The move ends a contentious 11-year relationship with CMS that was launched during [the former governor’s] push to privatize government services.
BY RICK HEPP
Star-Ledger
NEWARK, N.J. — The state has canceled its $85 million annual contract with a St. Louis-based company that has provided medical, dental and pharmaceutical services to state prisoners since New Jersey privatized its inmate health care system in 1996, officials said yesterday.
The state Treasury Department notified Correctional Medical Services on Friday that it planned to replace it with the University of Medicine and Dentistry of New Jersey, the state’s medical school, according to a copy of a letter obtained by The Star-Ledger. UMDNJ already provides mental health services for state inmates.
CMS, whose contract expired last night, had sought a 4.73 percent increase to cover costs associated with caring for the 27,600 inmates in state prisons and an additional 14,000 inmates being held in county facilities until a state cell is available.
“The state has decided that it is in its best interest to contract with the University of Medicine and Dentistry to provide all of the inmate health care services,” wrote Alice Small, acting director of Treasury’s Division of Purchase and Property.
The move ends a contentious 11-year relationship with CMS that was launched during then-Gov. Christie Whitman’s push to privatize government services. It comes months after the state auditor and the state inspector general issued separate reports critical of the company.
It also gives the state-funded university a shot in the arm as it tries to emerge from federal oversight that documented more than $400 million in fraudulent and wasteful spending.
The state told CMS it would need to continue staffing inmate health services for 180 days so UMDNJ personnel can get up to speed.
Treasury spokesman Tom Vinz said the state believes the new arrangement, which will be enacted through an interagency compact rather than through public bidding, will “improve both the bottom line as well as services.” He said officials don’t know exactly how much the state would save.
“We believe that overall costs will be extremely competitive with the current contract and that the expanded partnership will result in new economies, efficiencies and conveniences that benefit the state,” Vinz said.
The cancellation came as a shock to CMS, which employs more than 800 health care professionals in New Jersey to handle the state inmate contract, said spokesman Ken Fields. He said the rate increase was pegged to the Consumer Price Index but “was well below the rate of inflation facing all other areas of health care in New Jersey.”
“The state has been extremely satisfied with our work and has never given us an indication that they would prefer to make a change in contractors,” said Fields. “We are disappointed that the state appears to have started a process that would not include getting any competitive bids. It has been our experience that state and local governments feel that a competitive bidding process results in the best value for them.”
UMDNJ spokeswoman Anna Farneski said the new agreement is “an enormous vote of confidence in UMDNJ’s abilities to effectively deliver care to a population in need of comprehensive services.” The state paid the medical school $49 million last year to provide mental health services for inmates.
Attorney Patricia Perlmutter, who reached a class-action lawsuit in 1999 against the Department of Correction on behalf of mentally ill inmates, said canceling the CMS contract is the end of “a failed experiment.”
“For years, they delivered very poor service to the prisoners in the state,” she said. “There certainly was improvement over time. The number of complaints we would receive did diminish the last year of contract term. But overall they didn’t deliver what they promised.”
Staff writer Josh Margolin contributed to this report.
Copyright 2008 Newark Star-Ledger