New Development

California Senate Bill 396 (SB 396), which strengthened requirements for outpatient clinics such as ambulatory surgery centers, was recently signed into law and becomes effective January 1, 2016.

What This Means for You

SB 396 builds upon the existing legal requirements that apply to ambulatory surgery centers and office-based surgery practices. Currently, each such outpatient surgery setting must have a medical staff that is professionally qualified and appropriately credentialed, and facilities that are not state-licensed or Medicare certified must be accredited by The Joint Commission or other accrediting agency approved by the Medical Board of California. Beginning on January 1, 2016, SB 396 will also require affected facilities to conduct peer review, obtain reports about medical staff applicants and members from state professional licensing boards, and be subject to “unannounced” accreditation inspections—which may be conducted after notice that an inspection will occur within 60 days.


A. Statutorily Required Peer Review

Existing law mandates that accredited outpatient surgery settings grant clinical privileges only to physicians who have been appropriately credentialed and determined to be professionally qualified.

With the passage of SB 396, accredited outpatient surgery settings also will be statutorily required to conduct peer review of the physicians on their medical staffs under California Business and Professions Code Section 805.5. Peer review evaluations must occur at least every two years and be performed by physicians who are qualified by education and experience to perform the same or similar types of procedures. The medical staff’s peer review findings must be evaluated by the facility’s governing body so it can determine whether the physicians reviewed continue to be qualified, and the results must be provided to the accrediting agency at the time of the facility’s on-site survey. The surveyor will review the peer review process and findings to ensure the facility’s process complies with the applicable accreditation requirements.

B. Obtaining Reports from State Licensing Boards

SB 396 will also allow and require outpatient surgery settings—including licensed, Medicare-certified, and accredited settings—to access information about practitioners that is reported to the Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, and the Dental Board of California. Starting January 1, 2016, each such outpatient surgery setting will be required to request a report from the applicable state licensing board to determine, prior to granting or renewing staff privileges, whether the applicant has been denied staff privileges, removed from a medical staff, or had his or her staff privileges restricted.

C. Unannounced Inspections

Existing law also requires that ambulatory surgery centers and office-based surgery practices be accredited if they are neither state-licensed nor Medicare certified. The accrediting agency is required to inspect such outpatient surgery settings at least every three years, and the Medical Board of California also may inspect such facilities as often as necessary, to ensure the quality of care provided.

With the passage of SB 396, approved accrediting agencies also will be authorized to conduct unannounced inspections subsequent to their initial accreditation inspections, as long as the accrediting agency provides specified notice of the unannounced inspection to the outpatient surgery setting. Accredited ambulatory surgery centers and office-based surgery practices that are neither state-licensed nor Medicare certified will receive notification that an inspection will occur within 60 days—so such inspections will not be entirely “unannounced.”

Next Steps

SB 396 becomes effective January 1, 2016.  To prepare for the new law’s changes, accredited surgery centers and office-based surgery practices need to do the following: 

  1. If accredited, review and update medical staff bylaws, policies and procedures to provide for the state’s statutorily required peer review evaluation process;
  2. If accredited, implement a peer review evaluation process that complies with the requirements of California Business and Professions Code Section 805.5 prior to renewing medical staff privileges of existing medical staff members;
  3. Whether licensed, Medicare-certified, or accredited, if not currently querying the relevant professional licensing agencies as part of credentialing, begin doing so for all applicants for initial granting or renewal of clinical privileges; and
  4. If accredited, review facility accreditation requirements and be prepared to undergo an unannounced inspection by the accrediting agency within 60 days following notification that an inspection will occur.