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State Medicaid Eligibility Policies for Individuals Moving Into and Out of Incarceration

Executive Summary

Many individuals in prisons and jails have significant physical and behavioral health care needs, but lack health insurance and regular access to care. Compared to individuals in the community, incarcerated individuals are much more likely to have chronic physical and mental health conditions, such as HIV/AIDS, a serious mental illness, or a substance abuse disorder. Despite having significant health care needs, many individuals do not receive necessary medical care during incarceration. Because the majority of individuals leaving prisons and jails do not have health insurance, they often continue to lack access to care after release.

Medicaid coverage for individuals moving into and out of incarceration may help increase their access to care and improve their health status, and thus contribute to broader benefits. Enrolling these individuals in Medicaid may also contribute to state savings. The Affordable Care Act’s (ACA) Medicaid expansion offers a new opportunity for states to connect individuals in prisons and jails to coverage. However, Medicaid eligibility policies for incarcerated individuals vary in both expansion and non-expansion states. These policies affect if and when individuals may be enrolled in coverage and the savings states may achieve from their coverage.

Federal law does not prohibit individuals from being enrolled in Medicaid while incarcerated. However, Medicaid will not cover the cost of care for incarcerated individuals, except for care received as an inpatient in a hospital or other medical institution. Given these broad federal rules, states have flexibility to make policy choices related to eligibility and enrollment of incarcerated individuals. Building on an earlier brief that provides an overview of health coverage and care for individuals involved with the criminal justice system, this brief highlights how state eligibility policies for incarcerated individuals differ, based on a review of state statutes, regulations, Medicaid eligibility manuals and other Medicaid agency guidance publicly available online and Medicaid managed care contracts. It finds:

A few states do not appear to have any written policies regarding Medicaid eligibility for incarcerated individuals. However, given the program’s potentially greater role for this population as a result of the Medicaid expansion, this is an area where states will likely continue to develop policies over time.

Many states terminate eligibility for individuals who become incarcerated, but the number of states that suspend rather than terminate eligibility appears to be growing. Some states have relatively broad suspension policies, while others explicitly limit suspension to certain groups of incarcerated individuals or for a specified length of time. Historically, many states terminated eligibility, as federal law prohibits Medicaid payment for most services provided to individuals in prisons and jails.  However, suspending eligibility allows individuals to receive services immediately after release and may make it easier for states to access federal Medicaid funding for inpatient services provided to incarcerated individuals.

Policies and processes related to accessing Medicaid reimbursement for inpatient services provided to incarcerated individuals vary among states. Many states’ policies acknowledge that individuals who are incarcerated may receive Medicaid coverage for inpatient services, and some outline the process for accessing federal reimbursement for these services. Other state policies do not specify this exception for inpatient services, meaning that the states may not be accessing available federal reimbursement. Accessing this federal reimbursement can lead to savings for states. The Medicaid expansion increases this savings potential, as more individuals qualify for the program, and the federal government provides an enhanced match rate for newly eligible adults.

States also vary in whether they allow individuals in prisons and jails to apply for and enroll in Medicaid. If individuals cannot apply and be determined eligible for Medicaid while incarcerated, they may not have access to health care services immediately after release. Policies in several states explicitly allow individuals who are incarcerated to apply for Medicaid before release. A few states also require corrections staff to facilitate the application process for individuals nearing release. Allowing individuals to apply for and enroll in Medicaid prior to release can help ensure timely access to care immediately after release.

Through their contracts with Medicaid managed care entities, some states have established policies to prevent making capitated payments on behalf of individuals who are incarcerated.1 Some contracts exclude individuals who are incarcerated from enrolling in the managed care plan and/or provide for disenrollment from the plan when an enrollee becomes incarcerated. In addition, some contracts specify that the state will recoup a capitated payment made on behalf of an enrollee who becomes incarcerated. By adopting such policies, states can stop capitated payments to plans for individuals while they are in prison or jail without terminating enrollment in Medicaid.

Several states have Medicaid managed care contract provisions that require plans to provide care coordination services to individuals upon release from jail or prison. Medicaid managed care entities may be well-positioned to help Medicaid enrollees access necessary community-based services upon release. Several states require plans to work with correctional agencies to help individuals returning to the community connect to services, particularly behavioral health services, upon release.

In conclusion, state Medicaid eligibility policies for individuals moving into and out of incarceration vary. These policies affect if and when individuals may enroll in Medicaid and the scope of any resulting savings. Looking ahead, state policies in this area will likely continue to evolve given the larger role of Medicaid for this population under the expansion. It will be important for states to consider the implications of different choices as they develop their policies. Suspending rather than terminating eligibility, allowing individuals to enroll in coverage prior to release, and facilitating enrollment as part of re-entry planning all promote timely access to health coverage upon release. Research suggests that coverage immediately upon release can lead to improved access to care and broader benefits. Expanding health coverage among individuals moving into and out of incarceration may also lead to state savings through federal reimbursement for inpatient services provided to incarcerated individuals, reductions in uncompensated care, and savings in other indigent care programs.

Introduction

Connecting individuals moving into and out of incarceration to health coverage may not only increase their access to care and improve their health status, but may also lead to state savings. The Affordable Care Act’s (ACA) Medicaid expansion to low-income adults offers a new opportunity to connect these individuals to health coverage. However, in both expansion and non-expansion states, a range of state policy choices determine if and when individuals moving into and out of incarceration may be enrolled in coverage and the potential savings that states may achieve from increasing coverage for these individuals. Based on a review of state statutes, regulations, publicly available state Medicaid policies, and Medicaid managed care contracts, this brief highlights examples of how Medicaid eligibility policies for incarcerated individuals differ among states and discusses the implications of these state policy choices. This work builds on an earlier brief that provided an overview of health coverage and care for the criminal justice-involved population and the role of Medicaid.

Background

Many individuals in prisons and jails have significant health care needs, but lack health insurance and regular access to care. As of 2013, approximately 1.5 million individuals were incarcerated in U.S. state and federal prisons and another 730,000 were incarcerated in county and city jails.2 These individuals are much more likely to have chronic physical and mental health conditions than individuals in the community.3 For example, HIV/AIDS is two to seven times more prevalent among people in correctional facilities than among individuals in the community.4 Similarly, the prevalence of serious mental illness is two to four times higher in state prisons than in the community.5 In addition, 68% of people in jails and over 50% of people in state prisons have a diagnosable substance abuse disorder, compared with 9% of the general population.6 Despite having these significant health care needs, many individuals do not receive necessary medical treatment during incarceration.7 The lack of access to continuous, quality care often persists after release, as the majority of individuals leaving prisons and jails do not have health insurance.8

Historically, Medicaid played a limited role for individuals moving into and out of prisons and jails. Prior to the ACA, only certain groups of low-income individuals qualified for the program: pregnant women and children, caretaker relatives, people over age 65, and people with disabilities.9 Most adults not living with their minor children were therefore excluded from the program under federal rules. As such, many individuals moving into and out of prisons and jails did not qualify for the program. Moreover, even for individuals enrolled in the program, federal law prohibits federal Medicaid payment for most health care services provided to individuals while incarcerated, with the exception of care received as an inpatient in a hospital or other medical institution (Box 1).10

The ACA Medicaid expansion provides a new opportunity to increase health coverage among individuals moving into and out of incarceration. The ACA expanded Medicaid to adults who do not fit into an existing Medicaid eligibility category, are not eligible for Medicare, and have incomes up to 138% of the Federal Poverty Level, providing a new coverage option for many individuals involved with the criminal justice system. However, the Supreme Court ruling on the constitutionality of the ACA effectively made the Medicaid expansion a state option. As of July 2015, 31 states have adopted the expansion, while the remaining 20 states have not.11

Box 1: Medicaid Funding for Individuals in Prisons and Jails

There is no federal statute, regulation, or policy that prevents individuals from being enrolled in Medicaid while incarcerated.12 Notably, in 2004, CMS issued guidance reminding states that “[i]ndividuals who meet the requirements for eligibility for Medicaid may be enrolled in the program before, during and after the time in which they are held involuntarily in secure custody of a public institution.”13 Federal law requires states to allow individuals to apply for Medicaid at any time.14

Although individuals may be enrolled in Medicaid while they are incarcerated, Medicaid generally will not cover the cost of their care. Specifically, federal law prohibits the use of federal Medicaid funds to pay for nearly all services for “an inmate of a public institution” regardless of whether they are otherwise eligible for Medicaid.15

However, states may receive federal Medicaid funds for services provided to individuals who are incarcerated, but are patients of a medical institution.16 CMS has clarified that this includes individuals admitted to a hospital, nursing facility, juvenile psychiatric facility, or intermediate care facility on an inpatient basis, as long as they remain Medicaid eligible.17

Increased Medicaid coverage among individuals leaving prisons and jails may improve their access to care and health outcomes. Without access to health services immediately upon release, recently incarcerated individuals’ physical and mental health conditions may deteriorate. In fact, research shows that individuals face a markedly increased risk of death– over 12 times that of other individuals – during the first two weeks after release.18 Research suggests that providing access to Medicaid upon release can promote more timely access to care, which may reduce that risk, particularly for individuals with chronic physical or mental health conditions.19 In addition, continuous access to health care immediately after release may reduce the risk of re-arrest and re-incarceration. One study of individuals with a severe mental illness found an association between enrollment in Medicaid before release from jail and fewer subsequent detentions.20

Increasing Medicaid coverage for individuals moving into and out of incarceration may also contribute to state savings. Although federal Medicaid funds are not available for most care provided to individuals while incarcerated, states may receive Medicaid reimbursement for care provided to eligible individuals admitted as inpatients to a medical institution, such as a hospital, nursing facility, psychiatric facility, or intermediate care facility. Prior to the ACA, only a few states pursued Medicaid reimbursement for these services. This decision may have been due in part to the limited share of the incarcerated population that qualified for Medicaid. However, the Medicaid expansion offers greater potential savings to states given that a larger share of the incarcerated population may qualify for Medicaid and that the federal government is providing states an enhanced federal matching rate for newly eligible adults. Increased coverage among individuals returning to the community from jail or prison may also contribute to other state and local savings through reductions in uncompensated care and savings in other indigent care programs, such as state-funded behavioral health services.

Methods

This analysis examines states’ policies regarding Medicaid eligibility and enrollment for individuals who are incarcerated. It is based on a review of state statutes, regulations, Medicaid eligibility manuals, and other Medicaid agency guidance that is publicly available online conducted during spring 2015. These resources were reviewed to determine if a state has written policies indicating if the state: (1) suspends or terminates Medicaid eligibility during incarceration; (2) has a process in place to access federal Medicaid funds for individuals who receive inpatient hospital services during incarceration; and (3) explicitly allows individuals to apply and be determined eligible for Medicaid during incarceration, and, if so, facilitates the process. In addition, sample state Medicaid managed care contracts were reviewed to identify any provisions regarding enrollees involved in the criminal justice system.

It is important to note that this review was limited to Medicaid agency guidance that is publicly available online. As a result, it may not have captured all pertinent agency guidance. Moreover, given that this area of policy is rapidly changing, the reviewed materials may not reflect the most current policies in all states. Lastly, this review did not assess whether and how states are implementing their written policies. Given these limitations, this analysis does not present any comprehensive conclusions about policies across all 50 states. Rather, it highlights the range of polices states have adopted in this area and discusses the implications of different policy choices. Future state survey work by the Kaiser Family Foundation will capture more comprehensive information on the status of state policies across the country.

Issue Brief

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.