BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 396 (Hill) - Health care:  outpatient settings and surgical  
          clinics:  facilities:  licensure and enforcement
          
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          |Version: May 5, 2015            |Policy Vote: B., P. & E.D. 9 -  |
          |                                |          0, HEALTH 9 - 0       |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 18, 2015      |Consultant: Brendan McCarthy    |
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          This bill meets the criteria for referral to the Suspense File.




          


          Bill  
          Summary:  SB 396 would make a surgical clinic eligible for  
          licensure by the Department of Public Health, regardless of  
          physician ownership.


          Fiscal  
          Impact:  
           Likely one-time costs of about $125,000 over two years for the  
            adoption of regulations by the Department of Public Health  
            (Licensing and Certification Fund).

           Projected initial licensing costs of about $800,000 to review  







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            license application information and conduct initial site  
            inspections of surgical clinics (Licensing and Certification  
            Fund). This cost estimate assumes that the number of licensed  
            surgical clinics under the bill will increase to approximately  
            500, the number that were previously licensed by the  
            Department. These costs would be incurred once the Department  
            completed the required regulations. After the initial increase  
            in licensing activity due to the new ability for surgical  
            clinics to be licensed, the ongoing costs should be  
            substantially reduced.
            
           Unknown costs for data collection and analysis by the Office  
            of Statewide Health Planning and Development. Any costs  
            incurred by the Office under the bill would be reimbursed by  
            fees paid by licensed surgical clinics.


          Background:  Under current law, the Department of Public Health licenses a  
          variety of health care facilities, including surgical clinics.  
          Under existing law, the definition of surgical clinic excludes  
          surgical clinics owned or leased by a physician or dentist.  
          However, current law also allows a physician or dentist (who  
          owns or leases a clinic) to apply for licensure by the  
          Department. In addition to licensure by the Department of Public  
          Health, surgical clinics may also be certified by the Centers  
          for Medicare and Medicaid Services (allowing them to bill  
          Medicare or Medi-Cal for services) and/or surgical clinics may  
          be accredited by an accrediting agency approved by the Medical  
          Board of California.
          Current law also requires the Medical Board of California to  
          adopt standards for accreditation and to approve independent  
          agencies to accredit outpatient settings (including surgical  
          clinics).


          Prior to 2007, most surgical clinics that were certified by the  
          Centers for Medicare and Medicaid Services were also licensed by  
          the Department of Public Health (since the regulatory standards  
          were effectively the same).


          A court case in 2007 found that certain physician-owned clinics  
          are not subject to licensure by the Department of Public Health.  
          The Department has interpreted this court decision as  








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          prohibiting it from licensing any physician owned clinics, even  
          if the physician owner requests licensure. Since 2007, the  
          number of licensed surgical clinics has declined from over 500  
          to 35.




          Proposed Law:  
            SB 396 would make a surgical clinic eligible for licensure by  
          the Department of Public Health, regardless of physician  
          ownership.
          Specific provisions of the bill would:
           Clarify current law to allow a physician or dentist, at their  
            option, to apply for licensure as a surgical clinic,  
            regardless of ownership;
           Until the Department of Public Health adopts implementing  
            regulations, deem a surgical clinic to have met licensure  
            requirements by demonstrating that the surgical clinic meets  
            federal certification standards for Centers for Medicare and  
            Medicaid Services;
           Require all inspections (after the initial inspection) by an  
            independent certifying entity (that has been approved by the  
            Medical Board) to be unannounced;
           Require an accredited outpatient setting and a Centers for  
            Medicare and Medicaid Services certified facility to be  
            subject to patient encounter and financial data reporting  
            requirements;
           Require an accredited outpatient setting and a Centers for  
            Medicare and Medicaid Services certified facility to pay a fee  
            to the Office of Statewide Health Planning and Development to  
            cover the costs of collecting and analyzing reported data;
           Require each licensee who performs procedures in an accredited  
            outpatient facility to be peer reviewed at least every two  
            years;
           Delays the deadline of a report from the Medical Board to the  
            Legislature on its vertical enforcement model, for one year to  
            March 2016.


          Related  
          Legislation:  SB 534 (Hernandez, Statutes of 2013) requires  
          chronic dialysis clinics, surgical clinics, rehabilitation  
          clinics, and certain intermediate care facilities to meet  








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          federal certification standards until the Department of Public  
          Health adopts licensing regulations for those facilities.


          Staff  
          Comments:  The Department of Public Health has indicated that  
          the bill as drafted may not allow them to license physician  
          owned clinics, even upon request of the physician. This analysis  
          assumes that future amendments to the bill to clarify the  
          Department's authority will allow for such licensure. The cost  
          estimates above assume that the Department will be able to  
          implement the bill, as intended by the author.
          The only costs that may be incurred by a local agency relate to  
          crimes and infractions. Under the California Constitution, such  
          costs are not reimbursable by the state.




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