The Sherman Food, Drug, and Cosmetic Law, among other things, prohibits a person from conducting a home medical device retail facility business in the state without a valid license from the State Department of Public Health. Existing law requires the department to inspect each place of business prior to issuing a license, and further requires the department to inspect each licensee at least annually.

This bill would modify, until January 1, 2023, the requirement for the department to inspect a licensed home medical device retail facility business if it is accredited, as specified, by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services. If so accredited, the bill would authorize the department to conduct an inspection only upon a complaint made to the department regarding the licensee. For a licensee that is not so accredited, the bill would continue to require the department to conduct an inspection at least annually.

The Sherman Food, Drug, and Cosmetic Law, among other things, prohibits a person from conducting a home medical device retail facility business in the state without a valid license from the State Department of Public Health. Existing law requires the department to inspect each place of business prior to issuing a license, and further requires the department to inspect each licensee at least annually.

This bill would modify, until January 1, 2023, the requirement for the department to inspect a licensed home medical device retail facility business if it is accredited, as specified, by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services. If so accredited, the bill would authorize the department to conduct an inspection only upon a complaint made to the department regarding the licensee. For a licensee that is not so accredited, the bill would continue to require the department to conduct an inspection at least annually.

The Sherman Food, Drug, and Cosmetic Law, among other things, prohibits a person from conducting a home medical device retail facility business in the state without a valid license from the State Department of Public Health. Existing law requires the department to inspect each place of business prior to issuing a license, and further requires the department to inspect each licensee at least annually.

This bill would modify modify, until January 1, 2023, the requirement for the department to inspect a licensed home medical device retail facility business if it is accredited accredited, as specified, by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services. If so accredited, the bill would authorize the department to conduct an inspection only upon a complaint made to the department regarding the licensee. For a licensee that is not so accredited, the bill would continue to require the department to conduct an inspection at least annually.

The Sherman Food, Drug, and Cosmetic Law, among other things, prohibits a person from conducting a home medical device retail facility business in the state without a valid license from the State Department of Public Health. Existing law requires the department to inspect each place of business prior to issuing a license, and further requires the department to inspect each licensee at least annually.

This bill would modify the requirement for the department to inspect a licensed home medical device retail facility business if it is accredited by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services. If so accredited, the bill would authorize the department to conduct an inspection only upon a complaint made to the department regarding the licensee. For a licensee that is not so accredited, the bill would continue to require the department to conduct an inspection at least annually.

Date of Hearing: April 4, 2017

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 1387

Author:(Arambula) – As Introduced Ver:February 17, 2017

SUBJECT: Home medical device retail facility business: licensing: inspections.

SUMMARY: Modifies the inspection requirements for home medical device retail (HMDR) facilities by requiring that HMDR providers, which have been accredited by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services (CMS), be inspected only in response to a complaint made to the Department of Public Health (DPH) regarding that provider. Continues to require at least annual inspections for those HMDR providers that are not accredited.

EXISTING LAW:

1. Defines HMDR facility to mean an area, place, or premises, other than a licensed pharmacy, in and from which prescription devices, home medical devices, or home medical device services are sold, fitted, or dispensed pursuant to a prescription.
   
2. Requires any person who is a HMDR provider in California to obtain a license from DPH.
   
3. Requires DPH to inspect each place of business of a HMDR provider in California to determine ownership, adequacy of facilities, and personnel qualifications before issuing a license, and requires DPH to inspect each licensee at least annually thereafter.
   
4. Requires out-of-state HMDR facilities to register with DPH in order to sell or distribute prescription devices in California.
   
5. Requires, under the federal Medicare Modernization Act of 2003, requires all HMDR providers to comply with specified quality standards in order to receive Medicare payments.

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, this measure eliminates a duplicative process that requires California-based HMDR facilities to be inspected by DPH while also being accredited by the federal government. California’s licensing system was established before there was a national accrediting process. Many HMDR companies providing supplies and equipment to California consumers are located outside of California, and those out-of-state companies must be registered but not inspected by DPH. The author states that this measure simply requires all HMDR providers serving California residents to meet the same quality assurance and patient protections standards. According to the author, the accreditation is a more extensive oversight process than DPH inspections.
2. BACKGROUND. The HMDR licensing program licenses California HMDR facilities and registers out-of-state HMDR facilities. Current law requires that in-state HMDR facilities be inspected prior to licensure and annually thereafter. According to DPH, the licensing of HMDR facilities is important to protect California consumers from unsafe, contaminated medical devices and adulterated prescription medical gasses. Mandated license inspections ensure that competent and knowledgeable persons dispense, repair, calibrate, and maintain prescription devices and sell prescription medical gasses. DPH states that its oversight ensures that HMDR facilities distributing or selling medical devices, such as ventilators and oxygen concentrators, drug delivery systems for home medication, hospital beds, traction equipment, and other medical devices, allows consumers to be safely treated or convalesce at home. DPH coordinates its inspection findings with the Department of Health Care Services to eliminate fraud by identifying HMDR facilities that are empty storefronts designed to falsely bill for products never sold or utilized. According to the author, there are approximately 1,100 HMDR in-state facilities and more than 300 out-of-state facilities that serve California residents. Currently, the license fee for new and renewal in-state HMDR providers is $1,105 annually. The out-of-state registration fee is $195 annually.

In November 2006, CMS approved 10 national accreditation organizations (AOs) to accredit suppliers of durable medical equipment (DME), prosthetics, orthotics, and supplies, known as HMDR facilities under California law, that meet the quality standards under Medicare Part B. According to CMS, the accreditation process may take up to nine months to complete for an applicant that has no deficiencies that require correction post onsite-survey.

1. SUPPORT. The California Association of Medical Product Suppliers (CAMPS), the sponsor, argues that this bill ensures patient and equipment safety while eliminating duplicative and varying standards of compliance. This bill would also level the playing field for in-state HMDR facilities who compete with out-of-state HMDR facilities that pay far less for registration and are not subject to initial or annual inspections. CAMPS states that most states do not have HMDR facility licensing requirements but two that do, Florida and Ohio, waive ongoing state inspections if the DME provider is CMS accredited. CAMPS reports that HMDR facility licensing by DPH began in 2002 and the requirements for compliance have largely been developed by DPH staff and inspectors with few elements detailed in regulation or statute, thus leading to inconsistent expectations from inspection to inspection. CAMPS argues that the Medicare accreditation process, which costs $3,000-$5,000, generally lasts for one to two days, is conducted by surveyors who are licensed health care providers with more than five years’ experience in the home medical industry, includes home visits, and is rigorous and more extensive than state requirements. Most accreditation organizations grant a three year accreditation. CMS also requires each AO to perform a percentage of random unannounced onsite surveys mid cycle to validate ongoing compliance.
2. AMENDMENTS. The following amendments are recommended:
   1. On page 2, line 10 of the bill, after “(2)” insert: “After the initial inspection required by subdivision (a)” to clarify that an initial inspection will always be done;
   2. On page 2, between lines 14 and 15 insert: For a licensee to be exempted from annual inspections by the department the following requirements must be met: (1) the licensee must be accredited at least every three years; (2) the licensee must be subject to unannounced on-site mid-cycle surveys to validate ongoing compliance; (3) the accrediting organization must submit the results of all surveys and inspections, including any corrective action plans, of the licensee to the department within 30 days; and, (4) the accrediting organization must notify the department within 15 days if a licensee fails an inspection.
   3. Add a January 1, 2023 sunset date for this bill.

REGISTERED SUPPORT / OPPOSITION:

Support

California Association of Medical Product Suppliers (sponsor)

Opposition

None on file.

Analysis Prepared by: John Gilman / HEALTH / (916) 319-2097

 CONSENT  

Bill No: AB 1387

Author: Arambula (D)

Amended: 4/18/17 in Assembly

Vote: 21

SENATE HEALTH COMMITTEE: 8-0, 7/12/17

AYES: Hernandez, Nguyen, Atkins, Leyva, Mitchell, Monning, Newman, Roth

NO VOTE RECORDED: Nielsen

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 76-0, 5/4/17 (Consent) - See last page for vote

SUBJECT: Home medical device retail facility business: licensing: inspections

SOURCE: California Association of Medical Product Suppliers

DIGEST:

This bill eliminates the requirement that licensed home medical device retail facilities be inspected annually if the licensed facility is accredited by an approved accrediting organization.

ANALYSIS:

Existing law:

1. Requires any person who wants to conduct a home medical device retail facility (HMDRF) in California to be licensed by the Department of Public Health (DPH), and requires a separate license for each of the premises where an HMDRF is operating. Requires the license to be renewed annually.
2. Establishes standards for HMDRFs, and requires HMDRFs to have written policies and procedures related to home medical device handling, including the cleaning, storage, and maintenance of home medical devices necessary to prevent damage or contamination.
3. Requires DPH, prior to issuing a license as an HMDRF, to inspect each place of business to determine ownership, adequacy of facilities, and personnel qualifications, and to inspect each licensee at least annually thereafter.
4. Exempts various entities from the requirement to be licensed as an HMDRF, including hospitals, home health agencies that do not have a Part B Medicare supplier number, licensed pharmacies, hospice programs, nursing homes, and breast feeding support programs, among others.
5. Requires an out-of-state HMDRF to register with DPH prior to selling or distributing prescription devices.

This bill:

1. Repeals the requirement that DPH inspect an HMDRF annually after the initial licensure inspection, and instead requires DPH to perform annual inspections of only those licensees that are not accredited by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services (CMS).
2. Requires DPH to inspect a licensed HMDRF that is accredited only upon a complaint made to DPH regarding the licensee.
3. Specifies that a licensed HMDRF is deemed to be accredited only if all of the following conditions exist:
   1. The licensee is accredited by the CMS-approved accrediting organization at least every three years;
   2. The licensee is subject to unannounced onsite mid-cycle surveys by the accrediting organization to validate ongoing compliance;
   3. The accrediting organization notifies DPH of the status of the licensee’s accreditation within 30 days following an inspection by the accrediting organization; and,
   4. The accrediting organization, if the licensee is less than fully accredited, notifies DPH of the reasons for the lack of full accreditation and any corrective action plan recommended to the licensee.
4. Requires DPH to inspect an HMDRF that ceases to be accredited, and to continue to annually inspect an HMDRF that is not accredited by a CMS-approved accrediting organization.
5. Sunsets the provisions of this bill on January 1, 2023.

Background

Prior to the year 2001, the Board of Pharmacy regulated “medical device retailers,” which were defined as those entities who were selling devices that contained a label designating the product as requiring a physician prescription (a “dangerous device”). However, there are many products for home medical use that do not contain a label designating it a prescription-only device, and sometimes different manufacturers of the same product will make different decisions about whether to include such a label. Because this created a situation where some medical device retailers were regulated by the Board of Pharmacy and some were not, in 2000 legislation was enacted that moved regulation of medical devices to DPH, and expanded the definition beyond prescription devices to also include items like oxygen delivery systems, hospital beds and commodes, apnea monitors, electronic wheelchairs, ventilators, among other devices.

According to DPH’s 2016 annual report, there are 1,228 licensed HMDRFs, plus another 323 out-of-state HMDRFs that are registered with DPH in order to sell or distribute prescription devices to California residents.

In November 2006, CMS approved ten national accreditation organizations that accredit suppliers of durable medical equipment (DME), prosthetics, orthotics and other medical supplies. In order to enroll or maintain Medicare billing privileges, all DME suppliers must be accredited by an approved accreditation organization. Approved accrediting organizations are required to review an application demonstrating that the provider meets specified requirements, and perform an unannounced, on-site inspection prior to granting accreditation. Accrediting organization are also required to perform unannounced, on-site inspections at least every three years for suppliers to retain their accredited status.

Comments

Author’s statement. According to the author, this bill eliminates the duplicative process and levels the playing field for medical product suppliers that have bricks and mortar in California. HMDRF licensing began in 2000 and the requirements for compliance have largely been developed by DPH staff and inspectors with few elements detailed in regulation or statute. In 2006, Medicare established a requirement that all providers of DME and medical supplies must be accredited by one of 10 recognized accrediting bodies. The accreditation process is rigorous with a procedure and process driven program to assure both quality and patient protections. It is a more extensive oversight process than state inspections. In addition under current law, an HMDRF located outside California that provides services to California residents is required to be licensed but is not subject to initial or annual inspections. There are approximately 1,100 HMDRFs in California and over 300 out of state HMDRFs. In state HMDRFs are subject to an additional burden and uncertain state requirements while out of state HMDRFs are not held to the same standards. This bill would exempt an HMDRF from annual inspections if they are accredited by an accrediting body approved by CMS/Medicare. Upon initial licensure a HMDRF would be inspected but after that would only be inspected based upon a complaint to DPH. Non-accredited HMDRFs would continue to be subject to annual inspections.

Related/Prior Legislation

AB 1496 (Olberg, Chapter 837, Statutes of 2000) replaced "medical device retailer" as a category of licensure under the Board of Pharmacy with HMDRFs, which are required to be licensed and regulated by DPH, and expanded the definition of who must be licensed as an HMDRF.

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

SUPPORT: (Verified 8/22/17)

California Association of Medical Product Suppliers (source)

OPPOSITION: (Verified 8/22/17)

None received

ARGUMENTS IN SUPPORT: This bill is sponsored by the California Association of Medical Product Suppliers (CAMPS), which states that it sponsored legislation in 2000 to create licensure for HMDRFs, and that the requirements for compliance have largely been developed by DPH staff and inspectors with few elements detailed in regulation or statute. CAMPS states that in 2006, Medicare established a requirement that all providers of durable medical equipment be accredited by one of 10 recognized accrediting bodies, and that this accreditation process is more extensive than the state inspections. According to CAMPS, the vast majority of HMDRFs serve Medicare patients and are thus accredited. CAPS states that additionally, under current law an HMDRF located outside California that provides services to California residents is required to be registered but is not subject to inspections. CAMPS argues that in-state HMDRGs are subject to an additional burden, while out-of-state HMDRFs are not held to the same standards. According to CAMPS, most states do not have HMDRF licensing, but at least two that do, Florida and Ohio, waive ongoing inspections if the provider is accredited.

ASSEMBLY FLOOR: 76-0, 5/4/17

AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Travis Allen, Bigelow, Cristina Garcia, Patterson

Prepared by: Vincent D. Marchand / HEALTH / (916) 651-4111

8/23/17 11:07:28

**** END ****

SENATE COMMITTEE ON HEALTH

Senator Ed Hernandez, O.D., Chair

BILL NO: AB 1387

SUBJECT: Home medical device retail facility business: licensing: inspections

SUMMARY:

Eliminates the requirement that licensed home medical device retail facilities be inspected annually if the licensed facility is accredited by an approved accrediting organization.

Existing law:

1. Requires any person who wants to conduct a home medical device retail facility (HMDRF) in California to be licensed by the Department of Public Health (DPH), and requires a separate license for each of the premises where an HMDRF is operating. Requires the license to be renewed annually.
2. Establishes standards for HMDRFs, and requires HMDRFs to have written policies and procedures related to home medical device handling, including the cleaning, storage, and maintenance of home medical devices necessary to prevent damage or contamination.
3. Requires DPH, prior to issuing a license as an HMDRF, to inspect each place of business to determine ownership, adequacy of facilities, and personnel qualifications, and to inspect each licensee at least annually thereafter.
4. Exempts various entities from the requirement to be licensed as an HMDRF, including hospitals, home health agencies that do not have a Part B Medicare supplier number, licensed pharmacies, hospice programs, nursing homes, and breast feeding support programs, among others.
5. Requires an out-of-state HMDRF to register with DPH prior to selling or distributing prescription devices.

This bill:

1. Repeals the requirement that DPH inspect an HMDRF annually after the initial licensure inspection, and instead requires DPH to perform annual inspections of only those licensees that are not accredited by an accreditation organization approved by the federal Centers for Medicare and Medicaid Services (CMS).
2. Requires DPH to inspect a licensed HMDRF that is accredited only upon a complaint made to DPH regarding the licensee.
3. Specifies that a licensed HMDRF is deemed to be accredited only if all of the following conditions exist:
   1. The licensee is accredited by the CMS-approved accrediting organization at least every three years;
   2. The licensee is subject to unannounced onsite mid-cycle surveys by the accrediting organization to validate ongoing compliance;
   3. The accrediting organization notifies DPH of the status of the licensee’s accreditation within 30 days following an inspection by the accrediting organization; and,
   4. The accrediting organization, if the licensee is less than fully accredited, notifies DPH of the reasons for the lack of full accreditation and any corrective action plan recommended to the licensee.
4. Requires DPH to inspect an HMDRF that ceases to be accredited, and to continue to annually inspect an HMDRF that is not accredited by a CMS-approved accrediting organization.
5. Sunsets the provisions of this bill on January 1, 2023.

FISCAL EFFECT:

According to the Assembly Appropriations Committee, any state fiscal effect is expected to be minor. DPH will incur some minor costs to verify accreditation, offset by cost savings from no longer performing inspections (Drug and Device Fund). The facilities will still be licensed and pay a licensure fee, which is adjusted annually to reflect projected costs.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, this bill eliminates the duplicative process and levels the playing field for medical product suppliers that have bricks and mortar in California. HMDRF licensing began in 2000 and the requirements for compliance have largely been developed by DPH staff and inspectors with few elements detailed in regulation or statute. In 2006, Medicare established a requirement that all providers of Durable Medical Equipment (DME) and medical supplies must be accredited by one of 10 recognized accrediting bodies. The accreditation process is rigorous with a procedure and process driven program to assure both quality and patient protections. It is a more extensive oversight process than state inspections. In addition under current law, an HMDRF located outside California that provides services to California residents is required to be licensed but is not subject to initial or annual inspections. There are approximately 1,100 HMDRFs in California and over 300 out of state HMDRFs. In state HMDRFs are subject to an additional burden and uncertain state requirements while out of state HMDRFs are not held to the same standards. This bill would exempt an HMDRF from annual inspections if they are accredited by an accrediting body approved by CMS/Medicare. Upon initial licensure a HMDRF would be inspected but after that would only be inspected based upon a complaint to DPH. Non-accredited HMDRFs would continue to be subject to annual inspections.
2. Background. Prior to the year 2001, the Board of Pharmacy regulated “medical device retailers,” which were defined as those entities who were selling devices that contained a label designating the product as requiring a physician prescription (a “dangerous device”). However, there are many products for home medical use that do not contain a label designating it a prescription-only device, and sometimes different manufacturers of the same product will make different decisions about whether to include such a label. Because this created a situation where some medical device retailers were regulated by the Board of Pharmacy and some were not, in 2000 legislation was enacted that moved regulation of medical devices to DPH, and expanded the definition beyond prescription devices to also include items like oxygen delivery systems, hospital beds and commodes, apnea monitors, electronic wheelchairs, ventilators, among other devices.
   
   According to DPH’s 2016 annual report, there are 1,228 licensed HMDRFs, plus another 323 out-of-state HMDRFs that are registered with DPH in order to sell or distribute prescription devices to California residents.
   
   In November 2006, CMS approved ten national accreditation organizations that accredit suppliers of DME, prosthetics, orthotics and other medical supplies. In order to enroll or maintain Medicare billing privileges, all DME suppliers must be accredited by an approved accreditation organization. Approved accrediting organizations are required to review an application demonstrating that the provider meets specified requirements, and perform an unannounced, on-site inspection prior to granting accreditation. Accrediting organization are also required to perform unannounced, on-site inspections at least every three years for suppliers to retain their accredited status.
3. Prior legislation. AB 1496 (Olberg, Chapter 837, Statutes of 2000) replaced "medical device retailer" as a category of licensure under the Board of Pharmacy with HMDRFs, which are required to be licensed and regulated by DPH, and expanded the definition of who must be licensed as an HMDRF.
4. Support. This bill is sponsored by the California Association of Medical Product Suppliers (CAMPS), which states that it sponsored legislation in 2000 to create licensure for HMDRFs, and that the requirements for compliance have largely been developed by DPH staff and inspectors with few elements detailed in regulation or statute. CAMPS states that in 2006, Medicare established a requirement that all providers of durable medical equipment be accredited by one of 10 recognized accrediting bodies, and that this accreditation process is more extensive than the state inspections. According to CAMPS, the vast majority of HMDRFs serve Medicare patients and are thus accredited. CAPS states that additionally, under current law an HMDRF located outside California that provides services to California residents is required to be registered but is not subject to inspections. CAMPS argues that in-state HMDRGs are subject to an additional burden, while out-of-state HMDRFs are not held to the same standards. According to CAMPS, most states do not have HMDRF licensing, but at least two that do, Florida and Ohio, waive ongoing inspections if the provider is accredited.

SUPPORT AND OPPOSITION:

Support: California Association of Medical Product Suppliers (sponsor)

Oppose: None received

-- END --

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1387

Author:(Arambula) – As Amended Ver:April 18, 2017

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

SUMMARY:

This bill, until January 1, 2023 and following an initial inspection, exempts a home medical device retail facility from annual inspections by the California Department of Public Health (CDPH) if the facility is accredited by an organization approved by the federal Center for Medicaid and Medicare Services (CMS).

FISCAL EFFECT:

Any state fiscal effect is expected to be minor. CDPH will incur some minor costs to verify accreditation, offset by cost savings from no longer performing inspections (Drug and Device Fund). The facilities will still be licensed and pay a licensure fee, which is adjusted annually to reflect projected costs.

COMMENTS:

1. Purpose. According to the author, this measure eliminates a duplicative process that requires California-based home medical device retail facilities to be inspected by CDPH while also meeting robust accreditation standards mandated by the federal government. The sponsor of this bill, the California Association of Medical Product Suppliers, also states the bill levels the playing field for in-state facilities to compete with out-of-state facilities that pay far less for registration and are not subject to inspections.
2. Background. A home medical device retail facility is defined as a place, excluding a pharmacy, where prescription devices, home medical devices, or home medical device services are stored, sold, fitted, or dispensed pursuant to a prescription at retail. CDPH licenses California home medical device retail facilities and registers out-of-state facilities. Current law requires in-state facilities to be inspected prior to licensure and annually thereafter. According to CDPH, the licensing of these facilities is important to protect California consumers from unsafe, contaminated medical devices and adulterated prescription medical gasses. Currently, the license fee for new and renewal in-state HDMR providers is $1,105 annually, while the out-of-state registration fee is $195 annually. Fees were for a variety of programs within the CDPH Food and Drug Branch, including this licensure program, were increased by 30% in 2016 in order to right-size revenues and costs.

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