Summary of Report 98-013

January 1998

Report Number 98-013

Overall Conclusion

The implementation of a managed health care system, completed in fiscal year 1995, achieved the overall objective of controlling the increasing costs of providing health care to the inmates at the Texas Department of Criminal Justice (Department). As a result, the cost per inmate per day (capitation rate) has decreased from $5.99 in fiscal year 1993 to $5.23 in fiscal year 1997.

Opportunities now exist to improve management controls in several areas of the managed health care system, including the system's governance and organizational structure, the capitation rate, and performance evaluation and monitoring.

Key Facts and Findings

In fiscal year 1997, $238.7 million was spent to provide managed health care to an average daily inmate population of 125,110 at the Department.

University members of the Correctional Managed Health Care Advisory Committee (Committee), the governing board for the managed health care system, may be placed in a position of conflicting loyalties by negotiating service contracts with their employers.

The Department does not directly contract with The University of Texas Medical Branch at Galveston and Texas Tech University Health Sciences Center (university providers) to provide health care to its inmates. Instead, it contracts with the Committee, which in turn contracts with the university providers.

Before the capitation rate for the next biennium is set, allowable and unallowable cost components of the managed health care appropriation should be considered. The appropriation is in excess of the university providers' costs. At the end of fiscal year 1996 the university providers realized a net profit of $25.3 million (10.47 percent of revenues) after returning $12 million to the State's general revenue fund.

As reported by our correctional health care consultant, the correctional managed health care system has achieved some efficiencies since it was implemented in September 1994. Accomplishments were noted in areas such as utilization management, decreased pharmacy costs, and use of telemedicine.

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