BILL ANALYSIS Ó SB 1365 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1365 (Hernandez) - As Amended June 16, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill requires a general acute care hospital to provide a specified notice to each patient scheduled for a service in a hospital-based outpatient clinic, when that service is available in another location that is not hospital-based. FISCAL EFFECT: Any costs to the California Department of Public Health to enforce this requirement are minor and absorbable (Licensing and SB 1365 Page 2 Certification Fund). COMMENTS: 1)Purpose. According to the author, this disclosure bill is intended to notify patients when a hospital is scheduling them to receive services in a hospital-based outpatient setting that is more costly than other outpatient settings. The author notes hospitals often charge a hospital facility fee even when its clinics are simply providing primary care services that could easily be performed in a physician's office. The author also explains this has two significant consequences: higher out-of-pocket costs for consumers, and higher health insurance premiums, as a result of patients unwittingly, and unnecessarily, receiving care in more expensive settings. This bill is sponsored by the California Teamsters Public Affairs Council (Teamsters) and supported by Health Access California, health insurance plans, and other labor groups. It has no opposition. 2)Background. Medicare, which sets precedent in health care payment that are commonly adopted throughout the insurance industry, pays for hospital outpatient department (HOPD) services at a rate that includes a hospital facility fee. The rates are generally higher than the rate paid to physician not affiliated with a hospital facility. Last year, the Government Accountability Office (GAO) reported Medicare expenditures for HOPD services have grown rapidly. This has raised questions about the extent to which this growth in spending can be attributed to services that were previously performed in physician offices shifting to HOPDs. CDPH licenses and regulates health facilities, including SB 1365 Page 3 general acute care hospitals. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081