Improving Parolee Substance Use Disorder Treatment Through Medi-Cal

Improving Parolee Substance Use Disorder Treatment Through Medi-Cal GABRIEL PETEK LEGISLATIVE ANALYST APRIL 2021 analysis full gutter AN LAO REPORT Executive Summary Several Benefits to Providing Effective Substance Use Disorder Treatment (SUDT) to Parolees. People released from prison after serving a term for a serious or violent offense are generally supervised in the community by state parole agents. The state provides these parolees with access to a variety of rehabilitation services, including SUDT. Providing effective SUDT to parolees can have several benefits for both the people who receive these services (such as a lower risk of imprisonment and overdose) and the state (such as reduced prison costs). To be effective, SUDT must be delivered in a manner that is appropriate for the patient’s needs. Parolee SUDT Primarily Provided Through California Department of Corrections and Rehabilitation (CDCR) Contracts. CDCR provides people who are on parole with access to CDCR-funded rehabilitation programs by using its General Fund resources to contract with third parties to deliver specific services (such as SUDT). For example, Specialized Treatment for Optimized Programming (STOP) is a CDCR-funded program that provides a range of services to parolees, but primarily focuses on SUDT. CDCR currently has agreements with four regional STOP contractors who (1)-pay local providers to deliver services to parolees through subcontracts, (2)-connect parolees with these providers, and (3)-conduct oversight of the services provided to parolees. Some Parolees Receive Medi-Cal SUDT. Medi-Cal (the state’s Medicaid program) provides funding to cover the costs of health care services—including SUDT—for low-income families and individuals. The federal government provides reimbursement of up to 90-percent of the cost for services provided to Medi-Cal beneficiaries. Within the Medi-Cal program, SUDT services are administered locally by counties. Counties generally pay for the costs of these services when they are provided and then submit their eligible expenditures to the state in order to receive federal reimbursement. Most parolees with a need for SUDT are eligible for treatment through Medi-Cal. Medi-Cal SUDT Has Advantages Over CDCR’s SUDT for Parolees. Specifically, Medi-Cal SUDT is better equipped to (1)-provide medically appropriate SUDT to parolees for various reasons, such as offering a wider range of treatment options; (2)-ensure continuity of service as it is available when people are discharged from parole; and (3)-leverage federal funding to reduce state costs. Recommend Increasing Utilization of Medi-Cal for Parolee SUDT. Specifically, we recommend that the Legislature (1)-direct CDCR to refer all parolees to medically appropriate SUDT, (2)-require STOP providers to provide parolees with Medi-Cal-funded SUDT, (3)-structure funding for parolee SUDT to streamline billing and reduce workload, and (4)-use a portion of freed-up funding to ensure costs are not shifted to counties and nonreimbursable services for parolees are maintained. We estimate that doing so will allow the state to achieve net savings of as much as $25-million to $50-million annually by leveraging federal reimbursements while also increasing the quality of services provided to parolees. www.lao.ca.gov 1 analysis full gutter AN LAO REPORT INTRODUCTION When people are released from prison, they are effective SUDT improves the lives of inmates generally supervised in the community for a period and parolees by helping them avoid crime and of time—usually between one to three years. While the health effects of substance use—including some of these people are supervised by county death from overdose. In addition, effective SUDT probation departments, people convicted of a has been found to reduce crime. This creates serious or violent offense are generally supervised fiscal benefits for the state including reduced by state parole agents. The state provides these incarceration costs—as offenders will not return parolees with access to a variety of rehabilitation to prison—as well as reduced costs in providing services, including substance use disorder various assistance to victims of crime. Moreover, treatment (SUDT). when SUDT is provided in an effective manner, As of February 28, 2021, there were these benefits have been found to outweigh the 53,500 people on parole. Roughly 36,000 (or about costs of providing the service. To be effective, two-thirds) of those people are estimated to have SUDT must be delivered in a manner that is a need for SUDT. Several studies have found that appropriate for the patient’s needs. In addition, upon release from prison, people with substance research has found that SUDT is more likely to use disorders have notably high risks of overdose be effective for people released from prison if it relative to the general public—particularly in the first is provided both in prison and after they have two weeks following release. In addition, untreated been released. substance use disorders can also increase In this report, we (1) provide background the likelihood of a person committing a new information on the various ways parolees access offense after being released from prison (known SUDT through providers who are typically either as recidivating). funded by the California Department of Corrections Providing effective SUDT to inmates and and Rehabilitation (CDCR) or through Medi-Cal parolees can have several direct and indirect (the state’s Medicaid program), (2) assess the benefits for both the people receiving the service trade-offs between these two approaches, and and the state. Research has demonstrated that (3) recommend steps to provide SUDT services to parolees in a more cost-effective manner. BACKGROUND OVERVIEW OF SUBSTANCE USE some patients receive intensive outpatient SUDT that provides up to 20 hours of services DISORDER TREATMENT per week. During this time, patients attend Methods of Treating Substance Use individual or group therapy sessions. For Disorders. There are various methods of delivering example, patients might attend cognitive SUDT treatment (typically called “modalities”). Each behavioral therapy (CBT)—a form of therapy modality is geared to different types of patients’ that is intended to help patients identify and needs and varies in the intensity and manner of adjust their thought processes regarding service it provides. The major modalities include: substance use to avoid future use. Patients generally do not need to live on-site when • Outpatient. Outpatient SUDT typically lasts a receiving outpatient services. few months and consists of services provided • Residential. Residential SUDT typically lasts for fewer than 9 hours per week—although for a few months to up to a year based on 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT patient needs. During this time, patients live CDCR, inmates were generally assigned to SUDT on-site and receive a structured schedule of based on whether they had a “criminogenic” need services throughout the day. Treatment can for the program—meaning the inmate’s substance include individual and group therapy sessions use disorder could increase their likelihood of as well as additional services such as committing a future crime if untreated. To determine assistance from clinicians who monitor patient criminogenic needs, nonmedical staff at CDCR use conditions while they go through withdrawal. an assessment tool called the Correctional Offender • Medication Assisted Treatment (MAT). Management Profiling for Alternative Sanctions People who are addicted to certain (COMPAS). (This tool is also used for placement substances such as opioids or alcohol can into other rehabilitation programs, such as anger develop a chemical dependency. This can management.) When administering COMPAS, result in strong physical cravings, withdrawal staff collect an inmate’s basic demographic data, that interferes with treatment, and/or criminal history, and responses to dozens of medical complications. MAT is intended interview questions that seek additional background to combine the services described above information (such as the inmate’s education and (such as CBT) with medications that address work history). COMPAS uses this information to chemical dependencies to alcohol or opioids. determine whether the inmate has a low, moderate, Various types of medications can be used or high need for certain rehabilitation programs. to provide MAT. Some of these medications In addition to placement based on criminogenic can reduce the likelihood of a relapse by need, some inmates could be required to attend blocking the effects of the substance and SUDT if they were caught using alcohol or illegal potentially reducing cravings. In addition, substances in prison. some medications serve as a substitute to New Integrated Substance Use Disorder the substance to minimize the impacts of Treatment Program (ISUDTP). As part of the withdrawal while the patient works toward 2019-20 budget package, CDCR received funding sobriety. Some patients receive medications to establish ISUDTP. When fully implemented, for a short period of time to help gain medical ISUDTP is intended to provide a continuum of stability, while other patients continue care to inmates to address their SUDT and other to receive MAT for many years to help rehabilitative needs. Accordingly, ISUDTP services maintain sobriety. include education, CBT, intensive outpatient treatment, and MAT when appropriate. Under ISUDTP, inmates are assigned to SUDT OVERVIEW OF CALIFORNIA’S based on whether they have a medical rather than SUDT PROGRAMS FOR INMATES criminogenic need. While there is significant overlap AND PAROLEES between inmates with a medical and criminogenic need for SUDT, the process for identifying the In this section, we describe the SUDT services need and developing a treatment plan is different. CDCR provides to both inmates and parolees, To identify a medical need for SUDT, health care including how the type of in-prison services inmates staff screen inmates for substance use disorders receive help determine the service they are referred with the National Institute on Drug Abuse (NIDA) to when they are released to parole. Quick Screen. The NIDA Quick Screen consists of a series of scored questions about prior substance CDCR Provides In-Prison SUDT use. The total points accrued indicate whether a Programs treatment plan needs to be developed to address Historical Provision of SUDT in Prison. Until an inmate’s need. recently, CDCR’s in-prison SUDT consisted primarily Treatment plans are developed utilizing the of CBT sessions a few hours a week for several American Society of Addiction Medicine (ASAM) months. Similar to other rehabilitation programs in Criteria. The ASAM Criteria is a diagnostic tool www.lao.ca.gov 3 analysis full gutter AN LAO REPORT that allows clinicians to assess six dimensions— Figure 1 such as the presence of other related medical and behavioral health conditions—that research Dimensions Assessed by American Society of Addiction Medicine Criteria has found can impact the effectiveness of SUDT modalities, as shown in Figure 1. By using the ASAM Criteria, medical staff are able to determine what treatment options are most appropriate for each patient, including whether they would benefit from MAT. CDCR has estimated that out of the total inmate population of about 112,000 inmates in Past and current experiences with substance use and withdrawal. 2019-20, 67 percent had a substance use disorder and 32 percent could potentially benefit from MAT. Past and current physical health conditions. CDCR-Funded Contracts Provide Emotional, behavioral, and cognitive SUDT to Parolees conditions. As previously mentioned, people released from Readiness and interest to make changes. prison after serving a term for a serious or violent offense are generally supervised in the community Potential for relapse based on by state parole, with the remainder of people current use or past relapses. released generally supervised by county probation Living environment and other external under what is known as Post-Release Community factors that could impact treatment. Supervision. In addition to supervision, CDCR provides people who are on state parole with access to CDCR-funded rehabilitation programs by using its General Fund resources to contract with third parties to deliver specific services (such as SUDT). Specialized Treatment for Optimized Figure 2 Programming (STOP) Provides Most Parolee SUDT. STOP is a CDCR-funded program that Four Contractors provides a range of services to parolees, but Administer Six STOP Regions primarily focuses on various SUDT modalities. These modalities include residential and outpatient services but exclude MAT. CDCR currently has agreements with four nonprofit and private contractors that administer STOP at a regional West Care level. These regional contractors (1) pay local providers to deliver services to parolees through subcontracts, (2) connect parolees with these providers, and (3) conduct oversight of the services provided to parolees. As shown in Figure 2, there are currently six STOP regions in California administered by these four contractors. Amity For example, West Care currently serves as the GEO Reentry Services regional contractor in most of Northern and Central Health Right 360 California and subcontracts with various local providers in those counties to provide services STOP = Specialized Treatment for Optimized Programming. to parolees. 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Upon placement in STOP, parolees can receive Some Parolees Get SUDT Through services for up to 180 days. However, these Medi-Cal Instead of CDCR-Funded services can be extended up to an additional Programs 185 days if parolees are nearing the end of their initial treatment period and the provider and CDCR Overview of Medi-Cal SUDT Services. agree that additional SUDT is necessary. For Some parolees—particularly those receiving example, a provider might identify that a parolee MAT—receive SUDT services outside of CDCR’s who is nearing the end of a 180-day residential contracts. Usually these services are funded treatment period could benefit from additional time through Medi-Cal, which is overseen by the state in residential or outpatient SUDT provided through Department of Health Care Services (DHCS). STOP. The provider and regional STOP contractor Medi-Cal provides funding to cover the costs would then submit a request to extend treatment to of health care services for low-income families CDCR for approval. and individuals. Medi-Cal services are partially The program’s total budget for 2020-21 is reimbursed by the federal government. The federal $68 million General Fund. The cost per participant reimbursement rate for California is generally at and the number of parolees who are served in least 50 percent of the costs for eligible services. a given year varies considerably. For example, However, the federal government provides CDCR reported serving about 8,000 parolees at reimbursement of up to 90 percent of the cost for a cost of roughly $8,300 per parolee in 2017-18. services provided to certain Medi-Cal beneficiaries. In comparison, CDCR reported serving about For example, the federal government currently 15,000 parolees at a cost of roughly $5,600 per pays 90 percent of the cost for services provided participant in 2018-19. These variations are due to Medi-Cal beneficiaries who gained coverage to a number of factors including (1) the modality of in 2014 as a result of the Patient Protection and SUDT services provided, (2) the number of parolees Affordable Care Act (ACA). The ACA provided who leave before completing the program thereby states with the option to expand Medicaid eligibility freeing up space for another parolee, and (3) the to childless adults—through what became known number of parolees who have their treatment in California as the ACA expansion. This group of extended beyond 180 days. Medi-Cal beneficiaries is known as the “expansion population” and includes childless adults who make Other CDCR-Funded Programs Offer less than 138 percent of the federal poverty level. Limited SUDT Services. While STOP is the main provider of SUDT services funded by CDCR, Most people being released from prison qualify some parolees receive outpatient-level SUDT for Medi-Cal and are often part of the expansion through other programs provided under contract population. CDCR screens inmates before release with CDCR, including day reporting centers and, as of 2019-20, submits Med-Cal applications (DRCs). DRCs operate in 21 counties and provide for about 82 percent of inmates. Between July outpatient services for a variety of parolee needs 2018 and June 2019 (the most recent data in addition to SUDT. The program served about available), Medi-Cal applications were submitted 8,900 parolees in 2018-19, though many received for about 29,900 of the 36,400 inmates who were non-SUDT services, such as anger management. In released. Of the 29,900 applications submitted, addition, CDCR offers parolee service centers and about 24,000 (80 percent) were approved, 90 (less transitional housing programs. These programs, than 1 percent) were denied, and the remaining which served about 2,000 parolees in 2018-19, pair 5,700 (19 percent) were pending at the time housing with reentry services such as job training of release. and offer a limited amount of rehabilitation services Within the Medi-Cal program, certain behavioral which can include outpatient-level SUDT. health care services, including SUDT, are administered locally by county behavioral health departments. Counties generally pay for the costs of these services when they are provided and then www.lao.ca.gov 5 analysis full gutter AN LAO REPORT submit their eligible expenditures to DHCS in order Rates providers receive for SUDT services to receive federal reimbursement. are based on the costs of providing services Counties Work With Various Medi-Cal-Funded up to a statewide maximum. For example, SUDT Providers. Similar to the regional STOP as of 2018, the maximum rate for residential contractors, counties contract with providers who services is about $90 per day. To the extent offer various SUDT modalities such as outpatient a particular provider’s costs exceed this and residential services. In order to enter a contract maximum rate, they may choose not to with a county, providers must first be licensed and provide services to Medi-Cal patients. certified by DHCS. • Drug Medi-Cal Organized Delivery System Medi-Cal-Funded SUDT Also Available (DMC-ODS). Counties that have opted Outside County Contracts. In addition to these into DMC-ODS operate under a waiver of county-contracted providers, parolees can also certain federal rules that allow them to draw receive outpatient SUDT and MAT through Medi-Cal down federal funding for SUDT services not from other providers in the community. These eligible for reimbursement under standard providers include: Drug Medi-Cal. This allows counties to offer a wide variety of additional SUDT services, • Community health centers provide many including case management, withdrawal parolees with health care (which can include management, and several forms of MAT SUDT). These centers utilize various federal, medication not available under standard Drug state, and local funding sources—including Medi-Cal. Treatment plans are developed Medi-Cal—to provide services to people. We based on the ASAM criteria. The waiver also note that some community health centers allows for residential SUDT facilities to have choose to become county-contracted more than 16 beds. Counties that opt into providers. DMC-ODS also have the ability to propose • Other community providers, such as private county-specific rates that ensure they cover primary care providers, can offer parolees the costs of providing SUDT. This provides SUDT services so long as the provider counties with greater flexibility to adjust their accepts Medi-Cal and is authorized to provide rates based on local costs—allowing counties those services. For example, in order for a in high cost areas to attract more providers. provider to be authorized to provide MAT to For example, in one DMC-ODS county, the an eligible parolee, they must meet federal median rate for residential services was requirements for prescribing the medication. $124 per day, which is much higher than the $90 daily reimbursement for standard Drug We note that some providers, including many of Medi-Cal. As shown in Figure 3 on the next the community health care centers, participate in a page, DMC-ODS has been widely adopted network that tailors services to address the needs throughout California. Currently, 37 counties of people recently released from prison. have opted into DMC-ODS. Roughly Services Eligible for Federal Reimbursement 95 percent of parolees live in these counties. Vary by County. The types of SUDT services eligible for federal reimbursement through Medi-Cal vary by county based on which Medi-Cal delivery REFERRAL AND PLACEMENT INTO system is used. Specifically, counties can choose PAROLEE SUDT PROGRAMS from one of the two following systems: In this section, we describe how parolees are • Standard Drug Medi-Cal. In standard referred and placed into SUDT services in the Drug Medi-Cal counties, federal Medicaid community, which depends on a variety of factors. reimbursement for residential SUDT services is limited to services provided to perinatal women in facilities with no more than 16 beds. 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Referral Process Standard Pre-Release Planning Process. Inmates being released to parole typically go There are three main ways that a person being through a pre-release planning process once they released from prison into parole supervision can be are within 90 to 210 days of release. (When inmates referred to SUDT. Before leaving prison, inmates enter prison, a similar process is used to place being released to parole go through a pre-release them into in-prison programs.) Specifically, a Parole planning process, which can include referrals to Services Associate (PSA) meets with the inmate SUDT providers in the community. Typically, these to develop a case plan for addressing the inmate’s referrals are to CDCR-funded providers. In addition, criminogenic needs once they are on parole as CDCR is in the process of implementing a separate identified by COMPAS Reentry (an assessment process (known as enhanced pre-release planning) similar to COMPAS but designed for parolees). to refer certain inmates—such as those receiving While COMPAS Reentry determines whether a MAT—to a broader range of SUDT providers— person has a low, moderate, or high criminogenic including Medi-Cal-funded providers. Finally, after need for SUDT, it does not provide guidance on being released from prison, parolees can also the treatment modality that is appropriate for that be referred to SUDT by their parole agents or by person. For example, COMPAS Reentry does navigating the process on their own. not indicate whether a parolee’s need for SUDT would be best addressed through an outpatient or residential program or Figure 3 whether MAT is appropriate. Enhanced Pre-Release 37 Counties Have Opted into DMC-ODS Planning. Because some inmates released to parole need services (such as MAT) DMC-ODS that are not available through Standard Drug Medi-Cal CDCR-funded SUDT programs, CDCR currently takes steps on a case-by-case basis to ensure that these inmates are connected to appropriate services in the community and are approved for Medi-Cal when applicable. As part of ISUDTP, CDCR is in the process of creating a more formal enhanced pre-release planning process intended to provide more comprehensive pre-release planning services including connecting inmates to programs in the community—such as Medi-Cal funded programs—that are not under contract with CDCR. This process would be focused on certain inmates, including those who (1) currently receive MAT, (2) have a high medical need for SUDT as identified by medical staff DMC-ODS = Drug Medi-Cal Organized Delivery System. using the NIDA Quick Screen and www.lao.ca.gov 7 analysis full gutter AN LAO REPORT ASAM criteria, and/or (3) have been convicted of example, as county residents, parolees can seek crimes with a nexus to substance use disorder and out treatment through county behavioral health who do not have an SUDT placement by the time departments without first being referred by their they are within 90 days of release. This process parole agents. would involve a multidisciplinary team—including Placement Into Services nursing staff and social workers (rather than just a PSA)—conducting a comprehensive plan for Once a parolee has been referred to a provider, the rehabilitative and health care services that the the provider determines what services should be inmate will receive upon release. As part of these offered to the parolee. This placement process planning activities, the team would ensure inmates varies depending on whether the provider is funded are enrolled in programs like Medi-Cal and referred by CDCR or Medi-Cal. to either CDCR-funded or Medi-Cal-funded SUDT Placement Into CDCR-Funded SUDT. CDCR providers in the community by the time of their provides limited guidance to the providers it funds release. According to CDCR, it has started working on how they should determine what services with all 58 counties to help ensure that the process to provide parolees. As a result, providers take will allow for inmate needs to be met once they different approaches when placing parolees into are released. services. For example, while some CDCR-funded Referral Processes While on Parole. In providers administer COMPAS again or similar addition to being referred to SUDT programs prior tools to identify criminogenic need, others might to being released from prison, parolees who are use tools such as the ASAM Criteria to develop a already in the community can be referred to SUDT treatment plan. by their parole agent or choose to access these Placement Into Medi-Cal-Funded SUDT. services on their own. Parole agents can refer When parolees are referred to a Medi-Cal provider, them to CDCR-funded SUDT programs under a they are assessed to determine what services are number of circumstances, including in response appropriate based on medical necessity and then to a request from the parolee or in response placed into treatment based on the assessment to a substance use related parole violation. like any other Medi-Cal patient. In addition to Parole agents also have the flexibility to refer ensuring the parolee gets the appropriate services, parolees to non-CDCR-funded programs such making treatment decisions based on medical as Medi-Cal-funded SUDT providers. However, necessity is required in order to ensure the CDCR lacks a formal process for making or services are reimbursable through Medi-Cal. For keeping track of referrals to non-CDCR-funded example, in DMC-ODS counties, providers are SUDT. In addition, parolees can also choose to required to use the ASAM Criteria when developing access non-CDCR-funded SUDT on their own. For treatment plans. MEDI-CAL SUDT HAS ADVANTAGES OVER CDCR’S SUDT FOR PAROLEES As discussed above and summarized in (2) allows care to continue beyond parole, and Figure 4 on the next page, there are key similarities (3) makes greater utilization of federal funding. and differences between CDCR and Medi-Cal Medically Appropriate Levels of Care SUDT services for parolees. Based on our review of the differences, we find that SUDT provided CDCR-Funded SUDT Does Not Always Result through Medi-Cal has several advantages over in Medically Appropriate Level of Care. We find CDCR-funded SUDT. Specifically, Medi-Cal-funded that CDCR’s ability to provide medically appropriate SUDT (1) provides care based on medical necessity, 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT care to parolees through its SUDT programs is a parolee completes the program. In limited. This is primarily due to three factors: order to receive these services, a parolee needs to seek treatment outside of the • Referrals Not Based on Medical Necessity. CDCR-funded providers, such as by going to Referrals based on COMPAS Reentry focus a Medi-Cal-funded provider. While CDCR is on criminogenic need rather than medical currently establishing a process to connect necessity. In addition, PSAs have indicated that they do Figure 4 not always rely on COMPAS Reentry and sometimes make Key Similarities and Differences Between referrals to residential SUDT CDCR and Medi-Cal SUDT Services for Parolees programs based on other nonmedical factors, such as CDCR Medi-Cal a whether an inmate has a need for temporary housing STOP Standard Drug DMC-ODS Medi-Cal upon release. SUDT Modalities • Medically Appropriate Outpatient Treatment Plans Not Always Developed. Once a parolee Residentiala X is referred to CDCR-funded SUDT, providers are expected MATb X to develop treatment plans. Other Services However, there is a lack of consistency between Sober Living and Transitional Housingc providers when developing these plans. As previously Services Addressing Other X X discussed, this is because Criminogenic Needsd providers receive limited Aftercare (Post-Treatment X X guidance from CDCR on Recovery Services) how to make treatment Case Management X X decisions. Accordingly, some providers utilize Availability and Funding criminogenic assessments that are not designed to Available After Parole X create medically appropriate Provided Based on X treatment plans. For Medical Necessity example, COMPAS Reentry Generally Eligible for X cannot determine whether Federal Reimbursement outpatient or residential treatment is appropriate for a particular parolee. a Residential SUDT provided through standard Drug Medi-Cal is limited to perinatal women receiving services in facilities with 16 beds or less. As such, most parolees would not qualify. • Certain Services Not b Standard Drug Medi-Cal does not offer the full range of MAT services available through DMC-ODS. Available. CDCR-funded c Sober living and transitional housing provided through Medi-Cal is not eligible for federal reimbursement. SUDT for parolees does d Certain services addressing other needs such as anger management can be provided through Medi-Cal if there not provide certain SUDT is a nexus to the patient’s substance use disorder. services such as MAT, CDCR = California Department of Corrections and Rehabilitation; SUDT = substance use disorder treatment; case management, and STOP = Specialized Treatment for Optimized Programming; DMC-ODS = Drug Medi-Cal Organized Delivery System; and MAT = medication assisted treatment. post-treatment care after www.lao.ca.gov 9 analysis full gutter AN LAO REPORT some inmates to Medi-Cal services prior by CDCR, they are better equipped to provide to release from prison, this process would medically appropriate SUDT. For example, Medi-Cal not apply to parolees who are already in the providers in DMC-ODS counties can provide MAT, community. Furthermore, as we discuss in the case management, and post-treatment recovery nearby box, the Legislature recently adopted services (such as follow-up calls from the provider legislation to incentivize parolees to participate after completing outpatient or residential services). in MAT. This will likely result in more parolees Continuity of Service being interested in MAT—making it even more important for them to be able to easily access CDCR-Funded Services Only Available this service. During Parole Term. Once individuals are discharged from parole, they generally can no As a result of the above factors, many parolees longer receive services from their CDCR-funded may not be receiving SUDT modalities that provider. If these individuals need to continue or are appropriate for their needs. Providing an resume services due to unresolved SUDT needs inappropriate level of service not only results in or a relapse, it is ultimately their responsibility an ineffective use of resources, it can also be to find treatment. This is problematic because counterproductive. For example, a parolee referred when left untreated, substance use disorders to residential SUDT based on a need for housing and relapses can have serious health or criminal might not need that level of SUDT. In fact, the consequences. In particular, relapse following structured nature of residential SUDT could make treatment can result in an increased likelihood of it more challenging for the parolee to engage in overdose. This is because, after treatment, people other activities that are critical to success, such as generally have lower tolerances for their drugs seeing their family, going to school, or working. In of choice. Moreover, as discussed in the box on addition, because the number of parolees who can the next page, recent legislation that reduces the be treated in residential SUDT is limited, it could amount of time people spend on parole could have prevent another parolee who does have a need for implications for continuity of care. This is because residential treatment from receiving services. people will have less time to access or resume Medi-Cal Services Provide Medically CDCR-funded SUDT before being discharged Appropriate Levels of Care. Unlike CDCR-funded from parole. SUDT for parolees, referrals and treatment plans for Medi-Cal Services Have Potential Continuity Medi-Cal services must be medically appropriate. of Care Advantages. Because Medi-Cal is not This ensures that patients receive the correct level specifically for parolees, people who receive of care and that treatment decisions are made in Medi-Cal-funded SUDT while on parole could a consistent manner based on the needs of the continue or resume those services after being patient rather than varying based on the PSA or discharged from parole. For example, if people provider. Moreover, because Medi-Cal providers receive Medi-Cal-funded SUDT while on parole, can offer a range of services beyond those funded Incentive for Parolees to Participate in Medication Assisted Treatment (MAT) Chapter 325 of 2020 (AB 1304, Waldron) established an incentive program for certain people on parole to participate in substance use disorder treatment (SUDT) programs including MAT. For each six months of treatment completed, eligible parolees can receive a 30-day reduction in the length of their parole—up to a maximum of 90 days. As such, this program could result in more parolees seeking Medi-Cal-funded SUDT since the SUDT programs funded through the California Department of Corrections and Rehabilitation do not provide MAT. 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT their coverage for SUDT continues even after to Medi-Cal funded services that receive federal being discharged from parole. As such, people reimbursements, CDCR does not draw down discharged from parole could continue receiving any federal funding for parolee SUDT. According services such as case management and aftercare to CDCR, it attempts to leverage Medi-Cal from the same provider they were receiving services when applicable and some STOP providers from while on parole. In view of the above, Medi-Cal have a number of beds set aside to provide is better equipped to help ensure continuity of Medi-Cal-funded treatment to eligible patients care following parole discharge and potentially for including parolees. However, the department is several years after. This could help prevent further unable to provide information on the number of serious health or criminal consequences resulting parolees placed into the Medi-Cal-funded beds and from substance use disorders. does not have a process to ensure providers use Currently, residential SUDT provided to adults Medi-Cal funding before seeking funding through through Medi-Cal is typically limited to no more CDCR. Moreover, contractors who administer than two nonconsecutive 90-day periods in a STOP in multiple regions of the state indicate that year, in contrast to STOP services, which can it is uncommon for providers within their networks be provided for as long as a full year. However, to offer Medi-Cal-funded beds. This means that as part of the Governor’s California Advancing the state must bear the full cost of these services and Innovating Medi-Cal (CalAIM) proposal—a instead of drawing down federal funding through far-reaching set of reforms to expand, transform, Medi-Cal to cover a portion of the cost. and streamline Medi-Cal service delivery and Medi-Cal Funded Programs Draw Down financing—the administration proposes to remove Additional Federal Funding. Up to 90 percent this restriction on the provision of Medi-Cal of Medi-Cal-funded SUDT expenditures are residential SUDT services. If approved, Medi-Cal reimbursed by the federal government, resulting residential SUDT services could be provided in the state and local governments paying for longer periods of time than STOP services if substantially less than the full cost of the medically necessary. (In addition to approval from service provided. For example, in Santa Barbara the Legislature, this change would also require County, the full cost of providing outpatient federal approval. More information about CalAIM SUDT is relatively similar between STOP and can be found in our publication The 2021-22 Medi-Cal—$135 for one session through STOP Budget: CalAIM: The Overarching Issues.) and $130 (median rate) for one session through Medi-Cal. However, the nonfederal share of the Utilization of Federal Funding Medi-Cal funded session is $65 if the federal CDCR Does Not Utilize Federal Funding. While government reimburses 50 percent of the cost most parolees are eligible for Medi-Cal and many and only $13 if the federal government reimburses SUDT services provided through STOP are similar 90 percent of the costs. (As discussed earlier, Reduced Length of Parole Terms Chapter 29 of 2020 (SB 118, Committee on Budget and Fiscal Review) established an opportunity for parolees to earn early discharge after one year of parole based on good behavior. Chapter 29 also established maximum parole terms of two or three years for most parolees. (Previously, parole terms were generally set at three or more years.) Due to the reduced length of parole, there is a greater likelihood for parolees to be discharged from parole before having their substance use disorder treatment needs fully met. To continue treatment after being discharged from parole, these people will need to seek treatment elsewhere, such as from Medi-Cal providers. www.lao.ca.gov 11 analysis full gutter AN LAO REPORT most parolees are part of the Medi-Cal expansion provided through STOP. As such, leveraging population, for which the federal government Medi-Cal to provide parolees with SUDT would reimburses 90 percent of the costs.) In either likely be considerably less costly to the state than case, after federal reimbursements, the nonfederal CDCR’s current approach of paying the full cost of share of a Medi-Cal-funded outpatient session SUDT directly. is substantially less expensive than the session RECOMMEND INCREASING UTILIZATION OF MEDI-CAL FOR PAROLEE SUDT In order to capitalize on the advantages of would not typically be eligible for Medi-Cal. Medi-Cal-funded SUDT programs for parolees, This would ensure that all parolees receive we recommend a series of steps to increase the the benefits of medically appropriate SUDT utilization of these programs as compared to the while also eliminating the need to maintain CDCR-funded SUDT programs. Specifically, we two separate SUDT systems. As we discuss recommend that the Legislature (1) direct CDCR to below, this approach would have some refer all parolees to medically appropriate SUDT, implications on providers and funding (2) require STOP providers to provide parolees for SUDT. with Medi-Cal-funded SUDT, (3) structure funding Require STOP Providers Become Medi-Cal for parolee SUDT to streamline billing and reduce Providers and Ensure Continuity of Care. workload, and (4) use a portion of freed-up We recommend that the Legislature direct funding to ensure costs are not shifted to counties CDCR to require all STOP providers to become and nonreimbursable services for parolees are Medi-Cal-funded providers. This would help ensure maintained. We find that these steps will improve that there are sufficient Medi-Cal-funded providers parolee SUDT while allowing the state to draw in the community and that parolees receive down additional federal funding. medically appropriate SUDT based on their needs. Connect All Parolees With Medically We also recommend directing CDCR to require Appropriate SUDT. In order to connect all parolees that STOP providers take steps to help ensure with medically appropriate SUDT, we recommend continuity of care after parolees are discharged the Legislature require CDCR to: from parole. The Legislature could implement these changes by requiring CDCR to include provisions in • Ensure that all eligible inmates entering parole the regional STOP contracts requiring the regional are enrolled in Medi-Cal. contractors to only subcontract with providers that: • Conduct all parolee SUDT referrals for inmates preparing for reentry and parolees already in • Provide services in a manner that is consistent the community in a manner consistent with with Medi-Cal, including placing parolees in ISUDTP. Specifically, CDCR and providers services based on medical necessity. should use the NIDA Quick Screen and ASAM • Become licensed and certified by DHCS to Criteria when identifying needs and creating provide residential SUDT. treatment plans. • Become contracted Medi-Cal providers • Ensure that the prerelease planning processes through county departments of behavioral being established as part of ISUDTP are health. robust enough to accommodate all parolees • Help ensure continuity of care by working and ensure there is no gap in SUDT services with parolees to develop a plan for continued when parolees are released from prison. access to services after completion of parole • Refer all parolees with SUDT needs to as necessary. Medi-Cal providers—including parolees who 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT We note that implementing these changes with regional STOP contractors, with the amount could result in additional workload and costs depending on negotiations between CDCR and for providers who switch over to Medi-Cal. the contractors.) Shifting parolee SUDT costs to For example, providers might need to make Medi-Cal would result in an increase in Medi-Cal adjustments to their operations such as such spending. However, utilizing Medi-Cal would as switching over from CDCR’s administrative allow for federal reimbursements for a significant processes to Medi-Cal processes. In addition, there portion of these costs. The actual amount of could be funding implications for providers due to reimbursements available would depend on (1) the potential differences in the Medi-Cal rates set by level of expenditures on parolee SUDT in a given counties and the rates providers currently receive year, (2) the percent of those costs eligible for from the regional STOP contractors. However, we federal reimbursement, and (3) the extent to which note that counties generally set Medi-Cal rates parolees qualify for federal reimbursement at a rate based on the costs of providing services and have of 50 percent or 90 percent. Assuming parolee processes to adjust these rates to reflect changes SUDT expenditures remain at around $68 million, in provider costs. we estimate that federal reimbursements could Structure Funding to Streamline Billing and cover between roughly $25 million and $50 million Reduce Workload. Currently, STOP providers of parolee SUDT costs. submit their expenditures for reimbursement to the Ensure Costs Are Not Shifted to Counties regional STOP contractors who then bill CDCR. and Nonreimbursable Services Maintained. Instead, we recommend requiring these providers Currently, the nonfederal share of Medi-Cal SUDT to submit their expenditures for reimbursement to costs is paid for with a combination of state and county behavioral health departments who would county funding. However, in order to avoid passing then submit their expenditures to DHCS for either the nonfederal share of parolee SUDT costs onto state or federal reimbursement. This is the process counties, the Legislature could direct DHCS to currently used by Medi-Cal and would ensure pass any costs to CDCR for STOP services that are that Medi-Cal eligible services are being billed billed through Medi-Cal and not eligible for federal appropriately. In addition, this approach minimizes reimbursement. We estimate that the nonfederal potential workload increases for providers because share of these services currently could be between they would only need to bill the counties rather than $18 million and $43 million annually. A portion of having to bill some services through the counties CDCR’s current allocation for STOP of $68 million and some services through the regional STOP could be used to pay for these costs. These contractors. This would eliminate the need for costs include: funding for services provided to parolees to pass • The nonfederal share of costs for Medi-Cal through the regional STOP contractors. However, eligible services provided to parolees—which CDCR would continue to need to use these would be 10 percent of the cost of SUDT contractors to connect parolees with providers services for most parolees. upon release and conduct oversight of the • Costs for SUDT services provided to parolees non-SUDT services provided to parolees. who are not eligible for Medi-Cal. Under this funding structure, expenditures on • Key services generally not covered by parolee SUDT would shift from CDCR to Medi-Cal. Medi-Cal, such as temporary housing for As such, CDCR would no longer need the full parolees participating in residential SUDT $68 million (General Fund) currently allocated to and any services providers offer to address the STOP program. (We note that CDCR would non-SUDT criminogenic needs, such as continue to need some of this funding to contract anger management. www.lao.ca.gov 13 analysis full gutter AN LAO REPORT CONCLUSION Parolees with untreated substance use disorders SUDT through Medi-Cal ensures parolees receive can experience negative health impacts and medically appropriate care while also drawing are at increased risk of recidivism. However, down additional federal funding. As such, by effectively providing SUDT has been found to increasing the utilization of Medi-Cal for parolee reduce these impacts. Moreover, the benefits of SUDT, we estimate that the state can achieve net effectively providing SUDT often outweigh the savings of as much as $25 million to $50 million costs. As we discuss in this report, providing SUDT annually by leveraging federal reimbursements while through Medi-Cal has multiple advantages over also increasing the quality of services provided the CDCR-funded SUDT. Specifically, providing to parolees. LAO PUBLICATIONS This report was prepared by Luke Koushmaro, and reviewed by Drew Soderborg and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 14 LEGISLATIVE ANALYST’S OFFICE