Press Release  Audit Finds $5.8 Million in Annual Inmate Health Care Cost Savings

Boston — State Auditor Suzanne Bump today estimated that the state will save more than $5.8 million annually in health savings by utilizing Medicaid for eligible inmates who become inpatients at a medical facility. Last year, as the audit was ongoing, the Legislature required the state’s Medicaid program, MassHealth, to develop a plan to take advantage of this federal reimbursement opportunity. The issue was advocated for by county sheriffs who were seeking budgetary relief. In her audit report released today, Bump details that by billing MassHealth for inmate inpatient health services, the Commonwealth could have received more than $11.6 million in federal reimbursements during a two-year audit period.

Since 2011, Auditor Bump has identified more than $91.3 million in unallowable, questionable, or potentially fraudulent spending and savings opportunities in the MassHealth program.

MassHealth provides access to health care to approximately 1.4 million Massachusetts residents. In Fiscal Year 2013, MassHealth paid more than $10.8 billion to health care providers, of which approximately 50 percent was funded by the federal government. The Medicaid program normally does not reimburse states for inmate health care costs, but an exception allows reimbursement if inmates meet program eligibility requirements and become inpatients at a medical facility outside the correctional institution for more than 24 hours.

“Whether the spending is coming from one agency’s line item or another, all state agencies must work in concert to find the best efficiencies and savings for the taxpayers of the Commonwealth,” said Auditor Bump. “The Legislature has required MassHealth to take full advantage of available federal reimbursement for inmate medical costs, and now we know how much it is expected to save.”

Today’s audit, which reviewed health costs in 2011 and 2012, found that MassHealth has not collaborated with the Department of Corrections (DOC) and county sheriffs to establish a process to take advantage of this cost-saving Medicaid exemption. As a result, MassHealth did not seek available federal reimbursement for inmate inpatient medical costs and consequently the Commonwealth lost the opportunity to receive $11,644,611.

During the audit, DOC and county officials expressed concerns and issues regarding inmate hospitalizations including hospitalization costs that have significantly exceeded budgeted amounts and the need to outsource or hire new staff to process medical bills. The $11.6 million in lost savings represented more than $7.5 million in lost reimbursements related to inmates at the 14 county houses of correction and more than $4 million in lost reimbursements related to inmate at the DOC facilities.

Auditor Bump has called on MassHealth to establish a process with the DOC and county offices to enroll eligible inmates in MassHealth, but suspend their benefits until they are admitted as inpatients. Auditor Bump also recommended that an inmate have health benefits reactivated upon release as access to health care is a factor in reducing recidivism. MassHealth has responded positively to the audit findings and stated that it is in process of creating an eligibility category specifically for incarcerated individuals.

The Office of the State Auditor conducts technical assessments and performance audits of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.

The Examination of State Policies and Practices Regarding Medicaid Coverage for Inmate Inpatient Healthcare Costs audit is available here.

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