BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1817 (Arambula)
Hearing Date: 08/02/2010 Amended: 04/26/2010
Consultant: Jacqueline Wong-HernandezPolicy Vote: Public Safety
7-0
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BILL SUMMARY: AB 1817 would require the Department of
Corrections and Rehabilitation (CDCR) to maintain a statewide
utilization management program with respect to inmate health
care. Specifically, this bill would require CDCR to:
1) 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.
2) 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.
3) Report on March 1, 2012, and each March 1 thereafter, to
specified legislative committees, performance objectives
achieved or not achieved and reasons for each, as well as
costs for inmate health care for the previous fiscal year.
This bill makes legislative findings and declarations.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Codifies existing plans/practice Potentially substantial
future cost avoidance General
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STAFF COMMENTS:
AB 1817 codifies the healthcare utilization management program
currently being implemented by the Federal Receiver. The
utilization management program was restructured in 2008, and in
part of the Receiver's Turnaround Plan of Action. 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. When it is
fully utilized, it will likely save more than $70 million per
year, compared to the cost of the previous CDCR system.
As specified in this bill, CDCR must, by January 1, 2011, must
develop and implement utilization management policies and
procedures, as well as performance objectives, as specified. By
March 1, 2010, CDCR must report its progress and outcomes for
those objectives to the Joint Legislative Budget Committee, the
Public Safety, Budget, Health, and Appropriations committees of
both houses. The Federal Receiver has already directed that
these activities occur, and they are in process under his
authority (and in the absence of statute). Thus, any increase in
workload to create and implement the utilization management
system, and the initial report, is attributable to the
Receiver's
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AB 1817 (Arambula)
order, and not to the bill. Similarly, any savings achieved from
the implementation of this new process while prison health care
is still under federal receivership is also the result
of the Receiver's directives and not this codifying bill. When
the receivership ends, the bill will serve to continue these
policies, which will have already begun to achieve ongoing cost
avoidance.
CDCR prison health care is currently in federal receivership. In
2005, the United States District Court for the Northern District
of California established a Receivership to take control of the
delivery of medical services to all CDCR inmates. In its order,
the Court set forth comprehensive duties for the Receiver,
including leadership and executive management of the California
prison medical health care delivery system. The Court expressly
ordered the Receiver to "exercise all powers vested by law in
the Secretary of the CDCR as they relate to the administration,
control, management, operation, and financing of the California
Medical health care system." The Court suspended the
Secretary's exercise of these powers for the duration of the
Receivership. Moreover, the Court's order expressly provides
that, "all costs incurred in the implementation of the policies,
plans, and decisions of the Receiver relating to the fulfillment
of his duties under this Order shall be borne by (the state).
(The state) shall also bear all costs of establishing and
maintaining the Office of Receiver, including the compensation
of the Receiver and his staff."
After the Receivership ends, which is unlikely to occur before
the first report is due (in March 2012) to the Legislature, the
reporting requirement would continue as a result of this bill.
At that time, both the savings from utilization management and
the cost of the report would continue because this bill would
add both to statute. Because the report on utilization
management cannot occur without the continued employment of
utilization management, the cost would functionally be a minor
reduction in savings from utilization management. The majority
of costs for the report would be incurred in the first year
(under federal receivership) to develop the initial system for
collecting and compiling data.