RESULTS OF THE INSPECTION

COMMUNITY PROVIDER SERVICES

The BOP purchases health services from community hospitals, physicians, and other health care providers to supplement its direct health care delivery system. Although the BOP is continuously expanding the number of services it can provide in-house, institutional Health Services Unit (HSU) staffs refer inmates to community medical specialists and hospitals as warranted. In FY 1994 community provider services costs comprised 27 percent of the BOP's total health care costs, up from 25 percent in FY 1990. However, the rate of yearly cost increase dropped from 30 percent in FY 1992 to 9 percent in FY 1994. Institutions' community provider services costs will fluctuate based on frequency of service usage, services obtained, and costs paid for the services.

The Chief for the Procurement and Property Branch stated that around 1989 his office was responsible for an outside contract initiative. The Deputy Chief determined that outside medical costs for five of the "Big Six" prisons [ The "Big Six" includes facilities at Butner, Fort Worth, Lexington, Rochester, Springfield, and Terminal Island.] had increased from 17 percent to 112 percent between FYs 1989 and 1990. The exception was Terminal Island with a 3 percent increase. At the time, Terminal Island was the only institution in the "Big Six" with a local hospital contract. Terminal Island's recognized cost savings was the impetus for the BOP to encourage all institutions to obtain community hospital contracts.

In 1989 the Procurement and Property Branch began providing annual medical services procurement training for institutional staff members. From 1990 through early 1996, the Branch provided training to approximately 190 employees. The course curricula has included negotiating service contracts, negotiating medical service contracts, and advanced procurement for hospital service contracts.

The BOP has encouraged its institutions to obtain reduced community provider rates. In early 1992 the BOP issued a Statement of Policy in the Federal Register that informed the public of the BOP's intention to contract for health services with hospitals, physicians, and other health care providers that agreed to accept reimbursement rates no higher than the prevailing Medicare allowable rates. The BOP can use other providers to obtain reduced rates. As an example, the Civilian Health and Medical Programs for the Uniformed Services payment levels are basically similar to Medicare. In addition, institutions can also use interagency agreements with other Federal agencies, such as with the United States Army Hospital at Fort Bliss, to obtain outside medical services.

From our review of Procurement and Property Branch files, we determined that in FY 1995, 97 percent of the BOP's institutions had community provider contracts that provided discounted rates. Of the institutions with contracts, 53 percent had more than one contract. These contracts include physician, hospitalization, and laboratory services provided to inmates outside institutional facilities as well as physician services provided to inmates inside the BOP's facilities.

According to the Chief, National Contracts and Policy Section, institutions utilize purchase orders for outside community provider services in the first year following activation. This operating procedure enables recently activated institutions to establish a base requirement for community provider services. As illustrated in the following chart, the number of institutions with community provided contracts has increased from 79 percent in FY 1992 to 97 percent in FY 1995.

Additional Managed Care Initiatives

In addition to increasing the number of community provider services contracts and educating institutional staff on obtaining contracts, the BOP has taken other managed care initiatives to contain community provider services costs. A summary of these initiatives follows:

· Pharmacy Prime Vendor Contract - The Administration Division and HSD implemented this initiative in FY 1993 with the intent of curtailing costs through bulk purchasing and reducing pharmaceutical inventories at each facility.

· Contracting Initiative - The Administration Division and HSD are expanding this initiative to include a method of reimbursement to hospitals known as the prospective payment system (PPS). Under PPS, fixed hospital payment rates are established in advance of the provision of services. As a result, the BOP believes that this method will provide incentives for hospitals to contain their costs.

· Combined 325/350 Project - In FY 1995 the North Central Region implemented this pilot project allowing institutions to combine funds for outside care (known as B325 funds) and inside care (known as B350 funds). This project encouraged Wardens to combine funds for the two types of care, thereby increasing Wardens' authority and responsibility in the fiscal management of health care and requiring them to manage health care within a budget allocation. In FY 1996 the BOP implemented the project in five regions and expects full implementation in FY 1997.

The HSD implemented a training program on the use of the BOP's fund control system. The training focuses on preparing Health Services Administrators (HSA) to better track medical expenditures for outside and inside care and to reconcile their obligations with the Financial Management Information System.

· Pre-certification/Utilization Review Pilot Program - In early 1994 the Executive Staff approved the HSD's implementation of this study in the South Central Region for FY 1995. The study will provide hospital pre-certification, utilization management, and hospital claims review prior to payment. As of March 1996, the South Central Region's outside hospitalization costs had decreased by approximately 32 percent compared to the previous year.

· Preferred Provider Organization (PPO) - The purpose of this pilot project was to validate potential savings for community hospital services and specialty consultant services utilizing a managed care organization for three institutions in California. The results of the study indicated a potential cost savings of approximately 28 percent if the BOP had a contractual arrangement with a PPO.

The HSD Chief, Budget and Management Support, told us that the BOP found in phase two of the project that outside institutional contracts resulted in a true savings of 14 to 18 percent. Phase three, another iteration of the project, will evaluate payment methodologies for medical services at PPO rates on a regional level.

· Managed Care Network Project - In the Western Region, some institutions' community hospital contracts were modified to allow billing information to be sent directly to a private sector reviewing organization. The organization reviews the claims and makes a determination of the reasonableness of the rates for various procedures. The original claims are then sent to the institution for payment.

· Joint Program Steering Group Telemedicine Program - This DOJ and Department of Defense program will use a telecommunications network to link the host site, the Veterans Administration Hospital in Lexington, Kentucky, with the BOP's United States Penitentiaries (USP) Lewisburg and Allenwood located in Pennsylvania, and FMC Lexington, Kentucky. The network is scheduled to be operational by October 1996, and BOP expects the telemedicine program to improve security, reduce costs, and promote better scheduling of inmates' medical visits.

In addition to these cost containment efforts, the BOP will conduct a health care privatization project at the Federal Correctional Complex in Beaumont, Texas. The House and Senate Committees on Appropriations were notified on March 1, 1996, by the Department of Justice's Assistant Attorney General for Administration of the BOP's plan for the project. The demonstration project will include the utilization of private and other contracts to provide all medical care for inmates, including telemedicine services. The project is to begin in FY 1997 and last for at least three years.

The HSD, the Administration Division, regions, and institutions have implemented many initiatives to contain community provider costs. However, expenditures for these services have continued to increase at a rate greater than the CPI-U. In addition, per capita costs have increased, indicating that inmate population growth is not the sole reason for increasing community provider services costs. Although we found that the HSD and the Administration Division were monitoring program initiatives and overall costs, we believe they could enhance their ability to assess cost containment efforts and to develop new program initiatives if they identified performance data to measure inmate use of community provider services.

During our review, we found that the HSD was not using current or complete data on the community provider hospital contracts, although this data was maintained by the Administration Division. Also, the HSD and the Administration Division were not using similar data to report and measure community provider activities. For example, the data documenting inmates' community provider medical and hospital visits were not consistent between the Divisions. We believe that the use of community provider services will continue to increase and that the HSD should be monitoring this growth. At the conclusion of our review, we suggested that the HSD identify the data it needs to effectively monitor inmate use of community provider services and costs and systematically review the data to determine if cost containment efforts are effective and if additional efforts are needed.

MEDICAL GUARD ESCORT SERVICE

When inmate medical treatment is not available within an institution, the inmate is transported with a BOP correctional staff officer to a community provider for treatment. Custodial coverage at the community provider facility may be provided by an institution's correctional staff or by contract guards through the use of contractual agreements between the institution and local security firms, companies, or individuals. Medical escorted trips are classified as either emergency or non-emergency.

Medical escorted trips are used for either inpatient or out-patient treatment by a community provider. Inpatient treatment occurs when the inmate is admitted to a community medical facility for care that extends beyond the day of admission. Out-patient treatment occurs when the inmate departs and returns to the institution on the same day. Inmates require guard service for community provided treatment from the time they leave the institution until they re-enter. The exception would be inmates who are medically furloughed for community provided treatment. Inmates with OUT or COMMUNITY [ The BOP institutions are grouped in four security levels-- high, medium, low, and minimum as well as an administrative category. The BOP has four inmate custody levels: MAXIMUM, IN, OUT, and COMMUNITY. The lowest level of custody, COMMUNITY, is normally reserved for those inmates who meet the qualifications for participation in community activities.] status may be granted medical unescorted furloughs to obtain medical care not available at the institution.

The BOP's Program Statements 5500.06, Guard Service at Local Medical Facilities, and 5538.03, Escorted Trips, provide security guidelines for inmates requiring community medical care. According to the BOP's statements, contract guard personnel may be used at community medical facilities for minimum and low security inmates assigned IN custody or a lower custody level. One contract guard must be of the same sex as the inmate requiring medical treatment.

Wardens have the authority to approve medical furloughs as well as adjust the number of guards for an inmate medical trip. Therefore, guard escorts may not be needed on all inmate medical trips. From our review of a progress report submitted for the BOP's June 1995 Strategic Plan Goals and Objectives Progress Report, we noted that FCI Englewood developed a plan to furlough Federal Prison Camp inmates during overnight hospital visits to eliminate escort overtime.

The BOP annual per capita cost for guard escort service increased from $128 in FY 1990 to $226 in FY 1994, or 77 percent. In FY 1994 guard escort service costs comprised 7 percent of the total health care costs, up 2 percent from FY 1990. The HSD Chief, Budget and Management Support, stated that the costs had gone up because of the increase in the inmate population.

From our review of Central Office National Contracts and Policy files, we identified the number of institutions within each region with contractual guard service. The following chart summarizes this information.

CONTRACTUAL GUARD SERVICE
AS OF MAY 20, 1996

The BOP could not readily determine the exact number of inmates in each institution that met the criteria for contract guard service. The BOP's March 1996 fact card shows inmates by security levels as minimum, 32 percent; low, 29 percent; medium, 25 percent; and high, 14 percent. An Assistant Administrator, Correctional Services Branch, told us that medium and high security level institutional units can house inmates who meet contract guard service criteria. Therefore, we could not determine with specificity the number of institutions that could possibly use contractual services to guard inmates at community medical facilities.

Although Central Office officials could not explain why some minimum and low level institutions did not have contract guard service, we were told that some institutions did not have access to a service in their locality. Wardens are responsible for acquiring contractual guard service and ensuring that their institutions are providing medical custodial coverage cost effectively.

An Assistant Administrator in the Correctional Services Branch stated that the majority of inmates' medical escorted trips result in overtime payments if BOP employees are used because institutional staffing does not accommodate the staffing required for these types of trips. When a BOP employee in an off-duty status serves as an inmate escort for a medical trip, the employee receives overtime for the assignment commensurate with his or her pay grade and may be allowed two hours of outside medical overtime to prepare for the detail.

Of the two minimum and low security level institutions we visited, one had awarded a guard service contract. In FY 1993 FMC Fort Worth awarded a contract for guard services. According to data provided by FMC Fort Worth's HSA, in FY 1995 the contractor was paid $377,023 for 19,158 hours, or an hourly rate of $19.68.

We compared FMC Fort Worth's hourly rate to medical overtime paid by Low Security Correctional Institution (LSCI) Allenwood to identify any cost savings. Based on data supplied by LSCI Allenwood controller personnel, the institution paid the BOP personnel 209.75 hours of medical escort overtime, totaling $4,567.71, or an average of $21.78 per hour, during May 1995.

This comparison suggests that the similar use of BOP correction officers paid at the established Federal pay scale, which is the same at both institutions (disregarding locality pay), will cost more than using private contract guards. We believe that similar savings can be realized by institutions that use contractual guard service. However, Wardens must evaluate their requirements and determine if contractual guard service could result in cost savings and better utilization of correctional staff. If contract guard service is not an option in a locality, the institutional staff should monitor local businesses so it can take advantage of any newly established contract guard service enterprises.

RECOMMENDATION:

The Inspections Division recommends that the Director, Bureau of Prisons:

1. Ensure that appropriate institutions are utilizing contract guard service.

STAFFING OF MID-LEVEL PRACTITIONER, NURSE, AND EMERGENCY MEDICAL TECHNICIAN/PARAMEDIC POSITIONS

An institution's health services staffing complement is based upon recommendations made by the Regional Director, the Warden, and health services personnel. The Financial and Executive staffs review the recommendations. Once approved, the complement becomes an institution's authorized staffing level. Institutions' health staffing complements vary based on facilities' inmate population, security level, mission, and needs. As of May 20, 1996, the HSD reported approximately 2,713 health services positions. Of these positions, 18 percent were PHS officers, 72 percent were BOP employees, and 10 percent were vacant. Appendix IV provides a breakdown of the 2,713 health service positions.

Since FY 1990 the BOP salary costs have increased by 106 percent, or 36 percent in per capita costs. In addition, PHS associated costs have increased by 61 percent, or 6 percent in per capita costs. In FY 1994 the BOP salary costs comprised 38 percent and PHS associated costs comprised 9 percent of the total health care costs. We examined the BOP's cost containment efforts in this area.

In June 1995 the BOP issued a change notice to the Health Services Manual, Program Statement 6000.04. This change notice provided guidelines to assist institutions in restructuring health care staffing. This restructuring should assist the institutions to fill Health Services vacancies, create a work environment more attractive to clinical staffs, and result in salary savings for institutions. Within institutions' HSUs, the staffing guidelines typically provide for a Clinical Director, HSA, mid-level practitioners, and other paraprofessional staff.

As of May 1996, mid-level practitioner positions comprised 27 percent of the BOP's health services positions, the largest single group. Mid-level practitioner positions include nurse practitioner (NP), physician assistant (PA), physician assistant certified (PA-C), and unlicensed medical graduate (UMG). Registered nurse (RN), licensed practical nurse (LPN), and clinical nurse assistant (CNA) comprised 19 percent of the health service positions.

In addition to mid-level practitioners and nurses, the BOP's HSD identified 18 Emergency Medical Technician/Paramedic (EMT) positions as health care delivery providers. All 18 EMT positions are BOP employee positions. The EMTs were hired as part of the EMT Pilot Program implemented on October 28, 1994, to augment existing institutional health care delivery providers. Specifically, the EMTs were to provide morning shift watch coverage at minimum and low security institutions.

Institutions' participation in the EMT pilot program was voluntary. According to the HSD National Health Systems Administrator, as of November 1995, nine institutions employed EMTs. He stated that the BOP planned to evaluate the program by the end of 1995, but because of other priorities the evaluation would occur later. Although he could not provide any cost savings for the EMT pilot program, the BOP anticipated the pilot program would substantiate the use of EMTs to provide quality care at a more cost-effective level.

The following table provides a breakdown of the number of positions for mid-level practitioners, nurses, and EMTs as provided by the HSD Chief, Budget and Management Support. Unlicensed medical graduates comprise 16 percent of the BOP's health services positions, the single largest position category.

At four institutions we visited, we found that these institutions did not use nurse positions but relied on mid-level practitioners to staff their health care clinics. Furthermore, we found that a large portion of authorized health care clinic positions were mid-level practitioners: 17 of 31 at USP Lewisburg, 11 of 19 at FCI Allenwood, 7 of 16 at LSCI Allenwood, and 9 of 23 at FCI Seagoville. In addition, each institution had physicians performing a full range of medical services. These institutions were authorized the following number of physicians: USP Lewisburg, 3; FCI Allenwood, 2; LSCI Allenwood, 2; and FCI Seagoville, 2.

We reviewed the BOP's salary tables for mid-level practitioner, nurse, and EMT positions. The following chart provides the grade and salary ranges for these three types of positions.

GRADE AND SALARY RANGES FOR
MID-LEVEL PRACTITIONER, NURSE, AND EMT POSITIONS

(Locality pay is not included.)

*The BOP's PAs and UMGs are covered by a nationwide special salary rate.

**Nurse positions in six localities receive special salary rates not reflected above. The locations include Fort Worth, Texas; Lexington and Richmond, Kentucky; Springfield, Missouri; Rochester, Minnesota; Lompoc and Vandenberg Air Force Base, California; and Butner, North Carolina. Nurse positions outside the six localities receive the law enforcement rate of pay for GS-4 through GS-10 levels. The base minimum rate for GS-11 is $34,981.

***No special salary rates exist for EMTs but positions are covered by the law enforcement rate of pay.

From our observations and review of records at FCI Seagoville, we noted that one of the two EMTs covered the 11:30 p.m. to 9:30 a.m. time period seven days a week. There was an overlap of an EMT's shift with PA's shifts from 6:00 a.m. through 9:30 a.m. Because FCI Seagoville replaced at least one mid-level practitioner with an EMT, it saved anywhere from $5,617 to $13,919 annually. If the EMT pilot program proves successful for augmenting mid-level practitioners during morning shifts, the BOP should be able to realize a substantial salary cost savings.

The HSD is encouraging Wardens to review their mix of staff for mid-level practitioner and nurse positions to reduce costs without reducing the quality of care. In addition, the HSD has provided training to Wardens in this area. We believe that the BOP's institutions need to assess their current staffing of mid-level practitioner and nurse positions to ensure that institutional health care clinics have the most cost-effective mix for their mission and needs. If the institutions could utilize a greater percentage of nurse positions for institutional staffing, the BOP would reduce salary expenditures.

RECOMMENDATION:

The Inspections Division recommends that the Director, Bureau of Prisons:

2. Instruct the Wardens to review their mid-level practitioner and nurse staffing and restructure where appropriate.

INMATE FEES FOR BOP HEALTH CARE

In FY 1992 the BOP considered charging inmates a co-payment fee for certain medical services. Based on a number of states' recent successes in establishing co-payment fees for medical services, the BOP began in December 1995 to reexamine its proposal for charging inmates a fee for certain medical services. We believe that if the BOP instituted a co-payment system, it could anticipate (1) a decrease in the number of inmates attending sick call, (2) an increase in inmate accountability and responsibility for part of their own health care, and (3) an awareness by the public of inmates' financial participation in the cost of medical services received during incarceration.

Implementation Considerations

The experiences of several states' Department of Corrections (DOC) with inmate co-payment systems for medical services provide the BOP with examples of feasible co-payment programs. Five states (Nevada, Arizona, Kansas, Virginia, and Florida) have implemented a co-payment system for medical services. The Nevada DOC program dates back to 1981; the other four state DOCs have instituted their co-payment systems in the last few years. Five states (Connecticut, Georgia, New Jersey, Washington, and Colorado) currently are developing a co-payment system. Each of the five states with co-payment systems addressed implementation considerations before instituting the program. These states' DOCs incorporated the following assumptions in their co-payment programs: (1) inmates would not be refused medical treatment based on their inability to pay, (2) inmates were to be assessed a set amount for each inmate initiated visit for health care related services, (3) an exclusion list of services from the co-payment requirement should be developed, and (4) inmates would authorize a medical co-payment from their trust fund account.

According to the Virginia DOC's pamphlet on inmate co-payment charges, the program became effective on July 1, 1995. Inmates are assessed a $5 co-payment for medical treatment, $2 for dental treatment, and $2 for each original order of a non-exempt medication. The Virginia DOC excludes the following from the co-payment requirement: (1) emergency services as a result of life threatening illnesses or injuries as determined by the medical authority, (2) initial physical assessments during the reception and classification process, (3) lab work to include inmate requests for HIV testing, (4) X-rays, (5) scheduled follow-up visits related to the initial problem, and (6) several additional charges. [ Other charges include Hepatitis B vaccines, immunizations, TB testing, physiological and social work services, dental referrals, and referrals made to another provider.]

In the Virginia DOC, after an inmate has received a health care related service, a charge form is forwarded to the business office where the co-payment is deducted from the inmate's trust account. If there are insufficient funds to cover the charge, the amount of the co-payment is set up as an outstanding debt. Any subsequent funds received for the inmate's trust account will automatically be deducted to pay for any outstanding co-payment charges. Although Virginia's DOC co-payment program has been in effect only since July 1995 and involves less than a third of the number of BOP's inmate population, we believe it serves as one example of a viable co-payment system.

An article published in The Washington Times, on September 9, 1995, stated that the Virginia DOC director proposed the co-payment to discourage frivolous health care requests in a system that he described as hard-pressed to meet demands. The DOC's director of health services is quoted as stating, "Co-pay teaches responsibility for the use of expensive resources. Since most of society pays a co-payment for health care benefits, inmates should also make a co-payment."

The article reports that the effects of the inmate co-payment program in the Virginia DOC have been significant since its implementation. Between April and June 1995 before the co-payment charge was implemented, inmates were seen by nurses an average of 40,916 times a month in the major institutions. In July the number of sick call visits fell to 27,812, a 32 percent reduction. In addition, the Virginia DOC collected $32,000 for the first month. Revenues from the DOC's inmate co-payment fee are being used for a pilot project providing two-way audio and video communications between Powhatan Correctional Center Hospital and the Medical College of Virginia Hospitals.

The Nevada DOC co-payment system provides an additional model for the BOP. [ The levying of the Nevada co-payment charge has been challenged in court on several occasions by inmates, specifically in the cases of Shapley vs. Nevada Board of Prison Commissioners (1985) and Scott vs. Angelone (1991). In these two cases, inmates' litigations against inmate co-payments were unsuccessful. ] Inmates are charged $4 for each visit initiated by the inmate to an institutional physician and $2 for each prescription order. Since the system was implemented in 1981, the Nevada DOC has had an opportunity to review its efficacy. Due to other states' interest, the Nevada DOC presented to the American Correctional Health Services Association in 1992 an evaluation of its co-payment system for inmate medical services. This report indicated that prior to the co-payment system, inmate provider visits at the maximum security prison averaged 18 visits per inmate per year, while the department-wide average was 12 visits per inmate per year. The Nevada DOC's review of provider visits during FYs 1989, 1990, and 1991 indicated a reduction in the number of visits at maximum prisons to 4.39 visits per inmate per year, a decrease of 76 percent. The department-wide average decreased to 5.99 visits per inmate per year, a decrease of 50 percent.

In its report, the Nevada DOC conceded that the revenues recovered from co-payments were not substantial but iterated that the program was not initiated for the sole purpose of revenue. The Nevada DOC concluded that, more importantly, the inmate co-payment has succeeded in realizing its other goals: to reduce the number of abusive sick call visits, to hold inmates partially responsible for their own health care expenses, and to address the public and legislative concerns about inmate health care costs.

Feasibility of a Co-Payment System

Inmates can maintain personal monies for commissary, debit card vending, and inmate telephone system (ITS) [ The inmate telephone system is a direct dial system which allows inmates controlled access to a group of telephones for outgoing calls to approved numbers. The ITS is programmed to prevent inmates from completing calls to non-approved numbers.] expenditures in the Trust Fund Program. The funds are accounted for in a revolving account to which inmates' debits and credits are posted.

Inmate expenditures on commissary, vending machine, and ITS sales suggest that inmates have monetary means available from which a co-payment for medical services could be assessed. In FY 1994 the BOP reported $84.5 million in commissary sales, $1.4 million in vending sales, and $32.7 million in ITS sales.

Anticipated Benefits of a Co-Payment System

An HSD Senior Deputy Assistant Director estimated that inmates average 12 inmate sick call visits a year. Each inmate visit to sick call draws upon the BOP's health care personnel, equipment, and supplies resources. To some extent, we believe an inmate co-payment system would deter inmates' frivolous use of sick call and discourage inmates from utilizing sick call to avoid their work assignment. The co-payment system would not, however, involve any intent to deny an inmate access to health care.

The Administration Division provided documentation that as early as 1993 the BOP had intentions of developing an inmate user fee pilot project. Based on FY 1993 inmate health care services, BOP estimated that 70 percent of the inmate medical visits would not generate a fee because of required examinations or medical treatments. BOP also estimated that an inmate user fee would reduce the number of initial inmate initiated visits by 10 percent. The BOP did not anticipate any significant savings from salaries or supplies. Furthermore, the BOP estimated that administrative costs for implementing and maintaining the program would diminish any gains realized from a user fee. Also, a BOP Associate General Counsel told us that the BOP would need statutory authority to use inmates' Trust Fund accounts for a medical co-payment system.

If the BOP decides to implement an inmate co-payment system for medical services, we believe it could anticipate the following benefits:

· A decrease in the number of inmates attending sick call. A reduction in the use of sick call not only addresses the issue of misuse but may result in better utilization of existing staff.

· An increase in inmate accountability and responsibility for their own health care.

· An awareness by the public of inmates' financial participation in the cost of medical services received during incarceration.

The amount of revenue that the BOP would actually recover would be affected by the availability of inmates' financial resources, ongoing administrative costs, and other related co-payment fees such as dental services and non-exempt medications.

RECOMMENDATION:

The Inspections Division recommends that the Director, Bureau of Prisons:

3. Pursue the proposal of charging inmates a co-payment fee for medical services.

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