BILL ANALYSIS
SB 90
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Date of Hearing: July 15, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 90 (Ducheny) - As Introduced: January 20, 2009
Policy Committee:
AppropriationsVote:
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill, as proposed to be amended , appropriates $645 million
(GF) to the Department of Corrections and Rehabilitation (CDCR)
to augment the Budget Acts of 2007 and 2008 to cover
deficiencies for those years. (This appropriation is factored
into current budget figures and does not add to the current
budget deficit.) Specifically, this bill:
1)Appropriates $135.1 million (GF) to augment the 2007 Budget
Act for CDCR health care-related deficiencies, and authorizes
the transfer of up to $126.5 million (GF) between the main
CDCR budget support item and the CDCR health care item to
account for increased health delivery costs.
2)Appropriates $486.8 million (GF) to augment the 2008 Budget
Act for CDCR health care-related deficiencies.
3)Requires Prison Health Care Services (PHCS) (the federal
health care receiver) to provide the Legislature written
reports, as specified, detailing actions taken and planned to
reduce and better manage medical contract service costs in
2009-10.
4)Appropriates $23.3 million (GF) to augment the 2008 Budget Act
for net inmate population and caseload adjustments.
5)Requires any unencumbered funds to revert to the GF.
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FISCAL EFFECT
1)Appropriates $135,064,000 (GF) to augment the 2007 Budget Act
as follows:
a) $128,706,000 for health care funding pursuant to the
federal court receivership over the Department of
Corrections and Rehabilitations (CDCR) provision of health
care services. (Expenditures for prison medical care in
2007-08 were about $1.4 billion.)
i) $82,868,000 to provide overtime funding for health
care guarding and transportation to provide inmates
specialty care outside of prisons in order to comply with
court mandates to provide constitutional levels of
medical care to all inmates.
ii) $45,838,000 to augment pharmaceuticals and medical
supplies base funding.
b) $6,358,000 to implement September 2007 court orders in
the Armstrong v Schwarzenegger case, which requires CDCR to
address issues related to disabled inmates.
2)Appropriates $510,125,000 (GF) to augment the 2008 Budget Act
as follows:
a) $486,800,000 for contract medical services. This
appropriation, augmenting a contract medical services base
of $359 million, is directly related to the Receiver's
implementation of reforms determined necessary to address
the federal court's order to raise inmate health care above
what the court deemed cruel and unusual punishment.
b) $23,325,000 for inmate population and caseload
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adjustments.
COMMENTS
1)Rationale. This bill contains funding necessary to address
deficiencies in the 2007 and 2008 Budget Acts for CDCR. These
funds have already been spent. The appropriations in this bill
will not impact current budget difficulties.
The proposed funding in this measure has been approved by the
DOF and the Joint Legislative Budget Committee.
2)LAO crabby regarding receiver request, but acknowledges the
state has little choice . The LAO notes in a June 23, 2009
letter that deficiency funding - or supplemental
appropriations, as deficiencies are now known - is meant to
cover unanticipated expenses in advance of expenditure. The
LAO notes, in reference to the receiver's $486 million
deficiency request, that the request for additional funding
came after a large share of the requested funding had already
been spent. "As a result, the Legislature has little choice at
this point but to approve the supplemental appropriation,
since there is no other feasible alternative at this time to
address the increased expenditures resulting from a court
order regarding inmate medical care."
The LAO's recommendations that any supplemental appropriations
for contract medical costs be restricted to that purpose, that
any unspent funds revert to the GF, and that the receiver
provide detailed cost control plans to the Legislature, are
all included in this bill.
3)According to federal receiver, burgeoning reforms will hold
contract medical costs in check . While the use and cost of
medical service contracts increases each year, PHCS is
implementing cost containment measures to minimize continuing
deficiencies. According to PHCS, "In the short term, trends
show that contract medical will continue to increase until
cost containment measures can be fully implemented. In 2008,
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CPHCS began to invest the funding needed to implement a
Utilization Management (UM) program. The UM program would lead
to cost containment measures by evaluating the
appropriateness, medical need, and efficiency of health care
services procedures and facilities according to established
criteria and/ or guidelines?.
"Another attempt at cost containment is having a third party
administrator (TPA) pay medical invoices. The CPHCS does not
currently administer a healthcare claims processing system as
would typically be found in the public sector. Instead, the
current process relies on providers to submit invoices for
payment and then the invoices are manually entered into a
database that collects minimal utilization and expenditure
data and has no ability to track whether the services or line
items on the claim are valid. The staff that enters the data
into this database are not industry-trained. Most health
plans (including Medi-Cal and Medicare) rely on the services
of a TPA to electronically process claims. Directing most
CPHCS hospital, physician and ambulance claims to the TPA will
eliminate the substantial errors and duplications in payment.
Additionally, the TPA will conduct a two-year post audit to
identify which claims were paid incorrectly to allow CPHCS to
set up accounts receivable to collect the difference.
Additionally, paying on time and reducing penalties will allow
CPHCS to renegotiate lower rates from providers."
4)Related Legislation.
a) SB 1069 (Ducheny) appropriated $135 million to address
the 2007 Budget Act CDCR deficiencies. SB 1069 passed this
committee 11-0 but was held on the Assembly floor.
b) SB 1068 (Ducheny) appropriated $22 million to address
2007-08 deficiencies. SB 1068 was chaptered June 2, 2008.
c) SB 100 (Ducheny) appropriated $141 million to address
2006-07 deficiencies. SB 100 was chaptered June 5, 2007.
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d) SB 101 (Ducheny) appropriated $213 million to address
2006-07 deficiencies. SB 101 was chaptered July 17, 2007.
Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081