BILL ANALYSIS AB 1985 Page 1 Date of Hearing: April 21, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1985 (Galgiani) - As Introduced: February 17, 2010 Policy Committee: Health Vote:15-2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill authorizes the California Department of Corrections and Rehabilitation (CDCR), subject to approval by the federal receiver of medical care, to establish a list of durable medical equipment (DME) and to determine the maximum allowable reimbursement rates for each item, per methodologies used in the Medi-Cal program. Exempts the provisions of the bill from the Administrative Procedures Act. FISCAL EFFECT 1)This bill is permissive. If CDCR chose to implement the DME approach proposed in this bill, the fiscal impact is a one-time GF cost of $250,000 to CDCR to research and establish a list of DME and associated fee schedules for 33 correctional facilities with distinct procurement and expenditure policies. 2)Annual GF costs of $1.5 million to $2 million to CDCR to provide staff to oversee the implementation and procurement of DME pursuant to the provisions of this bill. 3)Unknown GF savings may accrue to the extent a centralized procurement and reimbursement system brings down CDCR costs for DME. COMMENTS 1)Rationale . This bill is author sponsored and proposes to conform the reimbursement of durable medical equipment in California prisons to current law under the Medi-Cal program. DME includes items such as wheelchairs, hospital beds, oxygen, AB 1985 Page 2 and related respiratory equipment. This bill proposes DME language enacted by AB 1762 (Committee on Budget), Chapter 230, Statutes of 2003 for the Medi-Cal program to be applied to DME procured by CDCR. The author indicates this approach will increase efficiencies and generate savings. 2)Plata Receivership Eclipses DME Requirements in Legislation . In February 2006, the federal District Court for Northern California appointed a receiver to control the delivery of medical services for California prisoners. Given that CDCR medical care is now under federal receivership, it may be appropriate to allow the receiver to evaluate whether CDCR is following the dictates of current court orders and best medical practices before requiring additional practices that may overlap or conflict with the direction of the receivership. 3)Medi-Cal Audit of DME . Following a Bureau of State Audits report in 2002 about prohibitive DME cost escalation in Medi-Cal, AB 1762 was enacted to require Medi-Cal to establish price caps and fee schedules. Following enactment of those provisions, Medi-Cal DME costs were reduced substantially. While the enactment of AB 1762 may have generated cost savings and alleviated escalating expenditures under Medi-Cal, the funding and circumstances of health care provided in California prisons are fundamentally different. The approach that was effective for Medi-Cal may not be plausible in the corrections environment. The CDCR approach to DME is generally decentralized and is focused around competitive bidding for costs of less than $100,000 and for costs in excess of $100,000 the Department of General Services handles procurement. It is unclear how easily CDCR could adapt to the approach contained in this bill. 4)Related Legislation . AB 2119 (Galgiani) in 2008 was similar to this bill, but required action by CDCR, while AB 1985 is permissive. AB 2119 was held on the Suspense File of this Committee. Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081