BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1462
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          Date of Hearing:  July 3, 2012

                            ASSEMBLY COMMITTEE ON HEALTH
                              William W. Monning, Chair
                      SB 1462 (Leno) - As Amended:  May 25, 2012

           SENATE VOTE :  23-15
           
          SUBJECT  :  County sheriffs: release of prisoners: medical 
          release.

           SUMMARY  : Provides authority for sheriffs, with specified 
          limitations, to release persons from county jail who have a 
          terminal illness with a life expectancy of less than six months 
          and who do not pose a threat to the community.  Provides 
          authority for sheriffs to grant medical parole for inmates who 
          are incapacitated.   For analysis of these provisions see the 
          Assembly Public Safety Committee analysis.   

          Also requires the county to continue to pay the nonfederal share 
          of the Medi-Cal costs for any prisoner released or granted 
          medical parole by the sheriff and who is eligible for Medi-Cal.  
          Further requires the county to consider whether any probationers 
          granted medical probation have private medical insurance, 
          income, or assets to provide for his or her own care and the 
          county shall not be required to provide care to the probationer 
          who can provide his or her own care.  

          EXISTING LAW  :  

          1)Establishes the Medi-Cal Program, administered by the 
            Department of Health Care Services (DHCS), to provide 
            comprehensive health care services and long-term care to 
            pregnant women, children, and people who are aged, blind, and 
            disabled.

          2)Establishes a schedule of benefits under the Medi-Cal Program 
            but excludes from the definition of "health care services," 
            care or services for any individual who is an inmate of an 
            institution (except as a patient in a medical institution), 
            except to the extent permitted by federal law.

          3)Allows, under federal law, continued Medicaid (Medi-Cal in 
            California) eligibility even when an inmate of a public 
            institution is prohibited from receiving benefits, and states 








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            that an individual is not considered to be living in a public 
            institution if the individual is in a public institution for a 
            temporary period pending other arrangements.

          4)Authorizes a sheriff to release a prisoner for transfer to a 
            medical facility or residential care facility if the 
            prisoner's physical condition, as determined by a private 
            physician (not under contract with the county or a county 
            employee), renders the prisoner incapable of causing harm to 
            others upon release, the prisoner's condition is not expected 
            to improve to the extent he/she would pose a threat to public 
            safety, and the sheriff determines the prisoner's medical 
            needs would be better served in a medical facility or 
            residence other than a county correctional facility.

          5)Authorizes compassionate release for prisoners determined by 
            the Secretary of the California Department of Corrections and 
            Rehabilitation (CDCR) or the Board of Parole Hearings to be 
            either: a) terminally ill with an incurable condition caused 
            by an illness or disease that would produce death within six 
            months, as determined by a CDCR physician, or, b) permanently 
            medically incapacitated with a medical condition that renders 
            him or her permanently unable to perform activities of daily 
            living, resulting in 24-hour care, and the incapacitation did 
            not exist at the time of original sentencing.

           FISCAL EFFECT  :  According to the Senate Appropriations 
          Committee:

          1)No state costs.  Increased annual costs to provide long-term 
            care services of $1.5 million federal funds statewide, to the 
            extent 30 prisoners are granted medical probation and 
            determined eligible for Medi-Cal. Estimated costs are based on 
            an average annual cost of $100,000 per individual. Statewide 
            costs could be higher or lower commensurate with the actual 
            number of prisoners granted medical probation and the medical 
            costs specific to each individual.

          2)Major annual savings in the millions of dollars to local jails 
            as a result of eliminating costly security and medical costs 
            for these prisoners.  In Los Angeles (LA) County alone, annual 
            savings of $7.3 million is estimated for 10 individuals 
            identified as potentially eligible for medical probation 
            (based on an average daily security/base medical rate of 
            $2,000 per prisoner).








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           COMMENTS  :

           1)PURPOSE OF THIS BILL  .  According to the author, this bill 
            provides sheriffs with an additional tool to help them more 
            effectively manage the high costs of their medically 
            incapacitated inmate population by extending to county jail 
            facilities a similar authority to compassionate release and 
            medical parole that is currently granted to CDCR.  The author 
            states that this bill is needed because under the current law, 
            sheriffs may only release someone who has been diagnosed by a 
            private doctor.  However, given that the illness must happen 
            after the time of sentencing, it is a practical impossibility 
            for a non-contracted, or non-county doctor to come into 
            contact with the inmate and make a diagnosis.  According to 
            the author, this bill would also allow the sheriff to request 
            that the court re-sentence an inmate to medical probation, in 
            lieu of jail time, in cases where a prisoner is deemed to no 
            longer pose a threat to public safety, is permanently unable 
            to perform activities of daily living, and requires 24-hour 
            care - or - the patient requires acute long-term inpatient 
            rehabilitation services.  

           2)BACKGROUND  .  According to the author, prior to the 
            implementation of realignment, inmates sentenced to county 
            jail typically served misdemeanor sentences of one year or 
            less in custody.  In fact, the average time served for a 
            misdemeanor in LA County was as little as 26 days behind bars. 
             Since realignment, however, inmates can now serve 
            considerably longer sentences at the local level leaving 
            county sheriffs without the resources necessary to provide the 
            constitutionally mandated level of medical care required 
            should a prisoner become incapacitated due to a serious 
            illness that did not exist at the time of their sentencing.  
            This bill attempts to provide financial relief to counties in 
            terms of lower medical costs.  According to the author, only 
            one county in the state, LA, has a licensed hospital 
            associated with the jail facility.  In LA County there are 
            three options available to seriously ill inmates while in 
            custody.  There is an acute care hospital that is operated by 
            the sheriff.  If the inmate requires urgent care, the county 
            hospital is then utilized.  And finally, if the inmate is in 
            the north part of the county and unable to be transported, the 
            sheriff has a direct contract with a private hospital.  
            According to the LA Sheriff, the cost for treatment in the 








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            medical facility operated by the county jail is about $1,971 
            dollars a day, without any surgeries.  Every other county in 
            the state must contract with outside hospitals to house and 
            treat inmates with acute medical needs.  Incarcerated inmates, 
            regardless of their medical condition, are not eligible to 
            receive any federally funded medical care.  Under this bill, 
            prisoners granted medical probation will no longer be 
            prohibited from accessing federally funded medical benefits.  

           3)MEDI-CAL  .  Medi-Cal is California's version of the federal 
            Medicaid program.   It is a health coverage program for 
            certain low-income individuals, children and families.  It is 
            not universal medical coverage and everyone is not eligible.  
            There are eligibility requirements.  The largest categories 
            are the aged, blind, disabled (called seniors and people with 
            disabilities or SPDs), children, pregnant women, parents and 
            certain other relatives caring for a child without a parent, 
            women with breast or cervical cancer, people that have 
            tuberculosis, people needing dialysis, and people in long-term 
            care.  Many, but not all of these individuals must be at or 
            below a certain income limit, usually measured as a percent of 
            the federal poverty level (FPL) to be eligible.  Others must 
            spend their income above a certain limit on their own medical 
            expenses before Medi-Cal will pay for the remainder of their 
            medical expenses.  The portion that a person or family must 
            pay or incur towards their own medical expenses is called a 
            share of cost.  Some individuals are eligible for Medi-Cal 
            without an application such as persons who are low-income 
            SPDs.  These individuals also qualify for programs such as the 
            Supplemental Security Income/State Supplementary Payment 
            (commonly referred to as SSI/SSP) program.  

          The federal and state governments jointly fund the Medicaid 
            program.  Because Medicaid is an entitlement program, there is 
            no limit on the amount the federal government pays as long as 
            the state pays its share.  The federal funds are referred to 
            as federal financial participation (FFP).  The shared 
            financing has been a source of tension between the states and 
            the federal government for many years.  States have incentives 
            to maximize FFP using financing mechanisms available under 
            federal law.  Some states' use of these mechanisms to increase 
            federal payment has led to increased federal scrutiny and 
            legislative and regulatory actions to limit certain financing 
            arrangements.









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           4)FINANCING MECHANISMS  .  Certified Public Expenditures (CPEs) 
            are one of several mechanisms that a state may employ to 
            obtain FFP and make supplemental payments to Medi-Cal 
            providers without cost to the state General Fund.  Under a CPE 
            arrangement, government providers certify their Medicaid 
            expenditures to the state, and the state then obtains federal 
            reimbursement on the basis of these CPEs.  Medicaid law allows 
            states to finance the nonfederal share of payments with CPEs 
            as long as the funds are derived from state or local tax 
            revenue and certified by units of local or state government as 
            eligible for federal reimbursement.  States are responsible 
            for ensuring that expenditures are eligible for federal 
            reimbursement by reviewing standard cost reports filed 
            annually by each government provider.  In no event may the 
            reimbursement rate exceed the equivalent Medicare rate.  

          In 2005, the State of California sought a five year federal 
            waiver as a Medicaid demonstration project under the authority 
            of Section 1115(a) of the Social Security Act.  The nonfederal 
            share of Medi-Cal funds for 22 county and University of 
            California (UC) hospitals known as Designated Public Hospitals 
            (DPHs) was shifted from State General Funds to CPEs.  This 
            allowed the state to reduce the General Fund contribution and 
            allowed DPH hospitals to be reimbursed up 100% of the 
            equivalent Medicare rates.  This financing mechanism was 
            renewed in the 2010 successor demonstration waiver.  

          Provider fees or taxes are another mechanism states have used to 
            generate state matching funds.  In 1991, federal law was 
            enacted to limit the use of provider fees as it was viewed as 
            an overt recycling of money collected from providers to obtain 
            the match and paid back to the providers or retained by the 
            state.  The law now limits the class of health care providers 
            and requires the fee to be assessed uniformly on all 
            non-public providers in the class (Medi-Cal and non Medi-Cal) 
            and prohibits states from guaranteeing that a portion will be 
            returned to the provider (referred to as "hold harmless").  
            California has enacted provider fees on hospitals, nursing 
            homes, managed care organizations, and intermediate care 
            facilities for the developmentally disabled.  Payment in those 
            programs may be based on the volume of Medi-Cal services or 
            patient quality measures.  

           5)ADULT INMATES AND PAROLEES  .  In November 2010, CMS approved a 
            five-year Medi-Cal Section 1115(a) Demonstration/Pilot Project 








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            Waiver, entitled "A Bridge to Reform."  This Demonstration is 
            intended as a bridge to implementation of the Patient 
            Protection and Affordable Care Act which requires states to 
            include childless adults, under age 65, who are not otherwise 
            eligible for Medi-Cal or Medicare with incomes up to 133% of 
            the federal poverty level (FPL) in its Medicaid program.  The 
            2010 waiver and AB 342 (John A. Pérez), Chapter 723, Statutes 
            of 2010, implementing these provisions, establishes the 
            Low-Income Health Plan (LIHP) for this population and provides 
            for it to be statewide at county option.  A county that 
            chooses to participate will use CPEs as the matching funds.  
            Counties are authorized to provide LIHP coverage to persons 
            with income up to 200% FPL as well, but in a fashion that 
            minimizes the need to impose a limit on the population that is 
            0-133% FPL.  AB 1628 (Committee on Budget), Chapter 729, 
            Statutes of 2010, allows counties to enroll inmates, 
            prisoners, and parolees in the LIHP program to obtain FFP for 
            inpatient hospital services provided to state prison inmates 
            and for mental health services provided to parolees and 
            provides for reimbursement to the counties from the CDCR for 
            those inmates for whom it is responsible.  Additionally, AB 
            1628 allows participating counties to seek FFP for Medi-Cal 
            eligible jail inmates that were paid for from county funds.

          Medi-Cal regulations make individuals who are inmates of public 
            institutions ineligible for Medi-Cal.  However, the federal 
            Social Security Act governing Medicaid and a 1997 letter from 
            the federal Department of Health and Human Services indicates 
            FFP is available through Medicaid when an inmate becomes a 
            patient in a medical institution on an inpatient basis.  
            Additionally, a 2004 letter to State Medicaid directors from 
            CMS encourages states to "suspend" and not "terminate" 
            benefits while a person is in a public institution or 
            Institute for Mental Disease, noting the payment exclusion 
            (known as the "inmate exception") under Medicaid does not 
            affect the eligibility of an individual for the Medicaid 
            program.  This policy was codified with regard to juveniles in 
            SB 1147 (Calderon and Yee), Chapter 546, Statutes of 2008.  
            DHCS indicated that the necessary protocols were issued in 
            March 2010.   

          6)SUPPORT  .  The LA County Sheriff's Department, sponsor of this 
            bill, writes in support that with realignment, county jails 
            are housing inmates with much longer sentences such as four, 
            seven, 10 years and more.  According to the sponsor, the 








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            concern is that if one of these longer-term inmates has a 
            severe medical problem, where they are incapacitated or if 
            they are going to die within a short time, it makes sense to 
            provide for a mechanism to release them from county jail 
            custody.  The sponsor states in support, this bill will create 
            a system to accomplish release for certain medically infirm 
            inmates who have less than six months of life expectancy and 
            where the inmate would not pose a threat to public safety.  In 
            addition, according to the sponsor, this bill allows the 
            sheriff to request a medical probation for an inmate who is 
            physically incapacitated.  The California Catholic Conference, 
            also in support, states that compassionate release of 
            qualified prisoners is a responsible way to reduce the prison 
            population, save costs and maintain public safety.  

           7)OPPOSITION .  According to the California District Attorneys 
            Association (CDAA), this bill creates new processes with an 
            untenable conflict built into them because the doctor 
            rendering the opinion about inmates to be potentially released 
            is a county jail employee or contractor, and is therefore 
            presumably beholden to the county that employs him or her.  
            Existing law does not suffer from this conflict because the 
            doctor cannot be a county employee or under contract with the 
            county.  According to CDAA, regarding medical probation if a 
            defendant no longer qualifies, the court can keep him or her 
            out of custody.  An offender who no longer qualifies for the 
            relief contemplated by this bill should cease to enjoy it.  
            The opposition further states they understand the sheriffs' 
            desire and need to be able to effectively manage their 
            populations, but are concerned that bills of this nature 
            limiting custody time are becoming the weapon of choice to 
            deal with the obvious outcroppings of the policies espoused by 
            realignment.  At some point, there have to be consequences for 
            criminality and this bill diminishes that notion.

           8)PREVIOUS LEGISLATION  .  

             a)   AB 396 (Mitchell), Chapter 394, Statutes of 2011, 
               requires the DHCS to develop a process to allow counties 
               and the Division of Juvenile Facilities of CDCR to obtain 
               federal funds for inpatient hospital and psychiatric 
               services provided to juvenile.    

             b)   AB 678 (Pan), Chapter 397, Statutes of 2011, establishes 
               a supplemental payment program for governmental entity 








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               providers of Medi-Cal emergency medical transportation 
               services using CPEs to match federal funds and authorizes 
               local entities to claim FFP for the difference between the 
               reimbursement rate under the Medi-Cal Program and the 
               actual cost of providing the service.  

             c)   SB 695 (Hancock), Chapter 647, Statutes of 2011, allows 
               counties to seek reimbursement for Medi-Cal benefits for an 
               individual awaiting adjudication in a county juvenile 
               detention facility or camp, if that individual is eligible 
               to receive benefits at the time of their admittance.  

             d)   SB 1399 (Leno), Chapter 405, Statutes of 2010, provides 
               that any prisoner determined to be medically incapacitated 
               with a medical condition that renders the prisoner 
               permanently unable to perform activities of basic daily 
               living, and results in the prisoner requiring 24-hour care, 
               and that incapacitation did not exist at the time of 
               sentencing, shall be granted medical parole, if the Board 
               of Parole Hearings determines that the conditions under 
               which the prisoner would be released would not reasonably 
               pose a threat to public safety.

             e)   AB 959 (Frommer), Chapter 162, Statutes of 2006, 
               authorizes state facilities (hospitals, veterans' homes, 
               and clinics) and clinics owned or operated by the state, 
               cities, counties, and UC and health care districts to use 
               local funds to obtain FFP for supplemental Medi-Cal 
               reimbursements for hospital outpatient services.  

             f)   AB 915 (Frommer), Chapter 747, Statutes of 2002, 
               authorizes local public agencies and public health 
               facilities to use local funds to obtain FFP for 
               supplemental Medi-Cal reimbursements for hospital 
               outpatient services.

           9)DOUBLE REFERRAL  .  This bill is double referred and was heard 
            in the Assembly Public Safety Committee and passed out on a 
            vote of 4-2 on June 26, 2012.

           10)POLICY COMMENT  .  The Senate Appropriations Committee amended 
            this bill to require any prisoner or probationer with assets, 
            resources, or health insurance to pay the costs of their own 
            care.  If the prisoner or probationer is eligible for 
            Medi-Cal, the amendments require the county to pay the 








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            nonfederal share.  This latter may prove to be easier said 
            than done for the following reasons:

              a)   No mechanism for county payment  .  Generally, Medicaid 
               programs are jointly funded by the state and federal 
               government.  Each quarter, States receive federal matching 
               funds, usually at a dollar for dollar matching rate, based 
               on each state's estimate of anticipated Medicaid 
               expenditures as certified  by the state  on specific forms 
               prescribed by CMS.  States are also required to submit very 
               specific documentation of expenditures to ensure that the 
               reported expenditures are allowable.  This bill does not 
               include any mechanism for the equivalent documentation of 
               county expenditures.  This will not be a problem in 
               counties covered by the waiver and that have county 
               facilities and is already using CPEs if the care is 
               provided at a county facility.  However, beyond that, if it 
               is the intent of the bill that the State makes the 
               expenditure, there needs to be a mechanism for the county 
               to reimburse the State and a methodology for determining 
               the amount owed.  

              b)   Enforcement  .  Medi-Cal is an entitlement.  If a person 
               is released from custody under this bill and is eligible 
               for Medi-Cal, it is questionable whether a requirement that 
               the county pay the nonfederal share is enforceable.  

              c)   Payment to private providers  .  A person who is released 
               pursuant to the provisions of this bill will be eligible to 
               receive services from any Medi-Cal provider, not only a 
               county operated or owned provider.  In fact, most of those 
               released on medical parole will probably be place in 
               private long-term care facilities.  In such a case, the 
               county funds will be used to pay a private provider.  
               Currently, in most, if not all, circumstances in which a 
               county is providing the match, the services are also being 
               provided by the county at a county owned or operated 
                                                                               facility.  Generally, when the non-federal share of 
               Medi-Cal payments are to private providers, and are funded 
               with other than general fund, it is by means of private 
               funds, such as provider fees.  In fact, in 1991, Congress 
               limited the use of funds from local governments to pay 
               private providers and use of them has come under federal 
               scrutiny.  









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           11)SUGGESTED AMENDMENT  .  The requirement that the county pay the 
            nonfederal share for a prisoner on medical parole is limited 
            to the period of medical parole, but is not similarly for a 
            person released with a terminal illness.  There is no 
            rationale for requiring the county to be financially 
            responsible beyond the time it would have been otherwise 
            liable.  To clarify this, the following technical amendment is 
            suggested:

            d) For any prisoner released pursuant to this section who is 
            eligible for Medi-Cal, the county shall continue to pay the 
            nonfederal share of the prisoner's Medi-Cal costs  for the 
            period of time the prisoner would have otherwise been 
            incarcerated.
             
           REGISTERED SUPPORT / OPPOSITION  :

           Support 

           Los Angeles County Sheriff's Department (sponsor)
          California Attorneys for Criminal Justice 
          California Catholic Conference
          California Probation, Parole, and Correctional Association
          California Public Defenders Association
          California State Sheriffs' Association
          Californians United for a Responsible Budget
          Chief Probation Officers of California 
          Crestwood Behavioral Health
          Legal Services for Prisoners with Children

           Opposition 
           
          California District Attorneys Association
          Crime Victims Action Alliance
          Crime Victims United of California

           Analysis Prepared by  :    Marjorie Swartz / HEALTH / (916) 
          319-2097