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AB-926 Physicians and surgeons: direct employment.(2011-2012)

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Amended  IN  Assembly  April 27, 2011


Assembly Bill
No. 926

Introduced  by  Assembly Member Hayashi

February 18, 2011

An act to add and repeal Section 2401.1 of the Business and Professions Code, relating to physicians and surgeons, and declaring the urgency thereof, to take effect immediately.


AB 926, as amended, Hayashi. Physicians and surgeons: direct employment.
Existing law, the Medical Practice Act, restricts the employment of licensed physicians and surgeons and podiatrists by a corporation or other artificial legal entity, subject to specified exemptions. Existing law established, until January 1, 2011, a pilot project to allow qualified district hospitals that, among other things, provide provided more than 50% of patient days to the care of Medicare, Medi-Cal, and uninsured patients, to employ a physician and surgeon, if the hospital does did not interfere with, control, or otherwise direct the professional judgment of the physician and surgeon. The pilot project authorized the direct employment of not more than 20 physicians and surgeons by all of those hospitals to provide medically necessary services in rural and medically underserved communities. Existing law imposed specified duties on the Medical Board of California with regard to the pilot project.
This bill would, until January 1, 2022, reenact the pilot project to allow all qualified district hospitals to employ not more than 50 physicians and surgeons, under circumstances described above. The bill would require the Medical Board of California to report to the Legislature by October 1, 2020, on the effectiveness of the pilot project.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


 Section 2401.1 is added to the Business and Professions Code, to read:

 (a) The Legislature finds and declares as follows:
(1) Due to the large number of uninsured and underinsured Californians, a number of California communities are having great difficulty recruiting and retaining physicians and surgeons.
(2) In order to recruit physicians and surgeons to provide medically necessary services in rural and medically underserved communities, many district hospitals have no viable alternative but to directly employ physicians and surgeons in order to provide economic security adequate for a physician and surgeon to relocate and reside in their communities.
(3) The Legislature intends that a district hospital meeting the conditions set forth in this section be able to employ physicians and surgeons directly and to charge for their professional services.
(4) The Legislature reaffirms that Section 2400 provides an increasingly important protection for patients and physicians and surgeons from inappropriate intrusions into the practice of medicine, and further intends that a district hospital not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment.
(b) A pilot project to provide for the direct employment of a total of 50 physicians and surgeons by qualified district hospitals is hereby established in order to improve the recruitment and retention of physicians and surgeons in rural and other medically underserved areas.
(c) For purposes of this section, a qualified district hospital means a hospital that meets all of the following requirements:
(1) Is a district hospital organized and governed pursuant to the Local Health Care District Law (Division 23 (commencing with Section 32000) of the Health and Safety Code).
(2) Provides a percentage of care to Medicare, Medi-Cal, and uninsured patients that exceeds 50 percent of patient days.
(3) Is located in a county with a total population of less than 750,000.
(4) Has net losses from operations in fiscal year 2008–09, as reported to the Office of Statewide Health Planning and Development.
(d) In addition to the requirements of subdivision (c), and in addition to other applicable laws, a qualified district hospital may directly employ a licensee pursuant to subdivision (b) if all of the following conditions are satisfied:
(1) The total number of physicians and surgeons employed by all qualified district hospitals under this section does not exceed 50.
(2) The medical staff and the elected trustees of the qualified district hospital concur by an affirmative vote of each body that the physician and surgeon’s employment is in the best interest of the communities served by the hospital.
(3) The licensee enters into or renews a written employment contract with the qualified district hospital prior to December 31, 2015, for a term not in excess of four years. The contract shall provide for mandatory dispute resolution under the auspices of the board for disputes directly relating to the licensee’s clinical practice.
(4) The total number of licensees employed by the qualified district hospital does not exceed five at any time.
(5) The qualified district hospital notifies the board in writing that the hospital plans to enter into a written contract with the licensee and the board has confirmed that the licensee’s employment is within the maximum number permitted by this section. The board shall provide written confirmation to the hospital within five working days of receipt of the written notification to the board.
(e) (1) The board shall report to the Legislature not later than October 1, 2020, on the evaluation of the effectiveness of the pilot project in improving access to health care in rural and medically underserved areas and the project’s impact on consumer protection as it relates to intrusions into the practice of medicine.
(2) The report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.
(f) Nothing in this section shall exempt the district hospital from any reporting requirements or affect the board’s authority to take action against a physician and surgeon’s license.
(g) This section shall remain in effect only until January 1, 2022, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2022, deletes or extends that date.

SEC. 2.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to increase the recruitment and retention of physicians and surgeons in rural and other medically underserved areas and to provide improved access to health care in those areas at the earliest possible time, it is necessary that this act take effect immediately.