BILL ANALYSIS Ó
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|Hearing Date:April 9, 2012 |Bill No:SB |
| |1095 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 1095Author:Rubio
As Introduced: February 16, 2012 Fiscal: Yes
SUBJECT: Pharmacy: clinics.
SUMMARY: Revises and expands the types of clinics to which the Board
of Pharmacy may issue a limited license for purchasing drugs at
wholesale for administration or dispensing to clinic patients for pain
and nausea under the direction of a physician to include: specified
outpatient settings, ambulatory surgical centers participating in the
Medicare Program, as well as surgical clinics, as specified; and
authorizes the Board to conduct compliance inspections of licensed
clinics at any time.
Existing law, the Business and Professions Code (BPC):
1)Provides for the licensure and regulation of the practice of pharmacy
under the Pharmacy Law by the California State Board of Pharmacy
(Board) within the Department of Consumer Affairs (DCA).
2)Authorizes the Board to issue a license to a surgical clinic to
purchase drugs to administer or dispense to the clinic's patients,
as specified. (BPC § 4190)
3)Authorizes a licensed surgical clinic to purchase drugs at wholesale
prices to administer or dispense to patients registered for care at
the clinic and limits the administration or dispensing of surgical
clinic drugs to drugs that control pain and nausea, and prohibits
drugs from being dispensed in amounts greater than that required to
meet the patient's needs for 72 hours.
4)Authorizes surgical clinics to purchase and distribute such drugs
only after being licensed to do so by the Board, as specified, and
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requires surgical clinics to keep records as to the kind and amount
of drugs purchased, administered, and dispensed, for at least three
years.
5)Requires a surgical clinic that is licensed to purchase and provide
such drugs to notify the Board of any proposed changes in ownership
or beneficial interest, as specified.
6)Authorizes the Board to inspect a clinic at any time in order to
determine the clinic's compliance with the law. (BPC § 4195)
Existing law, the Health and Safety Code (HSC):
1)Requires surgical clinics to be licensed and certified by the
Department of Public Health (DPH). (HSC § 1248 et seq).
2)Defines a surgical clinic as a clinic that is not part of a hospital,
and that provides ambulatory surgical care for patients who remain
less than 24 hours (HSC § 1204).
3)Defines an outpatient setting as any facility, clinic, office, or
other setting that is not part of a general acute care hospital,
where anesthesia is used in compliance with the community standard
of practice. (HSC § 1248 (b))
4)Prohibits the operation of an outpatient setting, including a
surgical clinic, unless the setting is licensed by the DPH,
certified to participate in the Medicare program, as specified, or
accredited by an accreditation agency approved by the Medical Board
of California (MBC).
5)Requires the MBC to adopt standards for accreditation of outpatient
settings, as defined, and in approving accreditation agencies to
perform accreditation of outpatient settings, ensure that the
certification program shall, at a minimum, include standards for
specified aspects of settings' operations.
6)Defines an "ambulatory surgical center" as an ambulatory surgical
center certified to participate in the Medicare Program under Title
XVIII of the federal Social Security Act (42 U.S.C. Sec. 1395 et
seq.).
This bill:
1)Revises and recasts the authorization for the Board to issue a
license to a "surgical clinic," to instead refer to the license
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being issued to a "clinic," and defines "clinic" to mean any of the
following:
a) A surgical clinic licensed pursuant to HSC § 1204.
b) An outpatient setting as defined in HSC § 1248.
c) An ambulatory surgical center certified to participate in the
Medicare Program pursuant to federal law.
2)Specifies that the provisions above shall not limit the ability of a
physician and surgeon or a group medical practice to prescribe,
dispense, administer, or furnish drugs at a clinic, as specified.
3)Authorizes the Board to conduct inspections of these clinics at any
time in order to determine whether a clinic is operating in
compliance with the law.
4) Makes conforming changes relating to a licensed clinic to
purchasing and administering or dispensing drugs to the clinic's
patients.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1. Purpose. This bill is sponsored by the California Ambulatory
Surgery Association (Sponsor) to expand the term "clinic" to
include accredited or Medicare certified Ambulatory Surgical
Centers (ASCs) in statute. This change would allow ASCs to obtain
a license from the California Board of Pharmacy in order to
purchase drugs at wholesale and safely store them within the
facilities.
According to the Author, in 2007, the California Court of Appeal ruled
in Capen v. Shewry to prohibit the DPH from licensing ASCs that are
either partially or fully owned by a physician, even if the
physician-owned ASC is properly accredited and Medicare certified.
Without proper licensure from the DPH, the Board cannot grant the
ASC a license to purchase medications wholesale.
Current law is problematic because approximately 90% of ASCs have some
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type of physician ownership, according to the Author. As a result
of the Capen v. Shewry decision, physicians that own ASCs incur a
significant liability by having to purchase drugs at retail prices.
The Author states that the bill provides physician-owned ASCs the
proper licensing necessary to administer high quality care by
allowing them to purchase certain drugs wholesale and storing them
on site.
2.Ambulatory Surgical Centers. ASCs are health care facilities that
specialize in providing surgery, pain management and certain
diagnostic (e.g., colonoscopy) services in an outpatient setting.
Since the first ASC was established in 1970, many procedures that
used to be performed exclusively in hospitals began taking place in
ASCs, such as knee, shoulder, eye, spine, and other surgeries. Most
ASCs are licensed, certified by Medicare and accredited by one of
the major health care accrediting organizations. Stand-alone ASCs
rarely have a single owner and most involve at least some physician
ownership. Physician partners who perform surgeries in the center
will often own at least some part of the facility, but ownership
percentages vary considerably. Some ASCs are entirely
physician-owned and some have a development or management company
that owns a percentage of a center.
3.Medicare Certification. The federal Centers for Medicare and
Medicaid Services (CMS) develops Conditions of Participation and
Conditions for Coverage which are minimum standards a health care
organization must meet in order to participate in the Medicare and
Medicaid programs. Certification as a surgical clinic is limited to
any distinct entity that operates exclusively for purposes of
providing surgical services to patients not requiring
hospitalization. A surgical clinic may be either hospital-operated
or independent. However, it must be physically and administratively
distinct from other operations of the hospital and be able to
identify its costs separately from other hospital costs. According
to CMS, covered procedures performed in certified ASCs are those
that generally do not exceed 90 minutes in length and do not require
more than four hours recovery or convalescent time. The surgical
clinic may not perform a surgical procedure on a Medicare
beneficiary when, before surgery, an overnight hospital stay is
anticipated. Anticipated extended care in a non-hospital health
care setting as a result of a particular procedure is not a covered
surgical clinic procedure for Medicare beneficiaries.
4.MBC Accreditation. Physicians are currently prohibited by law from
performing specified outpatient surgeries, unless they are performed
in a licensed or accredited setting. The law also specifies that
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certain outpatient surgery settings are excluded from the
accreditation requirement, such as surgery clinics certified to
participate in the Medicare program and licensed surgical clinics.
Physicians presently performing surgery under specified anesthesia
levels in unlicensed settings that are also not Medicare-certified,
such as their offices, must seek accreditation from one of the
accreditation agencies approved by MBC.
5.Board Licensure Requirement. Under existing law, the surgical
clinic, outpatient setting, or ASC is required to comply with all
applicable laws and regulations enforced by the DPH and the Board,
relating to drug distribution, in order to ensure that inventories,
security procedures, training, protocol development, recordkeeping,
packaging, labeling, dispensing, and patient consultation are
carried out in a manner that is consistent with the promotion and
protection of the health and safety of the public.
6.Capen v. Shewry. In 2007, a California appellate court ruled that
ASCs owned, in whole or in part, by physicians would no longer be
eligible for licensure by the DPH. As a result, the DPH ceased
licensure activities of ASCs owned by physicians, although it
continued to perform Medicare certification for those facilities.
Prior to the Capen v. Shewry ruling, the DPH interpreted the
exemption from licensure in law for physician-owned clinics to mean
that each licensed health practitioner at the clinic had to have at
least some share in the ownership (or leasehold) and operation of
the clinic. The DPH interpreted the law in this way to ensure that
a practitioner at the clinic could not disclaim responsibility for
its operation should a problem arise. Although following Capen v.
Shewry, the DPH is not renewing or granting any licenses to a
surgical clinic with any degree of physician ownership, it continues
to certify these centers for Medicare purposes.
7.Related Legislation. SB 100 (Price, Chapter 645, Statutes of 2011)
increased oversight of outpatient settings by the MBC, the DPH, and
the bodies that accredit outpatient settings; requires the MBC to
adopt regulations governing physician availability in settings using
laser or intense pulse light devices (so-called "medical spa"
treatments); includes clinics that provide in vitro fertilization in
the definition of outpatient setting.
AB 847 (Lowenthal) of 2011 was substantially identical to SB 1095. The
bill died in the Assembly Health Committee without being heard.
AB 2292 (Lowenthal) of 2010, would have permitted the Board of Pharmacy
to grant a limited license to a clinic that is certified as an
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ambulatory surgical center for participation in the Medicare program
or accredited as an outpatient setting to allow them to purchase
drugs at wholesale for administration or dispensing to clinic
patients for pain and nausea under the direction of a physician.
Would allow the Board to conduct inspections of these clinics at any
time in order to determine whether a clinic is operating in
compliance with the law. The bill died on the Assembly
Appropriations Committee suspense file.
AB 832 (Jones) of 2009 would have required the DPH to convene a
workgroup to develop recommendations regarding the oversight of ASCs
to address issues raised in Capen v. Shewry. The bill died on the
Assembly Appropriations Committee suspense file.
AB 1574 (Plescia) of 2008 contained similar provisions to those
proposed in AB 2292 of 2010 and would have required the Board to
inspect outpatient settings and ASCs within 120 days of issuing a
clinic license and then at least annually thereafter. The bill was
vetoed by the Governor stating: "The bill failed to address the
larger issue concerning the Capen v. Shewry ruling."
AB 2122 (Plescia) of 2008 would have required surgical clinics to meet
licensing requirements, including compliance with Medicare
conditions of participation; contained provisions nearly identical
to those proposed in AB 1574. The bill died in the Assembly
Appropriations Committee.
AB 543 (Plescia) of 2007 would have required surgical clinics to meet
specified operating and staffing standards, to limit surgical
procedures, as specified, and to develop and implement policies and
procedures consistent with Medicare conditions of participation,
including interpretive guidelines. The bill was vetoed by the
Governor stating that the bill did not establish appropriate time
limits for performing surgery under general anesthesia, and
inappropriately restricted administrative flexibility, and created
fiscal pressure during ongoing budget challenges.
AB 2308 (Plescia) of 2006 would have required the Department of Health
Services (now DPH) to convene a workgroup to develop licensing
criteria to protect surgical clinic patients, and to submit the
workgroup conclusions and recommendations to the Legislature by
March 1, 2007. The bill would have replaced the term "licensed
surgical clinic" with "ambulatory surgical centers." The bill was
vetoed by the Governor stating, "The bill did not establish clear
licensing standards for surgical clinics."
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AB 595 (Speier, Chapter 1276, Statutes of 1994) required that certain
outpatient settings, including surgical clinics, to be licensed by
the state, Medicare certified, or accredited by an agency approved
by the MBC.
8.Arguments in Support. Numerous surgery clinics have written in
support indicating that the ability to obtain a limited pharmacy
license from the Board is only currently authorized for state
licensed surgical clinics. These limited pharmacy licenses allow
facilities to purchase a limited supply of drugs at wholesale and
requires these drugs to be stored safely by that facility.
Supporters state that current law provides specific oversight for an
ambulatory surgery center (ASC) utilizing certain levels of
anesthesia; however, the Board of Pharmacy will not issue a pharmacy
permit (i.e. limited pharmacy license) to an ASC until it can
document state licensure. Supporters suggest that the court ruling
in Capen v. Shewry (155 Cal.App.,lth 378) has prohibited the DPH
from issuing state licenses to almost all ASCs. As a result,
accreditation and Medicare certification are the only other
regulatory options for most ASCs. Without adding an accredited
outpatient setting and Medicare certified ambulatory surgical center
to the list of facilities that can obtain a limited pharmacy license
from the Board, individual staff physicians are therefore required
to acquire and maintain on-hand a myriad of medications to dispense
at the point of care, as opposed to those medications simply being
readily centralized and available by the ASC.
Supporters state that the ASC industry prides itself on providing
convenient access to high quality medical care. To that end,
patients being treated in a California ASC deserve a consistent,
concise and comprehensive set of transparent limited pharmacy
licensure requirements for an industry that has traditionally been
regulated to ensure the optimum health, welfare and safety of the
general public.
SUPPORT AND OPPOSITION:
Support:
California Ambulatory Surgery Association (sponsor)
Advanced Eye Surgery Center
Airport Endoscopy Center
AmSurg Corp
Antelope Valley Surgery Center
ASD Management
Aspen Surgery Center
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Brentwood Surgery Center
Carlsbad Surgery Center
Central California Endoscopy Center
Coast Surgery Center
East Bay Endosurgery
El Camino Surgery Center
Glendale Eye Surgery Center
Glendora Digestive Disease Institute
Golden Triangle Surgicenter
Hacienda Surgery Center
Hope Square Surgical Center
Inland Surgery Center
La Jolla Endoscopy Center
Millennium Surgery Center
Monterey Peninsula Surgery Centers
Monterey Peninsula Surgery Centers
National Surgical Hospitals
North Coast Surgery Center
Oasis Surgery Center
Orthopaedic Surgery Center
OtayLakes Surgery Center
Outpatient Surgery Center of La Jolla
Pain Diagnostic and Treatment Center
Parkway Endoscopy Center
Physicians Plaza Surgical Center
Pleasanton Surgery Center
Rancho Bernardo Surgery Center
Redding Endoscopy Center
Riverside Surgery Center
Roseville Surgery Center
San Luis Obispo Surgery Center
San Mateo Surgery Center
Skyway Surgery Center
Southwest Surgical Center
Surgery Center of Santa Monica
Surgery Center of the Pacific
Surgical Care Affiliates
Temecula Valley Endoscopy Center
Templeton Endoscopy Center
The Oaks Surgery Center
The Surgery Center of Santa Rosa
United Surgical Partners
Valley Digestive Health Center
Opposition:
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None received as of April 3, 2012
Consultant:G. V. Ayers