BILL ANALYSIS
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Mark Leno, Chair A
2009-2010 Regular Session B
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AB 1817 (Arambula) 7
As Amended April 26, 2010
Hearing date: June 22, 2010
Penal Code
SM:mc
CORRECTIONS: INMATE HEALTH CARE:
UTILIZATION MANAGEMENT PROGRAM
HISTORY
Source: California Prison Healthcare Services (Federal Prison
Health Care Receiver)
Prior Legislation: SBx4 13 (Ducheny) - Chap. 22, Stats. of 2009
Support: Unknown
Opposition:Taxpayers for Improving Public Safety
Assembly Floor Vote: Ayes 70 - Noes 0
KEY ISSUES
SHOULD THE CALIFORNIA DEPARTMENT OF CORRECTIONS AND
REHABILITATION ("CDCR") BE REQUIRED TO MAINTAIN A STATEWIDE
UTILIZATION MANAGEMENT PROGRAM WITH RESPECT TO INMATE HEALTH
CARE, AS SPECIFIED?
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(CONTINUED)
SHOULD CDCR BE REQUIRED TO DEVELOP AND IMPLEMENT POLICIES AND
PROCEDURES TO ENSURE THAT ALL PRISONS EMPLOY THAT PROGRAM AND
REQUIRE THAT A COPY OF THESE POLICIES AND PROCEDURES BE PROVIDED TO
SPECIFIED LEGISLATIVE COMMITTEES BY JULY 1, 2011?
SHOULD CDCR BE REQUIRED TO ESTABLISH ANNUAL QUANTITATIVE UTILIZATION
MANAGEMENT PERFORMANCE OBJECTIVES, AS SPECIFIED, AND, ON JULY 1,
2011, REPORT THE OBJECTIVES IT INTENDS TO ACCOMPLISH IN EACH ADULT
PRISON DURING THE NEXT 12 MONTHS TO SPECIFIED LEGISLATIVE
COMMITTEES?
SHOULD CDCR BE REQUIRED TO REPORT ON MARCH 1, 2012, AND EACH MARCH 1
THEREAFTER, TO SPECIFIED LEGISLATIVE COMMITTEES, SPECIFIED
PERFORMANCE OBJECTIVES ACHIEVED NOT ACHIEVED AND REASONS FOR EACH AS
WELL AS COSTS FOR INMATE HEALTH CARE FOR THE PREVIOUS FISCAL YEAR
BOTH STATEWIDE AND IN EACH PRISON AND A COMPARISON OF COSTS FROM THE
YEAR PRIOR TO THAT?
PURPOSE
The purpose of this bill is to (1) make specified findings and
declarations; (2) require the Department of Corrections and
Rehabilitation (CDCR) to maintain a statewide utilization
management program with respect to inmate health care, as
specified; (3) require CDCR to develop and implement policies
and procedures to ensure that all prisons employ that program
and require that a copy of these policies and procedures be
provided to specified legislative committees by July 1, 2011;
(4) require CDCR to establish annual quantitative utilization
management performance objectives, as specified, and, on July 1,
2011, report the objectives it intends to accomplish in each
adult prison during the next 12 months to specified legislative
committees; and (5) require CDCR to report on March 1, 2012, and
each March 1 thereafter, to specified legislative committees,
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specified performance objectives achieved or not achieved and
reasons for each, as well as costs for inmate health care for
the previous fiscal year both statewide and in each prison and a
comparison of costs from the year prior to that.
Existing law requires the California Department of Corrections
and Rehabilitation (CDCR) to consult with the California Medical
Assistance Commission to assist the department in planning and
negotiating contracts for the purchase of health care services.
The commission shall advise the department, and may negotiate
directly with providers on behalf of the department, as mutually
agreed upon by the commission and the department. (Penal Code
5023.)
Existing law provides:
CDCR may contract with providers of health care services
and health care network providers, including, but not
limited to, health plans, preferred provider organizations,
and other health care network managers. Hospitals that do
not contract with the department for emergency health care
services shall provide these services to the department, as
specified. The department may only reimburse a noncontract
provider of hospital or physician services at a rate equal
to or less than the amount payable under the Medicare Fee
Schedule, regardless of whether the hospital is located
within or outside of California.
An entity that provides ambulance or any other emergency
or nonemergency response service to the department, and
that does not contract with the department for that
service, shall be reimbursed for the service at the rate
payable under the Medicare Fee Schedule, regardless of
whether the provider is located within or outside of
California.
The maximum rates set forth in this section shall not
apply to contracts entered into through the department's
designated health care network provider, if any. The rates
for those contracts shall be negotiated at the lowest rate
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possible under the circumstances.
The department and its designated health care network
provider may enter into exclusive or nonexclusive contracts
on a bid or negotiated basis for hospital, physician, and
ambulance services contracts.
During the existence of the receivership established in
United States District Court for the Northern District of
California, Case No. C01-1351 TEH, Plata v. Schwarzenegger,
references in this section to the "secretary" shall mean
the receiver appointed in that action. (Penal Code
5023.5.)
This bill requires that, in order to promote the best possible
patient outcomes, eliminate unnecessary medical and pharmacy
costs, and ensure consistency in the delivery of health care
services, the department shall maintain a statewide utilization
management program that shall include, but not be limited to,
all of the following:
Objective, evidence-based medical necessity criteria and
utilization guidelines.
The review, approval, and oversight of referrals to
specialty medical services.
The management and oversight of community hospital bed
usage and supervision of health care bed availability.
Case management processes for high medical risk and high
medical cost patients.
A preferred provider organization (PPO) and related
contract initiatives that improve the coverage, resource
allocation, and quality of contract medical providers and
facilities.
This bill requires CDCR to develop and implement policies and
procedures to ensure that all adult prisons employ the same
statewide utilization management program described above that
supports the department's goals for cost-effective auditable
patient outcomes, access to care, an effective and accessible
specialty network, and prompt access to hospital and infirmary
resources. The department shall provide a copy of these
policies and procedures, by July 1, 2011, to the Joint
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Legislative Budget Committee, the Senate Committee on
Appropriations, the Senate Committee on Budget and Fiscal Review
, the Senate Committee on Health, the Senate Committee on Public
Safety, the Assembly Committee on Appropriations, the Assembly
Committee on Budget, the Assembly Committee on Health, and the
Assembly Committee on Public Safety.
This bill requires CDCR to establish annual quantitative
utilization management performance objectives to promote greater
consistency in the delivery of contract health care services,
enhance health care quality outcomes, and reduce unnecessary
referrals to contract medical services. On July 1, 2011, the
department shall report the specific quantitative utilization
management performance objectives it intends to accomplish
statewide in each adult prison during the next 12 months to the
Joint Legislative Budget Committee, the Senate Committee on
Appropriations, the Senate Committee on Budget and Fiscal
Review, the Senate Committee on Health, the Senate Committee on
Public Safety, the Assembly Committee on Appropriations, the
Assembly Committee on Budget, the Assembly Committee on Health,
and the Assembly Committee on Public Safety. The requirement
for submitting a report imposed under this subdivision is
inoperative on January 1, 2015, pursuant to Section 10231.5 of
the Government Code.
This bill requires that on March 1, 2012, and each March 1
thereafter, the department shall report all of the following to
the Joint Legislative Budget Committee, the Senate Committee on
Appropriations, the Senate Committee on Budget and Fiscal
Review, the Senate Committee on Health, the Senate Committee on
Public Safety, the Assembly Committee on Appropriations, the
Assembly Committee on Budget, the Assembly Committee on Health,
and the Assembly Committee on Public Safety:
The extent to which the department achieved the
statewide quantitative utilization management performance
objectives set forth in the report issued the previous
March as well as the most significant reasons for achieving
or not achieving those performance objectives.
A list of adult prisons that achieved and a list of
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adult prisons that did not achieve its quantitative
utilization management performance objectives and the
significant reasons for the success or failure in achieving
those performance objectives at each adult state prison.
The specific quantitative utilization management
performance objectives the department and each adult state
prison intends to accomplish in the next 12 months.
A description of planned and implemented initiatives
necessary to accomplish the next 12 months' quantitative
utilization management performance objectives statewide and
for each adult state prison. The department shall describe
initiatives that were considered and rejected and the
reasons for their rejection.
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 fiscal year prior to the
fiscal year being reported both statewide and at each adult
state prison.
This bill states that it is the intent of the Legislature that
any activities the department undertakes to implement the
provisions of this section shall result in no year over year net
increase in state costs.
This bill provides that the following definitions shall apply to
this section:
"Contract medical costs" mean costs associated with an
approved contractual agreement for the purposes of
providing direct and indirect specialty medical care
services.
"Specialty care" means medical services not delivered by
primary care providers.
"Utilization management program" means 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 the
application of defined criteria or expert opinion, or both.
Utilization management assesses the efficiency of the
health care process and the appropriateness of decision
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making in relation to the site of care, its frequency, and
its duration through prospective, concurrent, and
retrospective utilization reviews.
"Community hospital" means an institution located within
a city, county, or city and county which is licensed under
all applicable state and local laws and regulations to
provide diagnostic and therapeutic services for the medical
diagnosis, treatment, and care of injured, disabled, or
sick persons in need of acute inpatient medical,
psychiatric, or psychological care.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
The severe prison overcrowding problem California has
experienced for the last several years has not been solved. In
December of 2006 plaintiffs in two federal lawsuits against the
Department of Corrections and Rehabilitation sought a
court-ordered limit on the prison population pursuant to the
federal Prison Litigation Reform Act. On January 12, 2010, a
federal three-judge panel issued an order requiring the state to
reduce its inmate population to 137.5 percent of design capacity
-- a reduction of roughly 40,000 inmates -- within two years.
In a prior, related 184-page Opinion and Order dated August 4,
2009, that court stated in part:
"California's correctional system is in a tailspin,"
the state's independent oversight agency has reported.
. . . (Jan. 2007 Little Hoover Commission Report,
"Solving California's Corrections Crisis: Time Is
Running Out"). Tough-on-crime politics have increased
the population of California's prisons dramatically
while making necessary reforms impossible. . . . As a
result, the state's prisons have become places "of
extreme peril to the safety of persons" they house, .
. . (Governor Schwarzenegger's Oct. 4, 2006 Prison
Overcrowding State of Emergency Declaration), while
contributing little to the safety of California's
residents, . . . . California "spends more on
corrections than most countries in the world," but the
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state "reaps fewer public safety benefits." . . . .
Although California's existing prison system serves
neither the public nor the inmates well, the state has
for years been unable or unwilling to implement the
reforms necessary to reverse its continuing
deterioration. (Some citations omitted.)
. . .
The massive 750% increase in the California prison
population since the mid-1970s is the result of
political decisions made over three decades, including
the shift to inflexible determinate sentencing and the
passage of harsh mandatory minimum and three-strikes
laws, as well as the state's counterproductive parole
system. Unfortunately, as California's prison
population has grown, California's political
decision-makers have failed to provide the resources
and facilities required to meet the additional need
for space and for other necessities of prison
existence. Likewise, although state-appointed experts
have repeatedly provided numerous methods by which the
state could safely reduce its prison population, their
recommendations have been ignored, underfunded, or
postponed indefinitely. The convergence of
tough-on-crime policies and an unwillingness to expend
the necessary funds to support the population growth
has brought California's prisons to the breaking
point. The state of emergency declared by Governor
Schwarzenegger almost three years ago continues to
this day, California's prisons remain severely
overcrowded, and inmates in the California prison
system continue to languish without constitutionally
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adequate medical and mental health care.<1>
The court stayed implementation of its January 12, 2010, ruling
pending the state's appeal of the decision to the U.S. Supreme
Court. On Monday, June 14, 2010, the U.S. Supreme Court agreed
to hear the state's appeal in this case.
This bill does not appear to aggravate the prison overcrowding
crisis described above.
COMMENTS
1. Need for This Bill
According to the author:
AB 1817 codifies the healthcare utilization management
program currently being used by the Prison
Receivership. This healthcare delivery process uses
standardized, nationally tested, and updated criteria
to control when inmates are referred to expensive
outside specialists, as well as control the
utilization of expensive community hospital beds.
This bill is a key measure to move the state prison
system out of federal court receivership. By
codifying this decision-making process, the Department
of Corrections and Rehabilitation will use a system
that meets the court's standards when control of the
state's prisons is returned to CDCR. The bill is part
of the budget plan to reduce prison costs by $800
million, including ongoing annual savings of
approximately $100 million.
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<1> Three Judge Court Opinion and Order, Coleman v.
Schwarzenegger, Plata v. Schwarzenegger, in the United States
District Courts for the Eastern District of California and the
Northern District of California United States District Court
composed of three judges pursuant to Section 2284, Title 28
United States Code (August 4, 2009).
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2. The Federal Prison Health Care Receivership
The inadequate provision of medical services to inmates at CDCR
prompted several class action lawsuits and court-ordered reforms
over the last several years. After "numerous experts testified
as to the 'incompetence and indifference' of prison physicians
and medical staff and described an 'abysmal' medical delivery
system where 'medical care too often sinks below gross
negligence to out-right cruelty'. . .[i]n February 2006, the
district court issued an order appointing a Receiver and
conferring upon the Receiver all of the powers of the Secretary
of the CDCR with respect to the delivery of medical care, while
concurrently suspending the Secretary's exercise of the same."
(Plata v. Schwarzenegger, 2010, U.S. App. LEXIS 8969, 5-6 (9th
Cir. Cal. Apr. 30, 2010).) The California Prison Health Care
Services (CPHCS) is a non-profit organization created to house
the activities of the federal Receiver and works at the
direction of federal Health Care Receiver, J. Clark Kelso.
3. Utilization Management - Background
According to the Health Care Receiver, utilization management is
a program to ensure the appropriate use of limited health care
resources. AB 1817 will require that the California Department
of Corrections and Rehabilitation (CDCR) maintain a statewide
utilization management program to ensure prison health care
resources are used in the most cost-effective and efficient
manner possible and only when medically necessary.
The Receiver states that CDCR originally tried to implement a
statewide utilization management (UM) program in April 1996,
but this program was less than effective. The lack of
standardized UM operations, inconsistent oversight of referral
processes, and ineffective control systems resulted in
unnecessary referrals, inappropriate hospital admissions,
lengthy hospital stays, and bottlenecked institutional
resources. This contributed to the "access to care" issues
addressed by the Plata class action lawsuit which culminated
in the appointment of the federal Receiver in 2006. In order
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to meet the lawsuit's legal mandates, the CDCR implemented a
rapid expansion of health care services. This resulted in an
increase in medical costs. To address the escalating costs
and volume of services the Receiver reconfigured the UM
program in 2008. Current measures indicate that the
restructured UM program has begun to decrease the cost and
volume of contract medical services.
4.UM Program
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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 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.
5. Preferred Provider Organization (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
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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.
6. 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 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.
SHOULD THIS PROGRAM BE REQUIRED?
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