BILL ANALYSIS �
AB 778
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ASSEMBLY THIRD READING
AB 778 (Atkins)
As Amended April 27, 2011
Majority vote
HEALTH 14-1 BUSINESS & PROFESSIONS
6-1
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|Ayes:|Monning, Ammiano, Atkins, |Ayes:|Hayashi, Allen, Hagman, |
| |Bonilla, Garrick, | |Hill, Ma, Smyth |
| |Hayashi, Roger Hern�ndez, | | |
| |Bonnie Lowenthal, | | |
| |Mansoor, Mitchell, Pan, | | |
| |V. Manuel P�rez, Silva, | | |
| |Williams | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Nestande |Nays:|Bill Berryhill |
| | | | |
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APPROPRIATIONS 15-0
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|Ayes:|Fuentes, Harkey, | | |
| |Blumenfield, Bradford, | | |
| |Charles Calderon, Campos, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Nielsen, Norby, | | |
| |Solorio, Wagner | | |
| | | | |
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SUMMARY : Permits a dispensing optician, an optical company, a
manufacturer or distributor of optical goods, or a nonoptometric
corporation to own a health care service plan (health plan) that
provides vision care services and share its profits, contract
for business services with, lease office space or equipment to
or from, or share office space with, a health plan that provides
vision care services, and jointly advertise vision care services
with a health plan that provides vision care services.
Specifically, this bill :
1)Permits a dispensing optician, an optical company, a
manufacturer or distributor of optical goods, or a
nonoptometric corporation to:
AB 778
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a) Own a health plan that provides vision care services and
share its profits;
b) Contract for business services with, lease office space
or equipment to or from, or share office space with, a
health plan that provides vision care services; and,
c) Jointly advertise vision care services with a health
plan that provides vision care services.
2)Prohibits a registered dispensing optician, an optical
company, a manufacturer or distributor of optical goods, or a
nonoptometric corporation from engaging in conduct designed to
influence or interfere with the clinical decisions of an
optometrist employed by, or who has contracted with, a
specialized vision care service plan for fiscal or
administrative reasons.
3)Requires the clinical decisions of an optometrist who is
employed by, or who has contracted with, a specialized vision
care service plan to be unhindered by fiscal and
administrative management, as specified.
EXISTING LAW :
1)Prohibits health plans from being deemed to be engaged in the
practice of a profession, and may employ, or contract with,
any licensed health care professional to deliver professional
services, and may directly own, and may directly operate
through its professional employees or contracted licensed
professionals, offices, and subsidiary corporations.
Prohibits licensed health care professionals from owning or
controlling offices or branch offices unless otherwise
expressly authorized.
2)Provides for the licensure and regulation of dispensing
opticians by the Medical Board of California (MBC). Provides
for the licensure and regulation of optometrists by the
California Board of Optometry (CBO).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor and absorbable costs to the Department of
Managed Health Care (DMHC) to continue oversight of licensed
health plans, as well as to the CBO and the MBC to regulate
optometrists and opticians, respectively.
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COMMENTS : According to the author, EYEXAM of California was
licensed in 1986 as a specialized health plan, regulated by
DMHC, to provide vision services to its members throughout the
state. Most EYEXAM locations are within a LensCrafters store
and have a partnership with the store. Patients can purchase
frames at this location, or at any other eyewear location,
should they need prescription eyewear. The author states that
there are over 100 EYEXAM locations throughout the state where
close to 400 optometrists are employed, serving their community.
The author states that current California law does not prohibit
a Knox-Keene plan from having a business relationship with an
optical dispenser, but there is no statutory language that
specifically authorizes this relationship either. However,
current California law prohibits an optometrist from being
directly employed by an optical company. The author states that
this bill is intended to specifically allow a specialty health
care plan (like EYEXAM) to conduct business with an optical
dispenser (like Lens Crafters). The author states that due to
an ambiguity in the law, there is a question about whether the
co-location model can continue to remain in California and that
this bill seeks to provide clarity on the issue by defining the
business model. According to information provided by the
sponsor of this bill, Californians for Healthy Vision (a
coalition of co-located eye care businesses and optometrists),
in California there are four companies that own both a plan and
an optical company
The co-location model that this bill codifies has been the
subject of past litigation as well as ongoing litigation. Cases
brought by the Attorney General (AG) of California and private
defendants challenging the influence of control such
arrangements have over optometrists and ophthalmologists have
been settled over the last decade, leaving the underlying legal
issues unresolved. Most recently, a federal judge struck down
the law upon which the AG's case was based as unconstitutional.
This case has been appealed. According to the sponsor of this
bill, this litigation could take years to resolve.
In general, opponents (VSP, the California Optometric
Association, and the United Nurses Association of
California/Union of Health Care Professionals) argue that the
model allows for inappropriate lay control over health care
providers and that the legal process should be allowed to run
its course.
Analysis Prepared by : Teri Boughton / HEALTH / (916)
AB 778
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319-2097FN: 0000616