BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1985 (Galgiani)
Hearing Date: 08/02/2010 Amended: 07/15/2010
Consultant: Jacqueline Wong-HernandezPolicy Vote: Public Safety
5-0
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BILL SUMMARY: AB 1985 would require the Department of
Corrections and Rehabilitation (CDCR), by January 1, 2011, to
adopt industry standard claim forms for use by contract health
care providers, to be able to accept electronic submissions of
claims from contract health care providers, to perform periodic
audits of claims paid to contract health care providers, and to
provide remote electronic access to claim status information to
contract health care providers. The bill would authorize CDCR to
adopt policies and procedures for enabling electronic health
care claims management and processing, and would exempt the
adoption, amendment, and repeal of policies and procedures for
this limited purpose from the rulemaking provisions of the
Administrative Procedures Act (APA).
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Codifies existing practice No new state costs resulting
from this bill General
New state
savings after receivership ends General
APA exemption Potentially significant
future state savings General
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STAFF COMMENTS:
AB 1985 would primarily codify existing practice and plans
currently being implemented by the California Prison Healthcare
Services (the Receiver's office), under the direction of the
Federal Receiver.
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."
Page 2
AB 1985 (Galgiani)
As specified in this bill, CDCR must, by January 1, 2011, to
adopt industry standard claims forms for use by contract
healthcare service providers, to be able to accept secure
electronic submission of claims from contract healthcare service
providers, and to provide secure, remote electronic access to
claim status information to those contract healthcare service
providers submitting claims electronically. The Federal Receiver
has already directed staff to begin these activities, and they
are in process under his authority (and in the absence of
statute). Thus, any increase in workload to initiate the new
processes is attributable to the Receiver's order, and not to
the bill. Similarly, any savings achieved from the
implementation of this new process while prison health care is
still in federal receivership is also the result of the
Receiver's directives and not the codifying provisions of this
bill. When the receivership ends, the bill will serve to
continue these policies, which have already been demonstrated to
achieve ongoing cost avoidance.
This bill also requires CDCR to perform periodic audits of
claims paid to contract healthcare providers. This ongoing
requirement will likely achieve savings. The Receiver's office
is currently performing post-payment audits, and has already
recovered more than $3,000,000. Once the electronic claim
payment system is fully implemented, overpayments will likely
decrease substantially (and the audits will recover less money).
This bill would permit CDCR to adopt policies and procedures for
the purpose of enabling electronic healthcare claims management
and processing and would exempt the adoption, amendment, or
repeal of policies and procedures for this limited purpose from
the rulemaking provisions of the APA. This exemption would allow
CDCR, after the federal receivership has ended, to make changes
to these policies without going through a lengthier APA process.
Presumably, this would allow the department to respond more
quickly to changing circumstances and achieve greater
efficiencies.