Federal Prisons: Responses to Questions Related to Containing Health Care
Costs for an Increasing Inmate Population (Correspondence, 06/14/2000,
GAO/GGD-00-160R).

Pursuant to a congressional request, GAO responded to congressional
questions on its April 6, 2000, testimony on the Bureau of Prisons (BOP)
efforts to contain the costs of providing health care to inmates,
focusing on whether: (1) requiring a copayment would reduce the number
of prisoners seeking medical care in order to get out of work or other
duties; (2) recent BOP initiatives have helped reduce staff costs; (3)
it would be more cost-effective for BOP to have an intermediate care
medical facility for inmates needing long-term care; and (4) the Federal
Prisoner Health Care Copayment Act of 1999 would significantly
contribute to reducing health care costs.

GAO noted that: (1) in prisons that adopted a prisoner copayment
program, prison medical facilities experienced average reductions in
sick call visits of 16 percent to 50 percent; (2) BOP health care
officials state that frivolous visits to medical units do occur and that
some reduction in this kind of abuse could be anticipated if some
additional charge were levied; (3) the Congressional Budget Office (CBO)
reported that after adopting copayment requirements, 36 states or local
jurisdictions experienced reductions in the number of sick call visits;
(4) a restructuring initiative that focused on using qualified,
lower-salaried medical personnel instead of more highly paid physicians
and physicians' assistants for certain routine duties has allowed for
more efficient operations; (5) BOP attributed annual savings of about
$5.5 million to this initiative; (6) BOP officials expect overall
medical costs to continue to rise in future years for several reasons:
(a) the number of inmates incarcerated in federal facilities show
continued increases; (b) felony inmates transferred to BOP from the
District of Columbia Department of Corrections generally have more
medical needs than other BOP inmates; (c) BOP is receiving increasing
numbers of long-term, nonreturnable detainees from the Immigration and
Naturalization Service; and (d) BOP's expenditures for pharmaceuticals
likely will rise due to the increasing prevalence of certain illnesses;
(7) an intermediate care facility could have advantages for BOP, since
medical costs at BOP's medical referral centers are higher on a per
inmate basis than medical costs at standard prisons; (8) the estimated
medical costs on a per inmate basis at a medical referral center are
about $16,000 per year, whereas medical costs at a standard prison are
less than $2,500 per year; (9) a May 1999 CBO analysis of the proposed
$2 copayment health care service fee estimated that BOP might generate
additional revenue of about $1 million in fiscal year 2000; (10)
however, BOP endorses the proposed fee primarily as a means to reduce
unnecessary or frivolous medical visits; and (11) BOP has suggested that
the proposed legislation be modified to mandate that 100 percent of
collected fees go to the Federal Crime Victims Fund.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-00-160R
     TITLE:  Federal Prisons: Responses to Questions Related to
	     Containing Health Care Costs for an Increasing Inmate
	     Population
      DATE:  06/14/2000
   SUBJECT:  Prisoners
	     Health care services
	     Health care cost control
	     Correctional facilities
	     Health care facilities
	     Cost effectiveness analysis
	     Health care personnel
	     Proposed legislation
	     Medical fees
	     Health services administration
IDENTIFIER:  Crime Victims Fund

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Testimony.                                               **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************

GAO/GGD-00-160R

United States General Accounting Office General Government Division
Washington, D. C. 20548

Page 1 GGD- 00- 160R Questions About Inmate Health Care Costs

B- 285591 June 14, 2000 The Honorable Strom Thurmond Chairman, Subcommittee
on Criminal Justice Oversight Committee on the Judiciary United States
Senate

Subject: Federal Prisons: Responses to Questions Related to Containing
Health Care Costs for an Increasing Inmate Population

Dear Mr. Chairman: On April 6, 2000, we testified at an oversight hearing
the Subcommittee held on inmate health care costs of the federal Bureau of
Prisons (BOP). 1 This letter responds to your request of May 22, 2000, in
which you and Senator Patrick Leahy, Ranking Minority Member, Senate
Committee on the Judiciary, raised additional questions about BOP's efforts
to contain the costs of providing health care to inmates. To respond to
these questions, we drew upon the information we developed in preparing for
the hearing and performed additional work in May 2000 in accordance with
generally accepted government auditing standards. Because our work was based
primarily on publicly available reports and testimonies, including our own
previously published reports, we did not seek agency comment on a draft of
this letter. Our responses to your questions (1 through 4) and to Senator
Leahy's questions (5 and 6) follow.

Question 1. Do you think that prisoner abuse of health care, such as inmates
using medical visits to get out of work or other duties, is a significant
problem, and would you expect a copay requirement to help reduce any such
abuse?

In our testimony, we reported that the Congressional Budget Office (CBO) had
looked at this question and reported that, where similar prisoner copayment
programs were adopted in 36 states or local jurisdictions, prison medical
facilities experienced average reductions in sick call visits of 16 percent
to 50 percent. Although we are not aware of any formal study by BOP or
others, we received anecdotal information from BOP health care officials
that frivolous visits to medical units do occur in BOP and that some
reduction in this kind of abuse could be

1 Federal Prisons: Containing Health Care Costs for an Increasing Inmate
Population (GAO/ T- GGD- 00- 112, Apr. 6, 2000).

B- 285591

Page 2 GGD- 00- 160R Questions About Inmate Health Care Costs

anticipated if some additional charge were levied. However, we were not
provided with an estimate of the magnitude of the anticipated reduction.

Question 2. Does it appear that states have benefited from a copay
requirement?

As noted in response to the previous question, CBO has reported that after
adopting copayment requirements, 36 state or local jurisdictions experienced
reductions in the number of sick call visits. These reductions ranged from a
low of 16 percent to a high of 50 percent.

Question 3. It appears that personnel salaries are the primary category for
health care costs. Have recent BOP initiatives, such as restructuring staff
to depend less on highly paid physicians for routine duties, helped reduce
staff costs in recent years?

One BOP official told us that, as a result of our 1994 report, 2 BOP began
examining the utilization of its health care staff to allow for more
efficient operations. One result the BOP official cited was a restructuring
initiative that focused on using qualified, lower- salaried medical
personnel instead of more highly paid physicians and physicians' assistants
for certain routine duties. BOP attributed annual savings of about $5.5
million to this initiative. We also testified that BOP medical personnel
salaries- on a macro level- have decreased steadily from a peak of $1, 399
per inmate in fiscal year 1996 to $1,225 in fiscal year 1999. We testified
that Public Health Service (PHS) associated costs, largely composed of PHS
salaries, have dropped from $378 per inmate in fiscal year 1997 to $367 in
fiscal year 1999. A BOP Health Services Division official was quite
confident that the downward slope in per inmate medical personnel salaries
and PHS associated costs was due to the staff restructuring initiative and
other related cost- cutting initiatives. However, BOP officials were
concerned that the savings from these economy and efficiency measures will
eventually bottom out.

BOP officials said they expect overall medical costs to continue to rise in
future years for several reasons:

ï¿½ Projections of the number of inmates incarcerated in federal facilities
show continued increases.

ï¿½ Felony inmates transferred to BOP from the District of Columbia Department
of Corrections generally have disproportionately more medical needs than
other BOP inmates.

ï¿½ BOP is receiving increasing numbers of long- term, nonreturnable detainees
from the Immigration and Naturalization Service (INS).

ï¿½ BOP's expenditures for pharmaceuticals likely will rise due to the
increasing prevalence of illnesses such as HIV and hepatitis.

Question 4. You noted during your oral testimony that many inmates are
staying in medical referral centers for long periods due to serious medical
conditions. Do you think it may be more cost effective for BOP to have an
intermediate care medical facility for inmates needing long- term care?

2 Bureau of Prisons Health Care: Inmates' Access to Health Care Is Limited
by Lack of Clinical Staff (GAO/ HEHS- 94- 36, Feb. 10, 1994).

B- 285591

Page 3 GGD- 00- 160R Questions About Inmate Health Care Costs

Most evidence indicates that an intermediate care facility could have
advantages for BOP, although a thorough cost- benefit study might still need
to be conducted to consider the various forms that such a facility could
take. Medical costs at BOP's medical referral centers are higher on a per
inmate basis than medical costs at standard prisons. Based on BOP data, the
estimated medical costs on a per inmate basis at a medical referral center
are about $16,000 per year, whereas medical costs at a standard prison are
less than $2,500 per year.

In terms of inmate access to medical care, BOP officials told us that it is
important that there be a regular turnover of patients in medical referral
center hospital beds- based on the medical needs of the patients. They told
us that increasing numbers of chronically ill inmates with long sentences
are being sent to medical referral centers because the inmates' medical
conditions cannot be treated appropriately at a standard prison. For these
inmates, the medical referral center is the end of the line. This means that
fewer and fewer hospital beds are turning over. It also means that new
patients from standard prisons may have to wait for the next available
medical referral center hospital bed to be freed up. For example, at one
medical referral center we toured, we learned that the waiting list of new
patients for the next available bed is gradually getting longer.

Anecdotally, we were told that BOP already has enough chronically ill
inmates to fill an intermediate care medical facility of 400 beds. This type
of facility would have the added benefit of freeing up more expensive
medical referral center beds presently occupied by inmates who have little
chance of returning to their home prison. Nonetheless, a cost- benefit study
could determine, for instance, whether the per inmate cost of constructing
an intermediate care medical facility would be more or less than competing
alternatives, such as contracting for a privatized nursing home environment
or renovating an existing building at a medical referral center just for the
chronically ill.

Question 5. In your written statement, you indicated that CBO has estimated
that the Federal Prisoner Health Care Copayment Act of 1999 would generate
annual revenues of $1 million and “would be helpful to BOP's efforts
to control medical costs.” Under section 4048( g) of this legislation,
fees collected from inmates subject to an order of restitution shall be paid
to victims in accordance with the order. Seventy- five percent of all other
fees collected would be deposited into the Federal Crime Victim's Fund and
the remainder would be used to cover the administrative expenses incurred in
carrying out this Act. With legislative mandates on the use of copayment
fees, how would the Federal Prisoner Health Care Copayment Act of 1999
significantly contribute to reducing health care costs?

We testified that a May 1999 CBO analysis of the proposed $2 health care
service fee estimated that BOP might generate additional revenue of about $1
million in fiscal year 2000. However, BOP endorses the proposed fee
primarily as a means to reduce unnecessary or frivolous medical visits- that
is, BOP does not view the proposed fee primarily as a revenue generator.

BOP has suggested that the proposed legislation be modified to mandate that
100 percent of collected fees go to the Crime Victims Fund. According to one
official, BOP might send a check each quarter to the fund- a procedure that
would help to minimize administrative

B- 285591

Page 4 GGD- 00- 160R Questions About Inmate Health Care Costs

expenses. BOP suggested this alternative because an administrative process
is already in place that could be modified at little or no cost to include
tracking collected fees. However, the cost of distributing restitution
checks to victims is another matter since no administrative process or
supporting staff structure currently exists. One BOP official told us that
the number of checks could be enormous, the amount of each check would be
small, and the administrative cost of establishing and maintaining a process
(to make sure victims received the appropriate checks) would be an
additional expense. This official also opined that victims might react
negatively to receiving checks of such small amounts repeatedly over the
years.

CBO has looked at this question of unnecessary or frivolous medical visits.
CBO reported that where similar prisoner copayment programs were adopted in
36 states or local jurisdictions, prison medical facilities experienced
average reductions in sick call visits of 16 percent to 50 percent. We
received anecdotal information from BOP health care officials that frivolous
visits to medical units do occur in BOP and that some reduction in this kind
of abuse can be anticipated if additional charges are levied. However, we
have not independently verified the magnitude of such a reduction.

Neither BOP nor we believe that the primary benefit of the copayment
proposal is to generate revenue. Rather, its primary benefit would be to
reduce unnecessary or frivolous medical visits and the burden that such
visits place on BOP medical staff. Given the projected increase in the
prison population through 2006, it appears the demands on BOP's health care
system will increase.

Question 6. Have the administrative initiatives that BOP put into place over
the last several years to contain inmate health care costs and increase
efficiency of services been taken into account by your estimate? Have the
facts or assumptions on which you based your estimate of $1 million changed?

The estimates of increased efficiency of services by virtue of
administrative initiatives BOP has undertaken over the last several years
are BOP estimates. The $1 million estimate of anticipated revenue generated
by a prisoner copayment provision is CBO's estimate. We referred to the CBO
estimate in our testimony because we did not want to duplicate that work.
Also, given the short time in which we conducted our review, we did not
attempt to independently verify the estimates and do not know whether the
facts and assumptions used by CBO have changed.

BOP officials believe that savings or benefits from the economy and
efficiency initiatives BOP has implemented will eventually bottom out and
they expect that inmate health care costs will rise given

ï¿½ the pressures from a growing prison population;

ï¿½ transfers of inmates to BOP from the District of Columbia Department of
Corrections- inmates who generally have disproportionately more medical
needs than other BOP inmates;

ï¿½ the increase in numbers of long- term, nonreturnable detainees from INS;
and

ï¿½ the growth in expenditures for pharmaceuticals because of the increasing
prevalence of illnesses such as HIV and hepatitis.

B- 285591

Page 5 GGD- 00- 160R Questions About Inmate Health Care Costs

We believe it is time to consider additional measures for containing BOP
medical costs. The copayment provision is one alternative to consider- not
because it is a revenue generator, but rather because such a provision can
be expected to reduce the demand on medical services by reducing the number
of unnecessary or frivolous medical visits by inmates.

As agreed with your office, we plan no further distribution of this letter
until 30 days after its issuance, unless you publicly release its contents
earlier. We will then send copies of this letter to Senator Charles E.
Schumer, the Subcommittee's Ranking Minority Member; Senator Orrin G. Hatch,
Chairman, and Senator Patrick Leahy, Ranking Minority Member, Senate
Committee on the Judiciary; and Representative Henry J. Hyde, Chairman, and
Representative John Conyers, Jr., Ranking Minority Member, House Committee
on the Judiciary. Copies will also be made available to others upon request.

If you or your staff need additional information, please call me on (202)
512- 8777. Sincerely yours,

Richard M. Stana Associate Director, Administration of Justice Issues

Ordering Copies of GAO Reports The first copy of each GAO report and
testimony is free. Additional copies are $2 each. Orders should be sent to
the following address, accompanied by a check or money order made out to the
Superintendent of Documents, when necessary. VISA and MasterCard credit
cards are accepted, also. Orders for 100 or more copies to be mailed to a
single address are discounted 25 percent.

Order by mail: U. S. General Accounting Office P. O. Box 37050 Washington,
DC 20013

or visit: Room 1100 700 4 th St. NW (corner of 4 th and G Sts. NW) U. S.
General Accounting Office Washington, DC

Orders may also be placed by calling (202) 512- 6000 or by using fax number
(202) 512- 6061, or TDD (202) 512- 2537.

Each day, GAO issues a list of newly available reports and testimony. To
receive facsimile copies of the daily list or any list from the past 30
days, please call (202) 512- 6000 using a touchtone phone. A recorded menu
will provide information on how to obtain these lists.

Viewing GAO Reports on the Internet For information on how to access GAO
reports on the INTERNET, send e- mail message with “info” in the
body to:

info@ www. gao. gov or visit GAO's World Wide Web Home Page at: http:// www.
gao. gov Reporting Fraud, Waste, and Abuse in Federal Programs To contact
GAO FraudNET use: Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm
E- Mail: fraudnet@ gao. gov Telephone: 1- 800- 424- 5454 (automated
answering system)

United States General Accounting Office Washington, D. C. 20548- 0001

Official Business Penalty for Private Use $300

Address Correction Requested Bulk Rate

Postage & Fees Paid GAO Permit No. G100

(182840)
*** End of document. ***