(a) In order to promote the best possible patient outcomes, eliminate unnecessary medical and pharmacy costs, and ensure consistency in the delivery of health care services, the department shall maintain a statewide utilization management program that shall include, but not be limited to, all of the following:

1. (1) Objective, evidence-based medical necessity criteria and utilization guidelines.
2. (2) The review, approval, and oversight of referrals to specialty medical services.
3. (3) The management and oversight of community hospital bed usage and supervision of health care bed availability.
4. (4) Case management processes for high medical risk and high medical cost patients.
5. (5) A preferred provider organization (PPO) and related contract initiatives that improve the coverage, resource allocation, and quality of contract medical providers and facilities.

(c)

1. (1) The department shall establish annual quantitative utilization management performance objectives to promote greater consistency in the delivery of contract health care services, enhance health care quality outcomes, and reduce unnecessary referrals to contract medical services. On July 1, 2011, the department shall report the specific quantitative utilization management performance objectives it intends to accomplish statewide in each adult prison during the next 12 months to the Joint Legislative Budget Committee, the Senate Committee on Appropriations, the Senate Committee on Budget and Fiscal Review, the Senate Committee on Health, the Senate Committee on Public Safety, the Assembly Committee on Appropriations, the Assembly Committee on Budget, the Assembly Committee on Health, and the Assembly Committee on Public Safety.
2. (2) The requirement for submitting a report imposed under this subdivision is inoperative on January 1, 2015, pursuant to Section 10231.5 of the Government Code.

(d) On March 1, 2012, and each March 1 thereafter, the department shall report all of the following to the Joint Legislative Budget Committee, the Senate Committee on Appropriations, the Senate Committee on Budget and Fiscal Review, the Senate Committee on Health, the Senate Committee on Public Safety, the Assembly Committee on Appropriations, the Assembly Committee on Budget, the Assembly Committee on Health, and the Assembly Committee on Public Safety:

1. (1) The extent to which the department achieved the statewide quantitative utilization management performance objectives set forth in the report issued the previous March as well as the most significant reasons for achieving or not achieving those performance objectives.
2. (2) A list of adult prisons that achieved and a list of adult prisons that did not achieve their quantitative utilization management performance objectives and the significant reasons for the success or failure in achieving those performance objectives at each adult state prison.
3. (3) The specific quantitative utilization management performance objectives the department and each adult state prison intends to accomplish in the next 12 months.
4. (4) A description of planned and implemented initiatives necessary to accomplish the next 12 months’ quantitative utilization management performance objectives statewide and for each adult state prison. The department shall describe initiatives that were considered and rejected and the reasons for their rejection.
5. (5) The costs for inmate health care for the previous fiscal year, both statewide and at each adult state prison, and a comparison of costs from the fiscal year prior to the fiscal year being reported both statewide and at each adult state prison.

(f) The following definitions shall apply to this section:

1. (1) “Contract medical costs” mean costs associated with an approved contractual agreement for the purposes of providing direct and indirect specialty medical care services.
2. (2) “Specialty care” means medical services not delivered by primary care providers.
3. (3) “Utilization management program” means a strategy designed to ensure that health care expenditures are restricted to those that are needed and appropriate by reviewing patient-inmate medical records through the application of defined criteria or expert opinion, or both. Utilization management assesses the efficiency of the health care process and the appropriateness of decisionmaking in relation to the site of care, its frequency, and its duration through prospective, concurrent, and retrospective utilization reviews.
4. (4) “Community hospital” means an institution located within a city, county, or city and county which is licensed under all applicable state and local laws and regulations to provide diagnostic and therapeutic services for the medical diagnosis, treatment, and care of injured, disabled, or sick persons in need of acute inpatient medical, psychiatric, or psychological care.