Amended in Senate April 8, 2013

Senate Bill No. 631

Introduced by Senator Beall

February 22, 2013

An act begin insert to amend Sections 1255, 1275, 127170, and 128740 of, and to add Section 1253.7 to, the Health and Safety Code, end insert relating to health care.

LEGISLATIVE COUNSEL’S DIGEST

SB 631, as amended, Beall. Health begin delete care. end delete begin insert care: health facilities: observation and short-stay observation services. end insert

begin insert

Existing law provides for the licensure and regulation of health facilities, including general acute care hospitals, by the State Department of Public Health. A violation of these provisions is a crime. Existing law provides that a general acute care hospital may be approved to offer special services, as specified, and requires the department to issue a special permit authorizing a health facility to offer one or more special services when specified requirements are met. Existing law provides for the application by general acute care hospitals for supplemental services approval and requires the department to, upon issuance and renewal of a license for certain health facilities, separately identify on the license each supplemental service.

end insert begin insert

This bill would require a general acute care hospital that provides observation and short-stay observation services, as defined, to apply for approval from the department to provide the services as a supplemental service, and would require a general acute care hospital to obtain a special permit to provide short-stay observation services. The bill would require the department to adopt and enforce staffing standards for certain outpatient services and all ambulatory surgery centers, as specified, and would make other conforming changes.

end insert begin insert

By expanding the definition of a crime, this bill would create a state-mandated local program.

end insert begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance.

end delete begin delete

This bill would make findings and declarations regarding the PPACA and would declare the intent of the Legislature to evaluate the current use of observational and outpatient settings for the delivery of inpatient-level care, assess the volume of inpatient services delivered in these settings, and determine policy changes necessary to create safe care environments for patients receiving care in these settings.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1253.7 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 1253.7. end insert   

(a) For purposes of this chapter, “observation
services” and “short-stay observation” services mean outpatient
services provided by a general acute care hospital to those patients
described in subdivision (e) who have unstable or uncertain
conditions potentially serious enough to warrant close observation,
but not so serious as to warrant inpatient admission to the hospital.
Observation and short-stay observation services may include the
use of a bed, monitoring by nursing and other staff, and any other
services that are reasonable and necessary to safely evaluate a
patient’s condition or determine the need for a possible inpatient
admission to the hospital.

(1) Observation services may be provided for a period of no
more than 24 hours.

(2) Short-stay observation services may be provided for a period
of no more than 48 hours.

(b) A general acute care hospital that provides observation or
short-stay observation services shall, pursuant to Section 1253.6,
apply for approval from the department to provide the services as
a supplemental service.

(c) The department shall adopt standards and regulations,
pursuant to subdivision (a) of Section 1275, for the provision of
observation and short-stay observation services as a supplemental
service under the general acute care hospital’s license.

(d) Short-stay observation services shall be a special service,
as defined in Section 1252, and shall require a special permit, as
defined in Section 1251.5.

(e) (1) Observation and short-stay observation services may
only be ordered by an appropriately licensed practitioner for any
of the following:

(A) A patient who has received triage services in the emergency
department but who has not been admitted as an inpatient.

(B) A patient who has received outpatient surgical services and
procedures.

(C) A patient who has been admitted as an inpatient and is
discharged to an observation center or short-stay observation
center.

(D) A patient previously seen in a physician’s office or
outpatient clinic.

(f) Notwithstanding subdivisions (d) and (e) of Section 1275,
observation and short-stay observation services provided by the
general acute care hospital, including the services provided in a
freestanding physical plant, as defined in subdivision (g) of Section
1275, shall comply with the same staffing standards, including
licensed nurse-to-patient ratios, as supplemental emergency
services.

(g) A patient receiving observation or short-stay observation
services shall receive written notice that his or her care is being
provided in an outpatient setting, and that the provision of
observation or short-stay observation services in an outpatient
setting may impact reimbursement by Medicare, Medi-Cal, or
private payers of health care services, or cost-sharing
arrangements through his or her health care coverage.

(h) All areas in which observation or short-stay observation
services are provided shall be marked by signage identifying the
area as an outpatient area. The signage shall use the term
“outpatient” in the title of the area to clearly indicate to all
patients and family members that the observation or short-stay
observation services provided in the center are not inpatient
services.

(i) Observation and short-stay observation services shall be
deemed outpatient or ambulatory services that are
revenue-producing cost centers associated with hospital-based or
satellite service locations that emphasize outpatient care.
Identifying an observation or short-stay observation service by a
name or term other than that used in this subdivision shall not
exempt the general acute care hospital from the requirement of
providing observation or short-stay observation services as a
distinct supplemental service or a distinct supplemental special
permit service, as applicable.

(j) This section shall not modify standards for any other
outpatient services in health facilities licensed under Section 1250,
or clinics licensed under Chapter 1 (commencing with Section
1200), which limit the presence of patients in outpatient or clinic
facilities to less than 24 hours.

(k) Observation and short-stay observation service data reported
to the Office of Statewide Health Planning and Development
pursuant to subdivision (a) of Section 128740, shall be aggregated
for supplemental observation services and supplemental special
permit short-stay observation services when health facilities subject
to this section have multiple units or clinics that are approved for
both types of centers. For purposes of this subdivision,
“aggregated” means that both observation and short-stay
observation services provided in general acute care hospitals shall
be reported under “observation services” pursuant to paragraphs
(7), (11), and (15) of subdivision (a) of Section 128740.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1255 of the end insert begin insert Health and Safety Code end insert begin insert is amended
to read: end insert

1255.  

(a) In addition to the basic services offered under the
license, a general acute care hospital may be approved in
accordance with subdivision (c) of Section 1277 to offer special
services, including, but not limited to, the following:

(1) Radiation therapy department.

(2) Burn center.

(3) Emergency center.

begin insert

(4) Short-stay observation, as defined in Section 1253.7.

end insert begin delete

(4)

end delete

begin insert (5) end insert  Hemodialysis center (or unit).

begin delete

(5)

end delete

begin insert (6) end insert  Psychiatric.

begin delete

(6)

end delete

begin insert (7) end insert  Intensive care newborn nursery.

begin delete

(7)

end delete

begin insert (8) end insert  Cardiac surgery.

begin delete

(8)

end delete

begin insert (9) end insert  Cardiac catheterization laboratory.

begin delete

(9)

end delete

begin insert (10) end insert  Renal transplant.

begin delete

(10)

end delete

begin insert (11) end insert  Other special services as the department may prescribe by
regulation.

(b) A general acute care hospital that exclusively provides acute
medical rehabilitation center services may be approved in
accordance with subdivision (b) of Section 1277 to offer special
services not requiring surgical facilities.

(c) The department shall adopt standards for special services
and other regulations as may be necessary to implement this
section.

(d) (1) For cardiac catheterization laboratory service, the
department shall, at a minimum, adopt standards and regulations
that specify that only diagnostic services, and what diagnostic
services, may be offered by a general acute care hospital or a
multispecialty clinic as defined in subdivision (l) of Section 1206
that is approved to provide cardiac catheterization laboratory
service but is not also approved to provide cardiac surgery service,
together with the conditions under which the cardiac catheterization
laboratory service may be offered.

(2) Except as provided in paragraph (3), a cardiac catheterization
laboratory service shall be located in a general acute care hospital
that is either licensed to perform cardiovascular procedures
requiring extracorporeal coronary artery bypass that meets all of
the applicable licensing requirements relating to staff, equipment,
and space for service, or shall, at a minimum, have a licensed
intensive care service and coronary care service and maintain a
written agreement for the transfer of patients to a general acute
care hospital that is licensed for cardiac surgery or shall be located
in a multispecialty clinic as defined in subdivision (l) of Section
1206. The transfer agreement shall include protocols that will
minimize the need for duplicative cardiac catheterizations at the
hospital in which the cardiac surgery is to be performed.

(3) Commencing March 1, 2013, a general acute care hospital
that has applied for program flexibility on or before July 1, 2012,
to expand cardiac catheterization laboratory services may utilize
cardiac catheterization space that is in conformance with applicable
building code standards, including those promulgated by the Office
of Statewide Health Planning and Development, provided that all
of the following conditions are met:

(A) The expanded laboratory space is located in the building
so that the space is connected to the general acute care hospital by
an enclosed all-weather passageway that is accessible by staff and
patients who are accompanied by staff.

(B) The service performs cardiac catheterization services on no
more than 25 percent of the hospital’s inpatients who need cardiac
catheterizations.

(C) The service complies with the same policies and procedures
approved by hospital medical staff for cardiac catheterization
laboratories that are located within the general acute care hospital,
and the same standards and regulations prescribed by the
department for cardiac catheterization laboratories located inside
general acute care hospitals, including, but not limited to,
appropriate nurse-to-patient ratios under Section 1276.4, and with
all standards and regulations prescribed by the Office of Statewide
Health Planning and Development. Emergency regulations
allowing a general acute care hospital to operate a cardiac
catheterization laboratory service shall be adopted by the
department and by the Office of Statewide Health Planning and
Development by February 28, 2013.

(D) Emergency regulations implementing this paragraph have
been adopted by the department and by the Office of Statewide
Health Planning and Development by February 28, 2013.

(E) This paragraph shall not apply to more than two general
acute care hospitals.

(4) After March 1, 2014, an acute care hospital may only operate
a cardiac catheterization laboratory service pursuant to paragraph
(3) if the department and the Office of Statewide Health Planning
and Development have adopted regulations in accordance with the
requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code that provide
adequate protection to patient health and safety including, but not
limited to, building standards contained in Part 2.5 (commencing
with Section 18901) of Division 13.

(5) Notwithstanding Section 129885, cardiac catheterization
laboratory services expanded in accordance with paragraph (3)
shall be subject to all applicable building standards. The Office of
Statewide Health Planning and Development shall review the
services for compliance with the OSHPD 3 requirements of the
most recent version of the California Building Standards Code.

(e) For purposes of this section, “multispecialty clinic,” as
defined in subdivision (l) of Section 1206, includes an entity in
which the multispecialty clinic holds at least a 50-percent general
partner interest and maintains responsibility for the management
of the service, if all of the following requirements are met:

(1) The multispecialty clinic existed as of March 1, 1983.

(2) Prior to March 1, 1985, the multispecialty clinic did not
offer cardiac catheterization services, dynamic multiplane imaging,
or other types of coronary or similar angiography.

(3) The multispecialty clinic creates only one entity that operates
its service at one site.

(4) These entities shall have the equipment and procedures
necessary for the stabilization of patients in emergency situations
prior to transfer and patient transfer arrangements in emergency
situations that shall be in accordance with the standards established
by the Emergency Medical Services Authority, including the
availability of comprehensive care and the qualifications of any
general acute care hospital expected to provide emergency
treatment.

(f) Except as provided in this section and in Sections 128525
and 128530, under no circumstances shall cardiac catheterizations
be performed outside of a general acute care hospital or a
multispecialty clinic, as defined in subdivision (l) of Section 1206,
that qualifies for this definition as of March 1, 1983.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1275 of the end insert begin insert Health and Safety Code end insert begin insert is amended
to read: end insert

1275.  

(a)  The begin delete state end delete department shall adopt, amend, or repeal,
in accordance with Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code and
Chapter 4 (commencing with Section 18935) of Part 2.5 of Division
13, any reasonable rules and regulations as may be necessary or
proper to carry out the purposes and intent of this chapter and to
enable the begin delete state end delete department to exercise the powers and perform
the duties conferred upon it by this chapter, not inconsistent with
any statute of this state including, but not limited to, the State
Building Standards Law, Part 2.5 (commencing with Section
18901) of Division 13.

All regulations in effect on December 31, 1973, which were
adopted by the State Board of Public Health, the State Department
of Public Health, the State Department of Mental Hygiene, or the
State Department of Health relating to licensed health facilities
shall remain in full force and effect until altered, amended, or
repealed by the director or pursuant to Section 25 or other
provisions of law.

(b)  Notwithstanding this section or any other begin delete provision of end delete law,
the Office of Statewide Health Planning and Development shall
adopt and enforce regulations prescribing building standards for
the adequacy and safety of health facility physical plants.

(c)  The building standards adopted by the State Fire Marshal,
and the Office of Statewide Health Planning and Development
pursuant to subdivision (b), for the adequacy and safety of
freestanding physical plants housing outpatient services of a health
facility licensed under subdivision (a) or (b) of Section 1250 shall
not be more restrictive or comprehensive than the comparable
building standards established, or otherwise made applicable, by
the State Fire Marshal and the Office of Statewide Health Planning
and Development to clinics and other facilities licensed pursuant
to Chapter 1 (commencing with Section 1200).

(d)  Except as provided in subdivision (f), the licensing standards
adopted by the begin delete state end delete department under subdivision (a) for outpatient
services located in a freestanding physical plant of a health facility
licensed under subdivision (a) or (b) of Section 1250 shall not be
more restrictive or comprehensive than the comparable licensing
standards applied by the begin delete state end delete department to clinics and other
facilities licensed under Chapter 1 (commencing with Section
1200).

(e)  Except as provided in subdivision (f), the state agencies
specified in subdivisions (c) and (d) shall not enforce any standard
applicable to outpatient services located in a freestanding physical
plant of a health facility licensed pursuant to subdivision (a) or (b)
of Section 1250, to the extent that the standard is more restrictive
or comprehensive than the comparable licensing standards applied
to clinics and other facilities licensed under Chapter 1
(commencing with Section 1200).

(f)  All health care professionals providing services in settings
authorized by this section shall be members of the organized
medical staff of the health facility to the extent medical staff
membership would be required for the provision of the services
within the health facility. All services shall be provided under the
respective responsibilities of the governing body and medical staff
of the health facility.

(g)  For purposes of this section, “freestanding physical plant”
means any building which is not physically attached to a building
in which inpatient services are provided.

begin insert

(h) Notwithstanding subdivisions (d) and (e), or any other law,
the department shall adopt and enforce staffing standards for
supplemental outpatient surgical services provided in a
freestanding physical plant of a health facility licensed under
subdivision (a) of Section 1250 that are consistent with the staffing
standards for inpatient surgical services and post-anesthesia care
provided in general acute care hospitals and that shall apply when
the freestanding physical plant provides outpatient services and
anesthesia, except local anesthesia or peripheral nerve blocks, or
both, is used in compliance with the community standard of
practice, in doses that, when administered, have the probability
of placing a patient at risk for loss of the patient’s life-preserving
protective reflexes.

end insert begin insert

(i) Notwithstanding subdivisions (d) and (e), or any other law,
the department shall adopt and enforce staffing standards for
supplemental outpatient surgical services of a health facility
licensed under subdivision (a) of Section 1250 that are consistent
with the staffing standards for inpatient surgical services and
post-anesthesia care provided in general acute care hospitals and
that shall apply when anesthesia, except local anesthesia or
peripheral nerve blocks, or both, is used in compliance with the
community standard of practice, in doses that, when administered,
have the probability of placing a patient at risk for loss of the
patient’s life-preserving protective reflexes.

end insert begin insert

(j) Notwithstanding any other law, the department shall adopt
and enforce staffing standards for ambulatory surgery centers not
included in subdivisions (h) and (i) for a health facility licensed
under subdivision (a) of Section 1250 that are consistent with the
staffing standards for inpatient surgical services and
post-anesthesia care provided in general acute care hospitals and
that shall apply when the ambulatory surgery center provides
outpatient services and anesthesia, except local anesthesia or
peripheral nerve blocks, or both, is used in compliance with the
community standard of practice, in doses that, when administered,
have the probability of placing a patient at risk for loss of the
patient’s life-preserving protective reflexes.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 127170 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

127170.  

Except as otherwise exempted by any other provision
of law, projects requiring a certificate of need issued by the office
are the following:

(a)  Construction of a new health facility, relocation of a health
facility or specialty clinic on a site that is not the same site or
adjacent thereto, the increase of bed capacity in an existing health
facility, the conversion of an entire existing health facility from
one license category to another, or the conversion of a health
facility’s existing beds from any bed classification set forth in
Section 1250.1 to skilled nursing beds, psychiatric beds, or
intermediate care beds, and the conversion of skilled nursing beds,
psychiatric beds, or intermediate care beds to any other bed
classification set forth in Section 1250.1, except for skilled nursing
beds or intermediate care beds licensed as of March 1, 1983, as
part of a general acute care hospital. The conversion may not
exceed during any three-year period 5 percent of the existing beds
of the bed classification to which the conversion is made.

A health facility may use beds in one bed classification that,
pursuant to the facility’s license, have been designated in another
bed classification, if all of these bed classification changes do not
at any time exceed 5 percent of the total number of the facility’s
beds as set forth by the facility’s license and if this use meets the
requirements of Chapter 2 (commencing with Section 1250) of
Division 2. In addition, a facility may use an additional 5 percent
of its beds in this manner if the director finds that seasonal
fluctuations justify it.

For purposes of this subdivision, “adjacent,” means real property
within a 400-yard radius of the site where a health facility or
specialty clinic currently exists.

(b)  Establishment of a new specialty clinic, as defined in
paragraphs (1) and (3) of subdivision (b) of Section 1204, a project
by a health facility for expanded outpatient surgical capacity, the
conversion of an existing primary care clinic to a specialty clinic,
or the conversion of an existing specialty clinic to a different
category of specialty-clinic licensure. It does not constitute a
project and no certificate of need is required for the establishment
of a primary care clinic, as defined in subdivision (a) of Section
1204, the conversion of an existing specialty clinic to a primary
care clinic, or the conversion of an existing primary care clinic to
a different category of primary-care-clinic licensure. Any capital
expenditure involved in the establishment of a primary care clinic
also does not constitute a project, except as provided in subdivision
(d).

(c)  The establishment of a new special service delineated in
begin delete subdivision (a), (b), (c), (e), (f), (g), or (h) end delete begin insert paragraph (1), (2), (3),
(6), (7), (8), or (9) of subdivision (a) end insert of Section 1255, or the
establishment by a specialty clinic, as defined in paragraphs (1)
and (3) of subdivision (b) of Section 1204, of a new special service
identified by or pursuant to Section 1203.

(d)  The initial purchase or lease by a clinic subject to licensure
under Chapter 1 (commencing with Section 1200) of Division 2,
of diagnostic or therapeutic equipment with a value in excess of
one million dollars ($1,000,000) in a single fiscal year, or where
the cumulative cost exceeds this amount in more than one fiscal
year. For purposes of this subdivision, the purchase or lease of one
or more articles of functionally related diagnostic or therapeutic
equipment, as determined by the office, shall be considered
together.

(e)  (1)  Any project requiring a capital expenditure for a
specialty clinic, as defined in paragraphs (1) and (3) of subdivision
(b) of Section 1204, or for the services, equipment or modernization
of a specialty clinic in excess of one million dollars ($1,000,000)
in the current fiscal year or cumulation to an expenditure of one
million dollars ($1,000,000) in the same fiscal year or subsequent
fiscal years for a single project.

(2)  The threshold exemptions from certificate-of-need
requirements provided for in this subdivision do not apply to
projects for expanded outpatient surgical capacity.

(3)  For the purposes of this subdivision, “capital expenditure”
means any of the following:

(A)  An expenditure, including an expenditure for a construction
project undertaken by the specialty clinic as its own contractor,
that under generally accepted accounting principles is not properly
chargeable as an expense of operation and maintenance and that
exceeds one million dollars ($1,000,000). The cost of studies,
surveys, legal fees, land, offsite improvements, designs, plans,
working drawings, specifications, and other activities essential to
the acquisition, improvement, expansion, or replacement of the
physical plant and equipment for which the expenditure is made
shall be included in determining whether the cost exceeds one
million dollars ($1,000,000). Where the estimated cost of a
proposed project, including cost escalation factors appropriate to
the area where the project is located, is, within 60 days of the date
that the obligation for the expenditure is incurred, certified by a
licensed architect or engineer to be one million dollars ($1,000,000)
or less, that expenditure shall be deemed not to exceed one million
dollars ($1,000,000) regardless of the actual cost of the project.
However, in any case where the actual cost of the project exceeds
one million dollars ($1,000,000) the specialty clinic on whose
behalf the expenditure is made shall provide written notification
of the cost to the office not more than 30 days after the date that
the expenditure is incurred. The notification shall include a copy
of the certified estimate.

(B)  The acquisition, under lease or comparable arrangement,
or through donation, of equipment for a specialty clinic, the
expenditure for which would have been considered a capital
expenditure if the person had acquired it by purchase. For the
purposes of this paragraph, “donation” does not include a bequest.

(C)  Any change in a proposed capital expenditure that meets
the criteria set forth in this subdivision.

(4)  “Capital expenditure” includes the total cost of the proposed
project as certified by a licensed architect or engineer based on
preliminary plans or specifications and concurred in by the state
department.

(5)  For the purposes of this subdivision, “project” does not
include the purchase of real property for future use or the transfer
of ownership, in whole or part, of an existing specialty clinic or
the acquisition of all or substantially all of the assets or stock
thereof, or the construction, modernization, purchase, lease, or
other acquisition of parking lots or parking structures, telephone
systems, and nonclinical data-processing systems.

(6)  For the purposes of this subdivision, “modernization” means
the alteration, expansion, repair, remodeling, replacement, or
renovation of existing buildings, including initial equipment
thereof, and the replacement of equipment of existing buildings.

(f)  Except as provided in subdivision (g), only those projects
where 25 percent or less of the patients are covered by prepaid
health care.

(g)  Projects otherwise subject to review under subdivision (a)
that are for the addition of new licensed skilled nursing beds by
construction or conversion, regardless of the percentage of patients
served who are covered by prepaid health care.

(h)  (1)  Except as provided in paragraph (2), the office shall
annually adjust the dollar thresholds set forth in subdivisions (d)
and (e) to reflect changes in the cost of living, as determined by
the Department of Finance, using 1981 as the base year.

(2)  Notwithstanding the amount of the dollar thresholds
specified in paragraph (1), in the event Congress increases or
repeals the amount or amounts of the thresholds, the dollar
thresholds set forth in subdivisions (d) and (e) shall be the highest
amount or amounts permitted by Public Law 93-641, as amended,
or one million dollars ($1,000,000), whichever is less, on the date
congressional action is effective.

(i)  This section is not applicable to an intermediate care
facility/developmentally disabled habilitative or an intermediate
care facility/developmentally disabled--nursing.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 128740 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

128740.  

(a) Commencing with the first calendar quarter of
1992, the following summary financial and utilization data shall
be reported to the office by each hospital within 45 days of the
end of every calendar quarter. Adjusted reports reflecting changes
as a result of audited financial statements may be filed within four
months of the close of the hospital’s fiscal or calendar year. The
quarterly summary financial and utilization data shall conform to
the uniform description of accounts as contained in the Accounting
and Reporting Manual for California Hospitals and shall include
all of the following:

(1) Number of licensed beds.

(2) Average number of available beds.

(3) Average number of staffed beds.

(4) Number of discharges.

(5) Number of inpatient days.

(6) Number of outpatient visits begin insert , excluding observation and
short-stay observation service visits end insert .

begin insert

(7) Number of observation and short-stay observation service
visits and number of hours of services provided.

end insert begin delete

(7)

end delete

begin insert (8) end insert  Total operating expenses.

begin delete

(8)

end delete

begin insert (9) end insert  Total inpatient gross revenues by payer, including Medicare,
Medi-Cal, county indigent programs, other third parties, and other
payers.

begin delete

(9)

end delete

begin insert (10) end insert  Total outpatient gross revenues by payer, including
Medicare, Medi-Cal, county indigent programs, other third parties,
and other payers.

begin insert

(11) Total observation and short-stay observation service gross
revenues by payer, including Medicare, Medi-Cal, county indigent
programs, other third parties, and other payers.

end insert begin delete

(10)

end delete

begin insert (12) end insert  Deductions from revenue in total and by component,
including the following: Medicare contractual adjustments,
Medi-Cal contractual adjustments, and county indigent program
contractual adjustments, other contractual adjustments, bad debts,
charity care, restricted donations and subsidies for indigents,
support for clinical teaching, teaching allowances, and other
deductions.

begin delete

(11)

end delete

begin insert (13) end insert  Total capital expenditures.

begin delete

(12)

end delete

begin insert (14) end insert  Total net fixed assets.

begin delete

(13)

end delete

begin insert (15) end insert  Total number of inpatient days, outpatient visits, begin insert excluding
observation and short-stay observation service visits, end insert and
discharges by payer, including Medicare, Medi-Cal, county
indigent programs, other third parties, self-pay, charity, and other
payers.

begin delete

(14)

end delete

begin insert (16) end insert  Total net patient revenues by payer including Medicare,
Medi-Cal, county indigent programs, other third parties, and other
payers.

begin delete

(15)

end delete

begin insert (17) end insert  Other operating revenue.

begin delete

(16)

end delete

begin insert (18) end insert  Nonoperating revenue net of nonoperating expenses.

(b) Hospitals reporting pursuant to subdivision (d) of Section
128760 may provide the items in paragraphs begin delete (7), (8), (9), (10),
(14), (15), and (16) end delete begin insert (8), (9), (10), (12), (16), (17), and (18) end insert of
subdivision (a) on a group basis, as described in subdivision (d)
of Section 128760.

(c) The office shall make available at cost, to any person, a hard
copy of any hospital report made pursuant to this section and in
addition to hard copies, shall make available at cost, a computer
tape of all reports made pursuant to this section within 105 days
of the end of every calendar quarter.

(d) The office shall adopt by regulation guidelines for the
identification, assessment, and reporting of charity care services.
In establishing the guidelines, the office shall consider the
principles and practices recommended by professional health care
industry accounting associations for differentiating between charity
services and bad debts. The office shall further conduct the onsite
validations of health facility accounting and reporting procedures
and records as are necessary to assure that reported data are
consistent with regulatory guidelines.

This section shall become operative January 1, 1992.

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begin insert SEC. 6. end insert   

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No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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SECTION 1.  

(a) The Legislature finds and declares the
following:

(1) The landscape of health care delivery is changing as we look
forward to the full implementation of the federal Patient Protection
Affordable Care Act (PPACA) in California, through which
millions of uninsured Californians will obtain health care coverage.
As rates of health care coverage increase, it is anticipated that more
individuals will seek health care services, including services in
general acute care hospitals. The increased demand may place
additional strains on already crowded emergency departments and
hospitals.

(2) The PPACA imposes new requirements on general acute
care hospitals that will likely result in those hospitals making
significant organizational changes in order to promote the goals
of the PPACA to lower health care costs. These organizational
changes may range from reducing readmission rates, changing the
ways in which patient acuity is assessed, and making more efficient
use of bed space.

(3) Currently, hospitals delay admission of some patients
through extensive use of observational settings. These settings are
often found adjacent to emergency departments, and are used as
an alternative to admitting patients who cannot be safely discharged
to their homes. In these settings, patients are placed for what can
be prolonged periods of time, often extending beyond 24 hours.

(4) The use of outpatient services is expected to increase as
hospitals adapt to payment models that incent avoidance of hospital
readmission. Further, some hospitals have enacted models in which
inpatient services, including inpatient cardiac catheterization, are
provided in outpatient settings.

(5) Observational and outpatient settings are not subject to many
of the laws and regulations aimed at ensuring patient safety and
adequate staffing standards, and the increasing use of these settings
for patients in need of inpatient care raises serious concerns about
patient access to safe levels of care and service.

(b) To ensure that patients are not denied access to safe inpatient
care in today’s health care delivery system, and as hospitals adjust
their business models to comport with new PPACA requirements,
it is the intent of the Legislature to evaluate the current use of
observational and outpatient settings for the delivery of
inpatient-level care, assess the volume of inpatient services
delivered in these settings, and determine policy changes necessary
to create safe care environments for patients receiving care in these
settings.

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