BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    AB 2747             
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          |AUTHOR:        |Hadley                                         |
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          |VERSION:       |March 17, 2016                                 |
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          |HEARING DATE:  |June 29th,     |               |               |
          |               |2016           |               |               |
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          |CONSULTANT:    |Vince Marchand                                 |
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           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  :  
          
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          |Assembly Floor:                     |79 - 0                      |
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          |Assembly Appropriations Committee:  |19 - 0                      |
          |------------------------------------+----------------------------|
          |Assembly Health Committee:          |19 - 0                      |
          |                                    |                            |
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          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
          
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