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Colorado DOC's Medical Oversight Found Remiss

An independent auditor found the Colorado Department of Corrections (CDOC) to be lax in its oversight of medical care contractors.

In April 2005, Navigant Consulting, Inc., reported the results of its audit, commissioned by the Colorado State Auditor, of the CDOC external health care services provided to prisoners. The audit examined the rates paid to external care providers, administration of the utilization management program, and the CDOC's oversight of its external care contractor. It did not examine the quality of care provided to prisoners, the facilities, the credentials of the personnel providing the care, or the appropriateness of medical care provided to any prisoner. Navigant concerned itself only with fiduciary matters. If it had looked deeper, as did other auditors, it likely would have found more problems than it did.

"Another state audit of the five private prisons in Colorado found lax oversight," The Denver Post reported. None of the private prison medical clinics were licensed by the state. The CDOC had not inspected any of the clinics from May 2003 to December 2004. Two prisoner deaths may have been caused by medication changes ordered by private prison doctors who had not even examined the prisoners. Kit Carson Correctional Facility, a Corrections Corporation of America (CCA) prison, had sought to save $35 by switching Jeffrey Buller, 26, to another drug. He died 27 hours before he was to be released.

The CDOC's medical services are, at best, little better. The Rocky Mountain News reported that the CDOC's poor medical care turned two prisoner's prison terms into death sentences. Dan Smith, 44, complained of chronic back pain for eight months before receiving an MRI. It found a 10-inch tumor on his spine and another on his pancreas. Deric Barber, 31, complained for six to nine months before receiving a colonoscopy, which found colon cancer. Both prisoners are now housed in maximum security medical facilities where the CDOC refuses to allow reporters to interview them. Both men are considered terminally ill.

Navigant made nine recommendations. It recommended that the CDOC (1) improve its oversight of contractor's rate negotiations for external services, and (2) minimize the cost duplication for hospital security; regarding utilization management, Navigant recommended that the CDOC (3) hold the contractor accountable for prior authorization, (4) improve concurrent reviews and discharge planning, (5) ensure the contractor is conducting retrospective reviews, (6) review emergency visit claims, and (7) ensure that claims are accurate. In regards to oversight, Navigant recommended (8) that the CDOC improve its oversight of the external health care service's contractor by ensuring that it complies with the contract. Finally, the auditor recommended (9) that the CDOC consider using a capitation system rather than a fee-for-service payment system. The CDOC agreed or partly agreed with all nine recommendations.

The CDOC spent $59 million in fiscal year (FY) 2004 to provide medical care to over 18,000 prisoners. Access Correctional Care contracts with the CDOC to provide all external services and was paid about $1.4 million in FY 2004 for administering services totaling approximately $24 million. These services include inpatient hospital admissions, outpatient care, specialist visits, and ancillary services, i.e. laboratory services and durable medical supplies (e.g. hearing aids).

Navigant found that the CDOC provided "minimal oversight" of Access' rate-setting methodologies. Although the contract allowed the CDOC to review rate information, the CDOC did not request and Access did not volunteer this information. As a result, the CDOC occasionally sent prisoners to hospitals that charged twice the prevailing rate.

Additionally, the auditor found that Access failed to negotiate cost-effective rate-setting agreements with hospitals, costing the CDOC as much as an additional $2.5 million. The CDOC failed to establish guidelines and financial targets as contractually required nor had it reviewed the obsolete and inappropriate guidelines Access used. Navigant found that in nearly 80 percent of the hospital billings for providing security to intensive care patients, the CDOC actually provided the security. The CDOC agreed to improve its oversight of rate negotiations, inform its contractor when it provides security and require the contractor to negotiate an intensive care rate without security.

The auditor found that Access' external providers deny only two percent of specialist referrals while CDOC staff denies 29 percent of these referrals. The auditor recommended that the CDOC require the contractor to use more restrictive criteria and collaborate to modify the standard criteria, and to monitor, measure, and enforce performance of the contract.

The CDOC's contract with Access requires the CDOC to annually evaluate service delivery and utilization management along with periodic reviews of the contractor's claims processing. The CDOC has not performed any evaluation or audit since January 2001.

When the CDOC has found Access' performance deficient, its response has been to assign CDOC staff to perform the function or has taken minimal action to induce Access to correct its deficiencies. The CDOC has never used the remedial actions available in the contract--a contract existing since 1997.

Finally, the auditor noted that under the current arrangement, Access has no incentive to control costs. Access gets paid the same regardless of costs. Navigant recommended the CDOC perform cost/benefit analysis of a capitation arrangement where the CDOC pays a set rate for every prisoner. Twenty-three states use such an arrangement.

CDOC Director Joe Ortiz admitted to The Denver Post that "we were lax in our supervision of medical staff." One state audit found "lax oversight of private prisons" while another found the CDOC provided "minimal oversight" wherever the auditor looked. Even when the CDOC stumbled upon a problem, it has taken, at most, minimal action to address the problem. The CDOC has been a sleeping, toothless watchdog. Sadly, the CDOC's failings may have cost the taxpayers millions of dollars and a few unfortunate prisoners their lives and remaining prisoners inadequate medical care.

The full report is available at and

Additional sources: The Rocky Mountain News, The Denver Post.

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