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Report 2003-125 Highlights - July 2004

California Department of Corrections:

More Expensive Hospital Services and Greater Use of Hospital Facilities Have Driven the Rapid Rise in Contract Payments for Inpatient and Outpatient Care

HIGHLIGHTS

Our review of the California Department of Corrections' (Corrections) contracts for medical services revealed the following:

  • Corrections' hospital payments have risen $59.4 million from fiscal years 1998-99 through 2002-03, growing at an average rate of 21 percent per fiscal year.
  • Inpatient hospital payments increased by $38.5 million from fiscal years 1998-99 through 2002-03, primarily driven by increased payments per hospital admittance.
  • Outpatient hospital payments increased by $12.7 million from fiscal years 1998-99 through 2002-03, driven by both increased payments per hospital visit and increased numbers of hospital visits.
  • Two institutions attributed their inpatient hospital payment increases, among other reasons, to changes in contract terms resulting in hospital payments that were three times as much as they would have paid previously for the same inpatient stay.
  • Corrections paid some hospitals amounts that were from two to eight times the amounts Medicare would have paid the same hospitals for the same inpatient services, including a hospital operated by Tenet Healthcare Corporation, which was paid eight times the amount Medicare would have paid.
  • One institution's outpatient hospital payments increased by $821,000 primarily because its average payment per emergency room visit, which are paid at a percentage of the hospital bill without a maximum limit, increased from less than $950 per visit to more than $3,300 per visit.
  • Corrections' outpatient payment amounts averaged two and one-half times the amount Medicare would have paid for the same services.
  • A lack of key data being entered into Corrections' database limits analyses behind causes of increased payments and utilization, such as the extent to which case severity is a cause.














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