Audit: UTMB overcharged state while claiming massive deficit

The State Auditor's Office will be releasing an analysis today, reports the Austin Statesman ("UTMB prisoner health costs, raises scrutinized," Feb. 3), critical of UTMB's provision of healthcare at state prison facilities, accusing the agency of overcharging and giving large, unwarranted raises to dozens of employees. (UPDATE: Now online here.) Reports Mike Ward:

Texas taxpayers are spending more on treating convicted criminals at a Galveston hospital than they are on law-abiding citizens in other parts of the state, a critical audit of spiraling prison health care costs reveals.

Expected to be made public sometime today , the report by the State Auditor's Office also alleges that the University of Texas Medical Branch at Galveston charged the state's prison health care program for more than $16.2 million in costs not directly related to prisoner care, spent more than $6.6 million in two years for items that were not allowed under the prison contract and handed out $14.1 million in pay increases over three years while reporting that the program had a $95.1 million deficit.

In one case, the audit discloses, 40 employees of the prison medical division of UTMB received bonuses last November for which they were not supposed to be eligible — one receiving a payout of $125,460 — at a time when state agencies had been ordered to cut spending by 15 percent to staunch a predicted $27 billion budget shortfall.

A copy of the audit was obtained by the American-Statesman as it was distributed to select legislative leaders.

According to the audit, UTMB's prison health care division charges more for reimbursement for physician services, inpatient hospital services and outpatient services than it does for Medicare, Medicaid and at least one major private insurer's reimbursements.

The reimbursement amount for physician billing is, "on average, 135 percent of the Medicare reimbursement amount," the audit states.

State Sen. Steve Ogden had the money quote of the story:

"We did not know until the audit that UMTB was being reimbursed at the rate that it is, ... that we are paying more to treat felons than we are to treat law-abiding citizens," said Senate Finance Committee Chairman Steve Ogden, R-Bryan. "As I said earlier, ... we're going to uncover every rock, and this is one of them."

That may be a little unfair, though it's a great soundbite. I can think of reasons why it might cost more to deliver healthcare in a secure institutional setting than to free-world clients. OTOH, UTMB's reliance on telemedicine supposedly should have reduced costs, or so we've been told for years. Setting medical rates can be a tricky business, though I agree it's difficult to understand how rates for prison care could be higher than Medicare, much less private insurance plans. (UPDATE: From the audit overview, "UTMB develops reimbursement amounts for UTMB-CMC Division services internally without independent review and approval from the Correctional Managed Health Care Committee." If UTMB sets its own rates without oversight and takes lower rates from other clients, that is indeed problematic.)

Perhaps even more significant than the dispute over reimbursement rates, "The report also notes that UTMB might be charging 'a disproportionate amount of UTMB's indirect costs' to the prison health care program, including part of the salary of a senior vice president. It suggests that as much as $16.2 million in costs charged to prison health care might not be going toward providing care for offenders."

There's also coverage from the Dallas News, but it's behind their new paywall. I'll have more to say on the subject after the audit is publicly released, but this news casts an entirely different light on UTMB's complaints than they've been shorted $61 million by the prison system last biennium.

Ward says UTMB on Tuesday requested to cancel their contract to provide healthcare to the prison system, citing red ink in the budget, but one suspects legislators will continue this shotgun marriage for the foreseeable future, if only because they have few other immediate options.

MORE: Here's a response from UTMB published in the Galveston Daily News.