The US Department of Justice and the office of the inspector general have begun an audit program to investigate the Federal Bureau of Prison's higher healthcare reimbursement rates. The Department of Justice conducted interviews and collected data on how external agencies reimbursed healthcare services in order to understand how Medicaid costs were managed within the BOP by the Justice Management Division and Office of Deputy Attorney.
According to the Centers for Medicare and Medicaid Services, abuse in Medicaid refers to practices that result in unnecessary costs and inconsistent costly fiscal policies, leading to low service delivery standards. When fraud or abuse is suspected, it is the responsibility of the Department of Justice to initiate investigations and pursue charges through law enforcement agencies (McWay, 2013).
In 2016, the Office of the Inspector General (OIG) conducted an audit and issued a report. This
...report revealed that the Federal Bureau of Prisons (BOP) had been making excessive payments to hospitals and doctors who treated federal inmates. These payments exceeded what is considered appropriate under the Medicare program, resulting in over $100 million increase in Medicare costs. The audit also discovered that the BOP was not bound by the reimbursement statute that limits government agency payments. This created a loophole that corrupt BOP employees took advantage of, leading to inflated Medicare costs. Subsequently, negotiations occurred between the BOP and healthcare providers, providing an opportunity for corrupt activities to take place. According to the OIG audit, expenses solely for external medical care reached over $100 million for the BOP.
The OIG discovered that all the institutions received higher payments than what the Medicare program would provide through matching and comparisons. The audit showed
that, on average, BOP paid a higher percentage in all payments in 2014, with the highest amount being triple the recommended amount. BOP is not subject to statutes and government regulations that establish the maximum payment an agency should make when receiving external medical services. When seeking healthcare services, agencies are not obligated to pay more than the rates set in the Medicare program. This lack of payment regulation created a situation where service providers had the ability to increase their charges when providing services to the BOP. The statutes provide guidance on how state agencies can solicit and pay for services without inefficiently using existing resources.
The BOP had not examined all potential avenues for reducing treatment costs, such as evaluating the current charges of different healthcare providers. By seeking legal advice, the BOP could potentially use the law to limit the amount it pays for healthcare services. Additionally, the BOP could collaborate with a select few agencies to receive treatment at a reduced cost. However, receiving services from multiple agencies presented the risk of being overcharged without facing any consequences.
In order to reduce costs associated with the Medicare program, the Department of Justice (DOJ) has decided to establish alternative measures. The DOJ proposes forming working groups that will explore legislative options to standardize costs among its institutions. These teams will conduct research to identify potential regulations that won't hinder the Bureau of Prisons' (BOP) ability to acquire services, while ensuring reasonable rates for healthcare. The BOP is advised to use additional guidance from these groups in effectively managing healthcare costs across different agencies. It is crucial to continuously collect data on inmates' healthcare
needs as they contribute significantly to the high costs of medical services. This data collection will help find practical and affordable solutions for cost reduction.
References
- https://oig.justice.gov/reports/2016
- https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-Education/Downloads/fwa-overview-booklet.
- McWay, D. C. (2013). Today's health information management: An integrated approach. Cengage Learning.
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