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State's costs for inmates' health care could rise 60%


After five years of relatively stable health care costs for inmates, the state Board of Public Works approved an increase in spending of more than 60 percent yesterday that could push the annual tab to $110 million as officials try to improve medical services for the state's 27,000 prisoners, particularly in Baltimore's troubled jail facilities.

State corrections officials said the increases were driven by several factors: new, costlier treatment for inmates suffering from AIDS and hepatitis C; the need to hire more health care staff; and greater state responsibility for unexpected increases in medical expenses.

"I believe we've created something that will work for all of us," Mary Ann Saar, secretary of the Department of Public Safety and Correctional Services, told the board members: Gov. Robert L. Ehrlich Jr., Comptroller William Donald Schaefer and Treasurer Nancy K. Kopp.

"We are required to give adequate care," Saar said.

Contracts were awarded to five for-profit companies, which will run different segments in the prisons' privatized health care system, such as medical, mental health and pharmaceutical services. Last year, the state spent $68 million on inmate health care, state corrections officials said.

Of the new contracts, Schaefer remarked, "It's a shame to pay $100 million for people who go out and rape and kill ... and there are [law-abiding] people who don't have any medical care at all."

Largest contract

Correctional Medical Services Inc. of St. Louis won the biggest contract, a two-year, $125.6 million deal that involves providing medical services to state prisons and Baltimore's state-run jail facilities - a total of 32 facilities. Under a state contract signed in 2000, the company has provided comprehensive medical care services for the past five years to three prisons in Hagerstown.

The state's main prison health care contractor since 2000, Prison Health Services Inc. of Brentwood, Tenn., did not win any piece of the state's business in the latest round of bidding. Prison Health, which provided health care services to more than 20 state correctional facilities, had been criticized by inmate advocacy groups for skimping on services, particularly in Baltimore's jails.

Officials with Prison Health, a subsidiary of publicly traded America Service Group Inc., said the company lost a total of $14 million in Maryland, mostly over the past year, as skyrocketing medical expenses significantly outpaced the fixed amount of revenues it received from its state contract. But the company has strongly denied that its financial losses led it to cut its services to inmates.

Richard Rosenblatt, assistant secretary for treatment services for the Public Safety Department, said that Prison Health's performance in Maryland was not a factor in the recent selection process.

He said three of the five companies that won - including CMS - offered the best level of services for the lowest price.

In selecting CMS, the state swapped a major correctional health care provider for its top competitor.

CMS has a long record in Maryland: It has operated in the state since 1987. Rosenblatt said the state had few issues with CMS during its tenure at the Hagerstown prisons.

"We're very comfortable with CMS," he said. "We've been very happy with the way they've operated" in Maryland.

CMS has been the target of inmate advocacy groups and unfavorable media coverage over quality of care in the past, including an investigative series in the St. Louis Post-Dispatch in 1998. The newspaper reported incidents of alleged medical negligence that, in some cases, led to inmate deaths in Missouri and elsewhere.

"Correctional Medical Services' history of cutting corners to maintain profits jeopardizes the lives of thousands of incarcerated people across the country," said Elizabeth Alexander, director of the American Civil Liberties Union's National Prison Project, in a statement opposing CMS' selection as Maryland's inmate medical provider.

"Many states have already learned a painful lesson from their dealings with Correctional Medical Services," she said.

Ken Fields, a CMS spokesman, said the company, founded in the late 1970s, has a long record of satisfied customers, including the state of Missouri for the past 12 years.

He said the Post-Dispatch stories were "inaccurate, misleading and not reflective of the quality of care" that CMS provides in more than 280 correctional facilities across the country. As of March, he said, the company provided health care under contract to 229,000 inmates in various jails and state prison systems nationwide.

Underfunded system

CMS will take over a system of inmate health care that, critics say, has been underfunded by the state since at least 2000. Under the contract signed that year, the state essentially paid a flat monthly fee to Prison Health and CMS for medical, pharmaceutical, mental health, dental and other services.

But the companies were responsible for expenses that exceeded a fixed amount. Medical expenses - at least for Prison Health - far outpaced the revenue it received through its contract with the state, particularly over the past year, Prison Health officials have said.

In corporate filings with the Securities and Exchange Commission last year, Prison Health estimated it would lose more than $1 million per month until its Maryland contract expired June 30.

Fields declined to say whether CMS posted a loss or profit from its Maryland operations in the past year.

Under the new system, CMS and other companies will "pass through" the expenses they incur to the state. The Public Safety Department was forced to revamp the inmate care system, partly because contractors said they wouldn't bid if they had to assume the risk of covering 100 percent of the increases in health care costs, state corrections officials and Prison Health officials have said.

Hepatitis C

One big reason for the expected increase in costs was new treatment for inmates who have hepatitis C, a disease that has reached epidemic proportions in many correctional systems. Maryland must adopt federal treatment protocols for hepatitis C - a blood-borne liver disease that can be transmitted through intravenous drug use and unprotected sex.

Increases in staffing levels - from dentists to psychiatrists - are also expected, particularly in Baltimore's jail facilities, but Rosenblatt did not have specific figures yesterday.

CMS and the other four companies are expected to start work under the new contracts July 1. The other companies awarded contracts yesterday:

Correct Rx Pharmacy Services of Linthicum, a two-year, $32 million contract for pharmaceutical services;

MHM Services Inc. of Tysons Corner, Va., a two-year, $22.5 million contract for mental health services;

First Correctional Medical Inc.-MTC Joint Venture LLC, a two-year, $17.3 million contract for dental services, and

Wexford Health Sources Inc. of Pittsburgh, Pa., a two-year, $22 million contract to provide utilization management services - internal "best practices" reviews - so the other contractors will provide appropriate, cost-effective care for inmates.

CMS also won a separate contract - $3.2 million over two years - to provide electronic patient health record services. The state's inmate medical files are still largely paper-based, state corrections officials say.

Each of the contracts has three one-year renewal options for the state.

State selects prison health contractors

Correctional Medical Services Inc.

Headquarters: St. Louis, Mo.

Background: One of the country's largest for-profit correctional health care providers, CMS has been operating in Maryland since 1987. For the past five years, CMS had the contract to provide health care services to three Hagerstown prisons.

Awards: Two-year contract, worth $125.6 million, to provide medical care to all state prisons, plus Baltimore's jail facilities. Also won a two-year, $3.2 million contract to provide electronic patient health record services.

Correct Rx Pharmacy Services

Headquarters: Linthicum, Md.

Background: A Maryland company that specializes in providing pharmaceutical services to correctional facilities.

Award: A two-year, $32 million contract to provide pharmaceutical services to all state prisons, plus Baltimore's jail facilities.

MHM Services Inc.

Headquarters: Tysons Corner, Va.

Background: In business since 1981, MHM specializes in providing mental health services to prisons, jails and other health care and human services agencies. It operates in jail and prison systems in eight states.

Award: Two-year, $22.5 million contract to provide mental health services in all state prisons, plus Baltimore's jail facilities.

First Correctional Medical Inc.-MTC Joint Venture LLC

Headquarters (FCM): Tucson, Ariz. (Information not available on MTC)

Background: Formed in 1995, FCM is a small private company that offers comprehensive medical services in correctional settings.

Award: A two-year, $17.3 million contract to provide dental services in all state prisons, plus Baltimore's jail facilities.

Wexford Health Sources Inc.

Headquarters: Pittsburgh, Pa.

Background: Wexford has offered comprehensive medical services to prisons and jails since 1992.

Award: A two-year, $22 million contract to provide utilization management services - or internal "best practices" review - to all state prisons plus Baltimore's jail facilities.

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