiate may practice or continue to practice in a health care facility, clinic, or other setting providing medical services, and, if so, to determine the parameters of that practice and assess and improve the quality of care rendered in a health care facility, clinic, or other setting providing medical services. (Business and Professions Code (BPC) § 805(a)(1)(A))

5. Requires the chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic to file an "805 report" with the relevant agency within 15 days after the effective date on which any of the following occurs as a result of an action of a peer review body:

   1. A licentiate's application for staff privileges or membership is denied or rejected for a medical disciplinary cause or reason;

   2. A licentiate's membership, staff privileges, or employment is terminated or revoked for a medical disciplinary cause or reason; or,

   3. Restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a cumulative total of 30 days or more for any 12-month period, for a medical disciplinary cause or reason. (BPC § 805(b))

6. Requires a health facility, health care service plan, medical care foundation, or medical staff , as specified, request a report prior to granting or renewing staff privileges for any physician and surgeon, psychologist, podiatrist, or dentist, from the MBC, the Board of Psychology, the Osteopathic Medical Board, or the Dental Board of California to determine if any 805 report 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, as specified. (BPC § 805.5(a))

This bill:

1. Requires an ambulatory surgery center (ASC) certified to participate in the federal Medicare program and an accredited outpatient setting, as specified, to request a report from the appropriate regulatory board 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 applicant has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted.

2. 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.

3. 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 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.

4. Requires that the findings of the peer review be reported to the governing body.

5. Requires that the accrediting agency review the peer review process at the next survey to determine if the outpatient setting meets applicable accreditation standards.

6. Permits visits subsequent to the initial accreditation inspection to be unannounced. Requires the accrediting agency to notify the outpatient setting that such inspections will occur within 60 days.

7. 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 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.

Peer Review. Peer review is a process in which physicians evaluate colleagues’ work to determine compliance with the standard of care. A negative peer review report triggers the filing of an “805 report” to the appropriate regulatory body.

This bill will expand the list of entities which must request an 805 report to include a facility certified to participate in the Medicare program as an ASC or an accredited outpatient setting, as specified, to determine if a report has been made indicating that a licensee has had staff privileges revoked or restricted.

This bill will also require physicians working in accredited outpatient settings to be subjected to the peer review process every two years, and requires the findings from those reports to be reported to the governing body.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Assembly Appropriations Committee, there are minor and absorbable costs to the MBC (Contingent Fund of the MBC).

SUPPORT: (Verified 8/24/15)

California Ambulatory Surgery Association

Medical Board of California

OPPOSITION: (Verified 8/24/15)

None received

ARGUMENTS IN SUPPORT: The Medical Board of California writes in support, "[This bill] would require peer review evaluations every two years for physicians and surgeons working in ambulatory surgery centers and would allow the accredited outpatient setting facility inspections performed by accreditation agencies to be unannounced (after the initial inspection) and would require at least a 60 day window to be given to facilities for unannounced inspections…The [MBC] believes that for consumer protection, physicians working in [ambulatory surgery centers] should be subject to peer review evaluations, which would be given to the governing body of the outpatient setting and be reviewed by the accreditation agency at the next inspection of the outpatient setting"

ASSEMBLY FLOOR: 79-0, 8/20/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Chu

Prepared by: Sarah Huchel / B., P. & E.D. / (916) 651-4104

8/24/15 13:21:59

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 396

Author: Hill (D)

Amended: 6/29/15

Vote: 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

SENATE FLOOR: 40-0, 6/1/15

AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk

ASSEMBLY FLOOR: 79-0, 8/20/15 (Consent) - See last page for vote

SUBJECT: Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement

SOURCE: Author

DIGEST: This bill requires a Medicare-certified clinic and an accredited outpatient setting, as specified, to request a report from the appropriate healthcare regulatory board regarding the filing of a peer review report; requires licensees who perform procedures in outpatient settings to be subject to peer review every two years and that the governing body review the findings of those reports; and, specifies that inspections of accredited outpatient surgical centers may be unannounced with a 60-day warning of the pending inspection.

Assembly Amendments:

1. Strike requirements that an outpatient setting and a facility certified to participate in the federal Medicare Program as an ambulatory surgical center are required to report specified information and a fee to the Office of Statewide Health Planning and Development.

2. Strike provisions permitting a physician, podiatrist, or dentist to apply for licensure by the Department of Public Health (DPH) and strike provisions stating that a surgical clinic shall be eligible for licensure by the DPH regardless of physician, podiatrist, or dentist ownership.

3. Require that the findings of the peer review be reported to the governing body instead of the accrediting agency. Require that the peer review process that results in the findings be reviewed by the accrediting agency at the next survey to determine if the outpatient setting meets applicable accreditation standards.

4. Permit, rather than require, that visits subsequent to the initial accreditation inspection be unannounced. Require the accrediting agency to notify the outpatient setting that such inspections will occur within 60 days.

ANALYSIS:

Existing law:

1. Defines an "outpatient setting" to mean any facility, clinic, unlicensed clinic, center, office, or other setting that is not part of a general acute care facility, as specified, and where anesthesia or peripheral nerve blocks, or both, is used when 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; and, specifies that "outpatient setting" also means facilities that include in vitro fertilization. (Health and Safety Code (HSC) § 1248(b).

2. Defines an "accreditation agency" to mean a public or private organization that is approved to issue certificates of accreditation to outpatient settings by the Medical Board of California (MBC), as specified. (HSC § 1248(c))

3. Requires the MBC to adopt standards for accreditation and, in approving accreditation agencies to perform accreditation of outpatient settings, must ensure that the certification program meet specified standards and requirements. (HSC § 1248.15)

4. Defines "peer review" to mean a process in which a peer review body reviews the basic qualifications, staff privileges, employment, medical outcomes, or professional conduct of licentiates to make recommendations for quality improvement and education, if necessary, in order to determine whether a licentiate may practice or continue to practice in a health care facility, clinic, or other setting providing medical services, and, if so, to determine the parameters of that practice and assess and improve the quality of care rendered in a health care facility, clinic, or other setting providing medical services. (Business and Professions Code (BPC) § 805(a)(1)(A))

5. Requires the chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic to file an "805 report" with the relevant agency within 15 days after the effective date on which any of the following occurs as a result of an action of a peer review body:

   1. A licentiate's application for staff privileges or membership is denied or rejected for a medical disciplinary cause or reason;

   2. A licentiate's membership, staff privileges, or employment is terminated or revoked for a medical disciplinary cause or reason; or,

   3. Restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a cumulative total of 30 days or more for any 12-month period, for a medical disciplinary cause or reason. (BPC § 805(b))

6. Requires a health facility, health care service plan, medical care foundation, or medical staff , as specified, request a report prior to granting or renewing staff privileges for any physician and surgeon, psychologist, podiatrist, or dentist, from the MBC, the Board of Psychology, the Osteopathic Medical Board, or the Dental Board of California to determine if any 805 report 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, as specified. (BPC § 805.5(a))

This bill:

1. Requires an ambulatory surgery center (ASC) certified to participate in the federal Medicare program and an accredited outpatient setting, as specified, to request a report from the appropriate regulatory board 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 applicant has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted.

2. 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.

3. 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 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.

4. Requires that the findings of the peer review be reported to the governing body.

5. Requires that the accrediting agency review the peer review process at the next survey to determine if the outpatient setting meets applicable accreditation standards.

6. Permits visits subsequent to the initial accreditation inspection to be unannounced. Requires the accrediting agency to notify the outpatient setting that such inspections will occur within 60 days.

7. 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 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.

Peer Review. Peer review is a process in which physicians evaluate colleagues’ work to determine compliance with the standard of care. A negative peer review report triggers the filing of an “805 report” to the appropriate regulatory body.

This bill will expand the list of entities which must request an 805 report to include a facility certified to participate in the Medicare program as an ASC or an accredited outpatient setting, as specified, to determine if a report has been made indicating that a licensee has had staff privileges revoked or restricted.

This bill will also require physicians working in accredited outpatient settings to be subjected to the peer review process every two years, and requires the findings from those reports to be reported to the governing body.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Assembly Appropriations Committee, there are minor and absorbable costs to the MBC (Contingent Fund of the MBC).

SUPPORT: (Verified 8/21/15)

Medical Board of California

OPPOSITION: (Verified 8/21/15)

American Society for Dermatologic Surgery Association

ARGUMENTS IN SUPPORT: The Medical Board of California writes in support, "[This bill] would require peer review evaluations every two years for physicians and surgeons working in ambulatory surgery centers and would allow the accredited outpatient setting facility inspections performed by accreditation agencies to be unannounced (after the initial inspection) and would require at least a 60 day window to be given to facilities for unannounced inspections…The [MBC] believes that for consumer protection, physicians working in [ambulatory surgery centers] should be subject to peer review evaluations, which would be given to the governing body of the outpatient setting and be reviewed by the accreditation agency at the next inspection of the outpatient setting"

ARGUMENTS IN OPPOSITION: The American Society for Dermatologic Surgery Association writes that they are “specifically concerned that unannounced inspections would be disruptive and force physicians to divert attention away from patients. This risk to patient safety due to unexpected demands from unscheduled inspectors would be especially disruptive at small-office surgical centers where there may be only one physician on staff at a given time. If this one physician is required to work with inspectors instead of devoting time to patients, the physician cannot fulfill his or her responsibility to the patients receiving care in the center.”

ASSEMBLY FLOOR: 79-0, 8/20/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins

NO VOTE RECORDED: Chu

Prepared by: Sarah Huchel / B., P. & E.D. / (916) 651-4104

8/21/15 15:23:50

**** END ****

Date of Hearing: July 15, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

SBPCA Bill Id:SB 396

Author:(Hill) – As Amended Ver:June 29, 2015

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill implements improvements in oversight of outpatient settings, or ambulatory surgery centers (ASCs), by the Medical Board of California (MBC). Specifically, this bill:

1. Allows an accredited outpatient setting or Medicare-certified ASC to access peer review reports from the MBC to inform decisions regarding issuance of staff privileges.

2. Requires accredited outpatient settings to be subject to a peer review process (similar to a process required for procedures performed in hospitals) at least every two years, and requires these results to be reported to the governing body and reviewed by the accrediting agency.

3. Requires accreditation inspections to be unannounced, within a 60-day notification window.

FISCAL EFFECT:

Minor and absorbable costs to the MBC (Contingent Fund of the MBC).

COMMENTS:

1. Purpose. This bill is intended to improve the oversight of outpatient settings by making modest changes to existing accreditation requirements.

2. Background. Advances in technology, financial incentives, and consumer demand have resulted in a large number of surgical procedures being performed in ACSs, as opposed to in traditional hospital settings. ASCs are a highly profitable business, with average reported margins in the range of 17-30%. About 97% are investor-owned. A 2007 court decision, Capen v. Shewry (2007) 155 Cal.App.4th 378, removed the requirement for ASCs to be licensed by the California Department of Public Health (CDPH), and was interpreted to mean that ASCs with physician owners come under the oversight of the Medical Board of California, not CDPH. Since this change, there has been significant concern about ensuring adequate oversight of these outpatient settings and adequate enforcement mechanisms, as well as the ability to track data related to ASCs. At this time, surgical clinics that are not physician-owned can be licensed by CDPH, but physician-owned ASCs cannot. These ASCs, however, can be certified for Medicare participation or accredited by MBC-approved agencies.

A prior version of this bill solved this problem by specifically granting CDPH authority to license surgical centers owned by physicians, at physician option. It also required data reporting. However, the bill has been scaled back significantly and in its current version, it implements more modest improvements to oversight through the existing accreditation system.

3. Related Legislation. Numerous attempts have been made since 2007 to improve oversight in the wake of the Capen decision. Most were unsuccessful, and were either vetoed or did not pass the Legislature. The April 20, 2015, Senate Business, Professions, and Economic Development analysis discusses eight such efforts from 2006- 2011, and their outcomes.

SB 100 (Price), Chapter 645, Statutes of 2011, made a number of changes to the approval, oversight, and inspection of outpatient settings, added in vitro fertilization clinics to the oversight regime, and required MBC to promulgate regulations to address issues related to lasers in cosmetic surgery.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: July 7, 2015

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Susan Bonilla, Chair

SBPCA Bill Id:SB 396

Author:(Hill) – As Amended Ver: June 29, 2015

SENATE VOTE: 40-0

SUBJECT: Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement.

SUMMARY: Requires a Medicare-certified clinic and an accredited outpatient setting, as specified, to request a report from the appropriate healthcare regulatory board regarding the filing of a peer review report; requires licensees who perform procedures in outpatient settings to be subject to peer review every two years and the accrediting body to review the findings of those reports; and, further specifies that inspections of accredited outpatient surgical centers may be unannounced with a 60-day warning to the surgical center of the pending inspection.

EXISTING LAW:

1. Defines an "outpatient setting" to mean any facility, clinic, unlicensed clinic, center, office, or other setting that is not part of a general acute care facility, as specified, and where anesthesia or peripheral nerve blocks, or both, is used when 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; and, specifies that "outpatient setting" also means facilities that include in vitro fertilization. (Health and Safety Code (HSC) Section 1248(b).

2. Defines an "accreditation agency" to mean a public or private organization that is approved to issue certificates of accreditation to outpatient settings by the Medical Board of California (MBC), as specified. (HSC Section 1248(c))

3. Requires the MBC to adopt standards for accreditation and, in approving accreditation agencies to perform accreditation of outpatient settings, must ensure that the certification program meet specified standards and requirements. (HSC Section 1248.15)

4. Specifies that any outpatient setting may apply to an accreditation agency for a certificate of accreditation, and accreditation must be issued by the accreditation agency solely on the basis of compliance with its standards approved by the MBC. (HSC Section 1248.2(a))

5. Requires the MBC to obtain and maintain a list of accredited outpatient settings from the information provided by the accreditation agencies and the MBC to notify the public, by placing the information on its Internet website, whether an outpatient setting is accredited or the setting's accreditation has been revoked, suspended, or placed on probation, or the setting has received a reprimand by the accrediting agency. (HSC Section 1248.2(b))

6. Specifies that if an outpatient setting does not meet the standards approved by the MBC, accreditation must be denied by the accreditation agency, which must provide the outpatient setting notification of the reasons for the denial, and that an outpatient setting may reapply for accreditation at any time after receiving notification of the denial. (HSC Section 1248.25)

7. Provides that certificates of accreditation issued to outpatient settings are valid for three years. (HSC Section 1248.3)

8. Requires the MBC to inspect every outpatient setting which is accredited and ensure that accreditation agencies inspect outpatient settings. (HSC Section 1248.35(a))

9. Provides the following requirements for MBC inspections of outpatient settings: (HSC Section 1248.35(b)(1),(2))

   1. The frequency of inspections depends upon the type and complexity of the outpatient setting to be inspected; and,

   2. Inspections must be conducted no less often than once every three years by the accreditation agency and as often as necessary to ensure the quality of care provided.

10. Specifies that before an accrediting agency suspends or revokes a certificate of accreditation, the accreditation agency must provide the outpatient setting with notice of any deficiencies, and the outpatient setting must agree with the accreditation agency on a plan of correction that will give the outpatient setting reasonable time to supply information demonstrating compliance with the standards of the accreditation agency, as specified. (HSC Section 1248.35(d)(1))

11. Provides that if an outpatient setting does not comply with a corrective action within a timeframe specified by the accrediting agency, the accrediting agency must issue a reprimand, and may either place the outpatient setting on probation or suspend or revoke the accreditation of the outpatient setting and notify the MBC of its action. (HSC Section 1248.35(d)(2))

12. Specifies that if an outpatient setting's certification of accreditation has been suspended or revoked, or if the accreditation has been denied, the accreditation agency is required to do the following: 1) notify the MBC of the action, 2) send a notification letter to the outpatient setting of the action and provide specified information, and 3) require the outpatient setting to remove its accreditation certification and post the notification letter in a conspicuous location that is accessible to the public. (HSC Section 1248.35(i))

13. Defines "peer review" to mean a process in which a peer review body reviews the basic qualifications, staff privileges, employment, medical outcomes, or professional conduct of licentiates to make recommendations for quality improvement and education, if necessary, in order to determine whether a licentiate may practice or continue to practice in a health care facility, clinic, or other setting providing medical services, and, if so, to determine the parameters of that practice and assess and improve the quality of care rendered in a health care facility, clinic, or other setting providing medical services. (Business and Professions Code (BPC) Section 805(a)(1)(A))

14. Requires the chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic to file an "805 report" with the relevant agency within 15 days after the effective date on which any of the following occurs as a result of an action of a peer review body: (BPC Section 805(b))

    1. A licentiate's application for staff privileges or membership is denied or rejected for a medical disciplinary cause or reason;

    2. A licentiate's membership, staff privileges, or employment is terminated or revoked for a medical disciplinary cause or reason; or,

    3. Restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a cumulative total of 30 days or more for any 12 month period, for a medical disciplinary cause or reason.

15. Requires that prior to granting or renewing staff privileges for any physician and surgeon, psychologist, podiatrist, or dentist, any health facility licensed, as specified, or any health care service plan or medical care foundation, or the medical staff of the institution, request a report from the MBC, the Board of Psychology, the Osteopathic Medical Board, or the Dental Board of California to determine if any 805 report 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, as specified. (BPC Section 805.5(a))

THIS BILL:

1. Adds an ambulatory surgery center or an accredited outpatient setting, which are certified to participate in the Medicare program, to the list of entities required to request a report from the MBC, the Board of Psychology, the Osteopathic Medical Board, or the Dental Board of California prior to granting or renewing staff privileges for any licentiate, to determine if any 805 report has been made indicating that the licensee has had staff privileges revoked or restricted elsewhere, as specified.

2. Extends the date by one year, from March 1, 2015, to March 1, 2016 for the MBC to submit a report and make recommendations to the Governor and the Legislature on vertical enforcement.

3. Requires each licensee, who performs procedures in an outpatient setting that requires the outpatient setting to be accredited to be peer reviewed at least every two years, and that the peer review process must 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, including an outpatient setting with only one licensee.

4. Requires peer review to be performed by licensees who are qualified by education and experience to perform the same types of, or similar, procedures, and the findings of the peer review to be reported to the governing body who will determine if the licensee continues to meet the requirements, as specified.

5. Requires the process that resulted in the findings of the peer review to be reviewed by the accrediting agency at the next survey to determine if the outpatient setting meets applicable accreditation standards, as specified.

6. Provides that after the initiation inspection for accreditation, subsequent inspections may be unannounced, and for unannounced routine inspections, accreditation agencies must notify the outpatient setting that the inspection will occur within 60 days.

7. Makes other minor and technical changes.

FISCAL EFFECT: According to the Senate Appropriations Committee analysis dated May 18, 2015, this bill will likely result in one-time costs of about $125,000 over two years for the adoption of regulations by the Department of Public Health (DPH) The projected initial licensing costs may be approximately $800,000 to review license application information and conduct initial site inspections of surgical clinics. This cost estimate assumes that the number of licensed surgical clinics under the bill will increase to approximately 500, the number that were previously licensed by the Department. These costs would be incurred once the 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. There are also unknown costs for data collection and analysis by the Office of Statewide Health Planning and Development (OSHPD). Any costs incurred by the OSHPD under the bill would be reimbursed by fees paid by licensed surgical clinics.

COMMENTS:

Purpose. This bill is sponsored by the author. According to the author, "This bill would also allow an accredited outpatient setting or "Medicare certified ambulatory surgical center" (i.e. Ambulatory Surgery Center) to access reports from the [MBC] to ensure patient protection when credentialing, granting or renewing staff privileges for providers at that facility. This measure will require that current outpatient settings are also subject to peer review and that any peer review findings be reported to their appropriate accrediting agency… [L]astly, this bill would allow for unannounced inspections of an accredited outpatient setting facility by Accreditation Agencies or the [MBC]."

Background. The recent June 29, 2015 amendments to this bill significantly narrow the scope of the bill to require an accredited outpatient setting or Medicare-certified ambulatory surgery center to access peer review reports from the MBC when credentialing, granting or renewing staff privileges in an effort to enhance consumer protection. This bill also specifies that peer review evaluations are to be conducted every two years for physicians and surgeons working in accredited outpatient settings in order for recommendations to be made regarding quality improvement and education, if necessary, for each licensee in the outpatient settings. Lastly, this bill specifies that routine inspections of accredited outpatient settings may be unannounced with a 60-day window after notification that an unannounced inspection will occur. This bill is intended to strengthen the current accreditation process and ensure that peer review reports are considered as part of the accreditation process, as well as the process for granting staff privileges.

Peer Review. Peer review is a process where physicians evaluate their colleagues’ work to determine compliance with the standard of care. Peer reviews are intended to detect incompetent or unprofessional physicians early and terminate, suspend, or limit their practice if necessary. According to the MBC, a "peer review report" also referred to as an "805" report, is the mechanism in which peer review bodies are required to report certain information regarding licensees to the MBC. The 805 reports must be filed if specified actions occur, which include: 1) a peer review body denies or rejects a licensee's applications for staff privileges or membership for a medical disciplinary cause or reason; 2) a licensee's staff privileges, membership, or employment are revoked for a medical disciplinary cause or reason; 3) restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a total of 30 days or more within any 12 month period for medical disciplinary reasons; 4) if the resignation, leave of absence, withdrawal or abandonment of application or for renewal of privileges occurs after receiving notice of a pending investigation initiated for a medical disciplinary cause or reason; and, 5) a summary suspension of staff privileges, membership, or employment is imposed for a period in excess of 14 days. BPC Section 805 defines who the peer review body consists of, including the licensed medical or professional staff of any health facility, or clinic or an ambulatory surgery center that is Medicare certified.

The peer review process helps to review the basic qualifications, staff privileges, employment, medical outcome, or professional conduct of a licensee to make recommendations for quality improvement and education. In addition, the peer review process aids in the determination of whether a licensee may practice, or continue to practice in a healthcare facility, clinic, or other settings providing medical services.

As detailed above, an 805 report is required to be filed with the MBC (and other health related boards) within 15 days if a licensee's application for staff privileges or membership is rejected, on the effective date of an action to revoke or impose restrictions on privileges, membership, or employment, or if the licensee resigns, takes a leave of absence, withdraw or abandons an application for privileges. The 805 reports are not publicly available to consumers; however, copies may be requested by certain health care facilities. Prior to granting or renewing staff privileges for any physician and surgeon (and other health care licensees as specified), it is also required that any health care facility or the medical staff of the institution request from the MBC (or other related health board) a report to determine if any 805 report has been made indicating the applying physician and surgeon (or other health care licensee, as specified) has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted as provided in Section 805. A failure to file an 805 report could be punishable by a fine of up to $100,000 per violation, and for negligent or unintentional reporting, a fine up to $50,000 per violation.

This bill will expand the list of entities which must request an 805 report to include a facility certified to participate in the Medicare program as an ambulatory surgical setting or an accredited outpatient setting, as specified, to determine if a report has been made indicating that a licensee has had staff privileges revoked or restricted elsewhere.

In addition, this bill will require physicians and surgeons working in accredited outpatient settings to be subjected to the peer review process every two years, and requires the findings from those reports to be reported to the accreditation agency who would use the information as a tool to for the governing body of the facility to determine if the licensee who was subject to the peer review report continues to meet professional qualification standards and is professionally credentialed for the privileges to practice for which he or she is granted. This additional peer review requirement aims to help accrediting agencies determine whether the outpatient setting meets applicable accreditation standards.

Accredited healthcare facilities. Outpatient surgery care centers are facilities which provide surgery services in out-of-hospital settings. Under current law, physicians and surgeons may not perform outpatient surgeries unless they are performed in an accredited, licensed, or certified setting. According to the MBC, if the surgical procedure requires anesthesia to be administered in doses that have the probability of placing a patient at risk for loss of the patient's life-preserving protective reflexes, then the surgery must be performed in an accredited, licensed, or certified setting. However, if the surgery only requires local anesthesia or a peripheral nerve block, or administers anti- anxiety medications or pain killers in doses that do not place the patient at risk for loss of life-preserving protective reflexes, then the surgery does not have to be performed in an accredited, licensed, or certified setting.

Outpatient surgery may take place in the following settings: 1) an outpatient setting that is accredited by an accreditation agency approved by the MBC; 2) a surgical clinic licensed by the California Department of Public Health; or, 3) an ambulatory surgical center certified by the Center for Medicare and Medicaid Services to participate in the Medicare program. In addition to the outpatient settings above, there are specific settings which are recognized in HSC 1248.1. The MBC only has jurisdiction over those outpatient settings which are accredited through MBC approved accreditation agencies. The MBC notes that MBC approved accreditation agencies verify that each setting meets specified standards before being awarded accreditation. Each MBC approved accreditation agency is required to inspect each setting at least once every three years. HSC Section 1248.15 specifies the requirements necessary for an outpatient center to meet accreditation standards. As part of the accreditation process, accreditation agencies are required to be inspected once every three years, at a minimum. This bill will require that after the initiation inspection for accreditation, all subsequent inspections may be unannounced and for those that are unannounced, the accrediting body must provide a 60-day window after notification for when the inspection might occur.

If the results of the inspection conclude that the setting is out of compliance with the standards, the accreditation agency must issue a deficiency report and may require correction, issue a reprimand, place the setting on probation, or suspend or revoke the accreditation. The accreditation agency must issue a report to the MBC within 24 hours if the setting has been issued a reprimand, been placed on probation, or had its accreditation suspended or revoked. This information is then posted on the MBC’s website where it is available to the public.

The MBC currently recognizes five accrediting agencies which include: Accreditation Association for Ambulatory Health Care, Inc. (AAAHC), American Association for Accreditation of Ambulatory Surgery Facilities, Inc. (AAAASF), The Joint Commission, The Institute for Medical Quality (IMQ), and American Osteopathic Association / Healthcare Facilities Accreditation Program (HFAP).

Prior Related Legislation. SB 100 (Price), Chapter 645, Statutes of 2011, required the MBC to adopt regulations on or before January 1, 2013, on the appropriate level of physician availability necessary within clinics using laser or intense pulse light devices for elective cosmetic surgery. Made a number of changes regarding the approval, oversight and inspection of outpatient settings, as defined, by MBC and accreditation agencies approved by the MBC, and in developing a plan of corrective action for any deficiencies found by the accreditation agencies or the MBC during inspections, or otherwise. Revised the existing definition of “outpatient settings” to include fertility clinics that offer in vitro fertilization.

SB 1150 (Negrete McLeod) of 2010, would have required license designations on health care provider advertising; required the MBC to adopt regulations regarding the appropriate level of physician availability needed within clinics or other settings using laser or intense pulse light devices; required the MBC to post a factsheet on cosmetic surgery; required the MBC to adopt standards for settings that offer in vitro fertilization; and made changes to the MBC's oversight of accreditation agencies. STATUS: This bill was held in the Assembly Appropriations Committee.

SB 674 (Negrete McLeod) of 2009, would have required a health care practitioner, as specified, to include specific professional designation following the health care practitioner’s name in advertisements; required the MBC to adopt regulations on the appropriate level of physician availability necessary within clinics or other settings using laser or intense pulse light devices for elective cosmetic surgery; required certain healing arts licensees to include in advertisements certain words or designations following their names indicating the particular educational degree they hold or healing art they practice, as specified; and, authorized the MBC to issue an accreditation agency a citation, including an administrative fine, in accordance with a specified system established by the MBC if the agency is not meeting the criteria set by the MBC. STATUS: This bill was vetoed by Governor Schwarzenegger. The Governor’s veto message stated, "While some provisions may provide marginal improvements to consumer protection, I cannot support this bill when it fails to address the need for stronger licensing and oversight of outpatient surgical centers. The continued reliance by the medical community on external accreditation agencies without enforcement capability is an insufficient solution for protecting patients. As outpatient surgeries continue to increase in number and complexity, surgical centers cannot continue to perform procedures in an unregulated and unenforced environment."

AB 2122 (Plescia) of 2008, would have established the California Outpatient Surgery Patient Safety and Improvement Act, which would have required surgical clinics to meet prescribed licensing requirements and standards, including compliance with Medicare Conditions of Participation. STATUS: This bill was held in the Assembly Appropriations Committee.

AB 543 (Plescia) of 2007, would have established licensing requirements for surgical clinics and would have required, effective January 1, 2008, that all surgical clinics meet specified operating and staffing standards. STATUS: This bill was vetoed by Governor Schwarzenegger. The Governor’s veto message stated, “While I support the intent of this legislation, I am unable to sign it as it lacks critical patient safety protections. This bill doesn’t establish appropriate time limits for performing surgery under general anesthesia. Further, it inappropriately restricts administrative flexibility and creates state fiscal pressure during ongoing budget challenges. I am directing the Department of Public Health to pursue legislation that establishes licensure standards for these facilities that are consistent with federal requirements and protect the health and safety of patients.”

ARGUMENTS IN SUPPORT:

The Medical Board of California writes in support, "[This bill] would require peer review evaluations every two years for physicians and surgeons working in ambulatory surgery centers and would allow the accredited outpatient setting facility inspections performed by accreditation agencies to be unannounced (after the initial inspection) and would require at least a 60 day window to be given to facilities for unannounced inspections…The [MBC] believes that for consumer protection, physicians working in [ambulatory surgery centers] should be subject to peer review evaluations, which would be given to the governing body of the outpatient setting and be reviewed by the accreditation agency at the next inspection of the outpatient setting"

ARGUMENTS IN OPPOSITION:

None on file to reflect the current version of the bill.

REGISTERED SUPPORT:

Medical Board of California

REGISTERED OPPOSITION:

None on file to reflect the current version of the bill.

Analysis Prepared by: Elissa Silva / B. & P. / (916) 319-3301

 THIRD READING 

Bill No: SB 396

Author: Hill (D)

Amended: 5/5/15

Vote: 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 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)
   
   

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 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.

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

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

**** END ****

 THIRD READING  

Bill No: SB 396

Author: Hill (D)

Amended: 5/5/15

Vote: 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 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)
   
   

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 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.

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 5/29/15)

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

5/31/15 0:16:39

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 396 (Hill) - Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 396 would make a surgical clinic eligible for licensure by the Department of Public Health, regardless of physician ownership.

Fiscal Impact:

• Likely one-time costs of about $125,000 over two years for the adoption of regulations by the Department of Public Health (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 the bill will increase to approximately 500, the number that were previously licensed by the Department. These costs would be incurred once the Department 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 the Office of Statewide Health Planning and Development. Any costs incurred by the Office under the bill would be reimbursed by fees paid by licensed surgical clinics.

Background:

Under current law, the Department of Public Health licenses a variety of health care facilities, including surgical clinics. Under existing law, the definition of surgical clinic excludes surgical clinics owned or leased by a physician or dentist. However, current law also allows a physician or dentist (who owns or leases a clinic) to apply for licensure by the Department. In addition to licensure by the Department of Public Health, surgical clinics may also be certified by the Centers for Medicare and Medicaid Services (allowing them to bill Medicare or Medi-Cal for services) and/or surgical clinics may be accredited by an accrediting agency approved by the Medical Board of California.

Current law also requires the Medical Board of California to adopt standards for accreditation and to approve independent agencies to accredit outpatient settings (including surgical clinics).

Prior to 2007, most surgical clinics that were certified by the Centers for Medicare and Medicaid Services were also licensed by the Department of Public Health (since the regulatory standards were effectively the same).

A court case in 2007 found that certain physician-owned clinics are not subject to licensure by the Department of Public Health. The Department has interpreted this court decision as prohibiting it from licensing any physician owned clinics, even if the physician owner requests licensure. Since 2007, the number of licensed surgical clinics has declined from over 500 to 35.

Proposed Law:

SB 396 would make a surgical clinic eligible for licensure by the Department of Public Health, regardless of physician ownership.

Specific provisions of the bill would:

• Clarify current law to allow a physician or dentist, at their option, to apply for licensure as a surgical clinic, regardless of ownership;

• Until the Department of Public Health adopts implementing regulations, deem a surgical clinic to have met licensure requirements by demonstrating that the surgical clinic meets federal certification standards for Centers for Medicare and Medicaid Services;

• Require all inspections (after the initial inspection) by an independent certifying entity (that has been approved by the Medical Board) to be unannounced;

• Require an accredited outpatient setting and a Centers for Medicare and Medicaid Services certified facility to be subject to patient encounter and financial data reporting requirements;

• Require an accredited outpatient setting and a Centers for Medicare and Medicaid Services certified facility to pay a fee to the Office of Statewide Health Planning and Development to cover the costs of collecting and analyzing reported data;

• Require each licensee who performs procedures in an accredited outpatient facility to be peer reviewed at least every two years;

• Delays the deadline of a report from the Medical Board to the Legislature on its vertical enforcement model, for one year to March 2016.

Related Legislation:

SB 534 (Hernandez, Statutes of 2013) requires chronic dialysis clinics, surgical clinics, rehabilitation clinics, and certain intermediate care facilities to meet federal certification standards until the Department of Public Health adopts licensing regulations for those facilities.

Staff Comments:

The Department of Public Health has indicated that the bill as drafted may not allow them to license physician owned clinics, even upon request of the physician. This analysis assumes that future amendments to the bill to clarify the Department’s authority will allow for such licensure. The cost estimates above assume that the Department will be able to implement the bill, as intended by the author.

The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: SB 396

SUBJECT: Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement.

SUMMARY:

Requires a surgical clinic to be eligible for licensure by the California Department of Public Health regardless of physician ownership, deems a surgical clinic to have met licensure requirements if they are federally certified, requires inspections of accredited outpatient surgical settings to be unannounced, and requires both accredited and federally certified surgical settings to be subject to the same reporting requirements to the Office of Statewide Health Planning and Development as licensed surgical clinics.

Existing law:

1. Licenses and regulates various clinics by the California Department of Public Health (CDPH), including primary care clinics as well as specialty clinics which include surgical clinics.

2. Defines a “surgical clinic,” for purposes of provisions of law defining what types of clinics are eligible for licensure by CDPH, as a clinic that is not part of a hospital and that provides ambulatory surgical care for patients who remain less than 24 hours. However, it exempts from this definition any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual or group practice, but specifies that physicians or dentists, may, at their option, apply for licensure.

3. Requires any licensed health facility, health care service plan or medical care foundation, or the medical staff of the institution, prior to granting or renewing staff privileges for any physician, psychologist, podiatrist, or dentist, to request a report from the respective professional licensing board to see if any report has been made pursuant to existing provisions of law indicating that the licensee has been denied staff privileges, removed from a medical staff, or had his or her staff privileges restricted.

4. Requires, until CDPH adopts regulations relating to the provision of services by certain clinics, including surgical clinics, those clinics to comply with the federal certification standards in effect immediately preceding January 1, 2013. In the case of surgical clinics, these clinics are required to comply with applicable federal certification standards for an ambulatory surgical clinic, as specified. Requires CDPH, by July 1, 2017, to submit a report to the appropriate legislative committees that describes the extent to which the federal certification standards are or are not sufficient as a basis for state licensing standards, and requires this report to make recommendations for any California-specific standards that may be necessary. Sunsets these provisions of law on January 1, 2018.

5. Requires licensed clinics to annually file with OSHPD certain reports, including utilization and financial data, as well as an Ambulatory Surgery Data Record report for each patient encounter during which at least one ambulatory surgery procedure is performed. Establishes a fee that clinics are required to pay that is tied to the number of reports a clinic files, as specified.

6. Defines “outpatient setting” as any facility clinic or other setting that is not part of a general acute care hospital where anesthesia is used in doses that, when administered, have the probability of placing a patient at risk for loss of life-preserving protective reflexes. Specifies that an outpatient setting can only be operated if it is one of the following:

1. An ambulatory surgical center that is CMS-certified;

2. A tribal clinic, as specified;

3. A clinic operated directly by the United States or any of its departments;

4. A clinic licensed by CDPH;

5. A health facility licensed as a general acute care hospital;

6. A dental office using anesthesia pursuant to specified provisions of law; or,

7. An outpatient setting that has been accredited by an accreditation agency that is approved to issue certificates of accreditation to outpatient settings by the Medical Board of California (MBC).

7. Requires MBC to adopt standards for accreditation and, in approving accrediting agencies to perform accreditation of outpatient settings, to ensure that the certification program, at a minimum, includes specified standards, including having written transfer agreements with a hospital, permitting surgery only by physicians who have admitting privileges at a local hospital, and having a system for quality assessment and improvement.

8. Requires accrediting agencies to inspect outpatient settings, and permits MBC to also conduct inspections. Requires certificates of accreditation to be valid for no more than three years.

This bill:

1. Clarifies a provision of law that permits a physician or dentist, at their option, to apply for licensure from CDPH as a surgical clinic by specifically requiring a surgical clinic to be eligible for licensure by CDPH regardless of physician, podiatrist, or dentist ownership.

2. Deems a surgical clinic to have met licensure requirements, until CDPH adopts regulations relating to the provision of services by a surgical clinic, upon presenting documentation, within a three-year period, that the surgical clinic has met the federal certification standards for an ambulatory surgical clinic established by the Centers for Medicare and Medicaid Services (CMS-certified).

3. Adds a CMS-certified facility, or an accredited outpatient setting, as specified, to provisions of law requiring licensed health facilities to check with professional licensing boards prior to granting staff privileges to a physician or other licensed health care professional to see if a report has been made indicating that the licensee has had staff privileges revoked or restricted elsewhere.

4. Requires all inspections after the initial inspection for accreditation to be unannounced inspections, which existing law requires to be at least every three years by the accreditation agency and as often as necessary by MBC.

5. Requires an accredited outpatient setting, as defined, and a CMS-certified facility, to be subject to the provisions of law that require reporting of data to the Office of Statewide Health Planning and Development (OSHPD), including the Ambulatory Surgery Data Record report for each patient encounter during which at least one ambulatory surgery procedure is performed, as well as certain utilization and financial data.

6. Requires an accredited outpatient setting and a CMS-certified facility to pay a fee to OSHPD based on the number of ambulatory surgery data records submitted to OSHPD, but prohibits this fee from exceeding the reasonable costs incurred by OSHPD in regulating the outpatient setting and facility.

7. Requires each licensee who performs procedures in an accredited outpatient setting to be peer reviewed at least every two years. Requires this peer review to 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 necessary, including when the outpatient setting has only one licensee.

8. Requires the peer review for accredited outpatient settings to be performed by licensees who are qualified by education and experience to perform the same or similar types of procedures.

9. Requires the findings of the peer review of accredited outpatient settings to be reported to the accrediting body, which is required to determine if the licensee continues to meet the requirements necessary to be granted clinical privileges.

10. Delays a requirement, from March 1, 2015 to March 1, 2016, for MBC to make a report, along with recommendations, to the Governor and Legislature on the vertical enforcement and prosecution model, as defined.

FISCAL EFFECT:

This bill has not been analyzed by a fiscal committee.

COMMENTS:

1. Author’s statement. According to the author, the primary focus of this bill is to allow ambulatory surgical clinics (ASCs), which are Medicare certified and are currently required to seek accreditation as an “outpatient setting,” that meet both the accreditation requirements of an accrediting agency and those of MBC as well as those of CDPH, to have the option of becoming licensed by the CDPH, which has primary responsibility and oversight of those ASCs which are Medicare certified. This will allow one agency (CDPH) to have primary jurisdiction and responsibility for those ASCs operating within California and to ensure they meet all standards and requirements of both CDPH and the federal regulations for ASCs. This measure will also clear up any confusion as to where a patient may file a complaint regarding an ASC that may be accredited and at the same time Medicare certified. Currently, a complaint may have to be filed both with MBC and CDPH so that appropriate action may be taken against the ASC. This measure will also require that current outpatient settings are also subject to peer review and that any peer review findings be reported to their appropriate accrediting agency.

2. Background on ambulatory surgery centers and Capen v. Shewry. Under existing law, surgical clinics in California are regulated in one or more of three ways: (1) licensed as a surgical clinic by CDPH; (2) CMS-certified to accept payment from Medicare and Medicaid; or, (3) accredited by an agency approved by MBC. MBC currently has approved five accrediting agencies. Prior to 2007, most of the settings that were certified as ambulatory surgical centers by CMS to take Medicare and Medicaid payments were also licensed as surgical clinics by CDPH, as CDPH generally utilized the same standards for licensing as CMS uses for certification, and it was often in the clinic’s interest to be licensed for purposes of being included in health insurance networks. If the surgical setting did not plan on performing procedures for which it would seek payment from Medicare or Medi-Cal or other third-party payors, an outpatient surgical setting would often choose to just become accredited by an MBC-approved accrediting agency.

However, in 2007, the Third District Court of Appeal issued its decision in the lawsuit Capen v. Shewry (Capen). In Capen, the issue before the court was whether a surgical clinic that is wholly owned and operated by a physician, but where physicians who are not owners will practice, is required to obtain a license from CDPH. Up to this point, CDPH had interpreted existing law as requiring licensure when physician who were not owners were practicing surgery at the location. Existing law exempts from the definition of a surgical clinic “any place or establishment owned or leased and operated as a clinic or office by one or more physicians…in individual or group practice.” CDPH was asserting that if physicians who are not part of the ownership group were allowed to practice, the clinic would not fall under this exemption. However, the court found that the statute in question was ambiguous, and concluded that physician-owned clinics are not subject to licensing by CDPH. Even though the statute specifically gave a physician-owned clinic the option, at the clinics choice, of seeking licensure, CDPH interpreted the court’s decision in Capen to strip CDPH of the authority to license or regulate a surgical clinic that had any degree of physician ownership, and that it could not issue or renew a license for any surgical clinic that is even partly physician owned.

Because of the nature of surgical clinics, there is often at least some partial physician ownership, even with surgical facilities that are associated with large medical systems. As a result of the Capen decision and CDPH’s interpretation that it could no longer renew a license where there was partial physician ownership, the number of surgical clinics went from about 500 in 2007 to only 35 surgical clinics licensed in California today. Additionally, because only licensed clinics are currently required to report ambulatory surgery data to OSHPD, the amount of ambulatory surgical data has gone way down: according to the California HealthCare Foundation, 1,167,583 outpatient surgeries were reported to OSHPD in 2007, while only 120,155 were reported in 2010 – this despite the fact that more and more surgeries are happening in outpatient settings.

To help fill in some of the regulatory void created by the Capen decision and a concern that there was insufficient oversight of outpatient surgery settings, the Legislature passed SB 100 (Price), Chapter 645, Statutes of 2011. SB 100 made a number of changes regarding the approval, oversight, and inspection of outpatient settings that were accredited by MBC-approved accrediting agencies, and gave accrediting agencies the ability to issue outpatient settings a plan of corrective action for any deficiencies found during inspections.

3. Double referral. This bill was heard in the Senate Business, Professions and Economic Development Committee on April 20, 2015, and passed with a 9-0 vote.

4. Prior legislation. SB 534 (Hernandez), Chapter 722, Statutes of 2013, requires chronic dialysis clinics, surgical clinics, rehabilitation clinics, and intermediate care facilities/developmentally disabled-nursing to meet federal certification standards until CDPH adopts licensing regulations for these facilities, and sunsets these provisions on January 1, 2018.
   
   SB 100 (Price,) of 2011, required MBC to make a number of changes regarding the approval, oversight and inspection of outpatient settings and accreditation agencies and in developing a plan of corrective action for any deficiencies found by the accreditation agencies or the MBC during inspections.
   
   SB 1150 (Negrete McLeod), of 2010, would have required MBC to adopt regulations regarding the appropriate level of physician availability needed within clinics or other settings using laser or intense pulse light devices, required MBC to post a factsheet on cosmetic surgery, required MBC to adopt standards for out patient settings that offer in vitro fertilization, and made changes to MBC oversight of accreditation agencies. SB 1150 was held on the Assembly Appropriations Committee suspense file.

SB 674 (Negrete McLeod), of 2009, would have required specified healing arts licensees to include professional designations behind their names in advertisements; required MBC to adopt regulations regarding the appropriate level of physician availability needed within clinics or other settings using laser or intense pulse light devices for elective cosmetic procedures; permitted MBC to adopt standards that it deems necessary for outpatient settings that offer in vitro fertilization; and revised accreditation requirements and procedures. SB 674 was vetoed by the Governor, who stated: “While some provisions may provide marginal improvements to consumer protection, I cannot support this bill when it fails to address the need for stronger licensing and oversight of outpatient surgical centers. The continued reliance by the medical community on external accreditation agencies without enforcement capability is an insufficient solution for protecting patients. As outpatient surgeries continue to increase in number and complexity, surgical centers cannot continue to perform procedures in an unregulated and unenforced environment.”

AB 832 (Jones), of 2009, would have required CDPH to convene a workgroup to consider and develop recommendations for state oversight and monitoring of ambulatory surgical centers, to ensure public health and safety. AB 832 was held on the Assembly Appropriations Committee suspense file.

AB 543 (Plescia), of 2007, would have established licensing requirements for surgical clinics and would have required, effective January 1, 2008, that all surgical clinics meet specified operating and staffing standards. AB 543 was vetoed by the Governor, who stated: “While I support the intent of this legislation, I am unable to sign it as it lacks critical patient safety protections. This bill doesn’t establish appropriate time limits for performing surgery under general anesthesia. Further it inappropriately restricts administrative flexibility and creates state fiscal pressure during ongoing budget challenges. I am directing the Department of Public Health to pursue legislation that establishes licensure standards for these facilities that are consistent with federal requirements and protect the health and safety of patients.”

5. Support. This bill is supported by MBC, which states that existing law requires licensed surgical clinics to report aggregate utilization and patient encounter data to OSHPD. However, when these physician-owned ambulatory surgical centers were required to be accredited instead of licensed, there was no requirement to report data to OSHPD. MBC states that this resulted in a serious deficiency of data for accredited outpatient settings. In addition, MBC states that existing law allows a physician who owns his or her own outpatient setting to choose not to have peer review of his or her practice, and that MBC believes that for consumer protection, physician working in these settings should be subjected to peer review evaluations, which can be utilized as a tool by the accrediting agencies when determining compliance with existing law. Finally, MBC states that inspections currently performed by accrediting agencies are announced, unless they are deemed status surveys. Requiring subsequent inspections to be unannounced will help to ensure that facilities do not have time to prepare for an inspection and will more closely align with inspections for other types of ambulatory surgery settings. The California Ambulatory Surgery Association states in support that even though existing law provides adequate oversight for ambulatory surgery settings utilizing certain levels of anesthesia, a September 2007 court ruling (Capen v. Shewry) has prohibited CDPH from issuing state licenses to physician-owned surgery centers, which make up the vast majority of ambulatory surgery settings in California. Furthermore, CASA states that without adding an accredited outpatient setting and CMS-certified ambulatory surgical center to the list of eligible facilities that can obtain reports from the MBC, surgery centers are unable to ensure that physicians and others providing care in those facilities have not been denied staff privileges, been removed from a medical staff, or have had his or her staff privileges restricted. This bill is also supported by the California Hospital Association (CHA), which states that many of their hospitals and systems operate or have other business relationships with outpatient centers in which surgery is performed. CHA supports the requirement in this bill for the organization to determine if a certain report has been made indicating the applying physician, psychologist, podiatrist or dentist has been denied staff privileges or had his or her staff privileges restricted. CHA also supports the goal of the bill to establish a peer review process in these settings.

6. Opposition. The California Society of Plastic Surgeons (CSPS) opposes this bill, stating that it does not believe the changes would result in any improvement of the accreditation process or enhance patient safety. Rather, CSPS states that this bill only increases costs for accredited facilities, which will increase costs to the overall healthcare system. According to CSPS, this bill creates additional onerous data reporting with no obvious need or plan for use of the data. CSPS also argues 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 requirements for evaluating manual, logs, and patient records.

7. Oppose unless amended. The California Medical Association (CMA) states that it is concerned that some of the proposed changes would create significant logistical challenges for certain outpatient surgery settings without a commensurate increase in consumer protection. According to CMA, some of the proposed changes, including unannounced visits by an accreditation agency, some of the peer review changes, and mandatory reporting, could create unnecessary hardship on certain facilities. CMA states that we should not seek to unduly burden facilities with regulations that have an uncertain impact on improving patient care.

8. Technical amendments.

1. This bill requires an accredited outpatient setting and a CMS-certified facility to pay a fee to OSHPD based on the number of ambulatory surgery data records submitted to OSHPD, but prohibits this fee from exceeding the reasonable costs incurred by OSHPD in regulating the outpatient setting and facility. However, for these purposes, OSHPD is not “regulating” these settings, but just collecting data and making some of it publicly available. To avoid confusion, the word “regulating” should be deleted, and instead the costs should not exceed the reasonable costs incurred by OSHPD related to the reports filed by these settings.

2. This bill deems a surgical clinic to have met licensure requirements upon presenting documentation, within a three-year period, that the surgical clinic has met federal certification standards. The intent of this provision is to ensure the federal certification is within three years, but the way this is phrased it could be interpreted to mean that the clinic has three years within which to provide documentation of federal certification. This should be clarified.

SUPPORT AND OPPOSITION:

Support: California Ambulatory Surgery Association

California Hospital Association
Medical Board of California

Oppose: California Medical Association (unless amended)

California Society of Plastic Surgeons

-- END --

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2015 - 2016 Regular

Bill No: SB 396 Hearing Date: April 20, 2015

Subject: Health and care facilities: outpatient settings and surgical clinics.

SUMMARY: This bill will allow ambulatory surgical clinics which are Medicare certified to have the option of being licensed by the California Department of Public Health and also clarifies that they are deemed to be licensed if they are already Medicare certified. The bill also specifies that an accredited outpatient setting shall be defined as a peer review body and subject to the specified requirements of a peer review body, including the filing of an 805 report, and that the accredited outpatient setting and a Medicare certified clinic must also request a report from the Medical Board of California as to whether an 805 has been filed; specifies that licensees in these clinics must be peer reviewed at least every two years and the findings of the peer review reported to an accrediting agency of the outpatient setting. The bill further provides that an outpatient setting and Medicare certified clinic must also report specific data to the Office of Statewide Health Planning and Development and makes other minor and technical changes regarding the accreditation and inspection of outpatient settings.

Existing law, the Business and Professions Code (BPC):

1. Provides for the licensure and regulation of physicians and surgeons by the Medical Board of California (MBC), for podiatrists by the California Board of Podiatric Medicine (BPM) and for dentists by the Dental Board of California (DBC) under the Department of Consumer Affairs (DCA).
   
   

2. Defines “peer review” as a process in which a peer review body reviews the basic qualifications, staff privileges, employment, medical outcomes, or professional conduct of licentiates to make recommendations for quality improvement and education, if necessary, in order to determine whether a licentiate may practice, or continue to practice in a health care facility, clinic, or other setting providing medical services, and if so, to determine the parameters of that practice, and/or to assess and improve the quality of care rendered in a health care facility, clinic, or other setting providing medical services. (BPC § 805 (a)(1)(A))
   
   

3. Provides that a “peer review body” includes a medical or professional staff of any licensed health care facility or clinic or of a facility certified to participate in the federal Medicare programs as an ambulatory surgical center. (§ 805 (a)(1)(B))
   
   

4. Defines “licentiate” as a physician and surgeon, doctor of podiatric medicine, clinical psychologist, marriage and family therapist, clinical social workers, professional clinical counselor, dentist, or physician assistant. (§ 805 (a)(2))
   
   

5. Requires a peer review body to file a so-called “805 report” with the MBC within 15 days alerting the Board if a licentiate’s application for staff privileges is denied or rejected; his or her membership, staff privileges, or employment is terminated of revoked for medical disciplinary reasons; or if restrictions are imposed, or voluntarily accepted, on staff privileges, membership or employment for a cumulative total of 30 days or more for any 12 month period, for a medical disciplinary cause or reason. (§ 805 (b))
   
   

6. Requires that prior to granting or renewing staff privileges for any physician and surgeon, psychologist, podiatrist, or dentist, any licensed health facility or any health care plan or medical care foundation or medical staff of the institution shall request a report from the MBC, the Board of Psychology, the Osteopathic Medical Board of California, or the DBC to determine if any report has been made pursuant to Section 805 indicating that the licensee has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted as provided in Section 805. (BPC § 805.5 (a))
   
   

7. Requires that an accredited “outpatient setting” shall report an “adverse event” (both of which are defined in the Health and Safety Code) to the MBC no later than five days after the adverse event has been detected, or, if that event is an ongoing urgent or emergency threat to the safety of patients, the report the adverse event within 24 hours. (BPC § 2216.3)
   
   

8. Specifies that if an outpatient setting fails to report an adverse event that specified penalties may apply. (BPC § 2216.4)
   
   

Existing law, the Government Code (GC):

1. Creates within the Department of Justice (DOJ) the Health Quality Enforcement Section (Section) and provides that the primary responsibility of this Section is to investigate and prosecute proceedings against licensees within the jurisdiction of the MBC and other specified boards. (GC § 12529)
   
   

2. Provides that it is the intent of the Legislature to ensure quality and safety of medical care and that because of the critical importance of the MBC’s public health and safety function, and the complexity of cases involving misconduct of physicians and surgeons, and the evidentiary burden placed on the MBC’s, that a vertical enforcement prosecution model for investigation of these cases is in the best interests of the people of California. (GC § 12529 (a))
   
   

3. Provides that each complaint that is referred to the district office of the MBC for investigation shall be simultaneously and jointly assigned to an investigator and to a deputy attorney general within the Section. (GC § 12529.6 (b))
   
   

4. Requires the MBC, in consultation with the DOJ and the DCA, to report and make recommendations to the Governor and the Legislature on the vertical enforcement and prosecution model by March 1, 2015.

Existing law, the Health and Safety Code (HSC):

1. Provides that a “clinic” means 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. (HSC § 1200)
   
   

2. Provides that a specialty clinic, including a surgical clinic, shall be eligible for licensure with the California Department of Public Health (DPH). (HSC § 1204 (b))
   
   

3. Defines a “surgical clinic” as a clinic that is not part of a hospital and that provides ambulatory surgical care for patients who remain less than 24 hours, but that a surgical clinic does not include any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual group practice, regardless of the name used publicly to identify the place or establishment, provided, however, that physicians or dentists may, at their option, apply for licensure. (HSC § 1204 (b)(1))
   
   

4. Specifies that every clinic holding a license shall annually file with the Office of Statewide Health and Planning and Development (OSHPD) a verified report with specified information regarding patients served, type of medical services provided, gross patient charges, and other information as required by OSHPD; and the failure to report would subject the clinic to suspension of their license. (HSC § 1216)
   
   

5. Requires a surgical clinic to comply with federal certification standards for an ambulatory surgical clinic, as specified in Section 416.1 to 416.52, inclusive, of Title 42 of the Code of Federal Regulations. (HSC § 1225 (d)(2))
   
   

6. Provides that the DPH shall adopt, and may from time to time amend or repeal such reasonable rules and regulations as may be necessary. (HSC § 1225)
   
   

7. Provides that for every clinic for which a license or special permit has been issued shall be periodically inspected and should be conducted no less often than once every three years; an ambulatory surgical center is exempt from this requirement.
   (HSC § 1228)
   
   

8. Provides that the DPH shall notify any clinic of all deficiencies in its compliance with the provisions of Section 1200 et seq., or the rules and regulations of the DPH, and provides for penalties to be assessed for noncompliance or for the DPH to initiate action against the clinic to revoke or suspend the license. (HSC § 1229)
   
   

9. Provides that the DPH may suspend or revoke any license upon specified grounds and that the Director of DPH may suspend any license issued to a specialty clinic when in the opinion of the Director such action is necessary to protect the public welfare. (HSC § 1240 and § 1242)
   
   

10. 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))
    
    

11. Defines an “accrediting agency” as a public or private organization that is approved by the MBC to issue certificates of accreditation to outpatient settings pursuant to specified requirements. (HSC § 1248 (c))
    
    

12. Provides that no association, corporation, firm, partnership, or person shall operate, mange, conduct, or maintain an outpatient setting in this state unless it is accredited as provided under Section 1248 et seq., it is an ambulatory surgical center that is certified to participate in the Medicare program under Title XVIII (42 U.S.C. Sec. 1395 et seq.) of the federal Social Security Act, a surgical clinic licensed under Section 1204 et seq., or another clinic or dentist’s office as specified.

(HSC § 1248.1)

13. Provides that the MBC shall adopt standards for accreditation and, in approving accreditation agencies to perform accreditation of outpatient settings, shall ensure that the certification program meets specified standards and requirements.
    (HSC § 1245.15)
    
    

14. Provides that any outpatient setting may apply to an accreditation agency for a certificate of accreditation and that accreditation shall be issued on the basis of compliance with the standards and requirements of the accreditation agency as approved by the MBC. (HSC § 1248.2 (a))
    
    

15. Requires the MBC to obtain and maintain a list of accredited outpatient settings from the information provided by the accreditation agencies approved by the MBC, and shall notify the public, by placing the information on its Internet Web site, whether an outpatient setting is accredited or the setting’s accreditation has been revoked, suspended, or placed on probation, or the setting has received a reprimand by the accreditation agency; and specifies the information to be provided on the MBC’s Web site. (HSC § 1248.2 (b))
    
    

16. Provides that if the outpatient setting does not meet the standards approved by the MBC, accreditation shall be denied by the accreditation agency. (HSC § 1248.25)
    
    

17. Specifies that certificates of accreditation issued to outpatients settings by an accreditation agency shall be valid for not more than three years. (HSC § 1248.3)
    
    

18. Requires that every outpatient setting which is accredited shall be inspected by the accreditation agency and may also be inspected by the MBC, that inspections shall be conducted no less that once every three years to ensure the quality of care provided, and that the MBC shall ensure that accreditation agencies inspect outpatient settings pursuant to specified requirements. (HSC § 1248.35 (a)(b))
    
    

19. Provides that an accreditation agency, before suspending or revoking a certificate of accreditation, shall provide the outpatient setting with notice of any deficiencies and that the outpatient setting shall provide to the accreditation agency a plan of correction; the accreditation agency may however suspend the certificate of
    
    accreditation if it finds that there may be imminent danger to the health of an individual. (HSC § 1248.35 (d) (1))
    
    

20. Provides that if the outpatient setting does not comply with a corrective action then the accrediting agency shall issue a reprimand and may place the outpatient setting on probation or suspend or revoke the accreditation and shall notify the MBC of such action. (HSC § 1248.35 (d) (2))
    
    

21. Provides that the MBC may bring an action to enjoin the outpatient setting’s operation if it has failed to correct deficiencies or is operating without accreditation or is in violation of any other provisions as required under Section 1248 et seq.
    (HSC § 1248.7 and § 1248.75)
    
    

22. Creates OSHPD within the Health and Welfare Agency which is responsible for the collection of data and dissemination of information about California’s healthcare infrastructure, promotes an equitably distributed healthcare workforce, and published valuable information about healthcare outcomes. (HSC § 127000 et seq.)
    
    

23. Requires each general acute care hospital and freestanding ambulatory surgery clinic to provide specified information regarding patient encounters, surgical procedures performed and disposition of patients. (HSC § 128737)
    
    

24. Provides for reimbursement of OSHPD by ambulatory surgical clinics for the collection and disbursement of information regarding Item #22 above and provides that any fees collected in regulating the outpatient setting and the facility shall not exceed the reasonable costs incurred by the OSHPD. (HSC § 127280)
    
    

25. Requires health facilities and clinics to annually report to OSHPD regarding the current inventory of beds and service and acquisition of diagnostic and therapeutic equipment at a specified amount, or commencement of projects at a specified amount. (HSC § 127285)

Existing law, the Code of Federal Regulations (42 CFR 416 et seq.):

1. Specifies that an ambulatory surgical clinic (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. (CFR § 416.2)
   
   

2. Requires that an ASC must have an agreement with the Center for Medicare and Medicaid Services (CMS) and must meet specified requirements to participate in Medicare. (Id.)
   
   

3. 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. (CFR § 416.28)
   
   

4. Provides that as a condition of [Medicare] coverage, an ASC must comply with state licensure requirements and provide for the following: have an effective procedure for hospital transfer requiring emergency medical care; maintain a written disaster preparedness plan; perform surgical procedures in a safe manner by qualified physicians who have been granted clinical privileges; have standards in place for the administration of anesthesia; develop and implement and maintain an ongoing, data-driven quality assessment and performance improvement program; track and implement preventative strategies for adverse events; provide for a safe and sanitary environment; maintain an infection control program; and provide for other standards and meet other requirements as specified. (CFR § 416.40 to
   § 416.52)

This bill:

1. Specifies that an accredited outpatient setting shall also be defined as a “peer review body” and subject to certain specified requirements as a peer review body.
   
   

2. Requires that a facility certified to participate in the federal Medicare program as an ASC, or an accredited outpatient setting shall also request a report from the MBC, the Board of Psychology, the Osteopathic Medical Board of California or the DBC, prior to granting or renewing staff privileges for any licentiate, to determine if any report has been made indicating that the licensee has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted, as specified.
   
   

3. Requires that each licensee who performs procedures in an outpatients setting that requires the outpatient setting to be accredited shall be peer reviewed at least every two years, as specified, including when the outpatient setting has only one such licensee; and that the peer review shall be performed by licensees who are qualified by education and experience to perform the same types or similar procedures.
   
   

4. Requires the findings of the peer review to be reported to the accrediting agency who shall determine if the physician and surgeon who are granted clinical privileges are professionally qualified and appropriately credentialed for the performance of privileges granted.
   
   

5. Provides for the MBC to report its recommendations regarding the vertical enforcement and prosecution model to the Governor and Legislature by March 1, 2016.
   
   

6. Requires an accredited outpatient setting and a facility certified to participate in the federal Medicare program as an ASC to report specified information to OSHPD as indicated in Items #4, #22 and #24 above, and that any fees collected shall not exceed the reasonable costs incurred by the OSHPD in regulating the outpatient setting and the facility.
   
   

7. Provides that a physician, podiatrist or dentist may, at his or her option, apply for licensure and provides that a surgical clinic that has met the federal certification standards for an ASC shall be eligible for licensure by the DPH regardless of physician, podiatrist or dentist ownership.
   
   

8. Specifies that until the DPH adopts regulations relating to the provision of services by a surgical clinic, a surgical clinic is deemed to have met the licensure requirements upon presenting documentation, within a three-year period, that the surgical clinic has met the federal certification standards for an ASC.
   
   

9. Provides that an initial certificate of accreditation issued to any outpatient setting by an accrediting agency shall be valid for not more than two years, and a renewal certificate shall be valid for not more than three years.
   
   

10. Provides that after the initial inspection for accreditation, all subsequent inspections shall be unannounced.
    
    

11. Makes other technical and minor clarifying changes.

FISCAL EFFECT: Unknown. This bill has been keyed “fiscal” by Legislative Counsel.

COMMENTS:

1. Purpose. This measure is sponsored by the Author. According to the Author, the primary focus of this bill is to allow ambulatory surgical clinics (ASCs) which are Medicare certified and are currently required to seek accreditation as an “outpatient setting,” and meet both accreditation requirements of an accrediting agency and those of the MBC as well as those of the DPH, to have the option of becoming licensed by the DPH which has primary responsibility and oversight of those ASCs which are Medicare certified. This will allow one agency (DPH) to have primary jurisdiction and responsibility for those ASCs operating within California and to ensure they meet all standards and requirements of both DPH and the federal regulations for ASCs. This measure will also clear up any confusion as to where a patient may file a complaint regarding an ASC that may be accredited and at the same time Medicare certified. Currently, a complaint may have to be filed both with MBC and DPH so that appropriate action may be taken against the ASC. This measure will also require that current outpatient settings are also subject to peer review and that any peer review findings be reported to their appropriate accrediting agency.
   

2. MBC Accreditation (“Outpatient Settings”), DPH Licensure (“Surgical Clinics”) and Medicare Certification of ASCs. ASCs are generally facilities for surgical patients who do not need to be admitted to a hospital. An ASC patient typically arrives for admission, has surgery performed in a full-service operating room with specialized staff to recover safely and quickly from anesthesia and returns safely home within hours of surgery. Some procedures may require a patient to stay for several hours to be attended to by nurses or other staff to monitor their recovery. Depending on the ASC, the facility may specialize in one type of service such as plastic surgery or eye care, while other facilities may offer multiple specialties such as ear, nose and throat procedures, colonoscopies, gynecological procedures, general procedures, orthopedic procedures and podiatry procedures. 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 (“Ambulatory Surgery Centers: Big Business, Little Data”) (CHF Study) there are at least 1,600 operating rooms in 750 ASCs. However, this number is misleading since it only accounts for those ASCs which are Medicare certified. As indicated by the CHF Study, little is known about ASCs operating in California because little data is being reported to the DPH or to the OSHPD. Since a legal decision in 2007 which said that ASC’s which are physician-owned are no longer under the jurisdiction of the DPH, and therefore could not be licensed by DPH, most ASCs are now accredited as an “outpatient setting”, or are Medicare certified, or most likely both.
   (It should be noted that an ASC does not have to be an accredited outpatient setting if they are certified pursuant to CMS. However, if they are accredited, CMS allows ASCs to be “deemed” certified if they meet the requirements of accreditation and other standards as required by CMS.)
   
   As indicated, an outpatient setting is any facility, clinic, center, office or other setting where anesthesia is used and when administered has the probability of placing a patient at risk for loss of their reflexes. It can be owned by an association, corporation, firm, partnership, or individual person. Only licensed physicians and other medical staff who are professionally qualified and appropriately credentialed can be granted privileges to practice in an outpatient setting. As also indicated, the outpatient setting must be accredited by an accrediting agency approved by the MBC. (The four accrediting agencies approved by the MBC are the American Association for Accreditation of Ambulatory Surgery Facilities Inc., Accreditation Association for Ambulatory Health Care, the Institute for Medical Quality and the Joint Commission on accreditation of Healthcare Organizations.)
   
   The following provides some background on the changes that have been brought about regarding both accredited “outpatient settings” which includes ASCs and other types of surgical clinics.
   
   

1. Advent of SB 100 (2011). In 2007, Donda West, mother of musician Kanye West, died less than 24 hours after undergoing several cosmetic procedures at an “outpatient setting.” Her death revealed that there was little oversight of these outpatient clinics, including the clinic where Ms. West had her surgical cosmetic procedures performed. For example, there was a lack of specific requirements at the clinics dealing with pre- and post-operative procedures for emergencies; standards were unclear as to the regularity of inspections and the reporting of corrective action or serious problems with the clinics or of the physician to the MBC. DPH, on the other hand, licensed clinics and had more extensive oversight of the clinics which they licensed. (Surgical clinics actually have always had a choice as to whether they want to be accredited or licensed, but they have to be one or the other if they meet the definition of an “outpatient setting.” Most clinics which provide cosmetic procedures opt for accreditation rather than licensing by DPH.)
   
   Since the MBC only had limited jurisdiction over these outpatient settings, the Board could only take enforcement action against the licensee (physician) and not the clinic, and the physician continued to practice within the clinic until the license of the physician was possibly revoked or placed on probationary status. This could take years and the MBC had no authority to shut down the clinic in the meantime if serious problems existed with procedures performed by physicians in the clinic. DPH on the other hand had the authority to immediately revoke the license of the clinic to operate.
   
   It was determined that there was a need to conform the requirements for outpatient settings with those that apply to clinics licensed by the DPH, so as to improve and ensure quality and effectiveness of medical procedures performed within these clinics. The prior attempts at legislation included SB 1494 (Ridley-Thomas, 2008) which was held on the Assembly floor; SB 674 (Negrete McLeod, 2009) which was vetoed by the Governor; and SB 1150 (Negrete McLeod, 2010) which was held in the Assembly Committee on Appropriations.
   
   SB 100 (Price, Chapter 645, Statutes of 2011) was finally approved by the
   Governor and provided greater oversight and regulation of outpatient settings (surgical clinics), and ensured that quality of care standards are in place at these clinics and checked by the appropriate accreditation agency and by the MBC. As enacted, SB 100 also required MBC to obtain and maintain a web site listing of information on outpatient settings on its Web site, including name and accreditation status. The bill also made a number of changes regarding the approval, oversight, and inspection of outpatient settings by MBC and accreditation agencies approved by the MBC.
   
   

2. Capen Decision. Existing law’s distinction on which clinics are licensed by the DPH and which clinics fall under the jurisdiction of the MBC and require accreditation has been unclear and has been the subject of litigation. In Capen v. Shewry (2007) 147 Cal.App.4th 680, the issue before the court was whether a surgical clinic that is wholly owned and operated by a licensed physician, in which non-owner, non-licensee, physicians will practice, is required to obtain a license from DPH. The facts of the case reveal that the plaintiff, Dr. Capen, is a licensed physician who is building a surgical clinic that he will wholly own and operate, in which non-owner, non-licensee physicians will practice. He was informed by DPH (then Department of Health Services) that a license is required of the clinic because of the physicians who do not share in its ownership and operation. Dr. Capen sued DHS and argued that the existing law provisions governing the authority of DPH to license facilities is ambiguous. At issue in Capen was Section 1204 (b)(1) of the Health and Safety Code which states that “a surgical clinic is a clinic that is not part of a hospital and that provides ambulatory surgical care for patients who remain less than 24 hours. A surgical clinic does not include any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual or group practice, regardless of the name used publicly to identify the place or establishment, provided; however, that physicians or dentists may, at their option, apply for licensure.” The Court indicated that the provisions of Section 1204(b)(1) where clinics “owned or leased by one or more physicians in individual or group practice” was ambiguous because it could be interpreted to require an ownership or lease interest either by one physician in group practice or by all of the physicians in the group. As a result, the Court held that Section 1204(b)(1) is void since it did not follow the Administrative Procedure Act. The Court concluded that physician-owned-and-operated surgical clinics are not subject to licensing by DPH and are to be regulated by the MBC.
   
   In an effort to clarify the MBC’s authority over outpatient settings and surgical clinics, the MBC submitted a letter on October 18, 2007 to Judge Coleman Blease, who issued the opinion in the Capen case. The MBC stated that “the law does not give the MBC the authority to regulate clinics owned and operated by physicians. It just gives the MBC the authority to approve accrediting agencies that are in compliance with the standards set forth in Health and Safety Code Section 1248 et.seq.” However, as a result of this decision former surgical clinics licensed by DPH would need to be accredited or Medicare certified to meet the requirements of California law.
   
   On May 15, 2008, the DPH issued a memo to its district office managers and supervisors and indicated that pursuant to the Capen decision the DPH no longer has authority to license a surgical clinic, if a physician or group of physicians owns the clinic in whole or in part. Accordingly, the DPH could not issue or renew a license for any surgical clinic that is partly or entirely physicians owned, and indicated that until this issue is resolved by legislation, the DPH will permit only non-owner/operator licensed health care practitioners to practice at a clinic that otherwise qualifies for exemption from licensure under Section 1206(a) of the Health and Safety Code. (It should be noted that dental clinics owned by a dentist or group of dentist could still be licensed as a surgical clinic.)
   
   

3. Medicare Certification. 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.
   
   As indicated, the Code of Federal Regulations requires that as a condition of Medicare certification, an ASC must comply with the following requirements and standards: have an effective procedure for hospital transfer requiring emergency medical care; maintain a written disaster preparedness plan; perform surgical procedures in a safe manner by qualified physicians who have been granted clinical privileges; have standards in place for the administration of anesthesia; develop and implement and maintain an ongoing, data-driven quality assessment and performance improvement program; track and implement preventative strategies for adverse events; provide for a safe and sanitary environment; maintain an infection control program; and provide for other standards and meet other requirements as specified.
   
   The DPH is the contracting state agency for CMS and assures that required surveys of ASCs are performed and submitted to CMS for approval and that all of the above standards and requirements are being met. (If an ASC is accredited, then the survey may also be conducted by the accrediting agency.)
   
   

1. 805 Peer Review Reporting. Section 805 et seq. of the Business and Professions Code provides for both the requirements and the process for peer review of specified health care professionals. It defines who the peer review body should consist of, including licensed medical or professional staff of any health facility, or clinic or an ASC that is Medicare certified. It defines peer review as a process in which a peer review body reviews the basic qualifications, staff privileges, employment, medical outcome, or professional conduct of licensees to make recommendations for quality improvement and education, if necessary, to determine whether a licensee may practice or continue to practice in a health care facility, clinic or other setting providing medical services and determine the parameters of that practice, and assess and improve the quality of care rendered in a health care facility, clinic, or other setting providing medical services.
   
   An “805 report” is required to be filed with the MBC (and other health related boards as specified) by the chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic within 15 days if a licensees application for staff privileges or membership is:
   (1) denied or rejected for “medical disciplinary cause or reason” (which is defined as that aspect of a licensees competence or professional conduct that is reasonably likely to be detrimental to patient safety or to the delivery of patient care); (2) their membership, staff privileges, or employment is terminated or revoked for a medical disciplinary cause or reason; or (3) restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a cumulative of 30 days or more for any 12-month period, for medical disciplinary cause or reason.
   
   Those who are required to file an 805 report must also file an 805 report if the licensee, pursuant to any of the actions taken as indicated above: (1) resigns or takes a leave of absence from membership, staff privileges, or employment;
   (2) withdraws or abandons his or her application for staff privileges or membership;
   or (3) withdraws or abandons his or her request for renewal of staff privileges or membership.
   
   A willful failure to file an 805 report could be punishable by a fine of up to $100,000 per violation and for negligent or unintentional reporting of a fine of up to $50,000 per violation.
   
   Prior to granting or renewing staff privileges for any physician and surgeon (and other health care licensees as specified), it is also required that any health care facility or the medical staff of the institution request from the MBC (or other related health board) a report to determine if any report has been made pursuant to Section 805 indicating the applying physician and surgeon (or other health care licensee as specified) has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted as provided in Section 805.
   
   This measure would require ASCs to report 805 actions to the MBC and also allow ASCs access to any 805 reports.  The language, as it pertains to peer review for medical staff and other practitioners within these clinics, requires physicians and surgeons working in accredited outpatient settings to be subjected to the peer review process every two years.  However, that process would not result in 805 actions/reports at that time, the findings would be reported to the accrediting agency, who would use the information as a tool for existing accreditation requirements (specifically if the members of the medical staff and other practitioners who are granted clinical privileges are professionally qualified and appropriately credentialed for the performance of privileges granted. The outpatient setting is required to grant privileges in accordance with recommendations from qualified health professionals, and credentialing standards established by the outpatient setting, the peer review report would be another tool to accomplish this).  However, if the accredited outpatient setting takes an 805 reportable action against a physician and surgeon based on the peer review process, this information would need to be reported to the Board.
   
   

2. Reporting to OSHPD. Existing law, Section 1216 of the Health and Safety Code, requires clinics that are licensed by the DPH, including surgical clinics, to report aggregate date to OSHPD. This data includes number of patients served and descriptive background, number of patient visits by type of service, patient charges and other additional information required by OSHPD. Before the Capen decision, this data was being collected for the majority of ASCs as they were licensed rather than accredited. However, since Capen the ASCs have become accredited (and considered as “outpatient settings”) and are under the MBC’s jurisdiction and the reporting to OSHPD is no longer required (although it should be noted that some ASCs have continued to voluntarily submit the data to OSHPD). This has created a serious deficiency in the collection of important data regarding clinical care in California. This measure would now require that all accredited outpatient settings are to report the Section 1216 data to OSHPD. This measure would similarly require those ASCs that are Medicare certified to also report the Section 1216 data to OSHPD. This would effectively cover then all ASCs which operate within this state. Two other reporting requirements under Section 127285 and Section 128737 would also be required for accredited outpatient settings and those ASCs that are Medicare certified. This would provide similar data to OSHPD that is provided by other clinics and health facilities license by DPH. Section 127280 would provide for reimbursement to OSHPD for the collection of data from the accredited outpatient settings and the Medicare certified ASCs.
   
   

3. Prior Related Legislation. SB 100 (Price, Chapter 645, Statutes of 2011) required the MBC to adopt regulations on or before January 1, 2013, on the appropriate level of physician availability necessary within clinics using laser or intense pulse light devices for elective cosmetic surgery. Made a number of changes regarding the approval, oversight and inspection of outpatient settings, as defined, by MBC and accreditation agencies approved by the MBC, and in developing a plan of corrective action for any deficiencies found by the accreditation agencies or the MBC during inspections, or otherwise. Revised the existing definition of “outpatient settings” to include fertility clinics that offer in vitro fertilization.
   
   SB 1150 (Negrete McLeod) of 2010 required license designations on health care provider advertising, required MBC to adopt regulations regarding the appropriate level of physician availability needed within clinics or other settings using laser or intense pulse light devices, required MBC to post a factsheet on cosmetic surgery, required MBC to adopt standards for settings that offer in vitro fertilization, and made changes to MBC oversight of accreditation agencies. (Status: This measure was held in the Assembly Appropriations Committee.)
   
   
   SB 674 (Negrete McLeod) of 2009 required a health care practitioner, as specified, to include specific professional designation following the health care practitioner’s name in advertisements; required the MBC to adopt regulations on the appropriate level of physician availability necessary within clinics or other settings using laser or intense pulse light devices for elective cosmetic surgery; required certain healing arts licensees to include in advertisements certain words or designations following their names indicating the particular educational degree they hold or healing art they practice, as specified; and, authorized the MBC to issue an accreditation agency a citation, including an administrative fine, in accordance with a specified system established by the MBC if the agency is not meeting the criteria set by the MBC. (Status: This measure was vetoed by the Governor.
   
   The Governor’s veto message stated, "While some provisions may provide marginal improvements to consumer protection, I cannot support this bill when it fails to address the need for stronger licensing and oversight of outpatient surgical centers. The continued reliance by the medical community on external accreditation agencies without enforcement capability is an insufficient solution for protecting patients. As outpatient surgeries continue to increase in number and complexity, surgical centers cannot continue to perform procedures in an unregulated and unenforced environment.")
   
   AB 832 (Jones) of 2009, was sponsored by DPH and would have required DPH to convene a workgroup, no later than February 1, 2010, to consider and develop recommendations for state oversight and monitoring of ASCs, to ensure public health and safety. (Status: This measure was held in the Assembly Appropriations Committee.)
   
   SB 1494 (Ridley-Thomas) of 2008 required for purposes of advertising that a health care practitioner, as specified, provide the type of license under which the licensee is practicing and the type of degree received upon graduation from professional training and that a health care practitioner who is practicing in an outpatient setting, as defined, wear a name tag which includes his or her name and their license status. Required the MBC to adopt regulations on the appropriate level of physician supervision necessary within clinics using laser or intense pulse light devices for elective cosmetic surgery, and that the MBC establish as one of its priorities the investigation of unlicensed activity within such clinics. Required the MBC to post on its website a fact sheet to educate the public about cosmetic surgery, and the risks involved with such surgeries. Made a number of changes regarding the approval, oversight and inspection of outpatient settings, as defined, by the MBC and accreditation agencies approved by the MBC, and in developing a plan of corrective action for any deficiencies found by the accreditation agencies or the MBC during inspections, or otherwise. (Status: This measure was held on the Assembly Floor.)
   
   AB 2122 (Plescia) of 2008 would have established the California Outpatient Surgery Patient Safety and Improvement Act which would have required surgical clinics to meet prescribed licensing requirements and standards, including compliance with Medicare Conditions of Participation. (Status: This measure was held in the Assembly Appropriations Committee.)
   
   AB 543 (Plescia) of 2007 would have established licensing requirements for surgical clinics and would have required, effective January 1, 2008, that all surgical clinics meet specified operating and staffing standards. (Status: AB 543 was vetoed by the Governor.
   
   The Governor’s veto message stated, “While I support the intent of this legislation, I am unable to sign it as it lacks critical patient safety protections. This bill doesn’t establish appropriate time limits for performing surgery under general anesthesia. Further, it inappropriately restricts administrative flexibility and creates state fiscal pressure during ongoing budget challenges. I am directing the Department of Public Health to pursue legislation that establishes licensure standards for these facilities that are consistent with federal requirements and protect the health and safety of patients.”)
   
   AB 2308 (Plescia) of 2006, would have required the Department of Health Services (now DPH) to convene a workgroup to develop licensure criteria to protect patients receiving care in ASCs and to submit workgroup conclusions and recommendations to the appropriate policy committees of the Legislature no later than March 1, 2007. (Status: AB 2308 was vetoed by the Governor. There was no veto message.)

5. Arguments in Support. The California Ambulatory Surgery Association (CASA) is in support of this measure 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. As stated by CASA, “The California ASC industry prides itself on providing convenient access to the high quality medical care. To that end, patients being treated in a California ASC deserve the highest, most consistent, and concise and comprehensive set of transparent state-specific licensure requirements for an industry that has historically been regulated to ensure the optimum health, welfare and safety of the general public.” CASA also believes that by adding their clinics to the list of eligible facilities that can obtain reports from the MBC [805 reports], they will be able to ensure that physician and surgeons and others providing care in those facilities have not been denied staff privileges, been removed from a medical staff, or have had his or her staff privileges restricted.
   
   The Medical Board of California (MBC) is also in support of this measure. 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.
   
   

6. Arguments in Opposition. The California Society of Plastic Surgeons is opposed to this measure 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.
   
   

7. Policy Issue: Should the Data Provided by the DPH Regarding Licensed Surgical Clinics be Consistent with that of Accredited Outpatient Settings? Current law, subsection (b) of Section 1248.2 of the Health and Safety Code requires the MBC to obtain and maintain a list of accredited outpatient settings from the information provided by the accreditation agencies approved by the MBC, and shall notify the public, by placing the information on its Internet Web site, whether an outpatient setting is accredited or the setting’s accreditation has been revoked, suspended, or placed on probation, or the setting has received a reprimand by the accreditation agency; and specifies the information to be provided on the MBC’s Web site. It does not appear as if the DPH maintains similar information regarding its licensed surgical clinics (and those that would now be able to be licensed by DPH) or for those ASCs which are Medicare certified. Consideration should be given to requiring the DPH to maintain a similar Web site for consumers so they be able to access information regarding surgical clinics and ASCs they license as well as for those which have Medicare certification since DPH is the contracting agency with CMS.

NOTE:

Double-referral to Senate Committee on Health.

SUPPORT AND OPPOSITION:

Support:

California Ambulatory Surgery Association

Medical Board of California

Opposition:

California Society of Plastic Surgeons

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