Escalating inmate health care costs have been and continue to be a concern for the Bureau of Prisons (BOP). In fiscal year (FY) 1992 the Department of Justice's (DOJ) Management Control Report regarding the BOP identified the increasing costs of health care for inmates as a significant concern. This inspection report identifies factors contributing to inmates' health care costs and programs aimed at containing these costs. In addition, we reviewed the BOP's six corrective actions to the DOJ Management Control Report. Appendix I discusses the status of the BOP's corrective actions.

The BOP is required by 28 Code of Federal Regulations 0.95 to provide suitable medical care to all inmates in its custody. Under Title 18, United States Code, 4005, the Director, BOP, has authority, delegated by the Attorney General, to request assignment of Public Health Service (PHS) officers to assist with the direct delivery of health care. The BOP Director's authority to provide for the care and treatment of inmates has been delegated to the Medical Director. The Medical Director [ The Medical Director serves as the Bureau's Assistant Director for the Health Services Division.] administers all activities related to the physical and mental health of inmates.

The Health Services Division (HSD) provides overall direction for the BOP's inmate health care program. The HSD operations are organized as the Office of the Medical Director; Systems, Policy, Planning, and Evaluation Section; and Health Programs Section. Historically, the Medical Director has been a board-certified PHS physician.


The BOP's Program Statement 6000.04, Health Services Manual, states that the health care mission of the BOP is to provide the necessary medical, dental, and mental health services to inmates by a professional staff, consistent with acceptable community standards. [ The BOP is required to fully implement a health care system that is up to constitutional and professional standards. ] According to the Medical Director, the BOP's priorities for inmate health care are appropriate access to medical services, quality medical care, and contained costs. He stated that although the BOP recognizes the need to reduce health care costs, it must find a balance between costs and quality.

As of September 30, 1995, the BOP had 82 institutions with each providing inmate ambulatory care. Six of the 82 institutions were designed to provide major medical care, most of which are known as Federal Medical Centers (FMC): United States Medical Center for Federal Prisoners (USMCFP) Springfield, Missouri; FMC Rochester, Minnesota; Federal Correctional Institution (FCI) Butner, North Carolina; FMC Lexington, Kentucky; FMC Carswell, Fort Worth, Texas; and FMC Fort Worth, Texas. In addition to these six major medical centers, at the time of our field work, the BOP had FMCs slated for activation in FY 1997 at Butner, North Carolina, and in FY 1998 at Fort Devens, Massachusetts.

For inmates in short-term custody, initial physical, mental health, dental, and visual examinations are conducted within 30 days of admission and within 14 days for long-term inmates. However, tuberculosis (TB) screening must be completed within two working days of incarceration for all inmates. In each institution, inmate sick call is conducted at least four days per week with urgent care services available at all times.

A physician is either on-site or available for 24-hour continuous duty to handle medical problems that may occur after normal working hours. If an inmate requires medical services that the health care staff cannot provide, the inmate will be transferred to an outside community care provider or to one of the BOP's major medical centers.


Between FYs 1990 and 1994 total inmate health care costs increased by $124.8 million, or 91 percent. During this same period, the BOP's inmate population increased by 51 percent. The following table identifies the BOP's health care costs from FYs 1990 through 1994 by cost categories. Appendix II provides a definition of the cost categories.




(dollars in thousands)

CATEGORIES 1990 1991 1992 1993 1994
PHS Associated Costs $15,388 $18,490 $21,560 $23,787 $24,717
Community Provider Services 33,983 42,820 55,777 64,732 70,319
Guard Escort Service 7,107 10,918 12,739 14,418 18,878
Operating Expenses          
Salaries 48,897 60,897 76,357 87,684 100,485
Consultants 11,694 13,072 14,544 15,160 16,294
Equipment 3,710 4,249 2,735 4,125 3,470
Supplies 13,258 14,544 17,417 17,394 20,650
HIV Testing 1,098 1,193 1,545 1,396 1,408
Airlift Expenses 1,804 2,992 3,481 3,554 4,303
Headquarters Expenses 152 4,801 3,701 1,644 877
Other Costs 504 429 1,279 1,782 1,055
Total Costs $137,595 $174,405 $211,135 $235,676 $262,456
Average Inmate Population 55,407 61,404 67,225 75,498 83,421
BOP Facilities
(incurring obligations)
65 71 78 83 87
Annual Per Capita Costs $2,483 $2,840 $3,141 $3,122 $3,146


As indicated by the table, between FYs 1990 and 1994, health care costs increased notably:

guard escort service, 166 percent;

community provider services, 107 percent;

salaries for BOP employees, 106 percent; and

PHS associated costs, 61 percent.

In FY 1994 the following four cost categories accounted for 81 percent of the BOP's total health care costs:

salary costs for BOP employees, 38 percent;

community provider services, 27 percent;

PHS associated costs, 9 percent; and

guard escort service, 7 percent.

In addition to overall escalating health care costs, other issues to consider when examining the BOP's total health care costs are the per capita costs and the consumer price index.

Per Capita Costs - Although the BOP's health care costs were rising, its per capita costs increased by only 27 percent, or a 2 percent decrease in real dollars, between FYs 1990 and 1994. In addition, the BOP's per capita cost is typically lower than the per capita cost for citizens. In 1993 the national annual per capita cost was $3,299 while the BOP's FY 1993 per capita cost was $3,122. [ HSD's FY 1997 spring budget submission. ]

A comparison of the BOP's health care costs and per capita costs for FYs 1990 and 1994 follows. Among the categories with the most significant per capita increases were community provider services, guard escort service, and employee salaries.


FOR FY 1990 AND FY 1994
PHS Associated Costs $15,388




Community Provider Services 33,983




Guard Escort Service 7,107




Salaries 48,897




Consultants 11,694




Equipment 3,710




Supplies 13,258




HIV Testing 1,098




Airlift Expenses 1,804




Headquarters Expenses 152




Other Costs 504




TOTAL HEALTH CARE COSTS ANNUAL PER CAPITA COSTS $137,595 2,483 $262,456 3,146 27
* For each entry, the top number is the health care costs given in thousands, and the bottom number is the per capita costs.


Impact of the Consumer Price Index on the BOP's Health Care Cost - As reported in the HSD's FY 1997 spring budget submission, the United States Department of Labor Consumer Price Index for Medical Care (CPI-U) increased by 28.6 percent from FYs 1990 through 1994. [ Medical care is one item of the seven major groups of consumer items within the Consumer Price Index. Appendix III provides a definition of the medical care services indexes.] The CPI-U medical services indexes are not fully comparable to the BOP's health care cost categories. For instance, the BOP includes medical guard escort service, airlift expenditures, and replacement equipment costs. The BOP does not include equipment costs for new or renovated medical facilities or amortization of medical equipment in its health care costs. In contrast, the CPI-U includes hospital room costs and nursing home care, which are not included in the BOP's costs.

Even though the services and cost categories are not uniform, the CPI-U is useful for assessing the BOP's costs. Specifically, the BOP's costs for community provider services increased by 107 percent, or 79 percent in real dollars, between FYs 1990 and 1994. Although the rise in the CPI-U accounts for part of the BOP's rising health care expenditures in community provider services, the BOP's costs rose at a greater rate than the CPI-U.


A May 1995 study sponsored by the National Institute of Justice examined factors contributing to rising inmate health care costs. The study and the BOP officials we interviewed identified three areas that contributed to the increase in total inmate health care costs in the last several years: (1) the general aging of the inmate population; (2) the inflation in the medical services industry; and (3) the increase in the number of inmates with drug-related conditions such as Human Immuno-deficiency Virus (HIV)/Acquired Immune Deficiency Syndrome (AIDS), TB, and kidney diseases. [ Douglas C. McDonald, "Managing Prison Health Care Costs," National Institute of Justice Issues and Practices , National Institute of Justice, May 1995, p. 2.]

General Aging of the Inmate Population - According to an HSD Senior Deputy Assistant Director, in 1995 the BOP estimated that by 2005, 15 percent of its inmate population will be 50 years or older compared with 11.7 percent in 1988. The percentage has increased as a result of mandatory sentencing provisions for repeat offenders, the rising number of older people in the United States population, and the trend toward longer sentences to include life without parole. According to the study, the BOP may expect additional cost increases as older inmates are disproportionately heavy consumers of health care services. [ Ibid.]

Inflation in the Medical Services Industry - During the 1980s, health care became more expensive for society, and these costs were passed to prison systems including the BOP. Total national health care expenditures increased by 17 percent yearly, or 170 percent overall, between 1980 and 1990. These increases cannot be fully attributed to the United States population growing and more people demanding services. For example, in 1992, health care costs increased by 12 percent, but the United States population increased by only 1.2 percent. Health costs reflect a myriad of changes such as the price of services, the spread of more expensive technologies, and rising expectations regarding the level of health care to be provided. [ Ibid, p. 1.]

Increase in the Number of Inmates with Drug-related Conditions such as HIV/AIDS, TB, and Kidney Diseases - The proportion of State and Federal prisoners infected with HIV and TB is considerably higher than in the general population, and there is evidence that this trend will continue. [ Ibid, p . 3.] The BOP had a 62 percent increase from 1991 to 1994 in the number of inmate deaths from AIDS. In the 1994 calendar year, the BOP experienced increases in all types of hepatitis cases. The total number of Hepatitis A, B, and C cases for 1994 was 1,489, an increase of 188 cases over 1993. The treatment for inmates diagnosed with AIDS, TB, and hepatitis is costly and places a burden on the BOP's health care budget. Also, with earlier diagnosis and treatment, these inmates are living longer, adding to the BOP's health care costs. [ HSD's FY 1997 spring budget submission.]

In addition to the above factors contributing to the BOP's escalating inmate health care costs, we identified with BOP officials three other factors affecting costs: (1) the growing number of incoming inmates needing immediate medical services, (2) the increased number of inmates' medical outpatient visits, and (3) implementation of community standards.

Incoming Inmates' Need for Immediate Medical Services - Since June 1992 the number of incoming inmates who require immediate medical care has risen from 471 per month to 915 per month as of March 1995. Only 19 percent of the 915 inmates requiring medical care were sent to the BOP medical referral centers because the BOP was utilizing all its existing health care bed capacity. [ Ibid.] The BOP uses outside community provider care whenever its institutional facilities cannot provide inmates with required medical care.

The Increased Number of Inmates' Medical Outpatient Visits - Within the DOJ's FY 1996 budget submission to the Office of Management and Budget, the BOP reported 1,104,944 inmate outpatient visits [ For this report, a BOP outpatient visit is when an inmate receives a diagnosis, treatment, or both without being admitted to an inpatient bed. The inmate may receive these services either in a BOP Health Services Unit or in the community. ] for FY 1994, or an 11 percent increase in yearly visits from the previous year. During the same period, the BOP reported a 10 percent increase in its inmate population. Based on the BOP's FY 1996 data for total outpatient visits, hospital visits [ Data includes local hospital assignments per inmate per day. ] increased by 90 percent between FYs 1993 and 1994 and by 49 percent between FYs 1994 and 1995.

Implementation of Community Standards - Medical treatment consistent with community standards is costly and adds to the BOP's overall health care costs. Although there is no written guidance on acceptable community standards, the BOP generally adopts and implements medical treatment consistent with guidelines of responsible organizations such as the Center for Disease Control and the American Medical Association. For example, the BOP has implemented multiple drug combinations for the treatment of inmates with AIDS and the use of interferon in the treatment for Hepatitis C.


The BOP initiated inmate health care cost containment actions to combat inflationary costs and to meet the health care demands of a growing inmate population. The BOP has developed four long-term program objectives designed to provide quality health care while containing costs.

Health Promotion and Disease Prevention - This initiative promotes the concept of personal well-being and encourages inmate responsibility through innovative programs. The BOP has implemented the following initiative:

Regional Health Promotion and Disease Prevention Committees designed to actively implement programs aimed at educating inmates on the advantages of pursuing a healthy lifestyle.

Quality Assessment and Improvement (QA&I) - The BOP's QA&I program includes the evaluation and assessment of significant medical events, trends, and patterns. Two methods for evaluating the quality of health care provided to inmates by the BOP's medical centers and institutional health care clinics are assessments by HSD's Office of Policy, Planning, and Quality Management and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). [ The mission of the JCAHO is to improve the quality of health care provided to the public. The JCAHO develops standards of quality in collaboration with health professionals and others and encourages health care organizations to meet or exceed the standards through accreditation and the teaching of quality improvements concepts. Through JCAHO inspections, the BOP has certification that its facilities meet national health care standards.] Some of the BOP's major QA&I initiatives are as follows:

establishment of medical indicators for monitoring QA&I processes;

verification of professional standards for all newly employed health care professionals;

assessment of any special medical examinations, x-rays, and town trips for appropriateness;

program reviews;

participation in professional peer reviews, inmate mortality reviews, and medical record reviews; and

training for professional and paraprofessional health care providers.

Managed Care Initiatives - The BOP's Strategic Plan Report, December 1994, defines managed care as any system that manages the delivery of health care in such a way that the cost of health care is controlled. The Medical Director defined managed care as the right care by the right provider at the right cost, at the right time, and at the right place. The BOP has identified several specific initiatives that can assist in the management of health care costs:

negotiating contracts, which include Medicare rates, with community hospitals,

controlling referral and consultant utilization,

Federal resource sharing,

appropriate utilization of the BOP's medical referral centers,

managed care training, and

utilization (administrative) reviews for medical town trips and community hospitalizations.

Most of the BOP's cost containment efforts are implemented under managed care initiatives.

Special Program Needs of Physical Disabilities, Chronic and Terminal Illnesses, and Geriatric Offenders - All inmates entering into the BOP system are screened for disabilities and appropriate assignments are made for these inmates. According to the HSD National Health Systems Administrator, as of July 9, 1996, inmates had 3,749 medical disability assignments. [ An inmate may have one or more medical disability assignments such as hearing impairment, mental illness, disfigurement, or loss of an extremity.] The BOP could not readily provide the number of inmates with medical disability assignments.


The BOP's inmate health care programs are overseen by the Central Office and regional staffs and are tracked mainly through program reviews and strategic plan actions. Both staffs provide management with feedback at the institutional, regional, and Central Office levels.

The Program Review Division oversees review functions, conducts in-depth analyses of review outcomes, and monitors management changes made in accordance with review findings. Within HSD, we examined program review documentation for community provider services and guard services as well as appropriate health services program review guidelines.

In addition, the Program Review Division tracks the BOP's progress towards achieving its long-term strategic goals related to providing inmates with medical care. Wardens and institutional staffs develop their own action plans to address the BOP's long-term strategic goals and objectives. On a quarterly basis, institutions report progress on achieving their objectives to regions who in turn report to the Office of Strategic Plan Management in the Program Review Division. This office prepares reports for the BOP's Executive Staff.