Senate Bill No. 1269

Introduced by Senator Beall

February 21, 2014

An act to amend Sections 1255, 1275, and 128740 of, and to add Section 1253.7 to, the Health and Safety Code, relating to health care.

LEGISLATIVE COUNSEL’S DIGEST

SB 1269, as introduced, Beall. General acute care hospitals.

(1) Existing law establishes the State Department of Public health and sets forth its powers and duties, including, but not limited to, the licensing and regulation of health facilities, including, but not limited to, general acute care hospitals. A violation of these provisions is a crime.

Existing law authorizes the department to issue a special permit authorizing a health facility to offer one or more special services when specified requirements are met. Existing law provides for the application by general acute care hospitals for supplemental services approval and requires the department to, upon issuance and renewal of a license for certain health facilities, separately identify on the license each supplemental service. Existing law requires a hospital to report specified summary financial and utilization data to the Office of Statewide Health Planning and Development (OSHPD) within 45 days of the end of the every calendar quarter.

This bill would require a general acute care hospital that provides observation services, as defined, to apply for approval from the department to provide these services either as supplemental services or under a special permit.

The bill would require the department to adopt regulations for the provision of observation services under a special permit and as an approved supplemental service under the general acute care hospital’s license.

The bill would require hospitals to include certain data relating to observation service visits and total observation service gross revenues in the reports filed with OSHPD.

(2) This bill would require the department to adopt and enforce staffing standards for certain outpatient services and all ambulatory surgery centers, as specified, and would make other conforming changes.

(3) Because a violation of these provisions by a health facility would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1253.7 is added to the Health and Safety
Code, to read:

1253.7.  

(a) For purposes of this chapter, “observation services”
means outpatient services provided by a general acute care hospital
to those patients described in subdivision (e) who have unstable
or uncertain conditions potentially serious enough to warrant close
observation, but not so serious as to warrant inpatient admission
to the hospital. Observation services may include the use of a bed,
monitoring by nursing and other staff, and any other services that
are reasonable and necessary to safely evaluate a patient’s condition
or determine the need for a possible inpatient admission to the
hospital.

(b) Observation services may be provided for a period of no
more than 24 hours.

(c) A general acute care hospital that provides observation
services shall do either of the following:

(1) Apply for approval from the department, pursuant to
subdivision (a) of Section 1253.6, to provide the services as a
supplemental service.

(2) Apply for a special permit from the department pursuant to
subdivision (c) of Section 1277 to provide the services as a special
service.

(d)  The department shall adopt standards and regulations,
pursuant to subdivision (a) of Section 1275, for the provision of
observation services under a special permit and as a supplemental
service under the general acute care hospital’s license.

(e) Observation services may be ordered by an appropriately
licensed practitioner only for any of the following:

(1) A patient who has received triage services in the emergency
department but has not been admitted as an inpatient.

(2) A patient who has received outpatient surgical services and
procedures.

(3) A patient who has been admitted as an inpatient and is
discharged to an observation center.

(4) A patient previously seen in a physician’s office or outpatient
clinic.

(f) Notwithstanding subdivisions (d) and (e) of Section 1275,
observation services provided by the general acute care hospital,
including the services provided in a freestanding physical plant,
as defined in subdivision (g) of Section 1275, shall comply with
the same staffing standards, including, but not limited to, licensed
nurse-to-patient ratios, as supplemental emergency services.

(g) A patient receiving observation services shall receive written
notice that his or her care is being provided in an outpatient setting,
and that this may impact reimbursement by Medicare, Medi-Cal,
or private payers of health care services, or cost-sharing
arrangements through his or her health care coverage.

(h) All areas in which observation services are provided shall
be marked by signage identifying the area as an outpatient area.
The signage shall use the term “outpatient” in the title of the area
to clearly indicate to all patients and family members that the
observation services provided in the center are not inpatient
services.

(i) Observation services shall be deemed outpatient or
ambulatory services that are revenue-producing cost centers
associated with hospital-based or satellite service locations that
emphasize outpatient care. Identifying an observation service by
a name or term other than that used in this subdivision does not
exempt the general acute care hospital from the requirement of
providing observation services as a distinct supplemental service
or a distinct special permit service, as applicable.

SEC. 2.  

Section 1255 of the Health and Safety Code is amended
to read:

1255.  

(a) In addition to the basic services offered under the
license, a general acute care hospital may be approved in
accordance with subdivision (c) of Section 1277 to offer special
services, including, but not limited to, the following:

(1) Radiation therapy department.

(2) Burn center.

(3) Emergency center.

(4) Hemodialysis center (or unit).

(5) Psychiatric.

(6) Intensive care newborn nursery.

(7) Cardiac surgery.

(8) Cardiac catheterization laboratory.

(9) Renal transplant.

begin insert

(10) Observation services as defined in Section 1253.7

end insert begin delete

(10)

end delete

begin insert (11) end insert  Other special services as the department may prescribe by
regulation.

(b) A general acute care hospital that exclusively provides acute
medical rehabilitation center services may be approved in
accordance with subdivision (b) of Section 1277 to offer special
services not requiring surgical facilities.

(c) The department shall adopt standards for special services
and other regulations as may be necessary to implement this
section.

(d) (1) For cardiac catheterization laboratory service, the
department shall, at a minimum, adopt standards and regulations
that specify that only diagnostic services, and what diagnostic
services, may be offered by a general acute care hospital or a
multispecialty clinic as defined in subdivision (l) of Section 1206
that is approved to provide cardiac catheterization laboratory
service but is not also approved to provide cardiac surgery service,
together with the conditions under which the cardiac catheterization
laboratory service may be offered.

(2) Except as provided in paragraph (3), a cardiac catheterization
laboratory service shall be located in a general acute care hospital
that is either licensed to perform cardiovascular procedures
requiring extracorporeal coronary artery bypass that meets all of
the applicable licensing requirements relating to staff, equipment,
and space for service, or shall, at a minimum, have a licensed
intensive care service and coronary care service and maintain a
written agreement for the transfer of patients to a general acute
care hospital that is licensed for cardiac surgery or shall be located
in a multispecialty clinic as defined in subdivision (l) of Section
1206. The transfer agreement shall include protocols that will
minimize the need for duplicative cardiac catheterizations at the
hospital in which the cardiac surgery is to be performed.

(3) Commencing March 1, 2013, a general acute care hospital
that has applied for program flexibility on or before July 1, 2012,
to expand cardiac catheterization laboratory services may utilize
cardiac catheterization space that is in conformance with applicable
building code standards, including those promulgated by the Office
of Statewide Health Planning and Development, provided that all
of the following conditions are met:

(A) The expanded laboratory space is located in the building
so that the space is connected to the general acute care hospital by
an enclosed all-weather passageway that is accessible by staff and
patients who are accompanied by staff.

(B) The service performs cardiac catheterization services on no
more than 25 percent of the hospital’s inpatients who need cardiac
catheterizations.

(C) The service complies with the same policies and procedures
approved by hospital medical staff for cardiac catheterization
laboratories that are located within the general acute care hospital,
and the same standards and regulations prescribed by the
department for cardiac catheterization laboratories located inside
general acute care hospitals, including, but not limited to,
appropriate nurse-to-patient ratios under Section 1276.4, and with
all standards and regulations prescribed by the Office of Statewide
Health Planning and Development. Emergency regulations
allowing a general acute care hospital to operate a cardiac
catheterization laboratory service shall be adopted by the
department and by the Office of Statewide Health Planning and
Development by February 28, 2013.

(D) Emergency regulations implementing this paragraph have
been adopted by the department and by the Office of Statewide
Health Planning and Development by February 28, 2013.

(E) This paragraph shall not apply to more than two general
acute care hospitals.

(4) After March 1, 2014, an acute care hospital may only operate
a cardiac catheterization laboratory service pursuant to paragraph
(3) if the department and the Office of Statewide Health Planning
and Development have adopted regulations in accordance with the
requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code that provide
adequate protection to patient health and safety including, but not
limited to, building standards contained in Part 2.5 (commencing
with Section 18901) of Division 13.

(5) Notwithstanding Section 129885, cardiac catheterization
laboratory services expanded in accordance with paragraph (3)
shall be subject to all applicable building standards. The Office of
Statewide Health Planning and Development shall review the
services for compliance with the OSHPD 3 requirements of the
most recent version of the California Building Standards Code.

(e) For purposes of this section, “multispecialty clinic,” as
defined in subdivision (l) of Section 1206, includes an entity in
which the multispecialty clinic holds at least a 50-percent general
partner interest and maintains responsibility for the management
of the service, if all of the following requirements are met:

(1) The multispecialty clinic existed as of March 1, 1983.

(2) Prior to March 1, 1985, the multispecialty clinic did not
offer cardiac catheterization services, dynamic multiplane imaging,
or other types of coronary or similar angiography.

(3) The multispecialty clinic creates only one entity that operates
its service at one site.

(4) These entities shall have the equipment and procedures
necessary for the stabilization of patients in emergency situations
prior to transfer and patient transfer arrangements in emergency
situations that shall be in accordance with the standards established
by the Emergency Medical Services Authority, including the
availability of comprehensive care and the qualifications of any
general acute care hospital expected to provide emergency
treatment.

(f) Except as provided in this section and in Sections 128525
and 128530, under no circumstances shall cardiac catheterizations
be performed outside of a general acute care hospital or a
multispecialty clinic, as defined in subdivision (l) of Section 1206,
that qualifies for this definition as of March 1, 1983.

SEC. 3.  

Section 1275 of the Health and Safety Code is amended
to read:

1275.  

(a)  The begin delete state end delete department shall adopt, amend, or repeal,
in accordance with Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code and
Chapter 4 (commencing with Section 18935) of Part 2.5 of Division
13, any reasonable rules and regulations as may be necessary or
proper to carry out the purposes and intent of this chapter and to
enable the begin delete state end delete department to exercise the powers and perform
the duties conferred upon it by this chapter, not inconsistent with
any statute of this state including, but not limited to, the State
Building Standards Law, Part 2.5 (commencing with Section
18901) of Division 13.

All regulations in effect on December 31, 1973, which were
adopted by the State Board of Public Health, the State Department
of Public Health, the State Department of Mental Hygiene, or the
State Department of Health relating to licensed health facilities
shall remain in full force and effect until altered, amended, or
repealed by the director or pursuant to Section 25 or other
provisions of law.

(b)  Notwithstanding this section or any other begin delete provision of end delete law,
the Office of Statewide Health Planning and Development shall
adopt and enforce regulations prescribing building standards for
the adequacy and safety of health facility physical plants.

(c)  The building standards adopted by the State Fire Marshal,
and the Office of Statewide Health Planning and Development
pursuant to subdivision (b), for the adequacy and safety of
freestanding physical plants housing outpatient services of a health
facility licensed under subdivision (a) or (b) of Section 1250 shall
not be more restrictive or comprehensive than the comparable
building standards established, or otherwise made applicable, by
the State Fire Marshal and the Office of Statewide Health Planning
and Development to clinics and other facilities licensed pursuant
to Chapter 1 (commencing with Section 1200).

(d)  Except as provided in subdivision (f), the licensing standards
adopted by the begin delete state end delete department under subdivision (a) for outpatient
services located in a freestanding physical plant of a health facility
licensed under subdivision (a) or (b) of Section 1250 shall not be
more restrictive or comprehensive than the comparable licensing
standards applied by the begin delete state end delete department to clinics and other
facilities licensed under Chapter 1 (commencing with Section
1200).

(e)  Except as provided in subdivision (f), the state agencies
specified in subdivisions (c) and (d) shall not enforce any standard
applicable to outpatient services located in a freestanding physical
plant of a health facility licensed pursuant to subdivision (a) or (b)
of Section 1250, to the extent that the standard is more restrictive
or comprehensive than the comparable licensing standards applied
to clinics and other facilities licensed under Chapter 1
(commencing with Section 1200).

(f)  All health care professionals providing services in settings
authorized by this section shall be members of the organized
medical staff of the health facility to the extent medical staff
membership would be required for the provision of the services
within the health facility. All services shall be provided under the
respective responsibilities of the governing body and medical staff
of the health facility.

(g)  For purposes of this section, “freestanding physical plant”
means any building which is not physically attached to a building
in which inpatient services are provided.

begin insert

(h) Notwithstanding subdivisions (d) and (e), or any other law,
the department shall adopt and enforce staffing standards for
supplemental outpatient surgical services provided in a
freestanding physical plant of a health facility licensed under
subdivision (a) of Section 1250 that are consistent with the staffing
standards for inpatient surgical services and postanesthesia care
provided in general acute care hospitals and that shall apply when
the freestanding physical plant provides outpatient services and
administers anesthesia, except local anesthesia or peripheral nerve
blocks, or both, in compliance with the community standard of
practice and in doses that have the probability of placing a patient
at risk for loss of the patient’s life-preserving protective reflexes.

end insert begin insert

(i) Notwithstanding subdivisions (d) and (e), or any other law,
the department shall adopt and enforce staffing standards for
supplemental outpatient surgical services of a health facility
licensed under subdivision (a) of Section 1250 that are consistent
with the staffing standards for inpatient surgical services and
postanesthesia care provided in general acute care hospitals and
that shall apply when anesthesia, except local anesthesia or
peripheral nerve blocks, or both, is administered in compliance
with the community standard of practice and in doses that have
the probability of placing a patient at risk for loss of the patient’s
life-preserving protective reflexes.

end insert begin insert

(j) Notwithstanding any other law, the department shall adopt
and enforce staffing standards for ambulatory surgery centers not
included in subdivisions (h) and (i) for a health facility licensed
under subdivision (a) of Section 1250 that are consistent with the
staffing standards for inpatient surgical services and
postanesthesia care provided in general acute care hospitals and
that shall apply when the ambulatory surgery center provides
outpatient services and administers anesthesia, except local
anesthesia or peripheral nerve blocks, or both, in compliance with
the community standard of practice, in doses that have the
probability of placing a patient at risk for loss of the patient’s
life-preserving protective reflexes.

end insert

SEC. 4.  

Section 128740 of the Health and Safety Code is
amended to read:

128740.  

(a) Commencing with the first calendar quarter of
1992, the following summary financial and utilization data shall
be reported to the office by each hospital within 45 days of the
end of every calendar quarter. Adjusted reports reflecting changes
as a result of audited financial statements may be filed within four
months of the close of the hospital’s fiscal or calendar year. The
quarterly summary financial and utilization data shall conform to
the uniform description of accounts as contained in the Accounting
and Reporting Manual for California Hospitals and shall include
all of the following:

(1) Number of licensed beds.

(2) Average number of available beds.

(3) Average number of staffed beds.

(4) Number of discharges.

(5) Number of inpatient days.

(6) Number of outpatient visits begin insert , excluding observation service
visits end insert .

begin insert

(7) Number of observation service visits and number of hours
of services provided.

end insert begin delete

(7)

end delete

begin insert (8) end insert  Total operating expenses.

begin delete

(8)

end delete

begin insert (9) end insert  Total inpatient gross revenues by payer, including Medicare,
Medi-Cal, county indigent programs, other third parties, and other
payers.

begin delete

(9)

end delete

begin insert (10) end insert  Total outpatient gross revenues by payer, including
Medicare, Medi-Cal, county indigent programs, other third parties,
and other payers.

begin insert

(11) Total observation service gross revenues by payer,
including Medicare, Medi-Cal, county indigent programs, other
third parties, and other payers.

end insert begin delete

(10)

end delete

begin insert (12) end insert  Deductions from revenue in total and by component,
including the following: Medicare contractual adjustments,
Medi-Cal contractual adjustments, and county indigent program
contractual adjustments, other contractual adjustments, bad debts,
charity care, restricted donations and subsidies for indigents,
support for clinical teaching, teaching allowances, and other
deductions.

begin delete

(11)

end delete

begin insert (13) end insert  Total capital expenditures.

begin delete

(12)

end delete

begin insert (14) end insert  Total net fixed assets.

begin delete

(13)

end delete

begin insert (15) end insert  Total number of inpatient days, outpatient visits, begin insert excluding
outpatient service visits, end insert and discharges by payer, including
Medicare, Medi-Cal, county indigent programs, other third parties,
self-pay, charity, and other payers.

begin delete

(14)

end delete

begin insert (16) end insert  Total net patient revenues by payer including Medicare,
Medi-Cal, county indigent programs, other third parties, and other
payers.

begin delete

(15)

end delete

begin insert (17) end insert  Other operating revenue.

begin delete

(16)

end delete

begin insert (18) end insert  Nonoperating revenue net of nonoperating expenses.

(b) Hospitals reporting pursuant to subdivision (d) of Section
128760 may provide the items in paragraphs begin delete (7), (8), (9), (10),
(14), (15), and (16) end delete begin insert (8), (9), (10), (12), (16), (17), and (18) end insert of
subdivision (a) on a group basis, as described in subdivision (d)
of Section 128760.

(c) The office shall make available at cost, to any person, a hard
copy of any hospital report made pursuant to this section and in
addition to hard copies, shall make available at cost, a computer
tape of all reports made pursuant to this section within 105 days
of the end of every calendar quarter.

(d) The office shall adopt by regulation guidelines for the
identification, assessment, and reporting of charity care services.
In establishing the guidelines, the office shall consider the
principles and practices recommended by professional health care
industry accounting associations for differentiating between charity
services and bad debts. The office shall further conduct the onsite
validations of health facility accounting and reporting procedures
and records as are necessary to assure that reported data are
consistent with regulatory guidelines.

begin delete

This section shall become operative January 1, 1992.

end delete

SEC. 5.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.