BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1095|
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UNFINISHED BUSINESS
Bill No: SB 1095
Author: Rubio (D), et al.
Amended: 8/6/12
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE : 8-0, 4/9/12
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Strickland, Wyland
NO VOTE RECORDED: Vargas
SENATE APPROPRIATIONS COMMITTEE : 7-0, 4/30/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
SENATE FLOOR : 35-0, 5/3/12
AYES: Alquist, Berryhill, Blakeslee, Calderon, Corbett,
Correa, De León, DeSaulnier, Dutton, Emmerson, Evans,
Fuller, Gaines, Hancock, Harman, Hernandez, Huff, Kehoe,
La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod,
Pavley, Price, Rubio, Steinberg, Strickland, Vargas,
Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Anderson, Cannella, Padilla, Runner,
Simitian
ASSEMBLY FLOOR : 77-0, 8/21/12 - See last page for vote
SUBJECT : Pharmacy: clinic
SOURCE : California Ambulatory Surgery Association
CONTINUED
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DIGEST : This bill authorizes outpatient settings and
ambulatory surgical centers (ASCs) to purchase drugs at
wholesale for administering and dispensing to their
patients.
Assembly Amendments require agencies that accredit
outpatient settings to provide specified information to the
Board of Pharmacy (Board) within 10 days after the adoption
of a plan of correction for a notice of deficiencies, and
within 24 hours if an outpatient setting has been issued a
reprimand, if the outpatient setting's certificate of
accreditation has been suspended or revoked, or if the
outpatient setting has been placed on probation; and 2) add
Senator Wyland as a coauthor.
ANALYSIS :
Existing law, the Business and Professions Code:
1. Provides for the licensure and regulation of the
practice of pharmacy under the Pharmacy Law by the Board
within the Department of Consumer Affairs.
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.
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 requires surgical clinics to
keep records as to the kind and amount of drugs
purchased, administered, and dispensed, for at least
three years.
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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.
Existing law, the Health and Safety Code (HSC):
1. Requires surgical clinics to be licensed and certified
by the Department of Public Health (DPH).
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.
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
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.
This bill:
1.Revises and recasts the authorization for the Board to
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issue a license for the wholesale purchase of drugs to a
"surgical clinic," to instead refer to the license being
issued to a "clinic," and defines "clinic" to mean any of
the following:
A. A surgical clinic licensed pursuant to state Health
and Safety Code;
B. An outpatient setting accredited by an
accreditation agency, as defined in state Health and
Safety Code; or,
C. An ASC certified to participate in the Medicare
Program pursuant to federal law.
1.Deletes a provision stating that no clinic shall operate
without a license issued by the Board, but retains
provisions requiring a clinic to be licensed by the Board
in order to be entitled to purchase drugs at wholesale,
and allowing the Board to inspect those clinics at any
time in order to determine whether a clinic is operating
in compliance with the 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.Requires agencies that accredit outpatient settings to
provide specified information to the Board within 10 days
after the adoption of a plan of correction for a notice
of deficiencies, and within 24 hours if an outpatient
setting has been issued a reprimand, if the outpatient
setting's certificate of accreditation has been suspended
or revoked, or if the outpatient setting has been placed
on probation.
4.Makes conforming changes.
Background
Ambulatory Surgical Centers (ASC) . ASCs are health care
facilities that specialize in providing surgery, pain
management and certain diagnostic (e.g., colonoscopy)
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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.
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.
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 certain outpatient surgery
settings are excluded from the accreditation requirement,
such as surgery clinics certified to participate in the
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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.
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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Compliance inspection costs of estimated $164,000 in
2013-14 to the Pharmacy Board Contingent Fund, offset by
clinic licensing fees deposited in the Pharmacy Board
Contingent Fund; assuming inspections commence six months
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after the effective date of the bill.
Similar compliance inspection costs in 2014-15, 2015-16,
2016-17; licensing revenue fee shortfall of estimated
$63,000 annually.
Potentially reduced compliance inspection activities in
2017-18 and ongoing, costs offset by fees.
SUPPORT : (Verified 5/1/12)
California Ambulatory Surgery Association (source)
Advanced Eye Surgery Center
Airport Endoscopy Center
AmSurg Corp
Antelope Valley Surgery Center
ASD Management
Aspen Surgery Center
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
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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
ARGUMENTS IN SUPPORT : According to the author's office,
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.
Existing law is problematic because approximately 90
percent of ASCs have some type of physician ownership,
according to the author's office. 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's office states that this 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.
ASSEMBLY FLOOR : 77-0, 8/21/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
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Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell,
Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Hill,
Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara,
Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller,
Mitchell, Monning, Morrell, Nestande, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Wagner, Wieckowski,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Roger Hernández, Nielsen, Valadao
JJA:dn 8/21/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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