BILL ANALYSIS
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|Hearing Date:June 21, 2010 |Bill No:AB |
| |2566 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 2566Author:Carter
As Introduced: February 19, 2010 Fiscal: Yes
SUBJECT: Practice of medicine: cosmetic surgery: employment of
physicians and surgeons.
SUMMARY: Provides that a business entity that offers cosmetic
procedures in violation of the corporate practice of medicine
prohibition and contracts with a physician and surgeon for the
provision of those services is guilty of knowingly making or causing
to be made a false or fraudulent claim for payment of a health care
benefit. States that this provision is declaratory of existing law.
Existing law:
1)Requires any person who practices medicine to hold a valid
certificate to practice medicine. Establishes the Medical Board
of California (MBC) to license and certify physicians and
surgeons.
2)Prohibits corporations and other artificial legal entities from
having any medical professional rights, privileges, or powers
(known as the "prohibition against the corporate practice of
medicine.") However, further provides that the MBC may,
pursuant to regulations it has adopted, grant approval for the
employment of physicians and surgeons on a salary basis by a
licensed charitable institution, foundation, or clinic if no
charge for professional services rendered to patients is made by
that institution, foundation, or clinic. Provides other certain
exceptions to the prohibition against the corporate practice of
medicine.
3)Makes it unprofessional conduct for any licensee to violate or
attempt to violate, to assist in or abet the violation of, or to
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conspire to violate the prohibition against the CPM. Requires
the MBC to take action against any licensee who is charged with
unprofessional conduct. Specifies the types of actions that
constitute unprofessional conduct.
4)Requires the MBC in conjunction with the Board of Registered Nursing
(BRN), and in consultation with the Physician Assistant
Committee (PAC) and professionals in the field, to review issues
and problems relating to the use of laser or intense light pulse
devices for elective cosmetic procedures by physicians and
surgeons, nurses, and physician assistants.
5)Specifies that the review conducted by the MBC, the BRN and the PAC
shall include the appropriate level of physician supervision
needed, the appropriate level of training to ensure competency,
guidelines for standardized procedures and protocols that
address patient selection, education, instruction and informed
consent, use of topical agents, and procedures to be followed in
the event of complications or side effects from treatment and
procedures for governing emergency and urgent care situations.
6)Requires the MBC and the BRN to promulgate regulations to implement
changes determined to be necessary with regard to the use of
laser or intense pulse light devices for elective cosmetic
procedures by physicians and surgeons, nurses and physicians
assistants.
7)Makes it unlawful to knowingly make or cause to be made any false or
fraudulent claim for payment of a health care benefit.
Specifies that any person who violates this provision is guilty
of a public offense and provides for the following penalties:
a) When the claim or amount at issue exceeds $950,
the offense is punishable by imprisonment in the state
prison for 2, 3, or 5 years, or by a fine not to exceed
$50,000 or double the amount of fraud, whichever is
greater, or by both imprisonment and fine, or by
imprisonment in a county jail not to exceed one year, by
a fine of not more than $10,000, or by both that
imprisonment and fine.
b) When the claim or amount at issue is $950 or
less, the offense is punishable by imprisonment in a
county jail not to exceed six months, or by a fine of
not more than $1,000 or by both, unless the aggregate
amount of the claims or amount at issue exceeds $950 in
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any 12-consecutive-month period, in which case the
claims or amounts may be charged as in Item a) above.
8)Defines cosmetic surgery for purposes of health insurance and health
plan coverage as any surgery that is performed to alter or
reshape normal structures of the body in order to improve the
patient's appearance.
This bill:
1) Makes a business organization that offers to provide, or provides,
outpatient elective cosmetic procedures or treatments, that is
owned or operated in violation of the corporate practice of
medicine prohibition, and that contracts with, or employs, a
physician and surgeon for the provision of outpatient elective
cosmetic medical procedures or treatments that may only be provided
by a holder of a physician and surgeon's certificate, is guilty of
a violation of the prohibition against knowingly making or causing
to be made any false or fraudulent claim for payment of a health
care benefit. States that these provisions are declaratory of
existing law.
2) Defines outpatient elective cosmetic medical procedures or
treatments as medical procedures or treatments that are performed
to alter or reshape normal structures of the body in order to
improve appearance.
FISCAL EFFECT: According to the Assembly Appropriations Committee,
unknown, likely minor increases in Medical Board of California (MBC)
enforcement workload and fines related to violations of Corporate
Practice of Medicine prohibitions.
COMMENTS:
1.Purpose. The American Society for Dermatologic Surgery
Association (ASDSA), the Sponsor of this measure, indicates that
this bill will provide the MBC and other consumer protection
agencies with enhanced enforcement tools needed to effectively
prosecute well-resourced business entities engaged in the
unlawful practice of medicine through exotic, complicated, and
illegal arrangements with "employed" or "contracted" physicians.
ASDSA points out that penalties found in existing law are
relatively paltry in relation to the money being fraudulently
obtained from patients and are disregarded as the "cost of doing
business" in the largely cash-only field. The penalties
proposed in this bill will be more proportionate to the risks to
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which patients are exposed.
2.Background.
a) Penalties for violations of the provisions of this bill.
The provisions of this bill would make a business
organization that enters into a contract with a physician and
surgeon in the provision of medical services in violation of
the corporation practice of medicine prohibition guilty of
violating the prohibition against knowingly making or causing
to be made any false or fraudulent claim for the payment of a
health care benefit. The appropriate penalties depend on the
amount of the claim at issue. Generally, for claims that
exceed $950, the offense is punishable by imprisonment in
state prison for 2, 3, or 5 years, or by a fine not to exceed
$50,000, or both. When the amount or claim is $950 or less,
the offense is punishable by imprisonment in a county jail
not to exceed 6 months, or by a fine of not more than $1,000
or both fine and imprisonment. The MBC and local law
enforcement agencies, including deputy district attorney,
city attorney could take action against any entity that
violates the provisions of this measure.
b) Popularity of cosmetic procedures. Newspaper articles
provided by the Sponsor claims that the number of Americans
undergoing cosmetic procedures, including chemical peels,
laser procedures, Botox shots, and wrinkle-filler injections
continue to rise. According to the American Society of
Plastic Surgeons ' (ASPS) website, there were 12.5 million
cosmetic surgeries performed in the United States in 2009,
down 1% from 2008, and a 69% increase since 2000. The ASPS
indicates that the top five surgical procedures were breast
augmentation, nose reshaping, eyelid surgery, liposuction,
and tummy tuck. Moreover, ASPS points out that
minimally-invasive cosmetic procedures rose to nearly 11
million procedures in 2009. The top five minimally-invasive
procedures were Botox, soft tissue fillers, chemical peel,
microdermabrasion, and laser hair removal.
c) Medical Spas. The increasing popularity of cosmetic
procedures or treatments, and the lucrative business they
offer have given rise to a new model of providing cosmetic
services outside the traditional physician settings and into
malls and local spas. Medical spas or popularly known as
"medspas" are increasingly becoming the destination for
various cosmetic procedures or treatments.
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Recognizing the growing popularity of medical spas, the MBC has
posted on its website a fact sheet. The fact sheet indicates
that "medical spas are marketing vehicles for medical
procedures. If they are offering medical procedures, they
must be owned by physicians. The use of the term 'medical
spa' is for advertising purposes to make the procedures seem
more appealing. In reality, however, it is the practice of
medicine. There is no harm in seeking pampering or in
wanting to look better. A visit to a spa may provide a
needed respite from our stressful lives, and treatments that
make us look better often make us feel better. The MBC,
however, is concerned when medicine is being marketed like a
pedicure, and consumers are led to believe that being
injected, lasered, and resurfaced requires no more thought
than changing hair color. According to the MBC's fact sheet,
cosmetologists, while licensed professionals and highly
qualified in superficial treatments such as facials and
microdermabrasion, may never inject the skin, use lasers, or
perform medical-level dermabrasion or skin peels. Those
types of treatments must be performed by qualified medical
personnel. In California, that means a physician, or a
registered nurse or physician's assistant under the
supervision of a physician. Patients must know the
qualifications of persons to whom they are entrusting their
health. Those seeking cosmetic procedures or treatments
should know that the person performing them is medically
qualified and experienced."
3.Corporate Practice of Medicine (CPM) Prohibition. According to
the MBC's website, medical spas that offer medical procedures or
treatments involve the practice of medicine and must be
performed and owned by physicians. The CPM doctrine generally
prohibits corporations or other entities that are not controlled
by physicians from practicing medicine to ensure that lay
persons are not controlling or influencing the professional
judgment and practice of medicine by licensed physicians and
surgeons. In an effort to ensure medical spas are not violating
the CPM doctrine, one of the recommendations put forth by the
MBC and BRN is to give a higher priority to the investigation of
corporate practice of medicine violations in the medical spa
clinics or other settings using laser or intense pulse light
devices and the re-establishment of the Operation Safe Medicine
Unit within the MBC.
4.Recent Review by the MBC, BRN and PAC of Issues Involving Use of
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Certain Cosmetic Procedures. SB 1423 (Figueroa) Chapter 873,
Statutes of 2006, required the MBC in conjunction with BRN to
promulgate regulations on or before January 1, 2009 to implement
changes relating to the use of laser or intense pulse light
devices for cosmetic procedures. The MBC and the BRN have held
meetings, discussions and heard testimony from a number of
organizations representing nurses, physicians, physician
assistants, patients and the laser industry. The discussions
included recommendations on training of personnel that use laser
equipments, the appropriate level of physician supervision at
these facilities, the appropriate advertising to inform patients
of the practitioners' credentials and degrees, who should own or
control these facilities, liability and establishing
standardized procedural rules. The discussions and meetings
revealed that there is frequent disregard of the law in the use
of laser or intense pulse light devices in the treatment of
patients.
One of the recommendations from MBC and BRN was the
reestablishment of the Operation Safe Medicine Unit (Unit). The
Unit was established in 2000 by MBC as an enforcement program
dedicated to investigating the unlicensed practice of medicine,
unlicensed medical clinics and unlicensed persons soliciting
patients. In addition, two statements were approved by both
boards; the first outlines the responsibilities of physicians in
cosmetic procedures, including the supervision of allied health
staff performing laser procedures, and the second is a revised
statement to better inform consumers on cosmetic procedures,
currently available on MBC's website but includes the following:
"An appropriate examination must be conducted before treatments
are performed. This exam must be conducted by a physician, or
the doctor may delegate the examination to licensed nurse
practitioners or physician assistants. Physicians may not
delegate this examination to registered nurses."
5.Prior Efforts Dealing with Cosmetic Surgery Practices. In
California, cosmetic surgery can be performed by any licensed
physician, from a plastic surgeon to a pediatrician. Many
physicians, who may or may not be trained in cosmetic
procedures, are conducting increasingly complex procedures in
settings outside of hospitals such as outpatient surgery centers
and doctors' offices. It is also common for doctors performing
complex cosmetic surgeries to receive their only training from
weekend courses or instructional videos. Currently, there are
no uniform standards for physicians' training related to
cosmetic surgery. The Legislature attempted to regulate the
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practice of cosmetic surgery in previous years with the
introduction of several bills including:
a) SB 1423 (Figueroa) Chapter 873, Statutes of 2006, required
the MBC in conjunction with the Board of Registered Nursing
to promulgate regulations on or before January 1, 2009 to
implement changes relating to the use of laser or intense
pulse light devices for cosmetic procedures by physicians and
surgeons, nurses, and physician assistants.
b) SB 835 (Figueroa) of 1999, would have enacted the Cosmetic
Surgery Patient Disclosure Act, which would have required
physicians who perform cosmetic surgery, as defined, to
provide the MBC with specified information, including
training, board certifications, and number of procedures
performed, and requires the MBC to make this information
available to the public upon request and post the information
on the internet. SB 835 was vetoed by then Governor Davis
who indicated that the methods prescribed by the measure were
unduly burdensome.
c) SB 836 (Figueroa) Chapter 856, Statutes of 1999, expanded
and revised the prohibition against fraudulent advertising by
health practitioners.
d) SB 837 (Figueroa) of 1999, would have required cosmetic
surgery procedures to be performed in a licensed acute care
hospital or in a licensed or accredited outpatient surgery
setting. SB 837 died in the Assembly Appropriations
Committee.
6.Similar Legislation this Session. SB 1150 (Negrete McLeod),
pending in the Assembly Business, Professions and Consumer
Protection Committee, among other provisions, requires the MBC
to adopt regulations on or before January 1, 2012 on the
appropriate level of physician availability necessary within
clinics using laser or intense pulse light devices for elective
cosmetic surgery. Requires the MBC to post on its Internet
website a fact sheet to educate the public about cosmetic
surgery, and the risks involved with such surgeries. Makes a
number of changes regarding the approval, oversight and
inspection of outpatient settings, as defined, by the MBC and
accreditation agencies approved by the MBC, and in developing a
plan of corrective action for any deficiencies found by the
accreditation agencies or the MBC during inspections or
otherwise. Includes in the existing law definition of
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outpatient settings fertility clinics that offer in vitro
fertilization or assisted reproduction technology (ART)
treatments.
7.Prior Legislation.
a) AB 252 (Carter) of 2009, is substantially similar to the
provisions of this bill. Additionally, AB 252 would have
authorized the revocation of the license of a physician and
surgeon who practices medicine with a business organization
that offers to provide or provides outpatient elective
cosmetic medical procedures or treatments (cosmetic
procedures), as defined, knowing that the practice is owned
or operated in violation of the prohibition against the
corporate practice of medicine. AB 252 was vetoed by the
Governor who indicated that AB 252 "is duplicative of
existing law and unnecessary. The MBC already has
significant legal authority to take action against physicians
that violate the Medical Practice Act."
b) SB 674 (Negrete McLeod) of 2009, was substantially similar
to the provisions of
SB 1150 but was vetoed by the Governor. The Governor's veto
message related to the provisions dealing with outpatient
settings.
c) AB 2398 (Nakanishi) of 2008, is substantially similar to
the provisions of this bill, and would have authorized the
revocation of the license of a physician and surgeon who
practices medicine with a business organization that provides
outpatient elective cosmetic medical procedures or
treatments. AB 2398 failed passage on the Senate Floor.
d) AB 2968 (Carter) of 2008 would have enacted the Donda West
Law, which would prohibit elective cosmetic surgery on a
patient unless, prior to surgery, the patient has completed a
physical examination by, and has received written clearance
for the procedure from, a licensed physician and surgeon. AB
2968 was vetoed by Governor Schwarzenegger citing the State
budget crisis.
e) SB 1454 (Ridley-Thomas) would have required for purposes
of advertising that a health care practitioner, as specified,
provide the type of license under which the licensee is
practicing and the type of degree received upon graduation
from professional training and that a health care
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practitioner who is practicing in an outpatient setting, as
defined, and to wear a name tag which includes his or her
name and their license status. Requires the MBC to adopt
regulations on the appropriate level of physician supervision
necessary within clinics using laser or intense pulse light
devices for elective cosmetic surgery, and that the MBC
establish as one of its priorities the investigation of
unlicensed activity within such clinics by reestablishment of
the Operation Safe Medicine Unit (Unit). Requires the MBC to
post on its website a fact sheet to educate the public about
cosmetic surgery, and the risks involved with such surgeries.
Makes a number of changes regarding the approval, oversight
and inspection of outpatient settings, as defined, by the MBC
and accreditation agencies approved by the MBC, and in
developing a plan of corrective action for any deficiencies
found by the accreditation agencies or the MBC during
inspections, or otherwise. SB 1454 died on the Assembly
Floor.
8.Arguments in Support. Supporters, including the Medical Board
of California , state that the intent of this bill which is to
elevate the penalties of violating the corporate practice of
medicine prohibition in order to prevent further offenses will
improve the MBC's efficiency to protect consumers.
Additionally, the California Society of Dermatology and
Dermatologic Surgery , and the American Society of Plastic
Surgeons state that this bill would improve patient safety by
making it harder to enter into business or franchising
arrangements of hiring "in name only" medical directors at
medical spas.
SUPPORT AND OPPOSITION:
Support:
American Society for Dermatologic Surgery Association (Sponsor)
American Academy of Dermatology Association
American Academy of Facial Plastic and Reconstructive Surgery
American Academy of Otolaryngology-Head and Neck Surgery
American Medical Association
American Society of Plastic Surgeons
California Academy of Physician Assistants
California Society of Dermatology and Dermatologic Surgery
Massachusetts Medical Society
Medical Board of California
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Osteopathic Physicians and Surgeons of California
Opposition:
None on file as of June 15, 2010
Consultant:Rosielyn Pulmano