Key Points of Report
An Audit Report on Managed Health Care at
the Texas Department of Criminal Justice
January 1998
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.

Contact
Charles Hrncir, CPA, Audit Manager (512) 479-4700

Office of the State Auditor
Lawrence F. Alwin, CPA
This audit was conducted in accordance with Government Code, Sections 321.0132 and .0133.

Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overall Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Governance Structure of the Managed Health
Care System Is Atypical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Potential Exists for the University Members of the
Committee to Have Conflicting Loyalties to Two Entities . . . . . . . . . . . 7
Some Health Care Staff Are Placed in Potentially Conflicting
Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Contracts Between the Various Parties Could be
Strengthened . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Reevaluate the Managed Health Care Capitation Rate . . . . . 16
Allowable Costs Were Not Clearly Defined . . . . . . . . . . . . . . . . . . . . . 17
All Cost Components for Providing Direct Health Care
Have Not Been Identified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
University Providers' Catastrophic Reserve Funds Lack Sufficient
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Fixed and Variable Costs Associated With Providing Health
Care Impact the Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Transportation and Security Costs Related to Health
Care Are Not Tracked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Correctional Managed Health Care Lacks a
Comprehensive Monitoring System . . . . . . . . . . . . . . . . . . . . . . . . . 28
Management Does Not Have a Formal Tracking and
Reporting System to Assist in Monitoring and Evaluating
Health Care Operations at the Prison Units . . . . . . . . . . . . . . . . . . . . . 29

Table of Contents, concluded

No Standardized System Exists to Ensure Monitoring Is
Being Performed Consistently Across All Units . . . . . . . . . . . . . . . . . . . 38
A Closer Look at One Prison Unit's Performance Evaluation
System Report Illustrates the System's Monitoring Problems . . . . . . . . 39

Department Is Not Notified About Capital Assets Purchased
For Its Inmates' Health Care by the University Providers . . . . . . 42
Credentialing Processes for Practitioners Need to
Be Improved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Managements' Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Summary Letter From the Correctional Managed Health
Care Advisory Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Response From the Texas Department of Criminal Justice . . . . . . . . 51
Response From Texas Tech University Health Sciences Center . . . . . 59
Response From The University of Texas Medical Branch
at Galveston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Appendices
1 - Objectives, Scope, and Methodology . . . . . . . . . . . . . . . . . . . . . . . . .
2 - Health Care Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 - Location of Prison Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 - Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 - An Evaluation of Managed Health Care
in the Texas Prison System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73
76
81
82
85

Executive Summary

T

he 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:



University members of the governing body
may be placed in a position of conflicting
loyalties by negotiating service contracts
with their employers.



The capitation rate should be reevaluated
with consideration given to defining,
identifying, and quantifying allowable
costs to provide reasonable and necessary
health care to the inmates.



Management controls such as cost
allocation systems and performance
monitoring and evaluation need to be
improved.



Strengthening of contract provisions
would provide some compensating
controls and increase accountability of all
parties.

As reported by our correctional health care
consultant, the correctional managed health
care program has achieved some efficiencies
since it was fully implemented in September
1994. Accomplishments were noted in the
areas such as utilization management,
decreased pharmacy costs, and use of
telemedicine. See Appendix 5 for the
consultant's report.

JANUARY 1998

The Governance Structure of the
Managed Health Care System Is
Atypical
The Correctional Managed Health Care
Advisory Committee (Committee) was
legislatively mandated to create and oversee
the implementation of a managed health care
delivery system at the Department. The
existence of this separate governing body,
outside of the Department, has resulted in an
organizational structure comprised of a series
of contractual relationships.
Instead of contracting directly with the
inmates' health care providers, the Department
has a contract with the Committee, which in
turn contracts with The University of Texas
Medical Branch at Galveston (UTMB) and
Texas Tech University Health Sciences Center
(TTUHSC) to provide health care to the
inmates. UTMB and TTUHSC (university
providers) also have a number of
subcontractors that participate in the health
care delivery system.
This organizational structure has several
unique characteristics:


The governance structure of the managed
health care system creates the potential for
conflicting loyalties. The Committee is
comprised of six members: two each from
UTMB, TTUHSC, and the Department.
The Committee, which is responsible for
implementation and oversight of the
correctional managed health care system,
negotiates the contracts between itself and
its medical care providers, UTMB and
TTUHSC. Since two-thirds of the
Committee members are employed by the
universities that provide the health care,
this close relationship may not ensure the

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Executive Summary
objectivity of the health care procurement
process.

inmate to provide health care may not be set at
the appropriate level.



All cost components for providing direct
health care have not been identified. For
example, there is no fee or charge back for
indirect support services provided by the
universities to managed health care.
Furthermore, allocation of staff workload
among both university providers' managed
health care initiatives (for the Department and
others) is based upon estimations, which may
yield an inaccurate cost designation.

Oversight roles and responsibilities of all
parties are not obvious. These roles and
responsibilities are defined by various
contracts.
The many levels of contracting tend to
blur the lines of responsibility and
accountability by the various parties.
Because the health care system's
framework is structured through
contracting, it is essential that all
contractual agreements clearly define each
party's performance standards and
monitoring responsibilities.



The Committee’s funding is contained
within the legislative managed health care
appropriation for the Department. As a
result, the Committee cannot be held
directly accountable for its financial and
operational decisions by the Legislature.



Although the funding is appropriated to
the Department, the Committee has the
authority to decide disputes between the
Department and the university providers,
who represent a majority on the
Committee.

Reevaluate the Managed Health
Care Capitation Rate (Cost per
Inmate per Day)
Although the system of health care delivery
changed under managed health care, the
process used to calculate the appropriate
allocation to fund the services did not change.
The appropriation for correctional managed
health care was based on prior period
expenditures, not on estimates of reasonable
costs to provide managed health care to the
inmates. As a result, the current cost per

Each university provider has set aside a
catastrophic reserve fund; however, there has
been no actuarial analysis to determine what
the reserve fund balances should be. Because
the providers have realized excess revenues
over expenses since implementing managed
care, once the appropriate fund balance is
obtained, the capitation rate should be adjusted
downward.
The margin of revenues over expenses has
increased since managed health care was
implemented in September 1994. The
combined net profit realized by the university
providers at the end of fiscal year 1996 was
$37.3 million out of $241.8 million total
revenue. The providers refunded $12 million
to the State's general revenue fund in
September 1996, leaving a balance of over
$25 million; they plan to carry forward another
$12 million in excess revenue toward funding
the Department’s managed health care strategy
in the current biennium.

Correctional Managed Health
Care Lacks a Comprehensive
Monitoring System
Although a number of processes exist to
evaluate and/or monitor aspects of
performance, these processes do no interface

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Executive Summary
or link with each other to provide a
comprehensive monitoring and evaluation
system. Because the basis of several of the
monitoring processes is self-monitoring,
review of operations by another party becomes
even more necessary.
Although managers at all levels of the
managed health care system receive reports
from the evaluation and monitoring processes,
many complained that they cannot easily
integrate the multiple reports or use them to
plan for improving performance.
Establishment of a comprehensive,
standardized monitoring system that integrates
the various information and monitoring
systems already in place would enhance
current processes.

Summary of Management's
Response
The parties of correctional managed health
care generally agreed with most of the report
recommendations. A management response
from the Committee, summarizing the
responses of the Department, TTUHSC, and
UTMB follows each recommendation. A
summary letter from the Committee as well as
the parties' detailed responses, are included in
the "Managements' Responses" section of this
report, beginning on page 49.

JANUARY 1998

Summary of Objective and Scope
The objective of this audit was to evaluate key
controls over the Department’s managed
health care system. The correctional health
care consultant compared prior and current
periods in the areas of process quality and
scope of services.
The scope of our audit included the review of
management control systems such as
governance, performance evaluation and
monitoring processes, and information
management. We reviewed contract
provisions in the contracts between the
Department, the Committee, UTMB,
TTUHSC, and subcontractors. We evaluated
expenditures and cost allocation systems
related to the managed health care
appropriation. Changes implemented under
the managed health care system related to
service delivery were reviewed. Mental
Health Services was not included in our
evaluation because of the newness of the
program to a managed health care
environment.
The Department's managed health care
strategy was appropriated $260,040,472 in
fiscal year 1997. This amount represented
over 9 percent of the State's total appropriation
for Public Safety and Criminal Justice.

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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. University members of the governing body may be
placed in a position of conflicting loyalties by negotiating service contracts with their
employers. Management controls such as cost allocation systems and performance
monitoring and evaluation need to be improved. Strengthening of contract provisions
would provide some compensating controls and increase accountability of all parties.
The capitation rate should be reevaluated with consideration given to:




Defining allowable costs to provide "reasonable and necessary" health care
Identifying and quantifying all allowable costs
Determining a sufficient fund balance for a catastrophic reserve fund, if one is
deemed appropriate

As reported by our correctional health care consultant, the correctional managed health
care program has achieved some efficiencies since it was fully implemented in
September 1994. Accomplishments include:


Utilization management resulting in more on-site primary care and decreased
number of specialty visits and emergency trips.



Pharmacy cost savings achieved through use of clinical pharmacists, formulary
management, and disease management guidelines.



Deployment of telemedicine sites at various locations around the State, resulting
in reduced inmate travel to specialists and reduced security risks.

See Appendix 5 for the consultant's report.

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Section 1: GOVERNANCE AND ORGANIZATIONAL STRUCTURE

The Governance Structure of the Managed Health Care System Is
Atypical
Creation of the Correctional Managed Health
Care Advisory Committee
The 73rd Legislature established the Correctional
Managed Health Care Advisory Committee
(Committee) through the provisions of Section 501.059
of the Texas Government Code. The Committee is
composed of six members: two from The University of
Texas Medical Branch at Galveston; two from the
Texas Tech University Health Sciences Center; and two
from the Texas Department of Criminal Justice. One
member from each entity must be a physician.
The Committee was charged with developing a
managed health care plan to include “the
establishment of a managed care network of
physicians and hospitals . . .” and “to the extent
possible the committee shall integrate the managed
health care provider network with the public medical
schools of this state.”
Although the legislation creating the Committee and
mandating a managed health care system was
passed in the summer of 1993, the new delivery system
was not fully implemented until September 1, 1994.
The Committee, with support from its administrative
staff, is responsible for the general statewide oversight,
both fiscally and operationally, of the managed
health care system.

The organizational structure of the Texas
Department of Criminal Justice’s
(Department) managed health care system
consists of a series of contractual
relationships. Instead of contracting directly
with The University of Texas Medical Branch
at Galveston (UTMB) and Texas Tech
University Health Sciences Center
(TTUHSC), the Department contracts with the
Correctional Managed Health Care Advisory
Committee (Committee). The Committee in
turn contracts with UTMB and TTUHSC
(university providers) to provide health care to
Department inmates. Both university
providers also have a number of
subcontractors that participate in the health
care delivery system.
This structure creates an environment in
which the university providers could have
conflicting loyalties, and it places some health
care staff in conflicting roles. Strengthening
the contracts between the various parties could
reduce the opportunity for miscommunication
and ensure managerial and monitoring
decisions are made independently and
objectively.

Figure 1

The Correctional Managed Health Care System
Texas Department
of Criminal Justice

Figure 1 shows the organizational structure
and contractual relationship of the correctional
managed health care system.
The organizational structure creates several
unique circumstances:

Correctional Managed
Health Care Advisory
Committee


Texas Tech University
Health Sciences Center
Subcontractors

The University of Texas
Medical Branch at
Galveston
Subcontractors

The Department does not directly
contract with the university providers
for health care services to its inmates;
the Committee contracts for the
services.

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Oversight roles and responsibilities of all parties are not obvious. These roles
are defined by the various contracts.



The Committee’s funding is contained within the legislative managed health
care appropriation for the Department. As a result, the Committee cannot be
held directly accountable for its financial and operational decisions by the
Legislature.



Although the funding for the health care system is appropriated to the
Department, the Committee has the authority to decide disputes between
Department and the university providers, who represent a majority on the
Committee.



The Committee is in the unique position of being in a contractual relationship as
the “vendor” with the Department, and the “purchaser” with the university
providers.

Whereas an entity separate from the Department may have been necessary to create and
oversee implementation of a new health care delivery system, the existence of a
separate governing board such as the Committee may no longer be critical to the
continuation of the managed care system.
The following discussion is not intended to diminish the substantial endeavor
undertaken by the Committee to implement a managed health care system. Nor does it
challenge the obvious benefits to both the Department and the university providers by
using the State’s medical schools to provide health care to the inmates.
Section 1-A:

The Potential Exists for the University Members of the Committee
to Have Conflicting Loyalties to Two Entities
The current relationship between the Committee and the university providers does not
ensure the objectivity of the procurement process. The Committee, with two-thirds of
its members employed by the university providers, negotiates the contracts between the
Committee and the university providers. Good contract administration practices
generally prohibit parties who can influence procurement decisions in contract awards
from being in a position to gain advantage from those decisions and awards. An arm’s
length contractual relationship to oversee compliance and administer the health care
system would prevent questions about conflicting loyalties and add integrity to the
organizational structure.
While we did not find any evidence of bias in contracting decisions, the close
relationship between the Committee’s medical school members and their employers
(the university providers) may hamper competition by discouraging other potential
providers from pursuing service contracts. Currently, no other state medical schools
participate in the Department’s managed health care system. The Committee’s enabling

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legislation envisioned, “to the extent possible,” the integration of Texas’ public
medical schools into the managed care provider network. As previously discussed, the
Committee, the contractee for health services, is composed of members who are
employed by the university providers, the contractors who provide the health care.
This type of relationship, in the private sector, would raise questions over conflicting
loyalties between the parties.
Any sizeable managed health care system, especially one as large as the Department’s
system, requires two essential functions: system administration and a medical advisory
board. The administrative function provides for the centralized operation of the health
care system. An advisory board provides a forum to make decisions about health care
standards, to create policy and procedures, and to ensure consistency of correctional
health care throughout the State. While these two important functions are currently
part of the Committee, this structure is not the only one that could accommodate
system administration and a medical advisory board. For example, the Texas Youth
Commission contracts directly with both UTMB and TTUHSC to provide medical care
to the youth at its numerous facilities around the State. These interagency agreements
do not include an intermediate entity such as the Committee.
While the providers of medical care should be represented on the medical advisory
board to decide medical treatment and policy issues, they should not necessarily be in a
position to make decisions about the financial aspects of the system. Currently, the
three physicians and the three financial officer committee members make all
operational and financial decisions. The Committee meets quarterly, in open session.
Any sensitive or confidential issues must be discussed by the Committee in closed
(executive) session.
Staff from the Texas Sunset Advisory Commission are currently reviewing the
Committee’s function. The Commission will receive a self-evaluation report from the
Committee, conduct public hearings, and ultimately prepare a report to the 76th
Legislature recommending continuation, abolishment, or statutory changes for the
Committee.

Section 1-B:

Some Health Care Staff Are Placed in Potentially Conflicting Roles
Apart from the contractual relationships which may cause conflicting loyalties for
certain Committee members, the current organizational structure contains some areas
in which health care staff and management are placed in conflicting roles. As a result,
managerial and monitoring decisions may not be made independently and could be
suspect if a challenge arose.
The Medical Director of the Health Services Division is a full-time employee of
UTMB who provides his services to the Department. As Medical Director of the

Health Services Division, this doctor is in a position to approve or veto the Health
Services Division’s monitoring actions and policies, which could be taken against his

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full-time employer. The Department has been actively trying to hire a full-time Health
Services Division director who would not be an employee of either university provider.

Ruiz v. Estelle
In 1972, David Ruiz, an inmate of the Department,
filed a petition in U.S. district court claiming that
prison conditions were unconstitutional. In 1980,
federal district judge William Wayne Justice ruled
in favor of the plaintiff, saying that the totality of
the conditions in Texas prisons constitutes cruel
and unusual punishment. In 1992, the State
entered into a final judgement in the Ruiz case,
which contained some general and specific
requirements. In 1996, the Attorney General filed
a motion to terminate the Ruiz Final Judgement;
the federal district court had not ruled on the
motion by the end of December 1997.
Major reforms resulting from the Ruiz case include:
Improvements in health care and care of
special-needs inmates

Standards for the use of force

Standards for prison construction

Caps on prison population

Reforms in work safety and hygiene

Procedures for administrative segregation


The salaries of the Department doctors who
hold management positions in the Health
Services Division are paid through UTMB’s
payroll system. When the payment agreement

between the Department and UTMB was created
in 1988, the Department was having trouble
hiring and retaining qualified physicians while
under the specter of the Ruiz case’s federal court
supervision. Circumstances are changed now:
the university providers are the direct employers
of the prison unit physicians and the Department
is operating under limited orders from the
federal court. The only Department physicians
still paid by UTMB who are not bona fide
UTMB employees (with the exception of the
current Health Services Medical Director) are
the doctors in the Department’s Health Services
Division. Because this division contains staff
and functions that oversee the health care
services and providers, it is inappropriate for
staff members to be paid by the party they
monitor.

According to a recent Department internal audit report, some medical school
dental and mental health staff members are borrowed by the Health Services
Division to participate in the operational review process. The operational review

process provides an evaluation of prison health clinic operations, independent of the
service providers. Since this review is a major part of the Department’s monitoring
effort, use of medical school staff to monitor units staffed and operated by the
university providers presents a potential conflict of interest. This problem was noted in
the Department’s Internal Audit Report on Operational Review.

Section 1-C:

The Contracts Between the Various Parties Could Be Strengthened
The many levels of contracting tend to blur the lines of responsibility and
accountability for processes and performance. Because the health care system’s
framework is structured through contracting, it is essential that all contractual
agreements clearly define each party’s roles and responsibilities, especially concerning
performance standards and monitoring. Furthermore, frequent and open
communication between the various parties is critical. Lack of clear definition or
adequate communication can lead to finger-pointing and inaction in a time of crisis.

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Contracts at all levels of the organization would benefit from more specific
provisions related to performance expectations, financial controls, and
monitoring. The contract between the Department and the Committee does not

include provisions for:






Sanctioning for poor performance
Establishing guidelines for monitoring of subcontractors
Ensuring all costs are reasonable and necessary (due to the nature of unit-cost
contracts)
Verifying that comparable costs are charged for comparable services
Monitoring operational results to determine overall performance and or
compliance

The contracts between the Committee and the university providers mirror the contract
between the Committee and the Department; therefore, the provisions listed above are
lacking from the university providers’ contracts as well.
The contract between the Department and the Committee does not provide the
Department with direct recourse if performance of the contractors is unsatisfactory.
The Department lacks the authority to remove a doctor or dentist from direct patient
care if sufficient questions are raised about a specific care provider. The current
contract states that the Department must formally request that the university provider
remove the doctor from patient care, pending review by the university. If the
Department does not agree with the decision of the university provider, it can appeal to
the Committee, whose decision is binding. The Department does have authority to
deny access to the prison unit for security reasons.
There are no contract provisions which would allow the Department to hold the
university providers accountable for monitoring their subcontractors’ performance.
Neither the contract between the Department and the Committee nor the contracts
between the Committee and the university providers include a provision which requires
subcontractors to be monitored.
In July 1997, state health facility licensing inspectors found serious deficiencies at a
prison dialysis unit operated by a subcontractor of UTMB. Although the Department’s
Executive Director expressed his deep concern over the effectiveness of UTMB’s
monitoring of its subcontractor, the contractual agreements do not provide the
Department with any recourse against UTMB or the subcontractor in question.
Contracts between university providers and subcontractors should be
enhanced. Both UTMB and TTUHSC employ a number of subcontractors to

provide various medical services for the inmate population. In the western sector of
the State, TTUHSC subcontracts about 80 percent of its medical services to local
providers. The university providers have subcontracts with:



Local providers for off-site emergency care
Local providers for on-site care at the prison units

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Individual health care specialists
Health care providers for miscellaneous services such as ambulance
transportation, laboratory services, radiology services, and other ancillary care

In general, the contracts between the university providers and subcontractors lack (1)
clearly defined performance standards and measurable outcomes and (2) a clear
statement of how contractor performance is evaluated. The contracts cite general
standards such as those from the National Commission on Correctional Health Care,
the Department’s Comprehensive Care Plan, and applicable court mandates; however,
specific rules, such as licensing or state health laws which might apply to the
subcontractor, are not referenced. The contracts also lack specific reporting
requirements; however, subcontractors for on-site services must comply with reporting
Quality Improvement Program results.
Contract provisions specifying performance standards for subcontractors would give
the university providers a means of holding their subcontractors accountable for
specific performance. In the example above of the subcontracted dialysis unit, the
contract between UTMB and the subcontractor does not reference the specific
performance standards by which the State inspects dialysis units. Without this
provision, UTMB lost an enforcement tool.
Overall, the subcontracts do contain:




Termination provisions
Audit clauses that allow access to subcontractors’ records by oversight entities
A clear statement of expected services

Roles and responsibilities of all parties need to be more clearly defined. This is

especially important because the levels of contracting may hamper communication
between involved parties. For example, state health inspectors made a courtesy visit to
a prison dialysis unit in December 1995, before proposed licensing regulations became
effective. The purpose of the visit was to point out possible deficiencies at the dialysis
unit based on current rules in effect for licensing private dialysis facilities. (These
rules were considered a prototype for rules proposed for state entities.) Although
inspectors provided a summary report of potential deficiencies to the unit health
administrator (a UTMB employee) and spoke with the subcontractor (which provided
dialysis services for the unit), the report was not shared with anyone from the
Department.
The failure to provide feedback to the Department is especially surprising in light of
the fact that the Department is the official applicant for the dialysis unit’s license and is
responsible for the physical plant. By not sharing the courtesy licensing survey results
with Department, the Department was denied the opportunity to address a problem that
contributed to a serious deficiency report a year and a half later.
A situation in which a clear understanding of each party’s responsibility was critical
occurred in July 1997, when a team of state health facility licensing inspectors found

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serious deficiencies at the prison dialysis unit cited above. The deficiencies were both
in the operation of the dialysis center and the physical plant. The Department is
responsible for any problems with or changes to the physical plant itself. UTMB
employs the staff of the prison’s health clinic, including the physician responsible for
the dialysis center. A subcontractor for UTMB is responsible for the dialysis
operation, and the subcontractor employs yet another subcontractor to maintain the
water treatment system at the dialysis unit. Before deficiencies cited by the health
inspector could be addressed, even in a corrective action plan, all parties—the
Department, UTMB, and the subcontractors—had to communicate with one another
and jointly determine responsibilities and a course of action. Lack of cooperation on
anyone’s part would jeopardize corrective action and potentially the inmates’ health
and safety.
The organizational structure lacks sufficient processes to fully monitor
managed health care’s programmatic and financial operations. It is not

obvious from the organizational structure where the monitoring responsibilities lie; all
parties bear some risks and thus should oversee operations. As mentioned previously,
the various contracts do not necessarily assign all monitoring responsibility. However,
as the party legally responsible for the inmates, the Department must assume a major
monitoring role.
As a unique entity whose funding comes entirely from the Department’s managed
health care strategy, the Committee is not directly monitored by either the Department
or the Legislature. Provisions defining specific monitoring processes would ensure the
Department that both the Committee and the university providers could be held
accountable for specified performance standards. Similarly, specific monitoring
provisions in the contracts between the Committee and the university providers would
also strengthen the accountability of the health care providers.
Unless a monitoring process was specifically denoted in the contract
provisions, no party to the contract could reasonably be held accountable for
its execution. The contract between the Committee and the Department for fiscal

years 1996 and 1997 contained only the broad monitoring provision that the
Committee and the Department had the right to monitor provision of services under the
contract and to inspect all records, charges, billings, and supporting documentation.
The contracts between the Committee and the university providers for fiscal years 1996
and 1997 contained only the above provision and two others related to monitoring:


The university providers were responsible for developing and maintaining an
ongoing quality improvement plan and providing semi-annual reports to the
Committee and the Department.



Staff members of the university providers’ and Department’s internal audit
departments were to meet and jointly develop a plan outlining auditing
responsibilities. The contract provision indicates that each internal audit
department will be responsible for reviewing operations at its respective agency.

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Neither the Committee nor the university providers developed a statewide quality
improvement plan. The quality improvement/quality management (QI/QM) process
resides in the Department’s Health Services Division, and essentially remains
unchanged since the implementation of managed health care in September 1994. See
further discussion of the quality improvement process at Section 4-A.
Although the contract called for staff members of the internal audit departments to
meet and jointly create an auditing plan, this provision was not fully implemented. The
provision acknowledging the roles of the internal audit departments did not contain a
mechanism to ensure that the university providers resolved weaknesses noted in any
audit reports. The staff members of the three agencies met jointly two times in the
two-year period and never developed an overall auditing plan for managed health care.
The auditors agreed to each review managed health care operations within their
respective agencies. Moreover, few audits of the new health care system occurred.
Given the newness of the managed health care system and the sizeable resources
devoted to it, this should be considered a high-risk area. Audits that were completed
include:


A UTMB internal audit of the pharmacy year-end inventory in November 1996



A TTUHSC internal audit to test billings from private vendors in September
1996



A Department internal audit of the Health Services Division’s Operational
Review process in May 1997

The newly signed contracts for fiscal years 1998 and 1999 do not contain a similar
provision acknowledging the roles of the respective internal audit departments.
As noted in a recent Department Internal Audit Division report, no Department
division is responsible for monitoring the Committee’s and university providers’
compliance with contract provisions. The Department’s internal audit report cites
contract provisions which should receive regular monitoring but currently do not.
These provisions include the Committee’s reporting of required studies such as cost
containment, care case management, and utilization management. To address
monitoring deficiencies identified by the Department’s internal audit report in May
1997, the Department proposed a plan to hire additional staff in the Health Services
Division. The additional staff will be responsible for monitoring medical operations of
the correctional managed health care contracts.
Since the contracts between the university providers and their subcontractors mirror the
contracts between the university providers and the Committee, these contracts would
also benefit from specific monitoring provisions. As noted in Section 4, managed
health care lacks a comprehensive, integrated monitoring and evaluation process.
Adding specific contract provisions that assign and clarify monitoring responsibility to
all contractual agreements should promote accountability throughout the organizational

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structure. A better defined, integrated evaluation process will provide managers at all
levels with the information needed to adjust operations to achieve stated objectives.
Recommendation:

The Department is encouraged to pay its Health Services Division
physicians through its own payroll system.

Committee’s
Response:

TDCJ concurs.

Recommendation:

The Department is encouraged to continue its efforts to hire an
independent Health Services Division Medical Director, who is
independent of the contracted health care providers.

Committee’s
Response:

TDCJ concurs and has an action plan in process.

Recommendation:

The Health Services Division should secure sufficient staff to perform
all aspects of the Operation Review audits, eliminating reliance on
staff from the university providers to assist in the audits.

Committee’s
Response:

TDCJ concurs and has an action plan in process. The university
providers note that the utilization of peer practitioners in reviewing
the clinical aspects of health care delivery is an established and
traditional medical model recognized by both state law and industry
practice. The university providers will continue to offer and make
available their assistance to the TDCJ Health Services Division.
Should TDCJ elect to adopt this recommendation, the fiscal
implications resulting from increased staffing should be considered.
Given the historical difficulty experienced by TDCJ to recruit and
retain health care practitioners and the likely expense involved in
hiring full-time clinical staff to perform non-patient care duties, the
feasibility of contracting for such services should be examined.

Recommendation:

Consider an amendment to the current contracts between the
Department and the Committee and the Committee and the university
providers which enables the Department to hold the university
providers accountable for monitoring their subcontractors’
performance.

Committee’s
Response:

The university providers disagree with this recommendation. Under
current law, they contract with the CMHCAC and not the TDCJ and
are therefore accountable to the CMHCAC for contract compliance.
Amending the contracts as recommended would essentially bring
another party “TDCJ” into the agreement, would change the
character of the contract substantially and ignore the current
statutory arrangement. TDCJ concurs with the recommendation and

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has proposed that such an amendment be incorporated into the next
biennium contract.

JANUARY 1998

Recommendation:

In all applicable subcontracts, include by reference any relevant state
licensing or health regulations for the services being contracted.

Committee’s
Response:

The CMHCAC partners note that the current contracts contain a
number of general references to insure subcontractor compliance, but
concur that additional clarifying language would be beneficial. Due
to the number of contracts involved, the clarifying amendments will be
added during the next biennial contracting process and in any new
subcontracts entered into this biennium.

Recommendation:

Roles and responsibilities of all parties should be clearly defined and
specifically stated in the contracts.

Committee’s
Response:

The CMHCAC partners concur that additional role definition would
be beneficial and will work to more precisely define roles and
responsibilities. Such clarifications will serve as the groundwork for
the next biennial contracting process.

Recommendation:

Information relating to potential problems as well as any action
affecting managed health care must be shared with all parties within
the organization. This includes the Department’s executive
management and Department Health Services Division management,
the Committee, the university providers, their subcontractors, and unit
and regional management.

Committee’s
Response:

The CMHCAC partners concur. While it is believed that the example
cited in the report represents an aberration and not the norm, all
partners are committed to more effective communication on issues
relating to the managed health care program.

Recommendation:

The Department should develop a monitoring function which will be
responsible for monitoring all operational and financial aspects of the
contract between the Department and the Committee. This function
would also oversee the monitoring of the providers by the Committee
and have the authority to review all financial and operational records
related to the provision of health care to the Department’s inmates.

Committee’s
Response:

TDCJ concurs and has initiated an action plan for operational
monitoring. As noted by the university providers in an earlier
response above, the utilization of peer practitioners in overseeing the
health care delivery system is an established medical model. Should
TDCJ elect to adopt adding staff as called for in this recommendation,
the university providers suggest that the fiscal implications resulting
from increased staffing be considered. Given the likely expense

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involved and TDCJ’s difficulty in recruiting and retaining health
professionals, the feasibility of contracting for such services should be
examined. As needed, the university providers will continue to offer
and make available their assistance to the TDCJ Health Services
Division.
Perhaps more fundamental to this issue is that the university providers
believe that it is the Legislature’s prerogative to determine the role of
the CMHCAC in monitoring the university providers charged with
providing offender health care. The current legislatively established
structure vests that authority within the CMHCAC. At the same time,
the CMHCAC contract documents already clearly provide TDCJ and
the CMHCAC staff with access to “all records, charges, billings and
supporting documentation” and to all medical records.
A summary management letter from the Committee and detailed responses from the
Department, TTUHSC, and UTMB are included in the “Managements’ Responses”
section of this report, beginning on page 49.

Section 2: CAPITATION RATE

Reevaluate the Managed Health Care Capitation Rate
Although the system of health care delivery changed under managed care, the process
used to calculate the appropriate allocation to fund the services did not. The
appropriation for the inmates’ managed health care system was based mainly on prior
period expenditures, not on estimates of reasonable costs to provide managed health
care to inmates. Therefore, the current cost per inmate to provide health care may not
be set at the appropriate level.
To calculate an appropriate allocation for providing health care to the inmates, the
following steps must occur:


Allowable costs to provide “reasonable and necessary” health care must be
defined.



All allowable costs must be identified and quantified.



If a catastrophic reserve fund is deemed appropriate, the methodology for
determining a sufficient fund balance must be developed.



Fixed and variable costs associated with providing health care to the increasing
inmate population should be identified and tracked.

The Department’s prior health care system was essentially a “fee-for-service” system,
which is inherently more costly than a system where the use of specialty care is
managed through treatment protocols. In fact, the impetus behind the January 1993

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Texas Performance Review recommendation that Texas adopt a managed care system
for the inmates was to “effectively control health care costs.” Information reported by
the university providers shows that since the implementation of managed health care,
efficiencies have been realized in costly areas such as the use of specialists and length
of hospital stays. The demonstrated cost savings can be used in the reevaluation of the
managed health care appropriation.

Section 2-A:

Allowable Costs Were Not Clearly Defined
Capitation Rate
The capitation rate is the price per
inmate per day paid to the university
providers for inmate health care. The
capitation rate is calculated by taking
the amount appropriated to provide
health care to the inmates and
dividing by the average annual
inmate population. This annual figure
can also be recalculated and stated
as a daily or monthly amount.

Currently the university providers are paid for their services
based on a “capitated rate,” essentially a unit-cost contract.
With this type of contract, the university providers are not held
accountable for how the money is spent; that is, there are no
restrictions on the use of the funds. The unit-cost contractual
agreement emphasizes service delivery and does not state how
the dollars are to be spent or define allowable and unallowable
costs. As a result, any funds not spent on service delivery are
essentially “profit” to the university providers and can be spent
however they choose without violating the contract terms.

Without analyzing prior health care cost components or
defining allowable and unallowable costs for managed
health care, it is difficult to assess the reasonableness of the capitation rate.

When the managed health care concept was adopted and funded by the Legislature,
there was no effort to identify essential cost factors for providing health care to the
inmates. Allowable and unallowable costs for managed health care were not clearly
defined before the capitation rate was initially set. In fact, the initial appropriation to
fund the inmates’ health care was set at a level consistent with the expenditures in the
prior period. Even the funding for the Department’s hospital on the UTMB campus
remained at the same level.
While the cost of providing direct medical services to inmates would certainly be
considered an allowable expenditure, other expenditures related to the health care
system have not been categorized as allowable or unallowable. In our review of
expenditures by the university providers, we identified some items, budgeted by
UTMB for fiscal year 1997, which did not involve direct delivery of health care to
Department inmates. These expenses included:




JANUARY 1998

$400,000 to establish performance outcome measures for correctional health
care
$200,000 to start up a correctional health care residency training program
$1,000,000 for physician incentive bonuses; $668,000 in bonuses was actually
paid to physicians and dentists in August 1997.

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Neither the contracts to provide medical services nor the legislative appropriation
address the appropriateness of expenditures related to health care. Because the
capitation rate does not have guidelines for allowable expenditures, charges of this
nature are legitimate uses of managed health care funds. We did not find similar
expenditures when reviewing TTUHSC records.
Expenditures such as these raise the question of whether the university providers are
receiving more funding than is “reasonable and necessary” to cover the costs of
providing medical care to the inmates. The capitation rate is currently set higher than
the actual cost of providing health care to Department inmates. This is evidenced by
the $12,000,000 in excess revenues over expenses returned to the State at the
beginning of fiscal year 1997 and the existence of catastrophic reserve funds being
held by the university providers. The difference between the actual cost (the
expenditures by the university providers directly related to health care) and revenues
based on the capitation rate is the margin of profit to the providers.
As shown in Table 1 below, the combined net profit realized by the two university
providers in fiscal year 1996 was $25,325,283, or 10.47 percent excess revenue over
expenses. From this amount, the university providers set aside a total of $9 million as
catastrophic reserve funds. For further discussion of the catastrophic reserve funds, see
Section 2-C.
Continued excess revenues over expenses in fiscal year 1997 (not shown) resulted in a
carry forward of $12,000,000 to reduce the appropriation needed for the 1998-1999
biennium. If managed care efficiencies continue to be realized, further capitation rate
reductions may be possible.
Table 1
Reported TTUHSC and UTMB Combined
Summary Revenues and Expenses
Unaudited
Fiscal Years 1995 and 1996
Amount
1995

Percentage
1996

1995

1996

100,508

121,601

Revenues

$181,968,770

$241,845,627

100.00%

100.00%

Expenses

$181,890,952

$204,520,344

99.96%

84.57%

$77,818

$37,325,283

0.04%

15.43%

0

($12,000,000)

0.00%

(4.96%)

$77,818

$25,325,283

0.04%

10.47%

Average Daily Population

Revenues Over Expenses
Refund
Net Balance

Source: Correctional Managed Health Care Advisory Committee

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As the immediate purchaser of health care services from the university providers, the
Committee is responsible for monitoring the university providers’ expenditures.
However, since a majority of the Committee’s members are employees of the
university providers, this relationship is awkward and lacks the distance necessary to
ensure an independent appraisal.
The question of whether the university providers should be accumulating excess
revenues by providing medical care to the inmates and if so, how much the excess
should be, is a policy matter that only the Legislature can address. A solution involves
full identification and reporting of all expenditures by the university providers, which
would allow the Legislature to revisit the capitation rate based on more complete
expenditure information.

Section 2-B:

All Cost Components for Providing Direct Health Care Have Not
Been Identified
The inability to identify all managed health care cost factors prevents the university
providers from completely calculating the total costs associated with the managed
health care system. Two areas where cost are not clearly identified include (1) the
indirect support services provided by the university providers to the Department’s
managed care and (2) the cost of a portion of the reclaimed drugs.
There is no fee or charge back for indirect support services provided by the
universities to the Department’s managed care. Discussions with managed health

care administrators at both UTMB and TTUHSC reveal that costs for the following
support services provided by the universities are not charged to the Department’s
managed care:


At UTMB, the Department’s managed care is not charged for administrative
support services provided by the fiscal office or the payroll, accounting, and
legal divisions.



At TTUHSC, indirect support services such as risk management, legal,
contracting, payroll, data processing, and university administrative overhead
have never been charged to the Department’s correctional care accounts.
Building use at the TTUHSC main campus is provided at no charge to the
Department’s managed care program.

At TTUHSC, there are 11.5 full-time equivalent employees (FTE) who perform
accounting, human resource, and purchasing functions which are charged directly to
the correctional managed care accounts. A set fee covering these employees’ salaries,
benefits, and supplies was negotiated between TTUHSC and TTUHSC Correctional
Health Care.

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University providers’ management cite the difficulty of identifying percentage of time
spent by support function staff on different programs; however, the total cost of
providing inmate health care is not known without factoring in support services.
Further, best management practices increasingly emphasize the importance of
identifying total costs in order to manage effectively. One frequently neglected
component of total cost is indirect support services.
The university providers should allocate costs among all their managed care
programs. UTMB and TTUHSC operate managed health care programs for entities,

both private and governmental, other than the Department. Both the university
providers attempt to segregate and/or allocate resources used by Department and nonDepartment managed care programs. Whereas UTMB appears to have made an effort
to segregate the Department’s managed care funds and staff roles from its other
managed care programs, TTUHSC’s cost allocation efforts appear to have been
implemented more recently.
The allocation of staff time at UTMB is based upon management’s estimation of work
loads incurred by each respective program. No time sheets for direct administrative
support staff are maintained to substantiate this allocation. Aside from the
Department’s managed care contract, UTMB also operates managed care programs for
the Texas Youth Commission, Federal Beaumont Prison, and others. As of May 1997,
UTMB had 20 budgeted positions to perform activities for these programs. Of these,
17 budgeted positions work exclusively on non-Department programs and are paid out
of non-Department funds. Three budgeted FTEs perform activities for both the
Department and one or more of the non-Department managed care programs. Of these
3 positions, 1.23 FTEs are charged to non-Department funding sources.
Direct service staff members, such as dentists who perform services for more than one
of UTMB’s contracted correctional health care programs, have their time logged by
unit administrators. Time and expenses, based on the logs, are then charged back to
the appropriate accounts.
At TTUHSC, the allocation of staff time is derived from estimates of relative
workloads. No timekeeping system or other studies support the allocations. In
addition to Department managed care, TTUHSC has a Medicaid managed care
program and a number of Preferred Provider Organization (PPO) contracts. The PPOs
are located at the satellite campuses.
In fiscal year 1997, TTUHSC established a 5 percent administrative fee for managed
care programs, including Department managed care. The fee is assessed as 5 percent
of revenues received from each managed care program and was charged retroactively
in fiscal year 1997 for fiscal year 1996. This administrative fee was arbitrarily set; no
methodology was used to derive the 5 percent fee. In addition, as the fee is assessed
against total revenues, as opposed to total expenditures, it does not reflect the amount
of resources required to do the job. A fee set on revenues also fails to account for
TTUHSC’s reserve fund balance of $4 million for Department medical services,
among other considerations.

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The administrative fee assessed by TTUHSC for the Department’s medical services
contains a profit margin. For fiscal year 1996, the 5 percent administrative fee
assessed for correctional health care (exclusive of psychiatric) was $2,250,759, while
costs were $1,296,717, leaving a profit of $954,042 (42 percent). The administrative
fee for fiscal year 1997 is $2,504,022. Administrative salaries and costs are listed as
$1,167,592, leaving a profit of $1,336,430 (53 percent).
There are 30.75 administrative FTEs involved in TTUHSC’s managed care programs
(both Department and non-Department). Of these, 21.8 FTEs are funded out of
Department funds, while the remaining 8.95 FTEs are funded from other managed care
funds.
Estimates of workloads associated with various programs, without the benefit of time
sheets or supporting studies, may yield an inaccurate estimation of costs for different
programs. Without accurate identification of costs incurred on behalf of the
Department and other managed care programs, costs may be either understated or
overstated. Without an accurate cost allocation system in place, there is no protection
against subsidization of commercial managed care initiatives. Although we found no
evidence of this in our review, this issue becomes even more significant as both UTMB
and TTUHSC expand their managed care initiatives within and outside of the State.
The centralized pharmacy does not track all unused medicines. The centralized

pharmacy, operated by UTMB Managed Care through a contract with the University of
Houston School of Pharmacy, does not have an overall system in place to track all
unused, returned medicines. Unused medicines are sent back almost daily to the central
pharmacy in Huntsville, where they are manually sorted to be reclaimed or destroyed.
(Drugs which have not expired and are unit packaged are reshelved and reissued.
Medicines which have expired or are not unit packaged are destroyed.) The exact cost
of the returned drugs is not known; the dollar amount of destroyed drugs is not
estimated or tracked by the pharmacy. Because pharmacy costs are a major component
of the capitation rate, these costs must be accurately identified.
There is no computerized or manual inventory record of the reclaimed medicines sent
back to the centralized pharmacy from the UTMB prison units. Although reclaimed
drugs are reshelved and reissued, the costs for these drugs are not calculated.
Therefore, pharmacy costs cannot be accurately calculated and inventories do not
accurately reflect the cost of drugs issued to inmates.
Unlike returned medicines from the UTMB sector units, when medicines are returned
to the central pharmacy from the TTUHSC sector units, a dollar value is assigned to
those medicines than can be reissued. This amount varies each month between
$30,000 and $40,000. TTUHSC Managed Care contracts with UTMB Managed Care
for the purchasing and dispensing of medicines to inmates in the TTUHSC sector. The
credit for the reusable drugs is reflected on TTUHSC’s monthly statement from UTMB
Managed Care, along with the monthly charge for medicines issued to inmates in the
TTUHSC sector units and a percentage of salary costs to operate the pharmacy.

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Pharmacy management anticipates the implementation of an automated system, which
tracks medicines through bar coding, by the end of December 1997. Once the new
system is in place, reusable, reclaimed drugs will be credited to both university
providers through a bar code sorting process. The system will be able to track
medicines by drug, unit, and inmate number. This feature will provide health care
managers with better information, including an inmate’s compliance record with
prescribed medications.

Section 2-C:

Assumption of Risk
The Department’s managed health care system is
unlike managed health care organizations in the
private sector in two respects. First, a health
maintenance organization in the private sector
assumes all risk for the provision of health care
services to its members, regardless of the cost. In
the case of the Department’s prison system, the
State is ultimately responsible for funding the
inmates’ health care. For example, the contracts
between the Committee and the university
providers include a provision which allows the
university providers to be reimbursed for expenses
due to natural or manmade disasters. Secondly,
private health maintenance organizations do not
assume legal guardianship of their patients. While
the State can delegate responsibility to the
university providers to provide health care to the
inmates, the State is still legally responsible for the
inmates’ welfare. Legal opinions state that a state
cannot contract away its responsibility for the
inmates’ health care; however, this responsibility is
shared with the university providers through the
contractual agreements.

University Providers’ Catastrophic
Reserve Funds Lack Sufficient
Methodology
The existence and size of a catastrophic reserve
fund for correctional managed health care is an
area that warrants review. The funding of a
reserve and any adjustments to the fund amount
directly impact the capitation rate. If the reserve
fund is considered an allowable component of
managed health care costs, once the appropriate
fund balance is obtained, the capitation rate
should be adjusted downward.

Each university provider has established reserve
funds for unanticipated, catastrophic costs. At the
end of fiscal year 1996, UTMB had reserved $5
million and TTUHSC had reserved $4 million for
catastrophic medical expenses. There has been no
actuarial analysis on the question of how large the
reserve funds should be. The disparity in the
amount reserved by each school magnifies this
issue. UTMB has approximately 80 percent of the
inmate population and has reserved $5 million, while TTUHSC has 20 percent of the
inmate population and has reserved $4 million for catastrophic medical care.
The lack of analysis over the appropriate amount of a reserve fund creates
uncertainty as to the amount of funds the university providers should receive
under the capitated rate. In fiscal years 1995 and 1996 the university providers

realized a profit margin, of which a portion was plowed back into managed care for
catastrophic reserves. If the appropriate amount of the reserve were identified, the
margin and capitated rate could be reduced once the reserve amount was reached.
The university providers may not find similar correctional health care programs after
which to model a catastrophic reserve methodology. Data to perform an actuarial
analysis may be limited or nonexistent for correctional managed health care. A number

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of factors, such as the number of patients and past risk experience, must be considered
in establishing a catastrophic risk reserve fund. Since inmates generally have poorer
health than the general population, this fact needs to be considered as well.

Section 2-D:

Fixed and Variable Costs Associated with Providing Health Care
Impact the Rate
As shown in Table 2, the Department’s inmate population doubled between 1993 and
1996 and continues to grow. To accommodate the increasing census, the prison system
undertook a major construction program to build new units and modify some existing
ones.
Table 2
Inmate Population and Health Care Costs
Fiscal Years 1993 through 1997
Fiscal Year

Average Daily Population

Health Care Cost

Cost/Inmate Per Day

1993

60,490

$132,429,450

$5.99

1994

73,244

$144,750,669

$5.41

1995

100,508

$196,210,567

$5.35

1996

121,601

$229,881,339

$5.18

1997

125,110

$238,772,783

$5.23

Source: Correctional Managed Health Care Advisory Committee

Cost Factors
Costs are generally classified as either fixed costs or variable costs.
Fixed costs associated with providing inmate health care are those costs
which do not vary as more inmates are added to the correctional system.
The fixed costs of providing medical care at a prison unit do not increase
while the activity is within the capacity of the unit. Once the capacity is
exceeded (the average daily population exceeds a certain level), more
capacity (more prison units) and thus, fixed costs must be added to the
system. Costs related to capacity and overhead, such as salaries of
medical staff and equipment, are examples of fixed costs. Fixed costs will
be specific to each operating unit.
Variable costs are directly related to the number of inmates in a unit. At
some point before a prison unit reaches capacity, the fixed costs (such as
staffing and equipment) have been realized and should not increase as
the unit population increases. When additional inmates are added to the
unit after that point, the cost of adding each additional inmate only
includes a variable cost component.

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

If a newly constructed
unit was immediately
occupied to capacity, the
daily cost to provide
medical care to the
inmates there would
consist of both the fixed
and variable cost
components. However, at
units where occupancy
gradually increased, at
some point the fixed costs
would cease to be a factor
as the unit reached
capacity. That is because
the necessary equipment

PAGE 23

would have been purchased and the minimal staffing level achieved before all inmates
were added to the unit.
If the trend of the past five years continues, the incarcerated population at the
Department will keep growing and the need for new or expanded prison units will
remain. Excess capacity will result if all new beds are not filled as soon as they are
available. Tracking of the baseline costs of opening new or expanded units will enable
health care managers to calculate fixed and variable costs associated with prison
expansion. At the point where fixed costs do not increase but the unit has excess
capacity, the cost of providing health care to the unit’s additional inmates should be
only the variable cost component. Thus an opportunity may exist to reduce health care
costs as excess capacity is depleted at existing units.
Recommendation:

The Committee should annually evaluate the components and costs of
providing health care to the inmates. This information should be
provided to the Legislative Budget Board for use by the Legislature in
determining the appropriation for the managed health care strategy.
Before the capitation rate for the next biennium is set, allowable and
unallowable cost components of the health care appropriation should
be clearly defined.

Committee’s
Response:

The CMHCAC and its partners will continue to work closely with the
LBB and Legislative staff in providing information relating to the
components and costs of providing health care to the offender
population and establishing an appropriate capitation rate. TDCJ
concurs with the recommendation however, the university providers
disagree with the setting of allowable v. unallowable cost components
suggested by this recommendation because it significantly changes the
nature of the contracts. If the state wants to continue acquiring health
care through risk contracts then the concept of what is an
“allowable” or “unallowable” cost would not be applicable. Under
risk contracting the “at-risk” provider is liable for any and all costs
and is afforded the flexibility to allocate funds as needed to manage
their risk. The state has successfully been able to shift financial risk
to managed care organizations in a number of
instances—correctional health care, state employee health plans and
the evolving Medicaid Managed Care programs. Reverting to a
structure other than risk contacting for correctional health care will
be more costly to the state.

Auditor’s
Comment:

The university providers disagree with our recommendation that
allowable and unallowable cost components of the health care
appropriation should be clearly defined before the capitation rate is set
for the next biennium. Without analyzing prior health care cost
components or defining allowable and unallowable costs for managed
health care, it is difficult to assess the reasonableness of the capitation
rate.

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
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JANUARY 1998

JANUARY 1998

Recommendation:

To ensure a common financial reporting system for all medical
services provided, the Committee should establish financial reporting
requirements consistent with health care industry standards.
University providers should identify and report all expenditures of
correctional managed health care to the Committee, according to these
requirements, on a regular basis.

Committee’s
Response:

The CMHCAC partners concur and will establish a work group
comprised of financial officers from the partner agencies to establish
a common financial reporting system. The revised reporting system
would be in place by the start of the next fiscal year.

Recommendation:

UTMB and TTUHSC should develop a method to identify the costs of
providing indirect support services for Department managed care. An
appropriate charge back system should be developed to reimburse the
universities for the costs incurred in providing indirect support
services.

Committee’s
Response:

The university providers concur and have already taken action to
insure that appropriate indirect support services are charged to the
TDCJ managed care contracts.

Recommendation:

Proper allocation of expenditures and segregation of funding sources
for Department and non-Department managed care programs is
essential to maintain accountability for each medical school’s
programs. Both UTMB and TTUHSC should review present
allocation methods to ensure accuracy of the estimated workloads
driven by different programs. The medical schools should consider
use of a timekeeping system or conduct random moment time studies
for staff who perform activities for Department and other nonDepartment managed health care programs.

Committee’s
Response:

The university providers concur. Where allocation of costs and effort
are applicable, the university providers will utilize methodologies
similar to those used for federal grants and contracts.

Recommendation:

The Committee should identify the data elements needed to perform
an actuarial study on financial risk and should begin to collect this
data. After an appropriate baseline of information is established, an
analysis of the risk and required amount of reserves should be
performed.

Committee’s
Response:

The CMHCAC and the university providers concur and in
anticipation of this need, included language in the current university

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 25

contracts to select a mutually acceptable actuary to assist in this
process. The study will be completed by the time the next
appropriation request is to be submitted.
Recommendation:

The centralized pharmacy should continue its efforts to automate all
aspects of the drug dispensing process. Identifying the total cost of
reclaimed, reissued medicines should enable the managed health care
program to accurately calculate inmate pharmacy cost. Moreover, the
pharmacy will be able to accurately value its inventory when complete
costs are known.

Committee’s
Response:

The CMHCAC partners concur. Automation improvements are
scheduled for installation in January of 1998.

Recommendation:

The university providers should track the fixed costs associated with
establishing a health clinic in a new prison unit or modifying a current
unit to accommodate an increased population.

Committee’s
Response:

The CMHCAC partners concur.

A summary management letter from the Committee and detailed responses from the
Department, TTUHSC, and UTMB are included in the “Managements’ Responses”
section of this report, beginning on page 49.

Section 3: TRANSPORTATION AND SECURITY COSTS

Transportation and Security Costs Related to Health Care Are Not
Tracked
It is not possible to precisely track all related transportation and security costs incurred
when inmates are moved for medical reasons. Although transportation and security
costs are a component of the total cost of the Department’s health care program, these
costs have not been quantified; thus the total cost of delivering medical care to the
Department’s inmates is unknown. Under the terms of the contracts between the
Department and the two university providers, the Department is responsible for the
costs of transporting inmates for non-emergency medical reasons. The two university
providers are responsible for emergency medical transportation costs.
Inmate transportation is headquartered in Huntsville. The Department’s Classification
Division schedules and monitors movement of inmates, while the Transportation
Division is responsible for the actual transportation of inmates. In fiscal year 1996, a
total of 4.2 million miles were driven to transport inmates for general and medical
reasons. Inmates in outlying areas who are scheduled for medical transportation
generally ride regular “chain buses” along with inmates who are being moved for nonmedical reasons. Once inmates transported from outlying areas reach Huntsville, there

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

is a dedicated medical bus run from Huntsville to Hospital Galveston, the prison
hospital.
The Department estimates that approximately 55 percent of all regular chain bus
passengers are transported for medical reasons. The Department uses 89 separate
codes to detail the reasons why inmates on regular chain buses are being transported.
Although there are eight separate codes related to medical transports, some medical
transportation is coded under non-medical categories such as “en route.” The
Department’s Internal Audit Division has noted that efficiency of the transportation
system takes a “back seat” to effectiveness of medical and security concerns.
Although the Department collects data on security costs associated with transportation
runs, its analyses frequently do not capture overtime incurred by security staff;
therefore, the security costs related to transportation of inmates are understated.
Cost savings attributed to increased use of telemedicine consultations are not
verifiable with respect to transportation and security costs. The absence of one

or more medical passengers does not mean that the regularly scheduled bus, with fuel,
maintenance, and security costs, will not run to transport other inmate passengers.
Although Classification Code data and Department estimates indicate an overall
reduction in the total number of inmates transported on chain buses for medical
reasons, claims pertaining to cost avoidance attributed to the impact of telemedicine are
unsustained.
Efforts are being made to improve transportation and security efficiency. The

Medical Transportation Committee (Transportation Committee) is a standing
committee which includes members from the Committee, the Department, UTMB, and
TTUHSC. The Transportation Committee meeting minutes indicate that the group has
identified a number of strategies to improve the efficiency of transportation and
security. These include:

JANUARY 1998



Studying the possibility of coordinating patient intake/discharges with dedicated
medical bus runs. This could eliminate having buses empty on one leg of the
trip from Huntsville to Galveston.



Controlling/reducing security officer accumulation of overtime through better
coordination of scheduling.



Concentrating ambulatory chronic patients at the Stiles Unit to minimize the
need for transporting regularly to Galveston. The opening of the Texas City
Regional Medical Facility (RMF) is another example of redefining the mission
of units and concentrating categories of patients with special needs to minimize
transportation of inmates.



Using local referral options to reduce long distance medical transfers.

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 27



Increasing the use of telemedicine to reduce return to clinic appointments and
associated need for transportation.

Recommendation:

The Transportation Committee should continue to study and improve
operations with the objective of controlling and/or lowering the total
cost of inmate health care provision in a manner consistent with
maintenance of acceptable levels and quality of care.

Committee’s
Response:

The CMHCAC partners concur. The Transportation Committee was
established by the Committee to serve as an operating level work
group that could evaluate and weigh potential transportation
efficiencies against both security and medical considerations.

Recommendation:

The Department should improve controls over key data elements to
ensure the accuracy and completeness of information such as reasons
for inmate transfers and accumulation of overtime by security officers
on medically related duties. The Department should consider
application of operations research techniques to maximize the use of
available resources dedicated to transportation and security.

Committee’s
Response:

TDCJ concurs and will refer this issue to the joint transportation
committee. Like some aspects of the monitoring program,
consideration should be given to whether or not privately contracted
services could assist in such improvements.

A summary management letter from the Committee and detailed responses from the
Department, TTUHSC, and UTMB are included in the “Managements’ Responses”
section of this report, beginning on page 49.

Section 4: PERFORMANCE EVALUATION AND MONITORING

Correctional Managed Health Care Lacks a Comprehensive
Monitoring System
The Department’s correctional managed health care system does not have a
comprehensive monitoring system that clearly evaluates overall performance and holds
providers accountable for performance standards. As mentioned previously, the
monitoring roles of the Department, the Committee, and the university providers are
not clearly defined within the various contracts. Moreover, there are concerns about
data integrity and the ability of the various evaluation processes to provide meaningful
information to management for decision-making.

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Section 4-A:

Management Does Not Have a Formal Tracking and Reporting
System to Assist in Monitoring and Evaluating Health Care
Operations at the Prison Units
The present monitoring system is made up of separate evaluation processes that
monitor and/or evaluate some aspects of performance. These processes include:







Accreditation by the National Commission on Correctional Health Care
(NCCHC)
Operational Review
Quality Improvement/Quality Management Program (QI/QM)
Access to Care reports
Inmate Grievances and Patient Liaison Correspondence program
Peer Review

Each process gathers information; however, the processes do not interface or link with
each other to provide a comprehensive monitoring and evaluation system.
Furthermore, because the basis of several of these processes is self-monitoring, review
of operations by another party becomes even more necessary. The evaluation
processes are summarized below.
The NCCHC accreditation process involves on-site
surveys of the units every three years conducted
by NCCHC-appointed review teams and annual
self-reported verification by the Department of
continued compliance with the standards in the
interim years. To obtain and maintain
accreditation by the NCCHC, each unit must be
100 percent compliant with applicable “essential”
standards and at least 85 percent compliant with
applicable “important” standards. Essential
standards are those that relate to health, safety,
and welfare of prison inmates and the critical
components of a health care system. Important
standards represent acceptable practices for
health care providers.

NCCHC requires that corrective actions be
submitted for any deficiencies identified during
the on-site survey; however, no on-site followup visits to the units are conducted to verify the
corrective actions actually took place.

Achieving and maintaining accreditation by the
NCCHC for all of the Department’s health care
facilities is a requirement of the Ruiz final
settlement. (For more information on the Ruiz case,
please see the text box on page 9.) NCCHC
accreditation is also a performance requirement for
the units in the contracts between the Committee
and university providers. Currently, all Department
facilities are NCCHC accredited or, if the facility is
newly constructed, have submitted applications for
accreditation.

NCCHC standards serve as the common basis for most of the other monitoring
processes used by the Department, the Committee, and the university providers. The
Department’s Health Services Division Policy Manual, Operational Review audit
questions, and QI/QM indicators are partially based on NCCHC standards.

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
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PAGE 29

Our review, as well as a recent Department internal audit report, identified a
number of problems with the Operational Review process. These problems

include:


No criteria or performance standards exist to determine, quantitatively, when a
unit is assessed to be in compliance. Without this, no quantifiable conclusions
about compliance can be reached.

The Operational Review process was established by the
Department to ensure unit compliance with the Ruiz final
settlement and the Department policies and procedures. The
Operational Review instrument is divided into eight sections,
covering various medical disciplines such as medical,
administration, nursing, and dental services. The Department’s
Health Services Division conducts the Operational Review
audits to determine compliance with NCCHC standards and
the Department’s Health Services Division Policy Manual.
Operational Reviews are to be conducted at each unit at
least every two years. In addition, special audits may be
performed at units six months after opening, when a new
service provider takes over, or when significant deficiencies
are identified.



A threshold of acceptable
compliance and defined
measurable performance
standards has not been
established for the Operational
Review process. Reported
results do not identify the
number of units and/or
subcontracted health care
providers that are in
compliance. If Operational
Review results were compiled
in terms of meeting a set rate
of compliance, management
would have a better assessment
of provider performance.

Audit results are not monitored or measured in terms of NCCHC accreditation
requirements to assure management of compliance with NCCHC standards.
Although partially based on NCCHC standards and designed to prepare the unit
for NCCHC accreditation reviews, the Operational Review results are not
evaluated by NCCHC-established compliance rates for “essential” and
“important” NCCHC standards.



Compiling the results of individual unit Operational Review audits does not
provide a systemwide identification and assessment of trends or specific and
recurring areas of noncompliance.
In calendar year 1996, 33 UTMB and 11 TTUHSC medical units managed by
the university providers underwent the Operational Review audit process. If
the compliance rate were set at 80 percent or 90 percent, the results reported for
1996 would be as follows:

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Table 3
Operational Review Audits Summary of Compliance
1996*

UTMB

TTUHSC

All Units

Percentage of units with less than
80 percent compliance rate

18%

45%

25%

Percentage of units with less than
90 percent compliance rate

57%

100%

68%

*For the calendar year 1996, each medical record reviewed counted as one audit question to
determine compliance or noncompliance.
Source: Texas Department of Criminal Justice Health Services Division

Based on information reported by the Department, one fourth of these units did
not have at least an 80 percent compliance rate.


The Operational Review schedule was not based on a unit risk analysis or prior
performance.



Although the Department’s Health Services Division administers the
Operational Review process and must approve the units’ corrective action plans,
it lacks the authority to enforce the corrective action plans. If there is no
enforcement process to ensure corrective action, problems identified by the
Operational Review process could continue indefinitely.

An example of a problem which has not been successfully addressed through a
corrective action plan is the verification of the “Access to Care” reporting process. The
second most frequently missed question on the Operational Review audits for 1996
requires the audit team to verify the access to care numbers self-reported by the units
through their QI/QM process. In 48 of the 58 units audited, the Operational Review
team could not duplicate the previously reported access to care figures. (The 58 units
included the 44 units managed by the university providers as well as 14 other
Department units, which are either state jails or private prisons.) One unit, which was
reviewed three times over a 26-month period, repeatedly missed the access to care
verification. Although staff training on procedures was recommended and conducted
after each audit to correct the problem, the problem was not corrected during this
period.

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
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PAGE 31

NCCHC requires that a comprehensive quality
improvement program be in place for the
health clinics at the prison units. A quality
improvement plan ensures that care provided
meets established standards. In Department
prisons with an average daily population of
500 or more, a multi-disciplinary quality
improvement committee (made up of
university provider health care staff members
from various disciplines such as medicine,
nursing, mental health, dentistry, health
records, and pharmacy) monitors all major
aspects of health care. Examples include
admission screening and evaluation, sick call
services, chronic disease services, nursing
services, and pharmacy services. The
disciplines’ committees meet quarterly to
establish indicators, develop corrective action
plans based on monitoring findings, and assess
the effectiveness of corrective actions.



A QI/QM program is being maintained by each
unit; however, gaps exist in overall monitoring,
evaluations, and enforcement of the program. We

noted problems such as:


The current QI/QM system does not have a way to
identify systemwide problems. The results of the
QI/QM reports are not used to identify either
positive or negative trends.



QI/QM indicators are not routinely used to
address problem areas identified in Operational
Review audits or areas targeted for improvement
in corrective action plans. Some units continue to
report each year on indicators that have been at
100 percent compliant, instead of focusing on
other problem areas that could benefit from the
scrutiny.

Although the process requires units to monitor and report performance, there is
no enforcement of reporting requirements. The Department’s Office of
Professional Standards receives annual plans as well as monthly reports from all
prison units; however, it only administers the reporting process.
While these reports include compliance findings for clinical indicators and
corrective actions taken, the Department’s Health Services Division does not
verify that corrective actions took place. In fact, at the time of our review, a
number of units were delinquent in submitting their annual plans. The Office of
Professional Standards has no power to enforce submission of the annual plans
or any reports required of the units. Recently, the Health Services Division
Medical Director has attempted to notify units whose reports are delinquent.



The QI/QM program currently in place has had no significant changes since
before the implementation of managed care. Although both the prior and
current contracts between the Department and the Committee state that the
Committee is to ensure that the university providers develop and maintain an
ongoing self-monitoring plan, the Department’s Office of Professional
Standards has continued to monitor data submission for the QI/QM process,
three years after implementation of managed care.
Plans to revise the current QI/QM program have been initiated. A joint
Department, UTMB, and TTUHSC committee was formed in July 1995 to
revise the current policies and develop a new quality improvement program;
however, as of August 1997, the new program had not been implemented.
Implementation of the new quality improvement program is pending, awaiting
the hiring of the new Health Services Division Medical Director.

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Access to Care monitoring is a major component
of performance evaluation. Ensuring full access
to health care for all prisoners is one of the five
general orders in the Ruiz final settlement entered
into in December 1992. Furthermore, access to
medical care must be provided for any medical
condition, if the denial of medical care will result
in pain, suffering, deterioration, or degeneration.
The main tracking mechanism for Access to Care
is the self-monitoring by discipline through the
QI/QM process. Unit staff members monitor
access to care monthly through QI/QM indicators;
weekly access to care reporting is required for
new units or when compliance drops below 80
percent.

Our review of the Access to Care reporting
processes revealed problems such as inability
to verify timely access to care and lack of
standardized processes to record and track
sick call requests. Problems include:


The only copy of the inmate’s sick call
request is returned to the inmate. Without
this source document, one cannot have
complete assurance that the inmate’s sick call
request was processed within the required
24-hour period, thus providing timely access
to care.

Department policy requires inmates to request sick call by completing a single
copy form and placing it in one of many locked boxes located around inmate
cell housing areas. The sick call requests are collected, sorted daily by health
care staff, and entered into a sick call log. Health care staff members make
regular rounds in segregation units, allowing inmates on lock-down status to
voice their health needs daily. The sick call request form is returned to the
inmate with the disposition of his/her request noted. A copy of the initial sick
call form is not retained by the medical unit.


JANUARY 1998

Lack of standardized processes for recording dental sick call requests prevents
verification of timely access to care. Auditors could not verify specific dental
access to care indicators at 9 of 17 medical units reviewed during the audit.
Some of the inconsistencies noted were:
-

Sorting of sick call requests varied among the units. At 11 of the 17
medical units reviewed, sick call requests were not initially logged into a
master sick call log. Sick call requests were first sorted into three
disciplines—medical, dental, or mental health, then requests were placed
in boxes for the various disciplines to retrieve and log into their individual
sick call registers.

-

Dental sick call register forms varied among the units. The time of the
sick call request entry to the register was not clearly evident on all dental
sick call registers. Some dental sick call registers had a column for “date
appointment made” but did not have a column to note the date the sick call
request was received, thus preventing a reviewer from determining
whether the appointment was made within the required time period (48
hours or 72 hours on a weekend).

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 33



A process used to screen inmates for elective dental procedures was recently
ruled unacceptable. In a recent civil action the United States Eastern District
Court entered an order against a UTMB correctional managed health care
dentist. The court found the dentist was “deliberately indifferent” to the needs
of a Department offender and ordered the dentist to pay $1,000 in damages.
The court also stated that the “prison system’s adherence to the plaque index is
unacceptable to the extent that it has the effect of denying dental care to inmates
with serious dental problems.” Dentists at the prison units use the plaque test as
a means to compel inmates to use good oral hygiene. As a general rule, inmates
must pass the test in order to receive dental care, although exceptions are
permitted in serious situations.



Discussions with health care staff members revealed that it could not be readily
determined whether dental and mental health sick call requests were promptly
being retrieved and logged each day by the various disciplines.



Operational Review audits performed in 1996 often could not verify the Access
to Care results reported by the QI/QM process. Of the 58 medical units
reviewed in 1996, Operational Review staff could not independently verify
QI/QM Access to Care indicators in 48 of the units, primarily because medical
staff were not following established criteria for data collection on the indicators.
In an effort to remedy this widespread problem, written instructions on
conducting Access to Care audits were issued to all units by the Medical
Director of the Department’s Health Services Division; however, the
Department cannot enforce any corrective action.

Medically related information and feedback received from the grievance and
liaison correspondence processes are not effectively managed,
communicated, or evaluated:


Results from the data collected on medically related inmate grievances and the
liaison correspondence program are not used consistently by the health care
managers to alert them to potential problems or identify trends, even when the
number of grievances exceeds the system average. At the unit level, the
grievance and liaison correspondence processes are used as a means to answer
individual complaints.
The escalating numbers of grievances and liaison correspondences concerning a
specific unit do not alone trigger a special inquiry. For example, in the case
mentioned below, the sizeable number of unit complaints over a period of time

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

The grievance process allows inmates to file a
written complaint about any matter, such as
classification, facility operations, or medical. The
grievances are collected, recorded, and
investigated at the prison unit level, with final
disposition determined by the unit’s warden.
If the inmate is not satisfied with the response
given at the unit level or wants to pursue the issue,
the inmate can file a Step II grievance. The Step II
grievances are also collected at the unit level,
and then forwarded to a Regional Grievance
Coordinator to be further investigated, with final
disposition determined by the Regional Director.

eventually prompted a review of the
correspondence content by staff members of the
Department’s Health Services Division, not the
university provider. Review of the systemwide
liaison correspondence and grievance reports
from this prison health unit in fiscal years 1995
and 1996 revealed:

If the inmate is not satisfied with the response
given at the regional level, the inmate can file a
Step III grievance. The Step III grievances are
collected at the unit level, and then forwarded to
the Department’s Programs and Services Division
to be further investigated. However, medicallyrelated Step III grievances would be forwarded by
the Department’s Programs and Services Division
to the Department’s Office of Professional
Standards, where they are investigated.
Medically-related grievances make up about 10
percent of the total grievances filed.
On September 1, 1996, the formal grievance
process was changed from a three-step to a twostep method, basically eliminating the regional
level review. However, during fiscal year 1997,
there were still some units generating grievances
under the three-step method. As a result, the Step
II grievances, processed under the former
method, by-passed the regional level review and
were forwarded to the Department’s Programs
and Services Division to be reviewed.
Liaison correspondences are generally complaints
or questions that can be initiated by anyone, such
as an inmate, family or friend of the inmate, or
correctional staff. The liaison correspondences
are sent directly to the Department’s Office of
Professional Standards, where they are recorded,
reviewed, and investigated.



-

The unit had the greatest number of
combined liaison correspondences
and grievances systemwide for both
fiscal years 1995 and 1996.

-

The number of combined healthrelated liaison correspondences and
grievances at that unit nearly
doubled from 1995 to 1996. Totals
increased from 224.30 items per
1,000 inmates in 1995 to 438.07
items per 1,000 inmates in 1996.

-

In 1996, the unit’s 354.4 liaison
correspondences per 1,000 inmates
and 83.6 grievances per 1,000
inmates were more than four times
the systemwide average. The 1996
systemwide average was 84.3
liaison correspondences per 1,000
inmates and 20.6 grievances per
1,000 inmates.

Coding of grievances and liaison
correspondence by complaint area does
not provide sufficient detail. The medical
grievances and liaison correspondences
are manually coded into categories and
subcategories; detailed counts according
to subcategories cannot be retrieved from
the database and must be tabulated
manually. The medical grievances and
liaison correspondences are coded into 31
major categories and also subcategorized
within each major category.

Management reports only provide the total number of grievances by broad
category; thus reports do not provide sufficient detail to be meaningful for
management decision-making. Managers are expected to request special unit

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 35

reports containing the subcategory detail not provided by the broad category
reports.
For example, the category “Access to Care Issues” contains 13 subcategories,
which include among others “delays in being seen,” “specialist issues,”
“administrative segregation issues,” and “waiting area issues.” The category
“Medication Issues” includes 17 subcategories including “denial of
medication,” “medication not effective,” “allergic reactions”, and “pill
line/window issues.” Unless a manual count is taken on every grievance and
liaison correspondence within a category, the subcategory totals are not
reported, thereby depriving managers of a valuable source of feedback about
operations.


Logging of grievances is performed manually at all levels of the process. Work
performed at the units to categorize and encode the grievances is duplicated at
the agency level because the information systems at the prison units and at
Department headquarters in Huntsville are independent of one another. The
grievances are first collected and logged in at the units; the units then send their
grievances and monthly tallies to the Department’s Programs and Services
Division to be sorted; the medically-related ones are then forwarded to
Professional Standards within the Health Services Division. Professional
Standards staff members categorize the medical grievances and re-enter them
into their logging system.



The grievance and liaison correspondence information system is not capable of
performing automated queries; therefore, reports must be developed manually.
As a result, management cannot easily manipulate grievance and liaison
correspondence data to identify trends or poor performance.
All grievance and liaison correspondence information is entered into the
paradox database. The paradox database is used to generate a printed log of
grievances and liaison correspondences; then queries are manually calculated
from the printed log and entered into the paradox database to generate a printed
report.
Management resources are not being used efficiently when logging and tracking
processes are duplicated at more than one level of the organization. Various
levels of correctional managed health care management at both UTMB and
TTUHSC have developed their own independent tracking and reporting systems
in order to produce management reports, since many managers are neither
receiving nor are aware of systemwide reports generated by the Department.

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Figure 2

As shown in Figure 2, the total
number of medical grievances
and liaison correspondence
being logged and tracked has
increased over the last 6 years.

Total Step III Medical Grievances and Liaison Correspondence
Per 1,000 Offenders

84.3

100
67.61

80



64.22

52.45
45.53

60

34.2

40

26.47

25.32
17.93

20

16.33

17.54

20.59

0
1991

1992

1993

1994

1995

1996

No. of Medical Liason Correspondence Per 1,000 Offenders
No. of medical Grievance Per 1,000 Offenders

Distribution of systemwide
medical grievance and liaison
correspondence reports is very
limited. The distribution of
systemwide totals of medical
grievance and liaison
correspondence reports is
limited to the Department’s
Health Services Division and
correctional health care upper
management, such as:

Source: The Department’s Office of Professional Standards within the Health
Services Division

-

Correctional Managed Health Care Advisory Committee Executive
Director
TTUHSC Correctional Health Care Medical Director
UTMB Managed Care Medical Director
UTMB Managed Care Associate Medical Director

Department management reported that the grievance and liaison correspondence
processes are in the process of being further automated. The estimated completion date
is January 1998.
Cases are referred to university provider peer review
committees from various sources (including the Department’s
Health Services Division) to determine if appropriate care was
provided by individual health care staff members. Both UTMB
and TTUHSC have peer review for various disciplines
(physicians, dental, nursing, and psychology) to review all
identified cases, incidents, or practices that may not meet the
standards of acceptable medical or dental care in a
correctional setting. The review committees recommend
corrective action and follow the progress of the corrective
action implemented.

Medical staff members from the
Department’s Health Services
Division do not have voting
privileges in the formal peer
review process. Prior to 1997, the

Department’s medical staff did not
participate in the university providers’
peer review meetings. With the
adoption of the new contract between
the Department and the Committee, a
Department senior physician will be
appointed to each university peer
review committee, but only as an ad hoc member. The Department’s representative on
the Committee may request that corrective action be taken against the physician in
question, including removal from treating the Department’s patients pending the
provider’s peer review process. However, the Department does not determine the

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outcome; any dispute over a practitioner will be referred to the Committee and the
decision of the Committee will be binding.

Section 4-B:

No Standardized System Exists to Ensure Monitoring Is Performed
Consistently Across All Units
Managers at various levels of the organization complained that they cannot easily
integrate the multiple reports they receive or use them to plan for improving
performance. Some system reports were either unknown to managers or were not used;
many managers had developed their own tracking mechanisms or evaluation processes.
The main responsibility for monitoring the units, including subcontracted units, is
concentrated at the university provider regional management level by discipline.
Managers use QI/QM reports, Operational Review results, unit tallies of grievances,
cost reports, information gathered from on-site visits at the units, and individually
developed systems.
The university providers’ subcontractors are not being consistently monitored,
given the weaknesses that exist in the current information and monitoring
systems. Where responsibility for providing health care has been subcontracted to

local providers, regional management teams are responsible for monitoring the
subcontractors. Just as monitoring and evaluation processes vary by region,
subcontractor monitoring suffers from lack of integrated evaluation systems and
inconsistent processes.
In fiscal year 1996, UTMB began a process to integrate evaluation systems by
requiring that Regional Nursing Director Site Audit/Evaluations be performed for
the nursing discipline. The goal is to visit each unit, interview staff, review unit

goals, and review results of all performance evaluation processes: NCCHC
accreditation results, Access to Care statistics, QI/QM indicator reports, operation
review audit results, staffing patterns, and pharmacy inspection review results.
However, the results of these reviews remain at the regional level. A formal process to
aggregate results and communicate them to UTMB correction managed care
management would provide meaningful feedback about operations and performance.
Other disciplines in the UTMB sector are beginning to formulate a similar program.
Whereas TTUHSC regional management has monitoring systems in place, its process
does not formally integrate information from all evaluation systems.

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Section 4-C:

A Closer Look at One Prison Unit’s Performance Evaluation System
Report Illustrates the System’s Monitoring Problems
Taken collectively, the results of the monitoring processes do not allow for an accurate
overall evaluation of the prison unit. Some of the processes may indicate satisfactory
performance; however, in at least one instance, a closer look revealed serious
problems.
A special audit was conducted in September 1996 at the prison health unit
mentioned in Section 4-A with the large number of medical grievances and
liaison correspondences. The audit was initiated by the Department’s Health

Services Division and prompted by the extreme nature of numerous liaison
correspondences from other inmates, family members of inmates, and medical staff
members. These correspondences alleged lack of adequate medical care and abuse and
neglect of several chronically ill inmates, who all died before the special audit.
Findings from the special audit included:


Sick call requests were not being picked up daily and/or not entered onto the
Sick Call Log on a daily basis.



Over 50 percent of the offenders referred to a health care provider were not seen
within seven days from receipt of the sick call request, a requirement of Access
to Care.



A unit mortality review summary in October 1996 found the level of care in 67
percent (16 out of 24) of deaths at the unit was improper.



The mortality review summary indicated 54 percent (13 out of 24) of the cases
had been referred to physician peer review and 42 percent (10 out of 24) had
been referred to nursing peer review.



Early in fiscal year 1996, it was reported that grievances were not leaving the
unit to be submitted to the Office of Professional Standards within the
Department’s Health Services Division.

Routine monitoring and evaluation processes had not detected any of the
problems found by the special audit. The various performance reports produced

before the special audit showed:

JANUARY 1998



The unit was NCCHC accredited.



The Operational Review audit in March 1996 showed 90 percent overall
compliance rate.



QI/QM reports indicated few problems.

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Warning signs for this unit existed but went undetected. Grievance reports

indicated that the unit had the highest number of grievances and liaison
correspondences of any unit in both fiscal years 1995 and 1996. In 1996, the unit’s
liaison correspondences of 354.4 per 1,000 inmates and grievances of 83.6 per 1,000
inmates were more than four times the systemwide average. These totals were reported
at least quarterly and were distributed to the Department’s Health Services Division,
UTMB managed care upper management, and the Committee. Two of the three areas
receiving the most grievances and liaison correspondences for 1995 and 1996 were
“treatment issues” and “complaints against staff.”
The corrective action plan submitted by management as a result of the special
audit did not address all the findings and made no reference to using any of
the monitoring processes available to address the problem areas. Also,

documented evidence of corrective actions taken since the audit was not included. The
corrective action plan was not approved by the Department’s Health Services Division.
As of August 1997, no new corrective action plan had been submitted nor had a
follow-up audit been conducted.
Managers must closely track performance information such as volume and content of
grievances and correspondences and QI/QM indicators, which when used properly,
will alert them to problem areas or trends. A streamlined process that integrates the
input from the various information/monitoring systems would allow managers to more
easily evaluate operations, identify problems, and hold providers accountable for
performance standards.
Recommendation:

Define monitoring roles and responsibilities of the Department’s
Health Services Division, the Committee, and university providers.
Whereas self-monitoring is an important basis of a good monitoring
process, an independent review by a party with enforcement authority
would strengthen the process.

Committee’s
Response:

The CMHCAC partners concur that better definition of roles and
responsibilities relating to monitoring would be of benefit to all the
parties. Accordingly, the CMHCAC will form a joint work group to
examine the potential options available, including the possibility of
contracting for these services. The work group would be charged
with reengineering the monitoring processes to insure they provide
meaningful information for management and are consistent with
health care industry standards.

Recommendation:

A comprehensive, standardized monitoring system should be
established that integrates the various information/monitoring
processes already in place. A formal tracking system should be
established to assist in evaluating providers against defined
measurable performance standards.

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JANUARY 1998

Committee’s
Response:

The CMHCAC partners concur that while there are many monitoring
and reporting activities currently taking place, there is a need for
better integration of the data resulting from these efforts. As noted
above, the CMHCAC will form a joint work group to initiate a
reengineering of the monitoring processes to insure they yield
meaningful data consistent with health care industry standards. As a
part of this planning effort, the work group will further integrate
measures of performance with the information system development
now underway.

Recommendation:

To promote consistent and effective monitoring, results and feedback
from each of the monitoring processes should be continuously shared
among appropriate management and staff at the Department’s Health
Services Division, the Committee, the university providers, the
regional offices, and the medical units.

Committee’s
Response:

The CMHCAC partners concur. As a part of reengineering the
monitoring process, a review of effective means for communicating,
disseminating and following-up on results will be conducted.

Recommendation:

Tie the Operational Review compliance threshold more closely to
NCCHC standards compliance for accreditation of units.

Committee’s
Response:

The CMHCAC partners concur that NCCHC accreditation should
serve as the principal guidance for the monitoring efforts. Such
changes will be considered as part of the monitoring process
reengineering effort.

Recommendation:

Use a multiple copy sick call request form so that a copy of the
inmate’s original sick call request can be maintained in the medical
record to verify timeliness of access to care.

Committee’s
Response:

The CMHCAC partners concur in principle with the need to insure the
timeliness of access to care, but offer an alternate solution to using a
multiple copy sick call request form. The electronic medical record
and electronic clinical management systems currently being reviewed
and implemented will provide a means to verify access to care data
without requiring another copy of the sick call request form be
produced and maintained.

Recommendation:

Consider standardizing the logging process for sick call requests to
ensure that the medical units collect consistent access to care data
elements.

Committee’s
Response:

The CMHCAC partners concur in principle with the need to insure the
consistency of access to care, but offer an alternate solution to using a
manual logging system. The electronic medical record and electronic

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clinical management systems currently being reviewed and
implemented will provide a consist means to collect access to care
data.
Recommendation:

Committee’s
Response:

Health Services Division management should continue its efforts to
enhance and automate the grievance and liaison processes. As
management evaluates its options with automating the grievance and
liaison correspondence processes, management should identify critical
success factors:


Consider streamlining the duplicative processes.



Include management at all levels in identifying types of reports
needed for evaluation and expand distribution of reports.



Consider expanding grievance/liaison correspondence coding
list and querying function to meet managements needs at all
levels in order to identify systemwide and unit-specific trends
and red flags.



Include controls to ensure the accuracy of performance measure
data.

The CMHCAC partners concur. An action plan for automation
improvements is currently underway. Additional enhancements will
be considered as part of the monitoring process reengineering effort.

A summary management letter from the Committee and detailed responses from the
Department, TTUHSC, and UTMB are included in the “Managements’ Responses”
section of this report, beginning on page 49.

Section 5: FIXED ASSETS

The Department Is Not Notified About Capital Assets Purchased for Its
Inmates’ Health Care by the University Providers
Although purchased with funds appropriated for the Department’s managed health care
program, the existing inventory system does not enable the Department to track these
capital assets. If the current partnership should fail, the Department could not easily
identify capital assets purchased with its managed health care dollars. Managed health
care assets purchased by the university providers since September 1994 and prior to the
end of fiscal year 1997 totaled over $3,500,000. Most of these assets, approximately
97 percent, were purchased by UTMB.

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The current contract between the Department and the Committee does not
address the disposition of future asset purchases. The contract between the

Department and the Committee provides for the return, to the Department, of the assets
originally transferred to UTMB and TTUHSC if the contract with a provider is
canceled. However, this provision is not extended to assets purchased by the university
providers with the Department’s managed health care funds.
The contract between the Committee and the Department does not restrict the
use of capital assets purchased with the Department’s managed care funds.

However, it does include a provision restricting the use of the fixed assets transferred
by the Department to the university providers to State entities or individuals.
Potentially, this omission would allow the university providers to use the assets they
purchase with Department funds on patient populations other than those within their
state contracts. The contract allows the transferred assets to be moved “as needed
among Department facilities” but cannot be removed from Department premises. The
university providers are required to “notify the Department’s Health Services of the
nature of use of such assets for the benefit of any state entity or individual other than
Department.”
The current contract between the Department and the Committee does not
address the cost allocation of capital assets if the asset benefits a health care
program other than the Department. This is relevant now that the university

providers have expanded their managed care initiatives to include entities such as
inmates of the Beaumont Federal Prison, youth at the Texas Youth Commission, and
others. It is possible for the university providers to treat patients in the correctional
health care beds in Galveston or Lubbock. If multi-program usage of capital assets is
not tracked, capital asset expenses for the Department’s managed health care may be
overstated. Furthermore, at replacement time, the provider may not be able to
equitably allocate the replacement cost of the asset to the programs it benefited.
Capital assets used in the prison health clinics prior to managed care have been
transferred to TTUHSC and UTMB and properly recorded on the State Property
Accounting system. Newly acquired capital assets, which are for use in the prison
health clinics and hospitals, have been properly labeled with university identification
tags. The providers can account for these assets through identifying codes specific to
each prison health unit.
Recommendation:

JANUARY 1998

The Department and the Committee should consider a contract
amendment which ensures an ongoing inventory of all capital assets
purchased with Department’s managed health care funds. This
amendment should also address:


The disposition of the Department’s managed health care
capital assets if a provider contract is canceled.



The cost allocation of capital assets which benefit programs
other than the Department’s.

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Committee’s
Response:

The use of capital assets purchased with Department’s managed
health care funds.

TDCJ concurs, however the university providers disagree with this
recommendation. The providers have a risk contract with the
CMHCAC and receive no funding designated for capital asset
acquisition. An amendment such as recommended would change the
character of the contract considerably. As an alternative to the
recommendation, the university providers can provide Committee and
TDCJ with listings of any university assets located at TDCJ facilities.

A summary management letter from the Committee and detailed responses from the
Department, TTUHSC, and UTMB are included in the “Managements’ Responses”
section of this report, beginning on page 49.

Section 6: CREDENTIALING

Credentialing Processes for Practitioners Need to Be Improved
Overall, the existing credentialing processes for both UTMB and TTUHSC are largely
decentralized and the lines of accountability are not clearly defined. Management is
over-reliant on self-reporting from medical staff members for timely reporting of
discrepancies in their licensure status. Further, management relies heavily on licensing
and governing boards to thoroughly review credentials of medical professionals and to
regulate those with board restrictions, while not being completely aware of the
licensing and governing boards’ limitations. Improvements in the credentialing
process should give assurance that qualified individuals are providing consistent
quality care to Department inmates in compliance with appropriate standards.
Discussions with management and staff within the credentialing processes for
both UTMB and TTUHSC revealed discrepancies in accountability over licensure
verification and monitoring. The existing credentialing processes for UTMB and

TTUHSC are largely decentralized. In addition, the credentialing procedures have not
been formalized or completely documented. Confusion in interpreting the
credentialing processes and determining the lines of accountability has been
compounded by staff turnover and reassignment of duties. Because some staff
members incorrectly assumed that others were verifying credentials, gaps remain in the
credentialing processes of both providers.
Both university providers omitted a number of key steps in their credentialing
processes. These steps include:




Checking the practitioner’s references
Verifying the practitioner’s graduation from the appropriate professional school
Verifying completion of a residency program, if applicable

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Additionally, with the exception of the nursing disciplines at the university providers,
none of the other disciplines reviewed used a checklist in the applicant’s file to track
verification of credentials. Without proper screening of complete information about
each applicant, neither provider can be assured that only qualified candidates are being
hired.
Management relies on the practitioners to self-report changes in their licensure
status. On at least three occasions UTMB supervising managers told auditors they

were not aware of a practitioner’s board restrictions until notification was received
through the newspaper or another health care employee. The Texas State Board of
Medical Examiners does publish a quarterly statement which includes those physicians
who have recently been issued board restrictions. However, supervising managers
have not always carefully tracked these reports.
Management relies on accreditation processes and licensing boards to
thoroughly review credentials of medical professionals and to regulate those
with board restrictions. For example, one process relied upon by UTMB managers,

the NCCHC accreditation process, does not thoroughly review credentials of
practitioners. Unit and regional managers in both sectors told auditors that the
NCCHC performs a thorough review of credentials when accrediting a correctional
medical facility. This is not true. The NCCHC accreditation review of credentials
merely consists of obtaining a list of all medical staff members and ensuring a current
license is on hand for those staff members listed. NCCHC investigators do not call any
of the licensing boards to determine if there are any licensure discrepancies.
Management at both university providers rely on the state licensing boards to monitor
practitioners with board restrictions. Unless directed by the Texas State Board of
Medical Examiners, managers do not create additional or specific monitoring
procedures as a result of the board restrictions. Currently within the UTMB sector
there are six physicians and two nurses with board restrictions and one nurse in the
Texas Peer Assistance Program for Nurses. Within the TTUHSC sector, there are two
physicians with board restrictions. TTUHSC management stated it was not aware of
any nurses within its system who have board restrictions or are in the Texas Peer
Assistance Program for Nurses.
The university providers rely on their subcontractors to verify credentials of staff
who provide services to Department inmates. TTUHSC subcontracts a majority

of its health care services to local practitioners and hospitals. UTMB employs most of
its health care providers directly, although it does subcontract for some services. The
current contracts between the university providers and their subcontractors do not
require the subcontractor to immediately notify the university providers if there are
licensure discrepancies; therefore, neither university provider is aware of any licensure
discrepancies with subcontracted medical staff.
UTMB’s and TTUHSC’s managements rely on Medicare certification and the Joint
Commission on Accreditation of Health Care Organizations’ (JCAHO) accreditation of
the free world hospitals (subcontractors) to perform a verification of the medical staff

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members’ credentials for those staff members who are subcontracted. (Free world
hospitals are local, non-prison hospitals that contract with the university providers.)
And management further assumes any discrepancies noted during the certification and
accreditation processes would be duly noted and taken care of within hospital
management. However, discussions with the Medicare certification and JCAHO
accreditation staff members indicated that these expectations are false.
UTMB has taken steps toward standardizing and centralizing the credentialing
processes for correctional health care staff. In July 1997, UTMB awarded a

contract to a vendor who will verify and monitor credentials of physicians, mid-level
practitioners (physician assistants and advanced nurse practitioners), and dentists.
Registered nurses and licensed vocational nurses are not included in this contract.

Recommendation:

Management should formalize the credentialing process to ensure
roles and accountability are clearly defined. Important steps in
establishing a formalized credentialing process should include, among
others:


Clearly defining credentialing staff members’ roles and lines of
accountability



Documenting policies and procedures and effectively
communicating them to staff



Including a checklist in all applicant files, documenting the
credentials to be verified, the date checked, and by whom



Expanding the list of credentials to be verified to include:
-

Checking applicant references to inquire about past
performance

-

Verifying the practitioner’s graduation from the
appropriate professional school

-

Verify completion of a residency program, if applicable

Committee’s
Response:

The CMHCAC partners concur. Both university providers have
initiated action to strengthen the credentialing processes.

Recommendation:

Management should enhance monitoring controls over credentials to
ensure awareness of any licensure discrepancies. These controls
should include:


Formalized and documented policies and procedures for
monitoring credentials

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Committee’s
Response:



Monitoring tools for supervising management to use when
reviewing medical professionals with licensure discrepancies



Periodic review of evidence that subcontractors verified
credentials of the practitioners providing services to
Department inmates

The CMHCAC partners concur. Both university providers have
initiated action to strengthen the credentialing processes.

Recommendations: Consider requiring the subcontractors to immediately notify the
university providers in writing of any licensure discrepancies of the
staff who provide services to Department inmates.
Committee’s
Response:

The CMHCAC partners concur that requiring notification of any
license restrictions is appropriate.

A summary management letter from the Committee and detailed responses from the
Department, TTUHSC, and UTMB are included in the “Managements’ Responses”
section of this report, beginning on page 49.

JANUARY 1998

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This page intentionally left blank.

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Managements’ Responses

CORRECTIONAL MANAGED
HEALTH CARE ADVISORY
COMMITTEE
David R. Smith, M.D.
Chairman

December 10, 1997
Lawrence F. Alwin, CPA
State Auditor
Two Commodore Plaza
206 East Ninth Street, Suite 1900
Austin, Texas 78701
Re: SAO Report on the Correctional Health Care program
Dear Mr. Alwin:
Thank you for the opportunity to provide this consolidated management response
to the issues raised in your recent review of the correctional health care program. As
requested by your office, this response consolidates the responses received from the Texas
Department of Criminal Justice, the University of Texas Medical Branch at Galveston and
the Texas Tech University Health Sciences Center.
Before commenting specifically on each of the recommendations, we believe it
important to note that the review contains some very positive findings that speak well of
the CMHCAC partnership. While not highlighted in detail within the report, the
successes and efficiencies acknowledged by the SAO and their clinical consultant clearly
indicate that Texas offenders are being provided increased access to a higher quality
health care at a lower cost than by pre-managed care practices.
Eight of the nine clinical categories examined by the indicated a positive increase
in the mean level of compliance under the managed care program. Access to care shows a
27.7% improvement. Chronic care compliance increased over 158% and clinical
encounter compliance improved 35.7%. Only the compliance rate for intrasystem
transfers showed a slight decline, although still demonstrating a compliance rate of 93.8%.
This indicator may be directly related to the rapid pace of prison expansion and the
increased movement of offenders as a result of that expansion during the timeframe under
review by the SAO. A further examination of the individual performance indicators in
each of the categories finds that 22 clinical indicators showed statistically significant
improvements which averaged 85.4%.

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Lawrence F. Alwin
December 10, 1997
Page 2
In terms of cost efficiencies, the program has clearly exceeded expectations.
Costs per offender have declined from $5.99 per offender per day in FY 1993 prior to
implementation of this initiative to $5.23 per offender in FY 1997, a 12.7% decrease
(without consideration of the impact of inflation). In an almost unprecedented move, the
university providers returned funding they had earned under the arrangements when their
efficiency efforts produced faster results than had been anticipated. Overall cost savings
resulting from the program are projected to exceed $125 million in the first five years.
These savings are a direct result of the innovations and diligent efforts of the university
providers to reduce pharmacy costs, better manage utilization of resources, improve
staffing efficiencies, provide more health care onsite, negotiate competitive rates for
specialty and hospital services, and expand the use of technologies such as telemedicine.
We also believe that the national recognition of the success of this program should
not go unmentioned. Recognized both by the National Managed Health Care Congress
and by the National Commission on Correctional Health Care, the program has set a new
standard for correctional health care across the nation. The involvement of university
medical providers in prison health care is being emulated in a number of states including
Connecticut, Georgia, Florida, and Mississippi.
Clearly by redefining traditional roles, the correctional health care partnership
established by the enactment of SB 378 during the 73rd Legislative Session has
successfully accomplished its goals of increasing access, improving quality and managing
costs. At the same time, the partners realize that, as with any program as complex as the
correctional health care delivery system, refinements and improvements can and should be
made. Towards that end we appreciate the efforts of the State Auditor’s Office in
identifying areas for improvement.
Once again, we appreciate the opportunity to respond to this review. We are
convinced that the successes and efficiencies achieved by the correctional health care
program speak very highly of the professional efforts and dedication of the staff involved
in the delivery of medical care. As we continue to refine the system, the state can expect
this same dedicated and professional effort as these recommendations are considered.
Sincerely,

David R. Smith, M.D.
President, TTUHSC and Chairman
Correctional Managed Health
Care Advisory Committee

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Recommendations: (page 9 of Draft)
The Department is encouraged to pay its Health Services Division physicians through its own
payroll system.
TDCJ Response: Concur
The Department is encouraged to continue its efforts to hire an Independent Health Services
Division Medical Director, who is independent of the contracted health care providers.
TDCJ Response: Concur, action plan in process
Health Services Division should secure sufficient staff to perform all aspects of the Operation
Review audits, eliminating reliance on staff from the university providers to assist in the audits.
TDCJ Response: Concur, action plan in process
Consider an amendment to the current contracts between TDCJ and the CMHCAC and the
CMHCAC and the university providers which enables the Department to hold the university
providers accountable for monitoring their subcontractors' performance.
TDCJ Response: Concur, Proposed addendum submitted to CMHCAC by the Department on 829-97. Agreement will be incorporated into the next biennium contract.
In all applicable subcontracts, include by reference any relevant state licensing or health
regulations for the services being contracted.
TDCJ Response: Concur
Roles and responsibilities of all parties should be clearly defined and specifically stated in the
contracts.
TDCJ Response: Concur
Information relating to potential problems as well as any action affecting managed health care
must be shared with all parties within the organization. This includes TDCJ executive
management, the TDCJ Health Services Division management, the CMHCAC, the university
providers, their subcontractors, and unit and regional management.
TDCJ Response: Concur
TDCJ should consider adding staff who will be responsible for monitoring all operational and
financial aspects of the contract between TDCJ and the CMHCAC. This staff would also oversee

`
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the monitoring of the providers by the CMHCAC, and have the authority to review all financial
and operational records related to the provision of health care to TDCJ inmates.
TDCJ Response: Concur; action plan in process for operational monitoring and TDCJ’s
Financial Services Division/Contract Section will monitor the financial aspects of the contract;
action plan is being developed.
Recommendations: (page 18 of Draft)
Before the capitation rate for the next biennium is set, allowable and unallowable cost components
of the health care appropriation should be clearly defined by the Legislature.
TDCJ Response: Concur
To ensure a common financial reporting system for all medical services provided, the CMHCAC
should establish financial reporting requirements consistent with health care industry standards.
University providers should identify and report all expenditures of correctional managed health
care to the CMHCAC, according to these requirements, on a regular basis.
TDCJ Response: Concur
UTMB and TTUHSC should develop a method to identify the costs of providing indirect support
services for TDCJ managed care. An appropriate charge back system should be developed to
reimburse the universities for the costs incurred in providing indirect support services.
TDCJ Response: Concur
Proper allocation of expenditures and segregation of funding sources for TDCJ and non-TDCJ
managed care programs is essential to maintain accountability for each medical school's programs.
Both UTMB and TTUHSC should review present allocation methods to ensure accuracy of the
estimated workloads driven by different programs. The medical schools should consider use of a
timekeeping system or conduct random moment time studies for staff who perform activities for
TDCJ and other non-TDCJ managed health care programs.
TDCJ Response: Concur
UTMB and TTUHSC should identify the data elements needed to perform an actuarial study on
financial risk and should begin to collect this data. After an appropriate baseline of information is
established, an analysis of the risk and required amount of reserves should be performed.
TDCJ Response: Concur
The centralized pharmacy should continue its efforts to automate all aspects of the drug dispensing
process. Identify the total cost of reclaimed, re-issued medicines should enable the managed

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health care program to accurately calculate inmate pharmacy cost. Moreover, the pharmacy will be
able to accurately value its inventory when complete costs are known.
TDCJ Response: Concur
The university providers should track the fixed costs associated with establishing a health clinic at
a new prison unit or modifying a current unit to accommodate an increased population.
TDCJ Response: Concur
The CMHCAC should annually evaluate the components and costs of providing health care to the
inmates. This information should be provided to the Legislative Budget Board for use by the
Legislature in determining the appropriation for the managed health care strategy.
TDCJ Response: Concur
Recommendations: (page 21 of Draft)
The Transportation Committee should continue to study and improve operations with the objective
of controlling and/or lowering the total cost of inmate health care provision in a manner consistent
with maintenance of acceptable levels and quality of care.
TDCJ Response: Concur; action plan in process
TDCJ should improve controls over key data elements to ensure the accuracy and completeness of
information such as reasons for inmate transfers and accumulation of overtime by security officers
on medically related duties. TDCJ should consider application of operations research techniques
to maximize utilization of available resources dedicated to transportation and security.
TDCJ Response: Concur. There is joint committee of' TDCJ and CMHCAC staff which meets at
least quarterly to discuss these issues and make recommendations. This issue will be referred to
that committee by TDCJ.
Recommendations: (page 35 of Draft)
Define monitoring roles and responsibilities of TDCJ’s Health Services Division, CMHCAC, and
university providers. Whereas self-monitoring is an important basis of a good monitoring process,
an independent review by a party with enforcement authority would strengthen the process.
TDCJ Response: Concur. This issue was addressed in TDCJ’s Internal Audit Report of
CMHCAC and Health Services Operational Review Audit Tool. Action plans are in process.
A comprehensive, standardized monitoring system should be established that integrates the various
information/monitoring processes already in place. A formal tracking system should be
established to assist in evaluating providers against defined measurable performance standards.

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TDCJ Response: Concur
To promote consistent and effective monitoring, results and feedback from each of the monitoring
processes should be continuously shared among appropriate management and staff at TDCJ Health
Services Division, the CMHCAC, the university providers, the regional offices, and the medical
units.
TDCJ Response: Concur
Tie the Operational Review compliance threshold more closely to NCCHC standards compliance
for accreditation of units.
TDCJ Response: Concur; action plan in process
Use a multiple copy sick call request form so that a copy of the inmate's original sick call request
can be maintained in the medical record to verify timeliness of access to care.
TDCJ Response: Concur but, alternative action plan is implementation of electronic medical
record; separate file for sick call requests or electronic entry of sick call requests.
Consider standardizing the logging process for sick call requests to ensure that the medical units
collect consistent access to care data elements.
TDCJ Response: Concur but, alternative action plan is implementation of electronic medical
record.
Health Services Division management should continue its efforts to enhance and automate the
grievance and liaison processes. As management evaluates its options with automating the
grievance and liaison correspondence processes, management should identify critical success
factors:






Consider streamlining the duplicative processes.
Include management at all levels in identifying types of reports needed for evaluation
and expand distribution of reports.
Consider expanding grievance/liaison correspondence coding list and querying
function to meet managements needs at all levels in order to identify system wide /
unit specific trends and red flags.
Include controls to ensure the accuracy of performance measure data.

TDCJ Response: Concur; action plan for automation implemented 10/1/97.

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Recommendations: (page 37 of Draft)
TDCJ and the CMHCAC should consider a contract amendment which ensures an ongoing
inventory of all capital assets purchased with TDCJ Managed Health Care funds. This amendment
should also address:

the disposition of the TDCJ managed health care capital assets if a provider contract is
canceled.

the cost allocation of capital assets which benefit programs other than TDCJ

the use of capital assets purchased with TDCJ managed health care funds
TDCJ Response: Concur
Recommendations: (page 39 & 40 of Draft)
Management should formalize the credentialing process to ensure roles and accountability are
clearly defined. Important steps in establishing a formalized credentialing process should include,
among others:





-

clearly defining credentialing staff’s roles and lines of accountability
documenting policies and procedures and effectively communicating them to staff
including a checklist in all applicant files, documenting the credentials to be verified,
the date checked, and by whom
expanding the list of credentials to be verified to include:
checking applicant references to inquire about past performance
verifying the practitioner's graduation from the appropriate professional school
verify completion of a residency program, if applicable

TDCJ Response: Concur
Mange should enhance monitoring controls over credentials to ensure awareness of any
licensure discrepancies. These controls should include:




formalized and documented policies and procedures for monitoring credentials
monitoring tools for supervising management to use when reviewing medical
professionals with licensure discrepancies
periodic review of evidence that subcontractors verified credentials of the practitioners
providing services to TDCJ inmates

TDCJ Response: Concur
Consider requiring the subcontractors to immediately notify the university providers in writing
of any licensure discrepancies of the staff who provide services to TDCJ inmates.
TDCJ Response: Concur

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Memorandum

To:

Jim Riley, Executive Director
Correctional Managed Health Care

From:

David Smith, M.D.
President, TTUHSC

Date:

December 3, 1997

Subject:

Comments on State Audit Report

We have a major disagreement with the “cost” focus of the audit and its recommendations. The
entire concept of managed care is to allow the provider the widest latitude possible while
encouraging innovation, quality and the potential for reward for assuming risk. This is a capitated
system under managed care, not a fee for service or cost based system.
In the West Texas sector, Texas Tech University Health Sciences Center (TTUHSC) has heavily
involved the local community hospitals and individual preferred providers in the correctional
managed health care system. We accomplished this quickly and expanded rapidly to meet the
legislatively mandated rapid prison expansion plans in West Texas. We have impaneled private
community doctors and hospitals and must rely on them for success. The cost based restriction
suggested by the audit would greatly encumber the successes realized through our managed care
initiatives.
Concerning the issue of a catastrophic reserve fund, we must keep in mind many factors that will
affect our future in the correctional system. Some of those factors include an increasingly aging
population, increased communicable diseases (tuberculosis, AIDS, etc.) and a growing prison
population. The reserve in fact does not consider the expenses the Universities would experience
in extracting themselves from this contractual arrangement (i.e., personnel cost, etc.)

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Page Two
Regarding the fifth paragraph on page 14 of the draft audit, we disagree with the content and
believe it should have read as follows: “The administrative fee assessed by TTUHSC for TDCJ
medical services contains a reserve. For fiscal year 1996, the 5% administrative fee assessed for
correctional health care (exclusive of psychiatric) was $2,250,759 while direct costs were
$1,296, 717, leaving excess reserves of $954,042 or 2.12% of capitated earned revenue. The
budgeted administrative fee (exclusive of psychiatric) for fiscal year 1997 is $2,504,022, while
budgeted administrative salaries are listed as $1,167,592, leaving a reserve of $1,336,430 or 3% of
earned capital revenue. However, the above mentioned administrative fees do not reflect any
indirect costs that were considered in establishing the 5% administrative fee.
Overall, the audit points out some areas that definitely need attention, and we pledge to work
towards continuous improvement of health care in the criminal justice system. We need to strike a
balance between innovative successes and our ability to grow with the state within the rules
established.
Our comments related to specific audit recommendations are attached.

`
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CORRECTIONAL MANAGED HEALTH CARE DRAFT AUDIT REPORT
TTUHSC COMMENTS

Section 1: Governance and Organizational Structure
RECOMMENDATIONS:
TDCJ is encouraged to pay its Health Services Division physicians through its own
payroll system.
No comment.

TDCJ is encouraged to continue its efforts to hire an independent Health Services
Division Medical Director, who is independent of the contracted health care providers.
No comment.
Health Services Division should secure sufficient staff to perform all aspects of the
Operation Review audits, eliminating reliance on staff from the University providers to
assist in the audits.
No comment.
Consider an amendment to the current contracts between TDCJ and the CMHCAC and the
CMHCAC and the university providers which enables TDCJ to hold the university providers
accountable for monitoring their subcontractors performance.
Non-concur - under current law, TTUHSC contracts with CMHCAC.
In all applicable subcontracts, include by reference any relevant state licensing or health
regulations for the services being contracted.
Concur - will implement with new or renewal of current contracts.
Roles and responsibilities of all parties should be clearly defined and specifically stated in
the contracts.
Concur - will implement with new or renewal of current contracts.
Information relating to potential problems as well as any action affecting managed health care
must be shared with all parties within the organization. This includes TDCJ executive

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management, TDCJ Health Services Division management, the CMHCAC, the university
providers, their subcontractors, and unit and regional management.
Concur - there are a tremendous variety of present processes of identifying, solving and
exchanging information on potential problems. Some of these are participating in multiple
state wide committee meetings, the regularly scheduled CMHCAC committee meeting,
frequent visits with staffs at TDCJ headquarters, wide telephonic contracts with counterparts
at TDCJ and UTMB, leadership presence at all audit outbriefs, and constant contact and
communication with the TDCJ centralized preventative medicine department. Internally we
see it as a big management duty to assure that our staffs are kept fully abreast of all system
wide problems and recommended solutions, These are but a few present mechanisms for
sharing information throughout the system, but we certainly concur with any initiative to keep
informed and exchange information to better server our wards.
TDCJ should consider adding staff who will be responsible for monitoring all operational and
financial aspects of the contract between TDCJ and the CMHCAC. This staff would also oversee
the monitoring of the providers by the CMHCAC, and have the authority to review all financial
and operational records related to the provision of health care to TDCJ inmates.
Alternative solution - we recommend that the present system of .financial oversight by the
CMHCAC and operational monitoring by TDCJ be continued. The charge of financial
oversight is a legislative mandate to the CMHCAC and to change this would substantially
affect not only the legislative intent and directive but also the contractual obligations of all
parties. This could eventually be much more expensive to the State.

Section 2: Capitation Rate
RECOMMENDATIONS:
Before the capitation rate for the next biennium is set, allowable and unallowable cost
components of the health care appropriation should be clearly defined by the Legislature.
Non-concur - the contract was designed and accepted as a capitation, managed care, risk
contracting system and not a fee for service or cost based process. Much already exists to
estimate capitation rates and this was vested on the CMHCAC committee. Within the
managed care system there already exists a negotiation process for a capitation rate. The
original Legislative intent was to stop the tremendously escalating cost for correctional health
care and to revert to another system would potentially not do this and be more expensive to
the state.
To ensure a common financial reporting system for all medical services provided, the CMHCAC
should establish financial reporting requirements, consistent with health care industry standards.

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JANUARY 1998

University providers should identify and report all expenditures of correctional managed health
care to the CMHCAC, according to these requirements on a regular basis.
Concur - recommend a joint work group consisting of each agency's financial officer
established to develop a common system.
UTMB and TTUHSC should develop a method to identify the costs of providing indirect support
services for TDCJ managed care. An appropriate charge back system should be developed to
reimburse the universities for the costs incurred in providing indirect support services.
Concur.
Proper allocation of expenditures and segregation of funding sources for TDCJ and non-TDCJ
managed care programs is essential to maintain accountability for each medical school's programs.
Both UTMB and TTUHSC should review present allocation methods to ensure accuracy of the
estimated workloads driven by different programs. The medical schools should consider use of a
timekeeping system or conduct random moment time studies for staff who perform activities for
TDCJ and other non-TDCJ managed health care programs.
Concur.
UTMB and TTUHSC should identify the data elements needed to perform an actuarial study on
financial risk and should begin to collect this data. After an appropriate baseline of information is
established, an analysis of the risk and required amount of reserves should be performed.
Concur- preliminary estimates in comparison with similar systems indicate our reserves are
significantly lower than industry standards.
The centralized pharmacy should continue its efforts to automate all aspects of the drug dispensing
process. Identifying the total cost of reclaimed, re-issued medicines should enable the managed
health care program to accurately calculate inmate pharmacy cost. Moreover, the pharmacy will be
able to accurately value its inventory when complete costs are known.
Concur.
The university providers should track the fixed costs associated with establishing a health clinic in
at a new prison unit or modifying a current unit to accommodate an increased population.
Concur.
The CMHCAC should annually evaluate the components and costs of providing health care to the
inmates. This information should be provided to the Legislative Budget Board for use by the
Legislature in determining the appropriation for the managed health care strategy.

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Concur.

Section 3: Transportation and Security Costs
RECOMMENDATIONS:
The Transportation Committee should continue to study and improve operations with the objective
of controlling and/or lowering the total cost of inmate health care provision in a manner consistent
with maintenance of acceptable levels and quality of care.
Concur.
TDCJ should improve controls over key data elements to ensure the accuracy and completeness of
information such as reasons for inmate transfers and accumulation of overtime by security officers
on medically related duties. TDCJ should consider application of operations research techniques
to maximize utilization of available resources dedicated to transportation and security.
Concur.

Section 4: Performance Evaluation and Monitoring
RECOMMENDATIONS:
Define monitoring roles and responsibilities of the TDCJ’s Health Services Division, CMHCAC,
and university providers. Whereas self-monitoring is an important basis of a good monitoring
process, an independent review by a party with enforcement authority would strengthen the
process.
Concur - recommend we convene a Joint Work Group to examine options to more efficiently
coordinate monitoring efforts. At present there are already three external monitoring
processes which mandate external accountability. These are TDCJ internal audits, the
NCCHC inspections, and access to care reports. All of these have to be accounted external to
our internal system. TDCJ has always had enforcement authority which has been exercised
on numerous occasions when deemed necessary by the medical director of TDCJ health
services division.
A comprehensive, standardized monitoring system should be established that integrates the various
information/monitoring processes already in place. A formal tracking system should be
established to assist in evaluating providers against defined measurable performance standards.

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JANUARY 1998

Concur - need to streamline the various processes to make them more meaningful and
efficient.
To promote consist and effective monitoring, results and feedback from each of the monitoring
processes should be continuously shared among appropriate management and staff at TDCJ Health
Services Division, the CMHCAC, the university providers, the regional offices, and the medical
units.
Concur.
Tie the Operational Review compliance threshold more closely to NCCHC standards compliance
for accreditation of units.
Concur - this was one of our recommendations to the TDCJ ad hoc audit committee.
Use a multiple copy sick call request form so that a copy of the inmate's original sick call request
can be maintained in the medical record to verify timelines of access to care.
Alternative solution - rather than multiple paper copies we recommend continued
development of electronic records and other initiatives to alleviate this problem.
Consider standardizing the logging process for sick call requests to ensure that the medical units
collect consistent access to care data elements.
Alternative solution - recommend electronic medical record and other initiatives to alleviate
this situation.
Health Services Division management should continue its efforts to enhance and automate the
grievance and liaison processes. As management evaluates its options with automating the
grievance and liaison correspondence process, management should identify critical success factors

Consider streamlining the duplicative processes.

Include management at all levels in identifying types of reports needed for evaluation
and expand distribution of reports.

Consider expanding grievance/liaison correspondence coding list and querying
function to meet management's needs at all levels in order to identify system wide/unit
specific trends and red flags.

Include controls to ensure the accuracy of performance.
Concur.

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Section 5: Fixed Assets
RECOMMENDATIONS:
TDCJ and the CMHCAC should consider a contract amendment which ensures an ongoing
inventory of al capital assets purchased with the Department’s Managed Health Care funds. This
amendment-should also address:

the disposition of the TDCJ managed health care capital assets if a provider contract is
canceled

the cost allocation of capital assets which benefit programs other than TDCJ

the use of capital assets purchased with TDCJ managed health care funds
Non-concur - all capital equipment is accounted for in the University's invention, and
identified as STATE equipment. We have accounted for the equipment and are maintaining it.
We can currently provide an annual report to TDCJ accounting for the equipment in the
facilities.

Section 6: Credentialing
RECOMMENDATIONS:
Management should formalize the credentialing process to ensure roles and accountability are
clearly defined. Important steps in establishing a formalized credentialing process should include
among others:

clearly defining credentialing staff’s roles and lines of accountability.

documenting policies and procedures and effectively communicating them to staff

including a checklist in all applicant files, documenting the credentials to be verified,
the date checked, and by whom

expanding the list of credentials to be verified to include:
checking applicant references to inquire about past performance
verifying the practitioner's graduation from the appropriate professional
school
verify completion of a residency program, if applicable
Concur - we have initiated improvements in our credentialing processes for Texas Tech
Health Sciences Center employees and will require all our subcontracted hospitals to do the
same.
Management should enhance monitoring controls over credentials to ensure awareness of any
licensure discrepancies. These controls should include:

formalized and documented policies and procedures for monitoring credentials

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JANUARY 1998




monitoring tools for supervising management to use when reviewing medical
professionals with licensure discrepancies
periodic review of evidence that subcontractors verified credentials of the practitioners
providing services to TDCJ inmates

Concur.
Consider requiring the subcontractors to immediately notify the university providers in
writing of any licensure discrepancies of the staff who provide services to TDCJ inmates.
Concur - subcontractors will be required to immediately notify TTUHSC in writing of any
license restrictions, consistent with State law, on staff that provide medical care to TDCJ
inmates.

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PAGE 65

`
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JANUARY 1998

CORRECTIONAL MANAGED HEALTH CARE
AUDIT REPORT

Section 1: Governance and Organizational Structure:
Recommendations:
TDCJ is encouraged to pay its Health Services Division physicians through its own payroll
system.
UTMB has no comment
TDCJ is encouraged to continue its efforts to hire an independent Health Services Division
Medical Director, who is independent of the contracted health care providers.
UTMB has no comment
Health Services Division should secure sufficient staff to perform all aspects of the Operation
Review audits, eliminating reliance on staff from the university providers to assist in the audits.
UTMB has no comments
Consider an amendment to the current contracts between TDCJ and the CMHCAC and the
CMHCAC and the university providers which enables TDCJ to hold the university providers
accountable for monitoring their subcontractors performance.
UTMB disagrees with this recommendation. UTMB as a provider, contracts with CMHCAC and
not TDCJ, and therefore is accountable to CMHCAC for contract compliance. Amending the
contract as recommended would essentially bring another “party” (TDCJ) into the agreement and
would change the character of the contract substantially.
In all applicable subcontracts, include by reference any relevant state licensing or health
regulations for the services being contracted.
UTMB agrees with this recommendation
Roles and responsibilities of all parties should be clearly defined and specifically stated in the
contracts.
UTMB agrees with this recommendation
Information relating to potential problems as well as any action affecting managed health are
must be shared with all parties within the organization. This includes TDCJ executive

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 67

management, TDCJ Health Services Division management, the CMHCAC, the university
providers, their subcontractors, and unit and regional management.
UTMB agrees with this recommendation
TDCJ should consider adding staff who will be responsible for monitoring all operational and
financial aspects of the contract between TDCJ and the CMHCAC. This staff would also oversee
the monitoring of the providers by the CMHCAC, and have the authority to review all financial
and operational records related to the provision of health care to the TDCJ inmates.
UTMB has no comment

Section 2: Capitation Rate
Recommendations:
Before the capitation rate for the next biennium is set, allowable and unallowable cost
components of the health care appropriation should be clearly defined by the Legislature.
UTMB disagrees with this recommendation. If the state wants to continue acquiring this health
care through “risk contracts” then the concept of what is an “allowable” or “unallowable” cost
would not be applicable. The state has been able to shift financial risk to Managed Care
Organizations in a number of instances — Correctional Care, State employee health plans, and
evolving Medicaid Managed Care programs. Reverting to a structure other than “risk contracting”
for Correctional Care will be more costly to the State.
To ensure a common financial reporting system for all medical services provided, the CMHCAC
should establish financial reporting requirements, consistent with health care industry standards.
University providers should identify and report all expenditures of correctional managed health
care to the CMHCAC, according to these requirements, on a regular basis.
UTMB agrees with the recommendation
UTMB and TTUHSC should develop a method to identify the costs of providing indirect support
services for TDCJ managed care. An appropriate charge back system should be developed to
reimburse the universities for the costs incurred in providing indirect support services.
UTMB agrees with this recommendation
Proper allocation of expenditures and segregation of funding sources for TDCJ and non-TDCJ
managed care programs is essential to maintain accountability for each medical school's
programs. Both UTMB and TTUHSC should review present allocation methods to ensure
accuracy of the estimated workloads driven by different programs. The medical schools should

`
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JANUARY 1998

consider use of a timekeeping system or conduct random moment time studies for staff who
perform activities for TDCJ and other non-TDCJ managed health care programs.
UTMB agrees with this recommendation. Where allocation of costs and effort are applicable,
UTMB will utilize methodologies similar to those used for Federal grants and contracts.
UTMB and TTUHSC should identify the data elements needed to perform an actuarial study on
financial risk and should begin to collect this data. After an appropriate baseline of information
is established, an analysis of the risk and required amount of reserves should be performed.
UTMB agrees with this recommendation
The centralized pharmacy should continue its efforts to automate all aspects of the drug
dispensing process. Identifying the total cost of reclaimed, re-issued medicines should enable the
managed health care program to accurately calculate inmate pharmacy cost. Moreover, the
pharmacy will be able to accurately value its inventory when complete costs are known.
UTMB agrees with this recommendation. Efforts are underway to complete these automation
efforts during the first quarter (calendar) of 1998.
The university providers should track the fixed costs associated with establishing a health clinic in
at a new prison unit or modifying a current unit to accommodate an increased population.
UTMB agrees with this recommendation
The CMHCAC should annually evaluate the components and costs of providing health care to the
inmates. This information should be provided to the Legislative Budget Board for use by the
Legislature in determining the appropriation for the managed health care strategy.
UTMB has no comment

Section 3: Transportation and Security Costs
Recommendations:
The Transportation Committee should continue to study and improve operations with the
objective of controlling and/or lowering the total cost of inmate health care provision in a manner
consistent with maintenance of acceptable levels and quality care.
UTMB has no comment
TDCJ should improve controls over key data elements to ensure the accuracy and completeness of
information such as reasons for inmate transfers and accumulation of overtime by security

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 69

officers on medically related duties. TDCJ should consider application of operations research
techniques to maximize utilization of available resources dedicated to transportation and security.
UTMB has no comment

Section 4: Performance Evaluation and Monitoring
Recommendations:
Define monitoring roles and responsibilities of TDCJ Health Services Division, the CMHCAC,
and university providers. Whereas self-monitoring is an important basis of a good monitoring
process, an independent review by a party with enforcement authority would strengthen the
process.
UTMB disagrees with this recommendation. While it is important that monitoring and
responsibilities are clearly defined, the approaches utilized should conform to health care industry
standards.
A comprehensive, standardized monitoring system should be established that integrates the
various information/monitoring processes already in place. A formal tracking system should be
established to assist in evaluating providers against defined measurable performance standards.
UTMB disagrees with this recommendation. While it is important that monitoring and
responsibilities are clearly defined, the approaches utilized should conform to health care industry
standards.
To promote consistent and effective monitoring, results and feedback from each of the monitoring
processes should be continuously shared among appropriate management and staff at TDCJ
Health Services Division, the CMHCAC, the university providers, the regional offices, and the
medical units.
UTMB agrees with this recommendation
Tie the Operational Review compliance threshold more closely to NCCHC standards compliance
for accreditation of units.
UTMB agrees with this recommendation
Use a multiple copy sick call request form so that a copy of the inmate’s original sick call request
can be maintained in the medical record to verify timeliness of access to care.
UTMB agrees with this recommendation

`
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JANUARY 1998

Consider standardizing the logging process for sick call requests to ensure that the medical units
collect consistent access to care data elements.
UTMB agrees with this recommendation
Health Services Division management should continue its efforts to enhance and automate the
grievance and liaison processes. As management evaluates its options with automating the
grievance and liaison correspondence processes, management should identify critical success
factors:






Consider streamlining the duplicative processes.
Include management at all levels in identifying types of reports needed for evaluation and
expand distribution of reports.
Consider expanding grievance/liaison correspondence coding list and querying function to
meet management's needs at all levels in order to identify system wide/unit specific trends and
red flags.
Include controls to ensure the accuracy of performance measure data.

UTMB has no comment

Section 5: Fixed Assets
Recommendations:
TDCJ and the CMHCAC should consider a contract amendment which ensures an ongoing
inventory of all capital assets purchased with TDCJ Managed Health Care funds. This
amendment should also address:




the disposition of the TDCJ managed health care capital assets if a provider contract is
canceled
the cost allocation of capital assets which benefit programs other than TDCJ
the use of capital assets purchased with TDCJ managed health care funds

UTMB disagrees with this recommendation. UTMB has a risk contract with CMHCAC, and does
not receive any funding designated for capital asset acquisition. An amendment such as
recommended would change the character of the contract considerably. UTMB can provide
CMHCAC and TDCJ with listings of any UTMB assets located at Department facilities.

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 71

Section 6: Credentialing
Recommendations:
Management should formalize the credentialing process to ensure roles and accountability are
clearly defined. Important steps in establishing a formalized credentialing process should
include, among others:






clearly defining credentialing staff's roles and lines of accountability
documenting policies and procedures and effectively communicating them to staff
including a checklist in all applicant files, documenting the credentials to be verified, the date
checked, and by whom
expanding the list of credentials to be verified to include:
-

checking applicant references to inquire about past performance
verifying the practitioner's graduation for the appropriate professional school
verify completing of a residency program, if applicable

Management should enhance monitoring controls over credentials to ensure awareness of any
licensure discrepancies. These controls should include:




formalized and documented policies and procedures for monitoring credentials
monitoring tools for supervising management to use when reviewing medical professionals
with licensure discrepancies
periodic review of evidence that subcontractors verified credentials of the practitioners
providing services to TDCJ inmates

Consider requiring the subcontractors to immediately notify the university providers in writing of
any licensure discrepancies of the staff who provide services to TDCJ inmates.
UTMB agrees with this recommendation

`
PAGE 72

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Appendix 1:

Objectives, Scope, and Methodology
Objectives
The primary objectives of this project were to:


Evaluate and report on the condition of key management controls of the Texas
Department of Criminal Justice (Department) Managed Health Care System.



Evaluate and report on the contractual relationships between the Department,
the Correctional Managed Health Care Advisory Committee (Committee), The
University of Texas Medical Branch at Galveston (UTMB), and the Texas Tech
University Health Sciences Center (TTUHSC).



Compare aspects of the health care system at the Department prior to and after
the implementation of managed care in the areas of cost, process quality, and
scope of services.

Management controls are the policies, procedures, and processes used to carry out an
organization’s objectives. They should provide reasonable assurance that:





Goals are met.
Assets are safeguarded and efficiently used.
Reliable data are reported.
Laws and regulations are complied with.

Management controls, no matter how well designed and operated, can only provide
reasonable assurance that the organization’s objectives will be achieved. However,
monitoring established controls can assist in detecting and correcting weaknesses in a
timely manner.

Scope
The scope of this audit included:

JANUARY 1998



Consideration of the managed health care overall management systems: policy
management, information management, performance management, and resource
management.



Review of contract provisions in the contracts between the Department and the
Committee, the Committee and the university providers (UTMB and TTUHSC),
and the university providers and their subcontractors.



Review of the appropriation for the managed health care strategy.

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 73



Review of the expenditures and the cost allocation systems related to managed
health care.



Review of the scope of services and system changes implemented under the
managed health care system.

Mental Health Services was not included in our evaluation because of the newness of
the program to the managed health care environment.

Methodology
Information collected included the following:










Interviews with members and staff of the Committee
Interviews with Department Board members, executive management, and staff
Interviews with medical and administrative staff of UTMB Managed Care
Interviews with medical and administrative staff of TTUHSC Managed Care
Interviews with management and staff of the Legislative Budget Board
Interviews with members of the Legislature and legislative staff
Interviews with members of special interest groups
Interviews with Department inmates
Documentary evidence such as:
-

Revenue and expenditure data
Contracts
Various management reports
Audit reports from the State Auditor’s Office and the Department’s
Internal Audit Division relating to Department health care
Recommendations of the Texas Performance Review relating to
Department health care
Legal opinions

Procedures and tests conducted:








Review of the governance of the managed health care system
Review of sufficiency of contract provisions
Analysis of costs related to managed health care
Review of cost allocation methods and policies of the university providers
Review of performance monitoring and evaluation processes
Review of the credentialing processes for correctional health care staff
Collaboration with a correctional health care consultant, retained in partnership
with the internal audit departments at the Texas Department of Criminal Justice
and the Texas Youth Commission.

`
PAGE 74

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Criteria used:








State Auditor’s Office Accountability Methodology
State Auditor’s Office Contract Administration Model
Department’s Health Services Division Policies and Procedures
Ruiz Final Settlement
Section 501.059, Texas Government Code
National Commission on Correctional Health Care (NCCHC) standards
Other standards and criteria established during fieldwork

Other information
Fieldwork was conducted from January 1997 to July 1997. The audit was conducted
in accordance with applicable professional standards, including:



Generally Accepted Government Auditing Standards
Generally Accepted Auditing Standards

There were no significant instances of noncompliance with these standards.
The audit work was performed by the following members of the State Auditor’s Office:















Babette Laibovitz, MPA, CGFM (Project Manager)
Linda C. Buford, CPA
Kyle K. Doerr, MBA
Francine B. Guiterrez, CPA
William D. Hurley, CPA
Ester Jayme
Gilberto F. Mendoza, CPA
Abayomi A. Owolabi, MBA, MBA HCM
M. Betsy Schwing, CPA
Lisa A. Walters, CPA
John C. Young, M.P. Aff.
Julie L. Ivie, CIA (Quality Control Reviewer)
Charles R. Hrncir, CPA, CGFM (Audit Manager)
Craig D. Kinton, CPA (Audit Director)

Consulting work was performed by Jacqueline Moore and Associates of Chicago, IL.
In addition, the following Department internal auditors assisted us in collecting data at
a number of prison units:




JANUARY 1998

Lynda Brackett, CIA
Frank Anizan
Robert Mask

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 75

Appendix 2:

Health Care Costs
Expenses Have Decreased as a Portion of Revenues Under
Managed Health Care
Table 3 summarizes reported revenues and expenses of the two university providers for
the fiscal years 1995 and 1996, the first two years of managed health care. Note that
the net balance, or profit, increased substantially for both university providers in 1996,
probably as a result of savings realized using managed care mechanisms. The excess
revenue over expenses allowed the university providers to set aside catastrophic reserve
funds as well as refund money to the State’s general revenue fund.
Table 3
Reported TTUHSC and UTMB Summary Revenues and Expenses for
Fiscal Years 1995 and 1996 - Unaudited
TTUHSC

UTMB

1995

1996

1995

1996

20,351

25,378

80,157

96,223

Revenue

$22,035,620

$47,607,010

$159,933,150

$194,238,617

Expenses

$22,010,300

$40,251,548

$159,880,652

$164,268,796

$25,320

$7,355,462

$52,498

$29,969,821

Average Daily Population

Revenue Over Expenses
Refund to State
Net Balance

($2,000,000)
$25,320

$5,355,462

($10,000,000)
$52,498

$19,969,821

Source: Correctional Managed Health Care Advisory Committee

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Table 4 translates the dollars in Table 3 into percentages. Note that expenses for both
university providers decreased as a percentage of revenues from fiscal year 1995 to
fiscal year 1996.
Table 4
Reported TTUHSC and UTMB Summary Revenues and Expenses
as Percentage of Revenues
Fiscal Years 1995 and 1996 - Unaudited
TTUHSC

UTMB

1995

1996

1995

1996

20,351

25,378

80,157

96,223

Revenue

100.00%

100.00%

100.00%

100.00%

Expenses

99.89%

84.55%

99.97%

84.57%

0.11%

15.45%

0.03%

15.43%

Average Daily Population

Revenue Over Expenses
Refund to State
Net Balance

(4.20%)
0.11%

11.25%

(5.15%)
0.03%

10.28%

Source: Correctional Managed Health Care Advisory Committee

It is difficult to compare the two university providers’ costs of services because the
providers have different operating philosophies and accounting strategies. Likewise, it
is not possible to compare the efficiencies of the two providers. UTMB owns and
operates its own teaching hospital, while TTUHSC contracts with the University
Medical Center Hospital. Most inmates requiring specialty care or hospitalization in
the UTMB sector are transported to the Department’s hospital (Hospital Galveston),
which adjoins UTMB’s teaching hospital in Galveston. In contrast, a significant
amount of health services are provided by subcontractors in the TTUHSC sector. This
operating philosophy helps support local hospitals and medical specialists in towns
where Department units are located.
Tables 5 through 11 provide more detail for cost information that is summarized above.
In the tables, “On-site” refers to revenues generated or expenses incurred at
Department prison units. “Off-site” refers to revenues generated or expenses incurred
somewhere other than a prison unit, such as a prison hospital. “Free World Care”
encompasses care given outside of a prison-maintained location. “Med Surg” in
Tables 6 and 7 refers to the 48 bed medical surgical facility located at the Montford
Unit in Lubbock.

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 77

Table 5
Reported TTUHSC Revenues and Expenses - Fiscal Year 1995
Unaudited
Average Daily Population: 20,351

Per Day

Revenue

$22,035,620

$2.967

Expenses
Salaries
Fringe Benefits
Operating Expenses
Consultants
Subcontracts
Total Expenses

$5,855,555
620,773
831,577
317,968
14,384,427
$22,010,300

$0.788
0.084
0.112
0.043
1.936
$2.963

$25,320

$0.003

Revenue Over Expenses
Source: Correctional Managed Health Care Advisory Committee

Table 6
Reported TTUHSC Revenues and Expenses - Fiscal Year 1996
Unaudited
Average Daily Population: 25,378
On-Site

Off-Site

Pharmacy

Revenue

$28,441,929

$14,057,434

$5,107,647

Expenses

$27,602,577

$7,306,289

$4,643,328

$699,354

$40,251,548

$839,352

$6,751,145

$464,319

($699,354)

$7,355,462

Revenue Over
Expenses

Med Surg

Total
$47,607,010

Source: Correctional Managed Health Care Advisory Committee

Table 7
Reported TTUHSC Revenues and Expenses Per Day - Fiscal Year 1996
Unaudited
Average Daily Population: 25,378
On-Site

Off-Site

Pharmacy

Med Surg

Total

Revenue

$3.07

$1.52

$0.55

Expenses

$2.98

$0.79

$0.50

$0.08

$4.35

Revenue Over
Expenses

$0.09

$0.73

$0.05

($0.08)

$0.79

$5.14

Source: Correctional Managed Health Care Advisory Committee

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Table 8
Reported UTMB Revenues and Expenses - Fiscal Year 1995
Unaudited
Average Daily Population: 80,157/100,508*
On-Site

Off-Site

Pharmacy

Hospital

Other

Total

$987,099

$159,933,150

Revenue

$88,232,667

$15,455,309

$18,399,178

$36,858,897

Expenses

$85,845,571

$16,770,157

$16,846,112

$40,418,812

$2,387,096

($1,314,848)

$1,553,066

($3,559,915)

Revenue Over
Expenses

$159,880,652

$987,099

$52,498

* In Fiscal Year 1995 UTMB provided off-site care for the total inmate population of 100,508
Source: Correctional Managed Health Care Advisory Committee

Table 9
Reported UTMB Expenditure Detail - Fiscal Year 1995
Unaudited
On-Site

Off-Site

Free World
Care

Pharmacy

$15,270,157

Hospital

Other

$40,418,812

Total

$55,688,969

Salaries

$62,258,175

$62,258,175

Benefits

$462,913

$462,913

Contracted
Units

$8,868,828

$8,868,828

Unit
Operations

$14,255,655

Physician
Plan
Total

$16,846,112

$31,101,767

$1,500,000
$85,845,571

$16,770,157

$1,500,000
$16,846,112

$40,418,812

$0

$159,880,652

Source: Correctional Managed Health Care Advisory Committee

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 79

Table 10
Reported UTMB Revenues and Expenses - Fiscal Year 1996
Unaudited
Average Daily Population: 96,241
On-Site

Off-Site

Pharmacy

Revenue

$108,440,409

$30,292,998

$19,373,429

Expenses

$97,288,930

$21,901,564

Revenue Over
Expenses

$11,151,479

$8,391,434

Hospital

Other *

Total

$34,167,684

$1,964,097

$194,238,617

$11,897,790

$34,167,684

($987,172)

$164,268,796

$7,475,639

$0

$2,951,269

$29,969,821

* TTUHSC contracts with UTMB for its pharmacy services. The $2,951,269 represents the revenues and expenses of UTMB
that were associated with these contracted services.
Source: Correctional Managed Health Care Advisory Committee

Table 11
Reported UTMB Expenditure Detail - Fiscal Year 1996
Unaudited
On-Site
Free World Care
UTMB

Off-Site

Pharmacy

Hospital

Other

$8,014,452

$8,014,452

Free World Care
TTUHSC

($987,172)
$13,887,112

Physician Plan

Total

($987,172)
$13,887,112

UTMB/Department
Hospital

$34,167,684

$34,167,684

Salaries

$69,442,558

$1,032,445

$70,475,003

Benefits

$853,534

$16,978

$870,512

$10,848,367

$10,848,367

Drugs/Supplies
Contracted Units
Unit Operations
Equipment
Total

$16,927,719

$16,927,719

$9,285,067

$9,285,067

$780,052

$780,052

$97,288,930

$21,901,564

$11,897,790

$34,167,684

($987,172)

$164,268,796

Source: Correctional Managed Health Care Advisory Committee

`
PAGE 80

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Appendix 3:

Location of Prison Units

Texas Department
of Criminal Justice

Dalhart
Pampa
Amarillo
Tulia
Plainview
Lubbock Childress
Brownfield
Lamesa

Wichita Falls
Bonham
Jacksboro
Breckenridge Bridgeport

Snyder

New Boston

Winnsboro
Overton
Palestine
Teague Henderson
Rusk

Dallas
Venus

Abilene
Colorado City
El Paso

Gatesville
Brownwood

Diboll
Jasper
Midway
Lovelady
Livingston
Bartlett
Huntsville
Woodville
Burnet
Cleveland
Liberty
Austin
Navasota Dayton
Beaumont
Houston
Kyle
Atascosita
Lockhart Sugarland
San Antonio
Richmond
Rosharon
Texas City
Angleton
Galveston
Cuero
Brazoria
Kenedy
Dilley
Beeville
Marlin

Fort Stockton

Hondo

Cotulla
San Diego

Raymondville
Edinburg
Executive Services
REGION I
Diagnostic Unit (Huntsville)
Diboll Transfer
Eastham Unit (Lovelady)
Ellis Unit (Huntsville area)
Estelle Unit (Huntsville area)
Ferguson Unit (Midway)
Goodman Transfer (Jasper)
Goree Unit (Huntsville)
Holliday Transfer (Huntsville)
Huntsville Unit
Lewis Unit (Woodville)
Luther Unit (Navasota)
Pack Unit (Navasota)
Terrell Unit (Livingston)
Wynne Unit (Huntsville)

September 1997

REGION II
Beto Unit (Palestine)
Boyd Unit (Teague)
Coffield Unit (Palestine area)
Gatesville Unit (Gatesville/Female)
Gurney Transfer (Palestine area)
Hilltop Unit (Gatesville/Female)
Hobby Unit (Marlin/Female)
Hodge MROP Unit (Rusk)
Hughes Unit (Gatesville)
Michael Unit (Palestine area)
Moore,C. Transfer (Bonham)
Mountain View Unit (Gatesville/Female)
Murray Unit (Gatesville/Female)
Powledge Unit (Palestine)
Skyview Psychiatric Unit (Rusk)
Telford Unit (New Boston)
Ware Transfer (Colorado City)

PRIVATE PRISONS
REGION V
Allred Unit (Wichita Falls)
Bridgeport Pre-Release
Clements Unit (Amarillo)
Cleveland Pre-Release
Dalhart Unit
Diboll Pre-Release
Daniel Unit (Snyder)
Kyle Pre-Release
Jordan Unit (Pampa)
Lockhart Pre-Release(Female)
Middleton Transfer (Abilene)
Moore,B. Pre-Release (Overton)
Montford Psychiatric Unit (Lubbock)
Venus Pre-Release
Neal Unit (Amarillo/Female)
Roach Boot Camp (Childress)
Roach Unit (Childress)
Robertson Unit (Abilene)
Rudd Transfer (Brownfield)
Smith Unit (Lamesa)
Tulia Transfer
Wallace Unit (Colorado City)
Western Regional Medical Facility (Lubbock)

REGION III
Central Unit (Sugar Land)
Clemens Unit (Brazoria)
Darrington Unit (Rosharon)
Hightower Unit (Dayton)
Hospital Galveston (Medical)
Jester II &III Units (Richmond)
Jester IV Psychiatric Unit (Richmond)
LeBlanc Unit (Beaumont)
Ramsey I, II, III Units (Rosharon)
Retrieve Unit(Angleton)
Stiles Unit (Beaumont)
Texas City (Medical)

REGION IV
Briscoe Unit (Dilley)
Connally Unit (Kenedy)
Cotulla Transfer
Fort Stockton Transfer
Garza East Transfer (Beeville)
Garza West Transfer (Beeville)
Lynaugh Unit (Fort Stockton)
McConnell Unit (Beeville)
Segovia Transfer (Edinburg)
Stevenson Unit (Cuero)
Torres Unit (Hondo)

STATE JAIL DIVISION
Bartlett State Jail
Bradshaw State Jail (Henderson)
Cole State Jail (Bonham)
Dawson State Jail (Dallas)
Dominguez State Jail (San Antonio)
Formby State Jail (Plainview)
Gist State Jail (Beaumont)
Hutchins State Jail (Dallas)
Kegans State Jail (Houston)
Lindsey State Jail (Jacksboro)
Lopez State Jail (Edinburg)
Lychner State Jail (Atascosita)
Plane State Jail (Dayton/Female)
Sanchez State Jail (El Paso Area)
Travis Co. State Jail (Austin)
Willacy Co. State Jail (Raymondville)
Woodman State Jail (Gatesville/Female)

SUBSTANCE ABUSE
Glossbrenner SAFP (San Diego)
Halbert SAFP (Female - Burnet)
Havins SAFP (Brownwood)
Henley SAFP (Dayton)
Jester I SAFP (Richmond)
Johnston SAFP (Winnsboro)
Ney SAFP (Hondo)
Sayle SAFP (Breckenridge)
Wheeler SAFP (Plainview)

Source: Texas Department of Criminal Justice graphic

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 81

Appendix 4:

Legislation
Government Code, Sec. 501.059. Correctional Managed Health Care Advisory
Committee.
(a)

The Correctional Managed Health Care Advisory Committee to the Texas
Department of Criminal Justice is established.

(b)

The committee consists of:
(1)

two members employed full-time by the department, at least one of
whom is a physician, appointed by the executive director;

(2)

two members employed full-time by The University of Texas Medical
Branch at Galveston, at least one of whom is a physician, appointed by
the president of the medical branch; and

(3)

two members employed full-time by the Texas Tech University Health
Sciences Center, at least one of whom is a physician, appointed by the
president of the university.

(c)

A committee member serves at the pleasure of the appointing official or until
termination of the member's employment with the entity the member represents.

(d)

An appointment to the committee shall be made without regard to the race,
creed, sex, religion, disability, or national origin of the appointee.

(e)

A committee member serves without compensation but is entitled to
reimbursement for actual and necessary expenses incurred in the performance of
the duties of the committee.

(f)

The committee shall meet at least once in each quarter of the calendar year and
at any other time at the call of the chairman.

(g)

The committee may hire a managed health care administrator and may employ
personnel necessary for the administration of the committee's duties.

(h)

The committee shall develop a managed health care plan for all persons
confined by the department that includes:
(1)

the establishment of a managed care network of physicians and
hospitals that will serve the department as the exclusive health care
provider for persons confined in institutions operated by the
department;

`
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JANUARY 1998

JANUARY 1998

(2)

cost containment studies;

(3)

care case management and utilization management studies performed
for the department; and

(4)

concerning the establishment of criteria for hospitals, home health, or
hospice providers, a provision requiring the managed health care plan to
accept certification by the Medicare program under Title XVIII, Social
Security Act, as amended (42 U.S.C. Section 1395 et seq.), as an
alternative to accreditation by the Joint Commission on Accreditation of
Health care Organizations.

(i)

To the extent possible the committee shall integrate the managed health care
provider network with the public medical schools of this state and the
component and affiliated hospitals of those medical schools.

(j)

For those services for which the public medical schools and their components
and affiliates cannot provide, the committee shall initiate a competitive bidding
process for contracts with other providers for medical care to persons confined
by the department.

(k)

The committee may enter into a contract on behalf of the department to fully
implement the managed health care plan under Subsection (h).

(l)

The department shall pay necessary costs for the operation of the committee,
including costs of personnel, from funds appropriated by the legislature to the
department.

(m)

The committee shall evaluate and recommend to the board sites for new medical
facilities that appropriately support the managed health care provider network.

(n)

The committee may, in addition to providing services to the department,
contract with other governmental entities for similar health care services and
integrate those services into the managed health care provider network.

(o)

To implement the managed health care plan, The University of Texas Medical
Branch at Galveston and the Texas Tech Health Sciences Center, for employees
who are entitled to retain salary and benefits applicable to employees of the
Texas Department of Criminal Justice under Section 9.01, Chapter 238, Acts of
the 73rd Legislature, Regular Session, 1993, may administer, offer, and report
through their payroll systems participation by those employees in the Texas
employees uniform group insurance benefits program and the Employees
Retirement System of Texas.

(p)

The advisory committee may hold a meeting by telephone conference call or
other video or broadcast technology.

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 83

Added by Acts 1993, 73rd Leg., ch. 238, Sec. 8.01, eff. May 22, 1993; Amended by
Acts 1993, 73rd Leg., ch. 988, Sec. 1.08, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch.
384, Sec. 1, eff. June 8, 1995; Acts 1995, 74th Leg., ch. 965, Sec. 26, eff. June 16,
1995.

`
PAGE 84

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

Appendix 5:

An Evaluation of Managed Health Care in the Texas Prison System
by Jacqueline Moore and Associates
Section I:

Objective and Scope of Project
The purpose of this study was to evaluate health care delivery to inmates at the Texas
Department of Criminal Justice (TDCJ) prior to and after the implementation of managed
care. Structural characteristics, utilization data, personnel staffing, vacancy rates, inmate
population characteristics, and mortality data were reviewed. Mental Health Services
were not included in this study because they were recently transferred to the managed care
system and sufficient data was not available to evaluate the effect of managed care.
For purposes of this study, the prior period is defined as September 1992 through August
1994. The current period is September 1994 through August 1996.

Section II:

Process Compliance Analysis
Section II-A:

Sample Selection
A sample of 17 institutions was drawn from a list of 87 supplied by the TDCJ. (State jails
and private prisons were excluded from the population for sampling purposes.) The
institutions were grouped into four strata: provider, population, gender, and infirmary
capability. The sample was randomly selected by power analysis program.
Since two thirds of the care is provided by UTMB, eleven facilities were selected to
represent UTMB; six facilities were selected to represent TTUHSC. Within each stratum,
the requisite number of institutions was randomly sampled. The probability that an
institution was sampled was proportional to its size (number of inmates) compared with
the total number of inmates in the stratum. This allowed the use of unweighted averages
within a stratum as an unbiased estimate of the average across all inmates in all institutions
within the stratum.

Methodology
The scope of the clinical services evaluation focused on nine critical areas which included
access to care, chronic care, clinical encounter, emergency services, infection control
regarding HIV and tuberculosis (TB), intra-system transfer, specialty consults, and dental
care.
In addition to chart audits, confidential interviews were conducted with the unit health
administrator, director of nurses (DON), physicians, wardens, and ten inmates at each of
the facilities selected to participate in the study. The interviews consisted of structured

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 85

questionnaires containing both open and closed ended responses. A structured
questionnaire was used to ensure comparability of the responses.

Construction of the Instruments
In designing instruments for this study, it was decided to modify audit forms originally
developed by Dr. Joseph Paris for the State of Georgia, and audit forms utilized by the
Correctional Medical Authority in the State of Florida. Modifications to the forms were
made according to criteria contained in the TDCJ Operational Review Process, which is
currently utilized to measure compliance with TDCJ rules, regulations, policies and
practices. The questions on the interview forms were derived from the NCCHC Standards
for Health Services in Prisons and stipulations contained in the Final Settlement of the
Ruiz Consent Decree.

Pilot & Reliability Test
A pilot test of the instruments was conducted during the week of February 3 - 7, 1997.
The pilot test and subsequent audits were assessed for interrater and intrarater reliability.
Interrater reliability refers to the consistency of classifications of two or more raters who
classify a specified group of persons using the same measurement tool on the same
occasion. Intrarater reliability refers to the consistency with which a single rater classifies
a group of persons using a specified measuring tool on two separate occasions.

Limitations of the Study
Both measures used, interview and chart audit, have inherent methodological limitations
which can affect the results of the study. Moreover, the data collected for this project has
characteristics which limit the conclusions which can be drawn.
Methodological limitations: The utility of a chart audit in obtaining valid data is
dependent on the documentation of the care. If a chart does not contain documentation of
a particular behavior, it could be assumed that the behavior was not done. This may or
may not be the case. An omission on the record could mean that the care was performed
and not documented. Likewise, the presence of an activity on a record does not
necessarily mean that the provider has performed it. Thus, it may be that the audit
measures only what was recorded and not the actual care that was provided.
Limitations associated with interview as a source of information consist of either the
difficulty associated with the construction of the questionnaire or the accuracy of the
response. This latter reactive effect on the respondents cannot be overlooked. By singling
out an individual to be tested, the evaluator forces a role-defining decision regarding
“What kind of person will I be as I answer these questions?”
Limitations of the data: Data collected included information about staffing, utilization,
telemedicine, monitoring, and other processes. The data was collected from the TDCJ for
the time period prior to managed care and from the university providers after the
implementation of managed care. TDCJ collected and reported information in a different
format than the university providers, which hindered our ability to provide meaningful

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comparisons. Complete data was not available for each fiscal year from each university
provider. The university providers also collected and reported data in different formats,
which made comparisons difficult. Data was obtained from the State Auditor’s Office,
through correspondence with the university providers. There was no attempt to audit the
data.
Section II-B:

Results of Data Analysis
Procedures
Chart audits were utilized to examine the process of care in nine critical areas of clinical
service using 5-9 performance measures for each area. The auditor scored each measure
or indicator as in compliance (meets all requirements), out-of-compliance (fails one or
more requirements) or is not applicable. The latter category indicated the behavior was
not applicable for a particular situation, there was not an opportunity to document the
occurrence by chart audit, or refusal to receive care was signed. Although the goal was to
review the charts of ten patients/inmates for each critical area, from each of the 17 adult
facilities, for a total sample of 170 (except for chronic care where the goal was 16 per
facility for a total of 272), this was not always possible. For example, a facility may not
have had ten inmates with the specific type of clinical care desired. Thus for some critical
areas of clinical service, fewer than 170 charts were reviewed.

Overall Level of Compliance
A summary of the overall mean compliance levels for the adult facilities is presented in
Table [1]. Included is the mean level of compliance for each cohort (or time period) of
charts along with the standard error of the mean. When the changes are examined for each
area, a significant increase in overall mean level of compliance under managed care is
noted for three of the six areas for which data are available both prior to and under
managed care. In three areas -- dental care and infection control for HIV and for PPD -only data under managed care are available. Almost half (48.8%) of the charts reviewed
for dental care performance indicators had compliance levels below .80 with 30% having
compliance levels ranging from .50 to .60. It should be noted that TDCJ policy does not
require the units to maintain separate dental logs. Thus some units recorded dental
requests on sick call logs while others reported them on dental logs. This may have
affected some compliance scores and accounted for the lower overall level of compliance
for dental care.
Each chart was then categorized as in compliance with all relevant indicators or as not in
compliance with one or more relevant indicators. That is, charts with a level of
compliance of 1.0 were considered as in compliance; all other charts were categorized as
not in compliance. The proportion of charts rated compliant by area of clinic service is
reported in Table [2].

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TABLE [1]: MEAN LEVEL OF COMPLIANCE FOR ADULT FACILITIES PRIOR TO
MANAGED CARE AND UNDER MANAGED CARE
PRIOR TO
MANAGED CARE
AREA

UNDER
MANAGED CARE

n

Mean

Standard
Error (SE)a

n

Mean

Standard
Error
(SE)a

Access to Care

170

.845

.0173

169

.913

.0157

Chronic Care

196

.636

.0155

271

.803

.0107

Clinical Encounter

170

.884

.0113

170

.928

.0105

Consultation Request

138

.862

.0174

168

.889

.0129

Dental Care

---

----

----

170

.768

.0185

Emergency Care

67

.811

.0203

148

.843

.0126

Infection Control: HIV

---

----

----

121

.895

.0147

Infection Control: PPD

---

----

----

143

.884

.0131

Intrasystem Transfer

137

.942

.0094

165

.938

.0078

a

SE is the Standard Error of the Mean defined as the standard deviation (SD) divided by the square root of sample size.
The SE is used to construct confidence intervals around the point estimate. For example, a 95% confidence interval is
approximately the mean ±2 times the SE. The Standard Deviation is a descriptive measure of the variability within a
distribution.

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TABLE [2]: PROPORTION OF CHARTS COMPLIANT FOR ALL INDICATORS PRIOR TO
AND UNDER MANAGED CARE
PRIOR TO MANAGED CARE

UNDER MANAGED CARE

n

Proportion
Compliant
(p1)

Standard
Error
(SE)a

n

Proportion
Compliant
(p1)

Standard
Error
(SE)a

Percent
Changeb
(p2-p1)/p1

Access to Care

170

.635

.037

169

.811

.030

+27.7

Chronic Care

196

.107

.022

271

.277

.027

+158.9

Clinical Encounter

170

.529

.038

170

.718

.035

+35.7

Consultation Request

138

.594

.042

168

.601

.038

Dental Care

---

----

----

170

.459

.038

Emergency Care

67

.299

.056

148

.372

.040

Infection Control:
HIV

---

----

----

121

.639

.037

Infection Control:
PPD

---

----

----

143

.538

.042

Intrasystem Transfer

137

.708

.039

165

.661

.037

AREA

a

b

Standard error is computed as [p(1-p)/n] ½; a 95% confidence interval can be constructed around the point estimate
using p±1.96 (standard error)
Only statistically significant changers are reported

Individual Performance Measure Compliance
Tables A.1 through A.9 at the end of this report show the percent compliant prior to and under
managed care for each performance measure within each of the areas assessed. Because
compliance is defined as the ratio of the number of charts compliant on an indicator to the sum
of the number of charts for which the indicator is applicable, the sample size involved in
determining compliance becomes small for some indicators. Areas assessed included the
following:


Access to Care (Table A.1) - The percent compliant on individual access to care indicators
increased on three of the five indicators. One exception concerned routine lab or x-ray, when
required, being provided and reviewed within seven days. Compliance decreased from 92.3%
prior to managed care to 78.9% under managed care. The other exception was for the
reporting of missed clinic appointments in the no show log that demonstrated 80% compliance
prior to managed care and decreased to only 70.6% compliance under managed care.
However, the sample sizes for which this indicator was applicable in each of the time periods
was small, reflecting the fact that some units only count the number of missed appointments.
Auditors also noted that counseling was not routinely done.

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Chronic Care (Table A.2) - Prior to managed care, compliance on the indicators of chronic
care for diabetes, hypertension, pulmonary, and seizures ranged from 30.5% for education
regarding illness to 97.9% for medical problems listed on the master problem list. These same
two indicators also had the lowest (64.2%) and highest (97.0%) compliance following
managed care. Because the inmate may have had a chronic illness for a long time and may
also have been incarcerated for a long time, it was difficult to know whether inmate education
had been provided. In reviewing charts, auditors accepted only education within the prior year
as evidence of compliance. Additionally, units sometimes indicated they provided inmate
education, but it was not documented in the medical record and consequently was considered
as noncompliance. These factors contributed to the relatively lower levels of compliance for
patient education.



Clinical Encounter (Table A.3) - For each of the eight indicators in the area of clinical
encounter, the percent compliance exceeded 74% prior to managed care and 84% under
managed care. Two of the indicators refer to the nursing sick call protocol. Units, however,
varied in their use of nursing protocols; some always used the form while some never used the
form although they referred to it in chart notes. Both were accepted as evidence of
compliance.



Consultation Request (Table A.4) - Compliance for the eight indicators related to a
consultation request ranged from 76.7% to 90.6% prior to managed care and from 77.8% to
97.0% under managed care. Prior to managed care, approval forms were not utilized, which
accounts for the relatively few numbers of patients in the sample for that time period. Also,
because the forms were not utilized, it was difficult to determine how much time elapsed
between the consultation request and the consultation. However, the compliance for this
measure was consistent in the two time periods (76.8% prior to managed care and 79.2% under
managed care).



Dental Services (Table A.5) - Only data under managed care was available for the area of
dental services. As noted earlier, TDCJ policy does not require units to maintain separate
dental logs which accounts for the low compliance for the two measures concerning
documentation. For the other three indicators of dental service, compliance in meeting all
requirements exceeded 95%.



Emergency Services (Table A.6) - Compliance on most indicators used to assess emergency
services was high (>80%). The one exception was that the "medical chart shows the patient
sent out by the health care staff in less than 30 minutes of making a request for emergency
services." This question could not be answered with the information in the medical charts.
Generally the only time recorded in the chart was the time when the patient was seen for
emergency care, making it difficult to determine whether the inmate was seen within 30
minutes of request as stated in the indicator.



Infection Control (Tables A.7 and A.8) - In general, compliance with the indicators related
to infection control exceeded 80% with the exception of three indicators: a two-step skin test
for offenders over 45 years of age, although this indicator was applicable for only 14 inmates
(50.0%); education regarding medication compliance and side effects (62.1%); and post-

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counseling and providing results of HIV test (75.7%) In addition, auditors noted that
although HIV testing may have been provided, units were sometimes late with the testing,
ranging from one to five months.


Intrasystem Transfer Forms (Table A.9) - Most compliance rates for the indicators in the
area of intrasystem transfers exceeded 90% both prior to and under managed care. Less than
90% each time were compliant with the "receiving facility" portion of the intrasystem transfer
form completed by a nurse within 24 hours. Sometimes the nurse would sign the form but not
include the time and auditors could not find the time recorded in clinic notes. This could
present a risk management issue for inmates who may have experienced problems on the chain
bus during transfer. Also, one unit had the staff sign blank forms in order to expedite the
process when an inmate was transferred into a receiving facility. This was considered
noncompliance when auditing the charts.

Compliance Comparison - Prior to and Under Managed Care
In general, the percent compliant on individual performance measures tended not to differ
significantly under managed care when compared to the period before implementation of
managed care. Charts from four chronic disease categories were assessed during the audit:
diabetes, hypertension, pulmonary (asthma), and seizure. Comparisons were also made across
the two time periods for each of these four conditions (Appendix A, Tables A.2.1 through
A.2.4). The measure for a patient having a written treatment plan was significantly higher under
managed care for each of the four conditions. Additionally, among those with hypertension or
pulmonary disease, receiving education on their disease increased significantly under managed
care. Other significant increases were noted for those with a special diet being listed on the
Master Diet List provided to Food Services (hypertension) and regular monitoring of peak flow
or spirometer readings (pulmonary disease).

Section III:

Aspects of Managed Health Care Analysis
Section III-A:

Staffing
In analyzing the health care staffing levels for the TDCJ prison facilities, comparisons were
made prior to and after the implementation of managed care. Comparisons also were made
against both established models advocated by the Correctional Managed Health Care Advisory
Committee (CMHCAC) and established vacancy rates.
Vacancy rates were defined as the number of vacant budgeted full time positions for which
employers are seeking workers and the perception of the management staff regarding the need or
demand for additional services of providers.
Despite the increase in inmate population and new prison facilities that opened between 19931996, registered nurse (RN) and physician staff did not increase by a significant amount. The
most notable increases were in licensed vocational nurses ( LVNs), and the category of "other

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staff" which included staff such as medication aides, medical technicians, pharmacy technicians,
laboratory technicians, respiratory therapy, physical therapists, and x-ray technicians. Dental
staff consisting of dental assistants, hygienists, and dentists increased by over 100 providers
between 1993 and 1996 and clerical staff increased by 341 positions during the same period;
however the prison population also grew rapidly in this time period.

Established Staffing Models
In 1994, the CMHCAC, with the assistance of a correctional health consultant, conducted an
operational staffing study to ensure that quality care was provided in a cost-effective manner.
Staffing allocations which were previously in effect had been derived primarily from
requirements promulgated by the Comprehensive Health Care Plan developed in 1984. When
the Comprehensive Health Care Plan was approved by Ruiz, the inmate population was 36,000;
by 1994, it had grown to 95,000 and the existing staffing models were insufficient to meet the
need of the increased and changing characteristics of the current inmate population.
UTMB utilizes a cluster management model for certain units rather than duplicating
management staff for units in close geographic proximity. In the cluster model, some members
of the management team, such as the unit health administrator and the director of nursing
(DON), among others, are responsible for one or more units. Three criteria are used to
determine which units should be clustered:




The total population of units clustered can not exceed 4500 inmates.
Consideration is given to the types of services provided by the facility.
The units have to be in close proximity to each other.

TTUHSC does not use a cluster pattern for staffing.

Comparison with CMHCAC Recommended Staffing Model
In comparing the 17 TDCJ facilities surveyed to the guidelines recommended by the CMHCAC,
it was found that most of the facilities surveyed were staffed according to the recommended
staffing model. A few facilities fell short of the recommended staffing patterns in regard to
clerical staff, chronic infectious disease (CID) nurses, and record technicians. Oftentimes, a
facility would have more LVNs than suggested but would not have medication aides. In
comparing current staffing levels to the template model, only one unit reported a critical shortage
of manpower.

Vacancy Rates
Vacancy rates, when they occurred, were reported as problematic by all of the facilities
surveyed. Many of the DONs felt that the vacancy rates at the institutional level contributed to
inadequate staffing. As one DON stated, "If you only have five RNs and you are down one RN
position, the facility is short staffed."
Increase in pay was most frequently cited as a positive change that occurred with the
implementation of managed health care. Other positive changes that were mentioned regarding

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managed care included improved communication with management, increased educational
programs, better qualified staff, and the elimination of bureaucratic red tape in hiring new staff.
In conclusion, there are fewer RNs and physicians staffed per inmate, and more LVNs, nursing
technicians and medication aides being utilized. The substitution of lower qualified staff is a
common trend in managed care settings today among providers in the private sector as well as
correctional health care corporations.
It should be noted that although the university providers never formally adopted the
recommended CMHCAC staffing model, they were generally in compliance with its
recommendations. Facilities surveyed felt that their current staffing patterns were adequate when
all of their positions were filled.
It is difficult to specify an adequate staffing pattern for the TDCJ prisons. There are no national
standards or guidelines available. Staffing is generally unit specific according to the mission of
the unit, the level of care required, the provision of infirmary care, chronic care or diagnostic
services, the geographical layout of the facility, inclusion of satellite units, and the security
classification of the inmate.
The effectiveness of any correctional system is largely dependent upon staffing considerations
regarding quantity, mixture, qualifications and quality. Current contracts with UTMB and
TTUHSC do not specify staffing plans.
Section III-B:

Pharmaceutical Services
One vital element of health care delivery is the availability of a reliable medication delivery
system. Pharmacy services for TDCJ’s managed health care are centralized in Huntsville. The
University of Houston began managing pharmacy services for TDCJ in September 1990.
Pharmacy services provide prescription services five days a week, within 24 hours of the order
being placed. Each prison unit has a limited amount of stock medications to be initiated during
weekends, holidays, and for emergency situations. Routine medications are sent to each unit’s
pharmacy through a computerized ordering system, on a daily basis.
The existing formulary is managed by an interagency Pharmacy and Therapeutics Committee
(P&T). The formulary includes classifications of medications utilized in medical treatment. The
formulary is designed to provide physicians with a focused group of medications for the
treatment of the majority of conditions encountered in the correctional setting. Physicians
desiring to use non-formulary medications must first have a telephone consultation with a
clinical pharmacist. Clinical pharmacists act as non-formulary approving authorities. If a nonformulary drug is ordered, the clinical pharmacist either approves, suggests an alternative, or
denies the request. Any recommendation by the clinical pharmacist can be appealed by the unit
physician to the regional medical director. In interviews conducted with physicians during the
audit, 16 out of 17 physicians felt that the formulary was adequate and that it reflected current
treatment regimens.

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Distribution of medications to inmates occurs at regularly scheduled times at pill windows, with
either LVNs or medication aides administering the medications. Keep-on-person medications
(KOP) are provided to inmates for certain medications. Medications that can be abused such as
psychotropic or pain medications, or medications where staff want to ensure compliance, known
as directly administered therapy, (such as AIDS medications) are distributed at the pill window.
A protocol has been developed regarding HIV medication. As a result of both new and
increasing numbers of medications utilized to treat AIDS patients, the pharmacy reported that
the cost of AIDS medications was $21.76 per inmate per day for 1996. In the spring of 1997,
the pharmacy estimated that 125 inmates throughout the Texas system received protease
inhibitors at a cost of approximately $550 per inmate per month .
The pharmacy estimates that approximately 42% of the Texas inmate population is receiving
medication. In the 17 prison facilities surveyed, one of the most common complaints received
from inmates concerned receiving their prescribed medications. Inmates in 14 of the 17
facilities complained about the medication delivery system. In each individual prison unit,
anywhere from three to six inmates out of ten interviewed, reported problems receiving
medications. Many of the complaints revolved around the pill window: inmates complained that
the lines were too long or that pill windows did not accommodate inmates who worked or went
to school.
Previously, correctional officers were allowed to administer selected over-the-counter
medications such as maalox or aspirin. These medications were known as “wing medications.”
A pharmacy directive dated August 1995 and revised in February 1997 has restricted
medications distributed by officers to only acetaminophen. Other over-the-counter medicines
are available to inmates through the sick call process or pill windows.
The Pharmacy and Therapeutics Committee made a decision to decrease the categories of KOP
medications that could be prescribed so that health care providers could monitor patient
compliance with treatment regimens. Compliance was felt to be very low for many medications.
It has not been determined whether policy changes relating to direct administered therapy have
had a positive impact on medication compliance. Prior to managed care, approximately 61% of
the medication orders were KOP as compared to 44% currently.
As a result of several policy and procedural changes, inmates have had to wait in pill lines to
receive some legend drugs (which require a prescription by a physician) and over-the-counter
medications. The result has been long and crowded medication lines.
The new policy changes regarding KOP and over-the-counter medicines have created a source of
dissatisfaction among some inmates interviewed regarding pharmaceutical services. Other
inmate complaints regarding the pharmacy services involved the renewal system, the availability
and timeliness of medications, and missing medications while in segregation status.
In the current medication administration process, it is difficult to audit medications missed or not
given. There is a critical drug report, provided by the pharmacy, that tracks specific medication

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that are not taken. The report is unit specific and emphasizes certain medications such as TB or
chronic care medicines; however, not all medications are reported.
At the time of our review, only the current month was available on the computer medication
administration record (MAR) screen. Thus, if an audit was on the fifth day of the month, only
the first 5 days would be available. Special requests for other screens would have to be pulled
manually, a laborious process, which was not undertaken during this study. Additionally, the
current medication screen does not note allergies, nor allow an auditor to see if medications were
missed because of a no-show on the part of the inmate, the inmate was off the unit, the
medication was not renewed, or because the order was not received from the pharmacy within a
timely manner. If an inmate refuses a medication, it is documented on the computer; however,
missing medications from the pharmacy are not documented on the MAR.
The current operational review process for TDCJ does not audit the pharmacy system.
Departmental pharmacists visit prison facilities on a quarterly basis; however, their reports focus
on drug usage data, storage of medications, narcotic counts, and type of medications ordered, but
do not address timeliness or missed medications.
Tables [3-5] represent the number of medication orders filled and their cost for FY 1992 - 1996.

Table [3]
Cost Of Medication Orders Filled
FY 92

FY 93

FY 94

FY 95

FY 96

Legend Drugs

$5,919,368

$8,272,392

$11,482,907

$13,348,175.50

$11,148,766.23

OTC Items

$ 990,402

$1,087,614

$ 1,326,053

$ 1,893,993.00

$ 1,230,059.32

$6,909,770
$9,360,006
$12,808,960
TOTAL
Costs of recycled medications are not calculated into this data.

$15,242,168,50

$12,378,825.55

Table [4]
Average Number of Orders Per Inmate Per Year
FY 92
Inmate
Population*
Legend Drugs
OTC Drugs

FY 93

FY 94

FY 95

FY 96

47,651

58,480

70,863

101,295

110,484

12.79

12.44

13.59

13.83

12.92

6.27

5.49

4.92

4.48

4.64

19.06
17.93
18.51
TOTAL
18.31
17.56
*Population figures represent the inmate population that is served by the pharmacy . It does not include private
prison facilities. Additionally in FY 96 psychotropic medication was only provided to some units.

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Table [5]
Average Cost of Drugs Per Inmate Per Year
FY 92

FY 93

FY 94

FY 95

FY 96

Legend Drugs

$124.22

$141.46

$162.04

$ 131.78

$100.91

OTC Medication Orders

$ 14.17

$ 12.85

$ 13.38

$ 11.90

$ 9.25

Wing Drugs*

$

$

5.75

$ 5.34

$ 6.80

$ 1.88

Average Cost Per Inmate
Per Year

$145.00

$160.06

$180.76

$150.48

$112.04

Average Cost Per Inmate
$ 0.40
$ 0.44
$ 0.50
Per Day
$ 0.41
* Wing drugs are medications which may be administered by officers in the housing units.

$ 0.31

6.61

Despite an increase in pharmacy orders filled, the average number of orders filled per inmate has
decreased since the implementation of managed care. In 1992 medication orders per inmate
averaged 19.06 prescriptions per inmate; in 1996, prescriptions filled decreased to 17.56 per
inmate.
Additionally, the pharmacy has also reported cost savings in the average cost of medications
purchased per inmate per year. From fiscal year 1994 to fiscal year 1995, there was a 17%
reduction in pharmacy costs, and from fiscal year 1995 to fiscal year 1996 a 26% reduction was
noted. In reviewing Table [5], it can be seen that the average cost of all medications per inmate
per year decreased from a high of $160.06 per inmate per year in 1993 to $112.04 per inmate per
year reported in 1996; this represents a savings of $48.02 per inmate.
The director of pharmacy attributed the cost savings to the following factors:






licensure of the pharmacy as a Class C Institutional Pharmacy enabling the pharmacy to
reuse medications that had not been in the inmate's possession
better economies of scale with bulk purchases through group purchasing organizations
practicing clinical pharmacy or pharmacotherapy, wherein clinical pharmacists consult
with physicians to advise them on optimal drug treatment
formulary management
implementation of disease management guidelines

The director felt that the practicing clinical pharmacists as well as formulary management and
disease management guidelines had a positive effect on decreasing the amount of medications
ordered. As a result, the number of inmates having multiple prescriptions has been reduced.
There are 14 clinical pharmacists on-site at various TTUHSC and UTMB medical units, with
plans to hire three additional clinical pharmacists at TTUHSC facilities.

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Section III-C:

Preventive Health
Traditionally, incarcerated inmates have been from lower socioeconomic strata. As a group,
they have not had the benefits of adequate health care on the outside and tend to participate in
behaviors that place them at high risk for diseases such as HIV, TB, hypertension, renal failure,
sexually transmitted diseases, and heart disease, among others. The preventive health program
provided at TDCJ units focuses on two major areas: infectious and/or communicable diseases
and chronic care.
On admission to the prison, TDCJ inmates are queried and tested for communicable diseases.
Re-testing for tuberculosis is performed on an annual basis. Careful assessment and treatment at
the time of intake protects the health of both inmates and staff. Additionally, the information
obtained during these sessions aids in the development of relevant treatment plans and health
promotion activities for the inmate population.
With the implementation of managed care, each prison unit has been staffed with a new position,
an infectious disease nurse known as a CID nurse. The CID nurse is responsible for the tracking
and surveillance of all infectious and communicable diseases on the individual prison units. The
CID nurses are also responsible for the prison unit's Occupational Exposure Program. CID
nurses are responsible for pre and post test counseling for potential HIV inmates and they
counsel all inmates testing positive for tuberculosis. On an individual case basis, information is
provided to the inmate regarding his disease process and medication compliance.
Chronic illnesses such as hypertension, asthma, diabetes, and seizures are amenable to ongoing
management. If these diseases are not properly treated, there is a strong risk of impaired health
status and potentially greater health problems. All of the health care units at TDCJ prisons
conduct chronic disease programs. Inmates are seen by physicians or midlevel practitioners on a
semi-annual basis and individual patient treatment plans specific to the care of the inmate are
developed. In chronic care clinics, specific educational programs designed for chronic disease
are presented to inmates.
Diet has been shown to play a major role in the prevention of disease. Unfortunately, offenders
are given limited choices regarding their diets while they are incarcerated. Most prison diets
tend to rely heavily on carbohydrates.
Outcome data referring to a patient's subsequent health status such as an improvement in
symptoms or mobility have not been collected either pre or post implementation of managed
care. Many managed care organizations in the private sector are reporting outcome measures
from the Health Plan Employer Data and Information Set (HEDIS). While HEDIS reporting
measures have been used by many health maintenance organizations, it is recognized that their
data set is incomplete. Of the 60 measures contained in HEDIS, only nine focus on the quality
of care received by individual patients. These nine indicators focus on preventive services which
can be readily measured.

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Education materials should be developed at a level that can be readily communicated to and
understood by inmates. Many of the Texas inmates have never completed high school and 7th
grade is the average educational achievement score. Therefore, it is not surprising that inmates
may not read the pamphlets that are available. Either the inmate doesn't understand the material
presented or they are not inclined to read.
The challenge for preventive health care in corrections is not only to hold on to what is done, but
to improve what is done. The latter can only be accomplished by providing meaningful
information to inmates on self care and preventive measures.
Section III-D:

Utilization Management
Managing Utilization of Medical Services
Utilization Management is an integral part of a managed health network. Utilization
management programs assist in cost control by monitoring all inpatient and specialty services to
ensure that medical services are rendered in the most cost-efficient manner.
Utilization review for both UTMB and TTUHSC is provided by utilization review departments.
The review process includes pre-certification, concurrent review, and physician advisor review.
Each university provider utilizes different published guidelines to review inpatient hospital stays
and specialty requests. All requests for off-site care must be pre-certified. Denials can be
appealed by the on-site physician. Denial rates for TTUHSC for fiscal year 1996 were reported
as less than 8-10%, depending on the specialty. The denial rate for UTMB for fiscal year 1996
was 14%. In addition to reviewing prospective cases, the utilization review programs perform a
concurrent and retrospective audit of all inpatient and off-site medical care and charges.
UTMB contracts with specialists located primarily on their hospital staff. Tertiary care is
provided at UTMB Hospital in Galveston. The expansion of prisons into West Texas made
routine transfer to the prison hospital in Galveston impractical due to the cost of transportation
and security. To serve the TDCJ facilities in West Texas, the TDCJ has recently constructed a
48 bed hospital facility located in Lubbock. The facility will provide inpatient care for inmates
in West Texas and outpatient specialty clinics. Additionally, TTUHSC provides inpatient and
off-site health care through contracts with area rural hospitals and specialists.
The utilization review programs have been effective in providing more on-site primary care at
the facilities, reducing length of stay for inpatient admissions, and reducing waiting time for
specialists’ appointments. The average length of stay reported in 1990 for inpatient admissions
for UTMB was 10.9 days. In 1996 it had decreased to 7.3 days. For fiscal year 1996 TTUHSC
has reported an average length of stay of 5.3 days.
With the implementation of a managed care concept by the medical schools, a greater emphasis
has been placed on providing primary care services at the unit level. The result has been a
decrease in the number of specialty visits and emergency trips referred to UTMB and TTUHSC

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

hospitals, and an increase in the number of on-site clinic visits. Emergency room visits
decreased from .021 visits per 1000 inmates in 1993 to .009 visits per 1000 inmates reported in
1995.

Specialty Referral Process
Over 50% of the physicians interviewed (9 out of 17) felt that the specialty referral
process was both long and cumbersome. Physicians estimated that the average waiting
time (from the time they initiated the request until the inmate was seen) for a non-urgent request
averaged from one to six months, depending upon the service requested. The implementation of
a computer-generated appointment system at UTMB in November 1996, has helped to increase
the timeliness of approvals, and generate appointments. UTMB has reported that the waiting list
for the next available appointment for most routine referrals has been effectively reduced by
more than 50%, from 54 days in 1994 to 18 days at the end of 1996. Similar data regarding the
scheduling of appointments or the implementation of a computerized system is not maintained at
TTUHSC.
Section III-E:

Telemedicine
Under the managed health care system, telemedicine was introduced to TDCJ in October 1994.
The system includes two-way video and specialized diagnostic equipment (such as electronic
stethoscope, dermatology camera, video monitors and recorders). The patient is presented to the
consultant in a clinical setting. The consultant's recommendations and patient disposition are
included and maintained in the patient's chart. The patient is then sent back to his unit physician
for proper referral, medication and/or follow-up.
Currently, the TDCJ’s managed care telemedicine network includes three local hospitals and
fourteen remote locations at TDCJ sites. It encompasses a total of 19 general and specialty
services. From October 1994 through August 1996, 3,007 inmates utilized telemedicine
consults at UTMB sites and another 2000 inmates at TTUHSC managed sites. Proposed plans
include the deployment of telemedicine at nine additional units. TTUHSC plans to deploy
telemedicine to all of its units with inmate populations over 2,000. Telemedicine consults
occurring the most frequently include orthopedics, surgery, internal medicine, and psychiatry.
Telemedicine consults have been very successful in increasing the accessibility of care without
traveling great distances. Most conditions encountered in primary care have been found to be
suitable for teleconsultation. Only medical disease states that require invasive procedures for a
definite diagnosis are in question for adequacy of presentation by telemedicine.
Section III-F:

Mortality Rates
In reviewing mortality data for the TDCJ system, data was collected from mortality logs. All
causes of death were established by autopsy findings and HIV statistics obtained from the TDCJ

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 99

Office of Preventive Medicine. Table [6] presents leading related causes of death in the TDCJ
prison system from fiscal year 1993 through fiscal year 1996.
Table [6]
LEADING CAUSES OF OFFENDER DEATH
1993

1994

1995

1996

69,054

92,669

129,468

130,000

AIDS

76

86

151

119

Cardiac

43

50

66

52

Cancer

36

54

71

66

Cirrhosis

17

34

28

8

Pulmonary

14

12

15

32

Lethal Injection
(Execution)

16

12

19

8

Suicide

14

12

23

18

Homicide

1

6

10

5

Accident

1

3

4

5

Other

12

10

21

37

Total

230

279

408

350

Population

On a national level, AIDS has become the leading cause of death in correctional systems. In
1993 in Texas, the number of AIDS related deaths reported was 110 per 100,000 inmates; the
national average for AIDS related deaths was 89 per 100,000 inmates. In 1996, the Texas rate
was reported as 92 per 100,000 inmates.
Suicides per 100,000 inmates in TDCJ prisons averaged 20 in 1993, 13 in 1994, 18 in 1995, and
14 in 1996. In 1995, the suicide rate reported from the Corrections Yearbook for
adult/correctional institutions in the U.S. was 17 per 100,000 inmates.

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.1: ACCESS TO CARE: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

PERFORMANCE MEASURE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

Percent
Changeb
(p2-p1)/p1

Offender who submitted a sick call request
for medical services was physically triage
within 48 hours (72 hours on weekends or
holidays).

131

73.3

167

91.6

+25.0

Offender who was referred to a physician
or midlevel practitioner was seen by a
physician or midlevel practitioner within
seven (7) days.

114

77.2

109

86.2

Offender who requested routine care had a
treatment plan formulated during the sick
call visit.

160

93.8

153

94.1

If the offender required routine lab or Xray services, the service was provided, and
the results were reviewed by a midlevel
practitioner or physician within seven (7)
days.

13

92.3

19

78.9

Missed clinic appointments on-site and ofsite were properly reported in the no show
log (SLD-910) or had a refusal signed.

25

80.0

17

70.6

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changes are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 101

TABLE A.2: CHRONIC CARE ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

The medical problems are listed on the
master problem list.

194

97.9

271

97.0

The MAR, Med Pass or compliance record
PH-70 or PH-40 shows continuity for all
medications ordered..

164

92.7

261

95.4

Vital signs T, P, R, BP are recorded at each
chronic care visit or more frequently.

194

56.2

271

71.6

+27.4

Weight is recorded at each chronic care
clinic visit or more frequently.

194

64.9

271

76.4

+17.7

The offender has received education
regarding his/her illness.

189

38.1

271

64.2

+68.5

Baseline and regular monitoring of
EKG, BUN, Creatine, & Electrolytes;
FGS & Accuchecks; Peak flow or
Spirometer; or Dilantin and/or other
antiseizure drug blood levels.

190

72.6

266

86.1

+18.6

Offender receiving a therapeutic or
special diet is listed on the Master Diet
List provided to Food Services
Supervisor.

26

42.3

77

77.9

+84.2

The patient has a written treatment
plan which includes instructions
regarding diet, exercise, medication,
diagnostic testing, and frequency of
follow-up appointments.

190

30.5

268

73.1

+139.7

PERFORMANCE MEASURE

Percent
Changeb
(p2-p1)/p1

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.2.1: DIABETES CHRONIC CARE: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

The medical problems are listed on the
master problem list.

38

97.4

68

97.1

The MAR, Med Pass or compliance record
PH-70 or PH-40 shows continuity for all
medications ordered.

31

86.8

66

93.9

Vital signs T, P, R, BP are recorded at each
chronic care clinic visit.

38

50.0

68

66.2

Weight is recorded at each chronic care
clinic visit or more frequently.

38

65.8

68

72.1

The offender has received education
regarding his/her illness.

38

57.9

68

63.2

Baseline and regular monitoring of FBS,
accuchecks, HbgAC.

38

89.5

67

86.6

Offender receiving a therapeutic or special
diet is listed on the Master Diet List
provided to the Food Services Supervisor.

17

47.1

18

66.7

The patient has a written treatment plan
which includes instructions regarding diet,
exercise, medication, diagnostic testing, and
frequency of follow-up appointments.

37

37.8

68

73.5

PERFORMANCE MEASURE

Percent
Changeb
(p2-p1)/p1

+94.4

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 103

TABLE A.2.2: HYPERTENSION CHRONIC CARE: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

The medical problems are listed on the
master problem list.

57

96.5

68

98.5

The MAR, Med Pass or compliance record
PH-70 or PH-40 shows continuity for all
medications ordered.

52

94.2

68

94.1

Vital signs T, P, R, BP are recorded at each
chronic care clinic visit.

57

61.4

68

70.6

Weight is recorded at each chronic care
clinic visit or more frequently.

57

68.4

68

76.5

The offender has received education
regarding his/her illness.

56

30.4

68

66.2

Baseline and regular monitoring of EKG,
BUN, Creatine and electrolytes occur at
discretion of physician.

57

84.2

67

82.1

Offender receiving a therapeutic or special
diet is listed on the Master Diet List
provided to the Food Services Supervisor.

6

33.3

18

83.3

+150.1

The patient has a written treatment plan
which includes instructions regarding diet,
exercise, medication, diagnostic testing, and
frequency of follow-up appointments.

57

38.6

68

67.6

+75.1

PERFORMANCE MEASURE

Percent
Changeb
(p2-p1)/p1

+117.8

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.2.3: PULMONARY CHRONIC CARE: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

The medical problems are listed on the
master problem list.

53

98.1

68

97.1

The MAR, Med Pass or compliance record
PH-70 or PH-40 shows continuity for all
medications ordered.

44

88.6

66

97.0

Vital signs T, P, R, BP are recorded at each
chronic care clinic visit.

53

52.8

68

76.5

+44.9

Weight is recorded at each chronic care
clinic visit or more frequently.

53

58.5

68

79.4

+35.7

The offender has received education
regarding his/her illness.

50

30.0

68

70.6

+135.3

Baseline and regular monitoring of
peakflow and spirometer readings.

49

32.7

67

88.1

+169.4

Offender receiving a therapeutic or special
diet is listed on the Master Diet List
provided to the Food Services Supervisor.

---

---

19

84.2

The patient has a written treatment plan
which includes instructions regarding diet,
exercise, medication, diagnostic testing, and
frequency of follow-up appointments.

50

14.0

65

80.0

PERFORMANCE MEASURE

Percent
Changeb
(p2-p1)/p1

+471.4

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 105

TABLE A.2.4: SEIZURE CHRONIC CARE: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

The medical problems are listed on the
master problem list.

46

100.0

67

95.5

The MAR, Med Pass or compliance record
PH-70 or PH-40 shows continuity for all
medications ordered.

37

91.9

61

96.7

Vital signs T, P, R, BP are recorded at each
chronic care clinic visit.

46

58.7

67

73.1

Weight is recorded at each chronic care
clinic visit or more frequently.

46

67.4

67

77.6

The offender has received education
regarding his/her illness.

45

40.0

67

56.7

Baseline and regular monitoring of dilantin
and/or other antiseizure drug blood levels.

46

87.0

65

87.7

Offender receiving a therapeutic or special
diet is listed on the Master Diet List
provided to the Food Services Supervisor.

3

33.3

22

77.3

The patient has a written treatment plan
which includes instructions regarding diet,
exercise, medication, diagnostic testing, and
frequency of follow-up appointments.

46

32.6

67

59.3

PERFORMANCE MEASURE

Percent
Changeb
(p2-p1)/p1

+81.9

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.3: CLINICAL ENCOUNTER: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

PERFORMANCE MEASURE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

The nursing sick call protocol used was
appropriate to the patient’s chief complaint.

162

92.0

162

96.9

The nursing sick call protocol was
completely filled out.

161

83.9

161

90.1

Vital signs were charted T, P, R, and BP.

166

74.7

166

84.3

The signature and degree of the health care
provider is legible or the institution uses
signature stamps.

160

90.6

160

91.9

The date and time of the encounter were
noted.

160

99.4

160

97.5

Offenders who required further care had a
referral to a physician/midlevel practitioner
documented in the medical record.

80

100.0

78

100.0

Offender who was referred to a physician
or midlevel practitioner was seen within
seven (7) days of the original complaint or
sooner if clinically indicated.

78

74.4

73

93.2

If medication was obtained via telephone or
verbal order, the order was co-signed
within 72 hours.

39

87.2

44

93.2

Percent
Changeb
(p2-p1)/p1

+12.9

+25.3

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changes are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 107

TABLE A.4: CONSULTATION REQUEST: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

PERFORMANCE MEASURE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant (p2)

Percent
Changeb
(p2-p1)/p1

There is a consultation request on the chart
(TDCJ form HSM-1).

138

90.6

167

91.0

A consultation request was initiated by the
institutional staff.

60

76.7

168

97.0

+26.5

Consultation requests were approved or
denied by the regional medical director at
UTMB facilities or by the utilization
manager at Texas Tech facilities.

39

79.5

164

90.9

+14.3

If consultation denied, alternative
treatment plan initiated.

14

78.6

9

77.8

All emergent consults were performed
within 24 hours, urgent consults within 30
calendar days and non-urgent consults
within 180 calendar days of initial request.

99

76.8

120

79.2

Consultant’s report was written and
received by the facility within one week of
visit.

128

82.8

112

82.1

There is evidence that, if appropriate, the
consultant’s recommendations have been
reviewed and considered by the on-site
physician/midlevel practitioner.

108

88.9

85

89.4

Follow-up appointments have been
requested and scheduled according to the
consultant’s recommendations.

80

85.0

64

81.3

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.5: DENTAL SERVICES: ADULT FACILITIES
UNDER
MANAGED CARE
PERFORMANCE MEASURE

n

Proportion Compliant
(p1)

95% Confidence
Interval

Inmate who submits a sick call request has the
request documented in the Nursing Sick Call
Log.

150

44.0

36.1-51.9

Inmate who submits a sick call request has the
request documented int eh Dental Sick Call
Register or Dental Sick Call Log within 24
hours.

167

58.1

50.1-65.6

Patient eligible for a follow-up visit was seen
within 35 working days.

95

96.8

93.3-100.0

Patient who requests routine care has a
treatment plan formulated during the sick call
visit.

134

96.3

93.1-99.5

Incoming heath records were reviewed by dental
staff for priority one conditions.

157

95.5

92.3-98.7

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 109

TABLE A.6: EMERGENCY SERVICES: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED CARE

PERFORMANCE MEASURE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant
(p2)

Percent
Changeb
(p2-p1)/p1

Medical chart shows the patient sent out by
the health care staff in less than 30 minutes
of making a request for emergency care.

62

37.1

147

53.1

+43.1

Record indicates that appropriate referrals
to a physician or EMS were made.

63

98.4

145

97.9

If verbal or telephone medication orders
were obtained, they are co-signed in the
medical record within 72 hours.

27

88.9

49

81.6

If the patient was sent to the emergency
room, upon the offender’s return, the
medical record indicates patient was seen
by a unit health provider within 48 hours of
the emergency.

58

86.2

138

89.9

If the patient was sent to the ER, an
appropriate transfer form was completed
went he patient was sent.

66

89.4

137

94.9

An ER summary of discharge sheet from he
hospital or clinic was returned with the
patient to the unit.

58

84.5

146

84.2

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

`
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AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.7: INFECTION CONTROL HIV POSITIVE: ADULT FACILITIES
UNDER
MANAGED CARE
PERFORMANCE MEASURE

n

Proportion Compliant
(p1)

95% Confidence
Interval

An HIV test is documented in the medical
record.

121

95.0

91.1-98.9

The offender received pre-counseling prior to
the test.

109

80.7

73.3-88.1

The offender received post-counseling and was
told the results of the test.

107

75.7

67.6-83.8

If HIV positive, a CD4 count was ordered and
recorded on the medical record.

119

95.8

92.2-99.4

If CD4>500, a CBC and Chemistry Panel was
ordered and recorded in the medical record.

65

89.2

81.7-96.7

IF the CD4<500, a referral was made tot he unit
infectious disease clinic or CID nurse.

67

100.0

--------

If the CD4<200, PCP prophylaxis was initiated.

13

92.3

77.8-100.0

If the CD4<500, documentation in the chart
reflects that the offender was seen every 90 days
in either chronic care clinic or by the CID nurse.

54

98.1

94.5-100.0

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 111

TABLE A.8: INFECTION CONTROL PPD POSITIVE: ADULT FACILITIES
UNDER
MANAGED CARE
PERFORMANCE MEASURE

n

Proportion Compliant
(p1)

95% Confidence
Interval

A PPD or SCR is documented int he medical
record within the last year.

141

99.3

97.9-100.0

Offenders over 45 years of age received a twostep skin test.

14

50.0

23.8-76.2

If the offender was PPD positive, an HIV test
was offered.

136

83.8

77.6-90.0

If the PPD was positive, Chest X-rays were
ordered.

139

96.4

93.3-99.5

The immunization record is compete and up to
date. (PPD and tetnas are current).

143

97.9

95.5-100.0

The MAR, pill pass or treatment record
indicates that the offender is receiving
tuberculosis prophylaxis per protocol, unless a
refusal has been signed.

128

96.1

92.7-99.5

There is chart documentation indicating that the
offender has been educated regarding
medication compliance and side effects.

132

62.1

53.8-70.4

The offender has been seen monthly in a chronic
care clinic.

126

84.9

78.6-91.2

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

`
PAGE 112

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998

TABLE A.9: COMPLETENESS OF INTRASYSTEM TRANSFER FORMS: ADULT FACILITIES
PRIOR TO
MANAGED CARE

UNDER
MANAGED
CARE

PERFORMANCE MEASURE

n

Proportion
Compliant
(p1)

n

Proportion
Compliant
(p2)

There is an intrasystem transfer form in the
medical record.

137

97.8

163

99.4

The “receiving facility” portion of the
intrasystem transfer form was competed by
a nurse within 24 hours.

135

85.9

163

88.3

All care recommended in the intrasystem
transfer form is reviewed by the on-site
physician/midlevel practitioner as
evidenced by a signature on the HSN-1 or
HO-3A.

137

94.9

163

96.3

The MAR form or med pass shows
continuity for all medications listed in the
intrasystem transfer form or an alternative
as noted by the on-site physician.

61

95.1

95

98.9

There is a current physical or annual exam
based on policy or refusal.

137

97.1

163

86.5

There is an up-to-date tuberculin skin test
(PPD in mm) or CXR or a refusal form.

136

97.8

160

96.3

Chronic problems identified on the
intrasystem transfer form are identified on
the problem list.

99

98.0

134

93.3

Special housing was identified.

61

93.4

73

97.3

Chronic Care clinic follow-up identified &
scheduled according to policy.

67

85.1

79

91.9

Percent
Changeb
(p2-p1)/p1

-10.9

Note: n refers to the number of charts for which the indicator was relevant.
b
Only statistically significant changers are reported

JANUARY 1998

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

PAGE 113

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PAGE 114

AN AUDIT REPORT ON MANAGED HEALTH CARE AT
THE TEXAS DEPARTMENT OF CRIMINAL JUSTICE

JANUARY 1998