BILL ANALYSIS
AB 646
Page 1
Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 646 (Swanson) - As Amended: May 5, 2009
Policy Committee: Business &
Professions Vote: 6-4
Health 14-0
Urgency: No State Mandated Local
Program:NoReimbursable:
SUMMARY
This bill establishes a 10-year exemption from Corporate
Practice of Medicine (CPM) statutes for up to 45 health care
district hospitals (district hospitals). CPM generally prohibits
hospitals from hiring physicians in most hospital settings.
This bill authorizes district hospitals to each employ up to 10
physicians at a time until 2020. Establishes specific
eligibility for hospitals and requires the Office of Statewide
Health Planning and Development (OSHPD) to report to the
Legislature by June 1, 2019. This bill also establishes a fine
of up to $10,000 for hospital interference with provider
professional standards.
FISCAL EFFECT
Unknown fee-supported special fund cost of less than $50,000 to
OSHPD to complete the evaluation and submit a report to the
Legislature in 2019.
COMMENTS
1) Rationale . This bill is sponsored by the American Federation
of State Local and Municipal Employees (AFSCME) to provide
district hospitals with additional support to recruit and
retain medical staff. According to the author and sponsor,
health professional workforce issues are exacerbated in
medically underserved areas due to low reimbursement by
public payers such as Medi-Cal and Medicare and the
prevalence of low-income, uninsured, and underinsured
AB 646
Page 2
patients. This bill requires eligible hospitals to be
identified as a serving Medically Underserved Area (MUA), a
Medically Underserved Population (MUP), or a federally
designated Health Professional Shortage Area (HPSA).
2) The Corporate Practice of Medicine refers to prohibitions in
California law that ban the direct employment of physicians
by hospitals. California's prohibitions in this area are some
of the strongest in the country. Current law makes exceptions
for employment of doctors by UC medical centers, county
hospitals, some community clinics, and some non-profit
organizations. Current law contains several other specific
exemptions to CPM. This bill establishes a temporary
exception for district hospitals until 2020.
3) California Health Care Districts . The Legislature enacted
the Local Hospital District Law in 1945 to allow certain
communities access to a source of tax dollars to build and
fund health care services. The law allowed the creation of a
new legal entity with specified jurisdiction and governance.
Since that time more than 70 health care districts in
California have been formed. Districts may operate a variety
of medical facilities including hospitals, public health
clinics, chemical dependence recovery facilities, outpatient
surgery centers, and skilled nursing facilities. Some also
provide paramedic services and community-based education
programs to the residents of their districts. There are now
more than 30 districts that do not operate a hospital, with
many health care district hospital losses occurring due to
sales of facilities to for-profit or non-profit hospital
systems.
4) Related Legislation
a) AB 648 (Chesbro), also being heard in this committee
today, also establishes a CPM exception until 2020, for up
to 70 rural hospitals statewide.
b) AB 1944 (Swanson), SB 1294 (Ducheny), and SB 1640
(Ashburn) in 2008 each addressed modifications of CPM and
hiring of physicians. AB 1944 died in Senate Health
Committee, SB 1294 failed passage in the Assembly
Appropriations Committee, and SB 1640 failed passage in the
Assembly Business and Professions Committee.
AB 646
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c) SB 376 (Chesbro), Chapter 411, Statutes of 2003
established a pilot project to authorize district hospitals
to hire up to two physicians. The MBC has had difficulty
evaluating SB 376 because of the low number of physicians
who were hired. SB 376 expires in 2011.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081