BILL ANALYSIS
AB 542
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Date of Hearing: May 28, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 542 (Feuer) - As Amended: May 5, 2009
Policy Committee: HealthVote:13-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill establishes a payment prohibition on substantiated
adverse medical events to be administered by the California
Department of Managed Health Care (DMHC) in conjunction with the
California Department of Insurance (CDI), the Department of
Public Health (DPH), and CalPERS. Specifically, this bill:
1)Requires DMHC to adopt regulations pertaining to non-payment
policies consistent with federal law by September 1, 2010.
Specifies the policies apply to medical services that are high
cost, high volume, not present on admission, and/or could have
reasonably been prevented.
2)Requires DMHC and collaborating agencies to update non-payment
policies each year.
3)Requires the adoption of non-payment policies by the Healthy
Families Program (HFP) and the Medi-Cal program.
4)Revises adverse event reporting and adds additional events
developed by the federal Centers for Medicare and Medicaid
(CMS)
FISCAL EFFECT
1)One-time fee-supported special fund costs of $500,000,
combined, to DMHC, CDI, DHCS, CDI, and CalPERS to establish
non-payment policies and procedures, promulgate regulations,
and provide oversight to the initial requirements of this
bill.
2)Unknown on-going costs for administering agencies and programs
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to provide oversight and support workload related to updating
payment prohibitions, and to handle appeals.
3)Significant annual savings to Medi-Cal and HFP of more than
$10 million to the extent the payment prohibitions reduce
public costs. According to 2008 data, 1,500 adverse events
were reported to DPH. The estimated medical costs of these
events were more than $50 million and the Medi-Cal portion was
more than $13 million (50% GF). Actual savings to payers may
grow as reporting strengthens. However, part of the policy
rationale for the payment prohibitions is to focus attention
on error prevention efforts. To the extent the prohibitions
improve care, savings to payers will be less.
COMMENTS
1)Rationale . This bill establishes a framework for payers and
providers with respect to non-payment for specified serious
medical events such as surgery performed on the wrong body
part, an infant discharged to the wrong person, or a patient
death associated with a medication error. This bill does not
specify the events subject to non-payment, but instead
requires these events to be established according to set
criteria. According to the author, this bill protects patients
who have been harmed by medical errors from also being
responsible for paying the bill for those errors and by making
providers financially responsible for medical errors. SB 1301
(Alquist), Chapter 647, Statutes of 2006 requires the
reporting of serious adverse medical events. According to
recent statewide data, 1,500 of these events were reported in
2008.
2)Medicare Efforts . The federal Centers for Medicaid and
Medicare Services (CMS) has taken the first steps toward
preventing hospital reimbursements for the additional costs of
treating a patient who acquires specified conditions during
hospitalization. Since the fall of 2008, CMS will not
reimburse hospitals for the added cost of care for ten
conditions, including three serious preventable events
(sometimes called "never events") unless they were present on
admission.
3)California Adverse Event Reporting . Per SB 1301, California
hospitals are required to report adverse events to DPH within
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five days of their discovery. More serious events must be
reported within 24 hours. Adverse events include a wide array
of medical, pharmaceutical, and 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.
4)Concerns . Many groups have opposed this bill in prior
versions. Generally, opponents are concerned about whether
specified medical events are preventable and within a
provider's control. Several concerns have been addressed. Few
opponents have written with updated concerns about the most
recent version of this bill.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081