BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 442
S
AUTHOR: Ducheny
B
AMENDED: April 15, 2009
HEARING DATE: April 22, 2009
4
CONSULTANT:
4
Green/
2
SUBJECT
Clinic corporation: licensing
SUMMARY
Requires the Department of Public Health (DPH) to issue a
single, consolidated license to a clinic corporation that
operates one or more primary care or mobile clinics, and
meets specified licensure requirements.
CHANGES TO EXISTING LAW
Existing law:
Existing law defines a primary care clinic as an outpatient
health facility, operated by a nonprofit corporation, which
provides direct medical, surgical, dental, optometric, or
podiatric advice, services, or treatment to patients who
remain less than 24 hours. Existing law requires primary
care clinics to be separately licensed and certified by
DPH.
Upon approval of a primary care clinic's initial license
application, existing law requires DPH to issue a
provisional license, good for six months from the date of
issuance. DPH is then required to conduct an on-site
survey of the clinic within 30 days prior to the expiration
of the provisional license, and, if the clinic meets all
licensure requirements, issue a regular license. If it is
Continued---
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 2
determined during the on-site survey that the clinic does
not meet the requirements for licensure, but demonstrates
progress toward meeting the requirements, existing law
authorizes DPH to renew the provisional license for another
six months.
Existing law authorizes a primary care clinic that has held
a valid, unrevoked, and unsuspended license, for at least
five years, that has no demonstrated history of repeated or
uncorrected licensing violations that pose immediate
jeopardy to a patient, and that has no pending suspension
or revocation actions, to file an application with DPH to
establish an "affiliate clinic" at a new site. Upon
receipt of such an application, DPH is required to issue a
regular license for the affiliate clinic within 30 days,
without having to conduct an initial onsite survey, if the
parent clinic meets additional specified conditions.
Existing law does, however, authorize DPH to conduct a
licensing inspection at any time after receipt of the
affiliate clinic licensing application.
Existing law authorizes DPH to issue a special permit to a
clinic approved to provide one or more specified special
services, such as birthing services, for which the state
has established separate standards. Existing law grants
DPH the authority to take various types of enforcement
actions against a primary care clinic that has violated
state law or regulation, including imposing fines,
sanctions, civil or criminal penalties, and suspension or
revocation of the clinic's license.
Existing law also defines a mobile health care unit,
commonly referred to as a "mobile clinic," as a commercial
coach that is licensed by DPH as an independent
freestanding clinic, or approved by DPH as an adjunct of a
licensed parent health facility or clinic, and that
provides medical, diagnostic, and treatment services in
order to ensure the availability of quality health care
services for patients in remote or underserved areas, and
patients who need specialized types of medical care.
This bill:
This bill would require DPH to issue a single, consolidated
license to a "clinic corporation," defined as a nonprofit
organization that operates more than one primary care
clinic and/or mobile clinic, if the clinic corporation
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 3
meets specified requirements. The bill would specify that
in order to qualify for a consolidated license, all of the
clinics included on the license application must have the
same corporate officers, be owned and operated by the same
board of directors, and have a single set of policies,
procedures, and standards under which all medical directors
operate. Additionally, the clinic corporation must provide
evidence to the department, that each of the primary care
clinics that would be included on the license meets
applicable physical plant construction and safety
standards.
The bill would require DPH to issue a consolidated licensed
within 30 days of receipt of a completed application, or
within 7 days of the date the application is approved,
whichever is sooner. If DPH determines that an applicant
does not meet the criteria for a consolidated license, it
would be required to identify, in writing, the grounds for
that determination, and proceed to process the application
as an individual license application.
This bill would authorize a clinic corporation that is
issued a consolidated license to add or remove a primary
care or mobile clinic from the license at any time, as
specified. The bill would require DPH to develop a
single-page application form to add a clinic to the
consolidated license, including the name and address of the
clinic, and the services to be provided, and would require
a clinic corporation to pay a license fee for each added
clinic. This bill would also allow a clinic corporation
that is issued a consolidated license to consolidate
administrative functions, as specified, and to transfer
special permits from one site to another included in the
license.
The bill would specify that DPH may take any enforcement
action authorized by existing law with respect to a primary
care clinic included in a consolidated license, but would
prohibit an action against one or more clinics under the
license from being deemed an action against the clinic
corporation as a whole. The bill would authorize DPH to
remove or suspend a clinic that is found to be deficient
from the consolidated license, and would authorize a clinic
corporation to voluntarily remove a deficient clinic from
its consolidated license prior to the assessment of a civil
penalty or initiation of removal or suspension by the
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 4
department. The bill would prohibit DPH from revoking or
suspending the consolidated license, unless each clinic
under the license is cited in the notice of deficiencies,
and the clinic corporation failed to correct deficiencies
in each clinic, as specified.
The bill would specify that the business office of a clinic
corporation would not be required to be licensed as a
clinic, that a clinic included in the consolidated license
would be deemed licensed for the purposes of application
for enrollment as a provider in a public health program,
such as Medi-Cal, and that each clinic may separately apply
for enrollment as a provider in the Medi-Cal program, or
other health care program. The bill would also specify
that consolidated licensure of a clinic corporation would
not affect federal payment rates for specified federally
recognized clinics.
The bill would specify that clinics that are licensed and
in good standing as of December 31, 2009, and that are
included on a clinic corporation's consolidated license,
would not be subject to provisional licensing requirements.
The bill would require DPH to calculate the licensing fee
for a single consolidated license, based on a percentage of
the current primary care clinic fee, and apply it to each
primary care clinic included on the consolidated license.
The bill would also make various technical and conforming
changes.
FISCAL IMPACT
Unknown.
BACKGROUND AND DISCUSSION
According to the author, community clinics are at the core
of the state's health care safety net and primary care
delivery systems. The author states that, among the top
concerns for clinics in their day-to-day administration and
long-term planning are difficulties associated with state
licensing and certification. The author asserts that the
current system for licensing and certification of clinics
is outdated and inefficient, which causes providers and the
state to waste scarce financial and human resources.
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 5
The author states that most clinic organizations operate
multiple clinic sites, ranging in numbers from 2 to 25,
under the governance of a single board of directors and
medical directorship, using common business practices,
policies, and procedures, as well as medical oversight.
The author states that despite this, under current law,
each clinic site must be separately licensed, which
requires clinics to often submit the same information on
separate licensing applications, even when the information
is identical or unchanged. The author states that this
process is not only administratively burdensome and
duplicative, it does not account for the role of the
governing clinic organization. The author states that
delays in the processing of licensing applications often
inhibit clinics from providing and/or billing for
much-needed services in their communities. The author
states that, to avoid the state licensing process, many
clinics are opting to open "intermittent clinics," which
operate at or less than 20 hours per week, and do not
require state licensure. The author also states that a
precedent for consolidated health facility licensing has
been set by the consolidated licensure of California's
acute care hospitals.
The author states that this bill seeks to find a balance
which acknowledges the impact licensing plays in provider
enrollment, and ensures the public's health and safety.
The author states that this bill will reform the current
system of clinic licensure from a physical plant-based
model, to a single consolidated license model in order to
streamline the clinic licensing process, and create program
efficiencies.
Primary care clinic licensure
According to DPH, there are currently 972 primary care
clinics currently licensed in California. In order to
obtain a license, a primary care clinic must submit an
application and fee to DPH, and pass an initial licensure
survey conducted by DPH. Upon receipt of a completed
application for a clinic license, DPH has up to 100 days to
either grant or deny the license.
Existing law requires DPH to issue a provisional license,
good for six months from the date of issuance, to a clinic
that has not been previously licensed. DPH is required to
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 6
inspect the clinic within 30 days prior to the termination
of the provisional license, and, if the clinic meets all
licensure requirements, issue a regular license. Clinics
that do not meet the requirements for licensure, but make
progress toward meeting the requirements, may have their
provisional license renewed by DPH for another six months.
According to DPH, there are currently seven completed
primary care clinic licensing or certification applications
pending. Primary care clinics are currently required to
pay licensing fees in an amount of $600. Under current
law, DPH is required to set licensing fees for health
facilities based largely on projected workload and costs
relating to the licensing activities for each facility
type. For example, the current licensing fee for primary
care clinics is $600 per clinic. This fee was calculated
by DPH, based on the workload and resources it dedicates to
licensing clinics, including processing licensing
applications, performing inspections, conducting complaint
investigations, and other activities.
Primary care clinics that wish to establish additional
clinic sites, referred to as "affiliate clinics" are
granted an expedited licensure process. Affiliate clinics
are eligible for licensure based upon their parent clinic's
compliance history. In order to apply to establish an
affiliate clinic, a parent clinic is required to have held
a valid, unrevoked, and unsuspended license for the
preceding five years. In addition, the parent clinic must
have no demonstrable history of repeated or uncorrected
violations that pose immediate jeopardy to patients, as
well as no pending action to suspend or revoke the parent
clinic's license.
The parent clinic is required to submit a completed
application and an application fee, establish that the
parent clinic and the affiliate clinic have the same
corporate officers and are owned and operated by the same
organization with the same board of directors, and provide
evidence of compliance with minimum safety standards
related to the affiliate clinic's physical plant. If the
parent clinic meets these requirements, DPH is required to
issue a license to the affiliate clinic within 30 days.
Affiliate clinics are exempt from provisional licensure
requirements, and are not required to be surveyed to
qualify for licensure. However, affiliate clinics must
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 7
still pay license fees.
General acute care hospital licensure
The author states that the precedent for primary care
clinic consolidated licensure was set by the consolidated
licensure process for hospitals. Under existing law, a
single consolidated license may be issued to a general
acute care hospital that includes more than one physical
plant maintained and operated on separate premises, or that
has multiple licenses for a single health facility on the
same premises, with exceptions. To qualify for
consolidated licensure, the hospital must meet specified
criteria, including being nonprofit, and must share a
single governing body, administration, and medical staff
with any entity under its license. Additionally all of its
separate physical plants must be no more than 15 miles
apart, with exceptions.
General acute care hospitals are prohibited from
transferring any special services from one site to another
site on the consolidated license without prior approval
from DPH, and DPH is authorized to take enforcement action
against a licensee, including action to suspend or revoke a
consolidated license, for specified violations.
Prior legislation
AB 2010 (DeSaulnier), Chapter 90, Statutes of 2008, exempts
affiliate clinics from provisional licensure requirements.
SB 1213 (Ducheny), Chapter 360, Statutes of 2008, requires
mobile clinics to notify DPH at least 24 hours prior to
providing services at a new site, and waives any notice
requirement in the event the mobile clinic is responding to
federal, state, or local public health emergencies.
SB 937 (Ducheny), Chapter 602, Statutes of 2003, revises
provisions relating to the licensure and operation of
clinics, and authorizes a primary care clinic that has been
licensed and in good standing for five years to file an
application to establish an affiliate clinic at an
additional site.
AB 2404 (Reyes), Chapter 111, Statutes of 2002, prohibits
the Department of Health Services (DHS), now referred to as
DPH, from requiring the licensure of each site where a
mobile clinic provided services, and instead requires a
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 8
mobile clinic to report to DHS at least 15 days prior to
its first visit to a new site, and to report to local
authorities to obtain necessary approvals
AB 951 (Florez), Chapter 525, Statutes of 2001, requires
the Department of Health Services, now referred to as DPH,
to establish a centralized licensing application unit to
review applications, and train clinic surveyors in order to
process license applications in a more timely, uniform, and
cost-effective manner.
AB 2259 (Woodruff), Chapter 1020, Statutes of 1993,
provides for the licensure of mobile clinics to ensure the
availability of quality health care services for patients
in remote or underserved areas, and imposed various
licensure requirements and safety standards on mobile
clinics.
SB 1140 (Royce), Chapter 1456, Statutes of 1987, requires
provisional licensure for clinics, and other types of
health facilities.
Arguments in support
The California Primary Care Association (CPCA) states that
this bill would eliminate unnecessary administrative
barriers to increasing access to care by allowing primary
care clinics to operate multiple sites under one
consolidated license. CPCA states that moving to a
consolidated licensure will streamline the licensing
process, reduce duplication, and promote administrative
efficiency, and thereby maximize the ability of safety net
providers to meet the growing health care needs of
individuals and families in their communities.
Planned Parenthood Affiliates of California (PPAC) states
that each time a clinic corporation applies for a new
clinic, numerous documents must be submitted to DPH, many
of which are duplications of paperwork already filed with
the department. PPAC states that significant time and
money is expended on these cumbersome licensing activities
that take away from the critical services clinic staff
should be providing. PPAC states that this bill would
streamline and modernize the current overly burdensome
processes and eliminate duplication.
COMMENTS
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 9
1. Bill should clarify that clinic corporations must have
no significant enforcement actions against its license in
order to be eligible to apply for a consolidated license.
Under current law, a parent clinic may not be eligible to
establish affiliate clinic sites unless it has held a
valid, unrevoked and unsuspended license, as specified, has
no demonstrated history of repeated or uncorrected
violations, and has no pending suspension or revocation
action against its license. Since the clinic corporation
model proposed by this bill is similar to the parent clinic
model established by existing law, a suggested amendment
would be to require clinic corporations to meet the same
licensing standards as parent clinics when applying for a
consolidated license.
Proposed amendment:
Page 6, line 28, insert:
(1) The clinic corporation applying for the consolidated
license must have held a valid, unrevoked, and unsuspended
license for at least the immediately preceding five years,
with no demonstrated history of repeated or uncorrected
violations of this chapter, or any regulation adopted under
this chapter, that pose immediate jeopardy to a patient, as
defined in subdivision (d) of section 1218.1, and have no
pending action to suspend or revoke its license.
2. Bill limits DPH's enforcement authority. The bill
would prohibit an enforcement action by DPH against a
clinic included in a consolidated license from being deemed
an action against the clinic corporation as a whole.
However, as the sole licensee, the clinic corporation would
be responsible for the compliance of the clinics on its
consolidated license. DPH should have the authority to
take action against the license of a clinic corporation, if
a clinic on the license fails to comply with licensing
requirements.
Further, the bill would prohibit DPH from revoking or
suspending a consolidated license unless all of the clinics
under the license are cited in the notice of deficiencies,
and the clinic corporation failed to correct the
deficiencies in every clinic. Under these provisions, a
clinic corporation with 10 clinics on its consolidated
license could have uncorrected deficiencies in 9 out of the
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 10
10 clinics, and DPH would not be able to take action to
revoke or suspend the consolidated license if deemed
appropriate. The intent of the author is to ensure that an
action by DPH to remove or suspend a clinic under a
consolidated license does not automatically apply to all of
the clinics under the license. The bill should be amended
to reflect the author's intent. Additionally, to ensure
patient safety, DPH should have the authority to take
action to initiate revocation or suspension action against
clinic corporations if the department determines that
failure to do so will result in patient harm.
Proposed amendments:
a. Page 9, lines 4-6:
An action against one or more clinics included in the
consolidated license shall not be deemed an action against
the clinic corporation as a whole.
b. Page 14, lines 11-19:
Action taken by the department to suspend or remove one or
more clinics from a consolidated license shall not result
in the automatic suspension or revocation of the
consolidated license, unless the department determines that
failure to do so would result in the immediate jeopardy, as
defined in subdivision (d) of Section 1218.1, of a patient.
In no case shall the department initiate an action to
revoke or suspend the single consolidated license for
uncorrected deficiencies outlined in a written notice of
deficiencies, in one or more clinics included in a single
consolidated license, unless each clinic, including a
mobile health care unit, that is included in the single
consolidated license is cited in the notice of deficiencies
and the clinic corporation failed to correct the
deficiencies in every clinic within the allotted time
period according to the plan of correction.
3. Consolidated license fee calculation unclear. In its
current form, the bill's provision pertaining to the
calculation of licensing fees for a consolidated license is
unclear. The author and sponsor intend to work with DPH to
develop a method by which to calculate fees for
consolidated licensure that reflects DPH's workload and
costs, which for most licensing activities, such as
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 11
inspections and enforcement, will likely remain steady, but
that also reflects potential cost savings from a
streamlined licensure process. In the meantime, the author
should amend the bill to remove the current unclear
language requiring the calculation of the estimated fee.
Page 15, lines 31-38:
(d) Commencing February 1, 2010, and every February
thereafter, the department shall publish the estimated fee
for a single consolidated license issued under Section
1212.5 pursuant to this section. The calculation of the
estimated fee shall be based on a percentage of the fee for
primary care clinics, for each primary care clinic included
in a single consolidated license , and shall be included in
the report and list of estimated fees required by
subdivisions (c) and (e).
4. Consolidated license should specify name, location, and
other basic information about each clinic on the license.
When introduced, this bill contained a requirement for the
department to include the name, location, hours of
operation, and services of each clinic included on a
consolidated license. The current version of the bill does
not contain this provision. However, for the purposes of
basic identification of clinics on a consolidated license,
this provision should be added back into the bill.
Proposed amendment:
Page 7, after line 4, insert:
(e) A single consolidated license issued by the department
shall specify the name, location, hours of operation, and
services of each clinic included in the license.
5. DPH should give approval for transfer of special
permits. This bill would allow a clinic corporation to
transfer a special permit from one clinic site to another
included in the consolidated license. The bill should
specify that a clinic corporation may conduct such a
transfer only after obtaining approval from DPH.
Proposed amendment:
Page 8, lines 22-27:
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 12
(k) Upon written notice to the department, a clinic
corporation that has been issued a single consolidated
license may apply for one or more special permits pursuant
to Section 1202. A clinic corporation that is issued one or
more special permits may, with approval from the
department, transfer the special permits from one clinic
site to another site that is included in the single
consolidated license.
6. Clinics added to an existing consolidated license
would not have to prove compliance with minimum
construction and physical plant standards. To qualify for
consolidated licensure, a clinic corporation must submit
evidence that each of the primary care clinics on its
license meet specified construction and physical plant
standards. However, the bill would require a clinic that
is added to an existing consolidated license, to simply
self-attest that it meets such standards. These provisions
appear to be in conflict, and in order to ensure patient
safety, the bill should require a clinic corporation to
prove that all of its clinics, including those that are
added to an existing license, meet these standards.
Proposed amendment:
Page 8, lines 13-16:
(4) A self-attestation that each clinic site added meets
the requirements of Section 1212, including and evidence
that each clinic site meets minimum construction standards
for adequacy and safety of physical plant, pursuant to
subdivision (b) of Section 1226.
7. Proposed technical and clarifying amendments.
a. Page 2, lines 27-33 and Page 3, lines 13-15:
(3) "Clinic corporation" means a nonprofit organization
that operates one or more primary care clinics, as defined
in paragraphs (1) and (2) of subdivision (a) of Section
1204, that are required to be licensed under Section 1205,
that may include one or more mobile health care units
required to be licensed or approved pursuant to the Mobile
Health Care Services Act (Chapter 9 (commencing with
Section 1765.101)) and operated as primary care clinics, or
one or more primary care clinics and one or more mobile
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 13
health care units.
b. Page 6, lines 2-3:
?primary care clinic, as defined in paragraphs paragraph
(1) and (2) of subdivision (a) of section 1240 1204, the
department shall issue a single?
Page 6, line 39:
?subdivision (b) of Section 1126 1226 , for each primary
care clinic?
c. Page 7, lines 2-4:
(5) There are one or more medical directors operating under
a single set of policies, procedures, and standards for all
the primary care clinics and mobile health care units
maintained and operated by the licensee.
d. Page 7, line 32:
?was submitted on the date the denial of the consolidated
license was released issued.
e. Page 7, line 33:
(h) Upon application to the department, a clinic
corporation that?
f. Page 8, line 6:
?for adding or removing a clinic between renewal periods
that includes all of?
g. Page 8, lines 31-33:
? Failure by the clinic corporation to make timely payment
of the renewal fee shall result in the expiration of its
consolidated license any licenses and any special permits?
h. Page 9, line 2:
?1240 with respect to a primary care clinic, mobile health
care unit, or special services?
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 14
i. Page 12, lines 4-11:
1219. (a) Except for an affiliate clinic, as defined in
Section 1218.1, or a clinic corporation that includes, in
its application for a single consolidated license, one or
more primary care clinic clinics, including a one or more
mobile health care units unit, that were was licensed and
in good standing as of December 31, 2009, and included in
an application by a clinic corporation for a single
consolidated license , if a clinic or an applicant for a
license has not been previously licensed, the department
may only issue a provisional license to the clinic as
provided in this section.
POSITIONS
Support: California Primary Care Association (co-sponsor)
Planned Parenthood Affiliates of California
(co-sponsor)
Alliance Medical Center
Alliance for Rural Community Health
Alta Med Health Services
Anderson Valley Health Center
California Family Health Council
Central Valley Health Network
Chinatown Service Center
Clinicas del Camino Real, Incorporated
Clinica de Salud del Valle de Salinas
Clinica Sierra Vista
Community Clinic Association of Los Angeles County
East Community Health Center, Inc.
Eisner Pediatric and Family Medical Center
Family HealthCare Network
Family Health Centers of San Diego
Imperial Beach Health Center
LifeLong Medical Care
Long Valley Health Center
MayView Community Health Center
Mendocino Coast Clinics, Inc.
Mendocino Community Health Clinics, Inc.
Neighborhood Healthcare
North Coast Clinics Network
North County Health Services
Northeast Valley Health Corporation
Open Door Community Health Centers
Petaluma Health Center
STAFF ANALYSIS OF SENATE BILL SB 442 (Ducheny)Page 15
Planned Parenthood Mar Monte
Planned Parenthood of San Diego and Riverside
Counties
Planned Parenthood of Santa Barbara, Ventura and San
Luis Obispo
Planned Parenthood: Shasta-Diablo
Potter Valley Community Health Center
Redwood Coast Medical Services
Saban Free Clinic
Salud Para La Gente
Shasta Community Health Center
Shasta Consortium of Community Health Centers
Shingletown Medical Center
Six Rivers Planned Parenthood
Southern Trinity Health Services
UMMA Community Clinic
Venice Family Clinic
West County Health Centers, Inc.
One individual
Oppose: None received
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