BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: AB 2747 --------------------------------------------------------------- |AUTHOR: |Hadley | |---------------+-----------------------------------------------| |VERSION: |March 17, 2016 | --------------------------------------------------------------- --------------------------------------------------------------- |HEARING DATE: |June 29th, | | | | |2016 | | | --------------------------------------------------------------- --------------------------------------------------------------- |CONSULTANT: |Vince Marchand | --------------------------------------------------------------- SUBJECT : Chronic dialysis clinics SUMMARY : Requires the Department of Public Health to process a license application for a chronic dialysis clinic, and conduct a licensure survey, within 90 days of receiving an application, and to also conduct an unannounced certification survey for the Centers for Medicare and Medicaid Services (CMS) within 90 days of receipt of a letter from the clinic notifying the department of the clinic's readiness for the CMS certification survey. Existing law: 1)Licenses and regulates various clinics by Department of Public Health (DPH), including primary care clinics as well as specialty clinics which include: surgical clinics, chronic dialysis clinics, and rehabilitation clinics. 2)Requires DPH to adopt reasonable rules and regulations as may be necessary to enable DPH to carry out the purposes of provisions of law governing the various types of clinics licensed by DPH. 3)Requires chronic dialysis clinics to comply with federal certification standards for an end stage renal disease clinic, as specified, until DPH adopts regulations relating to the provision of services by a chronic dialysis clinic. 4)Requires DPH, no later than 90 calendar days have receipt of a home health agency application, to make every effort to complete the application paperwork and conduct a licensure survey, and to also make every effort to conduct an unannounced certification survey for CMS within 90 days of receipt of a letter from the agency notifying DPH of the AB 2747 (Hadley) Page 2 of ? agency's readiness for the CMS certification survey. This bill: 1)Requires DPH, within 90 calendar days after it receives an initial and complete CDC application, to complete the application paperwork and conduct a licensure survey, if necessary, to inspect the clinic and evaluate the clinic's compliance with state licensure requirements. Requires DPH to forward its recommendation, if necessary, and all other information, to CMS within the same 90 calendar days. 2)Requires DPH, for a CDC applicant seeking to receive reimbursement under the Medicare or Medi-Cal programs, to complete the initial application paperwork and conduct an unannounced CMS certification survey, if necessary, within 90 days after DPH's receipt of a letter from the CDC notifying DPH of its readiness for the certification survey. 3)Requires DPH, no later than 30 calendar days after the CMS certification survey, to forward the results of its licensure and certification surveys and all other information necessary for certification to CMS. 4)Makes various legislative findings and declarations, including the following: a) New dialysis facilities in California are being required to wait nine months or longer to be licensed by DPH and to receive CMS certification surveys after they are otherwise ready to serve patients; b) The prevalence of dialysis in California is increasing faster than the national average; c) A dialysis center must be staffed prior to requesting a survey, which means that the center is bearing the cost of staff for nine months or more before it can serve patients; d) It would require less than one full-time equivalent staff member to eliminate the current backlog of approximately 20 new dialysis centers; and, e) It is the intent of the Legislature in enacting this bill to require expeditious licensure and Medicare certification surveys for new dialysis clinics in California. AB 2747 (Hadley) Page 3 of ? FISCAL EFFECT : According to the Assembly Appropriations Committee, cost pressure under $75,000 annually to DPH to expedite licensure and certification for specified facilities (GF or Licensing and Certification (L&C) Fund). PRIOR VOTES : ----------------------------------------------------------------- |Assembly Floor: |79 - 0 | |------------------------------------+----------------------------| |Assembly Appropriations Committee: |19 - 0 | |------------------------------------+----------------------------| |Assembly Health Committee: |19 - 0 | | | | ----------------------------------------------------------------- COMMENTS : 1)Author's statement. According to the author, there is a dialysis center in his district which has been fully operational since January of 2015, and has still not been inspected. The author states that it is unconscionable that patients are denied medically necessary facilities due to inspection backlogs. This bill will remedy this problem by giving dialysis centers a reasonable wait time for certification. 2)Chronic dialysis clinics and the timeline for licensure and certification. A CDC provides care for the treatment of patients with end-stage renal disease (ESRD), including renal dialysis services. ESRD, also known as end-stage kidney disease or kidney failure, is when the kidneys, which remove waste and excess water from the body, are no longer able to work at a level needed for day-to-day life. The most common causes of ESRD in the United States are diabetes and high blood pressure. Dialysis does some of the job of the kidneys when they stop working, including removing extra salt, water, and waste products so they do not build up in the body. A typical patient with ESRD will need to go to a CDC three times a week for dialysis treatment, with each treatment taking about four hours. According to data from the United States Renal Data System, there is wide variation in the prevalence of ESRD throughout the United States, with the lowest rates in New England, and the highest rates in the Ohio and Mississippi River valleys, the Southeast, Texas and California. AB 2747 (Hadley) Page 4 of ? According to DPH, there are currently 534 licensed CDCs in California, and 13 CDC applicants awaiting their initial licensure survey. The length of time these 13 applications have been pending range from 51 days to more than 400 days. There are also 30 CDCs that have been licensed, but are awaiting the CMS certification survey. According to DPH, it cannot proceed with the CMS certification survey until it has received approval from CMS, and the average length of time to receive approval to schedule a CMS survey is 307 days from when CMS is notified that a CDC is ready for the certification survey. Once DPH receives the approval from CMS, the CDC is informed that there will be an unannounced survey within one to two months. A CDC may apply for a priority exemption request from CMS to shorten this wait, but DPH states that these are rarely granted, except in areas where the CDC can demonstrate a shortage of providers. 3)History of concern with DPH's Licensing and Certification Program. DPH's Licensing and Certification Program (L&C) licenses and regulates numerous categories of health facilities and agencies, including hospitals, skilled nursing facilities, and clinics. In addition, CMS contracts with L&C to evaluate facilities to certify that they meet federal requirements to become Medicare and Medi-Cal providers. L&C performs these functions directly, through various field offices, in most of the state, but contracts with Los Angeles County for the licensing and CMS certification function of health facilities located in Los Angeles County. There have been long-standing concerns about the L&C program, especially with regard to complaint investigation backlogs in long-term care facilities, and it has been the subject of multiple legislative oversight hearings, including by the Senate Budget and Fiscal Review Subcommittee No. 3, as well as an audit by the California State Auditor in 2014. A lack of an adequate number of health facility evaluator nurses to perform licensing and certification surveys and to work on complaint investigations was identified as part of these oversight hearings, and the 2015-2016 Budget included an increase in expenditure authority to add 237 positions to address the licensing and certification workload. The contract with Los Angeles County was also increased to provide additional resources for L&C activities in Los Angeles County. Budget trailer bill language was adopted that focused on shortening the timeline to investigate complaints in long-term care AB 2747 (Hadley) Page 5 of ? facilities. While L&C has hired many new health facility evaluator nurses, there are still a number of vacant positions, and they are working to improve efforts to fill these positions. 4)CMS survey policies. According to DPH, this bill's requirement that it conduct a CMS certification survey within 90 days of notification by the CDC is in conflict with the requirement that CMS approve a CDC for a survey prior to DPH performing the unannounced certification survey. DPH reports that it currently takes an average of 307 days for CMS to issue this approval, and even then, because it must be unannounced, the survey cannot take place immediately. CMS directs states to prioritize federal survey functions in four priority "tiers." Tier 1 consists of statutory mandates, such as surveys of existing nursing homes and home health agencies. Most initial surveys for providers seeking to participate in Medicare or Medicaid for the first time are prioritized in Tier 4, compared to complaint investigations and recertification of existing providers. Because of the unique reliance of dialysis patients on Medicare, CMS does grant end stage renal disease facilities, or CDCs in California, a higher priority than most other provider types by placing them in Tier 3. Further, CMS has a priority exception request procedure which allows providers to apply for an exception to their tier assignment if lack of CMS certification would "cause significant access-to-care problems for beneficiaries served by the provider." 5)Prior legislation. SB 534 (Hernandez of 2015), among other provisions, required CDC's to comply with applicable federal certification standards for end stage renal disease clinics until DPH adopts regulations relating to the provision of services by a CDC. SB 534 was held on the Senate Appropriations suspense file. AB 993 (Aghazarian, Chapter 620, Statutes of 2007), among other provisions, required DPH, no later than 90 calendar days have receipt of a home health agency application, to make every effort to complete the application paperwork and conduct a licensure survey, and to also make every effort to conduct an unannounced certification survey for CMS within 90 days of receipt of a letter from the agency notifying DPH of the agency's readiness for the CMS certification survey. AB 2747 (Hadley) Page 6 of ? 6)Support. This bill is supported by Fresenius Medical Care (FMC), which states that according to the most recent United States Renal Data Systems annual report, the number of Californians with ESRD has grown more than 36% in the past decade. FMC states that it operates more than 140 CDCs in California, but currently has 5 facilities that have been waiting since before August 2015 for their licensure and certification surveys. The California Dialysis Council states in support that this bill is an important step in ensuring that California has enough dialysis clinics for the increasing California population. Kaiser Permanente states in support that expedited DPH completion of application paperwork, licensure and certification surveys, and coordination with CMS would facilitate timely CMS certification of newly built dialysis centers, which would in turn positively affect its ability to place dialysis patients promptly and appropriately. DaVita and U.S. Renal Care both state that recently constructed dialysis clinics are waiting nine months or more for state licensure and CMS certification surveys. Meanwhile, patients are driving long distances to receive dialysis treatment while more convenient new clinics sit idle, fully equipped and fully staffed, waiting for DPH to conduct licensure and certification surveys. 7)Opposition. This bill is opposed by DPH, which states that the requirement that it conduct an unannounced CMS certification survey within 90 days of being informed by the CDC that it is ready for the survey is in contravention to CMS policy that requires the CDC to have an exception from CMS in order for DPH to perform the certification survey. DPH states it does not have the authority to preempt CMS requirements related to federal certification survey priorities. DPH states that generally, CMS policy is to make complaint investigations and recertification surveys for existing CMS-certified providers a higher priority than certification of new providers. Additionally, DPH states that mandatory timelines for processing initial licenses for health facilities removes needed flexibility for DPH to prioritize critical workload in a way that best protects patient safety. DPH states that creating mandatory timeframes would elevate the priority of initial licensing for CDC's at the expense of other functions, such as complaint investigations and relicensing of currently operating facilities. AB 2747 (Hadley) Page 7 of ? 8)Policy comment. This bill has two components: a 90 day clock for the initial licensure survey, and a second 90 day clock for the CMS certification survey. As noted above, DPH is bound to follow CMS policies, and cannot perform a CMS certification survey without first being approved to do so by CMS. The author may wish to consider amending this bill to retain the 90 day requirement for the initial licensure survey, but delete the 90 day requirement for the CMS certification survey, and simply require the certification survey within 60 days of DPH receiving CMS approval for the certification survey. SUPPORT AND OPPOSITION : Support: California Dialysis Council DaVita Fresenius Medical Care Kaiser Permanente Renal Support Network U.S. Renal Care One Individual Oppose: Department of Public Health -- END --