BILL ANALYSIS Ó
SB 1076
Page 1
SENATE THIRD READING
SB
1076 (Hernandez)
As Amended August 18, 2016
Majority vote
SENATE VOTE: 32-5
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Health |16-2 |Wood, Maienschein, |Lackey, Patterson |
| | |Bonilla, Burke, | |
| | |Campos, Chiu, Gomez, | |
| | |Roger Hernández, | |
| | |Nazarian, Olsen, | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, McCarty, | |
| | |Waldron | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Appropriations |16-4 |Gonzalez, Bloom, |Bigelow, Jones, |
| | |Bonilla, Bonta, |Obernolte, Wagner |
| | |Calderon, Chang, Daly, | |
| | |Eggman, Gallagher, | |
| | | | |
| | | | |
SB 1076
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| | |Eduardo Garcia, | |
| | |Holden, Quirk, | |
| | |Santiago, Weber, Wood, | |
| | |Chau | |
| | | | |
| | | | |
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SUMMARY: Requires a hospital patient receiving observation
services, either in an inpatient or observation unit of a
hospital, as defined, to be notified that they are on
observations status. Specifically, this bill:
1)Defines observation services as 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.
2)Requires, when a patient in an inpatient unit of a hospital or
in an observation unit, as defined, is receiving observation
services, or following a change in a patient's status from
inpatient to observation, that the patient receive written
notice that he or she is on observation status. Requires the
patient to receive the notice in writing, as soon as
practicable. Requires the notice to 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.
3)Defines "observation unit" as 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. Allows a hospital to establish
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one or more observation units that must be marked with signage
identifying the observation unit area as an outpatient area.
Requires the signage to use the term "outpatient" in the title
of the designated area to clearly indicate to all patients and
family members that the observation services provided in the
center are not inpatient services, and that identifying an
observation unit by a name or term other than that used in
these provisions does not exempt the hospital from compliance
with these requirements.
4)Requires an observation unit to comply with the same licensed
nurse-to-patient ratios as supplemental emergency services, as
specified.
5)Requires, upon request, the Office of Statewide Health
Planning and Development (OSHPD), to include summaries of
observation services data, as part of existing summaries of
individual facility and aggregate data currently posted on
OSHPD's Internet Web site
FISCAL EFFECT:
1)Ongoing costs, less than $50,000 per year, for additional
licensing enforcement activity by the Department of Public
Health (DPH) and Los Angeles County (Licensing and
Certification Fund). Under this bill, DPH (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.
2)Minor and absorbable costs to OSHPD to add data on observation
services to existing reports (California Health Data and
Planning Fund).
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COMMENTS: According to the author, this bill is intended to
address problems associated with the growing trend of patients
being treated under "observation status," as an outpatient, for
extended periods of time. Outpatient services are not subject
to many of the laws and regulations designed to ensure patient
safety and adequate staffing standards in acute care hospitals.
The author states that, often, patients are not even aware they
have not been admitted to the hospital, even when they have been
moved outside of the emergency room into a hospital bed and kept
overnight.
Two midnight rule. On August 2, 2013, the Centers for Medicare
and Medicaid Services (CMS) issued a final rule updating its
Medicare payment policies. This rule, commonly known as the
two-midnight rule, states that inpatient admission, and
therefore payment under Medicare Part A, is generally only
appropriate when the physician expects the patient to require a
stay that crosses at least two midnights and admits the patient
based on that expectation. If the physician does not expect the
patient to stay in the hospital for at least two midnights, the
expectation is that the patient will be treated as an
outpatient, under "observation," and Medicare will reimburse
providers under Part B. This has been controversial within the
hospital community. The rule had been enforced by contractor
audits that reviewed records of patients, and revoked payment
for inpatient stays that did not meet the CMS two-midnight rule.
In response to numerous complaints, in early 2014, CMS
announced that it would delay enforcement of the rule through
September 2014, and this delay was subsequently extended several
times. Most recently, as part of the Medicare Access and
Children's Health Insurance Program Reauthorization Act of 2015
that President Obama signed into law on April 16, 2015, the
delay on enforcement was extended through September 30, 2015.
Federal Notice of Observation, Treatment, and Implication for
Care Eligibility (NOTICE) Act. Federal legislation passed last
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year, the NOTICE Act, requires Medicare patients to be notified
when they are being held for observation rather than admitted.
Under the NOTICE Act, the hospital is required to give each
individual Medicare patient who receives observation services as
an outpatient for more than 24 hours an adequate oral and
written notification within 36 hours after the beginning of the
observation service. The NOTICE Act is scheduled to take effect
in August of this year, and CMS is currently preparing
rulemaking to implement this law.
Several states already require observation care notices
including: Connecticut, Maryland, New York, Pennsylvania, and
Virginia.
The California Nurses Association (CNA) is the sponsor of this
bill and states that because observation units are considered an
outpatient service, they are not subject to many of the laws and
regulations designed to ensure patient safety and adequate
staffing standards. CNA continues, many patients are not aware
that they are in observation, leaving them to believe they are
admitted as inpatients, which is especially concerning for
patients who may need to be discharged to a long-term care
facility, as Medicare requires patients to be admitted as
inpatients for three days before coverage for long-term care
will kick in.
The California School Employees Association (CSEA) supports this
bill noting that for patient safety this bill requires the
staffing in observation units to be the same as staffing
emergency rooms, and CSEA believes that staffing requirements in
observation units are important. The California Labor
Federation (CLF) supports this bill stating the impact on
patients of the misuse of observation units can be devastating.
CLF notes that since observation services are considered
outpatient care, patients can be billed for every individual
service, test, and drug provided, rather than just paying a
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single co-pay for inpatient care that includes all services.
The Marin Healthcare District (MHD) writes in opposition that
they believe the 1:4 nurse/patient ratio required by this bill
is much too high for these low acuity patients, noting that the
patients they place on observation status are not sick enough to
be admitted to the hospital. MHD concludes that staffing levels
should be left to the hospital to determine for these low acuity
patients.
Analysis Prepared by:
Lara Flynn / HEALTH / (916) 319-2097 FN:
0003960