BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 396 (Hill) - Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 5, 2015 |Policy Vote: B., P. & E.D. 9 - | | | 0, HEALTH 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 396 would make a surgical clinic eligible for licensure by the Department of Public Health, regardless of physician ownership. Fiscal Impact: Likely one-time costs of about $125,000 over two years for the adoption of regulations by the Department of Public Health (Licensing and Certification Fund). Projected initial licensing costs of about $800,000 to review SB 396 (Hill) Page 1 of ? license application information and conduct initial site inspections of surgical clinics (Licensing and Certification Fund). This cost estimate assumes that the number of licensed surgical clinics under the bill will increase to approximately 500, the number that were previously licensed by the Department. These costs would be incurred once the Department completed the required regulations. After the initial increase in licensing activity due to the new ability for surgical clinics to be licensed, the ongoing costs should be substantially reduced. Unknown costs for data collection and analysis by the Office of Statewide Health Planning and Development. Any costs incurred by the Office under the bill would be reimbursed by fees paid by licensed surgical clinics. Background: Under current law, the Department of Public Health licenses a variety of health care facilities, including surgical clinics. Under existing law, the definition of surgical clinic excludes surgical clinics owned or leased by a physician or dentist. However, current law also allows a physician or dentist (who owns or leases a clinic) to apply for licensure by the Department. In addition to licensure by the Department of Public Health, surgical clinics may also be certified by the Centers for Medicare and Medicaid Services (allowing them to bill Medicare or Medi-Cal for services) and/or surgical clinics may be accredited by an accrediting agency approved by the Medical Board of California. Current law also requires the Medical Board of California to adopt standards for accreditation and to approve independent agencies to accredit outpatient settings (including surgical clinics). Prior to 2007, most surgical clinics that were certified by the Centers for Medicare and Medicaid Services were also licensed by the Department of Public Health (since the regulatory standards were effectively the same). A court case in 2007 found that certain physician-owned clinics are not subject to licensure by the Department of Public Health. The Department has interpreted this court decision as SB 396 (Hill) Page 2 of ? prohibiting it from licensing any physician owned clinics, even if the physician owner requests licensure. Since 2007, the number of licensed surgical clinics has declined from over 500 to 35. Proposed Law: SB 396 would make a surgical clinic eligible for licensure by the Department of Public Health, regardless of physician ownership. Specific provisions of the bill would: Clarify current law to allow a physician or dentist, at their option, to apply for licensure as a surgical clinic, regardless of ownership; Until the Department of Public Health adopts implementing regulations, deem a surgical clinic to have met licensure requirements by demonstrating that the surgical clinic meets federal certification standards for Centers for Medicare and Medicaid Services; Require all inspections (after the initial inspection) by an independent certifying entity (that has been approved by the Medical Board) to be unannounced; Require an accredited outpatient setting and a Centers for Medicare and Medicaid Services certified facility to be subject to patient encounter and financial data reporting requirements; Require an accredited outpatient setting and a Centers for Medicare and Medicaid Services certified facility to pay a fee to the Office of Statewide Health Planning and Development to cover the costs of collecting and analyzing reported data; Require each licensee who performs procedures in an accredited outpatient facility to be peer reviewed at least every two years; Delays the deadline of a report from the Medical Board to the Legislature on its vertical enforcement model, for one year to March 2016. Related Legislation: SB 534 (Hernandez, Statutes of 2013) requires chronic dialysis clinics, surgical clinics, rehabilitation clinics, and certain intermediate care facilities to meet SB 396 (Hill) Page 3 of ? federal certification standards until the Department of Public Health adopts licensing regulations for those facilities. Staff Comments: The Department of Public Health has indicated that the bill as drafted may not allow them to license physician owned clinics, even upon request of the physician. This analysis assumes that future amendments to the bill to clarify the Department's authority will allow for such licensure. The cost estimates above assume that the Department will be able to implement the bill, as intended by the author. The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state. -- END --