Performance Audit Report

Inmate Healthcare
Reported Contractor Staffing Levels Could Not Be Verified
Contract Monitoring Procedures Were Inadequate
Contractor Patient Health Data Were Not Reliable

February 2007

OFFICE OF LEGISLATIVE AUDITS
DEPARTMENT OF LEGISLATIVE SERVICES
MARYLAND GENERAL ASSEMBLY

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This report and any related follow-up correspondence are available to the public through
the Office of Legislative Audits at 301 West Preston Street, Room 1202, Baltimore,
Maryland 21201. The Office may be contacted by telephone at 410-946-5900, 301-9705900, or 1-877-486-9964.

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Electronic copies of our audit reports can be viewed or downloaded from our website at
http://www.ola.state.md.us.

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Alternate formats may be requested through the Maryland Relay Service at 1-800-7352258.

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The Department of Legislative Services – Office of the Executive Director, 90 State Circle,
Annapolis, Maryland 21401 can also assist you in obtaining copies of our reports and
related correspondence. The Department may be contacted by telephone at 410-9465400 or 301-970-5400.

February 21, 2007
Delegate Charles E. Barkley, Co-Chair, Joint Audit Committee
Senator Nathaniel J. McFadden, Co-Chair, Joint Audit Committee
Members of Joint Audit Committee
Annapolis, Maryland
Ladies and Gentlemen:
We conducted a performance audit of certain aspects of the Department of
Public Safety and Correctional Services’ (DPSCS) current inmate healthcare
system, which began in fiscal year 2006. The current system consists of six
different contracts covering such areas as medical, pharmaceutical, dental, and
mental health services. During that year, contractor costs totaled $110 million.
The audit objectives included (1) the review of healthcare contractors’ staffing
levels, (2) DPSCS contract monitoring procedures to ensure the delivery of
appropriate medical services, and (3) coordination among the contractors in
rendering medical services to the inmate population. This audit was requested
by the chairmen of the Joint Audit Committee.
For our first objective, we focused on the medical, dental, and mental health
contractors and found that, although DPSCS did monitor staffing levels, the
required levels were not being provided by all three contactors. For example,
DPSCS identified a shortage of approximately 11 percent for May 2006 (the
equivalent of 66 full-time positions for the medical services contractor).
Furthermore, DPSCS did not verify the accuracy of the underlying contractor
timekeeping records. Our tests found the dental and mental health time records
to be generally reliable, but the medical contractor’s time records were not
always adequately supported. Also, medical contractor employees often worked
schedules that deviated from those approved by DPSCS. DPSCS also had not
formally assessed agreed-upon contractor staffing levels—which were based on
contractors’ estimates developed as part of the procurement process—to
determine whether these staffing levels were sufficient for providing inmate
healthcare.
For our second objective, we focused on the medical contract, which we deemed
the most critical since it relates to the primary provider of care to inmates. We
found inconsistent monitoring by DPSCS. Specifically, DPSCS had not required
the contractor to develop a formal corrective action plan to address known
healthcare service deficiencies, which included inmates not receiving initial
medical exams (on booking or incarceration). In addition, we identified problems
previously unknown to DPSCS because of its failure to verify the accuracy of

contractor records and reports used by DPSCS for monitoring purposes. For
example, based on available records, inmates did not always receive routine
check-ups for chronic health conditions and timely examinations for illnesses
requested during sick calls. Contractor reports of inmates with infectious
diseases, which were used by DPSCS to monitor treatment, were found by OLA to
be understated. Also, a required inmate methadone detoxification program had
not been implemented, although work appeared to be progressing in that area.
With respect to objective three, our audit disclosed that the development of the
Electronic Patient Health Records (EPHR) computer system—which is intended to
provide a comprehensive database of each inmate’s medical history and to aid in
the coordination of service delivery—was still ongoing. Although partially
operational, the EPHR system contained incomplete and inaccurate patient
health records and could not yet be used to effectively monitor inmate healthcare
contractors and services. We also found issues that indicate the need for better
coordination between contractors, including missing medical records.
On January 16, 2007, the State reached a settlement agreement with the United
States Department of Justice to resolve numerous previously identified health
and safety violations at the Baltimore City Detention Center. Many of those
health violations are similar to the findings in this report.
DPSCS also recently entered into agreements requiring the medical services
contractor and the mental health services contractor to pay liquidated damages
of $1.75 million and $130,000, respectively, for the period from July 1, 2005
through January 17, 2007. These negotiated agreements specify that DPSCS will
hold these contractors harmless from any further claims for liquidated damages
or costs relating to contractor billings for this period. As a result, DPSCS does not
have any further financial recourse against these contractors for deficiencies
occurring during that period, including those identified by our audit.
We wish to acknowledge the cooperation extended to us by DPSCS staff during
this audit, especially the Office of Inmate Health Services.
Respectfully submitted,

Bruce A. Myers, CPA
Legislative Auditor

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Table of Contents
Executive Summary

5

Background Information

10

Healthcare Contracts Overview
Historic Problems With Inmate Healthcare
Intended Benefits of New Healthcare Contract Format
Liquidated Damages and Settlement

10
12
13
15

Audit Scope, Objectives, and Methodology

17

Findings and Recommendations

21

Objective 1: Sufficiency of Contractor Staffing

21

Conclusion

21

Background
Finding 1 –Staffing Levels Reported by the Medical Contractor
Should Be Periodically Verified to Supporting Documentation
Finding 2 – Contractor Compliance With Scheduled Work Should
Be Monitored
Finding 3 – Appropriate Staffing Levels to Provide All Required
Services Need to Be Determined

25

Recommendations

28

Objective 2: Monitoring of Service Delivery Requirements in
Medical Services Contract

29

Conclusion

29

Background
Finding 4 – Medical Exams of Arrestees Should Be Completed
Timely
Finding 5 – Procedures Should Ensure that Inmates With Chronic
Medical Conditions Receive Appropriate Treatment
Finding 6 – Corrective Actions Should Be Taken to Address
Reported Healthcare Deficiencies
Finding 7 – A Methadone Detoxification Program Should Be
Implemented As Required

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27

31
32
33
34

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Finding 8 – Action Should Be taken to Address Service Delivery
Problems and Medical Contractor Reports Should Be Verified
Finding 9 – A Timely Independent Review of Each Inmate Death
Should Be Conducted
Finding 10 – Liquidated Damages Should Be Assessed for
Significant Healthcare Contract Violations

35
36
36

Recommendations

37

Objective 3: Coordination Among Contractors

39

Conclusion

39

Electronic Patient Health Records (EPHR) System Implementation

40

Background
Finding 11 –Outstanding Issues Delaying the EPHR System
Implementation Need to Be Resolved

40

Indicators on Adequacy of Coordination
Finding 12 –Actions Should Be Taken to Address ContractorReported Weaknesses in Coordination

42

Recommendations

43

Agency Response

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Appendix A

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Executive Summary
The Office of Legislative Audits conducted a performance audit of certain
aspects of the Department of Public Safety and Correctional Services’
(DPSCS) inmate healthcare system.1 In June 2005, DPSCS entered into six
inmate healthcare contracts with five contractors to provide healthcare
services to approximately 26,000 inmates in DPSCS custody. During fiscal
year 2006, the total cost of these service contracts was approximately $110
million. The audit had three stated objectives, the results of which are
summarized in the following three sections.
Unlike the previous fixed-price contracts for inmate healthcare services, the
current contracts for medical, mental health, and dental services generally
use a time and materials delivery and payment model. Payments for services
provided under these contracts are based on work hours reported by the
contractors at hourly rates established in the contracts for the various
positions (such as physicians and nurses). The contracts for pharmaceutical
services, utilization management services, and the Electronic Patient Health
Records (EPHR) computer system are fixed-price contracts with respect to
services performed directly by the contractors’ employees. In addition, DPSCS
pays the costs for medicines dispensed to inmates and specialty care
provided by hospitals and outpatient providers.
Many of these findings relate directly or indirectly to monitoring by DPSCS
staff within the Office of Inmate Health Services (OIHS). OIHS has a staff of
approximately 30 employees and is responsible for providing oversight of the
inmate healthcare system by monitoring healthcare operations throughout
Maryland. This is essentially the same staff as was used to monitor the
previous fixed-price inmate health service contracts. OIHS meets routinely
with contractor management and on-site personnel and conducts audits to
verify compliance with contract requirements.

Sufficiency of Contractor Staffing (pages 21 to 28)
Our first objective was to determine whether DPSCS had adequate procedures
to ensure that the contractors hired sufficient staff with the requisite

1

For the purposes of this report, we generally did not differentiate between arrestees
(persons awaiting booking or trial) and inmates (parties found guilty in a court of law and
assigned to the custody of DPSCS). Unless “arrestee” is specifically used, the term
“inmates” as used in this report applies equally to both.
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qualifications as stipulated by the inmate healthcare contracts and directives
of DPSCS. Our audit disclosed that, although there was a process in place to
ensure that contractor staff possessed the requisite qualifications, the
process was not designed to ensure that staff for the medical, dental, and
mental health contractors worked the scheduled hours. Our review of the
processes and related tests disclosed in the following deficiencies:
¾ Procedures were not established to ensure that reported contractor hours
worked were supported. Our tests of contractor timekeeping records
concluded that the reported work hours of employees of the medical
contractor could not always be verified to DPSCS facility sign-in/sign-out
logs or to other documentation of work performed during those periods
(such as patient records evidencing procedures performed). We were able
to verify the reported work hours tested for the mental health and dental
contractors. (Finding 1)
¾ Procedures were not established to verify that contractor employees were
physically present at their work stations. During a visit to various facilities
in the Baltimore Region, we were unable to sight all medical contractor
employees scheduled to work. We attempted to physically sight 37
medical contractor employees scheduled to work on November 17, 2006,
but OIHS and medical contractor staff could not locate 8 employees,
including 6 employees scheduled to perform intake medical exams in the
Baltimore Central Booking and Intake Center (BCBIC). (Finding 1)
¾ OIHS had not enforced work schedules under the medical services
contract, which generally indicated that contractor employees would work
8 hours per day, as we found that more than 10 percent of the shifts
analyzed exceeded 8 hours. The medical contractor’s timekeeping
records for May and June 2006 identified 2,418 individual work shifts (out
of 21,644) in which contractor employees worked at least 12 hours per
day, with 1,029 of those shifts of at least 16 hours per day duration.
(Finding 2)
¾ The medical, dental and mental health contractors had not provided
approximately 11 percent of the respective required staffing, and the OIHS
process for monitoring that deliverable, while providing a reasonable
estimate, could be improved. Furthermore, DPSCS had not conducted an
analysis to determine the adequacy of the contractually-required staffing
levels. (Finding 3)

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Monitoring of Medical Services Contractor (pages 29 to 37)
Our second objective was to determine whether DPSCS had implemented the
necessary contractor monitoring procedures to ensure compliance with
significant service delivery and reporting provisions of the medical contract.
We found several significant areas of noncompliance impacting the medical
services provided to inmates. Although a specific assessment of the quality of
medical services rendered was beyond the scope of this audit, the failure to
provide certain required medical services could impact inmate health and,
therefore, could be considered linked to the overall quality of care. From our
review of OIHS and medical contractor procedures and records, we found the
following deficiencies:
¾ As of November 13, 2006, OIHS had not required the medical
contractor to provide documentation that 416 inmates, held at BCBIC
since at least August 2006, had received the required initial medical
screenings. (Finding 4)
¾ OIHS did not ensure that inmates with chronic medical conditions
(such as heart disease, diabetes and infectious diseases) received
required quarterly medical examinations. For example, as of October
31, 2006, the medical contractor’s records indicated that
approximately 800 of 8,200 inmates with chronic medical conditions
had not been seen by a healthcare professional within the 90 days
subsequent to their scheduled quarterly follow-up appointment dates;
effectively, this means at least 180 days had passed since their last
examinations. (Finding 5)
¾ There was a lack of documentation that appropriate corrective actions
had been put in place for known medical service delivery issues. For
example, OIHS audits found that 39 percent of the inmates tested
during September 2006 had not received requested treatment within
established timeframes (either 48 or 72 hours). Also, a September 1,
2006 report from the medical contractor disclosed that 70 percent of
medication dosages were not documented for the 20 records tested.
Finally, at regularly held treatment meetings with contractors,
deficiencies in service delivery were repeatedly discussed, including
the aforementioned medication administration recordkeeping;
however, we could not find any documentation of formal corrective
action plans and follow-up of established plans. (Finding 6)

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¾ As of November 2006, an inmate methadone detoxification program
had not been implemented as required by the contract and by State
law. We were advised that, potentially, at least 10 percent of the
100,000 persons annually processed through BCBIC exhibit symptoms
of addiction to controlled substances and could possibly benefit from
such treatment. (Finding 7)
¾ OIHS had not established adequate procedures to verify the
completeness and accuracy of contractor reports intended to aid OIHS
in monitoring for compliance with the healthcare contracts. We found
contractor-prepared treatment monitoring reports that disclosed
numerous errors in the administration of medication and thousands of
medical appointments cancelled by the medical staff; however, there
was no OIHS process to verify the reliability of the data. Also, monthly
contractor reports of inmates with infectious diseases were not
comprehensive, and were not always consistent with other reports
submitted by the contractor. For example, over 800 and 400 inmates,
respectively, were omitted from the July and August 2006 reports,
which was not detected by OIHS. (Finding 8)
¾ OIHS did not ensure that an independent physician timely reviewed the
medical records of deceased inmates to assess the adequacy of the
treatment provided. We found that, as of September 30, 2006, 25 of
67 inmate deaths in fiscal year 2006 had not been reviewed. (Finding
9)
Several of the above issues indicate deficiencies in contractors’ performance
that would likely qualify for recovery of significant liquidated damages by
DPSCS. We noted that, although OIHS had negotiated a liquidated damages
amount from the medical contractor for significant contract violations during
the July 1, 2005 to January 17, 2007 period, OIHS had not determined the
potential amount of liquidated damages available based on the actual
violations and the specific contract provisions. (Finding 10)

Coordination Among Contractors (pages 39 to 43)
Our third audit objective was to determine whether DPSCS had implemented
procedures to ensure effective coordination among the five inmate healthcare
contractors in rendering inmate healthcare services. These services include
medical, dental, pharmaceutical, mental health, and secondary care (such as

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outpatient specialty care and hospitalization). A key element in the eventual
success of that coordination is the development of the Electronic Patient
Health Records (EPHR) computer system, designed to provide an electronic
medical record for each inmate accessible from DPSCS computer terminals
throughout the State. Implementation of the EPHR system would allow OIHS
to more effectively monitor contractor performance in several areas discussed
in our audit findings under Objective 2 (such as timeliness of medical exams,
inmate sick call responses, and visits to inmates with chronic medical
conditions).
We found that EPHR was not fully operational as of December 31, 2006,
which was 18 months into the two-year contract. Our tests disclosed that
EPHR contained incomplete inmate medical records as well as multiple
medical records for many inmates, which has delayed the implementation of
the medication administration module of EPHR for use in tracking each
inmate’s prescription drug history. In addition, medical contractor employees
did not consistently enter lab test results in EPHR. Furthermore, as of October
31, 2006, there was a backlog of 60 employees awaiting access to the EPHR
system to perform their job duties. (Finding 11)
Besides the deficiencies in EPHR, we found administrative issues affecting
the coordination between contractors, which could potentially impact patient
care. For example, the mental health contractor had reported that over 500
patient charts could not be found by the medical services contractor,
potentially hampering the delivery of mental health services. Required peer
reviews of providers of secondary care (specialty care and hospitalization
services) had not been conducted for fiscal year 2006 by the utilization
management services contractor as of November 30, 2006. Finally, the
medical services contractor did not always submit the required physician
referrals to the utilization management contractor to support visits to hospital
emergency rooms. During the period from October 1, 2005 to June 30, 2006,
the utilization management services contractor reported that referrals were
lacking for 209 of the 1,084 such visits. (Finding 12)

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Background Information
Healthcare Contracts Overview
In fiscal year 2006, the Department of Public Safety and Correctional Services
(DPSCS) entered into six new inmate healthcare service contracts with five
vendors. These contracts were to provide for inmate healthcare services in
the following six areas: (1) medical, (2) dental, (3) mental health, (4)
pharmaceutical, (5) utilization management, and (6) electronic patient health
records.2
The medical services contractor is the primary provider of healthcare services
to inmates and notifies the other contractors when additional services are
required (such as dental care, mental health counseling, prescription
medication, and specialty care). In general, the medical and mental health
contractors are to perform an immediate cursory exam of inmates upon arrival
at a DPSCS facility to determine whether hospitalization or infirmary care is
necessary. The medical contractor is responsible for performing a more
detailed medical exam of each inmate within seven days of arrival at a DPSCS
facility to determine whether each inmate requires routine follow-up care,
specialty care, or no additional treatment. The medical contractor is also
responsible for responding to inmate sick call requests within 48 hours during
weekdays and within 72 hours on weekends.
The utilization management services contractor (UM contractor) is responsible
for controlling the costs of outside care (such as from hospitals or specialists)
by establishing a network of secondary care providers and by authorizing and
making all payments for usage of such providers. The UM contractor is also
responsible for conducting periodic peer reviews of all providers of healthcare
services, which includes employees of the other contractors and secondary
care providers.
The contractor for the electronic patient health records (EPHR) is responsible
for implementing a computer system that provides a full medical history, in an
electronic format, for each inmate that could be accessed from any EPHR
system terminal in DPSCS facilities and offices to allow users to readily
determine whether appropriate healthcare services were provided.

2

The vendor selected for the medical services contract was also selected to implement a
computer system for electronic patient health records.

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The contractors began work on June 1, 2005 to provide a one-month
transition period between the new and old contracts (the old contracts
terminated on June 30, 2005). The new contracts are for a term of two years
and one month, with the State having the sole option to exercise up to three
additional one-year renewals. If all three renewals are exercised, the
contracts will terminate on June 30, 2010. The contract amounts are to be
evaluated annually and adjusted based on the consumer price index. The
total cost for these six contracts during fiscal year 2006 was approximately
$110 million, according to DPSCS records, and is summarized in the following
table:

Contract
Medical Services

Table 1
Inmate Healthcare Contract Costs
Fiscal Year 2006
Fiscal Year 2006
Contract Amounts
Actual Expenditures
$ 62,351,829
$ 49,169,351

Mental Health Services

11,163,827

9,323,978

8,605,578

6,764,469

Pharmaceutical Services

15,860,277

19,336,516

Utilization Management
Electronic Patient Health
Records (EPHR)
Total

10,901,741

23,320,505

1,782,082

1,782,082

$110,665,334

$109,696,901

Dental Services

The initial DPSCS budgeted amount for these contracts during fiscal year
2006 totaled approximately $85 million, which was subsequently amended to
approximately $109 million. The increase was primarily due to higher than
anticipated costs for (1) prescription medicines and (2) secondary care
services for inmate hospitalizations and specialty care, which are paid under
the utilization management contract.
Under the previous inmate medical services fixed-price contracts, two vendors
provided all services at a cost of approximately $69 million during fiscal year
2005. The significant increase in costs under the new contract model (from
$69 million to $85 million) was primarily due to increasing healthcare costs
(in particular, the rising costs to treat HIV, AIDS, and Hepatitis C), a statutory
requirement to provide methadone detoxification, the conversion from paper

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to electronic medical records, and generally making medical services more
readily available to the inmates (thereby increasing opportunities for use).
According to DPSCS records, the healthcare contractors provided healthcare
services to an average daily population of approximately 26,200 inmates in
State correctional facilities during fiscal year 2006.

Historic Problems With Inmate Healthcare
In the past, numerous complaints had been made about deficiencies in
Maryland’s inmate healthcare program, particularly in the Baltimore jail
system, and some have resulted in investigations and lawsuits. For example,
in August 2002, the Federal Department of Justice (DOJ) cited the Baltimore
City Detention Center for 107 different violations of health and safety,
including 45 violations related to medical care and mental health patient
treatment. In January 2007, the State reached an agreement with DOJ to
resolve these violations by January 2011. The aforementioned DOJ
investigation was conducted to determine whether the State had complied
with provisions of the 1993 federal consent decree regarding health and
safety conditions in the Baltimore jail system that had not sufficiently
improved since the initial lawsuit was filed in 1971.
Under this 1993 consent decree, the health and safety conditions at the
Baltimore City Detention Center and Baltimore Central Booking and Intake
Center must be accredited annually by the National Commission on
Correctional Healthcare. Although these facilities received provisional
accreditation as of June 30, 2006, the related accreditation report listed
numerous consent decree requirements that were not in full compliance, a
number of which are also included as audit findings in this report (such as
staffing shortages and poor recordkeeping related to dispensing of
medication, intake medical screenings, and treatment for the chronically ill).
These types of issues do not appear isolated to Maryland. Inmate healthcare
deficiencies in California, Florida, Michigan, and Missouri have been the
subject of various lawsuits and investigations in recent years. Available
literature and reports from other state auditors also point to similar problems:
¾ Tennessee state auditors, in a September 2003 report, found that
their state’s inmate medical contractor did not adequately monitor
inmates with chronic medical conditions, did not perform intake exams
in a timely manner, and did not comply with physician staffing
requirements.

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¾ New York state auditors, in an August 2002 report, found that Nassau
County’s inmate medical contractor did not provide sufficient medical
staffing and did not adequately use the infirmary in the County’s
correctional facility to reduce hospitalization costs.
¾ South Carolina state auditors, in a March 2000 report, found that their
state’s inmate medical contractor did not administer medication in a
timely manner. This report also indicated that South Carolina
corrections officials did not properly monitor medical services provided
or contractor staffing levels.

Intended Benefits of New Healthcare Contract Format
An underlying issue in the delivery of quality healthcare under fixed-price
contracts is that services rendered potentially impact the contractor’s profits.
We were advised by DPSCS management personnel that an inherent problem
with a fixed-price contract is the possibility that inmate’s medical services are
being weighed against the related costs. Another consideration is the inability
or unwillingness of contractors to hire a sufficient number of qualified medical
personnel.
In an effort to reform inmate healthcare services, DPSCS selected a time and
materials service delivery and payment model for the medical, dental, and
mental health contracts. The contracts established the following four service
delivery areas (SDA) in Maryland: Baltimore, Jessup, Eastern, and Western.
DPSCS payments for services provided under the medical, mental health, and
dental contracts are based on work hours reported by the contractors at
hourly rates established in the contracts in each SDA and for each position
(such as physician and nurse). The contracts with the medical services,
dental, and mental health providers contain staffing requirements expressed
as Full Time Equivalent (FTE) positions for each position (for example,
physician, registered nurse). The number of contractor positions budgeted for
the medical services, dental, and mental health contractors were 609 FTEs,
63 FTEs, and 87 FTEs, respectively. These staffing levels were basically
established by the winning contractors as part of the bid process based on
staffing levels under the previous contract.
The contracts for pharmaceutical services, UM services, and EPHR are fixedprice contracts with respect to services performed directly by the contractors.

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For each of these contracts, DPSCS pays monthly amounts that are onetwelfth of the annual administrative and payroll-related costs specified in the
contracts, except that a portion of the amount paid to the UM contractor is
withheld as an incentive reserve and is to be subsequently paid based on
certain benchmarks. The three contracts also allow the contractors to receive
reimbursement for allowable and approved expenditures, such as for the
purchase of equipment and materials. The costs for secondary healthcare
services (such as hospitalizations and outpatient specialty care) provided to
inmates are paid to the outside providers by the UM contractor and the UM
contractor is then reimbursed by DPSCS. Pharmaceuticals for inmates are
obtained at fixed prices for each medication, with no limits on total quantities
purchased to meet inmates’ prescribed needs.
The Office of Inmate Health Services (OIHS), within the DPSCS Office of
Treatment Services, is responsible for monitoring the five inmate healthcare
contractors to ensure that services are provided in accordance with the
related contracts. Approximately 30 OIHS employees3 located in Baltimore
and throughout the State have been assigned to monitor the inmate
healthcare contracts. The responsibilities of OIHS include determining
whether contractors adhered to contract requirements to provide sufficient
qualified staffing and timely healthcare treatment services (such as
healthcare for inmates with infectious diseases or chronic health conditions).
For example, the medical, dental, and mental health contracts require each
contractor to submit work schedules, for OIHS approval, detailing the daily
working hours for all employees during each month. OIHS employees also
participate in investigations of inmate healthcare-related complaints received
from inmates, DPSCS corrections personnel, and contractor employees. All
contractors are required to attend monthly quality improvement meetings held
in each SDA as well as quarterly statewide meetings held at OIHS
headquarters in Baltimore.
Invoice processing for contractor billings is handled by the DPSCS Office of the
Secretary. Specifically, OIHS is responsible for advising the Office to pay the
invoices after comparing the invoice totals to monthly budgeted amounts.
Subsequently, OIHS is responsible for verifying hours billed, billing rates, and
the mathematical accuracy of the invoices. These responsibilities are
addressed in our fiscal compliance audits of the Office of the Secretary.

3

This is essentially the same staff assigned in OIHS to monitor the previous fixed-price
contracts. Our audit did not undertake an evaluation of OIHS staffing levels; however, the
new time and materials contract model would be expected to require much more monitoring
(due to the open-ended cost structure) than was necessary under the fixed-price model.

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Liquidated Damages and Settlement
The contracts permit DPSCS to assess liquidated damages against any
contractor that fails to perform in a manner consistent with the contract
provisions and limits the extent of damages from any one incident to
$150,000. The liquidated damages calculations in the contracts consider
several factors, including the nature and severity of the contract violations
and the estimated time required by OIHS staff to determine the impact and
remedy.
Subsequent to our fieldwork, DPSCS entered into agreements requiring the
medical services contractor and the mental health services contractor to pay
liquidated damages, totaling $1.75 million and $130,000, respectively.
DPSCS management personnel advised that the terms and amounts of these
agreements were negotiated to settle all claims and potential damages for the
period from July 1, 2005 through January 17, 2007, and also to create a
“clean slate” for the new Secretary of DPSCS, going forward from January 17,
2007. These negotiated agreements specify that DPSCS will hold these
contractors harmless from any further claims for liquidated damages or costs
relating to contractor services and billings for this period.
Although details of the basis for the settlement amounts were not readily
available from DPSCS, we were advised by DPSCS that, prior to the
settlements, the contractors had made known their intentions to seek
monetary remuneration from DPSCS for certain issues under dispute. We
were also advised that the settlements were reached after consideration of
the potential claims and the likelihood that DPSCS would ultimately prevail on
its positions.
These agreements also specify that these contractors are entitled to the
compensation—as provided for in their respective contracts—for their services
during this period as invoiced by the contractors, without regard to OIHS preapproved work schedules. This is significant since the OIHS audit unit was in
the process of reviewing the inmate medical services contractor’s invoices
and reported work hours for compliance with the OIHS-approved work
schedules and had planned to assess penalties (which are different from
liquidated damages) to the medical services contractor for failure to comply
with those schedules. Even though OIHS had only reviewed a portion of the
medical services contractor invoice and reported work hours for one month
(November 2005), the OIHS preliminary findings resulted in a proposed
$219,805 penalty for work hours deemed not in compliance with the

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contract. This proposed penalty was about 8 percent of the total costs
reviewed of approximately $2.6 million; this review excluded approximately
$1.2 million invoiced for the Baltimore SDA, which was still under a grace
period.4
No liquidated damages have been assessed for the dental, pharmaceutical
services, UM services, and EPHR system contracts; however, there are no
time limitations specified in the contracts for assessment of liquidated
damages.

4

The grace period was to allow the new contractors time to ramp up staffing without
adherence to definite staffing schedules. The general grace period was 90 days, ending on
September 30, 2005 and, for the Baltimore area, was 180 days ending on December 31,
2005. Although the contractors would not be penalized for not adhering to the staffing
schedules during the grace period, contractors could still be penalized for staffing services
that were not provided or for incorrect billing rates.

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Audit Scope, Objectives,
and Methodology
Scope
We conducted a performance audit of the process used by the Department of
Public Safety and Correctional Services (DPSCS) to monitor certain aspects of
the inmate healthcare services program administered by contractors. This
audit was conducted in response to a request made in June 2006 by the Joint
Audit Committee. The committee was concerned as to whether intended
improvements had been made in the delivery of inmate healthcare services
during fiscal year 2006, which was the initial year of the new inmate
healthcare contracts. We conducted the audit under the authority of the State
Government Article, Section 2-1221 of the Annotated Code of Maryland, and
performed it in accordance with generally accepted government auditing
standards.

Objectives
We had three specific audit objectives:
1. To determine whether DPSCS established procedures to ensure
that the contractors hired sufficient staff with the requisite
qualifications as stipulated by contracts and other directives of
DPSCS
2. To determine whether DPSCS implemented the necessary
contractor monitoring procedures to ensure compliance with
significant reporting provisions of the medical services contracts
3. To determine whether DPSCS implemented adequate procedures
to ensure effective coordination among contractors in
rendering services to the inmate population
The focus of our audit was on determining the level of services and work
hours provided; generally, we did not attempt to calculate the potential

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financial impact of any contractor noncompliance.5 We also did not attempt
to assess the quality of care provided to individual inmates.

Methodology
To conduct this audit, we obtained and reviewed relevant current inmate
healthcare services contract documents and conducted interviews of the
contractors’ staff and employees of the DPSCS Office of Inmate Health
Services (OIHS) and certain DPSCS facilities to obtain an understanding of the
service delivery process and expectations.
To address our first objective, we reviewed existing DPSCS – OIHS reports
detailing actual staffing levels for the medical, dental, and mental health
contracts during fiscal year 2006, which were derived from the contractors’
monthly payroll expenditure data, and compared the staffing levels to contract
requirements. Contract employee work hours are recorded either in the
contractors’ electronic time keeping system or, for a small group of medical
contractor employees and temporary agency employees, on manual time
sheets.
To assess the reliability of contractor timekeeping records, we conducted
statistical and non-statistical testing of the three contractors’ time records,
and we
¾ compared the hours invoiced for employees to hours worked as
reported on time records, and
¾ verified whether these employees did indeed work at the designated
institutions by sighting evidence at the facilities, such as sign-in/signout logs or patient record entries.
In addition, to determine whether employees had the requisite qualifications
to perform their job duties, for these selected employees, we reviewed
qualifications and credentials.
For our second objective, after identifying and evaluating certain reports
prepared by OIHS for consistency with the underlying data provided by
contractors, we determined the extent to which OIHS used these reports to
monitor contractor compliance with significant contract provisions and for
5

The Office of Legislative Audits has recently completed a fiscal compliance audit of the
DPSCS Office of Secretary, and the resulting report, which was recently issued, contains
several comments addressing financial matters related to certain healthcare contract
monitoring issues.

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decision-making purposes impacting the adequacy of inmate healthcare. We
also reviewed OIHS procedures designed to ensure it received certain critical
contractually-required data regarding inmate healthcare service delivery (such
as reports of medication errors, missed appointments, missing patient
medical records, and hospital emergency room admissions) and OIHS
procedures to verify the reliability of that data.
To address our third objective, we reviewed the OIHS and the utilization
management services contractor (UM contractor) processes and procedures
for compiling treatment monitoring reports, which demonstrated whether the
various contractors effectively coordinated their responsibilities under the new
contracts. We determined whether related reports were in accordance with
contractual provisions. We also determined the reliability of certain critical
UM contractor-supplied data used by OIHS for decision-making purposes. In
addition, we determined whether OIHS had implemented corrective actions as
recommended in UM contractor reports and in the minutes of periodic
meetings with all the contractors to resolve treatment issues.
As part of our third objective, we also determined the progress of the
implementation of the Electronic Patient Health Records (EPHR) system. The
primary function of EPHR is to provide a consolidated record of all patient
health information to allow OIHS medical staff to readily determine whether
appropriate healthcare services were provided. While the EPHR modules for
medical, dental, and medication records have been developed, the system is
not fully operational due to some outstanding implementation issues (for
example, consolidation of multiple health records for individuals). Before we
began our fieldwork, we were advised by OIHS that many contractor
employees were not consistently entering treatment records into EPHR due to
a lack of training or staffing shortages; accordingly, we reviewed existing EPHR
reports and attempted to determine the extent to which the EPHR system is
being used by contractor employees. We also attempted to assess the
completeness of the patient records included in the EPHR system during our
testing of the source records for various treatment monitoring reports as
previously mentioned in objectives 2 and 3.

Fieldwork and DPSCS Response
We conducted our fieldwork from July 2006 to December 2006. The
response from DPSCS to our findings and recommendations is included as an
appendix to this report.

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Findings and
Recommendations
Objective 1

Sufficiency of Contractor Staffing
Conclusion
Our first objective was to determine whether the contractors had hired
sufficient staff with the requisite qualifications as stipulated by the inmate6
healthcare contracts and directives of the Department of Public Safety and
Correctional Services (DPSCS). Our testing identified three staffing issues,
two of which impacted the medical contractor exclusively, and the third
which applied to the medical, dental, and mental health contractors
equally. Our review of the DPSCS Office of Inmate Health Services (OIHS)
licensing verification process found that it was generally adequate to
ensure that licensed health professionals were employed by the three
contractors.

Staffing
Assessing contractor staffing levels requires reliance on the underlying
employee time reports. Since OIHS did not have a formal process for
verifying this information, we conducted statistical and non-statistical
testing of the three contractors’ time records for one week in May 2006.
We were able to verify the employee work hours reported by the mental
health and dental contractors; however, we concluded that the reported
hours for the medical contractor were unreliable because, for certain
medical contractor employees tested, there was no evidence that the
employees signed in or out of DPSCS facilities, as required. The contractor
could also not provide documentation of work performed (such as patients
visited or procedures performed) on the days tested to verify that the
specific contractor employees in question (7 of the 29 employees in our
May 2006 test) were otherwise physically present as reported on the

6

As used in this report, the term “inmate” collectively refers to both arrestees processed
by the Baltimore Central Booking and Intake Center awaiting arraignment or trial and
inmates consigned to the care of DPSCS facilities after being found guilty of associated
charges.
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contractor’s timekeeping records. Most of these 7 employees were
assigned to the Baltimore Region.
On November 17, 2006, we visited various facilities in the Baltimore
Region in an attempt to sight contractor medical staff. Eight of the 37
medical contractor employees scheduled to work that day could not be
found, including 6 employees scheduled to perform intake medical exams
at the BCBIC (see Finding 4 for the potential impact of understaffing of
these positions). Our test results ultimately impact the effectiveness of
assessing the adequacy of staffing.
We also found that, although OIHS was aware that the medical contractor
permitted some employees to work a schedule of more than 8 hours a day,
it was unaware of the frequency this was occurring, at least in part because
the contractor had not submitted required schedule modifications to OIHS
for prior approval. The medical contractor’s timekeeping records for May
and June 2006 indicated 2,418 daily individual work shifts (11 percent of
the total shifts for the period) in which contractor employees worked at
least 12 hours per day. We then reviewed the records for the Baltimore
Pretrial region (which includes the Central Booking and Intake Facility, and
the Baltimore City Detention Center) during the six-month period ending
September 2006. We found that the medical contractor’s records
indicated that employees worked a total of 3,054 daily individual work
shifts of at least 12 hours per day. The original reason OIHS intended to
limit daily shifts to 8 hours was to help ensure a high quality of care
rendered to inmates.
Finally, for all three contractors, we found that required staffing levels
based on Full Time Equivalent (FTE) positions were not being supplied. For
example, during the month of May 2006, OLA calculations placed the FTE
shortages between 8 and 14 percent of the required levels.7 Reported
understaffing has continued, yet a formal plan to reach full staffing has not
been implemented.
These required staffing levels were developed by the three contractors as
part of their respective bids, yet no subsequent formal assessment has
been conducted to determine what the necessary levels should be to
provide comprehensive services now that the contracts have been in force
for over a year and a half.
7

Note that the methodology used by OIHS and OLA differed. OIHS based its calculations
on a conversion of contractor-billed salary expenditures into FTEs, while the OLA based
its calculations on a conversion of reported hours worked, a more precise method. The
OIHS results, in this case, were reasonably close to the OLA results.

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Licensing
In accordance with Objective 1, we also conducted a review of the OIHS
monitoring process to ensure appropriate licensing of the healthcare
professionals employed by the medical services, dental, and mental health
contractors. Contract terms specified that certain healthcare professionals
employed by the medical, dental, and mental health contractors should be
licensed. Although our testing found one instance of a two-month lapse
between license expiration and renewal for one nurse employed by the
medical services contractor, we found that OIHS appeared to have an
adequate process in place to ensure that licensed staff provided
healthcare services to inmates. Specifically, OIHS reviews the licenses of
all new contractor healthcare personnel and then conducts quarterly
reviews of all employees for changes in licensing status.

Findings
Background
DPSCS entered into multi-year contracts at the beginning of fiscal year
2006 with several corporations to provide healthcare services to inmates
in DPSCS correctional facilities. To help ensure that services are effectively
provided at the various facilities in each region, three of the contracts
required the contractors to provide minimum staffing levels for various
types of healthcare professionals. The number of contractor positions
budgeted for the medical services, dental, and mental health contractors
were 609 FTEs, 63 FTEs, and 87 FTEs, respectively.
DPSCS’ OIHS is responsible for monitoring the medical services, dental,
and mental health contractors’ staffing level for compliance with these
staffing requirements. For each month, the contractors submit invoices
detailing the hours worked by their employees, according to work hours
reported in the contractors’ timekeeping systems. In addition to the
contractors’ timekeeping records, DPSCS policy requires each contractor
employee to record his or her name in a sign-in/sign-out log upon entering
and leaving a correctional facility, which serves as an independent source
in determining the reliability of hours billed.
The three contracts also require each contractor to submit a work
schedule, for OIHS approval, detailing the daily working hours for all
employees during each month; adjustments to the work schedule are
required to be approved in advance. In the vast majority of cases, the
approved daily work schedules consist of eight-hour work days. The
contract allows OIHS to recover any payments for unapproved hours.
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1. Staffing levels provided, as reported by the medical contractor,
should be periodically verified to supporting documentation. – We
found that OIHS compared hours billed to scheduled work hours and then
used billed hours to monitor staffing schedules. However, this process was
not effective because it did not include a verification that employees
actually worked the hours billed. This verification should include, on a test
basis, a review of the supporting sign-in/sign-out logs and a procedure to
physically sight employees on scheduled work days.
We conducted tests of billed hours and the facility log books, and found
that the billed work hours of dental and mental health contractor
employees tested were reliable. However, we could not reach a similar
conclusion for the much larger medical services contractor. In addition to
possibly paying for services that were not documented, since these billed
work hours are used by OIHS personnel to monitor required contractor
staffing levels, there is no assurance that the intended staffing and the
anticipated level of service are being provided. Our test results for the
medical services contractor were as follows:
¾ A statistical sample of 29 medical contractor employees disclosed
that, for 7 of these employees, the required sign-in/sign-out logs at
DPSCS facilities were not completed to substantiate 293 hours
invoiced during one week tested in May 2006. These
undocumented hours represented approximately 23 percent of the
total 1,262 hours billed during the week for the 29 employees in
our sample. After repeated inquiries, the contractor was unable to
provide any other documentation (such as notations on patient
medical records) to substantiate that these 7 employees were
physically at work on the days in question. Based on our statistical
sampling, we are 95 percent confident that supporting
documentation for reported work hours would not be available for at
least 11 percent of all the contractor’s employees reported as
working during our test period (the week of May 21 to May 27,
2006).8 For the month of May 2006, the medical contractor
reported that it employed 713 employees.
Based on these results, OIHS issued memos, on September 8,
2006, to the medical contractor and to the wardens in the Baltimore
Region—where 6 of the 7 employees were assigned—reinforcing the
policy that contractor employees sign in and out of DPSCS facilities.
We conducted a follow-up test during two weeks in October 2006 at
8

Our statistical sampling results cannot be projected beyond that period.

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the Baltimore Region for 10 medical contractor employees and
found that the required sign-in/sign-out logs were not always
completed for 5 employees.
¾ Since our original test showed incomplete sign-in/sign-out logs, we
chose to conduct an unannounced visit to sight medical contractor
employees at their workplaces. During a November 17, 2006 site
visit to the Baltimore Region, we could not physically sight 8 of 37
medical contractor employees who should have been working that
day, according to OIHS approved work schedules (which OIHS uses
to verify billed hours). During our visit, neither the contractor’s
representative nor the OIHS official who accompanied us could
provide an explanation for the employees that were not located. Of
those 8 employees, 6 were scheduled to work on intake screenings
in BCBIC. We found that, at the time of our visit, only 5 employees
were working on intake screenings.9
Subsequent to our fieldwork, we reviewed the medical services
contractor’s invoice for services provided during November 2006,
and the related time records, and determined that the contractor
billed DPSCS for 23.5 work hours for 3 of the aforementioned 8
employees that could not be located at BCBIC during our site visit
on November 17, 2006.
¾ From our November 2006 site visit, we also found that the medical
contractor was not regularly submitting adjustments to employee
work schedules to the OIHS regional contract manager, as required.
Twelve of the 29 contractor employees physically sighted during our
visit were not listed on the OIHS approved work schedule, but were
replacing other scheduled employees.

2. OIHS should closely monitor contractor compliance with pre-approved
work schedules. – OIHS did not require employees of the medical
contractor to adhere to pre-approved work schedules required in the
related service contract, which usually anticipated an 8 hour work day per
employee. Although the practice of working a fewer number of longer shifts
seems to be common in the private sector, we were advised by OIHS that
this scheduling was intended to positively impact the quality of healthcare
services provided, by limiting employee fatigue that could result from long
9

We also noted, in Finding 4, that intake screenings at BCBIC were not being completed in
a timely manner. These screenings form one of the primary methods for assessing
medical conditions and are required to be completed on inmates within 7 days of arrival
at BCBIC. Although we were not definitively able to determine the cause for the
untimely screenings, a lack of staffing would impact that service delivery.
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shifts. However, the contractor reported that many of its employees
consistently worked shifts of 12 hours or more per day.
According to the medical contractor’s electronic timekeeping records for
May and June 2006, there were 2,418 (11 percent of 21,644) daily
individual work shifts in which contractor employees worked at least 12
hours per day, including 1,029 (5 percent) work shifts in which contractor
employees worked at least 16 hours per day. As seen in Table 2 below,
statewide, 48 percent of the employees who reportedly worked during
those months had shifts of 12 hours or more (344 out of 713 employees).
The majority of the employees working long shifts were nursing staff at the
Baltimore Region’s facilities. Although OIHS management was aware that,
due to understaffing, the medical contractor allowed its employees to work
longer hours during evenings and weekends, OIHS did not formally monitor
the situation as it was unaware of the reported frequency. As noted in
Finding 1, there is no assurance that all work hours reported by the
medical contractor were actually worked; nevertheless, OIHS should have
taken action based on any reported instance of noncompliance.
Table 2
Count of Daily Work Shifts in May and June 2006 in Which
Medical Contractor Employees Reportedly Worked Excessive Hours

Region

Number of
Employees
in June
2006

May and June 2006 Combined Totals
Count of Employees
With Daily Shifts Of
12 to 15 Hours
Employees
Shifts

Count of Employees
With Daily Shifts Of At
Least 16 Hours
Employees
Shifts

Baltimore Pretrial1

177

43

620

61

373

Baltimore - Other

125

29

335

31

251

Baltimore Region

302

72

955

92

624

Jessup Region

202

30

177

52

206

Western Region

142

28

203

50

192

Eastern Region

67

16

54

4

7

Statewide Totals

713

146

1,389

198

1,029

Source: Electronic timekeeping records of inmate medical contractor
1 Baltimore

Pretrial includes the Central Booking and Intake Facility, and the Baltimore City
Detention Center.

Longer shifts, however, were not just confined to nursing staff. For
example, the medical contractor reported that one physician in the Eastern
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Region worked at least 12 hours per day for 29 days in June 2006. We
subsequently expanded our review of these records and found that, during
the six-month period from April to September 2006, contractor employees
in one Baltimore Region facility were reported to have worked a total of
3,054 shifts of at least 12 hours per day, which included 1,198 shifts of at
least 16 hours per day. Again, OIHS should have investigated any reported
instances of noncompliance.

3. OIHS should determine the appropriate contractor staffing levels
needed to provide all required services to inmates. – OIHS had no
assurance that adequate staffing levels were being provided for medical,
dental, and mental health services. As previously noted, the contracts
contained required staffing levels (expressed as Full Time Equivalent
positions, or FTEs) for specific categories of healthcare professionals;
however, there has not been a formal assessment or study to determine if
these Statewide and regional FTE totals are appropriate or adequate.
DPSCS acknowledged that the contractual staffing levels were developed
by the current contractors as part of the bidding process, and may not
necessarily reflect the staffing levels needed to provide all required
services to all inmates.
Furthermore, OIHS monitoring has shown that actual staffing levels were
not meeting the contractual FTE requirements, but OIHS had not taken any
specific actions to require the contractors to reach full staffing. For
example, OIHS estimated that, for the medical, dental, and mental health
services, 11, 12, and 10 percent, respectively, of the contractually required
FTEs were not provided for May 2006. For the medical services contract,
the 11 percent shortage equates to approximately 66 full-time positions.
Finally, while the monitoring methodology used by OIHS provided
reasonable estimates of FTEs, we found that it could be enhanced to
further improve reliability. Monthly, OIHS tallied the actual payroll
expenditures and compared them to budgeted expenditures10 to estimate
the FTEs being provided in relation to the contracts’ requirements. The use
of actual hours provided as the basis for determining staffing percentages
would more realistically equate to FTE positions. Our calculations of the
FTEs based on reported actual hours of service provided resulted in slightly
different percentages. We calculated the medical, dental, and mental

10

Budgeted expenditures are essentially annual estimated contract costs divided by 12
months.
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health FTEs that were not provided for May 2006, to be 8, 14, and 9
percent, respectively, of the contractually required FTEs.

Recommendations
1. We recommend that OIHS establish a process to monitor the medical
contractor’s adherence to the contractual time reporting requirements.
Specifically, contractor employees should be required to complete signin/sign-out logs and the contractor should submit employee work
schedule adjustments to the OIHS for approval. We also recommend
that OIHS establish a process to periodically verify contractor time
records and contractor employees’ presence at work, at least on a test
basis.
2. We recommend that the OIHS establish procedures to closely monitor
the medical contractor’s compliance with pre-approved contractor
employee work schedules. OIHS should recover any future payments to
the contractor for employee work hours that exceed the approved work
schedules.
3. We recommend that OIHS enhance its process to capture and record
Full Time Equivalent (FTE) positions actually delivered and use this
information to enforce contractor compliance with established staffing
requirements. We also recommend that OIHS determine the
appropriate contractor staffing levels needed to provide all required
services to inmates.

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Objective 2

Monitoring of Service Delivery Requirements in
Medical Services Contract
Conclusion
Our second objective was to determine whether DPSCS had implemented
monitoring procedures to ensure contractor compliance with significant
provisions of the medical services contract (other than required staffing
levels, which were reviewed in Objective 1). This objective was limited to
the medical services contract, which is the largest contract and the most
important in terms of overall patient care. This contractor is to provide
various levels of patient care (such as chronic healthcare checkups) and
acts as a gatekeeper, authorizing patient access to more expensive
specialty care and inpatient hospital services. We found a number of areas
in which inadequate OIHS monitoring appeared to lead to potential lapses
in required medical coverage and certain required medical treatments.
¾ As of November 13, 2006, OIHS had not ensured that 416 inmates,
held at BCBIC since prior to September 2006, had received medical
screenings that are required to be performed within seven days of
booking. Because of inadequate records, it was unclear whether
these screenings were ever performed.
¾ OIHS did not ensure that inmates with chronic medical conditions
(such as infectious diseases, diabetes, and heart disease) received
required quarterly follow-up visits from medical contractor
employees. For example, contractor records indicated that
approximately 800 inmates in chronic care as of October 31, 2006
had not been visited by the medical contractor within 90 days of
their scheduled quarterly follow-up appointment date.
¾ A methadone detoxification program for inmates of State
correctional facilities addicted to controlled substances had not yet
been implemented, even though it was required by the contract and
State law. We were advised by an OIHS management employee that
there is likely a significant unmet demand for this treatment.
¾ OIHS did not ensure that independent physician reviews of the
medical records of inmates who passed away in DPSCS custody

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were performed within 30 days. OIHS records indicated that timely
reviews were not performed for 25 of 67 inmate deaths during fiscal
year 2006.
We also noted deficiencies with the OIHS process for monitoring reported
service delivery problems and for developing appropriate corrective action
plans. There are various mechanisms in place to identify medical service
delivery issues, including periodic audits by OIHS and contractor staff,
routinely scheduled meetings between the contractor and OIHS, and
monthly contractor reports. Our review of these communicative processes,
disclosed a number of deficiencies for which there was no related
corrective action plan or formal OIHS follow-up to ensure that the issues
were satisfactorily addressed. The following are examples of the types of
issues noted:
¾ Inmates were not receiving timely treatment in response to sick call
requests. OIHS auditors noted this condition for 45 percent and 39
percent of those tested by OIHS during September 2005 and 2006,
respectively.
¾ According to a September 1, 2006 audit report prepared by the
medical contractor, there were documentation problems in the
administration of medication to 70 percent of the inmates tested
(representing 14 of 20 records tested) at BCBIC.
¾ During the period from March to August 2006, the medical
contractor reported 109 medication dispensing errors and 2,717
appointment cancellations by its staff.
As part of the monitoring process, OIHS often relied on contractor reports.
Although OIHS had processes in place to determine the reliability of certain
contractor reported data, these processes were often not effective, and
some critical data were not subject to verification to supporting
documentation, such as inmate medical records,. For example, our testing
of certain medical contractor reports of inmates with infectious diseases
found that they did not include all service regions, thereby underreporting
the extent of the problem by several hundred cases.
Several of the above issues are of a nature that would likely allow for
recovery of significant liquidated damages by DPSCS. We noted that,
although OIHS had negotiated a liquidated damages amount from the
medical contractor for significant contract violations during the July 1,

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2005 to January 17, 2007 period, OIHS had not previously determined the
potential amount of liquidated damages available based on the actual
violations and the applicable contract terms.

Findings
Background
The inmate medical services contract requires the medical contractor to
provide medical services (including medical exams, routine chronic care
visits, and inmate sick call visits) within specified timeframes. The
contractor is required to complete medical exams of inmates within seven
days of their arrival at DPSCS facilities. The majority of such medical
exams are conducted at the BCBIC. The exams are performed to detect
infectious diseases and serious medical conditions before arrestees are
released into the general inmate population. The contractor is also
required
¾ to maintain unique programs for chronic care patients which
ensures that these health conditions are appropriately diagnosed,
treated, and controlled, including visits at least every three months,
and
¾ to respond to inmate sick call requests within 48 hours during
weekdays and within 72 hours on weekends.
OIHS and the medical contractor periodically conduct audits of the medical
contractor’s records to ensure compliance with these contract
requirements. OIHS regional and headquarters staff also conduct
treatment monitoring meetings individually with contractors at least
monthly, and all of the contractors attend quarterly meetings at OIHS
headquarters. OIHS management asserted that these routine contractor
meetings, during fiscal year 2006, led to quicker and easier identification
of inmate healthcare problems and solutions.

4. Medical exams of arrestees should be completed within seven days of
arrest as required. – We were advised, in August 2006, by OIHS
management that it had become aware of hundreds of arrestees at BCBIC
who had not received medical exams within seven days of arrest, as
required. In September 2006, OIHS staff began to monitor this situation,
going forward, using DPSCS records of all arrestees processed by BCBIC
and by comparing these records to the medical contractor’s records of

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inmates who had received medical exams or who had been released. This
comparison enabled OIHS to quantify and identify inmates requiring
medical exams.
We used the same documents to quantify the number of current inmates
booked, prior to September 1, 2006, who had not received the required
medical exams. Our comparison identified 561 inmates, arrested prior to
September 2006 and still incarcerated at BCBIC, for which there was no
documentation that medical screenings had been received as required.
These 561 inmates represented 63 percent of the BCBIC population as of
September 7, 2006, and included 537 inmates who apparently still had
not received an exam at least one month after arrest and 151 inmates who
had not received exams at least 3 months after arrest. While we did not
verify the accuracy of the contractor and DPSCS records, our results
indicate that a significant problem may exist that OIHS should have
addressed.
OIHS monitoring records, as of November 13, 2006, indicated that medical
exams appeared to have been conducted, as required, for arrestees
processed after August 31, 2006; however, these records did not indicate,
and OIHS staff was unsure, whether medical exams had subsequently been
performed for 416 of the aforementioned 561 inmates.

5. A process should be put in place to ensure that inmates with chronic
medical conditions receive appropriate treatment as required. – OIHS
did not have a process to ensure that inmates with chronic medical
conditions (such as infectious diseases, diabetes, and heart disease) were
enrolled in chronic care clinics, as required, and that those enrolled
received required periodic visits from medical staff. OIHS also had
not reviewed chronic care reports received from the medical contractor and
had not taken appropriate corrective action to resolve reported deficiencies
in chronic care services. In addition, as commented upon in Finding 8,
OIHS had not established procedures to verify the accuracy and
completeness of certain contractor reports (including chronic care).
Nevertheless, OIHS should have taken steps to address these reported
deficiencies:
¾ Four of the 10 inmates diagnosed with Hepatitis C by the medical
contractor in July 2006 were not included in the contractor’s chronic
care clinic database as of October 31, 2006. Consequently, OIHS
had no assurance that those inmates were receiving appropriate
treatment.

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¾ The medical contractor’s records indicated that 1,917 of 8,247
inmates in chronic care as of October 31, 2006 (23 percent) had
not been seen by a healthcare professional within 30 days of their
scheduled quarterly follow-up appointment dates. This included
797 inmates for whom at least 180 days had passed since their last
examinations.
¾ The medical contractor’s reports disclosed that 144 inmates in
chronic care as of October 31, 2006 had gaps between scheduled
appointments of 4 to 12 months. The contract requires 3-month
intervals between follow-up visits.

6. Corrective actions should be taken to address reported healthcare
deficiencies. – OIHS did not take sufficient corrective action to follow up
on service delivery deficiencies noted in audits conducted by OIHS staff
and the medical contractor and those discussed in meetings between OIHS
and the contractors. We also noted that the OIHS audit coverage was
limited to certain regions.
OIHS staff performed audits of the response time for inmate sick call
requests for treatment and concluded that it was generally beyond the
contractually-required 48 to 72 hours. Specifically, OIHS audits in
September 2005 and September 2006 at certain DPSCS facilities
disclosed that, for 45 percent and 39 percent of the requests, respectively,
responses were untimely. The September 2005 audit also disclosed that,
for half of sick call requests tested, in which follow-up treatment was
necessary, there was no documentation that follow-up treatment was
provided. Furthermore, the September 2006 audit did not include the
correctional facilities in the Baltimore Region, which comprised 7,336 (28
percent) of the 26,200 inmates in the average daily inmate population of
DPSCS facilities as of June 30, 2006.
In addition, a September 1, 2006 audit report prepared by the medical
contractor, addressing BCBIC inmate medication administration
recordkeeping practices, disclosed that all medication dosages were not
documented for 14 of the 20 records tested (representing 70 percent).
Yet we found no evidence that OIHS had required the medical contractor to
provide formal corrective action plans for these OIHS and medical
contractor audits and no evidence that OIHS staff had followed up to
ensure that all audit weaknesses were resolved.
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Furthermore, OIHS did not ensure that corrective actions recommended
during its meetings with the medical contractor were actually implemented.
Our review of the minutes of OIHS meetings with the contractor disclosed
that several weaknesses in inmate medical services were discussed
repeatedly with no indication that corrective actions were implemented. For
example, medication administration recordkeeping deficiencies had been
discussed at each quarterly meeting during the period from September 22,
2005 to July 28, 2006; however, OIHS could not provide documentation
that it was regularly tracking the recommended corrective actions or taking
measure to ensure implementation of corrective actions.

7. A methadone detoxification program should be implemented as
required. – A methadone detoxification program for inmates of State
correctional facilities addicted to controlled substances had not been
implemented as of November 2006, as required by the medical services
contract.11 The contract, however, did not specify an effective date for the
establishment of such a program. We were advised by OIHS management
that the primary reason for the delay was that staff from DPSCS and the
medical contractor had underestimated the challenges in implementing a
methadone treatment program, which must be certified by federal and
State health agencies prior to its operation.
As of December 31, 2006, we were advised by OIHS management that the
medical contractor had developed the requisite program operation
manuals, had purchased required equipment (such as safes to store the
methadone), and had submitted program operation applications to federal
and State agencies, but that the contractor was still awaiting approval to
begin the program. Since the costs of implementing the program were
factored into the rates charged for services provided by the medical
services contractor, we were unable to readily determine the extent to
which costs associated with this program were included in the
approximately $49 million in payments made by DPSCS to the medical
services contractor during fiscal year 2006.
The issue of providing substance abuse treatment services to inmates as a
method of reducing recidivism has been a primary focus of DPSCS as
evidenced by initiatives, such as the RESTART program (Reentry
Enforcement Services Targeting Addiction, Rehabilitation and Treatment).
11

In addition to the contract, there has been a longstanding requirement in State law,
Correctional Services Article, Section 9-603 of the Annotated Code of Maryland,
requiring DPSCS to provide and pay for inmate methadone detoxification treatment.

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An OIHS management employee advised us that at least 10 percent of the
approximately 100,000 inmates per year at BCBIC exhibit symptoms of
addiction to controlled substances and could be eligible for treatment once
a methadone detoxification program is implemented.

8. Action should be taken to address identified service delivery
problems and medical contractor reports should be verified for
reliability. –OIHS had not established procedures to verify contractorreported service delivery statistics for accuracy and completeness, even on
a test basis, and had not taken action to correct the reported problems.
Reports from the medical contractor, for the period from March 1, 2006 to
August 31, 2006, disclosed that 109 errors were made by its staff in
dispensing prescription medication to inmates and that its staff had
cancelled 2,717 inmate medical appointments. For two months during this
period (May and June 2006), we tested the medical contractor reports of
medication administration errors in the Jessup Region and of cancelled
appointments in the Western Maryland Region; these were regions where
these problems appeared prevalent. Our tests disclosed that the medical
contractor could not provide any documentation to support the accuracy of
its reported figures (such as a list of the respective inmates for each
category). We also noted that OIHS had not established procedures to
verify other contractor reports, such as chronic care reports.
OIHS also did not verify the accuracy and completeness of various
infectious disease reports received from the medical contractor to ensure
the reports agreed to the underlying medical records. OIHS uses the
contractor’s infectious disease reports to track the spread of these
diseases within the inmate population and to identify significant
fluctuations in the number of infected inmates which may require further
investigation by OIHS staff and corrective action. When we reviewed these
monthly reports, we found reliability problems. For example, our
comparison of the July, August, and September 2006 monthly reports with
the underlying medical records found that
¾ the July and August 2006 reports omitted 400 inmates in facilities
in the Baltimore Region that were infected with the Hepatitis C
virus, and
¾ the July 2006 report omitted another 400 similarly infected
inmates from Jessup Region facilities.

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9. A timely independent review should be conducted of the adequacy of
care rendered subsequent to each inmate death. – OIHS did not
ensure that an independent physician performed a review of inmate deaths
in a timely manner. OIHS informal policy is that an independent physician
should review each inmate death within 30 days, to verify the cause of
death as reported by the medical contractor, and to conduct a
comprehensive review of the adequacy of the medical treatment provided
to the inmate. However, OIHS records of 67 inmate deaths during fiscal
year 2006 indicated that, as of September 30, 2006, there was no
evidence that the independent reviews had been performed for 25 inmate
deaths, including 13 inmates who had been deceased for at least six
months. We were advised by OIHS management that the delay in
conducting the independent death reviews was due to staffing shortages.

10. OIHS should ensure that all significant healthcare violations and
performance deficiencies are identified and documented timely and
that full liquidated damages are assessed as soon as practical. – As
indicated on page 15 of this report, OIHS had negotiated liquidated
damages agreements with the medical services contractor and the mental
health contractor for the July 1, 2005 through January 17, 2007 period.
However, OIHS did not have a definitive basis for the negotiated amounts.
We were advised by a management official that OIHS was tracking
contractor non-performance issues and wanted to build a compelling case
with several violations before assessing any damages; however, OIHS could
not provide documentation to show that all significant violations during the
period had been identified and documented, and that the value of
damages had been calculated in accordance with the contract terms.
According to the contract documents, OIHS may deduct liquidated
damages (reduce subsequent payments) for cases in which any of the five
contractors fails to perform in a satisfactory and timely manner, with a limit
of $150,000 in damages for any one incident. Liquidated damages serve
as an incentive for contractors to perform their responsibilities fully and
timely, and to mitigate any additional costs incurred by DPSCS as a result
of the contractor(s) deficiencies.
Following are some examples of major contractor deficiencies identified
during our audit:
¾ Failure to provide required care to inmates with chronic medical
conditions (Finding 5)

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¾ Delayed response time for inmate sick calls (Finding 6)
¾ Failure to implement a methadone detoxification clinic (Finding 7)
¾ Lack of peer reviews of providers of secondary care medical
services, such as specialists and hospitals (Finding 12)

Recommendations
4. We recommend that OIHS ensure that medical exams are completed
within seven days for all arrestees, as required in the inmate medical
contract.
5. We recommend that OIHS establish a process to ensure that all
inmates with chronic care conditions receive required services from the
contractor’s medical staff.
6. We recommend that OIHS require corrective action plans from
contractors to address service delivery deficiencies identified in audits
conducted by OIHS and by the contractors, as well as service delivery
weaknesses discussed in the periodic meetings with the contractors.
We also recommend that OIHS establish procedures to ensure that the
corrective action plans are implemented, and retain documentation
that establishes corrective actions have been fully implemented.
7. We recommend that OIHS ensure the required methadone
detoxification program is implemented as soon as possible.
8. We recommend that OIHS ensure that contractor service delivery
reports contain all required information, that OIHS periodically review
the underlying medical records for contractor reports to ensure
reliability, at least on a test basis and that OIHS investigate and resolve
any discrepancies. Finally, we recommend that OIHS take action to
address any identified service delivery deficiencies.
9. We recommend that OIHS establish a process to ensure that an
independent physician reviews each inmate death in a timely manner
to evaluate the adequacy of medical care provided to the inmate.
10. We recommend that OIHS ensure that all significant contractor
performance deficiencies are identified and documented timely, and
that related liquidated damages are fully recovered as soon as
practical.

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Objective 3

Coordination Among Contractors
Conclusion
Our third audit objective was to determine whether DPSCS implemented
procedures to ensure effective coordination among the five inmate
healthcare contractors in rendering inmate healthcare services. The
medical services contractor is the primary provider of healthcare services
to inmates and acts as the gatekeeper to an inmate’s access to additional
services. These services include dental care, mental health counseling, and
prescription medication, plus specialty care, and hospitalization.
Additionally, there are other matters requiring coordination among the
contractors which could potentially impact the quality of healthcare being
provided, such as maintenance of reliable patient records.
Our audit disclosed that the Electronic Patient Health Records (EPHR)
computer system was not fully operational as of December 31, 2006,
which was 18 months into the two year contract. The EPHR system is
intended to provide an electronic medical record for each inmate,
accessible from DPSCS computer terminals throughout the State, and
therefore, is a critical tool for properly coordinating the care provided to
inmates. A fully implemented EPHR system would also allow OIHS to more
effectively monitor contractor performance in several areas discussed in
our audit findings under our audit objective 2 (such as timeliness of
medical exams, inmate sick call responses, and visits to inmates with
chronic medical conditions).
Our audit also disclosed that inmate health records were not readily
available to mental health service providers, that the UM contractor did not
complete required peer reviews of secondary care providers (such as
outpatient specialty providers and hospitals), and that the medical services
contactor did not always provide documentation to the UM contractor for
hospital emergency room visits.

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Findings
Electronic Patient Health Records Computer System
Implementation
Background
In June 2005, DPSCS executed a contract for the development and
implementation of a computer system to electronically track patient health
records. The EPHR contract requires that the patient health records
include each inmate’s health history while in DPSCS custody, including all
medical exams, diagnoses, laboratory test results, medications
administered, and secondary care services (such as visits to hospitals or
specialists). As of December 2006, the EPHR contract had been in effect
for 18 months and DPSCS payments to the contractor totaled
approximately $2.7 million of the estimated $3.2 million two year contract
cost to implement the system.

11. Outstanding issues delaying the implementation of the
electronic patient records computer system need to be resolved.
– The EPHR system is not fully operational and contains inaccurate and
incomplete patient health records. As a result, OIHS has been unable to
use EPHR to analyze electronic patient health data which could help
address contract monitoring deficiencies, such as those discussed in four
of our audit findings (see Findings 5 through Finding 8). For example, a
patient’s electronic record is required to include a history of medical
exams, infectious diseases, chronic care visits, and sick call visits.
Specifically, our audit of the implementation of the EPHR system disclosed
the following conditions:
¾ The EPHR system contains multiple medical records for individual
inmates due to its inability to share inmate population data
effectively with other DPSCS computer systems that track inmates
during their incarcerations. One problem noted by DPSCS results
from the use of different numbers, among various DPSCS computer
systems, to identify individuals in its custody. EPHR uses the State
Identifier (SID) number, which was deemed by DPSCS to be the best
method of tracking an inmate throughout his or her incarceration.
However, the SID number is not assigned to arrestees until seven
days after their intake. Since the vast majority of arrestees are
released within three days without being assigned an SID number,

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most arrestees who have been arrested repeatedly and released
within seven days do not have a comprehensive medical history;
rather, these inmates have several medical records in EPHR. (This
situation is exacerbated when the individuals arrested use alias
names.) We were advised by OIHS management that it was working
with the DPSCS Information Technology and Communications
Division and the EPHR contractor to research the feasibility of
developing a computer program to merge multiple records and to
purge duplicate records without losing critical inmate medical
histories.
¾ The medication administration module of EPHR cannot be
successfully implemented to track medicine dosages for inmates
until a solution is developed for the aforementioned problem
regarding duplicate inmate records. As a result, OIHS cannot use
this vital component of the EPHR system to monitor prescription
trends and treatment success rates because of the risk of
prescribing the same medications repeatedly for a particular inmate
who has multiple medical records.
¾ Contractor employees were not always timely in entering lab test
results into the EPHR system. Specifically, our test of 49 inmate
laboratory tests, for inmates suspected of contracting Hepatitis C or
MRSA (Methicillin-Resistant Staphylococcus Aureus, which is
another very contagious disease) in the Jessup and Western
Maryland SDAs, disclosed that 48 of the laboratory results were not
reported on the respective inmates’ medical records in EPHR for
periods ranging from three to four months after the related lab
tests. Thirty-five of these 48 results indicated that the related
inmates had tested positive for these infectious diseases.
¾ According to an OIHS report, as of October 26, 2006, there was a
backlog of 60 employees, of both OIHS and the contractors, who
were awaiting EPHR access to perform their job duties, including 21
employees who had requested such access at least 90 days prior to
the report date. According to OIHS records, there were 891 users
with access to EPHR as of October 30, 2006.

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Indicators on Adequacy of Coordination
12. Actions should be taken to address contractor-reported
weaknesses in coordination. – As of November 30, 2006, OIHS had
not taken adequate corrective actions to investigate and resolve potential
weaknesses in the coordination among contractors. Contractor-prepared
treatment monitoring reports for March 1, 2006 through August 31, 2006
disclosed the following weaknesses for which no action had been taken:
¾ The mental health services contractor reported that 558 patient
charts could not be located by the medical services contractor and,
as a result, the mental health services contractor did not have these
inmate medical histories readily available when providing mental
health services. The number of missing patient charts generally
remained constant from March to August 2006, with no definitive
action by OIHS to have this problem corrected. An employee of the
mental health services contractor advised us that a fully
implemented EPHR system would help to alleviate this problem (see
Finding 11).
¾ As of November 30, 2006, the UM contractor had not conducted
any required peer reviews of providers of secondary care (specialty
care and hospitalization services) for fiscal year 2006. Such peer
reviews can assist the contracted healthcare providers in directing
needed outpatient services to the most effective, prompt, and least
costly secondary providers. The UM contractor is required to
establish a network of secondary care providers and to conduct a
peer review once every other month of each provider to assess the
quality of the care provided. These requirements are specified in
the UM service contract and the related costs are included in the
fees to administer the contract, payments for which totaled $1.1
million during fiscal year 2006. OIHS had taken no documented
actions to have the peer reviews performed as required by the
contract.
¾ Under the inmate medical services contract, documentation signed
by the referring physician is required to support visits to hospital
emergency rooms. This documentation is a vital tool used by the
UM contractor to determine whether emergency room visits were
preventable, and could result in the medical services contractor,
rather than DPSCS, being required to cover the cost of certain
hospitalizations, According to UM contractor reports, the medical

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services contractor did not submit the required documentation to
the UM contractor for 209 (19 percent) of 1,084 visits to hospital
emergency rooms during the period from October 1, 2005 to June
30, 2006. In addition, the UM contractor reported that the
percentage of emergency room admissions without required
supporting documentation increased from 8 percent of all such
visits during October 2005 to 31 percent of all such visits during
June 2006. OIHS had taken no formal actions to ensure that
complete documentation was provided to the UM contractor.

Recommendations
11. We recommend that OIHS take appropriate actions to ensure the full
implementation of the EPHR, including the medication administration
module, as soon as possible. We also recommend that OIHS establish
procedures to ensure that contractor employees are promptly and
accurately recording all laboratory testing results and other medical
records into the EPHR system, and in establishing access to EPHR for
authorized individuals. We further recommend that OIHS use the
EPHR patient health data to monitor contractors’ performance.

12. We recommend that OIHS ensure that identified deficiencies in
coordination among contractors are resolved as soon as possible, and
document the measures taken to resolve the deficiencies and the
results achieved. In particular, OIHS should ensure that inmate health
records are readily available to providers of mental health services,
require the UM contractor to perform the required peer reviews of
secondary care providers, and ensure that the medical services
contractor submits required documentation to support emergency room
admissions.

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Department of Public Safety and Correctional Services
______________________________________________________________________________________________________
Office of the Secretary
300 E. JOPPA ROAD • SUITE 1000 • TOWSON, MARYLAND 21286-3020
(410) 339-5000 • FAX (410) 339-4240 • TOLL FREE (877) 379-8636 • V/TTY (800) 735-2258 • www.dpscs.state.md.us
STATE OF MARYLAND
MARTIN O’MALLEY
GOVERNOR
ANTHONY G. BROWN
LT. GOVERNOR
GARY D. MAYNARD
ACTING SECRETARY
G. LAWRENCE FRANKLIN
DEPUTY SECRETARY
MARY L. LIVERS, PH.D
DEPUTY SECRETARY

DIVISION OF CORRECTION
DIVISION OF PAROLE AND
PROBATION

February 14, 2007
Mr. Gary D. Maynard, Acting Secretary
Department of Public Safety and Correctional Services
Suite 1000
300 East Joppa Road
Towson, Maryland 21286
Re: Performance Audit Report – Inmate Healthcare

DIVISION OF PRETRIAL
DETENTION AND SERVICES
PATUXENT INSTITUTION
MARYLAND COMMISSION ON
CORRECTIONAL STANDARDS
CORRECTIONAL TRAINING
COMMISSION
POLICE TRAINING
COMMISSION
MARYLAND PAROLE
COMMISSION

Dear Acting Secretary Maynard:
Below are the responses to the draft Performance Audit Report for Inmate
Healthcare. This Report reflects an analysis of the current inmate healthcare
delivery system, which went into effect on July 1, 2005. It does not compare this
system to that which was in place previously. Indeed, had such an assessment
been performed, the Report would have reflected:

CRIMINAL INJURIES
COMPENSATION BOARD
EMERGENCY NUMBER
SYSTEMS BOARD
SUNDRY CLAIMS BOARD
INMATE GRIEVANCE OFFICE

ƒ substantially increased staffing levels for the delivery of care (particularly
within the Division of Pre-trial Detention and Services), both with respect
to the required staffing levels and the percentage of the required staffing
delivered;
ƒ inmates receiving medications and consultations more often and on a
more timely basis as a result of eliminating profit for the denial of care as
a result of a reimbursement system; and
ƒ a greater responsiveness to issues raised by the Department as a result of
each functional unit (mental health, dentistry, pharmacy, and primary
medical) having distinct corporate identity that alleviates the need of a
single provider to balance and prioritize issues requiring attention.
No healthcare delivery system is perfect and, as the report indicates, the
Department’s inmate healthcare system is no exception. The issues identified in
the Report with which we agree require corrective action. That said, two points
remain to be made. First, one of the objectives of the Audit Report was to assess
coordination between the contractors in rendering services to the inmate
population. The Department could not be prouder of the professional manner in
which our contractors have worked together in a coordinated fashion under the

Acting Secretary Gary D. Maynard
Performance Audit Report – Inmate Healthcare
February 14, 2007
Page 2
leadership of the Office of Inmate Health Services (OIHS). The issues cited under
this section of the Analysis in the Report are important, but are not unique to a
multi-vendor delivery structure. If anything, our experience to date is that the
separate corporate entities responsible to the Department establish a system of
checks and balances more inclined toward exposing and resolving issues, rather
than a subcontractor situation under a single vendor where difficulties in delivery
and cooperation may be hidden from the Department.
The second point relates to the OIHS itself. As the Audit Report reflects, the
number of personnel within the Office has not increased concomitant to the
increase in responsibility under this delivery methodology and system of
remuneration. In order to appropriately address the audit issues, and to maximize
return on investment in health services, personnel enhancement is essential. With
the staffing resources available, the OIHS will have to prioritize its attention to
those issues likely to have the greatest impact on patient health outcomes (e.g.
required examinations, sick call, medication administration, follow-up care,
chronic care) and those issues required in the Department of Justice (DOJ)
settlement agreement. To the extent that the findings and recommendations of the
Legislative Auditors are congruent with these priorities, corrective action will be
taken as delineated below.
Finding #1 - Staffing levels provided, as reported by the medical contractor,
should be periodically verified to supporting documentation.
We agree. The Department will continue to develop its monitoring process of the
medical contractors’ adherence to the contractual time reporting requirements. The
Department will insist that sign-in/sign out logs are completed, and will
periodically verify contractor time records and contractor employees’ presence at
work, at least on a test basis. The Department will also ensure that the contractor
submit employee work schedule adjustments for approval, though this aspect of
the recommendation relates to deployment more than confirmation of staffing
levels at a facility.
Finding #2 - OIHS should closely monitor contractor compliance with preapproved work schedules.
We agree. As a means to ensure that the contractor is deploying staff in
accordance with agreed upon need, the Department will establish procedures to
monitor the medical contractor’s compliance with pre-approved contractor

Acting Secretary Gary D. Maynard
Performance Audit Report – Inmate Healthcare
February 14, 2007
Page 3
employee work schedules. To the extent that more staff is deployed than
approved, the Department will seek to recover payments made relative to these
additional hours. However, nothing herein should be construed as an indication
that the Department will limit an individual employee to a single work shift on the
approved staffing schedule on a given day, or that the Department will not approve
splitting work shifts to attain coverage.
Finding #3 - OIHS should determine the appropriate contractor staffing
levels needed to provide all required services to inmates.
We agree in part, disagree in part. The Department will continue in its effort to
enhance its process of capturing and recording FTE positions actually delivered,
and will continue to encourage the contractors to work toward achieving full
staffing levels. The Department will also continue to evaluate, on an on-going
basis, the demand for services against the staffing levels to ensure that the staffing
levels currently established are appropriate to provide all required services to
inmates. While the Department acknowledges that there may be situations from
time to time where staffing levels do not conform to service demands, it disagrees
that there is not currently a generally acceptable correlation between staffing
levels and service needs.
Finding #4 - Medical exams of arrestees should be completed within seven
days of arrest as required.
We agree. The Department will ensure that medical exams are completed within
seven days for all arrestees who are not released within that time, as required in
the medical contract.
Finding #5 - A process should be put in place to ensure that inmates with
chronic medical conditions receive appropriate treatment as required.
We agree. The Department will develop a process to ensure that all inmates with
chronic care conditions receive required services from the contractor’s medical
staff.
Finding #6 - Corrective actions should be taken to address reported
healthcare deficiencies.
We agree. The Department will require formal corrective action plans from
contractors to address service delivery deficiencies identified in audits conducted

Acting Secretary Gary D. Maynard
Performance Audit Report – Inmate Healthcare
February 14, 2007
Page 4
by the Department. Further, the Department will require such formal corrective
action plans, where appropriate, upon contractor self-disclosure or in furtherance
of issues discussed in the periodic meetings with contractors recognizing that
informal resolution may be appropriate in some instances. The Department will
establish procedures to ensure that where corrective action plans are developed,
they are implemented, and will retain documentation to such effect.
Finding #7 - A methadone detoxification program should be implemented as
required.
We agree. The Department will ensure that the required methadone detoxification
program is implemented as soon as possible in conformance with all required
licensing provisions.
Finding #8 - Action should be taken to address identified service delivery
problems and medical contractor reports should be verified for reliability.
We agree. The Department will ensure that contractor service delivery reports
contain all required information, will establish procedures to review the
underlying medical records to ensure reliability, at least on a test basis, and will
investigate and resolve discrepancies. Where such reports identify a service
delivery deficiency, the Department will take whatever action is appropriate to
ensure that the deficiency is addressed.
Finding #9 - A timely independent review should be conducted of the
adequacy of care rendered subsequent to each inmate death.
We agree. However, the Department contends that a timely independent review
of the adequacy of care is currently conducted subsequent to each inmate death in
the form of a Mortality and Morbidity Review. The issue identified for lack of
timeliness is the subsequent independent assessment of the cause of death by the
Department’s Medical Director. The Medical Director has been unable to conduct
such reviews within the thirty days required by the Department’s own policy due,
in part, to delays in completion of autopsies in some cases, and, in part, to
prioritization of cases with questionable issues related to a death. The Department
will continue to ensure that a timely independent review is conducted subsequent
to every inmate death and will re-examine and modify, as appropriate, its policies.

Acting Secretary Gary D. Maynard
Performance Audit Report – Inmate Healthcare
February 14, 2007
Page 5
Finding #10 - OIHS should ensure that all significant healthcare violations
and performance deficiencies are identified and documented timely and that
full liquidated damages are assessed as soon as practical.
We agree in part, disagree in part. The Department will ensure that all
significant contractor healthcare performance deficiencies are identified and
documented timely. However, it will continue to maintain discretion with respect
to the imposition of liquidated damages in the absence of “unjust enrichment.”
Unlike prior contracts, liquidated damages are not a means of recovering monies
paid for staffing that was not provided. In this contract, remuneration is based on
hours actually worked. Thus, the liquidated damages provisions in the contracts
reflect a measurement of compensation for injury sustained that otherwise is not
susceptible to calculation. Assessment of liquidated damages is not an end to
itself; it is a means to insist on improved performance and to obtain that
performance. Just as a Judge does not impose a maximum punishment for a first
offense, and may withhold judgment for a time to monitor improvement in
performance, the Department must utilize the liquidated damages provision of the
contract in a way that will best obtain the services it requires. Moreover, there are
many situations where the Department and the contractor agree on the facts but
disagree on whether the facts constitute a deficiency of performance under the
contract. In such instances, compromise may be appropriate to obtain any
recovery at all. 1

1

An example of these concepts lies in the compromise settlement between the
Department and the medical provider referenced in the Background section of the Report.
The auditors referred to a single month where $219,805 worth of services was not in
compliance with the contract. There was no dispute between the Department and the
medical provider that the State received this value of services. It was only that the
services provided were above and beyond the scheduled hours in the staffing schedule.
Still, even with these additional hours worked, the contractor fell below the available
allocation based on 100% staffing. Thus, the Department was not in a position to reclaim
the full dollars paid. Additionally, the contractor filed a claim to contest the Department’s
interpretation of the contract with respect to whether it was appropriate to withhold
payment for hours that were actually worked so long as the total value fell below the “not
to exceed amount” for wages. Thus, in an effort both to entice conformance to the
procedures for modifying work schedules, while at the same time paying for value
received and avoiding a claim, the Department folded this issue into the overall
settlement. If deviation continues, the Department can seek a more substantial remedy in
the future.

Acting Secretary Gary D. Maynard
Performance Audit Report – Inmate Healthcare
February 14, 2007
Page 6

Finding #11 - Outstanding issues delaying the implementation of the
electronic patient records computer system need to be resolved.
We agree. The Department will take appropriate action to ensure the full
implementation of the EPHR, including the medication administration module, as
soon as possible. The Department will also establish procedures to ensure that
contractor employees are promptly and accurately recording all laboratory testing
results and other medical records into the EPHR system, and in establishing access
to the EPHR for authorized individuals. Once the EPHR system is fully
functional, populated with data, and reliable, the Department will use the EPHR
patient health data to monitor contractors’ performance.
Finding #12 - Actions should be taken to address contractor-reported
weaknesses in coordination.
We agree. The Department will, and does, ensure that identified deficiencies in
coordination among contractors are resolved as soon as possible, and will
document the measures taken to resolve the deficiencies and the results achieved.
Even under a single contractual provider, access to medical records by mental
health professionals was problematic in the past leading to separate medical and
mental health files. Those files have now been consolidated for purposes of
ensuring quality of treatment and in preparing for the movement toward the
EPHR. However, the problem of access to written medical files by mental health
providers has re-emerged. Nevertheless, the Department will take steps to
eliminate this problem until it is finally resolved by the EPHR system. The
Department will also ensure that the primary care provider submits required
documentation to support emergency room admissions in order to facilitate the
retroactive approval for payment upon determination of necessity. Although peer
reviews of secondary care providers are required under the contract, such reviews
are not a reflection of coordination between vendors and, in fact, have minimal

AUDIT TEAM
Timothy R. Brooks, CPA, CFE
Audit Manager
Abdullah I. Adam
Senior Auditor
Andrew N. Dobin
Menachem M. Katz, CPA
Edward J. Welsh
Staff Auditors