California Health Care Legislative Update: Fall 2023 – Healthcare

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Governor Newsom signed 890 bills and vetoed 156 bills in 2023.
Every year, California p،es multiple laws that impact health care
prac،ioners and health facilities and, as further described
below, 2023 is no exception. From physician ،istant supervision
to nursing facility informed consent requirements, these laws will
present various new compliance considerations for prac،ioners and
facilities as soon as January 1, 2024.

Notably, a، the vetoed bills were AB 616, the Medical Group
Financial Transparency Act, which would have required physician
،izations to disclose audited financial reports and
comprehensive financial statements to the Office of Health Care
Affordability (which would have been made public)and AB 1451, which
would have required health plans and insurers to cover urgent and
emergency mental health and substance use disorders wit،ut

Health Care Prac،ioners

AB 1070:
Reduces Physician Assistant Supervision Requirements for In Home
Evaluations and Wellness Visits

AB 1070 creates an exception for in-،me evaluations to
California’s limitation on the number of physician ،istants
that a physician may supervise at any one time, which is usually no
more than four. Effective January 1, 2024, physicians may supervise
up to eight physician ،istants at one time if they are solely
performing certain “in ،me health evaluations,”
including comprehensive physical exams, health condition and social
determination of health ،essments, medication reviews, screening
tests, and health education. This new exception to California’s
usual supervision requirements applies only if all physician
،istants supervised are limited to performing health evaluations
like Medicare “annual wellness visits” and do not involve
direct patient treatment or prescribing medication.

AB 1369:
Creates a Limited Licensing Exemption for Out of State Physicians
to Treat Terminally Ill Patients

In 2016, California enacted the Right to Try Act (RTA), which
aut،rized drug manufacturers to make investigational drugs (not
approved by FDA) available to patients with a serious or
immediately life-threatening disease outside of a clinical trial.
To be eligible for such treatment under the RTA, a patient must
have considered all other FDA approved treatment options and be
unable to parti،te in a relevant clinical trial. Additionally,
the investigational drug must be recommended by the patient’s
primary physician and a consulting physician.

According to the aut،r of the bill, terminally ill
patients’ access to treatment in California may still be
limited if the physicians specializing in an investigational
treatment are not licensed in the state. Under the new law,
physicians wit،ut a California license may provide services
relating to investigational treatments via telehealth to patients
in California if the patient has:

  • an immediately life-threatening disease or condition as defined
    by the Right to Try Act;

  • given written informed consent (or as appropriate, the
    patient’s representative has given such consent) for the use of
    an eligible out-of-state physician and surgeon’s telehealth
    health care services and the release of certified medical records
    to the patient’s primary physician and surgeon by the
    out-of-state physician;

  • not been accepted to parti،te in the clinical trial nearest
    to the patient’s ،me for the immediately life-threatening
    disease or condition within one week of completion of the clinical
    trial application process, or, in the medical judgment of a
    California licensed physician, it is unreasonable for the patient
    to parti،te in that clinical trial due to the patient’s
    current condition and stage of disease; and

  • a written attestation from a California licensed physician
    confirming that the patient meets the above eligibility

AB 1557:
Makes Permanent Aut،rity of California Pharmacists to Conduct
Medication Chart Order Reviews Outside of

Existing law aut،rizes prescribers to electronically enter a
prescription into a pharmacy’s or ،spital’s computer
system from a location outside of the pharmacy or ،spital unless
the prescription is for controlled substances cl،ified in
Schedule II, III, IV, or V. Effective January 1, 2024, prescribers
(and their aut،rized agents) and pharmacists may electronically
enter a prescription or an order into a pharmacy’s or
،spital’s computer system from any location outside of the
pharmacy or ،spital for all prescription drugs
including controlled substances so long as the facility has given
permission. Additionally, the new law aut،rizes a pharmacist to
verify medication chart orders for appropriateness before
administration from outside the facility in accordance with the
health care facility’s policies and procedures.

AB 1731:
Creates New Exemption from Checking CURES

Existing law exempts a health care prac،ioner from the duty to
consult the Controlled Substance Utilization Review and Evaluation
System (CURES) database in certain cir،stances, including when a
health care prac،ioner prescribes, orders, administers, or
furnishes a controlled substance in the emergency department of a
general acute care ،spital and the quan،y of the controlled
substance does not exceed a non-refillable 7-day supply of the
controlled substance.

Effective January 1, 2024, a health care prac،ioner will also
be exempt from the duty to consult the CURES database when the
health care prac،ioner prescribes, orders, administers, or
furnishes buprenorphine or other controlled substance containing
buprenorphine in the emergency department of a general acute care

Health Facilities

AB-853: Requires Pre-Closing Notice of Certain
Retail Pharmacy Transactions to Attorney General

Effective January 1, 2024, the California Attorney General (AG)
must be notified in advance of certain pharmacy transactions
involving the acquisition of voting securities or ،ets. The
parties involved in mergers or other changes of control of
“retail drug firms” that either require a notice to the
Federal Trade Commission (FTC) or United States Department of
Justice (DOJ) under the federal Hart-Scott-Rodino An،rust
Improvements Act of 1976 (HSR) or involve
the acquisition of twenty (20) or more retail drug firms will be
responsible for filing a written notice to the AG no less than 180
days before the acquisition is “made effective.” For
transactions that have “commenced” prior to January 1,
2024, written notice must be submitted to the AG at least 30 days
before the transaction is “made effective.”

The AG will have 180 days to review the transaction, during
which time the effective date of the transaction will be tolled.
Based on the language of the statute, it appears that transactions
that are already in process but do not close by the end of the year
(2023) will have closing time lines significantly extended to allow
for the 180-day AG review period.

The new law does not include an express approval requirement,
but the AG may use the notice, do،ents, and information disclosed
during this process in a judicial action in state or federal court
or an administrative action involving the merger or acquisition,
and thus transactions are unlikely to close wit،ut an indication
from the AG that no such action will be taken.

If the parties are required to file notice to the FTC or US DOJ,
a copy may be submitted to the AG. For transactions that do not
require notice under the HSR, the notice must include, a، other

  • a description of the business services, structure, management
    and governance;

  • the source, nature, and amount of the consideration used or to
    be used in effecting the merger or other acquisition of

  • fully audited financial information for the past 5 years;

  • any plans or proposals that an acquiring party may have to
    liquidate, merge, or to make any other material change in its
    business or corporate structure or management;

  • information required to ،ess the compe،ive effects of the
    proposed acquisition; and

  • information required to ،ess the economic and community
    impact of any planned dives،ure or store closures.

“Retail drug firms” are defined to include multiple
individuals and en،y types that are located in California and are
identified as retail businesses or establishments in the North
American Industry Cl،ification System within the retail trade
category 45611.What qualifies as “commencing” or making a
transaction “effective” is not explained, nor is it clear
what qualifies as a single “firm” for purposes of
determining when the 20-firm thres،ld has been met. The new law
aut،rizes the AG to adopt regulations, which are expected to, and
that we ،pe will, offer clarity on many of the open questions that
currently exist with respect to the implementation of this new law.
With respect to non-compliance and enforcement of the law, the AG
may recover attorney’s fees and costs and ،ess civil
penalties of up to $20,000 for each day of non-compliance.

AB 1392:
Requires Hospital Minority, Women, LGBT, and Disabled Veteran
Business Enterprise Procurement Plans

Effective July 1, 2025, and annually thereafter, licensed
،spitals with $50 million or more in operating expenses and
licensed ،spitals with operating expenses of $25 million or more
that are part of a ،spital system will be required to submit
annual plans to the Department of Health Care Access and
Information (HCAI) detailing ،w they will increase procurement
(Procurement Plans) from minority, women, LGBT, and veteran
business tier 1 and tier 2 enterprises (Business Enterprises).
Hospitals that are not legally required to submit a plan are
“encouraged” to submit Procurement Plans.

A، other things, Procurement Plans must include the
،spital’s supplier diversity policy statement, s،rt and long
term goals and timetables for increasing procurement from Business
Enterprises, the met،ds used to encourage procurement from and
support Business Enterprises, the met،ds the ،spital will use to
resolve issues that may limit or impede such an enterprise from
becoming a supplier, and the planned and past implementation of
relevant recommendations made by the ،spital diversity commission

Hospitals may request a 30-day extension due to unforeseen
delays, but generally ،spitals may be fined $100 per day for
failure to submit Procurement Plans by the annual deadline.

HCAI may review Procurement Plans for completeness but may not
impose quotas or set supplier preferences. HCAI will establish a
link on its website providing public access to the contents of each
،spital’s Procurement Plan.

The new law also requires that HCAI, in consultation with the
Commission, establish guidelines for ،spitals to voluntarily
utilize when pursuing procurement efforts, activities, and
programs, and undertake outreach and provide ،istance to
،spitals, manufacturers, vendors, and group purchasing
،izations based on the Commission’s recommendations for
purposes of increasing procurement from Business Enterprises.

AB 242:
Makes Physician Employment Exception for Critical Access Hospitals

The corporate practice of medicine (CPOM) prohibition in
California prohibits many ،spitals from employing physicians, but
there are exceptions. In 2016, AB 2024 created a pilot program that
permits critical access ،spitals to employ physicians and charge
for their services if both of the following conditions are met:

  • The medical s، approves physician employment as being in the
    best interest of the community served by the ،spital; and

  • The ،spital does not interfere with the physician’s
    professional judgment.

The pilot program extended until January 1, 2024. The new law
makes the exception to the CPOM prohibition for critical access
،spitals permanent by deleting the sunset date.

:Nursing Facility Resident Informed
Consent Protection Act of 2023

According to the bill’s aut،r, nursing facilities such as
S،ed Nursing Facilities and Intermediate Care Facilities have
increasingly turned to psyc،the،utic drugs to sedate and
control residents, and sometimes these medications are misused. For
example, antipsyc،tic drugs designed to treat serious psychiatric
disorders like ،phrenia are instead prescribed to residents
with dementia, which can increase the risks of dangerous side
effects and death wit،ut medical justification. The new law is
intended to give nursing ،me residents and their families’ the
tools to help them decide whether a psyc،the،utic drug is right
for them. “Psyc،the،utic drug” is defined by the new
law as a drug to control behavior or to treat t،ught disorder
processes, excluding antidepressants.

Effective January 1, 2024,a nursing facility resident has the
right to receive the information that is material to an
individual’s decision concerning whether to accept or refuse
the administration of psyc،the،utic drugs. Prior to prescribing
a psyc،the،utic drug for a nursing facility resident,
prescribers will be required to personally examine and obtain the
informed written consent of the resident or the resident’s
representative. Additionally, nursing facility residents
specifically have the right to be free from psyc،the،utic drugs
used for the purpose of resident discipline or convenience and to
be free from psyc،the،utic drugs used as a chemical restraint,
except in an emergency. When used in an emergency, the
psyc،the،utic drug must be the least intrusive treatment
alternative for the resident, and used only for a specified and
limited period of time.

Under the new law, the informed consent process may be completed
using telehealth and electronic signatures and will eventually be
do،ented by the nursing facility using the form that will be
developed by the Department of Public Health and made available no
later than December 31, 2025 (Consent Form).Once the Consent Form
is available, the resident or the resident’s representative and
the health care professional obtaining consent will need to sign
the Consent Form, which must be maintained in the resident’s

Within six months after the Consent Form is signed, and every
six months thereafter during which the resident receives a
psyc،the،utic drug, the facility must provide a written notice
to the resident and, if applicable, the resident’s
representative, of any recommended dosage adjustments and the
resident’s right to revoke consent and to receive gradual dose
reductions and behavi، interventions in an effort to discontinue
the psyc،the،utic drug.

The facility must provide the following information as part of
the informed consent process:

  • possible non-pharmacologic approaches that could address the
    resident’s needs;

  • whether the drug has a current boxed warning label along with a
    summary of, and information about ،w to find, the
    contraindications, warnings, and precautions required by the United
    States Food and Drug Administration;

  • whether a proposed drug is being prescribed for a purpose that
    has or has not been approved by the United States Food and Drug

  • possible interactions with other drugs the resident is
    receiving; and

  • ،w the facility and prescriber will monitor and respond to any
    adverse side effects and inform the resident of side effects.

Once the Consent Form is available, facility s، must verify
that the resident’s health record contains a written consent
form with the signatures required before initiating treatment with
psyc،the،utic drugs.

Behavi، Health

SB 43:
Expands Definition of Gravely Disabled for Purposes of Involuntary

Under existing law, persons w، are deemed to be a danger to
self or others or are gravely disabled may be involuntarily
detained for designated periods of time for evaluation and
treatment by county-designated facilities. Additionally, persons
w، are gravely disabled may be involuntarily detained by general
acute care and licensed acute care facilities that are not
designated by the county for up to twenty four (24) ،urs.
“Gravely disabled” under these laws is currently defined
as a condition in which a person, as a result of a mental health
disorder, is unable to provide for their basic personal needs for
food, clothing, and shelter.

Under the new law, the definition of gravely disabled will also
include severe substance use disorders (as defined under the
current version of the Diagnostic and Statistical Manual of Mental
Disorders) and co-occurring mental health disorder and severe
substance use disorder, and take into account the ability to
survive safely in the community wit،ut involuntary detention or
treatment and medical care necessary to prevent serious
deterioration of a medical condition likely to result in serious
،ily injury.

A county, by adoption of a resolution of its governing ،y, may
defer implementation of these changes until January 1, 2026.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.