The Eighth Amendment to the U.S. Constitution prohibits the infliction of cruel and unusual punishments. A long line of judicial case law and federal civil rights statutes have established that this prohibition applies to the conditions in state prisons. In some cases, including several major rulings directly involving the CDC, judges have directly ordered changes in the conditions permitted at CDC institutions with the stated goal of eliminating alleged violations of the Eighth Amendment and civil rights statutes.
The proceedings in three major cases now pending are nearing a critical point, and all have resulted in agreements, court orders or recommendations adverse to CDC's initial legal position that no unconstitutional conditions existed. Gates v. Gomez. In this case, plaintiffs claimed that the mental health treatment provided at the California Medical Facility (CMF) at Vacaville--the long-established central hub of the CDC's medical care system--was unconstitutionally deficient in the provision of psychiatric services for inmates.
Rather than litigate the case, the CDC negotiated a consent decree to settle the legal dispute, agreeing to meet federal standards and guidelines for the CMF psychiatric program. Last October, plaintiffs representing the inmates persuaded the judge handling the case to hold CDC officials in contempt of court for their alleged failure to fully implement the consent decree. The department challenged the contempt ruling. In late January 1995, a federal appellate court stayed the contempt citation and ordered an expedited legal process on the contempt-citation issue that could result in a final ruling as soon as this spring.
Coleman v. Wilson. In this case, almost the entire CDC mental health delivery system, except for CMF, is under review by the courts to determine if the state has failed to provide the legally required minimum level of psychiatric care and services to inmates with mental illnesses.
Last June, a federal magistrate found that inadequate mental health care for inmates was prevalent and the result of deliberate indifference by the CDC to the Eighth Amendment ban on cruel and unusual punishments. The magistrate proposed major revisions in the statewide system by which inmates with mental illnesses are screened and treated, as well as the implementation of new standards for mental health care staffing and record-keeping for such patients by the CDC. The magistrate has also recommended the appointment of a special master to implement the eventual court order. The CDC has objected to the magistrate's proposals. A federal court judge has yet to act upon the magistrate's recommendation; a court ruling could come as soon as this spring.
Madrid v. Gomez. This case, like the Gates case, centers on allegations of unconstitutional conditions at a single institution rather than in the entire state prison system. The Madrid plaintiffs contended, among other things, that inmates at the five-year-old Pelican Bay State Prison near Crescent City are illegally subjected to excessive use of violent force by correctional officers; that general medical and mental health care systems there are inadequate; and that the use of a special Security Housing Unit (SHU) which almost totally isolates the inmates confined there constitutes cruel and unusual punishments.
A January 1995 ruling handed down by the federal district court judge handling the Madrid case permitted the SHU to remain in operation as long as inmates with serious medical problems likely to be aggravated by such isolation were no longer so confined. The judge also ruled that inmates were subjected to excessive violence and received poor medical and mental health care.
The judge appointed a special master who was directed to return to the court in 120 days with a plan to remedy the conditions at Pelican Bay that were deemed unconstitutional. Although the CDC has reserved the right to appeal part or all of the judge's ruling, the department's lawyers say they intend to confer with the special master in an effort to work out a plan that could resolve the case.
Fiscal Impact of Litigation Unclear. The exact effect of the three as-yet unresolved legal cases on the CDC budget is unknown but probably will be costly.
The CDC has cited these legal challenges as justification for major expenditure increases for its medical care, mental health, computer database, and recordkeeping functions.
The Legislature has already provided millions of dollars in budget augmentations in recent years to address deficiencies cited by the CDC. However, it now appears unlikely that these planned expenditures and operational changes in the CDC will completely satisfy the issues cited in these court cases and the plans to be formulated by special masters.
Full compliance with the court decisions could eventually cost tens of millions of dollars beyond the amounts now being budgeted for this purpose. For example, the magistrate's recommendation in the Coleman case suggested that the CDC would require staffing of 732 positions by the end of 1996-97 to provide an adequate level of mental health treatment for the entire prison system. Yet the CDC indicates that the three-phase plan now under way to improve mental health care would result in 478 positions at a cost of $36.6 million. (We discuss this plan in greater detail below.) The cost figure could escalate rapidly were the courts to insist on a higher level of care.
We recommend approval of $19.6 million from the General Fund and 284 positions for the second phase of the CDC's new health care delivery system. The plan has one more phase requiring an additional $9 million before it is complete in 1996-97. Future costs may be higher, however, for several reasons.
The budget requests $19.6 million and 284 positions to implement the second phase of a three-year plan to upgrade its health care delivery system for inmates in response to ongoing litigation. The request for 1995-96 includes costs and staffing for administration, additional laboratory and pharmacy costs, introduction of a new anti- psychotic drug therapy, therapeutic dietary services, and management information systems. The new system upgrades inmate access to both medical and mental health services. The CDC will spend approximately $8.1 million and add 117 new positions in the current year for the first phase of implementation. The final year of the project (1996-97) is estimated to cost $9 million and add an additional 77 positions.
In addition to the operations costs associated with the new system, the CDC is requesting $2.7 million in capital outlay for design and plans for modifications at five prisons to meet licensing and other facilities-related requirements of the service delivery plan. In 1996-97, the CDC estimates that it will need an additional $12.1 million for capital outlay, which includes construction at five institutions and design work for a further seven institutions. In 1997-98, the CDC estimates that a final $19.6 million will be needed to complete work at seven institutions. These estimates do not include medical-related construction costs for future new prisons.
Consequently, as Figure 19 shows, the total costs for implementing the operational components of the new delivery system will be $36.7 million over the three-year period, and more than $30 million annually thereafter. An additional $34.4 million will be needed for one-time capital outlay.
Background. In 1991, partly as a result of litigation, the CDC contracted with the Western Consortium for Public Health to develop a mental health services delivery system. The result was a final report, The Mental Health Services Delivery System, which made recommendations for a comprehensive health services delivery system that includes both medical and mental health services. The report, issued in February 1993, included plans for staffing, building, remodeling, and a model for a continuum of care, especially for mentally disordered inmates.
Continuum of Care Model for Mental Health Services. The concept of a continuum of care emphasizes early intervention, symptom management, and stabilization. The treatment focuses on housing the individual in the least restrictive environment possible and reintegrating the individual back into regular inmate programs to the maximum extent possible. This approach is designed to provide reasonable access to care and a mechanism for cost containment, in that housing inmate patients in the least restrictive environment is generally also the least costly option. Figure 20 (please see next page) provides an overview of the proposed continuum of care model for CDC's provision of mental health services.
Services Will Be Limited to Severely Mentally Disordered Inmates. The CDC plans to limit the provision of mental health services to only those inmates with severe mental disorders. Other categories of inmates, such as sex offenders, substance abusers, the developmentally disabled, and those with moderate personality disorders, would not receive specialized services unless they also manifest severe mental disorders. The CDC will measure severity of the mental illness by evaluating the functional impairment of the inmate. Only those inmates exhibiting symptoms and behaviors that require intervention will receive services. Any inmate that exhibits severe behaviors will receive care services.
The report estimates that 11 percent of males and 15 percent of female inmates have serious functional impairments and will need some type of service during their incarceration. A further 9 percent of male and female inmates will exhibit moderate impairment. These inmates will also need services. Consequently, one in five male inmates and one in four female inmates will have need of mental health services sometime during their imprisonment.
Centralized Provision of All Medical Services. The report criticized the CDC's method of providing mental health services in a centralized form. Prior to the implementation of this plan, mentally disordered inmates were transferred to one of three institutions, or to a Department of Mental Health (DMH) hospital on contract with the CDC. As a consequence, inmates were transferred to more expensive placements when a different type of intervention might have kept the inmate in a less costly placement.
Phase 2: Implementing the Health System Service Areas. In order to implement the continuum of care model and eliminate the problems associated with a centralized method of providing mental health services, the CDC plans, as part of its second phase, to implement a health care cluster approach to medical and mental health service areas. The CDC's institutions will be grouped into 17 geographical or medical service areas, ranging from a single institution (Pelican Bay) to geographically contiguous areas, such as the medical service area serving the prisons in Coalinga, Avenal, and Corcoran. In addition, the institutions will be grouped into mental health service areas to provide continuum of care services. Each service area will have hub institutions to provide an Enhanced Outpatient Program (EOP) and a licensed medical care facility.
Currently, inmates receive health service in unlicensed infirmaries, licensed CDC hospitals, or in community hospitals. This system results in higher costs because there is no intermediate level of care for inmates who need more services than are offered in an infirmary, but do not need acute hospital care. The CDC will attempt to address this problem in the second phase implementation by expanding the availability of sub-acute medical and mental health facilities. Specifically, the CDC will seek licensing for Correctional Treatment Centers (CTC) at 13 institutions. (The CTC is a new category of licensed health care facility.) The CTCs will be licensed to provide 24-hour care, but at less cost than hospitals. In addition, since the CTCs will be part of institutions, security costs will be lower. The CTCs will be in addition to the four already licensed hospitals. Each service area will have a CTC or hospital.
Meeting Licensing Requirements. The new CTC licensing requirements do not go into effect until December 1995. The department proposes to delay hiring staff that will be needed to meet licensing requirements until that time. To be licensed, CTCs must meet specific staffing requirements. For example, the CTC must be able to demonstrate that it has nursing staff to provide at least 2.5 hours of care for each patient and that a nurse is available 24 hours a day. The licensing requirements also specify that patients receive therapeutic meals that are reviewed by a dietician. As a consequence, CTCs will not be able to use mainline institution food services. There also are equipment and facilities requirements for licensure.
Costs Could Be Greater. The CDC reports that it will require an additional $9 million in 1996-97 (for the system's third phase) and $34.4 million for capital outlay to complete the implementation of its plan. Our review indicates that there could be further costs for two reasons.
First, there may be additional staffing and facilities costs to meet licensing requirements for the new CTCs. Second, the CDC's new health care system may not be acceptable to the courts, thereby necessitating additional expenditures.
Analyst's Recommendation. We believe that the department's budget year proposal is reasonable. Thus, we recommend approval of $19.6 million and 284 positions for the department's implementation of the second phase of its new health care delivery system. However, we note that the proposal has significant future costs. Licensing and court-related actions could result in costs that are even higher than the department's projections for completing the new system.
We recommend the reduction of 19 positions (18.1 personnel-years) for health care utilization review nurses because the department has not established a quality management system or completed standards for scope of services.
The budget requests 19 new registered nurse (RN) positions, one position for each of 19 institutions, to perform medical utilization reviews. The budget does not request additional funding for the positions, but instead proposes to pay for the new positions from savings that would be realized from utilization reviews. We estimate that the department would have to generate almost $1 million in savings to defray the costs of the new positions.
What Is Utilization Review? Medical services utilization reviews are intended to ensure quality of health services and control costs. Large health maintenance organizations, both private and public, use such reviews. For example, California's Medi-Cal program has both automated and health care professional utilization reviews.
Generally, utilization review consists of health care professionals (Medi-Cal uses RNs, physicians, and pharmacists) who evaluate whether certain medical procedures, tests, drug treatments, and elective surgeries are necessary for the patient and are part of the scope of services that the system provides. Integral to a utilization review system are two elements. First, the system must fully define what services it will provide, known as scope of benefits or services. For example, because the CDC provides emergency and basic medical care for inmates, these services would be part of the CDC's scope of services. In addition, the system must evaluate what services it will not provide. For example, the CDC would not be required to provide, in most instances, cosmetic surgery. The scope of services also identifies among alternative procedures which is the most cost-effective.
The second element of utilization review is a system for prior authorization. Prior authorization review requires that a health provider (for example, the physician, laboratory, pharmacy, or hospital) obtain approval prior to providing certain services (for example, tests, drugs, or procedures). If the service is medically necessary, as defined in the system's scope of services, it is approved. If not, then payment for the service is not approved.
The Department Does Not Have the Systems in Place for Utilization Review. Currently, the CDC does not have a centralized quality assurance system. Such a system would allow the department to monitor the provision of medical services, the associated costs, and evaluate whether the services are medically necessary within the scope of authorized services.
The CDC has not completed nor has it identified when it will complete its scope of services nor developed utilization standards and guidelines. Of equal importance, the department does not have a formalized prior authorization process, although it proposes developing Medical Authorization Review committees at individual prisons.
Analyst's Recommendation. Because the CDC does not have the basic framework for utilization review, we believe that the proposal is premature and recommend that the 19 proposed positions be deleted.
We recommend the enactment of legislation to allow the CDC to contract with the California Medical Assistance Commission (CMAC) to negotiate contracts for inmate medical services. We further recommend that the CDC and the CMAC report to the Legislature, prior to budget hearings, on an estimate of savings that can be realized from using CMAC.
Background. Some of the department's inmate medical services are provided through contracts with community providers. The department contracts with local hospitals, laboratories, pharmaceutical companies, medical equipment suppliers, and specialist health care providers to provide services that are not available within departmental infirmaries and hospitals. The department's budget for contract medical services for 1995-96 is proposed at $88 million.
Departmental Contract Negotiations. The CDC's Health Care Services Division has begun negotiating contract rates with various providers. The division has contracted with six hospitals that provide inpatient care and other services for approximately 49 percent of the CDC's annual inpatient hospital volume. The department reports that savings realized from these negotiations offset other contract medical costs that have increased in the current year.
Department Should Utilize Services of CMAC. In last year's Analysis, we recommended that the department consider contracting with the California Medical Assistance Commission (CMAC) to negotiate its contracts for hospital and related services. The CMAC negotiates contracts on behalf of the state with hospitals, county health systems, and health care plans that provide services to Medi-Cal recipients. Many of the agencies that CMAC contracts with also provide services to CDC inmates. The CMAC has many years of experience in contract negotiations, and more importantly, its Medi-Cal contracting experience allows it to negotiate with knowledge of the most favorable rates that many hospitals will accept. The Legislature adopted Budget Act language in the 1994 Budget Act directing the CMAC to provide the department with assistance in negotiating contracts, and reduced the CDC budget for 1994-95 by $3 million to account for expected contract savings.
The CDC has not contracted with CMAC because, according to the CDC, the CDC's contract rates are not confidential (as are Medi-Cal contract rates). Although not required, confidentiality of rates would improve the ability of negotiators to obtain the most favorable rates from competitive contractors. When contractors know what the department pays one contractor it is difficult to negotiate lower rates. The CDC sponsored legislation last year that would have resolved this issue, but it was not enacted. As a consequence, the DOF has restored the $3 million to the CDC's current year budget and included it in the department's baseline budget for 1995-96.
Analyst's Recommendation. We continue to believe that the CMAC has the ability to more effectively negotiate favorable contract rates than negotiators for the CDC. In addition, we question whether the department's proposed legislation to allow confidentiality in the rates is required in order for the CMAC to negotiate on behalf of the CDC. In order to address CDC's concerns, however, we recommend the enactment of legislation that removes any obstacles for the CMAC to negotiate for the department.
We also continue to believe that the department could incur significant General Fund savings from using CMAC. Thus, we recommend that the CDC and the CMAC report to the Legislature, prior to budget hearings, on the amount of savings that may be realized in the budget year resulting from CMAC negotiating on behalf of the CDC.
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