BILL ANALYSIS
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THIRD READING
Bill No: AB 542
Author: Feuer (D)
Amended: 8/17/10 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE HEALTH COMMITTEE : 6-2, 6/30/10
AYES: Alquist, Cedillo, Leno, Negrete McLeod, Pavley,
Romero
NOES: Strickland, Aanestad
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : 7-3, 8/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn, Walters, Wyland
NO VOTE RECORDED: Emmerson
SUBJECT : Hospital acquired conditions
SOURCE : Author
DIGEST : This bill requires the Department of Health Care
Services (DHCS) to convene a technical working group to
evaluate options for implementing nonpayment policies and
procedures for hospital acquired conditions for
fee-for-service Medi-Cal consistent with federal laws and
regulations and to submit recommendations to DHCS, the
California Health and Human Services Agency, and the
Legislature by February 1, 2011. This bill also requires
CONTINUED
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both DHCS and the Managed Risk Medical Insurance Board to
implement non-payment policies and procedures for Medi-Cal
and the Healthy Families Program and, when doing so, to
strongly consider the workgroup's recommendations.
ANALYSIS :
Existing federal law:
1. Requires, under the federal Deficit Reduction Act of
2005 or "DRA," the Secretary of the Department of Health
and Human Services (HHS) to select Medicare diagnosis
codes associated with at least two hospital acquired
conditions (HACs) that are (a) high cost or high volume,
or both, (b) result in the assignment of a patient to a
diagnosis-related group (DRGs are generally how Medicare
pays hospitals) that has a higher payment when the code
is present as a secondary diagnosis, and (c) are
conditions that could reasonably have been prevented
through the application of evidence-based guidelines.
2. Provides, pursuant to regulations adopted by the Centers
for Medicare and Medicaid Services (CMS), for the
non-payment under the Medicare program for specified
categories of HACs, when they are present on the
admission of the patient. Instead, the case is paid as
though the secondary diagnosis was not present. This
requirement applies to hospital discharges on or after
October 1, 2008.
3. Requires, under the Patient Protection and Affordable
Care Act (Public Law 111-148) (PPACA), the Secretary of
HHS to adopt regulations that are effective July 1,
2011, that prohibit payment for HACs in the Medicaid
program.
4. Directs the Secretary to apply to state Medicaid plans
the Medicare non-payment requirements as appropriate for
the Medicaid program, and to exclude certain conditions
if the Secretary finds them to be inapplicable to
Medicaid beneficiaries.
Existing state law:
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1. Establishes the Medi-Cal program as California's
Medicaid program, administered by the Department of
Health Care Services (DHCS), which provides
comprehensive health care coverage for low-income
individuals and their families; pregnant women; elderly,
blind, or disabled persons; nursing home residents; and
refugees who meet specified eligibility criteria.
2. Establishes various programs, including the Healthy
Families program, the Major Risk Medical Insurance
Program (MRMIP), the Access for Infants and Mothers
program (AIM) and the Medi-Cal program, which provide
health coverage to individuals meeting specified
eligibility criteria, and which are administered by the
Managed Risk Medical Insurance Board (MRMIB).
3. Requires the Department of Public Health (DPH) to
license and inspect health facilities, including general
acute care hospitals, acute psychiatric hospitals, and
special hospitals (hospitals).
4. Requires hospitals to report an adverse event to DHCS no
later than five days after the adverse event has been
detected, or, if the event is an ongoing urgent or
emergency threat to the welfare, health, or safety of
patients, personnel, or visitors, not later than 24
hours after the adverse event has been detected.
5. Defines an "adverse event" to include any of 27
specified occurrences.
This bill:
1. Requires DHCS to convene a technical working group to
evaluate options for implementing nonpayment policies
and procedures for hospital acquired conditions for
fee-for-service Medi-Cal consistent with federal laws
and regulations and to submit recommendations to DHCS,
the California Health and Human Services Agency, and the
Legislature by February 1, 2011.
2. Requires the technical working group to be made up of
consumer advocates, technical experts, physicians,
hospital representatives, employers, representatives of
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hospital staff, departmental representatives, and
representatives of MRMIB.
3. Requires both DHCS and MRMIB to implement non-payment
policies and procedures for Medi-Cal and the Healthy
Families Program and, when doing so, to strongly
consider the workgroup's recommendations.
4. Requires both DHCS and MRMIB to implement non-payment
policies and procedures for both Medi-Cal and the
Healthy Families Program that are consistent with
federal regulations promulgated pursuant to PPACA, and,
when doing so, to strongly consider the workgroup's
recommendations. PPACA does not require that Healthy
Families be included in implementing non-payment
policies.
5. References relevant federal statues to clarify the
hospital acquired conditions to be considered by the
workgroup.
6. States that this bill be implemented only to the extent
that federal financial participation is available and is
not jeopardized.
Background
Medicare provisions related to HACs
In February 2006, President Bush signed the DRA into law.
One provision of the DRA requires the Secretary of HHS to
take steps to prevent Medicare from paying hospitals for
the additional costs of treating patients who acquire
specified conditions during hospitalization. The DRA
required CMS to select at least two HACs that would be
subject to a quality payment adjustment. CMS consulted
with the Centers for Disease Control and Prevention (CDC)
to identify the conditions proposed for reduced payment
beginning October 2008, and additional conditions that
would be considered for reduced payment in subsequent
years. Under the DRA, the CMS is directed to identify
conditions that meet all of the following conditions:
Are associated with a high cost of treatment or high
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occurrence rates within hospital settings.
Result in higher payment to the hospital when submitted
as a secondary diagnosis.
Can reasonably be prevented by adoption and
implementation of evidence-based guidelines.
Pursuant to the DRA, for discharges occurring on or after
October 1, 2008, hospitals do not receive additional
Medicare payment for cases in which one of the selected
conditions was not "present on admission." In other words,
Medicare would pay the hospital as though the secondary
diagnosis were not present. On July 31, 2008, CMS adopted
regulations that included 10 categories of conditions that
are subject to the HAC payment provision. The 10
categories of HACs include:
Foreign object retained after surgery.
Air embolism.
Blood incompatibility.
Stage III and IV pressure ulcers.
Falls and trauma, including fractures, dislocations,
intracranial injuries, crushing injuries, burns, and
electric shock.
Manifestations of poor glycemic control.
Catheter-Associated Urinary Tract Infection.
Vascular Catheter-Associated Infection.
Surgical site infection following coronary artery bypass
graft surgery (mediastinitis), bariatric surgery, or
certain orthopedic procedures.
Deep Vein Thrombosis/Pulmonary Embolism associated with
total knee replacement or hip replacement.
In addition, CMS initiated a process in 2008 to review
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Medicare coverage of three so-called "never events" -
surgery on the wrong body part, surgery on the wrong
patient, and performing the wrong surgery on a patient. In
2008, CMS also provided guidance to state Medicaid
Directors on payment policies for Medicaid when it is a
secondary payer for care to dual eligibles (persons
eligible for Medicare and Medicaid). The guidance states
that states wishing to avoid loss of federal payments for
treatment for dual eligible for which Medicare will not pay
may do so by amending their state plans to provide a
mechanism to limit attempts by providers to bill Medicaid
as a secondary payer.
Federal health care reform provisions pertaining to
non-payment for HACs in Medicaid
Section 2702 of the PPACA requires the Secretary of HHS to
identify current state practices that prohibit payment for
health care-acquired conditions and to incorporate them, or
elements of them in regulations governing the Medicaid
program, which are required to be effective as of July 1,
2011. Section 2702 requires that the regulations must
ensure that the prohibition on payment for health
care-acquired conditions does not result in a loss of
access to care or services for Medicaid beneficiaries. The
Secretary is further directed to apply to state Medicaid
plans the Medicare non-payment requirements as appropriate
for the Medicaid program, and is allowed to exclude certain
conditions for which non-payment is required under the
Medicare program if the Secretary finds them to be
inapplicable to Medicaid beneficiaries.
Adoption of non-payment policies by insurers and other
states
A number of insurers have implemented policies to withhold
payments to hospitals for certain serious, preventable
errors. In 2009, Aetna began not paying facility charges
for three basic "never events" - surgery on the wrong
patient, surgery on the wrong body part, and the wrong
surgical procedure - and began not paying charges directly
related or solely related to eight other serious,
preventable errors. Anthem Blue Cross withholds payment
for four basic "never events" - surgery on the wrong
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patient, surgery on the wrong body part, the wrong surgical
procedure, and retention of a foreign object after surgery.
Several states have implemented hospital non-payment
policies for selected HACs, in some cases focused on
preventable serious adverse events.
Adverse event reporting
Pursuant to SB 1301 (Alquist), Chapter 647, Statutes of
2006, state law requires hospitals to report adverse events
to DPH. California's definition of "adverse events" was
adapted from the list of events developed by the National
Quality Forum, in conjunction with CMS. Additionally,
state law (SB 1058 [Alquist], Chapter 296, Statutes of
2008) requires specified health care-associated bloodstream
and surgical infections to be reported by hospitals to DPH.
Other than deep vein thrombosis and pulmonary embolism
following certain orthopedic procedures and certain actions
under falls and trauma, the current list of HACs from CMS
are reportable to DPH under state law.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
DHCS workgroup $100 $0 $0
General/*
staff & contracts Federal
DHCS and MRMIB likely in the hundreds of thousands
toGeneral/**
implementation millions of dollars commencing in FY
recommendations 2011-12 and going through FY 2012-13
to the extent exceeds federal
requirements
Potential savings due potentially in the hundreds
of thousands General/
to non-payment to millions of dollars commencing after
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reforms are in place
* Medi-Cal shares costs approximately 50 percent General
Fund, 50 percent federal funds
** Healthy Families shares funds approximately 35 percent
General Fund, 65 percent federal funds
SUPPORT : (Verified 8/17/10)
American Federation of State, County and Municipal
Employees, AFL-CIO
Blue Shield of California
California Hospital Association
California School Employees Association
Consumers Union
Health Access
Service Employees International Union
ARGUMENTS IN SUPPORT : Health Access California (Health
Access), and the Service Employees International Union
(SEIU) argue that this bill will end the practice of paying
for "never" events. Health Access and SEIU state "never"
events describe several dozen specific events that should
never happen in health care, and this bill operates on the
same principle that Medicare is adopting: doctors and
hospitals should not be paid for preventable "never"
events. Taking a support in concept position, the
California Hospital Association (CHA) stresses that any
state non-payment methodology for HACs must conform to the
methodology adopted by CMS for the Medicare and Medicaid
programs, and should be applied to the Medi-Cal
fee-for-service program, and not to Medi-Cal managed care
contracts. CHA states that the make up of the proposed
technical advisory group should be limited to technical
experts that DHCS deems necessary to assist it in
developing regulations and, assuming the focus of the
effort is on adopting non-payment policies for the Medi-Cal
fee-for-service program, should not include persons who are
involved in managed health care delivery. CHA additionally
questions the inclusion of language authorizing MRMIB and
DHCS to contract with a peer review organization to carry
out the non-payment policies. CHA also states that it
believes that making the determination that an event is a
non-pay event should not be treated as an admission of
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fault and should not be discoverable or admissible in court
and requests a technical amendment to clarify that
hospitals may not accept and retain payments from patients
related to care provided for HACs.
CTW:mw 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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