Summary

The growing federal prison population has been accompanied by rising health care costs for inmates. The Bureau of Prison's costs to treat inmates have soared from $137.6 million in 1990 to $372.1 million in 1999--an average annual increase of 8.6 percent. Since the early 1990s, the Bureau has tried to increase the efficiency and the economy of health care delivery to prisoners through various cost-containment initiatives, such as restructuring medical staffing, obtaining discounts by buying in bulk, leveraging resources through cooperative efforts with other governmental entities, and even privatizing medical services at some facilities. To further control costs, the Bureau recently proposed two legislative changes. The first--a prisoner copayment provision--would authorize the Bureau to collect a fee of not less than $2 every time a prisoner requests a health care visit. The second provision would build on the federal government's extensive experience in establishing payment rates for inpatient hospital services through Medicare's prospective payment system. That is, Medicare's prospective rates could be adopted to serve as caps for the Bureau's payments to community hospitals that care for federal prisoners. GAO notes that the Bureau might be able to save additional money by negotiating more cost-effective contracts with community hospitals that provide medical care to inmates.

GAO noted that: (1) in conjunction with a rising federal inmate population, BOP's health care costs (not adjusted for inflation) increased from $137.6 million in FY 1990 to $372.1 million in FY 1999, an average annual increase of about 8.6 percent; (2) adjusted for inflation, BOP's per capita inmate health care costs increased from $3,001 in FY 1990 to a high of $3,703 in FY 1996; (3) the per capita costs steadily decreased in subsequent fiscal years, declining to $3,242 in FY 1999; (4) in contrast, the nation's per capita health care costs (adjusted for inflation) rose continuously during FY 1990 through FY 1999; (5) since the early 1990s, BOP has attempted to increase the efficiency and economy of health care delivery to prisoners through various cost-containment initiatives, such as restructuring medical staffing, obtaining discounts through quantity or bulk purchases, leveraging resources through cooperative efforts with other governmental entities, and even privatizing medical services at selected facilities; (6) BOP reports that some of these efforts are starting to produce savings; (7) to further control medical costs, BOP has proposed two legislative provisions; (8) one--a prisoner copayment provision--would authorize the Director of BOP to assess and collect a fee of not less than $2 for each health care visit requested by a prisoner; (9) BOP officials expect that a copayment provision would serve primarily to reduce the number of unnecessary medical visits; (10) the Congressional Budget Office's (CBO) analysis also concluded that a copayment provision would reduce the number of unnecessary medical visits and would generate annual revenues of about $1 million; (11) the second legislative provision would establish a Medicare-based cap on payments to community hospitals that treat inmates; (12) CBO has estimated that this legislative provision would save BOP about $6 million annually; (13) GAO identified an administrative option whereby BOP might achieve further savings by negotiating more cost-effective contracts with community hospitals that provide medical care for inmates; (14) in late 1999, to provide a basis for identifying best value among competing proposed contracts, one of BOP's six regions--the South Central Region--began using an innovative "benchmarking" approach; and (15) according to regional office contracting officials, if the benchmarking approach were applied to all contracts in the South Central Region, the estimated savings would be about $5.6 million annually in this one region alone.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Implemented" or "Not implemented" based on our follow up work.

Recommendations for Executive Action