BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1076 (Hernandez) - General acute care hospitals: observation
services
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|Version: April 18, 2016 |Policy Vote: HEALTH 8 - 1 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 2, 2016 |Consultant: Brendan McCarthy |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: SB 1076 would establish new requirements on hospitals
relating to observation services.
Fiscal
Impact:
Ongoing costs, less than $50,000 per year, for additional
licensing enforcement activity by the Department of Public
Health and Los Angeles County (Licensing and Certification
Fund). Under the bill, the Department (and Los Angeles County,
under contract with the state) would experience a minor
increase in workload when performing licensing surveys of
hospitals that provide observation services.
Ongoing costs of $100,000 per year (and an additional $10,000
in the first year) for the Office of Statewide Health Planning
and Development to amend existing regulations, update data
reporting tools, and audit data reported by hospitals under
SB 1076 (Hernandez) Page 1 of
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the bill (California Health Data and Planning Fund). The bill
would require hospitals that provide observation services to
include specific data on observation services as part of the
existing requirement for hospitals to report certain data to
the state.
Background: Under current law, general acute care hospitals are licensed
by the Department of Public Health. (The state contracts with
Los Angeles County to perform licensing activities in Los
Angeles County.) Licensed general acute care hospitals are
authorized to provide 24-hour inpatient care with a variety of
basic medical services. In addition, hospitals can apply to
offer special services such as an emergency services,
psychiatric services, cardiac surgery, and others. Hospitals can
also apply to provide outpatient services.
Historically, when a patient was treated at an emergency
department or underwent a surgical procedure, a physician would
make a determination whether the patient could go home or needed
to be admitted to the hospital as an inpatient for further
observation and/or treatment. Existing regulations define an
outpatient as someone who has not been formally admitted to a
hospital and who does not remain over 24 hours.
In recent years, hospitals have begun treating patients under
"observation status" or "observation services" in which the
patient is not actually admitted to the hospital as an
inpatient, but is nevertheless given a bed in the hospital and
kept under clinical observation. In part, this trend is being
driven by Medicare and other third-party payers who are refusing
to pay for inpatient admissions under certain circumstances.
This leads to hospitals keeping patients on observation status,
often for more than 24 hours. Under federal Medicare rules, a
beneficiary is only eligible for Medicare-funded skilled nursing
facility care after three days as an inpatient in a hospital. If
a patient was in a hospital for several days, but some of those
days were on observation status, the patient may unknowingly be
ineligible for Medicare payment for the subsequent skilled
nursing care. In addition, the cost sharing that patients are
required to pay (such as copays and coinsurance) may differ
depending on whether the patient is an inpatient or an
outpatient. For example, a typical inpatient will be responsible
for a single copay for an inpatient day, whereas a patient who
SB 1076 (Hernandez) Page 2 of
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is being treated as an outpatient may be liable for multiple
copays if his or her health insurance is billed for multiple
individual services provided, rather than a single bill for an
inpatient day.
Proposed Law:
SB 1076 would establish new requirements on hospitals relating
to observation services.
Specific provisions of the bill would:
Define observation services;
Require hospitals to provide notification to a patient
who is receiving observation services;
Authorize hospitals to establish observation units, with
specified requirements;
Require observation units to comply with the same
nurse-to-patient ratios required for supplemental emergency
services;
Require hospitals to include information on observation
service visits and gross revenues in the data they are
currently required to report to the Office of Statewide
Health Planning and Development.
Related
Legislation:
SB 483 (Beall, 2015) would have prohibited hospitals
from providing "observation services" for more than 24
hours and would have imposed specified regulatory
requirements on hospitals that provide observation services
in an observation unit. That bill was held on this
committee's Suspense File.
SB 1269 (Beall, 2014) was substantially similar to SB
483 (Beall, 2015). That bill was held on this committee's
Suspense File.
SB 1238 (Hernandez, 2014) would have generally required
an outpatient to either be discharged or admitted to the
hospital after no more than 24 hours. That bill was held on
this committee's Suspense File.
Staff
SB 1076 (Hernandez) Page 3 of
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Comments: 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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