BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
SB 484 (Rubio)
As Amended March 21, 2011
Hearing Date: April 5, 2011
Fiscal: Yes
Urgency: No
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SUBJECT
Public Records: Health Care Services Contract Records
DESCRIPTION
This bill would authorize the Legislative Analyst's Office and
Members of the Legislature to inspect health care service
contracts or amendments entered into by the Department of
Corrections and Rehabilitation or the California Medical
Assistance Commission.
BACKGROUND
The California Public Records Act (CPRA), enacted in 1968,
requires public disclosure of public agency documents. The
Legislature, mindful of the right of personal privacy, carved
out exemptions from disclosure for various public agency
documents, including certain health care service contracts and
amendments entered into by public agencies. AB 1177 (Cunneen,
Ch. 749, Stats. 1995) provided an exemption to the public
disclosure requirement for health care service contracts and
amendments entered into by the Department of Corrections (now
the California Department of Corrections and Rehabilitation
(CDCR)) and California Medical Assistance Commission (CMAC).
(Gov. Code Sec. 6254.14.) This exemption was deemed necessary
to protect the competitive nature of the negotiations process
and protect trade secret information of the private companies
entering into these contracts. Although these CDCR and CMAC
health care service contracts are exempt from public disclosure,
as specified, these contracts are open to inspection by the
Joint Legislative Audit Committee (JLAC) and the Bureau of State
Audits (BSA).
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In 2001, a class action was brought on behalf of California
prison inmates for access to constitutional health care
services. This class action, Plata v. Schwarzenegger (2001)
N.D. Cal. Case No. C01-1351 TEH, exposed the lack of fiscal
accountability on the part of the CDCR. In 2005, the court
appointed a receiver to take over the health care service
operations from CDCR. This ten-year case continues to this day,
and CDCR is still under the control of a receivership. The
Inspector General agreed to periodically review the delivery of
medical care at each state prison, but this review does not
include health care services contracts entered into by CDCR.
In addition to documented fiscal irresponsibility on the part of
CDCR, recent news articles have reported that health care
services for prison inmates skyrocketed in 2008-2009 due to a
greater usage of contract medical services. (See Chaussee,
Trade Secrets: inmate health-care contracts kept confidential
Capitol Weekly (Dec. 16, 2010) http://www.capitolweekly.
net/article.php?xid= zclz6k7m6i9zoj as of March 10, 2011; Luery,
On the Money: Trade Secrets CBS Sacramento (Jan. 11, 2011)
http://sacramento.cbslocal.com/2011/01/11/on-the-money-trade-secr
ets/as of March 10, 2011.) These articles raise concerns that
these health care services contracts are exempt from public
disclosure, so taxpayers are not privy to how much these
contracts are costing the state.
On January 26, 2011, the Assembly Committee on Accountability
and Administrative Review heard testimony regarding the
receiver's management over CDCR. Prior to the hearing, the
committee requested budgetary and financial information from the
receiver, including copies of health care services contracts
between CDCR and a current private health care services
provider, Health Net Federal Services, LLC. The receiver's
office provided to the committee a significantly redacted
version of the Health Net contract, which excluded any payment
information, and referenced the confidentiality exemption for
these contracts under the CPRA.
This bill would add the Legislative Analyst's Office (LAO) and
Members of the Legislature to the list of entities authorized to
inspect confidential health services contracts and agreements
entered into by CDCR and CMAC.
This bill has also been referred to the Senate Committee on
Public Safety.
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CHANGES TO EXISTING LAW
Existing law , the California Public Records Act, requires public
disclosure of public agency documents. (Gov. Code Sec. 6250 et
seq.)
Existing law provides limited public access to health care
service contracts or amendments entered into by CDCR and CMAC
contracts, not including any payment rate provisions, one year
after contract execution. Existing law provides full public
access to these contracts, including payment rates, three years
after contract execution. (Gov. Code Sec. 6254.14.) JLAC and
BSA are authorized to inspect these confidential health service
contracts and amendments prior to public disclosure.
This bill would authorize inspection by LAO and Members of the
Legislature of confidential health care service contracts and
amendments entered into by CDCR and CMAC.
This bill also would maintain inspection authority and
confidentiality requirements in existing law as applied to LAO
and Members of the Legislature.
COMMENT
1. Stated need for the bill
The author writes:
Prison health care costs are currently skyrocketing. The
non-partisan LAO found a "dramatic increase in spending on
adult prison health care: from $1.2 billion in 2005-2006 to
$2.5 billion in 2008-2009." Last year, California spent an
average of $16,000 per inmate (170,000 total) on health care
services. The LAO directly attributes the growing health care
costs to greater usage of contract medical services. Despite
the growing costs in prison health care, the LAO and the
Legislature are kept in the dark about exactly how much is
being spent on health contracts because all health care
contracts and records under the Department of Corrections and
Rehabilitation (CDCR) are exempt from the Public Records Act.
2. Additional oversight of state contracts and determination of
state agency financial needs
This bill would authorize LAO and Legislators to inspect health
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care services contracts and agreements entered into by CDCR and
CMAC. Existing law authorizes inspection of these contracts and
agreements by JLAC and BSA prior to public release, and JLAC and
BSA are required to maintain confidentiality of these contracts
and amendments until the contracts or amendments are open to
inspection by the public. JLAC reports that the contracts can
only be reviewed by members of the Committee and may not be
discussed. BSA reports that, although it has inspection
authority, because it has not been asked to perform any audit of
these contracts it has not reviewed them.
The author states that, as demonstrated in the ongoing class
action lawsuit Plata v. Schwarzenegger (2001) N.D. Cal. Case No.
C01-1351 TEH, CDCR has a poor track record for providing
constitutionally adequate health care services to prison
inmates. In 2005, the court appointed a receiver to take over
health care services due, in part, to CDCR's flawed negotiating
procedures, agreeing to excessive rates of compensation, failing
to ensure discounts, and other fiscal incompetencies.
The author argues that, given the current budget crisis, it is
imperative that the Legislature have access to financial
information to adequately determine which state programs and
agencies need funding and appropriate monies as needed. Yet,
because of the unreasonable limited access to these state agency
health care contracts, LAO, charged with budgetary oversight
responsibilities, and Legislators have no way to determine the
current costs of CDCR and CMAC health care services. Indeed,
during a recent review of the CDCR receiver's budget and costs,
the Assembly Committee on Accountability and Administrative
Review requested a copy of the recent health care services
contract between CDCR and Health Net Federal Services, LLC.
Because CDCR is currently under a receivership, the receiver is
responsible for negotiating health care services contracts on
behalf of CDCR. However, the receiver's office provided to the
committee a significantly redacted version of the Health Net
contract, which excluded any payment information, and referenced
the confidentiality exemption for these contracts under the
CPRA.
Further, after the receiver was appointed over CDCR, the Office
of the Inspector General (OIG) agreed to perform periodic
reviews of the receivership's use of state funds for its
administrative operations. The OIG's review of the
receivership, however, is limited to the receivership's
administrative expenditures and does not include a review of
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expenditures for direct medical care delivery. (See Office of
the Attorney General, California Prison Health Care Receivership
Corporation Use of States Funds for Fiscal Year 2008-09,
http://www.oig.ca.gov/media/reports/BOA/audits/
California%20Prison%20Health%20Care%20Receivership%20Corporation%
20Use%20of%20State%20Funds.pdf, June 2010, p. 1.)
Taxpayers for Improving Public Safety, a supporter of this bill,
argues that "Ýw]ith decades of medical neglect culminating with
the federal government seizing control of prison healthcare, we
can prudently project that costs associated with delivering an
appropriate constitutionally compliant level of healthcare to
inmates is likely to climb; and our elected officials should not
be kept in the dark about the details of contracts to which we
are obligating taxpayer dollars." Accordingly, this bill would
provide LAO and Legislators access to these contracts and
amendments for more effective oversight.
3. Confidentiality requirements
This bill would require LAO and members of the Legislature to
observe the same confidentiality requirements that exist under
the CPRA for the Legislative Audit Committee regarding Medi-Cal
and CMAC health care services contracts entered into with county
agencies, as well as certain insurance records maintained by the
Managed Risk Medical Insurance Board. This bill also would
provide that a request for information made by a Legislator to
the BSA regarding CDCR or CMAC health care service contracts
will be considered a request for inspection and subject to
confidentiality provisions.
Health Net, an opponent of the bill, recently entered into a
contract with the California Prison Health Care Services.
Health Net argues against this bill because "Ýi]ncluded in our
contract are rate targets for various regions of the state. Our
concern is that if these target rates become public Health Net
will lose leverage with health care providers to negotiate the
lowest possible rates, and the state will lose savings they may
have otherwise achieved." However, existing law imposes
confidentiality requirements regarding certain state health care
services and insurance contracts. These contracts are
reviewable by certain state agencies or legislative agencies and
committees, but these contracts are exempt from public
disclosure under the CPRA for one year after contract execution,
at which point the public may review the contracts with payment
rates redacted. After three years of contract execution, the
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public may review the entire contract. This bill would maintain
these same confidentiality requirements.
Further, this bill would clarify that the CDCR and CMAC health
care services contracts and amendments are protected from
disclosure by existing trade secret protections during the time
these contracts are exempt from disclosure to the public.
Existing law, Evidence Code Section 1060, provides an
evidentiary privilege from disclosure for trade secrets in order
to protect trade secret owners and their ideas. This bill would
provide a cross-reference to Evidence Code Section 1060, which
would clarify that trade secret protections are applicable to
CDCR and CMAC health services contracts and amendments until the
contract or amendment is fully open to inspection by the public.
Providing legislative access to CDCR's health care services
contracts and amendments will not circumvent the trade secret
evidentiary privilege.
4. Application to CMAC
This bill would provide the LAO and Legislators with access to
health care services contracts entered into by CMAC. In
general, CMAC is responsible for negotiating contracts with
hospitals, on behalf of the Department of Health Care Services
for specific services provided under the Medi-Cal program.
Under existing law, CMAC must report to the Legislature on
January 1 and May 1 of each year the number of persons served
with health care services and the costs per service, among other
things. (Gov. Code Sec. 14165.9.) However, existing law
exempts from public disclosure, as specified, health care
contracts entered into by CMAC. (Gov. Code Sec. 6254(q).) As
such, CMAC health care contracts are confidential, as specified,
but the health care information must be organized and reported
to the Legislature.
Because of CMAC's expertise negotiating health care services
contracts, existing law provides that contracts may be
negotiated by CMAC on behalf of CDCR for prison inmate health
care services. (Gov. Code Sec. 14165.11.) The benefit of CMAC
primarily is to negotiate for lower services in large urban
areas where many medical resources are located and there is
large competition among the medical services. However, CMAC
states that it currently does not negotiate contracts on behalf
of CDCR because most CDCR health care needs are located in
non-urban locations where negotiated health care services are
less competitive. At this time, CMAC solely negotiates health
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care services on behalf of the Department for Health Care
Services. In any event, this bill would maintain existing
confidentiality provisions for CMAC-negotiated health care
services contracts.
Staff notes that, as of 1984, existing law authorizes full
disclosure of certain Medi-Cal and CMAC health care service
contracts or amendments to JLAC and LAO. (Gov. Code Sec.
6254(q).) Accordingly, there is precedence for LAO review of
confidential CMAC health care services contracts and agreements.
Support : Taxpayers for Improving Public Safety
Opposition : Health Net
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation : See Background.
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