Senate subcommittee hears DOC explain steep, concentrated inmate health‑care costs

Steve Herrick, deputy director of health services for the Virginia Department of Corrections, told the Senate Finance & Appropriations public safety subcommittee that rising health‑care costs for people in state custody are driven by a small number of very expensive cases, growing medication costs and reliance on costly temporary clinical staff.

Herrick said Virginia incarcerates about 23,000 people and that inmate health care generally comprises "roughly 20% of DOC's budget." He told the panel that 57% of inmates never go off‑site for specialty care, but "9% of the inmates... account for 86% of the spend" on off‑site care; a subset of 104 people had single events topping $75,000. He also said outpatient billing to DOC from Anthem averages about $1,300,000 per week for off‑site claims.

The presentation singled out four categories that drive DOC health costs: DOC medical personnel, contract/agency staff, external specialist services (off‑site care) and pharmaceutical costs. Herrick described post‑COVID agency markups for nursing staff — agencies effectively pay nurses at market rates while charging DOC large fees — and argued that raising state RN pay could reduce expensive reliance on agency and travel nurses.

Pharmaceutical spending is similarly concentrated, Herrick said: "5% of our inmates spend 60% of the prescription costs" and DOC spends about $42,000,000 on medications overall. He said two patients receiving new hemophilia drugs each cost roughly $1,000,000 a year and that DOC uses VCU 340B pricing and an interstate compact for drug discounts.

Committee members asked why some hospitalized inmates did not qualify for Medicaid. Herrick said roughly "11 percent of our individuals that are hospitalized do not qualify for Medicaid" because they retain community resources (veterans benefits, ownership of a vehicle or home) or refuse to sign Medicaid paperwork; he noted that other states have passed legislation allowing directors to sign applications in limited cases to secure federal matching funds.

Herrick outlined cost‑control options other states have tried: deeper partnerships with academic medical centers to provide on‑site specialty care, utilization committees that vet the necessity of off‑site referrals, legislating reimbursement rates (for example anchoring to Medicare/Medicaid rate schedules), and creating nursing‑home models for very high‑cost, medically fragile people exiting corrections so they can access Medicaid after release. He also warned of tradeoffs: legislating low provider rates can reduce access and injecting MOUD (medication for opioid use disorder) is costly and poses security/diversion risks; DOC is piloting wider oral MOUD to balance cost and safety.

The subcommittee asked for more detail on mental‑health staffing and possible programmatic responses. DOC's mental‑health chief said about 41% of the incarcerated population receives some form of mental‑health services; senators pressed for follow‑up cost estimates and staffing needs to expand therapy, peer counseling and university student partnerships.

No formal vote or budget adoption was taken in the subcommittee. Members and DOC staff agreed to follow up with additional data on vacancy rates, psychiatry capacity, the impact of increased state RN pay on agency usage, and the feasibility of securing DMAS‑level drug rebate access.

The subcommittee adjourned after the presentation; staff said some of these items will be revisited during the full committee's budget process.