BILL ANALYSIS
AB 120
Page 1
Date of Hearing: May 12, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 120 (Hayashi) - As Amended: May 7, 2009
SUBJECT : Healing arts: peer review.
SUMMARY : Amends the medical peer review process by
recommending external peer review in limited circumstances,
requires peer review bodies to share information, establishes a
process to provide reasonable opportunity for the selection of a
mutually acceptable hearing officer, establishes the duties of a
hearing officer, and sets parameters for attorney
representation. Specifically, this bill :
1)Declares the public policy of the state that healthcare
licentiates who may be providing substandard care be subject
to the peer review hearing and reporting process set forth, as
specified.
2)Prohibits a member of a medical or professional staff, by
contract or otherwise, from being required to alter or
surrender staff privileges, status, or membership solely due
to the termination of a contract between that member and a
health care facility to ensure that the peer review process is
not circumvented.
3)States that with respect to services that may only be provided
by members who have, or who are members of a medical group
that has a current exclusive contract for certain identified
services, termination of the contract, or termination of the
member's employment by the medical group holding the contract,
may result in the member's ineligibility to provide the
services covered by the contract.
4)Requires the peer review body of a health care facility to be
entitled to review and make recommendations to the governing
body of the facility regarding quality considerations whenever
the selection, performance evaluation, or any change in the
retention or replacement of licentiates with whom the health
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care facility has a contract occurs, and requires the
governing body to give great weight to these recommendations.
5)Preserves the right of a governing body's ability to take
action against a licentiate, as specified.
6)Declares the policy of the state that in certain limited
circumstances, external peer review may be necessary to
promote and protect patient care in order to eliminate
perceived bias, obtain needed medical expertise, or respond to
other particular circumstances.
7)Encourages a peer review body to obtain external peer review
for the evaluation or investigation of an applicant, privilege
holder, or member of the medical staff in the following
circumstances:
a) Committee or department reviews that could affect a
licentiate's membership or privileges do not provide a
sufficiently clear basis for action or inaction;
b) No current medical staff member can provide the
necessary expertise in the clinical procedure or area under
review; and,
c) To promote impartial peer review.
8)Requires a peer review body to respond to the reasonable
request of another peer review body and produce the records
requested concerning a licentiate under review to the extent
not otherwise prohibited by state or federal law, upon
reasonable receipt of copying costs.
9)Prohibits the records produced from being subject to discovery
to the extent provided in Section 1156.1 and 1157 of the
Evidence Code, and any other applicable sections of law.
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10)Requires the peer review body responding to the request to be
entitled to all confidentiality protections and privileges
provided by law as to the information and records disclosed.
11)Requires a hearing be held, as determined by the peer review
body, before a trier of fact, which shall be an arbitrator or
arbitrators selected by a process mutually acceptable to the
licentiate and the peer review body, or before a panel of
unbiased individuals, as specified.
12)Prohibits a hearing officer from gaining direct financial
benefit from the outcome of a hearing, requires the hearing
officer to disclose all actual and potential conflicts of
interest within the last five years as reasonably known to the
hearing officer, prohibits the hearing officer from acting as
a prosecuting officer or advocate, and prohibits the hearing
officer from voting.
13)Requires the hearing officer to meet both of the following
requirements:
a) Be selected through a process that provides a reasonable
opportunity for selection of a hearing officer who is
mutually acceptable to the licentiate and the peer review
body; and,
b) Be an attorney licensed to practice law in the State of
California. Except as otherwise agreed by the parties,
attorneys from a firm utilized by the hospital, the medical
staff, or the involved licentiate within the preceding two
years shall not be eligible.
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14)Establishes the following process as a reasonable opportunity
for selection of a mutually acceptable hearing officer:
a) If the licentiate and the peer review body are unable to
agree on a hearing officer within 10 business days of the
date that the peer review body receives the request for a
hearing, they shall utilize the services of a third party
selection service, as set forth in the healthcare
facility's medical staff bylaws, or if none is specified,
that is determined by mutual agreement of the parties
within 15 business days of the date the peer review body
receives the request for a hearing;
b) If the licentiate and the peer review body are unable to
agree on a third party selection service, the following
must occur:
i) Each party shall have five business days to provide
a list of five names of individuals meeting specified
requirements;
ii) Each party shall trade lists and have three business
days to strike up to two names from the list and to rank
the remaining names in order of preference, assigning
number one to the name with the strongest preference, and
no name shall be left blank;
iii) The candidate with the lowest combined score whose
name has not been stricken by either party shall be
invited to serve as the hearing officer;
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iv) In the event of a tie, the matter shall be resolved
by lot, drawing from the names of the two candidates with
the lowest combined score; and,
v) If this candidate is unable to serve, the other
candidate with the lowest combined score shall be asked
to serve. If neither of these two candidates is able to
serve, the peer review body may select a hearing officer
who need not be one of the individuals remaining on the
lists.
15)Requires that the timeframe within which a hearing must
commence, as specified, be tolled for purposes of complying
with the process of selecting a hearing officer, provided the
parties are engaged in a good faith attempt to select a
mutually acceptable hearing officer.
16)Requires the hearing officer to endeavor to ensure that all
parties maintain proper decorum and have reasonable
opportunity to be heard and present all relevant oral and
documentary evidence.
17)Requires the hearing officer to be entitled to determine the
order of, or procedure for, presenting evidence and argument
during the hearing and shall have the authority and discretion
to make all rulings on questions pertaining to matters of law,
procedure, or the admissibility of evidence.
18)Requires the hearing officer to take all appropriate steps to
ensure a timely resolution of the hearing, but may not
terminate the hearing process. However, in the case of
flagrant noncompliance with the procedural rules governing the
hearing process or egregious interference with the orderly
conduct of the hearing, the hearing officer may recommend that
the hearing panel terminate the hearing, provided that this
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activity is authorized by the applicable bylaws of the medical
staff.
19)States that during a hearing concerning a final proposed
action for which reporting is required to be filed, as
specified, both parties shall have the right to be represented
by an attorney of the party's choice at the party's expense,
however:
a) Prohibits a peer review body from being represented by
an attorney if the licentiate notifies the peer review body
in writing no later than 15 days prior to the hearing that
he or she has elected to not be represented by an attorney.
Except as otherwise agreed to by the parties, this
election shall be binding;
b) If the licentiate does not provide the written notice
described within the required timeframe, the peer review
body may be represented by an attorney even if the
licentiate later elects to not be represented by an
attorney; and,
c) Dental professional society peer review bodies may be
represented by an attorney even if the licentiate declines
to be represented by an attorney.
20)Defines "external peer review" as peer review provided by
licentiates who are not members of the peer review body, who
are impartial, and who have the necessary expertise in the
clinical procedure or area under review.
21)Makes legislative findings and declarations.
EXISTING LAW :
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1)Establishes the Medical Board of California (MBC) which
regulates and licenses physicians and surgeons.
2)Provides for the professional review of specified healing arts
licentiates through a peer review process conducted by peer
review bodies, as specified.
3)Provides various due process rights for licentiates who are
the subject of a final proposed disciplinary action of a peer
review body, as codified under Section 809, et seq. These
include authorizing a licensee to request a hearing concerning
a final action, which must be held before either an arbitrator
mutually acceptable to the licensee and the peer review body
or a panel of unbiased individuals, as specified. These due
process requirements do not apply to peer review proceedings
conducted in state or county hospitals, University of
California hospitals, or to other teaching hospitals, as
defined.
4)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 healthcare facility
or clinic to file an 805 report to the MBC within 15 days
after the effective date of any of the following occurring as
a result of an action of a peer review body:
a) A licentiate's application for staff privileges or
membership is denied or rejected for a medical disciplinary
cause or reason;
b) A licentiate's membership, staff privileges, or
employment is terminated or revoked for a medical
disciplinary cause or reason; or,
c) 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.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
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Purpose of this bill . According to the author's office, "This
bill will improve the peer review system in California to ensure
quality health care is being provided to patients. Currently,
the peer review system can be open to manipulation and
unreasonable delay. This bill will provide for a more effective
peer review process in which physicians and surgeons are
continuously monitored and assessed to improve the quality of
care that is provided to patients."
Background . Medical peer review is the process by which a
professional review body considers whether a practitioner's
clinical privileges or membership in a professional society will
be adversely affected by a physician's competence or
professional conduct. The foremost objective of the medical
peer review process is the promotion of the highest quality of
medical care as well as patient safety.
Variations exist on the procedures, commencement, practice and
subject of peer review. All medical entities set their own
standards for peer review, some more rigorous than others, and
some adhere to them more meticulously than others. The peer
review process is often lengthy and can take months or even
years. Although peer review is supposed to be an objective
review of professional skills, there has been rising concern
relating to "sham peer review." Sham peer review is the use of
the peer review system to discredit, harass, discipline, or
otherwise negatively affect a physician's ability to practice
medicine or exercise professional judgment for a non-medical or
patient safety related reason. Other criticisms of peer review
include over legalization of the process, lack of transparency
in the system, and burdensome human and financial toll peer
review brings not only to the hospital but also to a physician
under review.
California law entitles a licentiate who is the subject of a
final action of a peer review body to specified due process
rights. Under Section 809 of the Business and Professions Code,
a physician about whom an 805 report may be filed is entitled to
notice of the proposed action and an opportunity for a hearing
with full procedural rights, including discovery, examination of
witnesses, formal record of the proceedings and written
findings. A physician may contest the results of this hearing
with judicial review in Superior Court.
When a licensee is disciplined for a medical cause or reason by
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a peer review committee, the MBC receives an 805 report so that
it may take appropriate action. According to the MBC in 2007,
it received 138 reports from a licensee pool of 125,612
physicians. Of these reports, one accusation was filed, 92
cases are pending disposition, and 45 cases were closed. The
number of 805 reports varies from year to year.
SB 231 (Figueroa) Chapter 674, Statutes of 2005, required the
MBC to contract with an independent entity to conduct a
comprehensive study of the existing peer review process. SB 231
required the study to include a comprehensive description of the
various steps of, and decision makers in, the peer review
process; a survey of peer review cases to determine the
incidence of peer review; and an assessment of the cost of peer
review to licentiates. In the report, Lumetra concluded that
"the present peer review system is broken for various reasons
and is in need of a major fix, if the process is to truly serve
the citizens of California."
One major recommendation is to re-design the peer
review process, including establishing a separate,
independent peer review organization that has no
vested interest in the review outcome, except the
protection of the public. [Licensed healthcare
facilities/clinics, healthcare service plans,
professional societies, and medical groups] would
still provide the first level quality/safety screening
of the physician practice but the independent agency
would assume the responsibility for making decisions
about any actions toward the physician, including 805
or 821.5 reporting. The establishment of an unbiased
third party would eliminate the inconsistencies,
variations, and conflicts of interest that confront
and baffle entities that perform peer review. The MBC
would continue to investigate all 805 reports and make
determinations about any license actions.
Less dramatic but equally important recommendations
involve correcting the transparency issue (e.g.,
through improved public disclosure), emphasizing
credentialing and re-credentialing as a means to
identify and further investigate potential physician
practice problems, and promoting education to better
inform physician and entities about peer review and
805 and 809 reporting criteria. We recommend that the
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codes be clarified, especially as they relate to the
timing of when to report an 805. We also offer
suggestions on ways to fund these recommendations that
would not involve increasing taxes or diverting State
Funds.
Finally, we emphasize the importance of pilot studies
and program evaluation in implementing any system
change and recommend that any change be phased in over
time to allow adjustments by the affected systems and
entities.
The Lumetra Study focused heavily on the reporting process to
the MBC that follows peer review. This bill does not address
those issues, but it does attempt to resolve the report's
recommendation that the process be redesigned to afford for
greater fairness to the physician under review. One of the more
significant changes to current law is the selection process for
the 809 hearing officer; the bill affords for mutual agreement
of either the officer or a third party selection service, but if
this is not achieved, each side chooses candidates which are
ranked and chosen according to score, and in case of a tie, by
drawing lots.
Suggested technical amendments . The committee recommends the
following technical amendments:
On page 5, line 36, after "those," insert "identified"
On page 8, line 13, delete "F," and insert "Without limiting the
foregoing, f"
On page 8, line 20, delete "applicable bylaws of the peer review
body," and insert "healthcare facility's medical staff bylaws"
On page 8, line 29, after "strike," insert "up to"
On page 9, line 3, delete "is required to occur," and insert
"must be commenced"
On page 9, line 26, insert "r" after "office"
On page 9, line 28, delete "peer review body" and insert
"medical staff"
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Related legislation . SB 58 (Aanestad) of 2009 makes various
changes relating to the Business and Professions Section 805
reporting process. This bill is set for hearing in the Senate
Judiciary Committee on May 11, 2009.
SB 700 (Negrete McLeod) of 2009 defines peer review and changes
what is included in the definition of peer review body. The
bill also allows the Medical, Dental, or Osteopathic Boards of
California to inspect and copy any peer review minutes or
reports in a disciplinary proceeding that results in a Business
and Professions Section 805 report. This bill is pending on the
Senate floor.
REGISTERED SUPPORT / OPPOSITION :
Support
California Medical Association (sponsor)
Opposition
California Hospital Association
Catholic Healthcare West
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301