An Audit Report on the Cost of the State's Correctional Managed Health Care Page: 2 of 34
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tate
" ditor's ___
i sffce An Audit Report on
The Cost of the State's Correctional
John Keel, CPA
State Auditor Managed Health Care
SAO Report No. 07-003
October 2006
Overall Conclusion
Amounts in the financial reports that the
University of Texas Medical Branch at Galveston Background Information
(Medical Branch) and the Texas Tech University The University of Texas Medical Branch
Health Sciences Center (Health Sciences Center) at Galveston covers the southern and
submit to the Correctional Managed Health Care heathrcar to approximately 9 percent
Committee are supported by each institution's of state prison inmates.
accounting system. The Texas Tech University Health
Sciences Center covers the western part
In addition, the methodologies that the Medical of the State and provides health care to
approximately 21 percent of state prison
Branch and the Health Sciences Center use to inmates.
account for and report the costs of providing The Department of Criminal Justice
health care to state prison inmates are contracts with the Correctional Managed
Health Care Committee, which then
reasonable. For example: contracts with each of the institutions
on a biennial basis.
The Medical Branch qualifies for the federal Inmate health care is financed through
government's Public Health Service Section direct appropriations to the Department
of Criminal Justice. These funds are
340B Drug Pricing Program, which enables it then passed to the Correctional
to obtain the lowest possible prices for Managed Health Care Committee, which
medicine. The Health Sciences Center does pays each of the institutions a capitated
rate for each inmate in the state prisons
not qualify for this program, but the MedicaL they serve.
Branch purchases medicine for the Health In fiscal year 2005, the Medical Branch
Sciences Center through a consortium. This and the Health Sciences Center received
enables the Medical Branch to obtain the a total of $342.2 million to provide
health care to a daily average of
lowest possible prices for the Health Sciences approximately 151,000 inmates.
Center.
Both the Medical Branch and the Health Sciences Center compute their indirect
cost allocation rates as a percent of revenue (instead of as a percent of
expenses) and then apply these rates to the revenue they received from the
Correctional Managed Health Care Committee. This is not the standard
methodology for allocating indirect costs (indirect costs are typically computed
as a percent of direct expenses), but cost accounting guidance indicates that any
reasonable method may be used.
Both institutions we audited also had reasonable support for the supplemental
appropriations they requested and received from the Legislature in fiscal year
2005.
This audit was conducted in accordance with Texas Government Code, Section 321.0131.
For more information regarding this report, please contact Dave Gerber, Audit Manager, or John Keel, State Auditor, at (512) 936-
9500.
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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/m1/2/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.