Virginia’s prison system faces a $45 million shortfall in inmate health care through next year, even as the corrections department bears the brunt of the latest round of cuts in the two-year state budget.

The shortfall emerged this year after a private company that had provided health care to inmates at 17 prisons in hard-to-serve areas ended its contract with the state at the end of September, according to Department of Corrections Director Harold Clarke in a presentation Monday to the House Appropriations Committee.

An emergency contract with another private provider took effect Oct. 1 but at a higher cost and in the face of a $10.2 million reduction in the Department of Corrections’ medical budget in the fiscal year that ended June 30 because of anticipated savings from the private contract, Clarke said.

The department faces a $14.4 million shortfall in its medical budget this year because of the sudden switch in providers, as well as higher off-site health care costs and the added expense of new medications necessary for better treatment of inmates with hepatitis C, a potentially fatal liver disorder. The shortfall is estimated at $30 million in the fiscal year that begins July 1.

Corrections already faces more than 500 layoffs under $92.4 million in cuts Gov. Terry McAuliffe announced last week as part of the state’s strategy for closing a $2.4 billion revenue shortfall in the biennium.

The department expects to place about 100 of the affected employees in other jobs, Clarke said in an interview, but it is constrained by the loss of vacant positions as part of the package of cuts.

The department will lose about $20.3 million in its budget this year from the cuts, which include the closure of the main unit at Powhatan Correctional Center and small facilities in Augusta and Clarke counties, as well as a delay of at least two years in turning a juvenile correctional facility in Culpeper County into a prison for adult women.

The shortfall in medical services stems primarily from the decision by Corizon Health in early June to end the contract it reached last year with the state to provide care at 17 correctional facilities in areas where medical professionals are hard to recruit and retain. The company gave a 120-day notice of the decision to end the contract, which had lowered the health care cost at the facilities by $15 million a year.

The corrections department reached an emergency contract with Armor Correctional Services in late June to begin providing services Oct. 1, but the switch will cost the state an additional $10.2 million for the final five months of this year and $21.6 million in the next, full fiscal year.

The department also is paying more for new medications to treat inmates with hepatitis C, which it estimates at 23 this fiscal year and 50 the next. The cost of their care is estimated at $1.8 million this year and $3.4 million the next year.

The department also has to bear the costs of in-patient hospital care for inmates, relatively few of whom qualify for Medicaid because of Virginia’s stringent eligibility rules, which the House of Delegates has refused to expand under the Affordable Care Act.

The McAuliffe administration estimated in August that the state would save almost $258 million over eight years if it had expanded Medicaid eligibility on July 1, by using federal funds to replace state dollars to pay for inmates who would qualify for Medicaid under new eligibility requirements in the federal law.

Currently, a little more than 3,300 inmates of the 30,000 in the system qualify for Medicaid coverage of in-patient hospital care.

The cost of their in-patient care is $14.2 million, which the state Medicaid program handles to ensure the state increases its savings through the federal match.

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