CONTENTS:

Makes changes relative to health care services provided to offenders who are in the custody or under the supervision of the Department of Rehabilitation and Correction, revises the procedures by which costs related to a prisoner’s confinement in a local detention facility are collected and consolidates the provisions containing those procedures, and increases from $30 to $50 the daily fine credit given to an offender jailed for failure to pay a fine

State Fiscal Highlights

STATE FUND		FY 2003	FY 2004			FUTURE YEARS
General Revenue Fund
Revenues	- 0 -			- 0 -	- 0 -
Expenditures	Increase, minimal at most			Increase, minimal at most	Increase, minimal at most
Offender Financial Responsibility Fund (Fund 5H8)
Revenues	Potential gain, likely to be sporadic			Potential gain, likely to be sporadic	Potential gain, likely to be sporadic
Expenditures	- 0 -			- 0 -	- 0 -

Note: The state fiscal year is July 1 through June 30. For example, FY 2003 is July 1, 2002 – June 30, 2003.

· Medical Services Program Costs. The bill makes several changes to the Department of Rehabilitation and Correction’s (DRC) medical services program, some of which carry very little in the way of ongoing fiscal burdens, as they largely comport with the department’s current practices or reflect directions in which it is already headed. The provisions requiring DRC: (1) to conduct a study on the feasibility and desirability of purchasing insurance to protect against unpredictable or catastrophic losses, and (2) to take actions that may ultimately lead to the implementation of an external utilization review program will, however, create some costs for which DRC had not planned. At this time, DRC does not expect those additional costs, which presumably would be borne by its General Revenue Fund (GRF) budget, to be significant.

· Fund 5H8 Revenues. DRC’s existing Offender Financial Responsibility Fund (Fund 5H8) may experience a gain in annual revenue as a result of collecting the cost of medical care from an offender or a third-party payer. That revenue is likely to be sporadic or intermittent, and the amounts that might be gained are highly uncertain and difficult to predict. An extremely large percentage of the offender population is indigent and very few are likely to be carrying health insurance coverage.

Local Fiscal Highlights

LOCAL GOVERNMENT		FY 2002		FY 2003		FUTURE YEARS
Counties and Municipalities
Revenues	Potential gain, not likely to exceed minimal in most jurisdictions		Potential gain, not likely to exceed minimal in most jurisdictions		Potential gain, not likely to exceed minimal in most jurisdictions
Expenditures	Minimal effect		Minimal effect		Minimal effect

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

· Confinement Costs Reimbursement. The bill essentially consolidates “pay-for-stay” mechanisms and revises some of the provisions containing those procedures. As a result, local governments could collect more confinement cost reimbursement revenues from offenders than might otherwise have been the case under current law. The magnitude of that potential revenue gain in any given local jurisdiction is not easily quantifiable, and is likely to be a function of at least two factors: (1) the aggressiveness of the local jurisdiction in imposing and then pursuing the collection of confinement costs, and (2) the financial circumstances of the offenders who have been assessed confinement costs. Recognizing those unknowns, generally speaking, it seems unlikely that most local jurisdictions would realize more than a minimal gain in annual confinement cost reimbursement revenues. In addition, if, as a result of the bill, a local jurisdiction decides to pursue more confinement cost reimbursements from more offenders, then, even if more revenues are actually collected, the costs of collecting those additional revenues would likely increase as well.

· Daily Fine Credits. The bill increases from $30 to $50 the credit that is given an offender jailed for failure to pay a fine. The practical effect of this provision is to potentially reduce the length of jail stays for offenders who are so jailed in the future from the length of jail stays that those offenders might otherwise have served under current law. If the length of jail stays is reduced, then local detention facilities turn their jail beds over more quickly, and if those “turned” beds are not immediately reoccupied, then those local detention facilities presumably realize some savings. Although the magnitude of those potential savings for local detention facilities is not readily quantifiable, it appears that any potential savings for a given local detention facility is unlikely to exceed minimal, especially in light of the fact that, generally speaking, there are more jail-bound offenders than there are jail beds in Ohio.

Detailed Fiscal Analysis

The bill contains the following five provisions that will or could affect the annual revenues and expenditures of the Department of Rehabilitation and Correction (DRC):

(1) Permits DRC to charge offenders for the cost of any medical care.

(2) Permits DRC to determine whether an offender is covered under a health insurance or health care policy, contract, or plan, and permits DRC or the health care services provider to promptly submit a claim to the appropriate third-party payer for payment for health services provided to the offender.

(3) Requires DRC to establish a schedule of health care benefits that are available to offenders, and to establish a program to encourage the utilization of preventive health care services by offenders.

(4) Requires DRC to develop specifications and request proposals for an external utilization review organization to evaluate the clinical necessity, appropriateness, efficacy, or efficiency of any outside health care service recommended for an offender, to report the responses to the request for proposals to certain parties within six months after the bill’s effective date, but does not require DRC to enter into a contract with an external utilization review organization unless its budget can adequately fund the provision of such a service.

(5) Requires DRC to study and report within six months after the bill’s effective date on the feasibility and desirability of purchasing insurance coverage to protect against unpredictable or catastrophic offender health care service costs.

From the perspective of local governments, most likely counties and municipalities, the bill contains the following provisions that could affect the revenues and expenditures of the state’s political subdivisions:

(1) Modifies the procedures by which costs related to a prisoner’s confinement in a local detention facility are collected.

(2) Permits reimbursement for the costs of confinement to include a one-time reception fee for the costs of processing the prisoner into the facility at the time of the prisoner’s initial entry into the facility.

(3) Increases from $30 to $50 the daily fine credit given to an offender jailed for failure to pay a fine.

State fiscal effects

Medical care charges

The bill explicitly allows DRC to charge offenders for the cost of their medical care. Currently, DRC charges offenders a $3 copay for any voluntary health care services visit. This copay is deposited in the state treasury to the credit of DRC’s existing Offender Financial Responsibility Fund (Fund 5H8). It is unlikely, however, that DRC would be able to charge many offenders the full cost of their medical care, particularly for chronic illnesses, because so many of those offenders are indigent. Any payments for medical care obtained from offenders as a result of this provision of the bill would also be deposited in the state treasury to the credit of the Offender Financial Responsibility Fund. In addition, existing law that creates the Offender Financial Responsibility Fund and specifies the uses of its revenues is permissive and broad enough that DRC could most likely attempt to collect for medical care costs now if it chose to do so.

Third-party payers

The bill permits DRC to determine if an offender has health insurance that would cover medical services being provided and then permits after such a determination for DRC or the provider of health care services to the offender to promptly file a claim with the appropriate third-party payer. Discussions with DRC indicate that little additional revenue or expenditure savings will be realized through this provision of the bill, as few offenders have health insurance coverage. Additionally, in the long run it may be more costly or difficult for DRC to adhere to the requirements of a health insurance company in order to receive reimbursement from an offender’s health insurance. For example, if the offender’s preferred care provider is hours away from the offender’s institution, DRC may be unable to utilize the medical coverage available. While the bill allows DRC to have health care services rendered to an offender at a site approved by the department, it is unclear how cooperative health care insurers will be in facilitating this process.

The bill also gives DRC the right of subrogation with regard to the payments from health insurance companies. This is to ensure that DRC receives such payments instead of the offender or a family member.

Because it is unlikely that many offenders have health insurance, this task is not likely to create an expensive administrative burden for DRC. Any reimbursements collected from third-party payers would also be deposited in the state treasury to the credit of the Offender Financial Responsibility Fund. The amount of additional annual revenue that might be generated is uncertain and likely to be sporadic.

Health care services rules

The bill requires DRC to adopt rules to establish a schedule of health care services benefits available to offenders, and to establish a program to encourage the utilization of preventive health care services by offenders. As these health care services rule adoption and program requirements largely comport with the department’s current practices or reflect directions in which its medical services program was already headed, their implementation will not be problematic or costly.

Catastrophic coverage

The bill requires DRC to examine and report on the feasibility and desirability of purchasing insurance coverage to protect against unpredictable or catastrophic health care losses. At this time, DRC believes it has sufficient staff and related resources to undertake this required study in-house.

External utilization review organization

The bill requires that DRC request proposals (based on specifications that the department will develop) for a utilization review program. The organization selected to perform these utilization reviews would be responsible for examining the clinical necessity, appropriateness, efficacy, or efficiency of any outside health care service recommended for an offender. The department is not then required to enter into a contract with an external utilization review organization to provide such a service unless it has an adequate amount of money to do so.

DRC is currently working on establishing just such a utilization review program for in-house medical care, but the utilization reviews would be conducted in-house. Although such reviews conducted by an external utilization review organization for a recommended outside health care service would create an additional ongoing annual cost for DRC, it is not expected to be significant (less than $100,000 per fiscal year).

Local fiscal effects

Confinement cost reimbursement

Local governments are permitted to use the following types of reimbursement (“pay-for-stay”) mechanisms for the purpose of recovering the costs of an offender’s confinement in a local detention facility: (1) reimbursement ordered by a court as part of a sentence, (2) reimbursement required pursuant to a specified standard procedure by the governmental entity that operates the local detention facility, (3) reimbursement pursuant to a policy “in lieu of” the standard procedure, and (4) reimbursement pursuant to a medical fee reimbursement mechanism. The bill essentially consolidates those “pay-for-stay” mechanisms and revises some of the provisions contained in those procedures.

From a fiscal perspective, those statutory changes most notably: (1) appear to make it easier for local governments to collect reimbursement for the costs of confinement if those local governments choose to do so, and (2) permit a local governmental entity to charge an offender a one-time reception fee for the costs of processing the offender into a local detention facility. As a result, local governments could collect more confinement cost reimbursement revenues from offenders than might otherwise have been the case under current law. The magnitude of that potential revenue gain in any given local jurisdiction is not easily quantifiable, and is likely to be a function of at least two factors: (1) the aggressiveness of the local jurisdiction in imposing and then pursuing the collection of confinement costs, and (2) the financial circumstances of the offenders who have been assessed confinement costs. Recognizing those unknowns, generally speaking, it seems unlikely that most local jurisdictions would realize more than a minimal gain in annual confinement cost reimbursement revenues. In addition, if, as a result of the bill, a local jurisdiction decides to pursue more confinement cost reimbursements from more offenders, then, even if more revenues are actually collected, the costs of collecting those additional revenues would likely increase as well.

Daily fine credits

The bill increases from $30 to $50 the credit that is given an offender jailed for failure to pay a fine. The practical effect of this provision is to potentially reduce the length of jail stays for offenders who are so jailed in the future from the length of jail stays that those offenders might otherwise have served under current law. If the length of jail stays is reduced, then local detention facilities turn their jail beds over more quickly, and if those “turned” beds are not immediately reoccupied, then those local detention facilities presumably realize some savings. Although the magnitude of those potential savings for local detention facilities is not readily quantifiable, it appears that any potential savings for a given local detention facility is unlikely to exceed minimal, especially in light of the fact that, generally speaking, there are more jail-bound offenders than there are jail beds in Ohio.

LSC fiscal staff: Laura A. Potts, Budget Analyst

FN124\HB0170SR.

BILL:	Sub. H.B. 170		DATE:	May 22, 2002
STATUS:	As Reported by Senate Judiciary--Criminal Justice		SPONSOR:	Rep. Schuring
LOCAL IMPACT STATEMENT REQUIRED:		No —	Local fiscal effects added after the “As Introduced” version