BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           1817 (Arambula)
          
          Hearing Date:  08/02/2010           Amended: 04/26/2010
          Consultant:  Jacqueline Wong-HernandezPolicy Vote: Public Safety  
          7-0
          _________________________________________________________________ 
          ____
          BILL SUMMARY: AB 1817 would require the Department of  
          Corrections and Rehabilitation (CDCR) to maintain a statewide  
          utilization management program with respect to inmate health  
          care. Specifically, this bill would require CDCR to:

             1) Develop and implement policies and procedures to ensure  
              that all prisons employ             that program and require  
              that a copy of these policies and procedures be provided to  
              specified legislative committees by July 1, 2011.
             2) Establish annual quantitative utilization management  
              performance objectives, as specified, and, on July 1, 2011,  
              report the objectives it intends to accomplish in each adult  
              prison during the next 12 months to specified legislative  
              committees.
             3) Report on March 1, 2012, and each March 1 thereafter, to  
              specified legislative committees, performance objectives  
              achieved or not achieved and reasons for each, as well as  
              costs for inmate health care for the previous fiscal year.

          This bill makes legislative findings and declarations.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions              2010-11                  2011-12       
           2012-13                         Fund
                                                                  
          Codifies existing plans/practice    Potentially substantial  
          future cost avoidance    General
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: 

          AB 1817 codifies the healthcare utilization management program  
          currently being implemented by the Federal Receiver. The  










          utilization management program was restructured in 2008, and in  
          part of the Receiver's Turnaround Plan of Action. This  
          healthcare delivery process uses standardized, nationally  
          tested, and updated criteria to control when inmates are  
          referred to expensive outside specialists, as well as control  
          the utilization of expensive community hospital beds. When it is  
          fully utilized, it will likely save more than $70 million per  
          year, compared to the cost of the previous CDCR system.

          As specified in this bill, CDCR must, by January 1, 2011, must  
          develop and implement utilization management policies and  
          procedures, as well as performance objectives, as specified. By  
          March 1, 2010, CDCR must report its progress and outcomes for  
          those objectives to the Joint Legislative Budget Committee, the  
          Public Safety, Budget, Health, and Appropriations committees of  
          both houses. The Federal Receiver has already directed that  
          these activities occur, and they are in process under his  
          authority (and in the absence of statute). Thus, any increase in  
          workload to create and implement the utilization management  
          system, and the initial report, is attributable to the  
          Receiver's 
          Page 2
          AB 1817 (Arambula)

          order, and not to the bill. Similarly, any savings achieved from  
          the implementation of this new process while prison health care  
          is still under federal receivership is also the result 
          of the Receiver's directives and not this codifying bill. When  
          the receivership ends, the bill will serve to continue these  
          policies, which will have already begun to achieve ongoing cost  
          avoidance.

          CDCR prison health care is currently in federal receivership. In  
          2005, the United States District Court for the Northern District  
          of California established a Receivership to take control of the  
          delivery of medical services to all CDCR inmates. In its order,  
          the Court set forth comprehensive duties for the Receiver,  
          including leadership and executive management of the California  
          prison medical health care delivery system. The Court expressly  
          ordered the Receiver to "exercise all powers vested by law in  
          the Secretary of the CDCR as they relate to the administration,  
          control, management, operation, and financing of the California  
          Medical health care system."  The Court suspended the  
          Secretary's exercise of these powers for the duration of the  
          Receivership. Moreover, the Court's order expressly provides  
          that, "all costs incurred in the implementation of the policies,  










          plans, and decisions of the Receiver relating to the fulfillment  
          of his duties under this Order shall be borne by (the state).  
          (The state) shall also bear all costs of establishing and  
          maintaining the Office of Receiver, including the compensation  
          of the Receiver and his staff."

          After the Receivership ends, which is unlikely to occur before  
          the first report is due (in March 2012) to the Legislature, the  
          reporting requirement would continue as a result of this bill.  
          At that time, both the savings from utilization management and  
          the cost of the report would continue because this bill would  
          add both to statute. Because the report on utilization  
          management cannot occur without the continued employment of  
          utilization management, the cost would functionally be a minor  
          reduction in savings from utilization management. The majority  
          of costs for the report would be incurred in the first year  
          (under federal receivership) to develop the initial system for  
          collecting and compiling data.