BILL ANALYSIS
AB 1817
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1817 (Arambula) - As Amended: April 5, 2010
SUBJECT : Corrections: inmate health care.
SUMMARY : Requires the California Department of Corrections and
Rehabilitation (CDCR) to maintain a statewide utilization
management (UM) program, ensure that each adult prison employ
the same program, and annually report to the Legislature, as
specified. Specifically, this bill :
1)Makes specified Legislative findings and declarations related
to rising pharmacy and medical costs for state prison inmates
and states that controlling such costs is a top priority for
the Legislature.
2)Defines "UM program" as a strategy designed to ensure that
health care expenditures are restricted to those that are
needed and appropriate by reviewing patient-inmate medical
records through defined criteria or expert opinion, or both.
3)Requires CDCR to do the following:
a) Maintain a statewide UM program that includes, but is
not limited to objective, evidence-based medical necessity
criteria and utilization guidelines; the review, approval,
and oversight of referrals to specialty medical services;
management and oversight of community hospital bed usage
and supervision of bed eligibility; case management for
high medical risk and cost patients; and, a preferred
provider organization (PPO) and related contract
initiatives that improve the quality of care.
b) Develop and implement policies and procedures to ensure
that all adult prisons employ the same UM program that
supports specified CDCR goals and provide the Joint
Legislative Budget Committee and the appropriate fiscal and
policy committees of the Legislature with a copy of these
policies and procedures by January 1, 2011.
c) Establish annual quantitative UM performance objectives
to promote greater consistency in health outcomes and other
AB 1817
Page 2
specified goals, report to the Legislature the specific
objectives it intends to accomplish in each adult prison
during the next 12 months by January 1, 2011, and makes the
requirement for submitting the report inoperative on
January 1, 2015.
d) Report to the Legislature on March 1, 2012 and each
March 1 thereafter until March 1, 2016, the following
information:
i) The extent to which CDCR achieved specified
objectives issued the previous March and the most
significant reasons for achieving or not achieving these
objectives.
ii) A list of adult prisons that achieved and did not
achieve specified objectives and the most significant
reasons for the success or failure in achieving these
objectives.
iii) Specific objectives CDCR and each adult prison
intends to accomplish in the next 12 months; a
description of planned and implemented initiatives
necessary to accomplish the next 12 months' objectives
statewide and for each prison; and, describe initiatives
that were considered and rejected and reasons for their
rejection.
iv) The costs for inmate health care for the previous
fiscal year, both statewide and at each adult state
prison and a comparison of costs from the prior and
current fiscal year both statewide and at prison.
4)States the Legislature's intent that specified requirements on
CDCR will result in no increases in cost to the state.
EXISTING LAW :
1)States the intent of the Legislature that CDCR operate in the
most cost-effective and efficient manner when purchasing
health care services for inmates.
2)Provides that CDCR may contract with health care providers and
health care network providers, including but not limited to,
health plans, PPOs, and other health care network managers.
AB 1817
Page 3
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . The author states that this bill, which
is sponsored by the federal Receiver, will reduce the high
cost of prison health care that results from over-utilization
of contract physicians and hospital beds. Specifically, this
bill will maintain the operation of the restructured CDCR UM
program and couple it with strong legislative oversight. The
author states that instituting the management tools contained
in this bill, according to estimates from the Receiver, would
reduce contract medical care costs by up to $100 million.
2)FEDERAL RECEIVER FOR CDCR . In February 2006, as a result of
Plata v. Schwarzenegger (N.D. Cal. Oct. 3, 2005) No. C01-1351
TEH (Plata), the federal court appointed a Receiver to control
the delivery of medical services for prisoners in California.
The court found that an inmate died needlessly every seven
days because of inadequate medical care in California's 33
adult prisons, which violated the Eighth Amendment of the U.S.
Constitution forbidding cruel and unusual punishment. Nearly
two years later, the court appointed a new Receiver to
continue the efforts made by the first Receiver to bring
prison medical care up to federal standards. The Receiver is
charged with taking over the operations of the state's prison
medical care system and bringing it up to constitutional
levels. The California Prison Health Care Services (CPHCS) is
comprised of the civil service employees, formerly from CDCR,
who work at the direction of the federal Receiver, J. Clark
Kelso.
3)UM PROGRAM . According to the CPHCS, the UM program, which
began in July 2008, is designed to utilize a criteria based
decision-making process to determine the most appropriate
treatment. Under the program, high cost patients who have
high acuity needs are assigned to a case management nursing
consultant, which maximizes the efficiency and coordination of
their continuity of care. This improved case management has
been shown to mitigate costs by reducing lapses in care. The
Receiver states that a small percentage of high acuity
patients generate a large portion of potentially avoidable
medical costs (according to claims information from fiscal
AB 1817
Page 4
year 2008-09, 588 patients generated over $139 million in
medical costs).
In 2010, CPHCS issued its Tri-Annual Report, which stated that
they expect to establish a centralized UM system by October
2010. In order to maximize the UM department, CPHCS
implemented InterQual specialty referral guidelines in
September 2008, initiated regular infirmary health care bed
management meetings in June 2009, and focused the rest of 2009
on statewide implementation of infirmary management meetings.
InterQual is a licensed software product that assists in the
clinical adjudication of specialty referrals. As of September
2009, CPHCS has redirected 12 positions from other parts of
the organization to implement the UM program, including a
Chief Medical Officer, Nursing Director, and four Regional
Physician Advisors based at the headquarters. Six other
Regional Field Staff, whose objective is to monitor specialty
referral practices, are field based. CPHCS expects to launch
a revamped case management system and open a new headquarters
for the UM Committee this year.
4)PPO . CPHCS states that it is in the final process of
evaluating bids to contract with a PPO for a health care
specialty and hospital network to provide non-primary care
services (the request for proposal does not include mental
health or dental services). While CDCR does have a
functioning contracts unit, it lacks the capacity to maintain
a full specialty network, monitor hospital and provider
offices for safety and cleanliness, monitor the network for
access and availability, and provide network upgrades. As a
result, CPHCS believes that it would be more efficient to
contract with a PPO instead. CPHCS believes that the PPO
program will provide them with improved oversight and
flexibility by allowing them to intervene with the network
faster, change providers who are not meeting particular
quality standards, and to leverage the patient population to
drive down the cost of care.
5)GROWTH IN PRISON HEALTH CARE COSTS . Since the beginning of
the Plata case prison health care costs have increased
substantially. While the state spent roughly $800 million on
health care costs in 2001, the administration estimates that
the state will spend $2.2 billion on inmate health care costs
this year. According to a recent CDCR report, increased
inmate health care costs are a result of implementing the
AB 1817
Page 5
provisions of three class action lawsuits and the major costs
increases come from increased medical staffing levels, salary
increases, pharmaceutical and medical supplies, and increased
custody staff for medical guarding, access, and
transportation. The Plata case resulted in increased costs of
about $810 million, Coleman v. Schwarzenegger (E.D. Cal. Jul.
23, 2007) No. S90-0520 LKK JFM P (related to mental health),
and Perez v. Tilton (N.D.Cal. Nov. 13, 2007) No. C 05-05241
JSW (related to dental health), resulted in an additional $423
million in annual costs. In an effort to reduce and stabilize
contract medical costs, which have a year to year expenditure
growth rate average of 28% from 2003-04 to 2008-09, CPHCS
reports that it is implementing several cost containment
measures. CPHCS hopes to achieve a zero growth rate for
2009-10 by implementing a third party administrator to improve
claims processing, a PPO, and fully implementing the UM
program.
6)SUPPORT . This bill is part of a package of bills that are
sponsored by the Federal Receiver to reduce prison health care
costs and bring the system up to Constitutional levels. The
Receiver states that this bill is necessary to ensure that
CDCR maintains the statewide UM program, which was established
under the Receiver. Health Management Systems (HMS) also
supports this bill as it would bring significant cost savings
to California by implanting a new UM function for California
inmates. HMS states that it has worked with state and federal
governments, including Medicaid and CDCR to improve quality
and contain costs. While HMS is supportive of the bill, the
organization recommends that the bill include language to
clearly separate the functions of the UM program from the
entity responsible for paying PPO claims, which will limit
perceived conflicts of interest.
7)RELATED LEGISLATION .
a) AB 1785 (Galgiani), sponsored by the federal Receiver,
requires CDCR to maintain a statewide telemedicine services
program, require an operational telemedicine program at
each institution, and expand telemedicine services and
encounters. AB 1785 is set to be heard in Assembly
Committee on Health on April 20, 2010.
b) AB 2747 (Lowenthal), sponsored by the federal Receiver,
would require CDCR to maintain and operate a comprehensive
AB 1817
Page 6
pharmacy services program for those facilities under its
jurisdiction, that incorporates a statewide pharmacy
administration system, as specified. AB 2747 is set to be
heard in the Assembly Committee on Health on April 20,
2010.
8)TECHNICAL AMENDMENT . On lines 27 and 32, strike out "January"
and insert "July."
REGISTERED SUPPORT / OPPOSITION :
Support
J. Clark Kelso, Federal Receiver, California Prison Health Care
Services (sponsor)
Health Management Systems
Opposition
None on file.
Analysis Prepared by : Martin Radosevich / HEALTH / (916)
319-2097