An Audit Report on Management of Correctional Managed Health Care Contracts
November 2004
Report Number 05-012
Overall Conclusion
Deficiencies in the Correctional Managed Health Care Committee's (Committee) management of inmate health care and potential conflicts of interest between the Committee and university providers could indicate that a separate committee is no longer critical to the management of contracts for inmate health care.
Many of the Committee's contractual duties are actually performed by either the Department of Criminal Justice or the university providers. In addition, potential conflicts of interest in the relationship between the Committee and the university providers make contract provisions difficult to enforce and may contribute to the lack of fiscal oversight. We first reported similar issues in our 1998 report, An Audit Report on Managed Health Care at the Texas Department of Criminal Justice.
The contracts between the Committee and the university providers for the provision of inmate health care do not ensure that the interests of the State are protected nor do they ensure that the university providers are held accountable for the cost-efficient delivery of quality services. The contracts lack basic provisions such as the evaluation of contractor performance, remedies for non-performance, and financial reporting requirements. Because the Committee does not require the university providers to maintain or report complete, detailed financial records, we were unable to determine if the current appropriation amount reflects the true cost of providing inmate health care.
Furthermore, the Committee does not provide sufficient fiscal oversight of managed care funds. From fiscal year 2001 to 2003, the Committee paid the university providers a total of $15.7 million above the agreed-upon rate as a "loss reimbursement" without reviewing sufficient supporting documentation. In addition, the Committee has not reported complete and accurate information regarding its finances to State decision makers. It has consistently held an available ending balance for each of the past eight fiscal years. This balance was as high as $31.8 million at the end of fiscal year 2000.
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