Legislative and Regulatory Issues
CalDerm Legislative Update
August 4, 2008
Prepared by: John Caldwell, CalDerm Government Relations Director
The Final Stretch. On Monday August 4, the Legislature returned from the July recess. In normal years, there are only four weeks left in the session. But this year, the Democratic National Convention will be held in the last week in August, so the already-short session has been shortened by another week. That's very little time for the lawmakers to vote on the thousand or so bills in the pipeline. And that doesn't include the state budget that was supposed to be passed and signed on July 1.
The state now faces a deficit of about $15 billion for the next fiscal year. As you may know, passage of the budget requires a 2/3 vote of both houses, and while the Democrats have very healthy majorities in each house, they are short of the 2/3 in each house. That means the Republicans and the Democrats have to agree on a solution - and the two sides are very, very far apart. The Democrats simply cannot abide the kind of cuts that would be needed to balance the budget without a revenue increase. The Republicans simply cannot abide the major tax increase that is needed to avoid the cuts.
The result will probably be what is referred to as a "get out of town budget" - that is, just enough to get them out of this mess this year. There may be some borrowing from local governments, the transportation budget, and even the lottery. And there will be some cuts and some revenue increases in the form of closing loopholes. In the process all the revenue estimates and the spending cuts will be inflated, so that the budget is balanced - at least on paper.
In the final three weeks, there are two items of interest that CalDerm will follow:
Penalizing Rent-A-Docs. CalDerm strongly supports AB 2398 by Assemblyman Alan Nakanishi. It authorizes the revocation of the license of a physician who practices medicine with a business that provides outpatient elective cosmetic medical procedures knowing that the business is owned or operated in violation of the prohibition against the corporate practice of medicine. In short, it authorizes strong penalties on those physicians who allow them to be used as "rent-a-docs" by corporate medspas. Not surprisingly, the med-spa folks are bitterly fighting this bill.
The bill was scheduled for Senate Appropriations on August 4, but the bill was granted a waiver on the hearing because the costs were judged to be insignificant. The bill now goes to the Senate Floor where it will be amended with some technical language. The bill should be voted on during the week starting August 11.
Given the opposition from the med-spa industry, constituent support for this bill would be helpful. So if you have a chance, contact your State Senator's office and urge them to vote for AB 2398.
The Administration's Sweeping Licensing Proposal. In the final days of session, we will also try to make sure that bills are not amended with language that is detrimental to dermatology - specifically a proposal by the Schwarzenegger Administration.
About six weeks ago, the Administration started shopping for an author for a surgical clinic licensure bill. As a practical matter, if this passes any physician-owned clinic that is now accredited would have to be licensed by the California Department of Public Health (DPH). Among other things, the proposal enacts costly hospital-like building standards including the requirement that the clinic owner "provide the department with of satisfactory completion of the structural and building requirements set forth" in the state building code.
Today "surgical clinics" have to be licensed by DPH. Under the law, they are defined as "a clinic that is not part of a hospital and that provides ambulatory surgical care for patients who remain less than 24 hours." However, the definition explicitly exempts physician-owned clinics: "A surgical clinic does not include any place or establishment owned or leased and operated as a clinic or office by one or more physicians or dentists in individual or group practice, regardless of the name used publicly to identify the place or establishment, provided, however, that physicians or dentists may, at their option, apply for licensure." The Administration proposal, among other things, eliminates that exemption.
The Administration argues that the proposal is necessitated by the so-called Capen decision which found that DPH could not force physician-owned clinics to be licensed. Indeed, some have argued that the decision may make it impossible for physician-owned clinics to be licensed by DPH, even if they want to be licensed. But the solution offered by the Administration is far more sweeping than what is needed to deal with the Capen decision.
When the proposal was released in mid June, the Administration made it clear that their intent was to place this language in a bill that was near passage. CalDerm's Legislative Committee reviewed the draft proposal, and with the help of a number of committee members we were able to put together detailed analysis of it. We then started educating pertinent members and staff about the problems with the idea.
As of July 31, they still have not found a vehicle and there are some indications that they will scale back the proposal and introduce it next year. Nevertheless, CalDerm will continue to oppose the idea.