BILL ANALYSIS                                                                                                                                                                                                    Ó







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        |Hearing Date:June 13, 2011         |Bill No:AB                         |
        |                                   |655                                |
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                      SENATE COMMITTEE ON BUSINESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                          Senator Curren D. Price, Jr., Chair
                                           

                         Bill No:        AB 655Author:Hayashi
                         As Amended:June 1, 2011  Fiscal:   No

        
        SUBJECT:   Healing arts.
        
        SUMMARY:  Requires a peer review body to produce relevant peer review 
        information about a physician and surgeon that was subject to peer 
        review for a medical disciplinary cause or reason.  

        Existing law:
        
        1)Establishes the Medical Board of California (MBC) to license, 
          regulate and discipline physicians and surgeons in California and 
          states that the protection of the public is the highest priority of 
          the MBC in exercising its functions.

        2)Provides for the professional review of specified healing arts 
          licentiates by a peer review body, as defined, including:  
          (Business& Professions Code (BPC) § 805)

           a)   A medical or professional staff of any health care facility 
             or a licensed clinic, or a facility certified to participate in 
             the federal Medicare Program as an ambulatory surgical center.

           b)   A health care service plan or a disability insurer, as 
             specified.

           c)   Any medical, psychological, marriage and family therapy, 
             social work, dental, or podiatric professional society, as 
             specified.

           d)   A committee organized by any entity that functions for the 
             purpose of reviewing the quality of professional care provided 





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             by members or employees of that entity.
            
        3)Defines a licentiate, for purposes of item # 2) above, as a 
          physician and surgeon, doctor of podiatric medicine, clinical 
          psychologist, marriage and family therapist, clinical social 
          worker, or dentist.  (Id.)

        4)Requires an  805 report  to be filed by the chief of staff, chief 
          executive officer, medical director, or administrator of any peer 
          review body and the chief executive officer or administrator of a 
          health facility or clinic, as defined, with the relevant agency 
          having regulatory jurisdiction over a licentiate under the 
          following:  (Id.)

           a)   Within 15 days after the effective date of any of the 
             following that occur as a result of an action of a peer review 
             body:

             i)     A licentiate's application for staff privileges or 
               membership is denied or rejected for a medical disciplinary 
               cause or reason.

             ii)    A licentiate's membership, staff privileges, or 
               employment is terminated or revoked for a medical disciplinary 
               cause or reason.

             iii)   Restrictions are imposed, or voluntarily accepted, on 
               staff privileges, membership, or employment for a cumulative 
               total of 30 days or more for any 12-month period, for a 
               medical disciplinary cause or reason.

           b)   Within 15 days if a licentiate does any of the following 
             based on information indicating medical disciplinary cause or 
             reason:  (Id.)

             i)     Resigns or takes a leave of absence from membership, 
               staff, or employment.

             ii)    Withdraws or abandons an application for staff privileges 
               or membership.

             iii)   Withdraws or abandons the request for renewal of 
               privileges or membership.

        5)Requires also for an 805 report to be filed within 15 days after 
          the imposition of a  summary suspension  of staff privileges, 





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          membership, or employment, if the summary suspension remains in 
          effect for over 14 days. (Id.) 

        6)Defines the following terms:  (Id.)

           a)   Staff privileges as any arrangement under which a licentiate 
             is allowed to practice or provide care for patients in a health 
             facility.  Such arrangements include, but are not limited to, 
             full staff privileges, active staff privileges, limited staff 
             privileges, auxiliary staff privileges, courtesy staff 
             privileges, locum tenens arrangements, and contractual 
             arrangements to provide professional services, including 
             arrangements to provide outpatient services.

           b)   Denial or termination of staff privileges, membership, or 
             employment includes failure or refusal to renew a contract or to 
             renew, extend, or reestablish any staff privileges, if the 
             action is based on medical disciplinary cause or reason.  

           c)   Medical disciplinary cause or reason as the aspect of a 
             licentiate's competence or professional conduct that is 
             reasonably likely to be detrimental to patient safety or to the 
             delivery of patient care.

        7)Requires a  copy  of the 805 report, and a  notice  advising the 
          licentiate of his or her right to submit additional statements or 
          other information, as specified, to be sent by the peer review body 
          to the licentiate named in the report.  (Id.)

        8)Indicates that the reporting required under Section 805 does not 
          act as a waiver of confidentiality of medical records and committee 
          reports.  Requires that the information reported or disclosed be 
          kept confidential, as specified.  (Id.)

        9)Requires, prior to granting or renewing staff privileges for any 
          physician and surgeon, psychologist, podiatrist or dentist, any 
          licensed health care facility, health care service plan or medical 
          care foundation, or the medical staff of an institution, to request 
          a  report  from the MBC, the Board of Psychology, the Osteopathic 
          Medical Board of California, or the Dental Board of California to 
          determine if any 805 report has been made, indicating that the 
          applying physician and surgeon, psychologist, podiatrist or dentist 
          has been denied staff privileges, been removed from medical staff, 
          or had his or her staff privileges restricted as provided in 
          Section 805.  Prohibits providing any report in the following 
          circumstances:





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        (BPC § 805.5)

           a)   If the denial, removal, or restriction was imposed solely 
             because of the failure to complete medical records.

           b)   If the MBC found the information reported is without merit.

           c)   If a period of three years has elapsed since the report was 
             submitted.

        10)Provides that peer review action may only be taken against the 
          licentiate by the peer review body if certain procedures and rules 
          are followed including written notice to the licentiate of the 
          proposed action, an opportunity for a hearing with full procedural 
          rights, including discovery, examination of witnesses, formal 
          record of the proceedings and written findings.  
        (BPC § 809 et seq.)
        
        This bill:

        1)Finds and declares that the sharing of information between peer 
          review bodies is essential to protect the public health.

        2)Requires a peer review body, upon receipt of reasonable processing 
          costs, to respond to the request of another peer review body and 
          produce relevant peer review information about a licentiate that was 
          subject to peer review by the responding peer review body for a 
          medical disciplinary cause or reason.  

        3)Requires the responding peer review body to determine the manner by 
          which to produce the information specified in #2) above and may 
          elect to do so through: 1) a written summary of relevant peer review 
          information, or 2) a relevant peer review record.

        4)Provides that relevant peer review information or peer review record 
          includes, but is not limited to, allegations and findings, 
          explanatory or exculpatory information submitted by a licentiate, 
          any conclusions made, or actions taken, and the reasons for those 
          actions, to the extent not prohibited by state or federal law.  
          Prohibits the information from identifying any other person, except 
          the licentiate.

        5)Indicates that the information produced by a peer review body shall 
          be used solely for peer review purposes and shall not be subject to 
          discovery, as specified.






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        6)States that the responding peer review body acting in good faith is 
          not subject to civil or criminal liability for providing information 
          to the requesting peer review body pursuant to this bill.  

        7)Entitles the peer review body responding to the request to all 
          confidentiality protections and privileges provided by law as to the 
          information disclosed.

        8)Requires the following prior to the release of any information 
          pursuant to this bill:

           a)   The requesting peer review body shall, upon request, sign a 
             mutually agreeable peer review sharing agreement with the 
             responding peer review body.  Requires the requesting peer review 
             body to indemnify the responding peer review body for any and all 
             claims, demands, liabilities, losses, damages, costs, and 
             expenses, including reasonable attorney's fees, resulting in any 
             manner, directly or indirectly, from the receiving peer review 
             body's improper release or disclosure of information that is 
             shared.

           b)   The licentiate under review by the peer review body requesting 
             information pursuant to this section shall, upon request, release 
             the responding peer review body, its members, and the health care 
             entity for which the responding peer review body conducts peer 
             reviews, from liability for the disclosure of information.

        9)Provides that the responding peer review body is not obligated to 
          produce the relevant peer review information unless both of the 
          following conditions are met:

           a)   The licentiate provides a release, as specified in #8 above 
             that is acceptable to the responding peer review body.

           b)   The requesting peer review body signs a mutually agreeable 
             peer review sharing agreement, as specified in #8) above with the 
             responding peer review body.

        FISCAL EFFECT:  Unknown.  This bill has been keyed "nonfiscal" by 
        Legislative Counsel. 

        COMMENTS:
        
        1.Purpose.  The  California Medical Association  (CMA) is the Sponsor of 
          this measure.  According to CMA, this bill facilitates the medical 
          peer review process by specifying procedures peer review bodies must 





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          follow in requesting and sharing peer review information with other 
          peer review bodies.  CMA indicates that nearly all peer review in 
          California is done efficiently, timely, and in a manner that 
          protects patients from quality of care deficiencies.  However, the 
          current peer review system has certain weaknesses.  Physicians are 
          often reluctant to serve on peer review committees due to the risk 
          of involvement in related future litigation, including medical 
          malpractice lawsuits against a physician under review.  In addition, 
          there has been rising concern relating to "sham peer review," the 
          use of the peer review system to discredit, harass, discipline, or 
          otherwise negatively affect a physician's ability to practice 
          medicine or exercise professional judgment for a non-medical or 
          patient safety related reason.  Sharing information between peer 
          review bodies will both increase consumer protection and protect 
          physicians.  CMA also states that "this bill reflects the mutual 
          agreement reached between CMA and the  California Hospital 
          Association  toward improving the peer review system."

        2.Background.  In peer review, physicians evaluate their colleagues' 
          practice to determine compliance with the standard of care.  Peer 
          reviews are intended to detect incompetent or unprofessional 
          physicians early and terminate, suspend, or limit their practice if 
          necessary.  Peer review is triggered by a wide variety of events 
          including patient injury, disruptive conduct, substance abuse, or 
          other medical staff complaints.  A peer review committee 
          investigates the allegation, comes to a decision regarding the 
          physician's conduct, and takes appropriate remedial actions.  
          However, there is reluctance among physicians to serve on peer 
          review committees due to the risk of involvement in related future 
          litigation, including medical malpractice lawsuits against a 
          physician under review.  In addition, there has been rising concern 
          relating to "sham peer review."  Sham peer review is the use of the 
          peer review system to discredit, harass, discipline, or otherwise 
          negatively affect a physician's ability to practice medicine or 
          exercise professional judgment for a non-medical or patient safety 
          related reason.  Other criticisms of peer review include over 
          legalization of the process, lack of transparency in the system, and 
          burdensome human and financial toll peer review brings not only to 
          the hospital but also to a physician under review.

        Recognizing that peer review is necessary to maintain and improve 
          quality medical care, Congress, in 1986, enacted the Health Care 
          Quality Improvement Act (HCQIA.)  HCQIA established standards for 
          hospital peer review committees, provided immunity for those who 
          participate in peer review, and created the National Practitioner 
          Data Bank (NPDB).  The NPDB is a confidential repository of 





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          information related to the professional competence and conduct of 
          physicians, dentists, and other health care practitioners.  
          Credentialing bodies are required to check the NPDB database before 
          granting privileges to physicians or re-appointing them.  Entities 
          such as hospitals, professional societies, state boards, and 
          plaintiffs' attorneys are given access to the NPDB.  In enacting the 
          NPDB, the United States Congress intended to improve the quality of 
          health care by encouraging State licensing boards, hospitals, and 
          other health care entities, and professional societies to identify 
          and discipline those who engage in unprofessional behavior; and to 
          restrict the ability of incompetent physicians, dentists, and other 
          health care practitioners to move from State to State without 
          disclosure or discovery of previous medical malpractice payment and 
          adverse action history.  The NPDB is a central repository of 
          information about: (1) Malpractice payments made for the benefit of 
          physicians, dentists, and other health care practitioners; (2) 
          licensure actions taken by State medical boards and State boards of 
          dentistry against physicians and dentists; (3) professional review 
          actions primarily taken against physicians and dentists by hospitals 
          and other health care entities, including health maintenance 
          organizations, group practices, and professional societies; (4) 
          actions taken by the Drug Enforcement Administration (DEA), and (5) 
          Medicare/Medicaid Exclusions. 

        According to the MBC, it received 138 805 reports in 2007-2008 from 
          hospitals/clinics (74), health care service plans (17), and medical 
          group/employers (47).  Out of all of these reports, one accusation 
          was filed, 92 cases are pending disposition and 45 cases were 
          closed.  The number of 805 reports varies from year to year, but it 
          appears that when adjusted to the number of physicians and surgeons 
          licensed and living in California, or the number of people living in 
          California, the trend shows a downward direction.

        3.Due Process Provisions (Section 809 et seq.).  In 1989, several due 
          process provisions for physicians subject to an 805 report were 
          adopted and codified under Section 809 et seq. of the Business and 
          Professions Code.  Committee analysis on  SB 1211  (Keene, Chapter 
          336, Statutes of 1989), which contained the provisions of Section 
          809, indicated that the CMA was the sponsor of the legislation, and 
          on the due process provisions of the measure, CMA indicated that 
          "the clear procedural standards in SB 1211 will reduce the risk of 
          erroneous peer review decisions."  Under Section 809, any physician, 
          for which an 805 report may be required to be filed, is entitled to 
          specified due process rights, including notice of the proposed 
          action, an opportunity for a hearing with full procedural rights 
          (including discovery, examination of witnesses, formal record of the 





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          proceedings and written findings).  Furthermore, a physician may 
          seek a judicial review in the Superior Court pursuant to Code of 
          Civil Procedure Section 1094.5 (writ of mandate).  It should be 
          noted that the due process requirements do not apply to peer review 
          proceedings conducted in state or county hospitals, to the 
          University of California hospitals or to other teaching hospitals as 
          defined.

        4.Previous Related Legislation.  
         
            a)   AB 1235  (Hayashi) of 2010 included various revisions to the 
             due process requirements of the medical peer review process, 
             including provisions relating to the production of peer review 
             information which are similar to this measure.  AB 1235 was 
             vetoed by former Governor Schwarzenegger who indicated: "It is 
             with sincere disappointment that I am unable to sign this 
             hospital peer review measure.  I vetoed two bills on this subject 
             last year, with a clear message for the interested stakeholders 
             to work together, along with my Administration, on this extremely 
             complicated and complex issue.  Unfortunately, this consensus did 
             not occur.  As California stands ready to implement health 
             reform, we need hospitals and physicians to work in new and more 
             efficient ways.  I believe both parties are working to provide 
             quality care to patients but there are better ways to work 
             together.  Litigation and protracted contract disputes are not 
             going to be mechanisms to achieve this common goal.  I would 
             encourage the author to keep working with these parties in the 
             coming year as this problem must be addressed.  I believe that a 
             final consensus product that first, and most importantly, 
             protects patients while also allowing hospitals and physicians to 
             work together can be reached."

            b)   SB 700  (Negrete McLeod), Chapter 505, Statutes of 2010, made 
             various changes relating to peer review and the 805 process, 
             including requiring the chief of staff of a medical or 
             professional staff or other chief executive officer, medical 
             director, or administrator of any peer review body and the chief 
             executive officer or administrator of any licensed health care 
             facility or clinic to file a confidential report with the 
             relevant agency within 15 days after completion of a formal 
             investigation of a licentiate for specified actions.

            c)   SB 58  (Aanestad) of 2009, among other provisions, provided for 
             changes in a physician and surgeon's central file of individual 
             historical records and the information that is publicly disclosed 
             regarding licensing and enforcement actions; required a peer 





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             review body to annually report to the MBC on its peer review 
             activities; defined an external peer review organization; 
             encouraged external peer review under certain conditions; 
             mandated external peer review for specific circumstances; and, 
             established an early detection and resolution program for 
             physicians and surgeons in lieu of the filing of an 805 report.  
             SB 58 was held on the Senate Appropriations suspense file.

            d)   SB 820  (Negrete McLeod) of 2009, included many of the 
             provisions of SB 700 and included the requirement that a 
             physician peer review body of a hospital make a confidential 
             report to the MBC regarding a disciplinary action taken against 
             a physician.  SB 820 was vetoed by then Governor Schwarzenegger. 


            e)   AB 120  (Hayashi) of 2009, is identical to AB 1235, and the 
             only difference is that AB 120 was made contingent on the 
             enactment of SB 820.  Since SB 820 was vetoed by the Governor, 
             the Governor was unable to sign AB 120.

            f)   AB 834  (Solorio)of 2009, authorized a peer review body to 
             impose, and a licentiate to  accept, voluntary remediation when 
             deemed appropriate by the peer review body, including for a 
             medical disciplinary cause or reason; made changes relating to 
             the qualifications of a hearing officer.  AB 834 was held in the 
             Assembly Business and Professions Committee.

            g)   SB 231  (Figueroa) Chapter 674, Statutes of 2005, required the 
             MBC to contract with an independent entity to conduct a 
             comprehensive study of the existing peer review process.  
             Lumetra was chosen by the MBC to conduct the study and the 
             report was submitted to the Legislature on July 31, 2008.  In 
             the report, Lumetra concluded that "the present peer review 
             system is broken for various reasons and is in need of a major 
             fix, if the process is to truly serve the citizens of 
             California."  Among other findings, the Lumetra Study indicated 
             there is variation and inconsistency in entity peer review 
             policies and standards; there is poor tracking of peer review 
             events; there is confusion regarding 805 reporting; lack of 
             coordination among state agencies, and licensing agencies; and 
             the costs of peer review are burdensome.

        5.Arguments in Support. The  California Hospital Association  states 
          that the peer review information sharing contained in this bill 
          will improve the peer review process and provide better protection 
          for patients.





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         NOTE  :  Double-referral to Judiciary Committee (second.)
        

        SUPPORT AND OPPOSITION:
        
         Support:  

        California Medical Association (Sponsor)
        California Hospital Association

         Opposition:  None on file as of June 3, 2011



        Consultant:Rosielyn Pulmano