BILL NUMBER: SB 895 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Alquist
FEBRUARY 18, 2011
An act to amend Sections 1279 and 1422 of the Health and Safety
Code, and to amend Section 14126.023 of the Welfare and Institutions
Code, relating to health facilities.
LEGISLATIVE COUNSEL'S DIGEST
SB 895, as introduced, Alquist. Health facilities: inspections.
(1) Under existing law, the State Department of Public Health
regulates the licensure and operation of various health facilities,
including long-term health care facilities, some of which are
collectively classified as nursing homes. Existing law requires the
department to conduct periodic inspections of health facilities for
which a license or special permit has been issued, to ensure the
quality of care. Existing law requires inspection of general acute
care hospitals, acute psychiatric hospitals, and special hospitals,
no less than once every 3 years and, for other health facilities,
inspections no less than once every 2 years.
This bill would revise these inspection requirements, as
specified.
(2) Existing law, the Long-Term Care, Health, Safety and Security
Act of 1973, requires the State Department of Public Health to
conduct annual inspections, without notice, of long-term health care
facilities that have not had serious violations of the act within the
last 12 months. The act requires every facility to be inspected at
least once every 2 years, and further requires the department to vary
the cycle for conducting these inspections to reduce the
predictability of the inspections.
This bill would delete these inspection requirements.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1279 of the Health and Safety Code is amended
to read:
1279. (a) Every health facility for which a license or special
permit has been issued shall be periodically inspected by the
department, or by another governmental entity under contract with the
department. The frequency of inspections shall vary, depending upon
the type and complexity of the health facility or special service to
be inspected, unless otherwise specified by state or federal law or
regulation. The inspection shall include participation by the
California Medical Association consistent with the manner in which it
participated in inspections, as provided in Section 1282 prior to
September 15, 1992.
(b) Except as provided in subdivision (c), inspections shall be
conducted no less than once every two years
other survey that the department conducts to determine compliance for
the Medicare program, the Medicaid program, or both, and as
often as necessary to ensure the quality of care being provided.
(c) (1) For a health facility specified in
subdivision (a), (b), or (f) of Section 1250, inspections shall be
conducted no less than once every three years, and as often as
necessary to ensure the quality of care being provided.
(2) For a health facility not certified for either the Medicare
program or Medicaid program, inspections shall be conducted no less
than once every two years, and as often as necessary to ensure the
quality of care being provided.
(d) During the inspection, the representative or representatives
shall offer such advice and assistance to the health facility as they
deem appropriate.
(e) For acute care hospitals of 100 beds or more, the inspection
team shall include at least a physician, registered nurse, and
persons experienced in hospital administration and sanitary
inspections. During the inspection, the team shall offer advice and
assistance to the hospital as it deems appropriate.
(f) The department shall ensure that a periodic inspection
conducted pursuant to this section is not announced in advance of the
date of inspection. An inspection may be conducted jointly with
inspections by entities specified in Section 1282. However, if the
department conducts an inspection jointly with an entity specified in
Section 1282 that provides notice in advance of the periodic
inspection, the department shall conduct an additional periodic
inspection that is not announced or noticed to the health facility.
(g) Notwithstanding any other provision of law, the department
shall inspect for compliance with provisions of state law and
regulations during a state periodic inspection or at the same time as
a federal periodic inspection, including, but not limited to, an
inspection required under this section. If the department inspects
for compliance with state law and regulations at the same time as a
federal periodic inspection, the inspection shall be done consistent
with the guidance of the federal Centers for Medicare and Medicaid
Services for the federal portion of the inspection.
(h) The department shall emphasize consistency across the state
and its district offices when conducting licensing and certification
surveys and complaint investigations, including the selection of
state or federal enforcement remedies in accordance with Section
1423. The department may issue federal deficiencies and recommend
federal enforcement actions in those circumstances where they provide
more rigorous enforcement action.
SEC. 2. Section 1422 of the Health and Safety Code is amended to
read:
1422. (a) The Legislature finds and declares that it is the
public policy of this state to ensure that long-term health care
facilities provide the highest level of care possible. The
Legislature further finds that inspections are the most effective
means of furthering this policy. It is not the intent of the
Legislature by the amendment of subdivision (b) enacted by Chapter
1595 of the Statutes of 1982 to reduce in any way the resources
available to the state department for inspections, but rather to
provide the state department with the greatest flexibility to
concentrate its resources where they can be most effective. It is the
intent of the Legislature to create a survey process that includes
state-based survey components and that determines compliance with
federal and California requirements for certified long-term health
care facilities. It is the further intent of the Legislature to
execute this inspection in the form of a single survey process, to
the extent that this is possible and permitted under federal law. The
inability of the state to conduct a single survey in no way exempts
the state from the requirement under this section that state-based
components be inspected in long-term health care facilities as
required by law.
(b) (1) (A) Notwithstanding Section 1279 or any other provision of
law, without providing notice of these inspections, the department,
in addition to any inspections conducted pursuant to complaints filed
pursuant to Section 1419, shall conduct inspections annually, except
with regard to those facilities which have no class "AA," class "A,"
or class "B" violations in the past 12 months. The state department
shall also conduct inspections as may be necessary to ensure the
health, safety, and security of patients in long-term health care
facilities. Every facility shall be inspected at least once every two
years. The department shall vary the cycle in which inspections of
long-term health care facilities are conducted to reduce the
predictability of the inspections.
(B)
(b) (1) Inspections and
investigations of long-term health care facilities that are certified
by the Medicare Program or the Medicaid Program shall determine
compliance with federal standards and California statutes and
regulations to the extent that California statutes and regulations
provide greater protection to residents, or are more precise than
federal standards, as determined by the department. Notwithstanding
any other provision of law, the department may, without taking
regulatory action pursuant to Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
implement, interpret, or make specific this paragraph by means of an
All Facilities Letter (AFL) or similar instruction. Prior to issuing
an AFL or similar instruction, the department shall consult with
interested parties and shall inform the appropriate committees of the
Legislature. The department shall also post the AFL or similar
instruction on its Internet Web site so that any person
may observe which California laws and regulations provide greater
protection to its residents or are more precise than federal
standards. Nothing in this subdivision is intended to change existing
statutory or regulatory requirements governing the care provided to
long-term health care facility residents.
(C)
(2) In order to ensure maximum effectiveness of
inspections conducted pursuant to this article, the department shall
identify all state law standards for the staffing and operation of
long-term health care facilities. Costs of the additional survey and
inspection activities required by Chapter 895 of the Statutes of 2006
shall be included as Licensing and Certification Program activities
for the purposes of calculating fees in accordance with Section 1266.
(2)
(3) The state department shall submit to the federal
Department of Health and Human Services on or before July 1, 1985,
for review and approval, a request to implement a three-year pilot
program designed to lessen the predictability of the long-term health
care facility inspection process. Two components of the pilot
program shall be (A) the elimination of the present practice of
entering into a one-year certification agreement, and (B) the conduct
of segmented inspections of a sample of facilities with poor
inspection records, as defined by the state department. At the
conclusion of the pilot project, an analysis of both components shall
be conducted by the state department to determine effectiveness in
reducing inspection predictability and the respective cost benefits.
Implementation of this pilot project is contingent upon federal
approval.
(c) Except as otherwise provided in subdivision (b), the state
department shall conduct unannounced direct patient care inspections
at least annually to inspect physician and surgeon services, nursing
services, pharmacy services, dietary services, and activity programs
of all the long-term health care facilities. Facilities evidencing
repeated serious problems in complying with this chapter or a history
of poor performance, or both, shall be subject to periodic
unannounced direct patient care inspections during the inspection
year. The direct patient care inspections shall assist the state
department in the prioritization of its efforts to correct facility
deficiencies.
(d)
(c) All long-term health care facilities shall report
to the state department any changes in the nursing home administrator
or the director of nursing services within 10 calendar days of the
changes.
(e)
(d) Within 90 days after the receipt of notice of a
change in the nursing home administrator or the director of nursing
services, the state department may conduct an abbreviated inspection
of the long-term health care facilities.
(f)
(e) If a change in a nursing home administrator occurs
and the Board of Nursing Home Administrators notifies the
state department that the new administrator is on probation
or has had his or her license suspended within the previous three
years, the state department shall conduct an
abbreviated survey of the long-term health care facility employing
that administrator within 90 days of notification.
SEC. 3. Section 14126.023 of the Welfare and Institutions Code is
amended to read:
14126.023. (a) The methodology developed pursuant to this article
shall be facility specific and reflect the sum of the projected cost
of each cost category and passthrough costs, as follows:
(1) Labor costs limited as specified in subdivisions (d) and (e).
(2) Indirect care nonlabor costs limited to the 75th percentile.
(3) (A) Administrative costs limited to the 50th percentile.
(B) Notwithstanding subparagraph (A), beginning with the 2010-11
rate year and in each subsequent rate year, the administrative cost
category shall not include any legal and consultant fees in
connection with a fair hearing or other litigation against or
involving any governmental agency or department until all issues
related to the fair hearing or litigation issues are ultimately
decided or resolved.
(C) Notwithstanding subparagraph (A), beginning with the 2010-11
rate year and in each subsequent rate year, the department shall not
allow any cost associated with legal or consultant fees in connection
with a fair hearing or other litigation against any governmental
agency or department where any of the following apply:
(i) A decision has been rendered in favor of the governmental
agency or department.
(ii) The determination of the governmental agency or department
otherwise stands.
(iii) A settlement or similar resolution has been reached
regarding any citation issued under subdivision (c), (d), or (e) of
Section 1424 of the Health and Safety Code or regarding any remedy
imposed under Subpart F of Part 489 of Title 42 of the Code of
Federal Regulations.
(iv) A settlement or similar resolution has been reached under the
provisions of Section 14123 or 14171.
(D) Facilities shall report supplemental data required to disallow
costs described in subparagraph (C) in a format and by the deadline
determined by the department.
(4) Capital costs based on a fair rental value system (FRVS)
limited as specified in subdivision (f).
(5) (A) Direct passthrough of proportional Medi-Cal costs for
property taxes, facility license fees, new state and federal
mandates, caregiver training costs, and liability insurance projected
on the prior year's costs.
(B) (i) Notwithstanding subparagraph (A), for the 2010-11 rate
year and each rate year thereafter, professional liability insurance
costs, including any insurance deductible costs paid by the facility,
shall be limited to the 75th percentile computed on a specific
geographic peer group basis.
(ii) Facilities shall report supplemental data described in this
subparagraph in a format and by the deadline determined by the
department, or the insurance deductible costs shall continue to be
reimbursed in the administrative cost category.
(b) (1) The percentiles in paragraphs (1) through (3) of
subdivision (a) shall be based on annualized costs divided by total
resident days and computed on a specific geographic peer group basis.
Costs within a specific cost category shall not be shifted to any
other cost category.
(2) Notwithstanding paragraph (1), for the 2010-11 and 2011-12
rate years, the percentiles in paragraphs (1) to (5), inclusive, of
subdivision (a) shall be based on annualized audited costs divided by
total resident days and computed on a specific geographic peer group
basis. Costs within a specific category shall not be shifted to any
other cost category.
(c) (1) Facilities newly certified to participate in the Medi-Cal
program shall receive a reimbursement rate based on the peer group
weighted average Medi-Cal reimbursement rate. Facilities shall
continue to receive the peer group weighted average Medi-Cal
reimbursement rate until either of the following conditions is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility specific
rate shall be calculated prospectively and shall be effective on
August 1 of each rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility-B facility specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(2) Facilities that have been decertified for less than six months
and upon recertification shall continue to receive the facility per
diem reimbursement rate in effect prior to decertification.
Facilities shall continue to receive the facility per diem
reimbursement rate until either of the following conditions is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility specific
rate based on the audited six months of Medi-Cal cost data shall be
calculated prospectively and shall be effective on August 1 of each
rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility-B facility specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility-specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(3) Facilities that have been decertified for six months or longer
and upon recertification shall receive a reimbursement rate based on
the peer group weighted average Medi-Cal reimbursement rate.
Facilities shall continue to receive the peer group weighted average
Medi-Cal reimbursement rate until either of the following conditions
is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility-specific
rate shall be calculated prospectively and shall be effective on
August 1 of each rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility-B facility specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility-specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(4) Facilities that have a change of ownership or change of the
licensed operator shall continue to receive the facility per diem
reimbursement rate in effect with the previous owner. Facilities
shall continue to receive the facility per diem reimbursement rate
until either of the following conditions is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility-specific
rate shall be calculated prospectively and shall be effective on
August 1 of each rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility B facility-specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility-specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(5) This subdivision represents codification of existing rules
promulgated by the department under the authority of Section
14126.027.
(d) The labor costs category shall be comprised of a direct
resident care labor cost category, an indirect care labor cost
category, and a labor-driven operating allocation cost category, as
follows:
(1) Direct resident care labor cost category which shall include
all labor costs related to routine nursing services including all
nursing, social services, activities, and other direct care
personnel. These costs shall be limited to the 90th percentile.
(2) Indirect care labor cost category which shall include all
labor costs related to staff supporting the delivery of patient care
including, but not limited to, housekeeping, laundry and linen,
dietary, medical records, inservice education, and plant operations
and maintenance. These costs shall be limited to the 90th percentile.
(3) Labor-driven operating allocation shall include an amount
equal to 8 percent of labor costs, minus expenditures for temporary
staffing, which may be used to cover allowable Medi-Cal expenditures.
In no instance shall the operating allocation exceed 5 percent of
the facility's total Medi-Cal reimbursement rate.
(e) Notwithstanding subdivision (d), beginning with the 2010-11
rate year and each rate year thereafter, the labor cost category
shall not include the labor-driven operating allocation and shall be
comprised only of a direct resident care labor cost category and an
indirect care labor cost category.
(f) The capital cost category shall be based on a FRVS that
recognizes the value of the capital related assets necessary to care
for Medi-Cal residents. The capital cost category includes mortgage
principal and interest, leases, leasehold improvements, depreciation
of real property, equipment, and other capital related expenses. The
FRVS methodology shall be based on the formula developed by the
department that assesses facility value based on age and condition
and uses a recognized market interest factor. Capital investment and
improvement expenditures included in the FRVS formula shall be
documented in cost reports or supplemental reports required by the
department. The capital costs based on FRVS shall be limited as
follows:
(1) For the 2005-06 rate year, the capital cost category for all
facilities in the aggregate shall not exceed the department's
estimated value for this cost category for the 2004-05 rate year.
(2) For the 2006-07 rate year and subsequent rate years, the
maximum annual increase for the capital cost category for all
facilities in the aggregate shall not exceed 8 percent of the prior
rate year's FRVS cost component.
(3) If the total capital costs for all facilities in the aggregate
for the 2005-06 rate year exceeds the value of the capital costs for
all facilities in the aggregate for the 2004-05 rate year, or if
that capital cost category for all facilities in the aggregate for
the 2006-07 rate year or any rate year thereafter exceeds 8 percent
of the prior rate year's value, the department shall reduce the
capital cost category for all facilities in equal proportion in order
to comply with paragraphs (1) and (2).
(g) For the 2005-06 and 2006-07 rate years, the facility specific
Medi-Cal reimbursement rate calculated under this article shall not
be less than the Medi-Cal rate that the specific facility would have
received under the rate methodology in effect as of July 31, 2005,
plus Medi-Cal's projected proportional costs for new state or federal
mandates for rate years 2005-06 and 2006-07, respectively.
(h) The department shall update each facility specific rate
calculated under this methodology annually. The update process shall
be prescribed in the Medicaid State Plan, regulations, and the
provider bulletins or similar instructions described in Section
14126.027, and shall be adjusted in accordance with the results of
facility specific audit and review findings in accordance with
subdivisions (i), (j), and (k).
(i) (1) The department shall establish rates pursuant to this
article on the basis of facility cost data reported in the integrated
long-term care disclosure and Medi-Cal cost report required by
Section 128730 of the Health and Safety Code for the most recent
reporting period available, and cost data reported in other facility
financial disclosure reports or supplemental information required by
the department in order to implement this article.
(2) Notwithstanding paragraph (1), or any other provision of law,
beginning with the 2010-11 and 2011-12 rate years, the department
shall establish rates pursuant to this article on the basis of
facility audited cost data reported in the integrated long-term care
disclosure and Medi-Cal cost report described in Section 128730 of
the Health and Safety Code and audited cost data reported in other
facility financial disclosure reports or audited supplemental
information required by the department in order to implement this
article.
(3) Notwithstanding paragraph (1), or any other provision of law,
beginning with the 2010-11 rate year and each rate year thereafter,
the department may determine a facility ineligible to receive
supplemental payments pursuant to Section 14126.022 if a facility
fails to provide supplemental data as requested by the department.
(4) This subdivision represents codification of existing rules
promulgated by the department under the authority of Section
14126.027.
(j) The department shall conduct financial audits of facility and
home office cost data as follows:
(1) The department shall audit facilities a minimum of once every
three years to ensure accuracy of reported costs.
(2) It is the intent of the Legislature that the department
develop and implement limited scope audits of key cost centers or
categories to assure that the rate paid in the years between each
full scope audit required in paragraph (1) accurately reflects actual
costs.
(3) For purposes of updating facility specific rates, the
department shall adjust or reclassify costs reported consistent with
applicable requirements of the Medicaid state plan as required by
Part 413 (commencing with Section 413.1) of Title 42 of the Code of
Federal Regulations.
(4) Overpayments to any facility shall be recovered in a manner
consistent with applicable recovery procedures and requirements of
state and federal laws and regulations.
(k) (1) On an annual basis, the department shall use the results
of audits performed pursuant to subdivisions (i) and (j), the results
of any federal audits, and facility cost reports, including
supplemental reports of actual costs incurred in specific cost
centers or categories as required by the department, to determine any
difference between reported costs used to calculate a facility's
rate and audited facility expenditures in the rate year.
(2) If the department determines that there is a difference
between reported costs and audited facility expenditures pursuant to
paragraph (1), the department shall adjust a facility's reimbursement
prospectively over the intervening years between audits by an amount
that reflects the difference, consistent with the methodology
specified in this article.
( l ) For nursing facilities that obtain an audit
appeal decision that results in revision of the facility's allowable
costs, the facility shall be entitled to seek a retroactive
adjustment in its facility specific reimbursement rate.
(m) Except as provided in Section 14126.022, compliance by each
facility with state laws and regulations regarding staffing levels
shall be documented annually either through
facility cost reports , including supplemental reports, or
through the annual licensing inspection process specified in Section
1422 of the Health and Safety Code .