BILL ANALYSIS Ó SB 396 Page 1 Date of Hearing: July 7, 2015 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair SB 396(Hill) - As Amended June 29, 2015 SENATE VOTE: 40-0 SUBJECT: Health care: outpatient settings and surgical clinics: facilities: licensure and enforcement. SUMMARY: Requires a Medicare-certified clinic and an accredited outpatient setting, as specified, to request a report from the appropriate healthcare regulatory board regarding the filing of a peer review report; requires licensees who perform procedures in outpatient settings to be subject to peer review every two years and the accrediting body to review the findings of those reports; and, further specifies that inspections of accredited outpatient surgical centers may be unannounced with a 60-day warning to the surgical center of the pending inspection. EXISTING LAW: 1)Defines an "outpatient setting" to mean any facility, clinic, unlicensed clinic, center, office, or other setting that is not part of a general acute care facility, as specified, and where anesthesia or peripheral nerve blocks, or both, is used when in compliance with the community standard of practice, in doses that, when administered have the probability of placing SB 396 Page 2 a patient at risk for loss of the patient's life-preserving protective reflexes; and, specifies that "outpatient setting" also means facilities that include in vitro fertilization. (Health and Safety Code (HSC) Section 1248(b). 2)Defines an "accreditation agency" to mean a public or private organization that is approved to issue certificates of accreditation to outpatient settings by the Medical Board of California (MBC), as specified. (HSC Section 1248(c)) 3)Requires the MBC to adopt standards for accreditation and, in approving accreditation agencies to perform accreditation of outpatient settings, must ensure that the certification program meet specified standards and requirements. (HSC Section 1248.15) 4)Specifies that any outpatient setting may apply to an accreditation agency for a certificate of accreditation, and accreditation must be issued by the accreditation agency solely on the basis of compliance with its standards approved by the MBC. (HSC Section 1248.2(a)) 5)Requires the MBC to obtain and maintain a list of accredited outpatient settings from the information provided by the accreditation agencies and the MBC to notify the public, by placing the information on its Internet website, whether an outpatient setting is accredited or the setting's accreditation has been revoked, suspended, or placed on probation, or the setting has received a reprimand by the accrediting agency. (HSC Section 1248.2(b)) 6)Specifies that if an outpatient setting does not meet the standards approved by the MBC, accreditation must be denied by the accreditation agency, which must provide the outpatient setting notification of the reasons for the denial, and that an outpatient setting may reapply for accreditation at any SB 396 Page 3 time after receiving notification of the denial. (HSC Section 1248.25) 7)Provides that certificates of accreditation issued to outpatient settings are valid for three years. (HSC Section 1248.3) 8)Requires the MBC to inspect every outpatient setting which is accredited and ensure that accreditation agencies inspect outpatient settings. (HSC Section 1248.35(a)) 9)Provides the following requirements for MBC inspections of outpatient settings: (HSC Section 1248.35(b)(1),(2)) a) The frequency of inspections depends upon the type and complexity of the outpatient setting to be inspected; and, b) Inspections must be conducted no less often than once every three years by the accreditation agency and as often as necessary to ensure the quality of care provided. 10)Specifies that before an accrediting agency suspends or revokes a certificate of accreditation, the accreditation agency must provide the outpatient setting with notice of any deficiencies, and the outpatient setting must agree with the accreditation agency on a plan of correction that will give the outpatient setting reasonable time to supply information demonstrating compliance with the standards of the accreditation agency, as specified. (HSC Section 1248.35(d)(1)) 11)Provides that if an outpatient setting does not comply with a corrective action within a timeframe specified by the accrediting agency, the accrediting agency must issue a reprimand, and may either place the outpatient setting on probation or suspend or revoke the accreditation of the SB 396 Page 4 outpatient setting and notify the MBC of its action. (HSC Section 1248.35(d)(2)) 12)Specifies that if an outpatient setting's certification of accreditation has been suspended or revoked, or if the accreditation has been denied, the accreditation agency is required to do the following: 1) notify the MBC of the action, 2) send a notification letter to the outpatient setting of the action and provide specified information, and 3) require the outpatient setting to remove its accreditation certification and post the notification letter in a conspicuous location that is accessible to the public. (HSC Section 1248.35(i)) 13)Defines "peer review" to mean a process in which a peer review body reviews the basic qualifications, staff privileges, employment, medical outcomes, or professional conduct of licentiates to make recommendations for quality improvement and education, if necessary, in order to determine whether a licentiate may practice or continue to practice in a health care facility, clinic, or other setting providing medical services, and, if so, to determine the parameters of that practice and assess and improve the quality of care rendered in a health care facility, clinic, or other setting providing medical services. (Business and Professions Code (BPC) Section 805(a)(1)(A)) 14)Requires the chief of staff of a medical or professional staff or other chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of any licensed health care facility or clinic to file an "805 report" with the relevant agency within 15 days after the effective date on which any of the following occurs as a result of an action of a peer review body: (BPC Section 805(b)) SB 396 Page 5 a) A licentiate's application for staff privileges or membership is denied or rejected for a medical disciplinary cause or reason; b) A licentiate's membership, staff privileges, or employment is terminated or revoked for a medical disciplinary cause or reason; or, c) Restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a cumulative total of 30 days or more for any 12 month period, for a medical disciplinary cause or reason. 15)Requires that prior to granting or renewing staff privileges for any physician and surgeon, psychologist, podiatrist, or dentist, any health facility licensed, as specified, or any health care service plan or medical care foundation, or the medical staff of the institution, request a report from the MBC, the Board of Psychology, the Osteopathic Medical Board, or the Dental Board of California to determine if any 805 report indicating that the applying physician and surgeon, psychologist, podiatrist, or dentist has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted, as specified. (BPC Section 805.5(a)) THIS BILL: 16)Adds an ambulatory surgery center or an accredited outpatient setting, which are certified to participate in the Medicare program, to the list of entities required to request a report from the MBC, the Board of Psychology, the Osteopathic Medical Board, or the Dental Board of California prior to granting or renewing staff privileges for any licentiate, to determine if any 805 report has been made indicating that the licensee has had staff privileges revoked or restricted elsewhere, as specified. SB 396 Page 6 17)Extends the date by one year, from March 1, 2015, to March 1, 2016 for the MBC to submit a report and make recommendations to the Governor and the Legislature on vertical enforcement. 18)Requires each licensee, who performs procedures in an outpatient setting that requires the outpatient setting to be accredited to be peer reviewed at least every two years, and that the peer review process must be a process in which the basic qualifications, staff privileges, employment, medical outcomes, or professional conduct of a licensee is reviewed to make recommendations for quality improvement and education, including an outpatient setting with only one licensee. 19)Requires peer review to be performed by licensees who are qualified by education and experience to perform the same types of, or similar, procedures, and the findings of the peer review to be reported to the governing body who will determine if the licensee continues to meet the requirements, as specified. 20)Requires the process that resulted in the findings of the peer review to be reviewed by the accrediting agency at the next survey to determine if the outpatient setting meets applicable accreditation standards, as specified. 21)Provides that after the initiation inspection for accreditation, subsequent inspections may be unannounced, and for unannounced routine inspections, accreditation agencies must notify the outpatient setting that the inspection will occur within 60 days. 22)Makes other minor and technical changes. SB 396 Page 7 FISCAL EFFECT: According to the Senate Appropriations Committee analysis dated May 18, 2015, this bill will likely result in one-time costs of about $125,000 over two years for the adoption of regulations by the Department of Public Health (DPH) The projected initial licensing costs may be approximately $800,000 to review license application information and conduct initial site inspections of surgical clinics. 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 DPH 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. There are also unknown costs for data collection and analysis by the Office of Statewide Health Planning and Development (OSHPD). Any costs incurred by the OSHPD under the bill would be reimbursed by fees paid by licensed surgical clinics. COMMENTS: Purpose. This bill is sponsored by the author. According to the author, "This bill would also allow an accredited outpatient setting or "Medicare certified ambulatory surgical center" (i.e. Ambulatory Surgery Center) to access reports from the [MBC] to ensure patient protection when credentialing, granting or renewing staff privileges for providers at that facility. This measure will require that current outpatient settings are also subject to peer review and that any peer review findings be reported to their appropriate accrediting agency? [L]astly, this bill would allow for unannounced inspections of an accredited outpatient setting facility by Accreditation Agencies or the [MBC]." SB 396 Page 8 Background. The recent June 29, 2015 amendments to this bill significantly narrow the scope of the bill to require an accredited outpatient setting or Medicare-certified ambulatory surgery center to access peer review reports from the MBC when credentialing, granting or renewing staff privileges in an effort to enhance consumer protection. This bill also specifies that peer review evaluations are to be conducted every two years for physicians and surgeons working in accredited outpatient settings in order for recommendations to be made regarding quality improvement and education, if necessary, for each licensee in the outpatient settings. Lastly, this bill specifies that routine inspections of accredited outpatient settings may be unannounced with a 60-day window after notification that an unannounced inspection will occur. This bill is intended to strengthen the current accreditation process and ensure that peer review reports are considered as part of the accreditation process, as well as the process for granting staff privileges. Peer Review. Peer review is a process where physicians evaluate their colleagues' work to determine compliance with the standard of care. Peer reviews are intended to detect incompetent or unprofessional physicians early and terminate, suspend, or limit their practice if necessary. According to the MBC, a "peer review report" also referred to as an "805" report, is the mechanism in which peer review bodies are required to report certain information regarding licensees to the MBC. The 805 reports must be filed if specified actions occur, which include: 1) a peer review body denies or rejects a licensee's applications for staff privileges or membership for a medical disciplinary cause or reason; 2) a licensee's staff privileges, membership, or employment are revoked for a medical disciplinary cause or reason; 3) restrictions are imposed, or voluntarily accepted, on staff privileges, membership, or employment for a total of 30 days or more within any 12 month period for medical disciplinary reasons; 4) if the resignation, leave of absence, withdrawal or abandonment of application or for renewal of privileges occurs after receiving notice of a pending SB 396 Page 9 investigation initiated for a medical disciplinary cause or reason; and, 5) a summary suspension of staff privileges, membership, or employment is imposed for a period in excess of 14 days. BPC Section 805 defines who the peer review body consists of, including the licensed medical or professional staff of any health facility, or clinic or an ambulatory surgery center that is Medicare certified. The peer review process helps to review the basic qualifications, staff privileges, employment, medical outcome, or professional conduct of a licensee to make recommendations for quality improvement and education. In addition, the peer review process aids in the determination of whether a licensee may practice, or continue to practice in a healthcare facility, clinic, or other settings providing medical services. As detailed above, an 805 report is required to be filed with the MBC (and other health related boards) within 15 days if a licensee's application for staff privileges or membership is rejected, on the effective date of an action to revoke or impose restrictions on privileges, membership, or employment, or if the licensee resigns, takes a leave of absence, withdraw or abandons an application for privileges. The 805 reports are not publicly available to consumers; however, copies may be requested by certain health care facilities. Prior to granting or renewing staff privileges for any physician and surgeon (and other health care licensees as specified), it is also required that any health care facility or the medical staff of the institution request from the MBC (or other related health board) a report to determine if any 805 report has been made indicating the applying physician and surgeon (or other health care licensee, as specified) has been denied staff privileges, been removed from a medical staff, or had his or her staff privileges restricted as provided in Section 805. A failure to file an 805 report could be punishable by a fine of up to $100,000 per violation, and for negligent or unintentional reporting, a fine up to $50,000 per violation. SB 396 Page 10 This bill will expand the list of entities which must request an 805 report to include a facility certified to participate in the Medicare program as an ambulatory surgical setting or an accredited outpatient setting, as specified, to determine if a report has been made indicating that a licensee has had staff privileges revoked or restricted elsewhere. In addition, this bill will require physicians and surgeons working in accredited outpatient settings to be subjected to the peer review process every two years, and requires the findings from those reports to be reported to the accreditation agency who would use the information as a tool to for the governing body of the facility to determine if the licensee who was subject to the peer review report continues to meet professional qualification standards and is professionally credentialed for the privileges to practice for which he or she is granted. This additional peer review requirement aims to help accrediting agencies determine whether the outpatient setting meets applicable accreditation standards. Accredited healthcare facilities. Outpatient surgery care centers are facilities which provide surgery services in out-of-hospital settings. Under current law, physicians and surgeons may not perform outpatient surgeries unless they are performed in an accredited, licensed, or certified setting. According to the MBC, if the surgical procedure requires anesthesia to be administered in doses that have the probability of placing a patient at risk for loss of the patient's life-preserving protective reflexes, then the surgery must be performed in an accredited, licensed, or certified setting. However, if the surgery only requires local anesthesia or a peripheral nerve block, or administers anti- anxiety medications or pain killers in doses that do not place the patient at risk for loss of life-preserving protective reflexes, then the surgery does not have to be performed in an accredited, SB 396 Page 11 licensed, or certified setting. Outpatient surgery may take place in the following settings: 1) an outpatient setting that is accredited by an accreditation agency approved by the MBC; 2) a surgical clinic licensed by the California Department of Public Health; or, 3) an ambulatory surgical center certified by the Center for Medicare and Medicaid Services to participate in the Medicare program. In addition to the outpatient settings above, there are specific settings which are recognized in HSC 1248.1. The MBC only has jurisdiction over those outpatient settings which are accredited through MBC approved accreditation agencies. The MBC notes that MBC approved accreditation agencies verify that each setting meets specified standards before being awarded accreditation. Each MBC approved accreditation agency is required to inspect each setting at least once every three years. HSC Section 1248.15 specifies the requirements necessary for an outpatient center to meet accreditation standards. As part of the accreditation process, accreditation agencies are required to be inspected once every three years, at a minimum. This bill will require that after the initiation inspection for accreditation, all subsequent inspections may be unannounced and for those that are unannounced, the accrediting body must provide a 60-day window after notification for when the inspection might occur. If the results of the inspection conclude that the setting is out of compliance with the standards, the accreditation agency must issue a deficiency report and may require correction, issue a reprimand, place the setting on probation, or suspend or revoke the accreditation. The accreditation agency must issue a report to the MBC within 24 hours if the setting has been issued a reprimand, been placed on probation, or had its accreditation suspended or revoked. This information is then posted on the MBC's website where it is available to the public. The MBC currently recognizes five accrediting agencies which include: Accreditation Association for Ambulatory Health Care, SB 396 Page 12 Inc. (AAAHC), American Association for Accreditation of Ambulatory Surgery Facilities, Inc. (AAAASF), The Joint Commission, The Institute for Medical Quality (IMQ), and American Osteopathic Association / Healthcare Facilities Accreditation Program (HFAP). Prior Related Legislation. SB 100 (Price), Chapter 645, Statutes of 2011, required the MBC to adopt regulations on or before January 1, 2013, on the appropriate level of physician availability necessary within clinics using laser or intense pulse light devices for elective cosmetic surgery. Made a number of changes regarding the approval, oversight and inspection of outpatient settings, as defined, by MBC and accreditation agencies approved by the MBC, and in developing a plan of corrective action for any deficiencies found by the accreditation agencies or the MBC during inspections, or otherwise. Revised the existing definition of "outpatient settings" to include fertility clinics that offer in vitro fertilization. SB 1150 (Negrete McLeod) of 2010, would have required license designations on health care provider advertising; required the MBC to adopt regulations regarding the appropriate level of physician availability needed within clinics or other settings using laser or intense pulse light devices; required the MBC to post a factsheet on cosmetic surgery; required the MBC to adopt standards for settings that offer in vitro fertilization; and made changes to the MBC's oversight of accreditation agencies. STATUS: This bill was held in the Assembly Appropriations Committee. SB 674 (Negrete McLeod) of 2009, would have required a health care practitioner, as specified, to include specific professional designation following the health care practitioner's name in advertisements; required the MBC to adopt regulations on the appropriate level of physician availability SB 396 Page 13 necessary within clinics or other settings using laser or intense pulse light devices for elective cosmetic surgery; required certain healing arts licensees to include in advertisements certain words or designations following their names indicating the particular educational degree they hold or healing art they practice, as specified; and, authorized the MBC to issue an accreditation agency a citation, including an administrative fine, in accordance with a specified system established by the MBC if the agency is not meeting the criteria set by the MBC. STATUS: This bill was vetoed by Governor Schwarzenegger. The Governor's veto message stated, "While some provisions may provide marginal improvements to consumer protection, I cannot support this bill when it fails to address the need for stronger licensing and oversight of outpatient surgical centers. The continued reliance by the medical community on external accreditation agencies without enforcement capability is an insufficient solution for protecting patients. As outpatient surgeries continue to increase in number and complexity, surgical centers cannot continue to perform procedures in an unregulated and unenforced environment." AB 2122 (Plescia) of 2008, would have established the California Outpatient Surgery Patient Safety and Improvement Act, which would have required surgical clinics to meet prescribed licensing requirements and standards, including compliance with Medicare Conditions of Participation. STATUS: This bill was held in the Assembly Appropriations Committee. AB 543 (Plescia) of 2007, would have established licensing requirements for surgical clinics and would have required, effective January 1, 2008, that all surgical clinics meet specified operating and staffing standards. STATUS: This bill was vetoed by Governor Schwarzenegger. The Governor's veto message stated, "While I support the intent of this legislation, I am unable to sign it as it lacks critical patient safety protections. This bill doesn't establish appropriate time limits for performing surgery under general anesthesia. Further, it inappropriately restricts administrative flexibility and creates state fiscal pressure during ongoing budget challenges. I am SB 396 Page 14 directing the Department of Public Health to pursue legislation that establishes licensure standards for these facilities that are consistent with federal requirements and protect the health and safety of patients." ARGUMENTS IN SUPPORT: The Medical Board of California writes in support, "[This bill] would require peer review evaluations every two years for physicians and surgeons working in ambulatory surgery centers and would allow the accredited outpatient setting facility inspections performed by accreditation agencies to be unannounced (after the initial inspection) and would require at least a 60 day window to be given to facilities for unannounced inspections?The [MBC] believes that for consumer protection, physicians working in [ambulatory surgery centers] should be subject to peer review evaluations, which would be given to the governing body of the outpatient setting and be reviewed by the accreditation agency at the next inspection of the outpatient setting" ARGUMENTS IN OPPOSITION: None on file to reflect the current version of the bill. REGISTERED SUPPORT: Medical Board of California REGISTERED OPPOSITION: None on file to reflect the current version of the bill. SB 396 Page 15 Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301