BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1817| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1817 Author: Arambula (I) Amended: 4/26/10 in Assembly Vote: 21 SENATE PUBLIC SAFETY COMMITTEE : 7-0, 6/22/10 AYES: Leno, Cogdill, Cedillo, Hancock, Huff, Steinberg, Wright SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 70-0, 5/20/10 - See last page for vote SUBJECT : Corrections: inmate health care: utilization management program SOURCE : California Prison Healthcare Services (federal Prison HealthCare Receiver) DIGEST : This bill (1) makes specified findings and declarations; (2) requires the Department of Corrections and Rehabilitation (CDCR) to maintain a statewide utilization management program with respect to inmate health care, as specified; (3) requires CDCR to 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; (4) requires CDCR CONTINUED AB 1817 Page 2 to 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; and (5) requires CDCR to report on March 1, 2012, and each March 1 thereafter, to specified legislative committees, specified performance objectives achieved or not achieved and reasons for each, as well as costs for inmate health care for the previous fiscal year both statewide and in each prison and a comparison of costs from the year prior to that. ANALYSIS : Existing law requires the CDCR to consult with the California Medical Assistance Commission to assist the department in planning and negotiating contracts for the purchase of health care services. The commission shall advise the department, and may negotiate directly with providers on behalf of the department, as mutually agreed upon by the commission and the department. (Penal Code Section 5023.) Existing law provides: 1. CDCR may contract with providers of health care services and health care network providers, including, but not limited to, health plans, preferred provider organizations, and other health care network managers. Hospitals that do not contract with the department for emergency health care services shall provide these services to the department, as specified. The department may only reimburse a noncontract provider of hospital or physician services at a rate equal to or less than the amount payable under the Medicare Fee Schedule, regardless of whether the hospital is located within or outside of California. 2. An entity that provides ambulance or any other emergency or nonemergency response service to the department, and that does not contract with the department for that service, shall be reimbursed for the service at the rate payable under the Medicare Fee Schedule, regardless of whether the provider is located within or outside of California. CONTINUED AB 1817 Page 3 3. The maximum rates set forth in this section shall not apply to contracts entered into through the department's designated health care network provider, if any. The rates for those contracts shall be negotiated at the lowest rate possible under the circumstances. 4. The department and its designated health care network provider may enter into exclusive or nonexclusive contracts on a bid or negotiated basis for hospital, physician, and ambulance services contracts. 5. During the existence of the receivership established in United States District Court for the Northern District of California, Case No. C01-1351 TEH, Plata v. Schwarzenegger , references in this section to the "secretary" shall mean the receiver appointed in that action. (Penal Code Section 5023.5.) This bill requires that, in order to promote the best possible patient outcomes, eliminate unnecessary medical and pharmacy costs, and ensure consistency in the delivery of health care services, the department shall maintain a statewide utilization management program that shall include, but not be limited to, all of the following: 1. Objective, evidence-based medical necessity criteria and utilization guidelines. 2. The review, approval, and oversight of referrals to specialty medical services. 3. The management and oversight of community hospital bed usage and supervision of health care bed availability. 4. Case management processes for high medical risk and high medical cost patients. 5. A preferred provider organization (PPO) and related contract initiatives that improve the coverage, resource allocation, and quality of contract medical providers and facilities. This bill requires CDCR to develop and implement policies and procedures to ensure that all adult prisons employ the CONTINUED AB 1817 Page 4 same statewide utilization management program described above that supports the department's goals for cost-effective auditable patient outcomes, access to care, an effective and accessible specialty network, and prompt access to hospital and infirmary resources. The CDCR shall provide a copy of these policies and procedures, by July 1, 2011, to the Joint Legislative Budget Committee, the Senate Committee on Appropriations, the Senate Committee on Budget and Fiscal Review , the Senate Committee on Health, the Senate Committee on Public Safety, the Assembly Committee on Appropriations, the Assembly Committee on Budget, the Assembly Committee on Health, and the Assembly Committee on Public Safety. This bill requires CDCR to establish annual quantitative utilization management performance objectives to promote greater consistency in the delivery of contract health care services, enhance health care quality outcomes, and reduce unnecessary referrals to contract medical services. On July 1, 2011, the CDCR shall report the specific quantitative utilization management performance objectives it intends to accomplish statewide in each adult prison during the next 12 months to the Joint Legislative Budget Committee, the Senate Committee on Appropriations, the Senate Committee on Budget and Fiscal Review, the Senate Committee on Health, the Senate Committee on Public Safety, the Assembly Committee on Appropriations, the Assembly Committee on Budget, the Assembly Committee on Health, and the Assembly Committee on Public Safety. The requirement for submitting a report imposed under this subdivision is inoperative on January 1, 2015, pursuant to Section 10231.5 of the Government Code. This bill requires that on March 1, 2012, and each March 1 thereafter, the department shall report all of the following to the Joint Legislative Budget Committee, the Senate Committee on Appropriations, the Senate Committee on Budget and Fiscal Review, the Senate Committee on Health, the Senate Committee on Public Safety, the Assembly Committee on Appropriations, the Assembly Committee on Budget, the Assembly Committee on Health, and the Assembly Committee on Public Safety: 1. The extent to which the department achieved the CONTINUED AB 1817 Page 5 statewide quantitative utilization management performance objectives set forth in the report issued the previous March as well as the most significant reasons for achieving or not achieving those performance objectives. 2. A list of adult prisons that achieved and a list of adult prisons that did not achieve its quantitative utilization management performance objectives and the significant reasons for the success or failure in achieving those performance objectives at each adult state prison. 3. The specific quantitative utilization management performance objectives the department and each adult state prison intends to accomplish in the next 12 months. 4. A description of planned and implemented initiatives necessary to accomplish the next 12 months' quantitative utilization management performance objectives statewide and for each adult state prison. The department shall describe initiatives that were considered and rejected and the reasons for their rejection. 5. The costs for inmate health care for the previous fiscal year, both statewide and at each adult state prison, and a comparison of costs from the fiscal year prior to the fiscal year being reported both statewide and at each adult state prison. This bill states that it is the intent of the Legislature that any activities the department undertakes to implement the provisions of this section shall result in no year over year net increase in state costs. This bill provides that the following definitions shall apply to this section: 1. "Contract medical costs" mean costs associated with an approved contractual agreement for the purposes of providing direct and indirect specialty medical care services. CONTINUED AB 1817 Page 6 2. "Specialty care" means medical services not delivered by primary care providers. 3. "Utilization management program" means a strategy designed to ensure that health care expenditures are restricted to those that are needed and appropriate by reviewing patient-inmate medical records through the application of defined criteria or expert opinion, or both. Utilization management assesses the efficiency of the health care process and the appropriateness of decision making in relation to the site of care, its frequency, and its duration through prospective, concurrent, and retrospective utilization reviews. 4. "Community hospital" means an institution located within a city, county, or city and county which is licensed under all applicable state and local laws and regulations to provide diagnostic and therapeutic services for the medical diagnosis, treatment, and care of injured, disabled, or sick persons in need of acute inpatient medical, psychiatric, or psychological care. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee anaylsis: Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Codifies existing Potentially substantial future cost General Plans/practice avoidance SUPPORT : (Verified 8/3/10) California Prison Healthcare Services (federal Prison HealthCare Receiver) (source) OPPOSITION : (Verified 8/3/10) Taxpayers for Improving Public Safety CONTINUED AB 1817 Page 7 ARGUMENTS IN SUPPORT : According to the author's office state, this bill codifies the healthcare utilization management program currently being used by the Prison Receivership. 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. This bill is a key measure to move the state prison system out of federal court receivership. By codifying this decision-making process, the Department of Corrections and Rehabilitation will use a system that meets the court's standards when control of the state's prisons is returned to CDCR. The bill is part of the budget plan to reduce prison costs by $800 million, including ongoing annual savings of approximately $100 million. ASSEMBLY FLOOR: AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Davis, De Leon, DeVore, Emmerson, Eng, Feuer, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nestande, Niello, Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Yamada NO VOTE RECORDED: Coto, De La Torre, Evans, Fletcher, Harkey, Nava, Norby, Villines, John A. Perez, Vacancy RJG:do 8/3/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED