BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 359|
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UNFINISHED BUSINESS
Bill No: SB 359
Author: Hernandez (D)
Amended: 8/29/12
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE APPROPRIATIONS COMMITTEE : 8-0, 1/19/12
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Steinberg
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR : 79-0, 8/16/12 (Consent) - See last page
for vote
SUBJECT : Hospital billing: emergency services and care
SOURCE : Author
DIGEST : This bill authorizes health care service plans
(health plans) to adjust payment to specified hospitals for
prestabilization emergency services and care when a
hospital exceeds an out-of-network emergency utilization
rate of 50% or greater.
�NOTE: This bill is now substantially similar to SB 1285
(Hernandez) which passed the Senate (21-15) on
5/14/12 and which was held on the Assembly
Appropriations Committee suspense file.]
CONTINUED
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Assembly Amendments (1) delete the Senate version of the
bill which dealt with food facilities, and instead add the
current language.
ANALYSIS :
Existing law:
1.Requires hospital emergency departments, under the
federal Emergency Medical Treatment and Active Labor Act
(EMTALA) and state law, to provide emergency screening
and stabilization services without regard to the
patient's insurance status or ability to pay.
2.Requires a health plan to reimburse providers for
emergency services and care provided to its enrollees
until the care results in stabilization of the enrollee.
3.Prohibits a health plan from engaging in an unfair
payment pattern and defines in regulation, for purposes
of this law, what constitutes appropriate reimbursement
of a claim. For noncontracted providers, regulations
require the payment of the reasonable and customary value
for the health care services, based upon statistically
credible information that takes into consideration
certain specified items, including the fees usually
charged by the provider.
4.Permits a noncontracted provider to dispute the
appropriateness of a plan's computation of the reasonable
and customary value and requires the plan to respond to
the dispute through the plan's mandated provider dispute
resolution process.
This bill requires a hospital with an out-of-network
emergency utilization rate, as defined, of 50% or more to
notify payers that its total billed charges for emergency
services and care provided to a patient prior to
stabilization are subject to adjustment such that the
hospital's total expected payment would be 60% of the
payer's average in-network payments, as defined, but shall
not be less than 150% of the payment the hospital
reasonably could expect to would from Medicare for similar
emergency services and care prior to stabilization. This
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bill authorizes a payer that receives this notice to
reimburse hospitals in accordance with that adjustment.
This bill specifies that these provisions do not apply to
charges billed by physicians or other licensed
professionals who are members of the hospital medical staff
or to charges provided as treatment for an injury that is
compensable for purposes of workers' compensation. This
bill also specifies that its provisions do not apply in
specified instances, including if any other law requires
the hospital to limit expected payment for the emergency
services and care to a lesser amount, if a contract governs
the total billed charges for the emergency services and
care, or if a government program of health benefits, as
specified, is the primary payer for the emergency services
and care. This bill provides for the repeal of its
provisions on January 1, 2017.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, there
are no significant costs associated with this bill.
SUPPORT : (Verified 8/30/12)
SEIU California
OPPOSITION : (Verified 8/30/12)
Alta Hospitals System, LLC
Arrowhead Regional Medical Center
Centinela Hospital Medical Center
Paradise Valley Hospital
Prime Healthcare Services
Private Essential Access Community Hospitals
United Hospital Association
ARGUMENTS IN SUPPORT : SEIU California states:
A different approach to this same problem has been
thoroughly reviewed by the legislature over the course of
this past year. This approach has been changed to
address the California Hospital Association's concerns
with the previous method, and these changes have rendered
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CHA neutral. A summary of those changes follows:
Sunset: The bill would sunset in four years
Rural hospital exclusion: Rural hospitals, like
public and district hospitals, would now be entirely
unaffected by the proposed law
Market-based remedy: The remedy is no longer based
on the Medicare rate, but is instead based on a
market-driver rate (a percentage of the payer's
average negotiated rates)
Additional protection for hospitals: Additional
measures have been included to prevent abuse of the
law by aggressive payers:
1. Three-year window: Hospitals have to be "over
the line" for a three-year period before payers can
access the remedy. However, hospitals can come
back into compliance after having contracts in
place for just 6 months.
2. Payers cannot benefit by cancelling contracts:
If a payer cancels or fails to renew a contract
that payer cannot benefit from the law. Refusing
to renew means the payer refuses to renew its
contract under substantially the same terms, and
with reasonable rate increases.
Additional tweaks help protect hospitals:
Additional tweaks have been made to ensure that
hospitals are well-protected from any unintended
consequences, including a better definition of "local"
patients, exclusion of transfers into a hospital from
another hospital, a simpler definition of what
constitutes an ER encounter and better language to
ensure that physician and professional bills are not
affected by the bill.
ARGUMENTS IN OPPOSITION : Prime Healthcare Services
argues:
SB 359 establishes a complicated default reduced
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reimbursement rate for emergency services provided by a
hospital that has an out-of-network emergency utilization
rate of fifty percent (50%) or greater for major
emergency department encounters by local patients as a
means to punish Prime Healthcare Services for refusing to
enter into a "neutrality agreement" with the Service
Employees International Union ("SEIU") which would make
it easier for the union to organize our hospitals than
the National Labor Relations Act requires. Prime
Healthcare Services is opposed to SB 359 because:
(1) SB 359 is a last minute "gut and amend"
designed to punish Prime Healthcare Services because it
refuses to buckle to the extortion of the Service
Employees International Union's (SEIU) organizational
campaign;
(2) While this bill is meant to target Prime
Healthcare Services, the fallout will be less healthcare
availability in a number of low-income communities and
communities of color in California;
(3) SB 359 will lead to additional job losses
and unemployment at a time when California cannot afford
more job losses. Three Prime Healthcare hospitals have
already notified the SEIU that SB 359 will result in
layoffs of at least 600 employees if enacted. Many of
these layoffs will occur at hospitals in low-income
communities that have borne the brunt of a continuing
recession and which rely on Prime Healthcare Services,
which was recognized this year as one of Top 15 Health
Systems in the Nation, for much needed healthcare;
(4) SB 359 interferes with the free market by
fixing prices (rates) for emergency medical services,
which hospitals have no choice but to provide;
(5) SB 359 is anti-competitive and destroys the
very idea of free and open competition on which America
is based. It exempts so many hospitals and health
systems that only one, Prime Healthcare Services, is
affected by the bill;
(6) It should come as no surprise to anyone that
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HMO's and Insurance companies reimburse hospitals in
affluent communities at a greater rate than they do
hospitals in low income communities. Most Prime
Healthcare Services' hospitals are in low-to-moderate
income communities and are reimbursed at a lower rate
than hospitals in wealthier communities. This bill,
while aimed at Prime Healthcare Services, will also
impact healthcare delivery in those communities;
(7) SB 359 provides HMOs and Insurance companies
with an undue windfall and additional profits to take to
their out-of-state parents for investment in places other
than California; and
(8) SB 359 serves no legitimate purpose and will
not improve patient care or access to patient care but
instead may limit access to care because its sole purpose
is to aid the SEIU in its campaign of extortion against
Prime Healthcare Services."
ASSEMBLY FLOOR : 79-0, 8/16/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell,
Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza,
Miller, Mitchell, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel P�rez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Lara
CTW/RJG:m 8/31/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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