BILL ANALYSIS AB 1817 Page 1 Date of Hearing: May 12, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1817 (Arambula) - As Amended: April 26, 2010 Policy Committee: HealthVote:18-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires the California Department of Corrections and Rehabilitation (CDCR) to maintain a statewide utilization management (UM) program, defined as a strategy to ensure health care expenditures are restricted to those most needed and appropriate by reviewing patient-inmate medical records through defined criteria, expert opinion, or both. Specifically, this bill requires CDCR to: 1)Maintain a statewide UM program that includes: a) objective, evidence-based medical necessity criteria and guidelines; b) review and approval of referrals to specialty medical services; c) management of community hospital bed use; d) case management for high medical risk and cost patients; e) a preferred provider organization (PPO) and contract initiatives to improve care. 2)Ensure all adult prisons employ the same UM program. 3)Establish annual quantitative UM performance objectives. 4)Provide reports to the Legislature regarding policies and procedures, objectives and performance outcomes. FISCAL EFFECT No new net costs as this bill essentially codifies current CDCR/federal medical receivership practice and planning. The AB 1817 Page 2 receivership estimates continued implementation of the UM program will result in annual GF savings in the range of $100 million. UM is a significant component of the receiver's ongoing prison health care "turn-around plan" as well as the governor's proposal to reduce correctional health care spending by $800 million in 2010-11. COMMENTS 1)Rationale . According to the receivership, the sponsor of this measure, while this bill is not necessary for implementation of the ongoing UM program, it is important to "to ensure the sustainability of a cost-effective prison health care system once the Receivership has returned control of prison health care back to some State entity. By codifying these nationally recognized standards of effective medicine, the legislature will establish some oversight of the State prison health care system in order to ensure that it does not once again backslide to an unconstitutional level in the future." 2)The problem as stated by the receivership in its October 2009 Utilization Management Project Charter, is a lack of a standardized process of access to specialty care, which has contributed to appointment backlogs, resulting in delayed access to care. In addition, the lack of standardized processes related to long-term bed needs, results in infirmary beds used for non-intended purposes and longer stays. According to the receivership in its April 2010 Cost Containment Report, the current UM referral management and institutional bed management processes are improving care and reducing costs. 3)Background - The California Prison Health Care Receivership is a non-profit organization created to house the activities of the federal Receiver. The Receivership was established by U.S. District Court Judge Thelton E. Henderson as the result of a 2001 class action law suit (Plata v. Schwarzenegger) over the quality of medical care in the state's 33 prisons. The court found that the care violated the Eighth Amendment of the U.S. Constitution, which forbids cruel and unusual punishment of the incarcerated. In 2006, the court appointed the receiver to oversee the delivery of inmate medical care within CDCR. According to the AB 1817 Page 3 Department of Finance (DOF) in a 2010-11 budget change proposal, since 2006 the receiver has significantly increased the number of clinical staff, clinician pay, access to CDCR clinicians, and referrals to specialists and contracted providers, which has resulted in the cost of inmate medical services increasing from $883 million in 2005-06 to $2 billion in 2008-09 with a slight reduction in expenditures anticipated for 2009-10 and 2010-11. 4)Related Legislation . a) AB 1785 (Galgiani), also before the committee today, and also sponsored by the receiver, requires CDCR to maintain a statewide telemedicine services program. b) AB 2747 (Lowenthal), also before the committee today, and also sponsored by the receiver, requires CDCR to maintain and operate a comprehensive pharmacy services program. c) AB 2668 (Galgiani), on this committee's Suspense File, requires CDCR to install telemedicine fixtures and broadband infrastructure in the CDCR Medical Facility. d) AB 2222 (Galgiani), on this committee's Suspense File, authorizes CDCR to install telemedicine fixtures and broadband infrastructure in new or existing buildings authorized pursuant to phase II of AB 900. e) AB 2233 (Nielsen), on this committee's Suspense File, requires CDCR to create a new system of inmate health care delivery and work with UC and the receiver to assess the concept of turning inmate health care over to the UC system. Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081