December 27, 2007...3:13 pm
The Four Basic Models for Delivering Health Care to Inmates.
This information is being provided as a reference only. A lot of the topics I will be writing about will refer to the following information, so I am publishing it first in an effort to reduce the amount of boring drivel you, the reader, will have to endure while reading…
Currently, health care for inmates is provided through one of four basic models, each with their own unique pros and cons. One benefit that goes with each private model is their enhanced IT capabilities. The private companies spend a lot more money on IT, in an effort to reduce their overall costs. than correctional facilities ever have in their budget. This is probably the main selling point of private contractors.
The first two models are currently utilized by private prison operators, or private medical contractors. The last two are utilized at facilities trying to stay in control of their health care operations.
Comprehensive Specialty Health Services Contract
Pros:
- Standardized pricing mechanism.
- Acts as insurance against catastrophic cases.
- Provides access to quality external health care and providers.
- Medical staff is not responsible for managing medical budget; this insures their medical decision making is not motivated by profit concerns.
- Lower potential for liability exposure or possibility of sub-standard care.
In this model, the contractor has no medical responsibility for the care that is provided at the correctional facility by institutional staff. The doctors and nurses that are employed by the institution are responsible for providing on-site care, and determining the necessity of off-site care only. Here, the contractor is responsible for the creation of a quality external network of specialty providers to provide specialized services beyond the capability of the on-site staff. Using various strategies to contract with local health care providers (Medicare, Medicaid, Discounts and per-diem rates), the contractor works to ensure that the facility receives quality care at a reduced rate.
The Federal Bureau of Prisons requires that all contracts for inmate health care be negotiated using Medicare pricing as a benchmark for contract rates. Typically, providers receive a premium to the Medicare rate for providing their services to inmate. This is effective because the pricing guidelines are standardized, determined at the federal level and adjusted nationwide on a per-locality basis. All providers are familiar with this pricing and are generally willing to enter into a contract using this methodology.
Cons:
- Cost-Plus contract with contractor acting as gateway.
- Facility does not control provider contracts.
- Coordination of Care with community providers can be difficult.
Since the contractor builds the provider network, they own the contracts. The facility then has to pay the contractor the rates that the contractor charges for those services, which are marked up from the rates they negotiate with the providers. This leads to a conflict of interest when it comes to adjudicating claims and paying providers. There is no real incentive to ensure that fraudulent claims are denied. The higher the claim amount, the more money the contractor makes.
In order to keep those rates secret, contact between the institution and the providers is usually limited. The coordination of care is managed by the contractor, which creates its own set of issues.
Capitated
Pros:
- Budget is known in advance.
- Internal health care staffing functions performed by vendor.
- Limits the number of off-site visits by staffing more specialists in-house which decreases costs for transportation and security requirements.
Under this model, the contractor is responsible for all aspects of delivery of health care at an institution. They are responsible for staffing the doctors and nurses that provide daily care to the inmates, along with managing the external network of providers. The main focus of contractors operating under this model is to provide as much care as possible “inside the walls”. This helps to keep costs lower by not incurring the fees from outside providers, or the costs of security and transportation required each time an inmate travels off site for medical care. The contractor is usually “at risk”, meaning that they pay all costs associated with medical care at the institution. This model is usually implemented on a cost per inmate per day agreement.
Cons:
- Higher potential for liability.
- Medical staff decision making ability affected by corporate budget constraints.
- Loss of control by prison staff.
This model introduces the practice of Corporate Medicine to the correctional facility. In theory, not such a bad idea. The whole problem is that the winner of these contracts is the low bidder. All this really means is that they have to do all the work with the least amount of money. This usually results in substandard care being provided to inmates because the money just isn’t in the budget to provide costly services AND pay year-end bonuses to the medical staff for coming in under budget…
All this adds up to a higher level of exposure for the correctional facility, because when care is not provided according to community standards, lawsuits abound.
The biggest negative about this model though, is the loss of control by the correctional facility staff. Medical decision making is taken away from the medical staff at the facility, oftentimes the staff is let go when the contractor starts services. This loss of control goes against every other aspect of management in place at a correctional facility, and is usually the hardest part for administrators to deal with.
Self Managed
Pros:
- Greater control over health care spending.
- Greater control over health care services.
- Better communication with providers.
- Possible to achieve better savings than with the Capitated or Comprehensive models.
In this model, the institution manages all of the health care functions on their own. They hire and manage their own internal staff of providers, as well as doing all of the contracting for the external network of providers. The reasons institutions employ this model are many. Some institutions have had bad experiences with contractors, some like to have control over these expenses directly instead of entrusting a third party to do so. In either case, this can be a very successful model, or it could cost many times more to operate than any of the other models.
Cons:
- Reduced IT capabilities.
- Difficult to hire and manage qualified staff.
- Difficult to build and maintain provider network.
As mentioned earlier, just the lack of IT capabilities found in most correctional facilities oftentimes drives the cost of care through the roof. Without the capability of accurately adjudicating medical claims, facilities are stuck paying billed charges, or only receiving token discounts from providers. Without the ability to track inmate care, facilities set themselves up for lawsuits because required care is ofter overlooked by the ever busy health services staff. Most health care at these facilities is managed through the use of log books and spreadsheets. It is a very manual process that is subject to high error rates. Their lack of technology can cost the facility to spend an extra 30% - 50% for health care over an automated facility.
Mandated Medicaid
Many states have battled with inmate health care costs. This has prompted several states to pass legislation requiring providers to treat inmates at published state Medicaid rates.
Key Benefits:
- Lowest possible cost for inmate health care is realized
Cons:
- Access to health care is substantially limited due to many providers’ unwillingness to provide routine/preventative care at state Medicaid rates.
- No access to enhanced technology or back office automation.
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