From August 2004 through March 2007, the OIG issued nine audit reports on BOP contracts for medical services. The OIG reported on major internal control deficiencies for eight of the nine medical services contract audits. Deficiencies included weak procedures or processes for calculating discounts, reviewing and verifying invoices and billings, paying bills, and managing the overall administration of the contracts. As of November 2007, the BOP’s Program Review Division said that corrective actions had been implemented for all recommendations in seven of the nine contract audits. For the other two audits (Correctional Medical Services at Fort Dix, New Jersey and Medical Development International at FCC Butner, North Carolina), the BOP agreed to take corrective actions on the OIG’s recommendations, and those actions were either completed or in progress as of November 2007. The OIG’s findings and recommendations for the nine audits are summarized below.

Parkview Medical Center

In an August 2004 audit report on the BOP’s contract with the Parkview Medical Center (PMC), the OIG reported on the purchase of inpatient and outpatient facility and physician services for inmates at the Federal Correctional Complex in Florence, Colorado.³⁰ The OIG found that: (1) PMC did not provide documentation to support billings for pharmacy items, (2) PMC billed for prescription drugs that were not on the BOP’s approved formulary, (3) PMC did not provide the required Summary Paid Billing Analysis Reports to the BOP each quarter, and (4) the BOP could improve contract administration by better analyzing contract modifications prior to the acceptance of new terms.

The OIG recommended the BOP:

• remedy $424,638 in questioned costs paid to the PMC for unsupported pharmacy items,

• remedy the $94,774 in questioned costs paid to the PMC for drugs not listed in an applicable BOP formulary,

• implement controls to ensure the PMC submits the Quarterly Summary Paid Billing Analysis Report on time, and

• analyze future contract modifications to accurately determine the effect on the contract prior to acceptance.

Correctional Medical Services

In a September 2004 report on the BOP’s contract with Correctional Medical Services (CMS), the OIG reported on the acquisition of comprehensive medical services for inmates at the FCI facility at Fort Dix, New Jersey.³¹

The OIG found that: (1) CMS did not schedule and provide outpatient institutional and physician services within the time allowed by the contract after receiving a request from the FCI, (2) the BOP had obtained services outside the contract because CMS could not provide agreed-upon services, (3) CMS did not provide a Quality Assurance and Improvement Program and quarterly Summary Paid Billing Analysis Reports to the BOP, (4) CMS did not provide replacement non-Medicare personnel in a timely manner, (5) CMS charged for duplicative services and for services cancelled by the BOP, and (6) CMS billed for Magnetic Resonance Imaging (MRI) services after the MRI portion of the contract had expired.

The OIG recommended the BOP:

• ensure that CMS provides outpatient institutional and physician services in accordance with the terms and conditions of the contract,

• remedy the $9,321,106 paid to the CMS because the government awarded the contract based on services in the CMS’s proposal that the CMS did not have the capability to deliver,

• acquire biomedical services from the CMS at the prices set forth in the contract,

• ensure that the CMS provides a Quality Assurance and Improvement Program and the Summary Paid Billing Analysis Reports in accordance with the contract,

• remedy the $1,600 in duplicative orthopedic examination costs paid to the CMS,

• remedy the $7,096 paid to the CMS for services cancelled by the BOP, and

• remedy the $31,620 that the CMS billed for MRI services after the MRI portion of the contract had expired.

Medical Development International at the United States Penitentiary and Federal Prison Camp in Leavenworth, Kansas

In a February 2005 report on the BOP’s contract with Medical Development International (MDI), the OIG reported on the acquisition of medical services for the United States Penitentiary and Federal Prison Camp in Leavenworth, Kansas.³² The OIG found that: (1) MDI did not obtain certification of residency forms from all medical providers as required by the contract, (2) the BOP Contracting Officer’s Technical Representative did not submit contractor monitoring reports on a quarterly basis as required, and (3) the BOP Contracting Officer’s Technical Representative did not use the BOP’s rating guidelines on monitoring reports submitted.

The OIG recommended the BOP:

• obtain the required residency certification forms for all medical personnel who provide off-site care for inmates, and

• require the Contracting Officer’s Technical Representative to submit contractor monitoring reports in a timely manner and use the rating guidelines when evaluating the contractor’s performance.

Wayne Memorial Hospital

In an April 2005 report on the BOP’s contract with the Wayne Memorial Hospital (WMH), the OIG reported on the acquisition of comprehensive inmate medical services provided by WMH to inmates at FCI, Jesup.³³ The OIG found that: (1) WMH did not always provide Inmate Discharge Summary Reports in a timely manner, (2) FCI Jesup obtained medical services from providers outside the contract when the contractor was able to provide some of those services, (3) WMH billed and was paid for medical services that were calculated using incorrect billing practices, (4) WMH billed and was paid for medical services that were not supported with adequate documentation, and (5) FCI Jesup paid for medical services with billings that were unsupported.

The OIG recommended the BOP:

• ensure the contract accurately specifies services that are to be provided and other specific terms and conditions of the contract,

• ensure the contractor provides Inmate Discharge Summary Reports in a timely manner,

• remedy more than $76,000 charged to the contract because the contractor used incorrect rates when it prepared the billing statements or because adequate documentation was not maintained to support the billing statements, and

• ensure the FCI strengthens its controls for reviewing and processing invoices for payment.

Salem Community Hospital

In a June 2005 report on the BOP’s Contract with the Salem Community Hospital, the OIG reported on the acquisition of comprehensive medical services for inmates at FCI Elkton facility in Salem, Ohio.³⁴ The OIG found that: (1) the Salem Community Hospital overcharged for services it provided during the first 8 months of the contract by using incorrect rates to calculate invoice discounts, (2) the Salem Community Hospital made additional errors in the discounts charged and in the time charges for operating and recovery room services, and (3) FCI Elkton had no formal written procedures for reviewing and verifying the accuracy of its invoices.

The OIG recommended the BOP:

• direct FCI Elkton to remedy $744 in overcharges paid to Salem Community Hospital,

• direct FCI Elkton to ensure the Salem Community Hospital implemented control procedures to ensure charges and discounts on invoices were correctly calculated,

• direct FCI Elkton to review and revise its review procedures to ensure invoices approved for payment were accurate, and

• direct FCI Elkton to formalize its invoice review procedures in writing.

Hospital Corporation of America-HealthONE

In a March 2006 report on the Medical Services contract with the Hospital Corporation of America-HealthONE, L.L.C. (HealthONE), the OIG reported on the acquisition of comprehensive medical services for inmates at the FCI Englewood facility in Littleton, Colorado.³⁵ The OIG found that: (1) HealthONE did not submit quarterly Summary Paid Billing Analysis Reports to FCI Englewood as required, (2) the BOP Contracting Officer’s Technical Representative could not provide documentation supporting the information reported in the quarterly contractor performance reports, (3) FCI Englewood had no written procedures for monitoring and reviewing of the contractor’s billing process, and (4) FCI Englewood had no documentation supporting a review process for exercising each option of the contract.

The OIG recommended the BOP:

• document the criteria used to assess contractor performance and document the quantitative results of the evaluations,

• prepare quarterly statistical reports as required,

• document procedures for verifying the accuracy of the invoices for supplies and services, and

• ensure the contractor submitted quarterly Summary Paid Billing Analysis Reports.

University of Massachusetts Medical School and the UMass Memorial Health Care, Inc.

In a March 2006 report on the medical services contract with the University of Massachusetts Medical School and the UMass Memorial Health Care, Inc. (collectively UMass), the OIG reported on the contractor’s compliance with the contract for providing medical services to inmates at FMC Devens in Ayer, Massachusetts.³⁶ The OIG found that: (1) UMass did not consistently provide services at the location most advantageous to the government, (2) UMass lacked a detailed electronic database containing individual charges which prevented tests of the charges, (3) the FMC was not able to independently verify contract charges based on the Medicare hospital inpatient prospective payment system, and (4) the contract contained terms and requirements that were unreasonable or imprecisely written and were ignored by both parties.

The OIG recommended the BOP:

• require the contractor to provide detailed data on all contract charges electronically and use this data to analyze and manage contractor performance and costs;

• develop and implement management tools to ensure services were consistently provided at the location most advantageous to the government;

• develop the capability to independently verify contractor charges for inpatient hospital services based on the Medicare inpatient prospective payment system; and

• improve contract administration by requiring the contractor to adhere to all terms and conditions of the contract, and when appropriate, amend the contract to ensure all contract terms were reasonable, clear, and enforceable.

John C. Lincoln Health Network

In an August 2006 report on the medical services contract with the John C. Lincoln Health Network, the OIG reported on the acquisition of hospital facility services for the United States Penitentiary and the Federal Prison Camp in Phoenix, Arizona (FCI Phoenix).³⁷ The OIG found that: (1) FCI Phoenix had not formalized in writing the procedures or policies for monitoring and reviewing contractor billings, (2) FCI Phoenix’s payments to the contractor were not processed in a manner consistent with the Prompt Payments Act, (3) the BOP Contracting Officer’s Technical Representative did not maintain adequate supporting documentation for performance reports, and (4) the BOP Contracting Officer did not review the performance reports in a timely manner.

The OIG recommended the BOP:

• finalize draft procedures for monitoring contractor billing and performance,

• identify procedural hindrances to full compliance with the Prompt Payments Act,

• implement new procedures for documenting supporting justification for evaluative rankings in performance reports,

• implement a policy to define and require a timely review of performance reports by the Contracting Officer, and

• ensure that the Contracting Officer either maintained or had accessed to a comprehensive listing of all contract expenditures to assist in contract monitoring.

Medical Development International at FCC Butner and FMC Butner

In a March 2007 report on another BOP contract with MDI, the OIG reported on the acquisition of comprehensive medical services provided to inmates at FCC Butner and FMC Butner in Butner, North Carolina.³⁸ The OIG found that: (1) the BOP’s procedures for reviewing and approving billing rates were weak; (2) MDI’s invoices contained transactions that were not within the service period being billed; (3) MDI billed the BOP for some transactions at a rate higher than specified in the contract; (4) MDI billed the BOP for some services not covered by the contract; (5) the BOP did not sign off on the timesheets submitted by the contractor; (6) MDI submitted timesheets that were either miscalculated, overstated, understated or not supported; (7) MDI billed for transactions where the hours billed were greater than the hours recorded in the institutions’ sign-in and out logs; (8) MDI billed for transactions where the hours billed were for MDI contractors whose names did not appear in the sign-in and sign-out logs; and (9) MDI did not provide adequate support for billing statements for “on call” services provided under the contract.

The OIG recommended the BOP:

• remedy the $2,428,345 in questioned costs;

• implement various internal controls to ensure the BOP paid for services allowed by the contract, actually provided by the contractor, and at rates contained in the contract;

• improve contract administration to ensure the contractor adhered to all terms of the contract; and

• include specific terms and requirements for the billing of personnel services in the pricing and billing sections for future medical services contracts.

30. Department of Justice, Office of the Inspector General, The Bureau of Prisons’ Contract with the Parkview Medical Center for the Acquisition of Medical Services (J40604c-030), Audit Report GR-60-04-008 (August 2004).

31. Department of Justice, Office of the Inspector General, Correctional Medical Services’ Compliance with the Federal Bureau of Prisons’ Contract J21451c-009, Audit Report GR-70-04-009 (September 2004).

32. Department of Justice, Office of the Inspector General, The Federal Bureau of Prisons’ Contract with Medical Development International for the Acquisition of Medical Services at its Leavenworth, Kansas Facilities (Contract No. DJB40804003), Audit Report GR-60-05-003 (February 2005).

33. Department of Justice, Office of the Inspector General, The Federal Bureau of Prisons’ Medical Services Contract with Wayne Memorial Hospital, Jesup, Georgia (Contract J30703c-020), Audit Report GR-40-05-006 (April 2005).

34. Department of Justice, Office of the Inspector General, The Federal Bureau of Prisons’ Contract Number DJB21602-004 with Salem Community Hospital in Salem, Ohio, Audit Report GR-50-05-012 (June 2005).

35. Department of Justice, Office of the Inspector General, The Federal Bureau of Prisons’ Contract with Hospital Corporation of America-HealthONE, L.L.C., Contract No. J40303c-146, Audit Report GR-60-06-006 (March 2006).

36. Department of Justice, Office of the Inspector General, T he University of Massachusetts Medical School and UMass Memorial Health Care, Incorporated’s Compliance with t he Federal Bureau of Prisons’ Contract DJB20507032, Audit Report GR-70-06-006 (March 2006).

37. Department of Justice, Office of the Inspector General, The Federal Bureau of Prisons’ Contract with the John C. Lincoln Health Network, Contract No. DJB60803144, Audit Report GR-60-06-009 (August 2006).

38. Department of Justice, Office of the Inspector General, The Bureau of Prisons’ Management of the Medical Services Contract with Medical Development International, Butner, North Carolina, Contract No. DJB10611-00, Audit Report Number GR-40-07-003 (March 2007).