A Performance Audit
An Audit Report on Correctional Managed Health Care at the University of Texas Medical Branch at Galveston and Texas Tech University Health Sciences Center
The two higher education institutions that contract with the Texas Department of Criminal Justice (TDCJ) to provide correctional managed health care services to offenders had processes and controls in place to help ensure that medical claims were accurately processed. However, the University of Texas Medical Branch at Galveston (UTMB) should strengthen certain controls.
The University of Texas Medical Branch at Galveston
UTMB had processes and related controls to help ensure that its medical claims for the Correctional Managed Health Care program (Program) were adequately priced, allowable, and supported. UTMB also accurately calculated pharmaceutical costs and accurately reported Program expenditures to TDCJ as required. However, UTMB should strengthen its processes to ensure that other costs are allowable. In addition, UTMB had significant weaknesses in selected information technology controls that reduced its ability to safeguard its data, which contains sensitive and confidential information. Auditors communicated details about the identified weaknesses separately to UTMB’s management in writing.
Texas Tech University Health Sciences Center (Health Sciences Center)
The Health Sciences Center had processes and controls to help ensure that Program funds were spent in accordance with contract requirements. In addition, it had adequate controls over the information systems it used to manage its Program.
The Texas Department of Criminal Justice (TDCJ) is charged with ensuring offenders’ access to medical health care, monitoring the quality of those services, and overseeing costs to help evaluate future Program needs. For fiscal years 2018 through 2020, the Texas Legislature appropriated TDCJ $1.8 billion for the Program and as of February 29, 2020, the Program had reported $1.9 billion in health care-related costs.
TDCJ contracts with the University of Texas Medical Branch and the Texas Tech University Health Sciences Center to deliver health care services at TDCJ’s correctional facilities throughout the state. Each university is responsible for establishing a comprehensive network of providers to efficiently deliver health care services in its regional area.
UTMB Accurately Reported Program Costs and Its Medical Claims Processes Helped Ensure That Payments Were Adequately Priced, Allowable, and Supported
UTMB reported complete and accurate Program costs to TDCJ totaling $1.5 billion from September 1, 2017, through February 29, 2020. UTMB also had processes to help ensure that medical claims were adequately priced, allowable and supported.
All 100 free-world provider claims tested totaling $221,195 were allowable and supported. However, UTMB did not consistently apply a 2 percent payment adjustment (called a “sequestration rate”) as required by the federal Budget Control Act of 2011 to all claims. UTMB asserted that it plans to recoup $167,000 for payments processed from September 1, 2017, through April 30, 2020.
UTMB charged the Program $37.4 million for indirect costs based on 2.75 percent of the total Program reimbursements from September 1, 2017, through February 29, 2020, however, it also continued to charge the Program for indirect costs through certain individual billings.
UTMB’s Expenditure Processes Did Not Consistently Ensure That Salaries and Other Payroll Costs Were Allowable and Supported
From September 1, 2017, through February 29, 2020, UTMB processed and reported $731.0 million in salaries and benefits. Out of that amount, UTMB:
- Was reimbursed $1.3 million in salaries for UTMB employees that did not provide services for the Program.
- Charged the Program $18.2 million for services without having executed agreements in place.
- Did not accurately report $11.8 million in costs as salaries and benefits, which limits the transparency of how Program funds are spent.
Auditors identified significant weaknesses in UTMB’s controls related to data protection. To minimize security risks, auditors communicated details separately to UTMB’s management in writing.
Pursuant to Standard 9.61 of the U.S. Government Accountability Office’s Generally Accepted Government Auditing Standards, certain information was omitted from this report because that information was deemed to present potential risks related to public safety, security, or the disclosure of private or confidential data. Under the provisions of Texas Government Code, Section 552.139, the omitted information is also exempt from the requirements of the Texas Public Information Act.
The Health Sciences Center Had Adequate Processes for Its Costs Associated With Correctional Managed Health Care Services
The Health Sciences Center ensured that its Program medical service payments, pharmaceutical purchases, and salary transactions adhered to contract requirements.
The Health Sciences Center Had Adequate Controls Over Information Systems Used to Manage Its Correctional Managed Health Care Program
The Health Sciences Center had sufficient processes and controls in place over the information systems used for the financial management, human resources, and claims processing related to its Program.
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