Amended in Assembly April 9, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 579

Introduced by Assembly Member Obernolte

February 24, 2015

An act to amend begin delete Section end delete begin insert Sections end insert 1250.8 begin insert and 128700 end insert of begin insert , and to add Section 1255.15 to, end insert the Health and Safety Code, relating to health facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 579, as amended, Obernolte. Health facilities: physical plant location.

Existing law requires the State Department of Public Health to issue a single consolidated license to a general acute care hospital that includes more than one physical plant maintained and operated on separate premises if all applicable requirements of licensure, as specified, are satisfied. Under existing law, the physical plants maintained and operated under a general acute care hospital’s single consolidated license must be located no more than 15 miles apart, unless a specified exception applies.

This bill would create an exception to permit a general acute care hospital to operate an emergency department located more than 15 miles from its main physical plant, if all applicable requirements of licensure are satisfied. begin insert The bill would also permit a closing general acute care hospital’s emergency department to continue to be operated at the same location or locations by an acquiring general acute care hospital, as specified. The bill would create an exception to permit the acquiring general acute care hospital to operate the closing general acute care hospital’s emergency department at that location or locations, even if located more than 15 miles from the acquiring general acute care hospital’s main physical plant, if all applicable requirements of licensure are satisfied. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 1250.8 of the Health and Safety Code is
amended to read:

1250.8.  

(a) Notwithstanding subdivision (a) of Section 127170,
the department, upon application of a general acute care hospital
that meets all the criteria of subdivision (b), and other applicable
requirements of licensure, shall issue a single consolidated license
to a general acute care hospital that includes more than one physical
plant maintained and operated on separate premises or that has
multiple licenses for a single health facility on the same premises.
A single consolidated license shall not be issued where the separate
freestanding physical plant is a skilled nursing facility or an
intermediate care facility, whether or not the location of the skilled
nursing facility or intermediate care facility is contiguous to the
general acute care hospital unless the hospital is exempt from the
requirements of subdivision (b) of Section 1254, or the facility is
part of the physical structure licensed to provide acute care.

(b) The issuance of a single consolidated license shall be based
on the following criteria:

(1) There is a single governing body for all the facilities
maintained and operated by the licensee.

(2) There is a single administration for all the facilities
maintained and operated by the licensee.

(3) There is a single medical staff for all the facilities maintained
and operated by the licensee, with a single set of bylaws, rules,
and regulations, that prescribe a single committee structure.

(4) Except as provided otherwise in this paragraph, the physical
plants maintained and operated by the licensee which are to be
covered by the single consolidated license are located not more
than 15 miles apart. If an applicant provides evidence satisfactory
to the department that it can comply with all requirements of
licensure and provide quality care and adequate administrative and
professional supervision, the director may issue a single
consolidated license to a general acute care hospital that operates
two or more physical plants located more than 15 miles apart under
any of the following circumstances:

(A) One or more of the physical plants is located in a rural area,
as defined by regulations of the director.

(B) One or more of the physical plants provides only outpatient
services, as defined by the department.

(C) One or more of the physical plants is an emergency
department, as defined in subdivision (b) of Section 128700.

(D) If Section 14105.986 of the Welfare and Institutions Code
is implemented and the applicant meets all of the following criteria:

(i) The applicant is a nonprofit corporation.

(ii) The applicant is a children’s hospital listed in Section 10727
of the Welfare and Institutions Code.

(iii) The applicant is affiliated with a major university medical
school and located adjacent thereto.

(iv) The applicant operates a regional tertiary care facility.

(v) One of the physical plants is located in a county that has a
consolidated and county government structure.

(vi) One of the physical plants is located in a county having a
population between 1,000,000 and 2,000,000.

(vii) The applicant is located in a city with a population between
50,000 and 100,000.

(c) In issuing the single consolidated license, the state
department shall specify the location of each supplemental service
and the location of the number and category of beds provided by
the licensee. The single consolidated license shall be renewed
annually.

(d) To the extent required by Chapter 1 (commencing with
Section 127125) of Part 2 of Division 107, a general acute care
hospital that has been issued a single consolidated license:

(1) Shall not transfer from one facility to another a special
service described in Section 1255 without first obtaining a
certificate of need.

(2) Shall not transfer, in whole or in part, from one facility to
another, a supplemental service, as defined in regulations of the
director pursuant to this chapter, without first obtaining a certificate
of need, unless the licensee, 30 days prior to the relocation, notifies
the Office of Statewide Health Planning and Development, the
applicable health systems agency, and the state department of the
licensee’s intent to relocate the supplemental service, and includes
with this notice a cost estimate, certified by a person qualified by
experience or training to render the estimates, which estimates that
the cost of the transfer will not exceed the capital expenditure
threshold established by the Office of Statewide Health Planning
and Development pursuant to Section 127170.

(3) Shall not transfer beds from one facility to another facility,
without first obtaining a certificate of need unless, 30 days prior
to the relocation, the licensee notifies the Office of Statewide
Health Planning and Development, the applicable health systems
agency, and the state department of the licensee’s intent to relocate
health facility beds, and includes with this notice both of the
following:

(A) A cost estimate, certified by a person qualified by experience
or training to render the estimates, which estimates that the cost
of the relocation will not exceed the capital expenditure threshold
established by the Office of Statewide Health Planning and
Development pursuant to Section 127170.

(B) The identification of the number, classification, and location
of the health facility beds in the transferor facility and the proposed
number, classification, and location of the health facility beds in
the transferee facility.

Except as otherwise permitted in Chapter 1 (commencing with
Section 127125) of Part 2 of Division 107, or as authorized in an
approved certificate of need pursuant to that chapter, health facility
beds transferred pursuant to this section shall be used in the
transferee facility in the same bed classification as defined in
Section 1250.1, as the beds were classified in the transferor facility.

Health facility beds transferred pursuant to this section shall not
be transferred back to the transferor facility for two years from the
date of the transfer, regardless of cost, without first obtaining a
certificate of need pursuant to Chapter 1 (commencing with Section
127125) of Part 2 of Division 107.

(e) Transfers pursuant to subdivision (d) shall satisfy all
applicable requirements of licensure and shall be subject to the
written approval, if required, of the state department. The state
department may adopt regulations that are necessary to implement
this section. These regulations may include a requirement that each
facility of a health facility subject to a single consolidated license
have an onsite full-time or part-time administrator.

(f) As used in this section, “facility” means a physical plant
operated or maintained by a health facility subject to a single,
consolidated license issued pursuant to this section.

(g) For purposes of selective provider contracts negotiated under
the Medi-Cal program, the treatment of a health facility with a
single consolidated license issued pursuant to this section shall be
subject to negotiation between the health facility and the California
Medical Assistance Commission. A general acute care hospital
that is issued a single consolidated license pursuant to this section
may, at its option, be enrolled in the Medi-Cal program as a single
business address or as separate business addresses for one or more
of the facilities subject to the single consolidated license.
Irrespective of whether the general acute care hospital is enrolled
at one or more business addresses, the department may require the
hospital to file separate cost reports for each facility pursuant to
Section 14170 of the Welfare and Institutions Code.

(h) For purposes of the Annual Report of Hospitals required by
regulations adopted by the state department pursuant to this part,
the state department and the Office of Statewide Health Planning
and Development may require reporting of bed and service
utilization data separately by each facility of a general acute care
hospital issued a single consolidated license pursuant to this
section.

(i) The amendments made to this section during the 1985-86
Regular Session of the Legislature pertaining to the issuance of a
single consolidated license to a general acute care hospital in the
case where the separate physical plant is a skilled nursing facility
or intermediate care facility shall not apply to the following
facilities:

(1) A facility that obtained a certificate of need after August 1,
1984, and prior to February 14, 1985, as described in this
subdivision. The certificate of need shall be for the construction
of a skilled nursing facility or intermediate care facility that is the
same facility for which the hospital applies for a single consolidated
license, pursuant to subdivision (a).

(2) A facility for which a single consolidated license has been
issued pursuant to subdivision (a), as described in this subdivision,
prior to the effective date of the amendments made to this section
during the 1985-86 Regular Session of the Legislature.

A facility that has been issued a single consolidated license
pursuant to subdivision (a), as described in this subdivision, shall
be granted renewal licenses based upon the same criteria used for
the initial consolidated license.

(j) If the state department issues a single consolidated license
pursuant to this section, the state department may take any action
authorized by this chapter, including, but not limited to, any action
specified in Article 5 (commencing with Section 1294), with
respect to a facility, or a service provided in a facility, that is
included in the consolidated license.

(k) The eligibility for participation in the Medi-Cal program
(Chapter 7 (commencing with Section 14000) of Part 3 of Division
9 of the Welfare and Institutions Code) of a facility that is included
in a consolidated license issued pursuant to this section, provides
outpatient services, and is located more than 15 miles from the
health facility issued the consolidated license shall be subject to a
determination of eligibility by the state department. This
subdivision shall not apply to a facility that is located in a rural
area and is included in a consolidated license issued pursuant to
subparagraphs (A), (B), and (C) of paragraph (4) of subdivision
(b). Regardless of whether a facility has received or not received
a determination of eligibility pursuant to this subdivision, this
subdivision shall not affect the ability of a licensed professional,
providing services covered by the Medi-Cal program to a person
eligible for Medi-Cal in a facility subject to a determination of
eligibility pursuant to this subdivision, to bill the Medi-Cal program
for those services provided in accordance with applicable
regulations.

(l) Notwithstanding any other provision of law, the director may
issue a single consolidated license for a general acute care hospital
to Children’s Hospital Oakland and San Ramon Regional Medical
Center.

(m) Notwithstanding any other provision of law, the director
may issue a single consolidated license for a general acute care
hospital to Children’s Hospital Oakland and the John Muir Medical
Center, Concord Campus.

(n) (1) To the extent permitted by federal law, payments made
to Children’s Hospital Oakland pursuant to Section 14166.11 of
the Welfare and Institutions Code shall be adjusted as follows:

(A) The number of Medi-Cal payment days and net revenues
calculated for the John Muir Medical Center, Concord Campus
under the consolidated license shall not be used for eligibility
purposes for the private hospital disproportionate share hospital
replacement funds for Children’s Hospital Oakland.

(B) The number of Medi-Cal payment days calculated for
hospital beds located at begin insert the end insert John Muir Medical Center, Concord
Campus that are included in the consolidated license beginning in
the 2007-08 fiscal year shall only be used for purposes of
calculating disproportionate share hospital payments authorized
under Section 14166.11 of the Welfare and Institutions Code at
Children’s Hospital Oakland to the extent that the inclusion of
those days does not exceed the total Medi-Cal payment days used
to calculate Children’s Hospital Oakland payments for the 2006-07
fiscal year disproportionate share replacement.

(2) This subdivision shall become inoperative in the event that
the two facilities covered under the consolidated license described
in subdivision (a) are located within a 15-mile radius of each other.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1255.15 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 1255.15. end insert   

(a) If a general acute care hospital (closing hospital)
that provides emergency medical services pursuant to Section 1255
is either scheduled for closure or has surrendered its license for
suspension or cancellation pursuant to Section 1300, the closing
hospital’s emergency medical services may continue to be provided
at the same location or locations by another general acute care
hospital (acquiring hospital) that has a special permit to offer
emergency medical services pursuant to paragraph (3) of
subdivision (a) of Section 1255, notwithstanding that basic services
are not offered at the closing hospital’s location or locations.

(b) Pursuant to subdivisions (a) and (b) of Section 1250.8, a
single consolidated license shall be issued to the acquiring hospital
to permit the continued provision of emergency medical services
at the closing hospital’s location or locations if located not more
than 15 miles apart from the acquiring hospital.

(c) Notwithstanding paragraph (4) of subdivision (b) of Section
1250.8, the director shall issue a single consolidated license to
the acquiring hospital to permit the continued provision of
emergency medical services at the closing hospital’s location or
locations, even if located more than 15 miles apart from the
acquiring hospital, if the acquiring hospital provides evidence
satisfactory to the department that it can comply with all
requirements of licensure and provide quality care and adequate
administrative and professional supervision.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 128700 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

128700.  

As used in this chapter, the following terms mean:

(a) “Ambulatory surgery procedures” mean those procedures
performed on an outpatient basis in the general operating rooms,
ambulatory surgery rooms, endoscopy units, or cardiac
catheterization laboratories of a hospital or a freestanding
ambulatory surgery clinic.

(b) “Emergency department” means, begin delete in end delete begin insert with respect to end insert a hospital
licensed to provide emergency medical services, the location in
which those services are provided.

(c) “Encounter” means a face-to-face contact between a patient
and the provider who has primary responsibility for assessing and
treating the condition of the patient at a given contact and exercises
independent judgment in the care of the patient.

(d) “Freestanding ambulatory surgery clinic” means a surgical
clinic that is licensed by the state under paragraph (1) of
subdivision (b) of Section 1204.

(e) “Health facility” or “health facilities” means all health
facilities required to be licensed pursuant to Chapter 2
(commencing with Section 1250) of Division 2.

(f) “Hospital” means all health facilities except skilled nursing,
intermediate care, and congregate living health facilities.

(g) “Office” means the Office of Statewide Health Planning and
Development.

(h) “Risk-adjusted outcomes” means the clinical outcomes of
patients grouped by diagnoses or procedures that have been
adjusted for demographic and clinical factors.