BILL ANALYSIS
AB 648
Page 1
ASSEMBLY THIRD READING
AB 648 (Chesbro)
As Amended May 28, 2009
Majority vote
BUSINESS & PROFESSIONS 9-0 HEALTH 18-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|Jones, Fletcher, Ammiano, |
| |Conway, Eng, Hernandez, | |Block, Carter, Conway, De |
| |Nava, Niello, | |La Torre, |
| |John A. Perez, Smyth | |De Leon, Emmerson, |
| | | |Gaines, Hall, Hayashi, |
| | | |Hernandez, |
| | | |Bonnie Lowenthal, Nava, |
| | | |V. Manuel Perez, Salas, |
| | | |Audra Strickland |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 15-0
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|Ayes:|De Leon, Nielsen, | | |
| |Ammiano, | | |
| |Charles Calderon, Davis, | | |
| |Duvall, Fuentes, Hall, | | |
| |Harkey, John A. Perez, | | |
| |Price, Skinner, Solorio, | | |
| |Audra Strickland, | | |
| |Torlakson | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Establishes a pilot project to permit certain rural
hospitals to directly employ physicians and surgeons, as
specified. Specifically, this bill :
1)Establishes the Rural Hospital Physician and Surgeon Services
Demonstration Project, which permits a rural hospital whose
service area includes a medically underserved area, a medically
underserved population, or that has been federally designated as
a health professional shortage area, to employ one or more
physicians and surgeons, not to exceed 10 physicians and
surgeons at one time, as specified, to provide medical services.
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2)Permits the rural hospital to retain all or part of the income
generated by the physician and surgeon for medical services
billed and collected by the rural hospital, if the physician and
surgeon approves the charges.
3)Permits a rural hospital to participate in the program if:
a) The rural hospital can document that it has been
unsuccessful in recruiting one or more primary care or
speciality physicians for at least 12 continuous months
beginning July 1, 2008; and,
b) The chief executive officer of the rural hospital
certifies to the Medical Board of California (MBC) that the
inability to recruit primary care or speciality physicians
has negatively impacted patient care in the community and
that there is a critical unmet need in the community, based
on a number of factors, including, but not limited to, the
number of patients referred for care outside the community,
the number of patients who experienced delays in treatment,
and the length of the treatment delays.
4)States that the total number of licensees employed by the rural
hospital at one time shall not exceed 10, unless the employment
of additional physicians and surgeons is deemed appropriate by
the MBC on a case-by-case basis.
5)Requires a rural hospital employing a physician and surgeon
pursuant to develop and implement a written policy to ensure
that each employed physician and surgeon exercises his or her
independent medical judgment in providing care to patients.
6)Requires each physician and surgeon employed by a rural hospital
to sign a statement biennially indicating that the physician and
surgeon:
a) Voluntarily desires to be employed by the hospital;
b) Will exercise independent medical judgment in all matters
relating to the provision of medical care to his or her
patients; and,
c) Will report immediately to the MBC any action or event
that the physician and surgeon reasonably and in good faith
believes constitutes a compromise of his or her independent
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medical judgment in providing care to patients in a rural
hospital or other health care facility owned or operated by
the rural hospital.
7)Requires a rural hospital to retain the signed statement for at
least three years and submit a copy of the signed statement to
the MBC within 10 working days after the statement is signed.
8)Prohibits a rural hospital from interfering with, controlling,
or directing a physician's and surgeon's exercise of his or her
independent medical judgment in providing medical care to
patients. If the MBC believes that a rural hospital has
violated this prohibition, the MBC shall refer the matter to the
State Department of Public Health, which shall investigate the
matter, as specified.
9)States that nothing in this chapter shall exempt a rural
hospital from a reporting requirement or affect the authority of
the board to take action against a physician's and surgeon's
license.
10)Requires the MBC to deliver a report to the Legislature
regarding the demonstration project no later than January 1,
2019. The report shall include an evaluation of the
effectiveness of the demonstration project in improving access
to health care in rural and medically underserved areas and the
demonstration project's impact on consumer protection as it
relates to intrusions into the practice of medicine.
11)Sunsets the project on January 1, 2020.
12)Makes legislative findings and declarations.
13)Defines a "rural hospital" as:
a) A general acute care hospital located in an area
designated as nonurban by the United States Census Bureau;
b) A general acute care hospital located in a rural-urban
commuting area code of 4 or greater as designated by the
United States Department of Agriculture; or,
c) A rural general acute care hospital, as defined in Health
and Safety Code 1250(a).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill has no direct fiscal impact to the MBC to
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continue oversight of physicians in California, the demonstration
project, corporate practice of medicine (CPM) prohibitions and
exceptions, and to complete the report to the Legislature at the
end of the 10-year period.
COMMENTS : According to the author's office, "Due to an overall
shortage of physicians, many California hospitals face significant
obstacles attracting and retaining physicians. This situation is
especially difficult in California's rural areas and this shortage
limits access to health care for Californians in these
communities. AB 646 improves access to health care in
California's rural communities through legislation allowing rural
hospitals to directly employ physicians and bill for their
professional services."
The CPM is typically referred to in the context of a prohibition,
banning hospitals from employing physicians. CPM evolved in the
early 20th century when mining companies had to hire physicians
directly to provide care for their employees in remote areas.
However, problems arose when physicians' loyalty to the mining
companies conflicted with patients' needs. Eventually,
physicians, courts, and legislatures prohibited CPM in an effort
to preserve physicians' autonomy and improve patient care.
There are 66 rural hospitals in California as defined by AB 648.
The sponsors of this bill indicate that rural hospitals have a
particularly difficult time attracting physicians, especially
primary care practitioners, and would benefit from the ability to
hire them directly as employees. There are varied reasons for the
dearth of qualified individuals, but often the problem is that
rural communities have a higher Medicare/Medicaid payer mix, and
the resulting lower reimbursement rates make it difficult for
physicians to maintain a practice.
SB 326 (Chesbro), Chapter 411, Statutes of 2003, established a
pilot project permitting district hospitals meeting specific
requirements to hire and employ up to two physicians each, for a
total of 20 physicians statewide, if the district hospital met
specified conditions.
SB 326 required the MBC to administer and evaluate the project
prior to its sunset on January 1, 2011. In its 2008 report, the
MBC stated that it was "challenged in evaluating the program and
preparing this report because the low number of participants did
not afford us sufficient information to prepare a valid analysis
of the pilot. ?[W]hile the Board supports the ban on the corporate
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practice of medicine, it also believes there may be justification
to extend the pilot so that a better evaluation can be made.
"However, until there is sufficient data to perform a full
analysis of an expanded pilot, the Board
contends that the statutes governing the corporate practice of
medicine should not be amended
as a solution to solve the problem of access to healthcare."
This bill proposes a new pilot for rural hospitals that would
include a greater number of participating facilities and
physicians, for a greater length of time, which should enable the
MBC to do a more thorough analysis of the direct employment of
physicians.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0001010