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

Findings

A few states do not appear to have any statutes, regulations, or written policies regarding Medicaid eligibility for individuals in prisons and jails. Moreover, many states lack complete written policies addressing every aspect of this issue, and several states appear to have internally inconsistent written policies. The dearth of clear and comprehensive policies on these topics in some states could reflect the limited role Medicaid has historically played for individuals moving into and out of incarceration. Given the program’s potentially greater role for this population as a result of the ACA Medicaid expansion, more states will likely develop their policies in this area over time.

Termination and Suspension of Eligibility for Incarcerated Individuals

Even though federal law does not preclude individuals who are incarcerated from being enrolled in Medicaid, many states have historically terminated coverage for enrollees who become incarcerated. States have found termination attractive from an administrative perspective because it makes improper billing for services provided to incarcerated individuals (who are not eligible for Medicaid coverage for most care) less likely. However, the Department of Health and Human Services encourages states to suspend rather than terminate Medicaid benefits during incarceration.¹ When states terminate eligibility, individuals must re-apply for Medicaid, which may delay access to services upon release. DHHS has noted that suspending Medicaid eligibility allows individuals to receive services immediately after release, which “may reduce the demand for costly and inappropriate services later.”² In addition, suspending Medicaid eligibility can make it easier for states to access federal Medicaid funding when individuals who are incarcerated receive inpatient services in a medical institution.

Many states continue to terminate eligibility for individuals who become incarcerated, but a number of states require the Medicaid agency to suspend rather than terminate eligibility. Some of these states specify that eligibility is suspended during incarceration. Others simply indicate that enrollees who become incarcerated retain their Medicaid eligibility, but cannot receive services through Medicaid. This area of state policy is evolving, with more states moving toward suspending Medicaid eligibility during incarceration. For example, in 2015, New Mexico enacted legislation stating that incarceration is not a basis to deny or terminate eligibility for Medicaid and requiring the Medicaid agency to adopt regulations implementing the statute.³ Other states have introduced similar legislation.⁴ However, some states that have  adopted policies to allow for suspension of eligibility have faced challenges updating their eligibility systems to implement these policies.⁵

Some states have relatively broad suspension policies, while others explicitly limit suspension of eligibility to certain groups of incarcerated individuals or for a specified length of time. For example, under a Florida state statute, all Medicaid enrollees who become incarcerated in a state, county, or municipal correctional facility remain eligible for Medicaid, but generally cannot receive services through Medicaid.⁶ Some states provide for suspension of Medicaid enrollees in some, but not all, correctional facilities. For example, North Carolina’s written policy suspends eligibility for individuals in state prisons, but not in other correctional facilities.⁷ Similarly, Arizona’s policy provides for suspension of eligibility only for individuals in state prisons and certain county jails.⁸ In addition, some states explicitly limit the length of time of a suspension. For example, Arizona’s policy does not allow for suspended eligibility for Medicaid enrollees who will remain incarcerated for 12 months or longer.⁹ Iowa and Indiana suspend eligibility for individuals regardless of how long they are expected to remain incarcerated, but the suspension cannot last for more than 12 months (Box 2).¹⁰

Accessing Federal Medicaid Funds for Inpatient Services

As noted above, federal law allows states to receive Medicaid reimbursement for inpatient services provided to incarcerated individuals by a hospital outside of a correctional facility. Historically, few states have sought out this reimbursement. This decision may have been due in part to the small share of the incarcerated population that qualified for Medicaid prior to the ACA. However, states may realize savings from accessing this reimbursement, and the savings potential is significantly enhanced by the ACA Medicaid expansion (Box 3).

Policies and processes related to accessing Medicaid reimbursement for inpatient services differ among states. Many states’ written policies acknowledge that individuals who are incarcerated may receive Medicaid coverage for inpatient services. However, others do not specify this exception. Some of the states that do specify this exception have adopted written policies outlining the process for accessing federal Medicaid funds for inpatient services. In many of these states, correctional staff members submit a Medicaid application on behalf of individuals receiving inpatient services. Some states allow submission after an individual is admitted to the hospital, while others do not allow submission until after discharge.¹⁷ Accordingly, the process for ensuring that eligibility is terminated or suspended upon discharge from the hospital also varies among states. In Arizona, for example, Medicaid eligibility simply begins on the date of hospital admission and ends on the date of hospital discharge.¹⁸ In Colorado, when an individual returns from the hospital to the correctional facility, facility staff must notify the Medicaid agency to properly terminate eligibility.¹⁹ Several states only specify a process for accessing Medicaid funding for individuals in certain correctional institutions.²⁰

Connecting Individuals to Coverage Upon Release

Enrolling individuals who are uninsured (including those whose coverage has been terminated upon incarceration) in Medicaid prior to release from prison or jail can help support access to care immediately after release. If individuals cannot apply for Medicaid until after release, they may experience a delay in obtaining coverage and thus, necessary care. As noted above, federal Medicaid law requires states to allow individuals to apply for Medicaid at any time,²¹ and CMS has clarified that states may enroll individuals who are incarcerated in Medicaid.²² As a practical matter, most individuals in prisons and jails will not be able to apply for Medicaid unless the state actively facilitates the process. States may require correctional or Medicaid agency staff to assist individuals with the application process, and federal Medicaid funding should be available to states for this purpose.²³ In addition, outside organizations may coordinate with states to send navigators or certified application counselors into jails and prisons to help individuals enroll in Medicaid.

Current state policies vary with regard to allowing individuals to enroll in Medicaid prior to release. Several states’ policies explicitly allow individuals who are incarcerated to apply for Medicaid (Box 4). Many of these policies specify that individuals who are nearing their release date may apply for Medicaid. Some note that the Medicaid agency must determine eligibility within the standard time period required under federal Medicaid regulations, but that individuals cannot be found eligible or cannot be enrolled in the program until after release.²⁴ However, at least two states, Michigan and North Carolina, appear to suspend eligibility for incarcerated individuals found to qualify for Medicaid.²⁵ These policies may allow individuals to receive services more quickly after release.

A few states require corrections staff to facilitate the application process for individuals nearing release.²⁹ For example, in Connecticut, the Department of Corrections and Department of Social Services have partnered to ensure that individuals who are discharged from a Department of Corrections facility continue to receive necessary health care upon re-entry into the community through Medicaid. The Department of Social Services has provided two eligibility workers dedicated solely to processing Medicaid applications for those individuals determined potentially eligible for assistance.³⁰ Moreover, in New Hampshire, state prison and county jail staff initiate Medicaid applications for individuals nearing release by using an automated process or by completing and mailing all necessary forms to the Medicaid agency.³¹ Similarly, in Virginia, state prison staff must complete and submit a Medicaid application for individuals who need to be placed in a nursing facility upon release.³²

Outlining Responsibilities for Managed Care Plans

Under federal Medicaid law, states may enter into contracts with managed care entities to provide services to Medicaid beneficiaries.³³ While federal law allows for several kinds of Medicaid managed care arrangements, most Medicaid managed care plans are “capitated” plans.³⁴ This means that states pay plans a set amount each month for providing health care services to an enrollee. Over the past several decades, managed care has come to play an increasingly important role in Medicaid, with almost three-quarters of Medicaid beneficiaries now enrolled in some type of managed care arrangement.³⁵ Given this fact, provisions in Medicaid managed care contracts may have implications for coverage and care of incarcerated individuals.

Through their contracts with Medicaid managed care entities, some states have taken steps to ensure that they do not make capitated payments on behalf of individuals who are incarcerated.³⁶ As discussed above, individuals who are incarcerated are generally not eligible to receive services through Medicaid. As a result, when individuals who are enrolled in a managed care plan become incarcerated, the plan is no longer responsible for providing their care. States have adopted several approaches to ensure that that they do not continue to make capitated payments to managed care plans on behalf of enrollees who become incarcerated. For example, some state 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.³⁷ Adoption of such policies can facilitate the ability of states to discontinue capitated payments to plans during a period of incarceration without terminating Medicaid eligibility. Additionally, several contracts specify that the state will recoup a capitated payment made on behalf of an enrollee who becomes incarcerated. For example, Wisconsin’s Medicaid HMO contract indicates that the state will recoup a capitated payment when the enrollee cannot use HMO facilities. As a result, when an enrollee enters a correctional facility before the first day of the month for which the state made the payment, the state will recoup the payment.³⁸

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 quickly access necessary community-based services during this time period. Colorado, for example, requires behavioral health plans to “collaborate with agencies responsible for the administration of jails, prisons and juvenile detention facilities to coordinate the discharge and transition” of enrollees.³⁹ In addition to ensuring that enrollees leaving incarceration receive medically necessary behavioral health services, plans must propose innovative strategies to meet the needs of enrollees involved with the criminal justice system.⁴⁰ Similarly, Florida requires Medicaid managed care plans to “make every effort…to provide medically necessary community-based services for Health Plan enrollees who have justice system involvement.”⁴¹ Among other things, plans must: (1) provide psychiatric services to enrollees and likely enrollees within 24 hours after release from a correctional facility; (2) ensure that enrollees are linked to services and receive routine care within 7 days after release; (3) conduct outreach to populations of enrollees “at risk of justice system involvement, as well as those Health Plan enrollees currently involved in this system, to assure that services are accessible and provided when necessary.”⁴² In addition, plans must work to develop agreements with correctional facilities that will enable the plans to anticipate the release of individuals who were enrolled prior to incarceration.⁴³

Conclusion

In conclusion, state Medicaid eligibility policies for incarcerated individuals vary significantly, and these policies affect if and when individuals may be enrolled in coverage and the scope of savings states may achieve from their coverage. Looking ahead, state policies will likely evolve given the growing importance of Medicaid for this population under the expansion. As policies continue to develop, it will be important to consider the implications of different state choices. Specifically, suspending rather than terminating eligibility for individuals who become incarcerated may help facilitate timely access to coverage and care upon release and may make it easier for states to access federal Medicaid reimbursement for inpatient services provided to individuals while incarcerated. In addition, explicitly allowing uninsured individuals to apply for and enroll in coverage prior to release and facilitating enrollment as part of re-entry planning can support timely access to coverage as individuals return to the community. Research suggests that coverage immediately upon release may lead to improved access to care and broader benefits. Gains in coverage among individuals returning to the community may contribute to savings in uncompensated care and other indigent care programs. Lastly, through managed care contracts, states can adopt policies that enable them to discontinue capitated payments to plans for enrollees who become incarcerated without terminating their Medicaid coverage. Moreover, managed care plans can play a key role in supporting individuals’ timely access to care as they return to the community, and states can outline and strengthen this role through contract provisions.