Senate BillNo. 1076


Introduced by Senator Hernandez

February 16, 2016


An act to amend Section 128740 of, and to add Section 1253.7 to, the Health and Safety Code, relating to health care.

LEGISLATIVE COUNSEL’S DIGEST

SB 1076, as introduced, Hernandez. General acute care hospitals: observation services.

(1) Existing law establishes the State Department of Public Health and sets forth its powers and duties, including, but not limited to, the licensing and regulation of health facilities, including, but not limited to, general acute care hospitals. A violation of these provisions is a crime.

Existing law authorizes the department to issue a special permit authorizing a health facility to offer one or more special services when specified requirements are met. Existing law requires general acute care hospitals to apply for supplemental services approval and requires the department, upon issuance and renewal of a license for certain health facilities, to separately identify on the license each supplemental service.

This bill would require a general acute care hospital that provides observation services, as defined, to comply with the same staffing standards as supplemental emergency services, as specified. The bill would require that a patient receiving observation services receive written notice immediately upon admission for observation services or placement into observation status, or immediately following a change from inpatient status to observation status, that his or her care is being provided on an outpatient basis. The bill would require observation units to be identified with specified signage, and would clarify that a general acute care hospital providing services described in the bill would not be exempt from these requirements because the hospital identifies those services by a name or term other than that used in the bill. Because a violation of these provisions by a health facility would be a crime, the bill would impose a state-mandated local program.

(2) Existing law requires a hospital to report specified summary financial and utilization data to the Office of Statewide Health Planning and Development (OSHPD) within 45 days of the end of every calendar quarter.

This bill would require hospitals to include certain data relating to observation service visits and total observation service gross revenues in the reports filed with OSHPD.

(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

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

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

P2    1

SECTION 1.  

Section 1253.7 is added to the Health and Safety
2Code
, to read:

3

1253.7.  

(a) For purposes of this chapter, “observation services”
4means outpatient services provided by a general acute care hospital,
5to those patients who have unstable or uncertain conditions
6potentially serious enough to warrant close observation, but not
7so serious as to warrant inpatient admission to the hospital.
8Observation services may include the use of a bed, monitoring by
9nursing and other staff, and any other services that are reasonable
10and necessary to safely evaluate a patient’s condition or determine
11the need for a possible inpatient admission to the hospital.

12(b) Notwithstanding subdivisions (d) and (e) of Section 1275,
13observation services provided by the general acute care hospital
14in an outpatient observation unit, including the services provided
15in a freestanding physical plant, as defined in subdivision (h) of
16Section 1275, shall comply with the same staffing standards,
17including, but not limited to, licensed nurse-to-patient ratios, as
18supplemental emergency services.

P3    1(c) A patient receiving observation services shall receive written
2notice immediately upon admission for observation services or
3placement into observation status, or immediately following a
4change from inpatient status to observation status, that his or her
5care is being provided on an outpatient basis, and that this may
6affect reimbursement by Medicare, Medi-Cal, or private payers
7of health care services, or cost-sharing arrangements through his
8or her health care coverage.

9(d) Observation units not provided in inpatient beds or attached
10to emergency services shall be marked with signage identifying
11the area as an outpatient area. The signage shall use the term
12“outpatient” in the title of the designated area to indicate clearly
13to all patients and family members that the observation services
14provided in the center are not inpatient services.

15(e) Observation services shall be deemed outpatient or
16ambulatory services that are revenue-producing cost centers
17associated with hospital-based or satellite services locations that
18emphasize outpatient care. Identifying an observation unit by a
19name or term other than that used in this subdivision does not
20exempt the general acute care hospital from compliance with the
21requirements of this section.

22

SEC. 2.  

Section 128740 of the Health and Safety Code is
23amended to read:

24

128740.  

(a) Commencing with the first calendar quarter of
251992, the following summary financial and utilization data shall
26be reported to the office by each hospital within 45 days of the
27end of every calendar quarter. Adjusted reports reflecting changes
28as a result of audited financial statements may be filed within four
29months of the close of the hospital’s fiscal or calendar year. The
30quarterly summary financial and utilization data shall conform to
31the uniform description of accounts as contained in the Accounting
32and Reporting Manual for California Hospitals and shall include
33all of the following:

34(1) Number of licensed beds.

35(2) Average number of available beds.

36(3) Average number of staffed beds.

37(4) Number of discharges.

38(5) Number of inpatient days.

39(6) Number of outpatientbegin delete visits.end deletebegin insert visits, excluding observation
40service visits.end insert

begin insert

P4    1(7) Number of observation service visits and number of hours
2of services provided.

end insert
begin delete

3(7)

end delete

4begin insert(8)end insert Total operating expenses.

begin delete

5(8)

end delete

6begin insert(9)end insert Total inpatient gross revenues by payer, including Medicare,
7Medi-Cal, county indigent programs, other third parties, and other
8payers.

begin delete

9(9)

end delete

10begin insert(10)end insert Total outpatient gross revenues by payer, including
11Medicare, Medi-Cal, county indigent programs, other third parties,
12and other payers.

begin insert

13(11) Total observation service gross revenues by payer,
14including Medicare, Medi-Cal, county indigent programs, other
15third parties, and other payers.

end insert
begin delete

16(10)

end delete

17begin insert(12)end insert Deductions from revenue in total and by component,
18including the following: Medicare contractual adjustments,
19Medi-Cal contractual adjustments, and county indigent program
20contractual adjustments, other contractual adjustments, bad debts,
21charity care, restricted donations and subsidies for indigents,
22support for clinical teaching, teaching allowances, and other
23deductions.

begin delete

24(11)

end delete

25begin insert(13)end insert Total capital expenditures.

begin delete

26(12)

end delete

27begin insert(14)end insert Total net fixed assets.

begin delete

28(13)

end delete

29begin insert(15)end insert Total number of inpatient days, outpatientbegin delete visits,end deletebegin insert visits
30excluding observation services, observation services,end insert
and
31discharges by payer, including Medicare, Medi-Cal, county
32indigent programs, other third parties, self-pay, charity, and other
33payers.

begin delete

34(14)

end delete

35begin insert(16)end insert Total net patient revenues by payer including Medicare,
36 Medi-Cal, county indigent programs, other third parties, and other
37payers.

begin delete

38(15)

end delete

39begin insert(17)end insert Other operating revenue.

begin delete

40(16)

end delete

P5    1begin insert(18)end insert Nonoperating revenue net of nonoperating expenses.

2(b) Hospitals reporting pursuant to subdivision (d) of Section
3128760 may provide the items in paragraphsbegin delete (7), (8), (9), (10),
4(14), (15), and (16)end delete
begin insert (8), (9), (10), (12), (16), and (18)end insert of subdivision
5(a) on a group basis, as described in subdivisionbegin delete (d)end deletebegin insert (f)end insert of Section
6128760.

7(c) The office shall make availablebegin delete at cost, to any person,end deletebegin insert to any
8person, at cost,end insert
a hard copy of any hospital report made pursuant
9to this section and in addition to hard copies, shall make available
10at cost, a computer tape of all reports made pursuant to this section
11within 105 days of the end of every calendar quarter.

12(d) The office shall adoptbegin delete by regulation guidelinesend deletebegin insert guidelines,
13by regulation,end insert
for the identification, assessment, and reporting of
14charity care services. In establishing the guidelines, the office shall
15consider the principles and practices recommended by professional
16health care industry accounting associations for differentiating
17between charity services and bad debts. The office shall further
18conduct the onsite validations of health facility accounting and
19reporting procedures and records as are necessary tobegin delete assureend deletebegin insert ensureend insert
20 that reported data are consistent with regulatory guidelines.

begin delete

21This section shall become operative January 1, 1992.

end delete
22

SEC. 3.  

No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.



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