BILL NUMBER: AB 2282	CHAPTERED
	BILL TEXT

	CHAPTER  772
	FILED WITH SECRETARY OF STATE  SEPTEMBER 29, 2006
	APPROVED BY GOVERNOR  SEPTEMBER 29, 2006
	PASSED THE ASSEMBLY  AUGUST 31, 2006
	PASSED THE SENATE  AUGUST 29, 2006
	AMENDED IN SENATE  AUGUST 24, 2006
	AMENDED IN SENATE  AUGUST 21, 2006
	AMENDED IN ASSEMBLY  APRIL 20, 2006

INTRODUCED BY   Assembly Member Oropeza

                        FEBRUARY 22, 2006

   An act to amend Section 650 of the Business and Professions Code,
and to amend Section 14107.2 of the Welfare and Institutions Code,
relating to health facilities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2282, Oropeza  Federally-qualified health centers.
   Existing law, with certain exceptions, prohibits the offer,
delivery, receipt, or acceptance by any healing arts licensee
regulated by the Business and Professions Code or under the
Chiropractic Initiative Act of any rebate, refund, commission,
preference, patronage dividend, discount, or other consideration, as
compensation or an inducement for referring patients, clients, or
customers to any person. A violation of this provision is a crime.
   This bill would provide that the offer, delivery, receipt, or
acceptance of any consideration between a federally-qualified health
center, as defined, and any individual or entity providing goods,
items, services, donations, loans, or a combination thereof to the
health center is permitted only if the transaction is consistent with
a specified federal law.
   Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Services and under
which qualified low-income persons receive health care benefits.
   Existing law provides that any person who solicits or receives any
remuneration in return for the referral, or promised referral, of
any individual to a person for the furnishing or arranging for the
furnishing of any service or merchandise for which payment may be
made under the Medi-Cal program, or in return for the purchasing,
leasing, ordering, or arranging for, or recommending the purchasing,
leasing, or ordering of any goods, facility, service, or merchandise
for which payment may be made under that program, is guilty of a
crime, except as specified. Existing law further provides that any
person who offers or pays any remuneration to refer any individual to
a person for the furnishing or arranging for furnishing of any
service or merchandise for which payment may be made under the
Medi-Cal program, or to purchase, lease, order, or arrange for or
recommend the purchasing, leasing, or ordering of any goods,
facility, service, or merchandise for which payment may be made under
that program, is guilty of crime, except as specified.
   This bill would exempt from the above criminal provisions
practices or transactions between a federally-qualified health
center, as defined, and any individual or entity only to the extent
sanctioned or permitted by federal law.
   This bill would incorporate additional changes to Section 650 of
the Business and Professions Code, proposed by AB 225, to be
operative only if AB 225 and this bill are both chaptered and become
effective on or before January 1, 2007, and this bill is chaptered
last.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 650 of the Business and Professions Code is
amended to read:
   650.  Except as provided in Chapter 2.3 (commencing with Section
1400) of Division 2 of the Health and Safety Code, the offer,
delivery, receipt, or acceptance by any person licensed under this
division or the Chiropractic Initiative Act of any rebate, refund,
commission, preference, patronage dividend, discount, or other
consideration, whether in the form of money or otherwise, as
compensation or inducement for referring patients, clients, or
customers to any person, irrespective of any membership, proprietary
interest or coownership in or with any person to whom these patients,
clients, or customers are referred is unlawful.
   The payment or receipt of consideration for services other than
the referral of patients which is based on a percentage of gross
revenue or similar type of contractual arrangement shall not be
unlawful if the consideration is commensurate with the value of the
services furnished or with the fair rental value of any premises or
equipment leased or provided by the recipient to the payer.
   The offer, delivery, receipt, or acceptance of any consideration
between a federally-qualified health center, as defined in Section
1396d(l)(2)(B) of Title 42 of the United States Code, and any
individual or entity providing goods, items, services, donations,
loans, or a combination thereof, to the health center entity pursuant
to a contract, lease, grant, loan, or other agreement, if that
agreement contributes to the ability of the health center entity to
maintain or increase the availability, or enhance the quality, of
services provided to a medically underserved population served by the
health center, shall be permitted only to the extent sanctioned or
permitted by federal law.
   Except as provided in Chapter 2.3 (commencing with Section 1400)
of Division 2 of the Health and Safety Code and in Sections 654.1 and
654.2, it shall not be unlawful for any person licensed under this
division to refer a person to any laboratory, pharmacy, clinic
(including entities exempt from licensure pursuant to Section 1206 of
the Health and Safety Code), or health care facility solely because
the licensee has a proprietary interest or coownership in the
laboratory, pharmacy, clinic, or health care facility; provided,
however, that the licensee's return on investment for that
proprietary interest or coownership shall be based upon the amount of
the capital investment or proportional ownership of the licensee
which ownership interest is not based on the number or value of any
patients referred. Any referral excepted under this section shall be
unlawful if the prosecutor proves that there was no valid medical
need for the referral.
   "Health care facility" means a general acute care hospital, acute
psychiatric hospital, skilled nursing facility, intermediate care
facility, and any other health facility licensed by the State
Department of Health Services under Chapter 2 (commencing with
Section 1250) of Division 2 of the Health and Safety Code.
   A violation of this section is a public offense and is punishable
upon a first conviction by imprisonment in the county jail for not
more than one year, or by imprisonment in the state prison, or by a
fine not exceeding fifty thousand dollars ($50,000), or by both that
imprisonment and fine. A second or subsequent conviction is
punishable by imprisonment in the state prison or by imprisonment in
the state prison and a fine of fifty thousand dollars ($50,000).
  SEC. 1.5.  Section 650 of the Business and Professions Code is
amended to read:
   650.  (a) Except as provided in Chapter 2.3 (commencing with
Section 1400) of Division 2 of the Health and Safety Code, the offer,
delivery, receipt, or acceptance by any person licensed under this
division or the Chiropractic Initiative Act of any rebate, refund,
commission, preference, patronage dividend, discount, or other
consideration, whether in the form of money or otherwise, as
compensation or inducement for referring patients, clients, or
customers to any person, irrespective of any membership, proprietary
interest or coownership in or with any person to whom these patients,
clients, or customers are referred is unlawful.
   (b) The payment or receipt of consideration for services other
than the referral of patients which is based on a percentage of gross
revenue or similar type of contractual arrangement shall not be
unlawful if the consideration is commensurate with the value of the
services furnished or with the fair rental value of any premises or
equipment leased or provided by the recipient to the payer.
   (c) The offer, delivery, receipt, or acceptance of any
consideration between a federally-qualified health center, as defined
in Section 1396d(l)(2)(B) of Title 42 of the United States Code, and
any individual or entity providing goods, items, services,
donations, loans, or a combination thereof, to the health center
entity pursuant to a contract, lease, grant, loan, or other
agreement, if that agreement contributes to the ability of the health
center entity to maintain or increase the availability, or enhance
the quality, of services provided to a medically underserved
population served by the health center, shall be permitted only to
the extent sanctioned or permitted by federal law.
   (d) Except as provided in Chapter 2.3 (commencing with Section
1400) of Division 2 of the Health and Safety Code and in Sections
654.1 and 654.2, it shall not be unlawful for any person licensed
under this division to refer a person to any laboratory, pharmacy,
clinic (including entities exempt from licensure pursuant to Section
1206 of the Health and Safety Code), or health care facility solely
because the licensee has a proprietary interest or coownership in the
laboratory, pharmacy, clinic, or health care facility; provided,
however, that the licensee's return on investment for that
proprietary interest or coownership shall be based upon the amount of
the capital investment or proportional ownership of the licensee
which ownership interest is not based on the number or value of any
patients referred. Any referral excepted under this section shall be
unlawful if the prosecutor proves that there was no valid medical
need for the referral.
   (e) (1) Except as provided in Chapter 2.3 (commencing with Section
1400) of Division 2 of the Health and Safety Code and in Sections
654.1 and 654.2, it shall not be unlawful to provide nonmonetary
remuneration, in the form of hardware, software, or information
technology and training services, necessary and used solely to
receive and transmit electronic prescription information in
accordance with the standards set forth in Section 1860D-4(e) of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003
(42 U.S.C. Sec. 1395w-104) in the following situations:
   (A) In the case of a hospital, by the hospital to members of its
medical staff.
   (B) In the case of a group medical practice, by the practice to
prescribing health care professionals that are members of the
practice.
   (C) In the case of Medicare prescription drug plan sponsors or
Medicare Advantage organizations, by the sponsor or organization to
pharmacists and pharmacies participating in the network of the
sponsor or organization and to prescribing health care professionals.

   (2) The exceptions set forth in this subdivision are adopted to
conform state law with the provisions of Section 1860D-4(e)(6) of the
Medicare Prescription Drug, Improvement and Modernization Act of
2003 (42 U.S.C. Sec. 1395w-104) and are limited to drugs covered
under Part D of the federal Medicare Program that are prescribed to
Part D eligible individuals (42 U.S.C. Sec. 1395w-101).
   (3) The exceptions set forth in this subdivision shall not be
operative until the regulations required to be adopted by the
Secretary of the United States Department of Health and Human
Services, pursuant to Section 1860D-4(e) of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (42 U.S.C. Sec.
1395W-104) are effective.  If the California Health and Human
Services Agency determines that regulations are necessary to ensure
that implementation of the provisions of paragraph (1) is consistent
with the regulations adopted by the Secretary of the United States
Department of Health and Human Services, it shall adopt emergency
regulations to that effect.
   (f) "Health care facility" means a general acute care hospital,
acute psychiatric hospital, skilled nursing facility, intermediate
care facility, and any other health facility licensed by the State
Department of Health Services under Chapter 2 (commencing with
Section 1250) of Division 2 of the Health and Safety Code.
   (g) A violation of this section is a public offense and is
punishable upon a first conviction by imprisonment in the county jail
for not more than one year, or by imprisonment in the state prison,
or by a fine not exceeding fifty thousand dollars ($50,000), or by
both that imprisonment and fine. A second or subsequent conviction is
punishable by imprisonment in the state prison or by imprisonment in
the state prison and a fine of fifty thousand dollars ($50,000).
  SEC. 2.  Section 14107.2 of the Welfare and Institutions Code is
amended to read:
   14107.2.  (a) Any person who solicits or receives any
remuneration, including, but not restricted to, any kickback, bribe,
or rebate, directly or indirectly, overtly or covertly, in cash or in
valuable consideration of any kind either:    (1) In return for the
referral, or promised referral, of any individual to a person for the
furnishing or arranging for the furnishing of any service or
merchandise for which payment may be made in whole or in part under
this chapter or Chapter 8 (commencing with Section 14200); or   (2)
In return for the purchasing, leasing, ordering, or arranging for or
recommending the purchasing, leasing, or ordering of any goods,
facility, service or merchandise for which payment may be made, in
whole or in part, under this chapter or Chapter 8 (commencing with
Section 14200) of this part, is punishable upon a first conviction by
imprisonment in the county jail for not longer than one year or
state prison, or by a fine not exceeding ten thousand dollars
($10,000), or by both the imprisonment and fine. A second or
subsequent conviction shall be punishable by imprisonment in the
state prison.
   (b) Any person who offers or pays any remuneration, including, but
not restricted to, any kickback, bribe, or rebate, directly or
indirectly, overtly or covertly, in cash or in valuable consideration
of any kind either:    (1) To refer any individual to a person for
the furnishing or arranging for furnishing of any service or
merchandise for which payment may be made, in whole or in part, under
this chapter or Chapter 8 (commencing with Section 14200); or   (2)
To purchase, lease, order, or arrange for or recommend the
purchasing, leasing, or ordering of any goods, facility, service, or
merchandise for which payment may be made in whole or in part under
this chapter or Chapter 8 (commencing with Section 14200), is
punishable upon a first conviction by imprisonment in the county jail
for not longer than one year or state prison, or by a fine not
exceeding ten thousand dollars ($10,000), or by both the imprisonment
and fine. A second or subsequent conviction shall be punishable by
imprisonment in the state prison.
   (c) Subdivisions (a) and (b) shall not apply to the following:
   (1) Any amount paid by an employer to an employee, who has a bona
fide employment relationship with that employer, for employment with
provision of covered items or services.
   (2) A discount or other reduction in price obtained by a provider
of services or other entity under this chapter or Chapter 8
(commencing with Section 14200), if the reduction in price is
properly disclosed and reflected in the costs claimed or charges made
by the provider or entity under this chapter or Chapter 8
(commencing with Section 14200). This paragraph shall not apply to
consultant pharmaceutical services rendered to nursing facilities nor
to all categories of intermediate care facilities for the
developmentally disabled.
   (3) The practices or transactions between a federally-qualified
health center, as defined in Section 1396d(l)(2)(B) of Title 42 of
the United States Code, and any individual or entity shall be
permitted only to the extent sanctioned or permitted by federal law.

   (d) For purposes of this section "kickback" means a rebate or
anything of value or advantage, present or prospective, or any
promise or undertaking to give any such rebate or thing of value or
advantage, with a corrupt intent to unlawfully influence the person
to whom it is given in actions undertaken by that person in his or
her public, professional, or official capacity.
   (e) The enforcement remedies provided under this section are not
exclusive and shall not preclude the use of any other criminal or
civil remedy.
  SEC. 3.  Section 1.5 of this bill incorporates amendments to
Section 650 of the Business and Professions Code proposed by both
this bill and AB 225. It shall only become operative if (1) both
bills are enacted and become effective on or before January 1, 2007,
(2) each bill amends Section 650 of the Business and Professions
Code, and (3) this bill is enacted after AB 225, in which case
Section 1 of this bill shall not become operative.