BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 232|
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THIRD READING
Bill No: AB 232
Author: Obernolte (R), et al.
Amended: 9/4/15 in Senate
Vote: 27 - Urgency
PRIOR SENATE VOTE NOT RELEVANT
SENATE HEALTH COMMITTEE: 9-0, 9/10/15
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Pan, Roth, Wolk
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: Not relevant
SUBJECT: Hospitals: seismic safety
SOURCE: Association of California Healthcare Districts
DIGEST: This bill permits a critical access hospital located
in the City of Tehachapi to submit a seismic safety extension
application, pursuant to specified provisions of existing law
that allow an extension up to January 1, 2020, notwithstanding a
deadline of September 2012 to apply for this extension.
ANALYSIS:
Existing federal law:
1)Establishes the Medicare Rural Hospital Flexibility Program to
permit states to designate certain health facilities to be
critical access hospitals. Requires critical access hospitals
to meet specified criteria, including that the facility be a
rural public or nonprofit hospital that is located more than a
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35-mile drive from any other hospital or is certified by the
state as being a necessary provider of health care services to
residents in the area.
2)Requires critical access hospitals to receive reasonable
cost-based reimbursement for their services from Medicare.
Existing state law:
1)Establishes, under the Alfred E. Alquist Hospital Facilities
Seismic Safety Act of 1983 (Alquist Act), timelines for
hospital compliance with seismic safety standards, including a
requirement that buildings posing a significant risk of
collapse and a danger to the public (referred to as SPC -1
buildings) be rebuilt or retrofitted to be capable of
withstanding an earthquake, or removed from acute care
service, by January 1, 2008, and a requirement that hospital
buildings be capable of continued operation after an
earthquake by January 1, 2030.
2)Permits the Office of Statewide Health Planning and
Development (OSHPD) to grant an extension of up to five years
to the 2008 deadline, which would be January 1, 2013, for
hospitals for which compliance will result in a loss of health
care capacity, as defined.
3)Permits OSHPD to grant various further extensions beyond the
initial five year extension in 2) above, under various
eligibility requirements, with January 1, 2020, being the
final permissible extension for SPC-1 buildings allowed under
any of the various extensions.
4)Requires owners of general acute care hospital buildings that
are classified as SPC-1 buildings to submit reports to OSHPD
annually describing the status of each building in complying
with the January 1, 2013, deadline.
5)Allows OSHPD to utilize computer modeling based on HAZUS,
which is a seismic risks analysis tool, for purposes of
determining the structural performance category of general
acute care hospital buildings.
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This bill:
1)Permits a critical access hospital located in the City of
Tehachapi to submit a seismic safety extension application,
pursuant to specified provisions of existing law that allow an
extension of the deadline until up to January 1, 2020,
notwithstanding deadlines in those provisions of existing law
that are earlier than the effective date of this bill,
including the September 2012 deadline to submit an
application.
2)Requires the application submitted pursuant to 1) above to
include a timetable, as required under existing law, detailing
how the hospital intends to meet the requested deadline.
3)Contains an urgency clause so that this bill will take effect
immediately, in order to prevent the loss of hospital
licensure and Medicaid and Medicare Funding that would lead to
closure of a critical access hospital and a loss of access to
health care in the City of Tehachapi.
Comments
1)Author's statement. According to the author, this bill
assists a small critical access hospital serving a remote
rural community located in the Tehachapi Mountains. The next
closest hospital is more than 38 miles away. Tehachapi
Hospital has set out to comply with the state's seismic
mandate by building a brand new hospital. The new Tehachapi
Hospital is currently under construction. However, in the
interim, the hospital must retrofit existing buildings in
order to remain operational and to ensure continued access to
critical health care services. The author states that under
the current seismic mandate, this hospital will be unable to
continue operating in its existing hospital buildings beyond
January 1, 2016. Should the hospital not be granted an
extension to this deadline, the consequences are severe -
including loss of hospital licensure and the exclusion from
federal participation in Medicaid and Medicare. According to
the author, this bill provides an exception for Tehachapi
Hospital to resubmit their seismic safety extension
application to OSHPD in accordance with laws that would
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provide an extension through January 1, 2020, for them to
retrofit their existing buildings.
2)Hospital seismic requirements. Following the 1971 San
Fernando Valley earthquake, California enacted the Alquist
Act, which mandated that all new hospital construction meet
stringent seismic safety standards. In 1994, after the
Northridge earthquake, the Legislature passed and the Governor
signed SB 1953 (Alquist, Chapter 740, Statutes of 1994) which
required OSHPD to establish earthquake performance categories
for hospitals, and established a January 1, 2008, deadline by
which general acute care hospitals must be retrofitted or
replaced so that they do not pose a risk of collapse in the
event of an earthquake, and a January 1, 2030, deadline by
which they must be capable of remaining operational following
an earthquake. Hospital buildings are categorized under a
structural performance category (SPC) rating system, whereby
buildings with a relatively high probability of collapse are
designated as SPC-1, and these are the buildings subject to
the original January 1, 2008 deadline and its various
extensions. Current law allowed most hospitals to qualify for
an extension of the 2008 deadline, with hospitals able to
request extensions in one-year increments up to a maximum of
five years after January 1, 2008. Therefore, practically
speaking, the real initial deadline for hospitals to retrofit
or replace SPC-1 buildings was January 1, 2013.
In addition to this five-year extension, the Legislature has
passed additional bills allowing hospitals to extend the
deadlines for retrofitting or replacing SPC-1 buildings beyond
the 2013 deadline, with the very latest of the extensions
ending on January 1, 2020. After January 1, 2020, all SPC-1
buildings will either have been removed from service, or
brought up to at least SPC-2 status. The next deadline is the
January 1, 2030 deadline for hospitals to remain operational
following an earthquake, and at that time SPC-2 buildings will
no longer be permitted, and all buildings will have to at
least meet SPC-3, and in many cases, SPC-4 or SPC-5 (the
highest rating). According to OSHPD, only about 10 percent of
remaining hospital buildings are still classified as SPC-1.
The following are the Alquist Act deadline extensions that are
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relevant to Tehachapi Hospital and this bill:
a) SB 306 (Ducheny, Chapter 642, Statutes of 2007)
permitted a hospital owner to comply with seismic safety
deadlines and requirements in current law by replacing all
of its buildings subject to seismic retrofit by January 1,
2020, rather than retrofitting to SPC-2 by 2013 and
replacing them by 2030, if the hospital meets several
conditions and OSHPD certifies that the hospital owner
lacks the financial capacity to meet seismic standards, as
defined. Among the conditions a hospital must meet to be
eligible for this extension are that it maintains a
contract to provide Medi-Cal services, maintains a basic
emergency room, and is either in an underserved area,
serves an underserved community, is an essential provider
of Medi-Cal services, or is a heavy provider of services to
Medi-Cal and indigent patients. Eighteen hospitals have
qualified for extensions to 2020 under this authority.
Tehachapi Hospital applied for an extension under SB 306,
but the application was denied by OSHPD due to financial
criteria.
b) SB 608 (Alquist, Chapter 623, Statutes of 2010) provided
for an extension of hospital seismic deadlines, for
hospitals that have already received the five year
extension to January 1, 2013, of up to three years for
hospitals that document that a local planning delay will
cause them to miss the January 1, 2013 deadline. Tehachapi
Hospital was approved for an extension under SB 608 for the
maximum of three years, to January 1, 2016. This is the
deadline currently facing Tehachapi Hospital.
c) SB 90 (Steinberg, Chapter 19, Statutes of 2011) allowed
a hospital to seek an extension for seismic compliance for
its SPC-1 buildings of up to seven years based on the
following elements: the structural integrity of the
building, the loss of essential hospital services to the
community if the hospital closed, and financial hardship.
The deadline for submitting an application under SB 90 was
September 30, 2012. A hospital applying under SB 90, as
part of its application, was required to specify whether it
intended to rebuild, replace, or retrofit the building, and
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the amount of time necessary to complete the construction.
Additionally, a hospital seeking an SB 90 extension was
required to submit to OSHPD, as part of its application, a
structural reassessment, known as a HAZUS assessment, for
each of its SPC-1 buildings. Tehachapi Hospital initially
submitted an application for an extension under SB 90 in
2012, but withdrew the application because it intended to
build a new facility rather than retrofit their existing
building to SPC-2 standards.
3)Background on Tehachapi Hospital. Tehachapi Hospital is
operated by the Tehachapi Valley Healthcare District, and is
licensed as a 24-bed general acute care hospital, of which 19
beds are classified as "swing" beds, and can be used for
long-term skilled nursing care. Tehachapi Hospital is located
in the City of Tehachapi, which is about 35 miles southeast of
Bakersfield. The nearest hospital is Kern Medical Center in
Bakersfield, 38 miles away. Tehachapi Hospital is designated
by the Department of Public Health as a critical access
hospital, which under federal Medicare law means they are
eligible to receive cost-based reimbursement from Medicare,
and is intended to reduce hospital closures in rural areas. As
discussed above, Tehachapi Hospital was granted extensions
from the original January 1, 2008, deadline to bring their
SPC-1 buildings into SPC-2 compliance. Under its SB 608
extension, they have until January 1, 2016 to bring their
SPC-1 buildings into compliance, or stop providing services as
a general acute care hospital.
According to OSHPD, in March of 2012, Tehachapi Hospital applied
for an extension under SB 90, which would have provided for an
extension of up to 7 years beyond the 2013 deadline, or as
late as January 1, 2020. Because this application did not
include the required HAZUS assessment, OSHPD issued a letter
to Tehachapi informing the hospital that their application was
in jeopardy of being denied without the HAZUS assessment.
Rather than complete a HAZUS assessment, Tehachapi Hospital
withdrew their request for an SB 90 extension in June of 2012.
According to Tehachapi Hospital, the reason it withdrew its SB
90 application was because it was planning on building a new
hospital. Because Tehachapi Hospital planned to have this
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building completed by their current deadline, the hospital
determined that an SB 90 extension was unnecessary. However,
Tehachapi Hospital states that in the ensuing years, it has
had construction delays, and inconsistent leadership. The
hospital is on its third Chief Executive Officer (CEO) in the
last year and a half. According to the current CEO, the new
hospital construction, while behind schedule by more than a
year, is moving forward, and the health care district is on
much firmer financial footing as well. Construction on the new
hospital is expected to be finished by the end of May 2016,
and after inspections, setting up the new hospital, and
achieving licensure, the new Tehachapi Hospital is expected to
be operational by sometime in November of 2016.
In addition to completing the new building, the CEO of Tehachapi
Hospital states that it is continuing with efforts to retrofit
the existing hospital to meet SPC-2 standards, so that even
once the new hospital is up and running, the existing building
can continue to be used to provide non-acute care services.
Prior Legislation
AB 2557 (Pan, Chapter 821, Statutes of 2014) permitted hospitals
located in the Counties of Sacramento, San Mateo, or Santa
Barbara, or the City of San Jose, that had received an
additional extension of the January 1, 2008, seismic safety
requirements under specified provisions of existing law to
January 1, 2015, to request an additional extension until
September 1, 2015, in order to obtain either a certificate of
occupancy or a construction final from OSHPD.
SB 90 (Steinberg, Chapter 19, Statutes of 2011) allowed a
hospital that had already received an extension to January 1,
2013, to seek an extension for seismic compliance for its SPC-1
buildings of up to seven additional years, if the hospital meets
several interim deadlines and requirements. Required OSHPD, in
deciding whether to grant the extension and in deciding how long
the extension should be, to base its decision on the following
elements: the structural integrity of the building, the loss of
essential hospital services to the community if the hospital
closed, and financial hardship.
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SB 608 (Alquist, Chapter 623, Statutes of 2010) provided for an
extension of hospital seismic deadlines of up to three years for
hospitals that document that a local planning delay will cause
them to miss the January 1, 2013 deadline. Permitted OSHPD to
grant an additional extension of up to two years, beyond the
three years, for projects that do not provide acute care
services and meet other criteria regarding life support systems
and structural risk, as specified.
SB 499 (Ducheny, Chapter 601, Statutes of 2009) required all
general acute care hospitals that have SPC-1 buildings to report
to OSHPD by November 1, 2010, and annually thereafter, on the
status of their compliance with the seismic safety deadlines.
SB 306 (Ducheny, Chapter 642, Statues of 2007) amended the
Alfred E. Alquist Hospital Facilities Seismic Safety Act to
permit hospitals to delay compliance with the July 1, 2008,
seismic retro deadline, and the 2013 extension, to the year
2020, by filing a declaration with OSHPD that the owner lacks
financial capacity to comply with the law.
SB 1661 (Cox, Chapter 679, Statutes of 2006) authorized an
extension of up to an additional two years for hospitals that
had already received extensions of the January 1, 2008, seismic
safety compliance deadline if specified criteria were met, and
required specified hospital reports to be posted on the OSHPD
Web site.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified9/10/15)
Association of California Healthcare Districts (source)
Adventist Health
California Hospital Association
Tehachapi Valley Healthcare District
OPPOSITION: (Verified9/10/15)
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None received
ARGUMENTS IN SUPPORT: This bill is sponsored by the
Association of California Healthcare Districts (ACHD), which
states that without the authority granted by this bill,
Tehachapi Hospital will be unable to continue operating in its
existing hospital as of January 1, 2016. ACHD states that as a
critical access hospital serving a remote rural community
located west of the Mojave Desert in the Tehachapi Mountains,
Tehachapi Hospital faces a greater disadvantage than larger,
urban hospitals and has faced both financial and design
challenges. Tehachapi Hospital planned to comply with the
state's seismic mandate by building a new hospital, and is in
the midst of constructing this hospital, which is more than 50
percent completed. ACHD states that this bill will ensure that
Tehachapi Hospital can continue to provide critical health care
services to a very rural and underserved community. This bill is
supported by the Tehachapi Valley Healthcare District (TVHD),
which states that under SB 90, hospitals were allowed to apply
for an extension through January 1, 2020. According to TVHD,
although its hospital meets the criteria for this extension, it
is unable to take advantage of the time frame established under
this law because they failed to submit an application, believing
that construction of the new hospital would be complete by
January 1, 2016. TVHD states that this bill would provide an
exception for TVHD to resubmit the seismic safety extension
application and acceptable plan to OSHPD in compliance with the
2020 deadline established under SB 90. Adventist Health states
in support that ensuring that a hospital's structural,
electrical, mechanical and plumbing systems can remain
operational following an earthquake is a very complex and
expensive process, and this bill will provide the hospital with
adequate time to retrofit the appropriate buildings and allow
Tehachapi Hospital to remain operational until the new hospital
is built.
Prepared by:Vince Marchand / HEALTH /
9/10/15 19:10:19
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