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