An Audit Report on the Cost of the State's Correctional Managed Health Care Page: 15 of 34
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The institutions' indirect cost rates also are reasonable when compared with
federal indirect cost reimbursement rates. The federal rates are typically
negotiated every few years for grants received from each cognizant federal
agency. Table 1 compares each institution's indirect cost rate for providing
inmate health care with its federal indirect cost reimbursement rate.
Table 1
The University of Texas Medical Approximately 7 percent of 24 to 51 percent of expenses,
Branch at Galveston revenue a depending on the federal grant
Texas Tech University Health 6 percent of revenue 26 percent of expenses
Sciences Center
a The 7 percent rate includes 5 percent of revenue plus an additional amount for shared information
technology services.
Source: State Auditor's Office analysis of information provided by the institutions.
How institutions compute indirect costs.
The Medical Branch sets aside 5 percent of its revenue from the Correctional
Managed Health Care Committee to cover institution-wide indirect costs.
This is consistent with the Medical Branch's practice of allocating indirect
costs to each of the institution's revenue-generating departments at a rate of 5
percent of the revenue generated externally. These indirect costs include
expenses from departments such as institutional administration, finance, and
human resources.
The Medical Branch's indirect costs also include allocations of the costs for
specific shared information technology services. If a portion of these costs
can be specifically attributed to a certain department, then those costs are
charged to that department; the remaining costs are allocated to departments
based upon the number of employees. The addition of the cost of these
services brings the total indirect cost rate to approximately 7 percent.
The Health Sciences Center sets aside 6 percent of its revenue from the
Correctional Managed Health Care Committee to cover institution-wide
indirect costs. However, this indirect cost rate is not based upon actual
indirect costs. To calculate this indirect cost rate, the Health Sciences Center
starts with its federal indirect cost calculation and judgmentally determines the
percentage of each cost category that applies to inmate health care. While this
is an unusual approach to determining an indirect cost allocation percentage,
the result appears to be reasonable.
An Audit Report on the Cost of the State's Correctional Managed Health Care
SAO Report No. 07-003
October 2006
Page 10
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Texas. Office of the State Auditor. An Audit Report on the Cost of the State's Correctional Managed Health Care, report, October 2006; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth517778/m1/15/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.