BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2024|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 2024
Author: Wood (D), et al.
Amended: 8/15/16 in Senate
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-0, 6/6/16
AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez,
Mendoza, Wieckowski
NO VOTE RECORDED: Jackson
SENATE HEALTH COMMITTEE: 8-0, 6/22/16
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,
Roth, Wolk
NO VOTE RECORDED: Pan
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
ASSEMBLY FLOOR: 79-0, 5/5/16 - See last page for vote
SUBJECT: Critical access hospitals: employment
SOURCE: Author
DIGEST: This bill authorizes a federally certified critical
access hospital (CAH) to employ physicians and charge for their
services until 2024 and requires the Medical Board of California
(MBC) to provide a report to the Legislature on the impact of
authorizing CAHs to employ physicians.
AB 2024
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ANALYSIS:
Existing law:
1)Provides for the licensure and regulation of physicians and
surgeons by the MBC pursuant to the Medical Practice Act
(Act). (Business and Professions Code (BPC) § 2000 et seq.)
2)States that corporations and other artificial legal entities
shall have no professional rights, privileges, or powers.
Provides that the MBC may in its discretion, and under
regulations adopted by it, grant approval of the employment of
licensees on a salary basis by licensed charitable
institutions, foundations, or clinics, if no charge for
professional services rendered patients is made by any such
institution, foundation, or clinic. (BPC § 2400)
3)Establishes exceptions to the ban on the corporate practice of
medicine (CPM), thereby allowing certain types of facilities
to employ physicians. (BPC § 2401)
4)Establishes the following protections against retaliation for
health care practitioners who advocate for appropriate health
care for their patients pursuant to Wickline v. State of
California (192 Cal. App. 3d 1630):
a) It is the public policy of the State of California that
a health care practitioner be encouraged to advocate for
appropriate health care for his or her patients. For
purposes of this section, "to advocate for appropriate
health care" means to appeal a payer's decision to deny
payment for a service pursuant to the reasonable grievance
or appeal procedure established by a medical group,
independent practice association, preferred provider
organization, foundation, hospital medical staff and
governing body, or payer, or to protest a decision, policy,
or practice that the health care practitioner, consistent
with that degree of learning and skill ordinarily possessed
by reputable health care practitioners with the same
license or certification and practicing according to the
applicable legal standard of care, reasonably believes
impairs the health care practitioner's ability to provide
appropriate health care to his or her patients.
AB 2024
Page 3
b) The application and rendering by any individual,
partnership, corporation, or other organization of a
decision to terminate an employment or other contractual
relationship with or otherwise penalize a health care
practitioner principally for advocating for appropriate
health care consistent with that degree of learning and
skill ordinarily possessed by reputable health care
practitioners with the same license or certification and
practicing according to the applicable legal standard of
care violates the public policy of this state.
c) This law shall not be construed to prohibit a payer from
making a determination not to pay for a particular medical
treatment or service, or the services of a type of health
care practitioner, or to prohibit a medical group,
independent practice association, preferred provider
organization, foundation, hospital medical staff, hospital
governing body, or payer from enforcing reasonable peer
review or utilization review protocols or determining
whether a health care practitioner has complied with those
protocols. (BPC § 510)
5)Authorizes, under the Knox-Keene Health Care Service Plan Act
of 1975, licensed health care service plans to employ or
contract with health care professionals, including physicians,
to deliver professional services, and requires health plans to
demonstrate that medical decisions are rendered by qualified
medical providers unhindered by fiscal and administrative
management. Provides in regulation that the organization of a
health plan must include separation of medical services from
fiscal and administrative management. (Health and Safety Code
§§ 1340 et seq.)
This bill:
1) Authorizes, until 2024, a federally certified critical access
hospital (CAH) to employ physicians and charge for
professional services rendered by those licensees, if the
medical staff concur by an affirmative vote that the
physician's employment is in the best interest of the
communities served by the hospital and the hospital does not
AB 2024
Page 4
interfere with, control, or otherwise direct the physician's
professional judgment.
2) Requires the Office of Statewide Health Planning and
Development (OSHPD), on or before July 1, 2023, to provide a
report to the Legislature containing data about the impact of
employing physicians on CAHs and their ability to recruit and
retain physicians.
3) Requires a CAH that is employing physicians and charging for
professional services rendered by those licensees to submit,
on or before July 1 of each year, a report to OSHPD for any
year in which this employment took place.
Background
Ban on the Corporate Practice of Medicine (CPM). CPM is usually
referred to in the context of a prohibition, banning hospitals
from employing physicians. The ban on CPM evolved in the early
20th century when mining companies had to hire physicians
directly to provide care for their employees in remote areas.
However, problems arose when physicians' loyalty to the mining
companies conflicted with patients' needs. Eventually,
physicians, courts, and legislatures prohibited CPM in an effort
to preserve physicians' autonomy and improve patient care.
Over the years, various state and federal statutes have weakened
the CPM prohibition. The California Research Bureau (CRB)
issued a report in 2016, The Corporate Practice of Medicine in a
Changing Healthcare Environment which suggested assessing
changing financial incentives; considering whether other methods
of protecting physician autonomy are sufficient; increasing
patient access to data about physician-hospital relationships
and hospital metrics; determining whether the current alignment
strategies used by physicians and hospitals are more costly than
direct employment models; and collecting additional data to
better understand the impact of CPM.
The Author notes that the CRB report reviewed key policy issues
associated with the ban, including the impact on rural access.
According to the Author, the CRB report noted the need for
additional data to assess how the CPM ban affects physicians and
access, and the Author notes that this bill can provide that
additional data.
AB 2024
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Health Care Access and the Changing Healthcare Employment
Landscape. California currently has a physician shortage. As
the CRB report notes, "AMA figures show that, on average,
California has 80 primary care physicians and 138 specialty
physicians per 100,000 residents. This is in the upper range
for primary care physicians (60-80) and above the range for
specialty care physicians (85-105) recommended by the Department
of Health and Human Services. However, when disaggregated by
region, there is a coverage disparity. California's rural
regions have lower numbers of physicians than its urban
areas?The number of healthcare providers, including primary care
physicians, in California is not anticipated to dramatically
increase soon."
The nationwide trend in healthcare is toward direct employment.
According to a 2011 survey from the consulting firm Accenture,
U.S. physicians continue to sell their private practices and
seek employment with healthcare systems. The survey found that
as physicians migrate from private practice to larger health
systems, the new landscape will require healthcare information
technology, medical device manufacturers, pharmaceutical
companies and payers to revise their business models and
offerings. At the same time, hospitals will need to determine
how to retain and recruit the correct mix of physicians,
especially in high-growth service lines, including
cardiovascular care, orthopedics, cancer care and radiology.
Patients will increasingly move to large health systems, as
opposed to the current trend of visiting doctors in private,
small practice settings. Benefits to employment include:
Relief from administrative responsibilities, especially those
relating to insurance billing.
Malpractice insurance.
Greater access and support for healthcare IT tools,
facilities, and medical equipment.
A predictable work week.
Economic stability.
CAHs are small (25 or less beds) and located in remote, rural
areas. The Author notes that they suffer significant
challenges in recruiting and retaining physicians and that the
difficulty in attracting physicians has serious implications for
public health. Maintaining these hospitals is necessary for
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Page 6
both the health of residents and the viability of the community.
The Author states that allowing these hospitals to employ
physicians would provide physicians with the economic security
and financial stability that comes with employment and assist in
the ability to attract physicians.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Committee on Appropriations analysis
dated August 11, 2016, the bill will result in potential
one-time costs of $70,000 for OSHPD to develop information
technology systems to collect specified data from participating
hospitals and potential ongoing costs of $130,000 per year to
develop data standards for reporting by participating hospitals,
collect and review data submitted by participating hospitals,
and eventually develop the required report.
SUPPORT: (Verified8/12/16)
Adventist Health
Alliance of Catholic Health Care
Association of California Healthcare Districts
Banner Lassen Medical Center
California Hospital Association
California Special Districts Association
Catalina Island Medical Center
Eastern Plumas Health Care
Fairchild Medical Center
Glenn Medical Center
Health Access California
Jerold Phelps Community Hospital
Kern Valley Healthcare District
Loma Linda University Health
Mayers Memorial Hospital District
Mendocino Coast District Hospital
Modoc Medical Center
Northern Inyo Healthcare District
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Rural County Representatives of California
San Bernardino Mountains Community Hospital
Santa Ynez Valley Cottage Hospital
Sutter Lakeside Hospital
Tehachapi Valley Healthcare District
Trinity Hospital
OPPOSITION: (Verified8/12/16)
None received
ARGUMENTS IN SUPPORT: Supporters note how difficult it is
for hospitals to recruit and retain physicians to practice in
rural and underserved areas and write that the ability to hire
physicians as this bill allows will directly improve and
increase access to quality health care services and the health
of the communities rural hospitals serve. Supporters note that
CAHs are the smallest, most remote rural hospitals in the state
and face numerous challenges in being able to hire the
physicians who would actually like to be hired. Supporters
write that California continues to be the most restrictive state
for employment of physicians by hospitals and that to remain
competitive in an already challenging environment, CAHs should
have the opportunity to offer physicians economic security and
financial stability through employment, thereby ensuring that
rural residents have access to medically necessary services.
ASSEMBLY FLOOR: 79-0, 5/5/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
AB 2024
Page 8
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Beth Gaines
Prepared by:Sarah Mason / B., P. & E.D. / (916) 651-4104
8/16/16 9:09:04
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