Amended in Senate April 18, 2016

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 amended, 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 samebegin delete staffing standardsend deletebegin insert end insertbegin insertlicensed nurse-to-patient ratiosend insert as supplemental emergency services, as specified. The bill would require that a patient receiving observation services receive writtenbegin delete notice immediately upon admission for observation services or placement into observation status, or immediately following a change from inpatient status to observation status,end deletebegin insert notice, as prescribed,end insert that his or her care is being provided on an outpatientbegin delete basis.end deletebegin insert basis, which may affect the patient’s health coverage reimbursement.end insert 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 carebegin delete hospital,end delete
5begin insert hospital and that have been ordered by a provider,end insert to those patients
6who have unstable or uncertain conditions potentially serious
7enough to warrant close observation, but not so serious as to
8warrant inpatient admission to the hospital. Observation services
9may include the use of a bed, monitoring by nursing and other
10staff, and any other services that are reasonable and necessary to
11safely evaluate a patient’s condition or determine the need for a
12possible inpatient admission to the hospital.

begin delete

13(b) Notwithstanding subdivisions (d) and (e) of Section 1275,
14observation services provided by the general acute care hospital
15in an outpatient observation unit, including the services provided
P3    1in a freestanding physical plant, as defined in subdivision (h) of
2Section 1275, shall comply with the same staffing standards,
3including, but not limited to, licensed nurse-to-patient ratios, as
4supplemental emergency services.

5(c) A patient receiving observation services shall receive written
6notice immediately upon admission for observation services or
7placement into observation status, or immediately following a
8change from inpatient status to observation status, that his or her
9care is being provided on an outpatient basis, and that this may
10affect reimbursement by Medicare, Medi-Cal, or private payers
11of health care services, or cost-sharing arrangements through his
12or her health care coverage.

13(d) Observation units not provided in inpatient beds or attached
14to emergency services

end delete
begin insert

15
(b) When a patient in an inpatient unit of a hospital or in an
16observation unit, as defined in subdivision (c), is receiving
17observation services, or following a change in a patient’s status
18from inpatient to observation, the patient shall receive written
19notice, as soon as practicable, that he or she is on observation
20status. The notice shall state that while on observation status, the
21patient’s care is being provided on an outpatient basis, which may
22affect his or her health care coverage reimbursement.

end insert

23begin insert (c)end insertbegin insertend insertbegin insertFor purposes of this chapter, “observation unit” means an
24area in which observation services are provided in a setting outside
25of any inpatient unit and that is not part of an emergency
26department of a general acute care hospital. A hospital may
27establish one or more observation units thatend insert
shall be marked with
28signage identifying thebegin insert observation unitend insert area as an outpatient area.
29The signage shall use the term “outpatient” in the title of the
30designated area to indicate clearly to all patients and family
31members that the observation services provided in the center are
32not inpatient services.begin insert end insertbegin insertIdentifying an observation unit by a name
33or term other than that used in this subdivision does not exempt
34the general acute care hospital from compliance with the
35requirements of this section. end insert

begin delete

36(e) Observation services shall be deemed outpatient or
37ambulatory services that are revenue-producing cost centers
38associated with hospital-based or satellite services locations that
39emphasize outpatient care. Identifying an observation unit by a
40name or term other than that used in this subdivision does not
P4    1exempt the general acute care hospital from compliance with the
2requirements of this section.

end delete
begin insert

3
(d) Notwithstanding subdivisions (d) and (e) of Section 1275,
4an observation unit shall comply with the same licensed
5nurse-to-patient ratios as supplemental emergency services. This
6subdivision is not intended to alter or amend the effect of any
7regulation adopted pursuant to Section 1276.4 as of the effective
8date of the act that added this subdivision.

end insert
9

SEC. 2.  

Section 128740 of the Health and Safety Code is
10amended to read:

11

128740.  

(a) Commencing with the first calendar quarter of
121992, the following summary financial and utilization data shall
13be reported to the office by each hospital within 45 days of the
14end of every calendar quarter. Adjusted reports reflecting changes
15as a result of audited financial statements may be filed within four
16months of the close of the hospital’s fiscal or calendar year. The
17quarterly summary financial and utilization data shall conform to
18the uniform description of accounts as contained in the Accounting
19and Reporting Manual for California Hospitals and shall include
20all of the following:

21(1) Number of licensed beds.

22(2) Average number of available beds.

23(3) Average number of staffed beds.

24(4) Number of discharges.

25(5) Number of inpatient days.

26(6) Number of outpatient visits, excluding observation service
27visits.

28(7) Number of observation service visits and number of hours
29of services provided.

30(8) Total operating expenses.

31(9) Total inpatient gross revenues by payer, including Medicare,
32Medi-Cal, county indigent programs, other third parties, and other
33payers.

34(10) Total outpatient gross revenues by payer, including
35Medicare, Medi-Cal, county indigent programs, other third parties,
36and other payers.

37(11) Total observation service gross revenues by payer,
38including Medicare, Medi-Cal, county indigent programs, other
39third parties, and other payers.

P5    1(12) Deductions from revenue in total and by component,
2including the following: Medicare contractual adjustments,
3Medi-Cal contractual adjustments, and county indigent program
4contractual adjustments, other contractual adjustments, bad debts,
5charity care, restricted donations and subsidies for indigents,
6support for clinical teaching, teaching allowances, and other
7deductions.

8(13) Total capital expenditures.

9(14) Total net fixed assets.

10(15) Total number of inpatient days, outpatient visits excluding
11observation services, observation services, and discharges by payer,
12including Medicare, Medi-Cal, county indigent programs, other
13third parties, self-pay, charity, and other payers.

14(16) Total net patient revenues by payer including Medicare,
15 Medi-Cal, county indigent programs, other third parties, and other
16payers.

17(17) Other operating revenue.

18(18) Nonoperating revenue net of nonoperating expenses.

19(b) Hospitals reporting pursuant to subdivision (d) of Section
20128760 may provide the items in paragraphs (8), (9), (10), (12),
21(16), and (18) of subdivision (a) on a group basis, as described in
22subdivision (f) of Section 128760.

23(c) The office shall make available to any person, at cost, a hard
24copy of any hospital report made pursuant to this section and in
25addition to hard copies, shall make available at cost, a computer
26tape of all reports made pursuant to this section within 105 days
27of the end of every calendar quarter.

28(d) The office shall adopt guidelines, by regulation, for the
29identification, assessment, and reporting of charity care services.
30In establishing the guidelines, the office shall consider the
31principles and practices recommended by professional health care
32industry accounting associations for differentiating between charity
33services and bad debts. The office shall further conduct the onsite
34validations of health facility accounting and reporting procedures
35and records as are necessary to ensure that reported data are
36consistent with regulatory guidelines.

37

SEC. 3.  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution because
39the only costs that may be incurred by a local agency or school
40district will be incurred because this act creates a new crime or
P6    1infraction, eliminates a crime or infraction, or changes the penalty
2for a crime or infraction, within the meaning of Section 17556 of
3the Government Code, or changes the definition of a crime within
4the meaning of Section 6 of Article XIII B of the California
5Constitution.



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