United States Marshals Service's Prisoner Medical Care
Report No. 04-14
Office of the Inspector General
USMS district officials have the authority (upon recommendation of a competent medical authority or physician) to acquire and pay for reasonable and medically necessary care, both emergency and non-emergency, to ensure the well-being of all USMS prisoners. However, it is not the policy of the USMS to provide either elective or, with some exceptions, preventive medical care.
USMS policy requires that a set of procedures be followed to provide reasonable assurance that medical and guard payment transactions are properly authorized, accurately recorded, and fully supported (See Appendix VII).
In our review of the USMS districts' management of outside medical care, we noted internal control weaknesses throughout the aforementioned process. A discussion of the specific areas of concern follows.
Pre-Authorization of Medical Procedures
Districts were not consistently reconciling invoices from health care providers to pre-authorizing documents such as a requisition or medical log.10 In many cases, this was because there were was no authorizing document with which to reconcile. The pre-authorization process is required to ensure that only necessary and reasonable medical procedures are performed on prisoners in USMS custody.
As shown in the following table, our review revealed that, more often than not, districts did not document the authorization process. In 8 of the 14 districts we examined, invoices were not being reconciled to pre-authorizing documents. In six of those districts, there were no pre-authorizing documents to reconcile to. In those cases, the first written documentation pertaining to a particular medical procedure was the invoice received from the health care provider. Absent a reliable audit trail, district personnel could not readily determine whether such an invoice was a valid billing, a duplicate billing, or a fraudulent claim. In fact, when asked how they detected duplicate payments, personnel in two districts stated that they relied on the re-pricing contractor to detect the double billings.
Recording of Financial Transactions in the Financial Management System (FMS)
Districts were not obligating funds in the FMS upon procurement of medical services. The districts were not entering an estimated obligated amount prior to or immediately after the medical services has been performed. This stemmed from the fact that procedures were often not pre-authorized, and as such did not enter the financial system until an invoice was received. Thus, the process approaches a cash basis of accounting wherein expenses are recorded when they are paid rather than when they are incurred, as is required under the accrual basis of accounting. The problem was exacerbated by the fact that invoices are often batched, with batch sizes ranging from several invoices to several hundred. Batching of invoices is a valid method of processing financial transactions, and in some instances it is impractical to do otherwise. But in the absence of other documentation, batching makes it difficult to track costs related to individual prisoners.
Additionally, we noted some inconsistency in how transactions were classified once they were obligated. In the case of medical procedures, the districts used two sub-object codes to track expenditures for outside medical care, as follows:
The information accumulated by the above-mentioned cost codes is used by the USMS to determine how funds have been expended for tracking and planning purposes. However, our audit testing determined that some districts used only sub-object code 2515 and did not use sub-object code 1154 in any of its transactions, and some that used it only sporadically.
Similarly, there were inconsistencies in the obligation of charges for hospital guard services. About half of the districts were obligating hospital guard expenses to sub-object code 1150 (Payment of compensation to temporary guards), while the other half were obligating guard expenses to sub-object code 2555 (Charges for guard services provided under contract agreement). Inconsistencies aside, the current code structure does not differentiate between hospital related guard services and other guard services, which makes it difficult for management to track guard service costs related to outside medical services provided to USMS prisoners.
Both the delays in obligating and the inconsistencies in classifying outside medical costs pose a problem for USMS management, which requires accurate and timely financial data in order to accurately evaluate program performance and effectively plan for future resource needs.
Prisoner Tracking System
The Prisoner Tracking System12 (PTS) is a distributed database system, operating as a separate database in each of the 94 federal judicial districts that provides case management support for individual prisoners, including the tracking and monitoring of medical care. USMS districts are required to use the PTS for tracking prisoners' medical information. Specifically, districts are required to document in the PTS whenever a prisoner receives outside medical treatment. The data fields include: 1) medical service date, 2) prisoner name and number, 3) dollar amount obligated, 4) name of medical provider, and 5) health problem and procedure.
Despite this requirement, our audit testing revealed that 1 of the 14 districts did not record any of the required information into the PTS. Another district entered only partial information. Further, our review of the entire PTS database revealed that several districts outside of the selected 14 districts were not entering data into the PTS. As will be discussed later, many of the districts were not entering prisoners' TB test results into the PTS, as required by USMS policy. Without complete and consistent medical data the USMS cannot readily determine what medical procedures have been performed on any given prisoner, and cannot make informed decisions regarding the welfare of the prisoner or other parties involved.
Prisoner Case Files
In the absence of a fully implemented PTS, district offices must rely on hardcopy prisoner case files. In addition to photographs and fingerprints, the prisoner case files contain vital medical information such as: 1) a record of all medical care afforded the USMS prisoner, including medications or medical equipment required while in transport; 2) whether the prisoner has been cleared for TB; 3) a record of outside medical billings; and 4) whether the prisoner has private insurance. The documents are an essential control in facilitating effective and secure prisoner transport. In addition, the records are useful to district accounting personnel in verifying medical bills.
However, here too we found that the district offices were less than diligent in tracking prisoner medical care. In 8 of the 14 district offices reviewed, we found that prisoner case files were incomplete. Two districts, the Central District of California and the Southern District of California, did not maintain case files at all. While most of the districts were able to provide a printout of medical expenditures, we were unable to locate medical release forms or TB clearances in most cases.
We reviewed a statistical sample of outside medical transactions using the USMS criteria for reasonable and necessary procedures and determined that in 26 percent of the sample medical procedures reviewed, the auditors could not determine whether the procedure met the USMS criteria, in part because of the lack of reliable documentation available at the district offices.
The lack of documentation at the district offices has both cost and public safety implications. The USMS cannot effectively manage costs if it is not aware of where those costs are being incurred. For example, several district offices had prisoners with high risk, high-cost medical problems, such as a terminal illness. In such instances, the USMS can request that prisoners be transferred from unsecured non-federal medical institutions to secured BOP medical facilities, or in some cases suggest to the court or the U.S. Attorney that the prisoner be released or placed on bond. This can reduce medical care and security costs, as well as reduce the risk exposure involved in transport to and from outside medical facilities. However, without an effective system for tracking these costs, USMS personnel cannot make timely or informed decisions in these matters.
Federal Acquisition Regulations
We found that USMS district offices are not fully complying with the Federal Acquisition Regulation (FAR) by employing simplified acquisition procedures when procuring prisoner health care services that exceed the $2,500 threshold for micro purchases.
A memorandum dated December 3, 1999, from the USMS General Counsel to the USMS Director stated that prisoner medical services were being procured in violation of the FAR at many USMS district offices. The General Counsel citing 31 U.S.C. §1501, stated that prisoner medical services were being entered into by individuals without contracting authority or by contracting officers in excess of the limits of their delegated authority.
The General Counsel further stated that the USMS's failure to enter into binding agreements for medical services violated the provisions of 31 U.S.C. §1501 because agency expenditures for services must be supported by documentary evidence of a binding agreement between the agency and the service provider before the expense can be properly recorded as a valid obligation of the United States.
According to the USMS General Counsel's memorandum, if prisoner medical services are procured in the absence of a binding agreement, expenditures associated with the procurement cannot be recorded as valid obligations of the USMS. If these expenditures are not properly recorded and accounted for, the USMS may violate the Anti-Deficiency Act (ADA) by obligating funds in excess of available appropriations.13
The General Counsel warned that in order to prevent violations of the FAR, 31 U.S.C. §1501, and the ADA, prisoner medical services acquired on behalf of the USMS must be procured pursuant to orders issued by contracting officers with appropriate levels of delegated authority to bind the government. However, despite these warnings, we determined that some districts continue to procure medical services in violation of federal regulations.
For the 14 sites audited we selected a random sample of 900 voucher payments from a universe of 6,525 payment transactions for review. Based on our audit testing we determined that 83 of the 164 payment transactions that exceeded $2,500 were not in full compliance with federal procurement regulations because the medical service providers did not have binding written agreements with the USMS.
We tested transactions exceeding the $2,500 simplified acquisition procedure threshold to determine compliance with the FAR.14 We determined that the USMS was in compliance with the FAR if the medical provider had a: 1) contract with the USMS, 2) contract with another federal agency,15 or 3) contract with the local detention facility and the local detention facility was being reimbursed by the USMS.
In many cases single invoices were below the $2,500 limit. However, districts often consolidate multiple prisoner treatments when paying for outside medical costs. Districts will often batch a large number of small payments (less than $500) owed to a single hospital, clinic or doctor into one large payment. These consolidated payments normally range between $1,000 and $100,000. By definition these payments, in aggregate, exceeded the $2,500 micro-purchase threshold.
Aside from complying with the FAR, by not negotiating contracts, USMS districts could miss the opportunity to negotiate rates below Medicare. We found that districts with negotiated contracts were able to obtain pharmacy discounts and specific medical procedures below Medicare rates, as was the case in the District of South Carolina, which had a contract with a private vendor. The contract statement of work provides that the USMS receives a discount of not less than 37 percent on the list price of drugs. The audit team determined that if the District of Middle Florida had a similar contract, it would have saved $10,251 on just the four payments that the audit team reviewed.
Conversely, procuring medical services without a contract, other than a micro-purchase,16 enables a supplier to obtain government business without competition. Not establishing a network of contracted health care providers increases the opportunities for fraud, waste, and abuse by allowing district officials to select medical providers directly, rather than through a competitive process.
Office of Program Review
The internal review function within the USMS falls under the jurisdiction of the Management and Budget Division, specifically the Office of Program Review. Organizationally, the Program Review Office consists of an eastern office, located at USMS Headquarters, a central office, located in Houston, Texas, and a western office, located in Denver, Colorado. Historically, Program Review's primary area of responsibility has been the performance of detailed reviews of district operations. The reviews are comprehensive in scope and cover nearly all aspects of district activity, including: 1) prisoner transport, 2) asset forfeiture, 3) contract and IGA billings, 4) judicial security, and 5) general management and administration. The inspection reports, signed by the USMS Director, contain findings and recommendations, and require a formal resolution process, documenting that necessary corrective actions have been taken.
On April 19, 2000 the USMS Deputy Director issued a memorandum directing the Program Review Office to suspend its reviews of USMS district operations. Prior to the suspension of district reviews, Program Review staff conducted about 30 district reviews annually, allowing for reviews of each of the 94 districts every 3 years. The action was defined as a short-term solution to critical staffing shortages in the field, which required that Program Review staff be detailed to district offices in need of administrative support. However, as of the last day of our fieldwork on October 28, 2003, the district review function remained on hold. According to USMS officials, the reason for the continued suspension is that the USMS plans to reorganize its internal review function, and that district review activities will remain on hold pending completion of the reorganization.
In the three years since the initial suspension of these district reviews, the Program Review Office has existed in a state of limbo. The staff is now restricted to performing property management reviews, and does so only on a special request basis. Staffing levels at the eastern office have dropped from six to two analysts. The staff assigned to the western office in Denver, Colorado, has been reduced from six to four analysts, with staff detailed to the Witness Security Program. The central office in Houston, Texas, has been closed.
Given the pervasiveness of the internal control weaknesses at the district level that we encountered throughout this audit, it is difficult to justify the effective dismantling of the agency's internal review function. We believe that USMS management needs to reconsider its decision to suspend detailed district reviews.
We recommend the USMS: