BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1817|
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                                 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  
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          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.


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          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  

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          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  

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             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.


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          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

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           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

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