BILL ANALYSIS
AB 832
Page A
Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 832 (Jones) - As Amended: April 22, 2009
AS PROPOSED TO BE AMENDED
SUBJECT : Clinic licensing.
SUMMARY : Requires the Department of Public Health (DPH) to
convene a workgroup no later than February 1, 2010, to consider
and develop recommendations for state oversight and monitoring
of ambulatory surgical centers (ASCs), as defined, to ensure
public health and safety. Specifically, this bill :
1)Requires the workgroup to consider the implications of the
2007 Third District Court of Appeals ruling, Capen v. Shewry ,
(155 Cal. App. 4th 378), existing quality and accreditation
standards, including federal conditions of participation for
ASCs participating in the Medicare Program, and the state of
the art of ambulatory surgery centers within this state.
2)Requires the workgroup to include, but not be limited to,
representatives from all of the following:
a) American Nurses Association of California;
b) California Academy of Eye Physicians and Surgeons;
c) California Ambulatory Surgery Association;
d) California Dental Association;
e) California Society of Dermatology and Dermatologic
Surgery;
f) California Medical Association;
g) California Nurses Association;
h) California Orthopedic Association;
i) California Podiatric Medical Association;
j) California Society of Anesthesiologists;
aa) California Society of Plastic Surgeons;
bb) Medical Board of California (MBC);
cc) Office of Statewide Health Planning and Development;
dd) Service Employees International Union;
ee) At least one advocacy organization that represents
consumers; and,
ff) Other organizations with expertise in the licensing and
operation of ASCs.
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EXISTING LAW :
1)Defines a "surgical clinic" as a clinic that is not part of a
hospital and that provides ambulatory surgical care for
patients who remain less than 24 hours. States that a
surgical clinic does not include any place or establishment
owned or leased and operated as a clinic or office by one or
more physicians or dentists in individual or group practice,
regardless of the name used publicly to identify the place or
establishment. Authorizes physicians or dentists in such
settings to apply for licensure.
2)Prohibits any person, firm, partnership, association,
corporation, or public agency from operating, establishing,
managing, conducting, or maintaining a clinic in this state
without first obtaining a clinic license, as specified, and
from providing any special service without obtaining a special
permit.
3)Exempts from clinic licensure any place or establishment owned
or leased and operated as a clinic or office by one or more
licensed health care practitioners and used as an office for
the practice of their profession, within the scope of their
license, regardless of the name used publicly to identify the
place or establishment and other specified clinics, except
that such an exempt place or establishment may opt for
licensure as a surgical clinic or a chronic dialysis clinic.
4)Defines "outpatient setting" as any facility, clinic,
unlicensed clinic, center, office, or other setting that is
not part of a general acute care hospital and where anesthesia
is used in compliance with the community standard of practice,
in doses that, when administered have the probability of
placing a patient at risk for loss of the patient's
life-preserving reflexes.
5)Prohibits any association, corporation, firm, partnership, or
person from operating, managing, conducting, or maintaining an
outpatient setting in California, unless the setting is one of
a number of specified facilities including a surgical clinic
that is certified to participate in the Medicare program, as
specified, a licensed surgical clinic, or an outpatient
setting accredited by an accreditation agency approved by the
Division of Licensing of MBC.
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6)Requires MBC to adopt standards for accreditation and, in
approving accreditation agencies to perform accreditation of
outpatient settings, to ensure that the certification program,
at a minimum, includes standards for aspects of the settings'
operations.
7)Requires periodic inspection of specified clinics. Permits
DPH to contract with local health departments for the
assumption of any of DPH's clinic licensing responsibilities,
as specified. Exempts specified facilities from these
requirements, including surgical clinics.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author argues that even though
existing law provides accreditation oversight for surgical
clinics utilizing certain levels of anesthesia, there is not
an existing consistent, concise, and comprehensive set of
state-specific licensure requirements for the surgical clinic
industry. In addition, the author indicates that the 2007
Third District Court of Appeals ruling, Capen v. Shewry , (155
Cal. App. 4th 378) has resulted in DPH determining that it no
longer has the authority to license certain types of surgical
clinics. DPH concluded that the Capen decision eliminated the
ability of DPH to license ASCs with any physician ownership,
even in cases where the physicians are seeking surgical clinic
licensure for purposes of meeting the payment standards of
payers, such as health plans and insurers. According to the
author, the Capen ruling creates confusion regarding both the
licensing and exemption standards for clinics and the
oversight authority for outpatient settings. The author
contends that this confusion can only be corrected by
developing and refining specific licensing and accreditation
standards under which all ASCs which reach a specific
threshold of services can be subject to state oversight. The
author states this bill is needed to engage stakeholders and
DPH in a process to identify the appropriate standards and
state oversight to ensure patients are adequately protected in
outpatient surgical clinics.
2)CAPEN RULING . This bill addresses the legal and regulatory
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uncertainty arising from the Capen case. Capen held that
ASCs partially or wholly owned by physicians are not eligible
for licensure by DPH. Prior to the Capen ruling, DPH
interpreted the exemption from licensure in law for
physician-owned clinics to mean that each licensed health
practitioner at the clinic had to have at least some share in
the ownership (or leasehold) and operation of the clinic.
DPH interpreted the law in this way to ensure that a
practitioner at the clinic could not disclaim responsibility
for its operation should a problem arise. Although following
Capen, DPH is not renewing or granting any licenses to a
surgical clinic with any degree of physician ownership, it
continues to certify these centers for Medicare purposes.
3)AMBULATORY SURGICAL CLINICS . Increasingly, significant
surgeries are being performed in outpatient settings. Without
adequate standards and appropriate oversight, patients can be
at risk, especially in the case of more serious procedures
involving heavy sedation. In the 1980s and 1990s, many
procedures that used to be performed exclusively in hospitals
began taking place in ambulatory surgery centers. Many knee,
shoulder, eye, spine and other surgeries are currently
performed in ASCs. In the United States today, more than 50%
of colonoscopy services under anesthesia are performed in
ambulatory surgery centers. While anesthesia is generally
safe when administered by appropriately trained professionals,
there are risks. Certain conditions may increase the dangers
of anesthesia. Those with cardiac conditions, brain injury,
or dysfunction of the liver may be at greater risk during
surgery than those who are healthy. More advanced age, prior
inpatient hospitalization within the past six months, and the
invasiveness of the surgery performed have been shown to be
indicators of an increased risk of hospital admission or death
within seven days of outpatient surgery.
Stand-alone ASCs rarely have a single owner and most involve at
least some physician ownership. Physician partners who
perform surgeries in the center will often own at least some
part of the facility, but ownership percentages vary
considerably. Some ASCs are entirely physician-owned and some
have a development or management company that owns a
percentage of a center. According to a 2008 article in Health
Affairs, in 2003, there were an estimated 3,800 ASCs
operational nationally, with more than 40% owned by physicians
and another 40% in joint physician-hospital or
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physician-corporate ventures. During the same period, there
were 3,998 hospital outpatient departments providing similar
services. From 2000 to 2006, the number of ASCs grew 55%.
4)MEDICARE CONDITIONS FOR PARTICIPATION . The federal Centers
for Medicare and Medicaid Services (CMS) develops Conditions
of Participation and Conditions for Coverage that are minimum
standards a health care organization must meet in order to
participate in the Medicare and Medicaid programs. A surgical
clinic must be certified and approved to enter into a written
agreement with CMS. Participation as a surgical clinic is
limited to any distinct entity that operates exclusively for
purposes of providing surgical services to patients not
requiring hospitalization. A surgical clinic may be either
hospital-operated or independent. However, the ASC must be
physically and administratively distinct from other operations
of the hospital and be able to identify its costs separately
from other hospital costs. According to CMS, surgical clinic
covered procedures are those that generally do not exceed 90
minutes in length and do not require more than four hours
recovery or convalescent time. The surgical clinic may not
perform a surgical procedure on a Medicare beneficiary when,
before surgery, an overnight hospital stay is anticipated.
Surgery clinic patients generally do not require extended care
as a result of surgical clinic procedures. An unanticipated
medical circumstance may arise that would require a surgical
clinic patient to stay in an overnight health care setting.
Such situations should be infrequent. Anticipated extended
care in a non-hospital health care setting as a result of a
particular procedure is not a covered surgical clinic
procedure for Medicare beneficiaries. The regulatory
definition of a surgical clinic does not allow the surgical
clinic and another entity to mix functions and operations in a
common space during concurrent or overlapping hours of
operations.
5)MEDICAL BOARD OF CALIFORNIA CERTIFICATION . As of July 1996,
California law prohibits physicians from performing some
outpatient surgery, unless it is performed in a licensed or
accredited setting. The law also specifies certain outpatient
surgery settings are excluded from the accreditation
requirement, such as surgery clinics certified to participate
in the Medicare Program and licensed surgical clinics.
Physicians presently performing surgery under specified
anesthesia levels in unlicensed settings, such as their
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offices, must seek accreditation from one of the following
accreditation agencies currently approved by MBC: American
Association for Accreditation of Ambulatory Surgery Facilities
Inc.; Accreditation Association for Ambulatory Health Care;
Joint Commission on Accreditation of Healthcare Organizations;
or, the Institute of Medical Quality (IMQ).
6)IMQ . The IMQ is a 501 (c) non-profit organization, affiliated
with the California Medical Association (CMA) that offers a
wide range of educational, accreditation, consultation, and
certification programs. IMQ's Ambulatory Program accredits a
wide range of entities, including surgery clinics, student
health centers, occupational health centers, medical
offices/medical groups, and other outpatient settings.
7)SUPPORT . The California Ambulatory Surgery Association (CASA)
writes in support of a prior version of this bill that the
current licensure criteria void and inconsistency has resulted
in significant delays for ASC licensure inspection surveys.
Furthermore, according to CASA, many third party payers
require state licensure prior to contracting with an ASC for
services. Lastly, CASA points out that the California Board
of Pharmacy will not issue a pharmacy permit to an ASC until
it can document state licensure. According CASA, the ASC
industry prides itself on providing convenient access to high
quality medical care. To that end, patients being treated in
a California ASC deserve a consistent, concise, and
comprehensive set of transparent state-specific licensure
requirements for an industry that has traditionally been
regulated to ensure the optimum health, welfare, and safety of
the general public.
8)OPPOSE UNLESS AMENDED. The California Dental Association is
opposed to the prior version of this bill unless it is amended
to ensure that dentists who provide anesthesia pursuant to a
permit from the Dental Board of California need not also
obtain a license from DPH.
9)OPPOSITION . Organizations representing physicians and
physician specialty groups are opposed to the prior version of
this bill. CMA writes in opposition to the prior bill that
physician-owned clinics are a high-quality, cost-effective
alternative to costly, inpatient hospital procedures and are
already regulated through the MBC. CMA argues that DPH does
not have the manpower or budget to survey the facilities for
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which they are already responsible. The California Society of
Anesthesiologists states that there has been no showing that
the present accreditation system has failed to protect patient
care quality and safety.
10)PREVIOUS LEGISLATION .
a) AB 543 (Plescia) of 2008 would have required surgical
clinics to meet specified operating and staffing standards,
including compliance with Medicare conditions of
participation. Would have required surgical clinics to
limit surgical procedures, as specified, and to develop and
implement policies and procedures consistent with Medicare
conditions of participation, including interpretive
guidelines, as specified. Governor Schwarzenegger vetoed
AB 543 with the following message:
While I support the intent of this legislation, I
am unable to sign it as it lacks critical patient
safety protections. This bill doesn't establish
appropriate time limits for performing surgery
under general anesthesia. Further, it
inappropriately restricts administrative
flexibility and creates state fiscal pressure
during ongoing budget challenges.
I am directing the Department of Public Health to
pursue legislation that establishes licensure
standards for these facilities that are
consistent with federal requirements and protect
the health and safety of patients.
b) AB 2122 (Plescia) of 2008 would have established the
California Outpatient Surgery Patient Safety and
Improvement Act which would have required surgical clinics
to meet prescribed licensing requirements and standards,
including compliance with Medicare conditions of
participation. AB 2122 was held under submission in the
Assembly Appropriations Committee.
c) AB 2308 (Plescia) of 2006 would have required the
Department of Health Services (now DPH) to convene a
workgroup to develop licensure criteria to protect patients
receiving care in surgical clinics, and to submit workgroup
conclusions and recommendations to the appropriate policy
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committees of the Legislature no later than March 1, 2007.
AB 2308 would have revised existing law to replace the term
"licensed surgical clinic" with "ambulatory surgical
centers" or "ASCs". AB 2308 was vetoed by the Governor.
d) AB 585 (Speier), Chapter 1276, Statutes of 1994,
requires that certain outpatient settings, including
surgical clinics to either be licensed by the state,
Medicare certified or accredited by an agency approved by
the Division of Licensing within MBC.
REGISTERED SUPPORT / OPPOSITION :
Support (prior version)
California Ambulatory Surgery Association
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Oppose unless amended (prior version)
California Dental Association
Opposition (prior version)
California Medical Association
California Society of Anesthesiologists
California Society of Dermatology and Dermatologic Surgery
California Society of Plastic Surgeons
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097