Amended in Assembly August 1, 2016

Amended in Senate April 18, 2016

Senate Bill No. 1076

Introduced by Senator Hernandez

February 16, 2016

An act to amend Section begin delete 128740 end delete begin insert 128765 end insert 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 same licensed nurse-to-patient ratios as supplemental emergency services, as specified. The bill would require that a patient receiving observation services receive written notice, as prescribed, that his or her care is being provided on an outpatient basis, which may affect the patient’s health coverage reimbursement. 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.

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(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.

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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.

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(2) Existing law, the Health Data and Advisory Council Consolidation Act, requires every organization that operates, conducts, or maintains a health facility to make and file with the Office of Statewide Health Planning and Development (OSHPD) specified reports containing various financial and patient data. Existing law requires OSHPD to maintain a file of those reports in its Sacramento office and to compile and publish summaries of individual facility and aggregate data that do not contain patient-specific information for the purpose of public disclosure.

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This bill would require OSHPD to include summaries of observation services data, upon request, in the data summaries maintained by OSHPD under the act.

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(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:

SECTION 1.  

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

1253.7.  

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

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

(c) For purposes of this chapter, “observation unit” means an
area in which observation services are provided in a setting outside
of any inpatient unit and that is not part of an emergency
department of a general acute care hospital. A hospital may
establish one or more observation units that shall be marked with
signage identifying the observation unit area as an outpatient area.
The signage shall use the term “outpatient” in the title of the
designated area to indicate clearly to all patients and family
members that the observation services provided in the center are
not inpatient services. Identifying an observation unit by a name
or term other than that used in this subdivision does not exempt
the general acute care hospital from compliance with the
requirements of this section.

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

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SEC. 2.  

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

128740.  

(a) Commencing with the first calendar quarter of
1992, the following summary financial and utilization data shall
be reported to the office by each hospital within 45 days of the
end of every calendar quarter. Adjusted reports reflecting changes
as a result of audited financial statements may be filed within four
months of the close of the hospital’s fiscal or calendar year. The
quarterly summary financial and utilization data shall conform to
the uniform description of accounts as contained in the Accounting
and Reporting Manual for California Hospitals and shall include
all of the following:

(1) Number of licensed beds.

(2) Average number of available beds.

(3) Average number of staffed beds.

(4) Number of discharges.

(5) Number of inpatient days.

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

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

(8) Total operating expenses.

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

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

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

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

(13) Total capital expenditures.

(14) Total net fixed assets.

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

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

(17) Other operating revenue.

(18) Nonoperating revenue net of nonoperating expenses.

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

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

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

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begin insert SEC. 2. end insert   

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begin insert Section 128765 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

128765.  

(a) The office shall maintain a file of all the reports
filed under this chapter at its Sacramento office. Subject to any
rules the office may prescribe, these reports shall be produced and
made available for inspection upon the demand of any person, and
shall also be posted on its Web site, with the exception of discharge
and encounter data that shall be available for public inspection
unless the office determines, pursuant to applicable law, that an
individual patient’s rights of confidentiality would be violated.

(b) The reports published pursuant to Section 128745 shall
include an executive summary, written in plain English to the
maximum extent practicable, that shall include, but not be limited
to, a discussion of findings, conclusions, and trends concerning
the overall quality of medical outcomes, including a comparison
to reports from prior years, for the procedure or condition studied
by the report. The office shall disseminate the reports as widely
as practical to interested parties, including, but not limited to,
hospitals, providers, the media, purchasers of health care, consumer
or patient advocacy groups, and individual consumers. The reports
shall be posted on the office’s Internet Web site.

(c) Copies certified by the office as being true and correct copies
of reports properly filed with the office pursuant to this chapter,
together with summaries, compilations, or supplementary reports
prepared by the office, shall be introduced as evidence, where
relevant, at any hearing, investigation, or other proceeding held,
made, or taken by any state, county, or local governmental agency,
board, or commission that participates as a purchaser of health
facility services pursuant to the provisions of a publicly financed
state or federal health care program. Each of these state, county,
or local governmental agencies, boards, and commissions shall
weigh and consider the reports made available to it pursuant to the
provisions of this subdivision in its formulation and implementation
of policies, regulations, or procedures regarding reimbursement
methods and rates in the administration of these publicly financed
programs.

(d) The office shall compile and publish summaries of individual
facility and aggregate data that do not contain patient-specific
information for the purpose of public disclosure. begin insert Upon request,
these shall include summaries of observation services data end insert begin insert . end insert The
summaries shall be posted on the office’s Internet Web site. The
office may initiate and conduct studies as it determines will
advance the purposes of this chapter.

(e) In order to assure that accurate and timely data are available
to the public in useful formats, the office shall establish a public
liaison function. The public liaison shall provide technical
assistance to the general public on the uses and applications of
individual and aggregate health facility data and shall provide the
director with an annual report on changes that can be made to
improve the public’s access to data.

SEC. 3.  

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