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California Health Care Legislative Update

Not surprisingly, in the wake of the COVID-19 pandemic, California legislators proposed hundreds of health-related bills in 2021. For those who are unfamiliar with the intricacies of the Golden State’s legislative process, June 5, 2021 was the deadline for the California Legislature to pass bills introduced in their house of origin. Accordingly, during the week of June 7th, the Senate and Assembly resumed policy committee hearings, reviewing measures from the opposite house.

Along with proposed legislation addressing health care funding, health care access, mental health and substance abuse treatment, disaster preparedness, and other issues brought to the forefront by the pandemic, there are multiple bills that seem to be aimed at various concerns raised by corporate involvement in the provision of health care. Below is an update on a few of the bills that fall into the latter category, including SB 642, which we discussed in more detail in a prior post.

Dead For Now

SB 642 Held In Committee But Could Be Back!

On May 20, 2021, California SB 642 was held in committee “under submission” by the Senate Committee on Appropriations. Generally, bills are held under submission when a bill is heard in committee and there is an indication that the author and the committee members want to work on or discuss the bill further, but there is no motion for the bill to progress out of committee. At this point, the bill won’t be revisited until next year.  Those concerned about the implications of SB 642 should continue to monitor the bill and be on the lookout for similar legislation. AB 705, a substantially similar bill, did not pass the Assembly.

If passed, the law will curtail hospital governing bodies’ ability to make decisions about the medical services provided at the facility without medical staff approval, impose new limitations on arrangements between management services organizations and professional corporations, and add additional factors to the Attorney General’s review and approval of nonprofit health care facility transactions.

SB 460 Placed in Inactive File: Patient Surrogate Decision Maker Requirements

On May 26, 2021, the author of SB 460 placed that bill in the inactive file. Among other things, the bill would have created the Office of the Patient Representative in the Department of Aging to train, certify, provide, and oversee patient representatives to protect the rights of nursing home residents who do not have the capacity to make health care decisions.  This new Office would have been required to designate someone to serve as the patient’s representative if no family member or friend is available to serve in that capacity.  According to the author, the bill reflected the final court order in California Advocates for Nursing Home Reform (CANHR) vs Smith, which required several key modifications to how a skilled nursing facility’s interdisciplinary team (IDT) authorized by Health and Safety Code 1418.8 was implemented in the care of patients without decision-making capacity. According to Professor Mort Cohen who assisted CANHR in challenging the statute on constitutional grounds, the original IDT process was “convenient for nursing homes” but “intrusive to residents,” and “people should not lose their rights to life and liberty simply because they live in a nursing home.”

Moving Forward

SB 650 Would Create New Ownership Transparency Requirements for Skilled Nursing Facilities

SB 650 (as amended) is co-sponsored by the SEIU California, California Advocates for Nursing Home Reform, and AARP California and as of May 27, 2021, has no known opposition. The bill’s sponsors argue that parent companies own skilled nursing facilities and the vendors and suppliers who service them, turning expenses into “off the books” income for the owners. According to the sponsors, these payments exceed $1 billion annually. According to the author, existing law has created incentives to reduce care in exchange for profit, putting vulnerable elderly patients at risk.

If SB 650 passes, organizations that operate, conduct, own, manage, or maintain a skilled nursing facility or facilities will be required to prepare and file an annual consolidated financial report that includes data from all operating entities, license holders, and related parties in which the organization has an ownership or control interest of 5% or more and that provides any service, facility, or supply to the skilled nursing facility with the Office of Statewide Planning. The bill would also require those organizations to submit copies of specified contractual agreements and leases, except when the contractual agreement is subject to the attorney-client privilege or another recognized privilege.

SB 664 Would Create Moratorium on New Hospice Licenses

SB 664 will temporarily halt the issuance of new hospice licenses. The author of the bill seems to be reacting to multiple newspaper articles including an exposé in the Los Angeles Times that suggests this “boom” has “spawned a cottage industry of illegal practices” and a 2019 investigation by the Sacramento Bee found California’s hospice system to be “marred by lax oversight and an inability of regulators to take meaningful action against hospices that may have violated rules and jeopardized the health of patients.”  According to the author, the intent of the bill is to identify deficiencies and recommend improvements to the hospice licensure and oversight process in California and spur attention and action to improve what many stakeholders, including hospice providers themselves, agree is a regulatory system in need of reform.

If SB 664 becomes law, the California Department of Public Health (CDPH) will be prohibited from issuing new hospice licenses on and after January 1, 2022, and until 365 days from the date that the California State Auditor publishes a report on hospice licensure.  CDPH may grant an exception to the moratorium imposed by this article upon making a written finding that an applicant for a new license has shown a demonstrable need for hospice services in the area where the applicant proposes to operate based on the concentration of all existing hospice services in that area. CDPH would not be prohibited from renewing existing licenses.

SB 362 Would Prohibit Community Pharmacy “Quotas”

According to the SB 362 bill analyses, some pharmacies use corporate metrics to evaluate pharmacist-employee performance with the idea is that a good pharmacist-employee should be able to dispense a certain number of prescriptions, shots, medications, services, and/or programs per day. According to the bill’s author, “[t]he imposition of performance quotas upon licensed pharmacist and pharmacy technician health care professionals who are ethically obligated and legally required to provide patient-centered care based on the individual needs and circumstances of each patient dangerously impairs and inhibits the provision of needed care and poses grave and unwarranted risks to patients.” If passed, SB 362 would prohibit community pharmacies from establishing a quota, defined as a fixed number or formula related to the duties for which a pharmacist or pharmacy technician license is required, against which the community pharmacy or its agent measures or evaluates the pharmacist or pharmacy technician’s performance of those duties in the community pharmacy. A community pharmacy would also be prohibited from communicating the existence of quotas to pharmacists or pharmacy technicians who are its employees or with whom it contracts, through employees, contractors, or third parties.

SB 524 Would Prohibit Patient Pharmacy Steering by Health Plans and Pharmacy Benefit Managers

According to the author, SB 524 will protect patient choice of pharmacy by prohibiting pharmacy benefit managers (PBMs) and health plans from requiring patients to have their prescriptions filled by a particular pharmacy (which are typically owned by the PBM or health plan) unless there is a clinical reason to do so. If  SB 524 passes,  health care service plans, health insurers, and self-insured employer plans (and their agents) will be prohibited from engaging in “patient steering,” defined as communicating to an enrollee or insured that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy, as specified, or offering group health care coverage contracts or policies that include provisions that limit access to only pharmacy providers that are owned or operated by the health care service plan, health insurer, self-insured employer plan. The bill does contain an exception for self-insured employer plans administered by a health care service plan or its health insurer affiliate that is part of a fully integrated delivery system.

AB 1102 Would Create New Telephone Medical Advice Service Requirements

Prior law required telephone medical advice services be registered with the Telephone Medical Advice Services, a requirement that was abolished as of January 1, 2017. If AB 1102 becomes law, California licensing boards for health care professionals will have jurisdiction to enforce telephone medical advice service company requirements and telephone medical advice service companies will be required to ensure that all health care professionals who provide telephone medical advice services from an out-of-state location are operating consistent with California professional licensing requirements. Additionally, telephone medical advice service companies will be required to comply with all directions and requests for information made by the respective healing arts licensing boards.

AB 1278 Referred to Committee: Physician Payment Disclosure to Patients

If passed, AB 1278 will require physicians to disclose payments and other “transfers of value” received from prescription drug and medical device companies in writing to each patient or patient representative prior to prescribing drugs or devices manufactured or distributed by the company. Additionally, physicians will be required to post an open payments database notice in each location where the licensee practices and in an area that is likely to be seen by all persons who enter the office and conspicuously post the same open payments database notice on the internet website used for the physician and surgeon’s practice. If physicians are employed by a health care employer, health care employers would be required to comply with these posting requirements. Failure by physicians to follow this law would constitute unprofessional conduct. The law would not apply to physicians working in hospital emergency departments (EDs).

AB 451 Would Create New Psychiatric Unit/Facility Emergency Service Requirements

If passed, AB 451 will require psychiatric hospital units, psychiatric health facilities, and acute psychiatric hospitals to provide emergency services and care to treat a person with a psychiatric emergency who has been accepted for psychiatric screening by the facility, regardless of whether the facility operates an ED, if all of the following requirements are met: a) The treating physician at the sending facility has determined that the patient is medically stable and appropriate for treatment in a psychiatric setting and has included that determination in the patient’s medical record; b) The facility has an available bed; and, c) The facility has appropriate facilities and qualified personnel available to provide the services or care.  The bill would also require these facilities to accept patients who are not on a “5150 hold” which allows for involuntary assessment, evaluation, and crisis intervention, or placement for evaluation and treatment of an individual in a designated facility for up to 72 hours when, as the result of a mental health disorder, the person is found to be gravely disabled or a danger to themselves or others.  Notably, violation of these requirements would be a crime.

According to the author, emergency physicians have experienced trouble trying to transfer patients to private psychiatric facilities that do not maintain an ED and that it’s been reported that some facilities will not accept a Medi-Cal or uninsured patient. The author also states that there have been instances of facilities not accepting a patient because the patient is not on a 5150 hold, when the patient needs more intense psychiatric services the ED cannot provide. The author introduced the bill to help individuals in a mental illness crisis obtain access to appropriate care.

The County Behavioral Health Directors Association of California opposes this bill for multiple reasons, including their belief that requiring psychiatric health facilities to treat individuals regardless of insurance status would jeopardize the viability of these facilities, and have the unintended consequence of reducing access to medically necessary care for individuals served through the state’s public mental health system.

We will continue to monitor and report on these legislative initiatives. Be sure to check back with Mintz’s Health Care Viewpoints for more updates on these and other proposed state and federal health care legislation.

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Lara Compton