BILL ANALYSIS
AB 542
Page 1
Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 542 (Feuer) - As Amended: April 22, 2009
AS PROPOSED TO BE AMENDED
SUBJECT : Adverse medical events.
SUMMARY : Requires the Department of Managed Health Care (DMHC)
to adopt regulations establishing uniform policies and practices
governing the nonpayment of hospitals for substantiated adverse
events by public and private payers, consistent with those
developed by the federal Centers for Medicare and Medicaid
Services (CMS), and revises and expands the existing
requirements for hospitals to report specified adverse events.
Specifically, this bill :
1)Requires DMHC, in collaboration with Department of Public
Health (DPH), Department of Health Care Services (DHCS), the
California Public Employees' Retirement System (CalPERS), and
the California Department of Insurance (CDI) to adopt and
implement regulations that establish uniform policies and
practices governing the nonpayment of hospitals for
substantiated adverse events, as follows:
a) On or before September 1, 2010, adopt regulations for
nonpayment polices and practices consistent with those
developed by CMS pursuant to the Deficit Reduction Act of
2005 (DRA), that have the following characteristics:
i) Are high cost, high volume, or both;
ii) Are not present on admission; and,
iii) Could reasonably have been prevented through the
application of evidence-based guidelines.
b) Synchronize definitions, coding, and practices, to the
extent feasible, with CMS regarding nonpayment for
substantiated adverse events; and,
c) By January 1, 2012, and annually thereafter, update
payment policies and practices regarding nonpayment for
substantiated adverse events to reflect changes made to
those developed and implemented by CMS.
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2)Authorizes DMHC and other departments involved to consult with
individuals with relevant clinical expertise to assist in the
development of the regulations.
3)Following the adoption of the regulations by DMHC, requires
the collaborating agencies listed in 1) above to adopt
regulations that are identical or substantially similar to
those promulgated by DMHC.
4)In accordance with the DMHC regulations, prohibits a hospital
from charging a patient or payer and exempts a patient or
payer from being required to pay for substantiated adverse
events.
5)Requires contracts between hospitals, and health plans and
health insurers, to be consistent with the DMHC nonpayment
regulations.
6)Requires the adoption of the nonpayment policies by the
Healthy Families Program (HFP) administered by the Managed
Risk Medical Insurance Board, and by Medi-Cal, administered by
DHCS, and to the extent feasible, all other programs
administered by DHCS, but limits the implementation of the
nonpayment policies for state and local government programs to
the extent federal financial participation for those programs
is not jeopardized.
7)Prohibits a hospital from billing a HFP enrollee, a Medi-Cal
recipient, or an enrollee of a health plan or health insurer
for care and services denied as a result of the nonpayment
regulations.
8)Requires a hospital to exclude from specified Medi-Cal cost
reports costs related to adverse events subject to the
nonpayment regulations.
9)Revises the existing adverse event reporting requirements
applicable to hospitals, adds additional reportable events in
compliance with reportable events developed by CMS, applies
the reporting requirements to surgical clinics, and requires
DPH to determine whether an adverse event reported by a
hospital was substantiated or not.
10)Requires hospitals to report annually to the hospital board
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of directors, or other similar governing body, the following:
a) The number of adverse events that occurred in the facility
in the most recent 12-month period; b) The outcomes for each
patient involved; and c) A comparison to comparable
institutions of rates of adverse events, if this data exists
and is publicly available.
EXISTING LAW :
1)Establishes state licensing and federal Medicare and Medicaid
program certification requirements for health facilities,
including general acute care hospitals. Requires DPH to
administer licensing and certification requirements for
California health facilities. Requires health facilities to
pay annual licensing fees, describes specified hospital fees,
and requires the fees to be adjusted annually, as directed by
the Legislature in the annual Budget Act.
2)Requires every health facility for which a license or special
permit has been issued to be periodically inspected by a
representative or representatives appointed by DPH, depending
upon the type and complexity of the health facility or special
service to be inspected. Requires inspections to be conducted
no less than once every two years and as often as necessary to
insure the quality of care being provided.
3)Requires general acute care hospitals, acute psychiatric
hospitals, and special hospitals to report an adverse event,
as defined, to DPH no later than five days after the event has
been detected or in the case of an urgent or emergent threat,
no later than 24 hours after the adverse event has been
detected.
Reportable adverse events are:
a) Surgical
i) Surgery performed on the wrong body part;
ii) Surgery performed on the wrong patient;
iii) Retention of a foreign object in a patient after
surgery or other procedure; and,
iv) Intraoperative or immediately post-operative death
in a normal, healthy patient.
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a) Product or device
i) Patient death or serious disability associated with
the use of contaminated drugs, devices, or biologics
provided by the health care facility;
ii) Patient death or serious disability associated with
the use or function of a device in patient care in which
the device is used or functions other than as intended;
and,
iii) Patient death or serious disability associated with
intravascular air embolism that occurs while being cared
for in a health care facility.
b) Patient protection
i) Infant discharged to the wrong person;
ii) Patient death or serious disability associated with
patient disappearance for more than four hours; and,
iii) Patient suicide or attempted suicide resulting in
serious disability while being cared for in a health care
facility.
c) Care management
i) Patient death or serious disability associated with
a medication error;
ii) Patient death or serious disability associated with
a hemolytic reaction due to the administration of
ABO-incompatible blood or blood products;
iii) Maternal death or serious disability associated with
labor or delivery on a low-risk pregnancy while being
cared for in a health care facility;
iv) Patient death or serious disability associated with
hypoglycemia, the onset of which occurs while the patient
is being cared for in a health care facility;
v) Death or serious disability associated with failure
to identify and treat hyperbilirubinemia in neonates;
vi) Stage 3 or 4 pressure ulcers acquired after
admission to a health care facility; and,
vii) Patient death or serious disability due to spinal
manipulative therapy.
d) Environmental
i) Patient death or serious disability associated with
an electric shock while being cared for in a health care
facility;
ii) Any incident in which a line designated for oxygen
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or other gas to be delivered to a patient contains the
wrong gas or is contaminated by a toxic substance;
iii) Patient death or serious disability associated with
a burn incurred from any source while being cared for in
a health care facility;
iv) Patient death associated with a fall while being
cared for in a health care facility; and,
v) Patient death or serious disability associated with
the use of restraints or bedrails while being cared for
in a health care facility.
e) Criminal
i) Any instance of care ordered by or provided by
someone impersonating a physician, nurse, pharmacist, or
other licensed health care provider;
ii) Abduction of a patient of any age;
iii) Sexual assault on a patient within or on the grounds
of a health care facility; and,
iv) Death or significant injury of a patient or staff
member resulting from a physical assault that occurs
within or on the grounds of a health care facility.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states this bill is
necessary to improve health care practices and protect
patients by shielding them from having to pay for medical
errors. The author states that while California passed
legislation (SB 1301 (Alquist), Chapter 647, Statutes of 2006)
making California the 24th state to require reporting of
"never events," California did not join with the 11 other
states where billing for such events is prohibited. The
author argues that this bill will protect patients who have
been harmed by medical errors from also being responsible for
paying the bill for those errors. The author contends that
making health care providers financially responsible for the
commission of medical errors will provide a greater incentive
to ensure such grievous and devastating errors never occur.
2)FEDERAL PAYMENT POLICY FOR ADVERSE EVENTS . The federal
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Centers for Medicaid and Medicare Services (CMS) are
implementing a provision of the DRA dealing with nonpayment
for specified adverse events. The DRA required hospitals to
begin reporting secondary diagnoses that are present on
admission, starting with discharges on or after October 1,
2007. Since October 2008, CMS will not reimburse hospitals
for the added cost of care for ten conditions including three
serious preventable events, unless the conditions are present
on admission. The categories are:
a) Foreign object retained after surgery;
b) Air embolism;
c) Blood incompatibility;
d) Stage III and IV pressure ulcers;
e) Falls and trauma;
f) Manifestations of poor glycemic control;
g) Catheter-associated urinary tract infection;
h) Vascular catheter-associated infection;
i) Surgical site infection following coronary artery bypass
graft (CABG), mediastinitis, bariatric surgery and
orthopedic procedures; and,
j) Deep vein thrombosis (DVT)/pulmonary embolism (PE)
following total knee replacement and hip replacement.
3)HEALTH INSURRER PAYMENT POLICIES FOR MEDICAL ERRORS . On April
3, 2008, Anthem Blue Cross (the new trade name for Blue Cross
of California) along with other regional licensees of the Blue
Cross and Blue Shield Association nationwide, announced steps
that it said are aimed at reducing serious medical errors at
its hospital network. According to Anthem, the policy is
aimed at ensuring that members will not be charged if any of
these three events occur: a) Surgery performed on the wrong
body part; b) Surgery performed on the wrong patient; and, c)
Wrong surgery performed on a patient. In addition, Anthem
announced steps to ensure that "only the appropriate payment
is made and no additional charges [will be] incurred" if any
of eight other events occur. Aetna also recently announced
that it will not pay for charges directly and solely related
to eight serious reportable events, including an extended
length of stay in the hospital due to the event.
4)INSTITUTE OF MEDICINE REPORT . In 1999, the Institute of
Medicine (IOM) released a call to action in the report titled,
"To Err Is Human: Building a Safer Health System." The
report is well known for its release of startling statistics,
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such as that between 44,000 and 98,000 Americans die each year
as a result of medical errors, that more people die in a given
year as a result of medical errors than from motor vehicle
accidents (43,458), breast cancer (42,297), or AIDS (16,516),
and that total costs of preventable adverse events are
estimated to be between $17 billion and $29 billion, half of
which are health care costs. The report addresses patient
safety and quality, and establishes a national agenda for the
reduction of medical errors. The report contains several
recommendations including the following:
a) Establishing national focus to enhance the knowledge
base about safety;
b) Identifying and learning from errors through immediate
and strong mandatory reporting efforts and encouraging
voluntary efforts;
c) Raising standards and expectations for improvements in
safety through oversight, actions by purchasers and
professional organizations; and,
d) Creating safety systems inside health care
organizations.
5)NATIONAL QUALITY FORUM . In 2003, The National Quality Forum
(NQF) published a consensus report titled "Serious Reportable
Events in Healthcare." In that report, the NQF noted the
historic lack of any national reporting system of health care
errors and adverse events, and the lack of a standard
definition of what constitutes an error or adverse event.
Consequently, the objective of the project the NQF undertook
was to "establish agreement on a set of serious preventable
adverse events that might form the basis for a national
state-based event reporting system and that could lead to
substantial improvements in patient care." The NQF report
identified 27 serious adverse events, that are serious,
largely preventable and of concern to both the public and
health care providers. The "Never 27" events are grouped into
six categories-surgical events, product or device events,
patient protection events, care management events,
environmental events, and criminal events.
6)HOSPITAL ADVERSE EVENT REPORTING REQUIREMENTS . Effective July
1, 2007 in California, hospitals are required to report
"adverse events" to DPH within five days of their discovery.
Events that are ongoing, urgent, or emergent threats to the
welfare, health, or safety of patients, personnel, or visitors
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must be reported within 24 hours. California's definition of
"adverse events" was borrowed from the list of events
developed by the NQF in conjunction with CMS. Adverse events
include a wide array of medical, pharmaceutical, and nursing
care errors, as well as criminal acts. DPH is required to
investigate all adverse event reports, and if substantiated,
the reports and outcomes of the investigations and inspections
become public information. DPH must make an onsite inspection
within 48 hours for ongoing urgent or emergent threats of
imminent danger or serious bodily harm. DPH must complete
other investigations where there is no threat of imminent
danger or serious bodily harm within 45 days. In addition,
before making the report, hospitals must inform affected
patients about the report.
7)PREVIOUS AND RELATED LEGISLATION .
a) AB 2146 (Feuer), similar to this bill, would have
prohibited hospitals and health care professionals from
billing a patient or a payer, as defined, for care or
services provided during which occurred or that resulted in
specified adverse events. AB 2146 was held on the Senate
Appropriations suspense file.
b) SB 1058 (Alquist) enacts the Medical Facility Infection
Control and Prevention Act to ensure that standards for
protecting patients from exposure to pathogens in health
facilities, including Methicillin-resistant Staphylococcus
aureus (MRSA), are adequate to reduce the incidence of
antibiotic-resistant infection acquired by patients in
these facilities. SB 1058 is pending in the Senate.
c) SB 1301 (Alquist), Chapter 647, Statutes of 2006,
requires general acute care hospitals, acute psychiatric
hospitals, and special hospitals to report an adverse event
to the Department of Health Services (DHS now DPH) no later
than five days after the event has been detected or in the
case of an urgent or emergent threat, not later than 24
hours after the adverse event has been detected.
d) SB 1312 (Alquist), Chapter 395, Statutes of 2006,
authorizes DHS to assess administrative penalties on
hospitals based on deficiencies constituting immediate
jeopardy to the health and safety of a patient. Requires
inspections and investigations of long-term care facilities
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certified by the Medicare or Medicaid program to determine
compliance with federal standards and California statutes
and regulations. Eliminates existing law that provides an
exemption for specified health care facilities from
periodic inspections by DHS.
8)SUPPORT . The Service Employees International Union (SEIU) and
CALPIRG support a prior version of this bill. SEIU argues
that this bill operates on the simple premise that doctors and
hospitals should be paid for doing the right thing, not the
wrong thing. CALPIRG maintains in support of the prior
version that this bill offers protections to the consumer and
will help reduce the incidence of adverse events by properly
placing the responsibility of cost on the party able to
prevent the mistakes in the first place. Blue Shield of
California supports the prior version of this bill stating
that it seems like common sense that a provider should not
bill a patient or the patient's health plan for a medical
error, but it happens.
9)OPPOSE UNLESS AMENDED . The California Hospital Association
(CHA) is opposed to a prior version of this bill unless
amended. CHA maintains that, while they agree with the
principles of this bill and take the position that health care
providers should not bill patients or other financially
responsible parties for charges resulting from their
preventable errors, CHA contends that this bill should be
amended so that the prohibition on provider billing applies
only to preventable errors that are the responsibility of the
provider. Physician representatives oppose the prior version
of this bill stating that the list of conditions for which
nonpayment is proposed goes far beyond medical errors and
contains complications and conditions that, despite best
efforts, patients who are ill, frail, or otherwise compromised
can develop. The California Medical Association (CMA) points
out in opposing the prior version of this bill that this bill
imposes nonpayment standards for "substantiated" events but
does not include a definition of what substantiated would
mean. According to CMA, the prior version established a
framework inconsistent with federal law so that, under the
federal Patient Safety Act, the goal is to encourage providers
to voluntarily undertake efforts to identify and reduce
patient care risks and hazards. CMA states that the federal
patient safety organizations are designed to make it clear
that patient safety information should not be used for
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external purposes.
10)POLICY QUESTION .
Scope of this bill . This bill would result in nonpayment of
unspecified adverse events or medical errors based on broad
criteria intended to reflect the criteria used by CMS in
establishing nonpayment policies for hospitals under Medicare,
which pays using a payment methodology based on the diagnosis
of the patient. Given the wide variation in payment methods
among all of the public and private programs affected by this
bill, the author may wish to more explicitly deal with how the
regulations developed by DMHC should address nonpayment by
various payers.
REGISTERED SUPPORT / OPPOSITION : (Prior version)
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
Blue Shield of California
California School Employees Association
Congress of California Seniors
Health Access California
Service Employees International Union
Opposition
California Orthopaedic Association
California Society of Anesthesiologists
Oppose Unless Amended
Adventist Health
Anaheim Memorial Medical Center
Bakersfield Memorial Hospital
Barton HealthCare System
California Association of Professional Liability Insurers
California Chapter of the American College of Emergency
Physicians
California Children's Hospital Association
California Hospital Association
California Medical Association
Catholic Healthcare West
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Centinela Hospital
Children's Hospital Central California
Children's Specialty Care Coalition
Chino Valley Medical Center
Community Hospital of the Monterey Peninsula
Community Memorial Health System
Cottage Health System
Delano Regional Medical Center
Desert Regional Medical Center
Desert Valley Hospital
Doctors Hospital of Manteca
Eden Medical Center
Enloe Medical Center
Fountain Valley Regional Hospital & Medical Center
Garden Grove Hospital Medical Center
George L. Mee Memorial Hospital
Glendale Adventist Medical Center
Good Samaritan Hospital, San Jose
Henry Mayo Newhall Memorial Hospital
Hoag Hospital
Huntington Beach Hospital
JFK Memorial Hospital
John Muir Health
Kaiser Permanente
Kaweah Delta Health Care District
La Palma Intercommunity Hospital
Lakewood Regional Medical Center
Little Company of Mary Hospital
Lodi Memorial Hospital
Long Beach Memorial Medical Center
Los Alamitos Medical Center
Memorial Hospitals Association
Mercy Hospitals of Bakersfield
Mercy Medical Center Mt. Shasta
Methodist Hospital of Southern California (2)
Mission Hospital in Mission Viejo
Montclair Hospital Medical Center
North Sonoma County Healthcare District
NorthBay Healthcare
Oak Valley Hospital
Orange Coast Memorial Medical Center
Professional Liability Insurers
Saddleback Memorial Medical Center
San Dimas Community Hospital
Sequoia Hospital
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Sharp Grossmont Hospital
Sharp HealthCare
Shasta Regional Medical Center
Sherman Oaks Hospital
Sierra Nevada Memorial Hospital
Sierra View District Hospital
Sierra Vista Regional Medical Center
Sonoma Valley Hospital
St. Helena Hospital
St. Joseph Hospital/Redwood Memorial Hospital
Sutter Amador Hospital
Sutter Delta Medical Center
Trinity Hospital
Twin Cities Community Hospital
University of California
West Anaheim Medical Center
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097