BILL ANALYSIS Ó SB 1462 Page 1 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 SB 1462 Page 2 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). SB 1462 Page 3 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 SB 1462 Page 4 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. SB 1462 Page 5 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 SB 1462 Page 6 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 SB 1462 Page 7 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 SB 1462 Page 8 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 SB 1462 Page 9 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. SB 1462 Page 10 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