BILL ANALYSIS SENATE HEALTH COMMITTEE ANALYSIS Senator Elaine K. Alquist, Chair BILL NO: SB 442 S AUTHOR: Ducheny B AMENDED: April 15, 2009 HEARING DATE: April 22, 2009 4 CONSULTANT: 4 Green/ 2 SUBJECT Clinic corporation: licensing SUMMARY Requires the Department of Public Health (DPH) to issue a single, consolidated license to a clinic corporation that operates one or more primary care or mobile clinics, and meets specified licensure requirements. CHANGES TO EXISTING LAW Existing law: Existing law defines a primary care clinic as an outpatient health facility, operated by a nonprofit corporation, which provides direct medical, surgical, dental, optometric, or podiatric advice, services, or treatment to patients who remain less than 24 hours. Existing law requires primary care clinics to be separately licensed and certified by DPH. Upon approval of a primary care clinic's initial license application, existing law requires DPH to issue a provisional license, good for six months from the date of issuance. DPH is then required to conduct an on-site survey of the clinic within 30 days prior to the expiration of the provisional license, and, if the clinic meets all licensure requirements, issue a regular license. If it is Continued--- STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 2 determined during the on-site survey that the clinic does not meet the requirements for licensure, but demonstrates progress toward meeting the requirements, existing law authorizes DPH to renew the provisional license for another six months. Existing law authorizes a primary care clinic that has held a valid, unrevoked, and unsuspended license, for at least five years, that has no demonstrated history of repeated or uncorrected licensing violations that pose immediate jeopardy to a patient, and that has no pending suspension or revocation actions, to file an application with DPH to establish an "affiliate clinic" at a new site. Upon receipt of such an application, DPH is required to issue a regular license for the affiliate clinic within 30 days, without having to conduct an initial onsite survey, if the parent clinic meets additional specified conditions. Existing law does, however, authorize DPH to conduct a licensing inspection at any time after receipt of the affiliate clinic licensing application. Existing law authorizes DPH to issue a special permit to a clinic approved to provide one or more specified special services, such as birthing services, for which the state has established separate standards. Existing law grants DPH the authority to take various types of enforcement actions against a primary care clinic that has violated state law or regulation, including imposing fines, sanctions, civil or criminal penalties, and suspension or revocation of the clinic's license. Existing law also defines a mobile health care unit, commonly referred to as a "mobile clinic," as a commercial coach that is licensed by DPH as an independent freestanding clinic, or approved by DPH as an adjunct of a licensed parent health facility or clinic, and that provides medical, diagnostic, and treatment services in order to ensure the availability of quality health care services for patients in remote or underserved areas, and patients who need specialized types of medical care. This bill: This bill would require DPH to issue a single, consolidated license to a "clinic corporation," defined as a nonprofit organization that operates more than one primary care clinic and/or mobile clinic, if the clinic corporation STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 3 meets specified requirements. The bill would specify that in order to qualify for a consolidated license, all of the clinics included on the license application must have the same corporate officers, be owned and operated by the same board of directors, and have a single set of policies, procedures, and standards under which all medical directors operate. Additionally, the clinic corporation must provide evidence to the department, that each of the primary care clinics that would be included on the license meets applicable physical plant construction and safety standards. The bill would require DPH to issue a consolidated licensed within 30 days of receipt of a completed application, or within 7 days of the date the application is approved, whichever is sooner. If DPH determines that an applicant does not meet the criteria for a consolidated license, it would be required to identify, in writing, the grounds for that determination, and proceed to process the application as an individual license application. This bill would authorize a clinic corporation that is issued a consolidated license to add or remove a primary care or mobile clinic from the license at any time, as specified. The bill would require DPH to develop a single-page application form to add a clinic to the consolidated license, including the name and address of the clinic, and the services to be provided, and would require a clinic corporation to pay a license fee for each added clinic. This bill would also allow a clinic corporation that is issued a consolidated license to consolidate administrative functions, as specified, and to transfer special permits from one site to another included in the license. The bill would specify that DPH may take any enforcement action authorized by existing law with respect to a primary care clinic included in a consolidated license, but would prohibit an action against one or more clinics under the license from being deemed an action against the clinic corporation as a whole. The bill would authorize DPH to remove or suspend a clinic that is found to be deficient from the consolidated license, and would authorize a clinic corporation to voluntarily remove a deficient clinic from its consolidated license prior to the assessment of a civil penalty or initiation of removal or suspension by the STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 4 department. The bill would prohibit DPH from revoking or suspending the consolidated license, unless each clinic under the license is cited in the notice of deficiencies, and the clinic corporation failed to correct deficiencies in each clinic, as specified. The bill would specify that the business office of a clinic corporation would not be required to be licensed as a clinic, that a clinic included in the consolidated license would be deemed licensed for the purposes of application for enrollment as a provider in a public health program, such as Medi-Cal, and that each clinic may separately apply for enrollment as a provider in the Medi-Cal program, or other health care program. The bill would also specify that consolidated licensure of a clinic corporation would not affect federal payment rates for specified federally recognized clinics. The bill would specify that clinics that are licensed and in good standing as of December 31, 2009, and that are included on a clinic corporation's consolidated license, would not be subject to provisional licensing requirements. The bill would require DPH to calculate the licensing fee for a single consolidated license, based on a percentage of the current primary care clinic fee, and apply it to each primary care clinic included on the consolidated license. The bill would also make various technical and conforming changes. FISCAL IMPACT Unknown. BACKGROUND AND DISCUSSION According to the author, community clinics are at the core of the state's health care safety net and primary care delivery systems. The author states that, among the top concerns for clinics in their day-to-day administration and long-term planning are difficulties associated with state licensing and certification. The author asserts that the current system for licensing and certification of clinics is outdated and inefficient, which causes providers and the state to waste scarce financial and human resources. STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 5 The author states that most clinic organizations operate multiple clinic sites, ranging in numbers from 2 to 25, under the governance of a single board of directors and medical directorship, using common business practices, policies, and procedures, as well as medical oversight. The author states that despite this, under current law, each clinic site must be separately licensed, which requires clinics to often submit the same information on separate licensing applications, even when the information is identical or unchanged. The author states that this process is not only administratively burdensome and duplicative, it does not account for the role of the governing clinic organization. The author states that delays in the processing of licensing applications often inhibit clinics from providing and/or billing for much-needed services in their communities. The author states that, to avoid the state licensing process, many clinics are opting to open "intermittent clinics," which operate at or less than 20 hours per week, and do not require state licensure. The author also states that a precedent for consolidated health facility licensing has been set by the consolidated licensure of California's acute care hospitals. The author states that this bill seeks to find a balance which acknowledges the impact licensing plays in provider enrollment, and ensures the public's health and safety. The author states that this bill will reform the current system of clinic licensure from a physical plant-based model, to a single consolidated license model in order to streamline the clinic licensing process, and create program efficiencies. Primary care clinic licensure According to DPH, there are currently 972 primary care clinics currently licensed in California. In order to obtain a license, a primary care clinic must submit an application and fee to DPH, and pass an initial licensure survey conducted by DPH. Upon receipt of a completed application for a clinic license, DPH has up to 100 days to either grant or deny the license. Existing law requires DPH to issue a provisional license, good for six months from the date of issuance, to a clinic that has not been previously licensed. DPH is required to STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 6 inspect the clinic within 30 days prior to the termination of the provisional license, and, if the clinic meets all licensure requirements, issue a regular license. Clinics that do not meet the requirements for licensure, but make progress toward meeting the requirements, may have their provisional license renewed by DPH for another six months. According to DPH, there are currently seven completed primary care clinic licensing or certification applications pending. Primary care clinics are currently required to pay licensing fees in an amount of $600. Under current law, DPH is required to set licensing fees for health facilities based largely on projected workload and costs relating to the licensing activities for each facility type. For example, the current licensing fee for primary care clinics is $600 per clinic. This fee was calculated by DPH, based on the workload and resources it dedicates to licensing clinics, including processing licensing applications, performing inspections, conducting complaint investigations, and other activities. Primary care clinics that wish to establish additional clinic sites, referred to as "affiliate clinics" are granted an expedited licensure process. Affiliate clinics are eligible for licensure based upon their parent clinic's compliance history. In order to apply to establish an affiliate clinic, a parent clinic is required to have held a valid, unrevoked, and unsuspended license for the preceding five years. In addition, the parent clinic must have no demonstrable history of repeated or uncorrected violations that pose immediate jeopardy to patients, as well as no pending action to suspend or revoke the parent clinic's license. The parent clinic is required to submit a completed application and an application fee, establish that the parent clinic and the affiliate clinic have the same corporate officers and are owned and operated by the same organization with the same board of directors, and provide evidence of compliance with minimum safety standards related to the affiliate clinic's physical plant. If the parent clinic meets these requirements, DPH is required to issue a license to the affiliate clinic within 30 days. Affiliate clinics are exempt from provisional licensure requirements, and are not required to be surveyed to qualify for licensure. However, affiliate clinics must STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 7 still pay license fees. General acute care hospital licensure The author states that the precedent for primary care clinic consolidated licensure was set by the consolidated licensure process for hospitals. Under existing law, a single consolidated license may be issued to a general acute care hospital that includes more than one physical plant maintained and operated on separate premises, or that has multiple licenses for a single health facility on the same premises, with exceptions. To qualify for consolidated licensure, the hospital must meet specified criteria, including being nonprofit, and must share a single governing body, administration, and medical staff with any entity under its license. Additionally all of its separate physical plants must be no more than 15 miles apart, with exceptions. General acute care hospitals are prohibited from transferring any special services from one site to another site on the consolidated license without prior approval from DPH, and DPH is authorized to take enforcement action against a licensee, including action to suspend or revoke a consolidated license, for specified violations. Prior legislation AB 2010 (DeSaulnier), Chapter 90, Statutes of 2008, exempts affiliate clinics from provisional licensure requirements. SB 1213 (Ducheny), Chapter 360, Statutes of 2008, requires mobile clinics to notify DPH at least 24 hours prior to providing services at a new site, and waives any notice requirement in the event the mobile clinic is responding to federal, state, or local public health emergencies. SB 937 (Ducheny), Chapter 602, Statutes of 2003, revises provisions relating to the licensure and operation of clinics, and authorizes a primary care clinic that has been licensed and in good standing for five years to file an application to establish an affiliate clinic at an additional site. AB 2404 (Reyes), Chapter 111, Statutes of 2002, prohibits the Department of Health Services (DHS), now referred to as DPH, from requiring the licensure of each site where a mobile clinic provided services, and instead requires a STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 8 mobile clinic to report to DHS at least 15 days prior to its first visit to a new site, and to report to local authorities to obtain necessary approvals AB 951 (Florez), Chapter 525, Statutes of 2001, requires the Department of Health Services, now referred to as DPH, to establish a centralized licensing application unit to review applications, and train clinic surveyors in order to process license applications in a more timely, uniform, and cost-effective manner. AB 2259 (Woodruff), Chapter 1020, Statutes of 1993, provides for the licensure of mobile clinics to ensure the availability of quality health care services for patients in remote or underserved areas, and imposed various licensure requirements and safety standards on mobile clinics. SB 1140 (Royce), Chapter 1456, Statutes of 1987, requires provisional licensure for clinics, and other types of health facilities. Arguments in support The California Primary Care Association (CPCA) states that this bill would eliminate unnecessary administrative barriers to increasing access to care by allowing primary care clinics to operate multiple sites under one consolidated license. CPCA states that moving to a consolidated licensure will streamline the licensing process, reduce duplication, and promote administrative efficiency, and thereby maximize the ability of safety net providers to meet the growing health care needs of individuals and families in their communities. Planned Parenthood Affiliates of California (PPAC) states that each time a clinic corporation applies for a new clinic, numerous documents must be submitted to DPH, many of which are duplications of paperwork already filed with the department. PPAC states that significant time and money is expended on these cumbersome licensing activities that take away from the critical services clinic staff should be providing. PPAC states that this bill would streamline and modernize the current overly burdensome processes and eliminate duplication. COMMENTS STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 9 1. Bill should clarify that clinic corporations must have no significant enforcement actions against its license in order to be eligible to apply for a consolidated license. Under current law, a parent clinic may not be eligible to establish affiliate clinic sites unless it has held a valid, unrevoked and unsuspended license, as specified, has no demonstrated history of repeated or uncorrected violations, and has no pending suspension or revocation action against its license. Since the clinic corporation model proposed by this bill is similar to the parent clinic model established by existing law, a suggested amendment would be to require clinic corporations to meet the same licensing standards as parent clinics when applying for a consolidated license. Proposed amendment: Page 6, line 28, insert: (1) The clinic corporation applying for the consolidated license must have held a valid, unrevoked, and unsuspended license for at least the immediately preceding five years, with no demonstrated history of repeated or uncorrected violations of this chapter, or any regulation adopted under this chapter, that pose immediate jeopardy to a patient, as defined in subdivision (d) of section 1218.1, and have no pending action to suspend or revoke its license. 2. Bill limits DPH's enforcement authority. The bill would prohibit an enforcement action by DPH against a clinic included in a consolidated license from being deemed an action against the clinic corporation as a whole. However, as the sole licensee, the clinic corporation would be responsible for the compliance of the clinics on its consolidated license. DPH should have the authority to take action against the license of a clinic corporation, if a clinic on the license fails to comply with licensing requirements. Further, the bill would prohibit DPH from revoking or suspending a consolidated license unless all of the clinics under the license are cited in the notice of deficiencies, and the clinic corporation failed to correct the deficiencies in every clinic. Under these provisions, a clinic corporation with 10 clinics on its consolidated license could have uncorrected deficiencies in 9 out of the STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 10 10 clinics, and DPH would not be able to take action to revoke or suspend the consolidated license if deemed appropriate. The intent of the author is to ensure that an action by DPH to remove or suspend a clinic under a consolidated license does not automatically apply to all of the clinics under the license. The bill should be amended to reflect the author's intent. Additionally, to ensure patient safety, DPH should have the authority to take action to initiate revocation or suspension action against clinic corporations if the department determines that failure to do so will result in patient harm. Proposed amendments: a. Page 9, lines 4-6:An action against one or more clinics included in the consolidated license shall not be deemed an action against the clinic corporation as a whole.b. Page 14, lines 11-19: Action taken by the department to suspend or remove one or more clinics from a consolidated license shall not result in the automatic suspension or revocation of the consolidated license, unless the department determines that failure to do so would result in the immediate jeopardy, as defined in subdivision (d) of Section 1218.1, of a patient.In no case shall the department initiate an action to revoke or suspend the single consolidated license for uncorrected deficiencies outlined in a written notice of deficiencies, in one or more clinics included in a single consolidated license, unless each clinic, including a mobile health care unit, that is included in the single consolidated license is cited in the notice of deficiencies and the clinic corporation failed to correct the deficiencies in every clinic within the allotted time period according to the plan of correction.3. Consolidated license fee calculation unclear. In its current form, the bill's provision pertaining to the calculation of licensing fees for a consolidated license is unclear. The author and sponsor intend to work with DPH to develop a method by which to calculate fees for consolidated licensure that reflects DPH's workload and costs, which for most licensing activities, such as STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 11 inspections and enforcement, will likely remain steady, but that also reflects potential cost savings from a streamlined licensure process. In the meantime, the author should amend the bill to remove the current unclear language requiring the calculation of the estimated fee. Page 15, lines 31-38: (d) Commencing February 1, 2010, and every February thereafter, the department shall publish the estimated fee for a single consolidated license issued under Section 1212.5 pursuant to this section. Thecalculation of theestimated feeshall be based on a percentage of the fee for primary care clinics,for each primary care clinic included in a single consolidated license, andshall be included in the report and list of estimated fees required by subdivisions (c) and (e). 4. Consolidated license should specify name, location, and other basic information about each clinic on the license. When introduced, this bill contained a requirement for the department to include the name, location, hours of operation, and services of each clinic included on a consolidated license. The current version of the bill does not contain this provision. However, for the purposes of basic identification of clinics on a consolidated license, this provision should be added back into the bill. Proposed amendment: Page 7, after line 4, insert: (e) A single consolidated license issued by the department shall specify the name, location, hours of operation, and services of each clinic included in the license. 5. DPH should give approval for transfer of special permits. This bill would allow a clinic corporation to transfer a special permit from one clinic site to another included in the consolidated license. The bill should specify that a clinic corporation may conduct such a transfer only after obtaining approval from DPH. Proposed amendment: Page 8, lines 22-27: STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 12 (k) Upon written notice to the department, a clinic corporation that has been issued a single consolidated license may apply for one or more special permits pursuant to Section 1202. A clinic corporation that is issued one or more special permits may, with approval from the department, transfer the special permits from one clinic site to another site that is included in the single consolidated license. 6. Clinics added to an existing consolidated license would not have to prove compliance with minimum construction and physical plant standards. To qualify for consolidated licensure, a clinic corporation must submit evidence that each of the primary care clinics on its license meet specified construction and physical plant standards. However, the bill would require a clinic that is added to an existing consolidated license, to simply self-attest that it meets such standards. These provisions appear to be in conflict, and in order to ensure patient safety, the bill should require a clinic corporation to prove that all of its clinics, including those that are added to an existing license, meet these standards. Proposed amendment: Page 8, lines 13-16: (4) A self-attestation that each clinic site added meets the requirements of Section 1212,includingand evidence that each clinic site meets minimum construction standards for adequacy and safety of physical plant, pursuant to subdivision (b) of Section 1226. 7. Proposed technical and clarifying amendments. a. Page 2, lines 27-33 and Page 3, lines 13-15: (3) "Clinic corporation" means a nonprofit organization that operates one or more primary care clinics, as defined in paragraphs (1) and (2) of subdivision (a) of Section 1204, that are required to be licensed under Section 1205,that may includeone or more mobile health care units required to be licensed or approved pursuant to the Mobile Health Care Services Act (Chapter 9 (commencing with Section 1765.101)) and operated as primary care clinics, or one or more primary care clinics and one or more mobile STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 13 health care units. b. Page 6, lines 2-3: ?primary care clinic, as defined inparagraphsparagraph (1) and(2)of subdivision (a) of section12401204, the department shall issue a single? Page 6, line 39: ?subdivision (b) of Section11261226 , for each primary care clinic? c. Page 7, lines 2-4: (5) There are one or more medical directors operating under a single set of policies, procedures, and standards for all the primary care clinics and mobile health care units maintained and operated by the licensee. d. Page 7, line 32: ?was submitted on the date the denial of the consolidated license wasreleasedissued. e. Page 7, line 33: (h) Upon application to the department, a clinic corporation that? f. Page 8, line 6: ?for adding or removing a clinic between renewal periods that includes all of? g. Page 8, lines 31-33: ? Failure by the clinic corporation to make timely payment of the renewal fee shall result in the expiration of its consolidated licenseany licensesand any special permits? h. Page 9, line 2: ?1240 with respect to a primary care clinic, mobile health care unit, or special services? STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 14 i. Page 12, lines 4-11: 1219. (a) Except for an affiliate clinic, as defined in Section 1218.1, or aclinic corporation that includes, in its application for a single consolidated license, one or moreprimary care clinicclinics, including a oneormoremobile health careunitsunit, thatwerewas licensed and in good standing as of December 31, 2009, and included in an application by a clinic corporation for a single consolidated license , if a clinic or an applicant for a license has not been previously licensed, the department may only issue a provisional license to the clinic as provided in this section. POSITIONS Support: California Primary Care Association (co-sponsor) Planned Parenthood Affiliates of California (co-sponsor) Alliance Medical Center Alliance for Rural Community Health Alta Med Health Services Anderson Valley Health Center California Family Health Council Central Valley Health Network Chinatown Service Center Clinicas del Camino Real, Incorporated Clinica de Salud del Valle de Salinas Clinica Sierra Vista Community Clinic Association of Los Angeles County East Community Health Center, Inc. Eisner Pediatric and Family Medical Center Family HealthCare Network Family Health Centers of San Diego Imperial Beach Health Center LifeLong Medical Care Long Valley Health Center MayView Community Health Center Mendocino Coast Clinics, Inc. Mendocino Community Health Clinics, Inc. Neighborhood Healthcare North Coast Clinics Network North County Health Services Northeast Valley Health Corporation Open Door Community Health Centers Petaluma Health Center STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 15 Planned Parenthood Mar Monte Planned Parenthood of San Diego and Riverside Counties Planned Parenthood of Santa Barbara, Ventura and San Luis Obispo Planned Parenthood: Shasta-Diablo Potter Valley Community Health Center Redwood Coast Medical Services Saban Free Clinic Salud Para La Gente Shasta Community Health Center Shasta Consortium of Community Health Centers Shingletown Medical Center Six Rivers Planned Parenthood Southern Trinity Health Services UMMA Community Clinic Venice Family Clinic West County Health Centers, Inc. One individual Oppose: None received -- END --