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May 12, 2021
Medicaid and Incarcerated Individuals
Medicaid is a joint federal-state means-tested entitlement
education or vocational training or individuals residing in a
program that finances the delivery of primary and acute
public institution temporarily (e.g., pending arrangements
medical services, as well as long-term services and
for community residence).
supports, for a diverse low-income population. States that
operate their programs within broad federal rules are
In a 2016 State Health Official (SHO) letter (SHO # 16-
entitled to federal Medicaid matching funds. (For more
007), the Centers for Medicare and Medicaid Services
information about Medicaid, see CRS Report R43357,
(CMS) provided additional guidance on the definition of
Medicaid: An Overview.)
inmate, stating, “CMS considers an individual of any age to
be an inmate if the individual is in custody and held
The Patient Protection and Affordable Care Act (ACA; P.L.
involuntarily through operation of law enforcement
111-48, as amended), and a subsequent Supreme Court
authorities in a public institution.” Thus, for the purposes of
decision (National Federation of Independent Business v.
Medicaid, CMS does not distinguish between individuals
Sebelius), made it optional for states to expand Medicaid
who are detained in a public institution pending disposition
coverage to non-elderly adults with income up to 133% of
of charges and those who are incarcerated post-sentencing.
the federal poverty level beginning in 2014. This created a
Individuals are not considered inmates for the purposes of
new eligibility pathway for such adults based solely on
Medicaid if they have “freedom of movement” (e.g., ability
income rather than on other categorical criteria, such as
to work outside a facility, to seek health treatment in a
disability, being a parent of dependent children, or being a
community setting). Therefore, individuals on probation or
pregnant woman. In states that expanded Medicaid, many
parole, under home confinement, residing in halfway
individuals transitioning into and out of incarceration—a
houses under the jurisdiction of state or local governments,
population that tends to have higher rates of substance use
etc., are not considered inmates.
disorder, mental illness, and chronic disease than the
general population—were eligible for Medicaid for the first
Medicaid Payment During Incarceration
time. This In Focus describes how incarceration can impact
Public institutions are required to provide medical care to
the availability of federal Medicaid payment and an
inmates as a consequence of the 1972 Supreme Court ruling
individual’s Medicaid coverage.
Estelle v. Gamble, which found that deliberate indifference
to a prisoner’s serious injury or illness constitutes cruel and
Medicaid Inmate Payment Exclusion
unusual punishment. Inmate health care can be costly for
Historically, Medicaid has not been a major source of
state and local governments, and billing Medicaid can
funding for the health care of incarcerated individuals. This
offset a portion of these expenses for coverable services
is mainly because federal Medicaid statute generally
when eligible inmates are inpatient for 24 hours or longer in
prohibits the use of federal Medicaid funds to pay for the
a medical institution (for details on inmate eligibility and
health care of an “inmate of a public institution”
enrollment, see “Medicaid Eligibility for Inmates ”). CMS
(hereinafter referred to as the inmate payment exclusion)
provides guidance on which settings qualify as medical
except when the individual is a “patient in a medical
institutions in its 2016 SHO letter, stating that medical
institution” that is organized for the primary purpose of
institutions can include hospitals, nursing facilities, and
providing medical care. Additionally, pre-ACA, many
intermediate care facilities for individuals with an
incarcerated individuals did not meet Medicaid eligibility
intellectual disability that are certified Medicaid providers,
criteria, so when the inmate was a patient in a medical
also serve members of the general public, and house and
institution, the stays were not billable to Medicaid (see
provide treatment based on medical need rather than
“Medicaid Payment During Incarceration”).
incarceration status, among other criteria.
Inmates of Public Institutions
Services provided to inmates in medical institutions on an
Generally, an individual detained in a local jail, state or
outpatient basis still are subject to the inmate payment
federal prison, detention facility, or other setting that is
exclusion. Similarly, any inpatient and outpatient medical
organized for the primary purpose of involuntary
services provided in settings that “primarily or exclusively”
confinement is an inmate of a public institution for the
treat inmates are subject to the inmate payment exclusion
purposes of Medicaid. Public institution is defined in
because they are considered correctional (not medical)
federal regulation as “an institution that is the responsibility
settings. Separate 2016 guidance (S&C: 16-21-ALL) from
of a governmental unit or over which a governmental unit
CMS provides that such settings can, among other things,
exercises administrative control,” with exceptions for types
limit personal privacy, restrict choice of physician, and use
of settings such as medical institutions, among others.
nonmedical restraint, all of which would disqualify them
Federal regulations define inmate as someone living in a
from obtaining certification as a Medicaid provider.
public institution, with certain exceptions for individuals
living in public educational/vocational institutions to secure
https://crsreports.congress.gov
link to page 2 Medicaid and Incarcerated Individuals
Medicaid’s “patient in a medical institution” exception
readily available. Waiting to implement a Medicaid
applies to federal inmates, but the Bureau of Prisons
suspension can reduce administrative burden and the
chooses to retain responsibility for the payment of health
potential for unnecessary interruption in Medicaid
care services for its inmates, so in practice, the policy is not
coverage, but it also can create the risk of inappropriate
applied to inmates in federal prisons.
billing of Medicaid.
Medicaid Eligibility for Inmates
Recent Laws and Related Guidance
Inmates who are eligible for, or enrolled in, Medicaid do
The Substance Use-Disorder Prevention That Promotes
not become ineligible for Medicaid based on their inmate
Opioid Recovery and Treatment for Patients and
status alone. The statutory inmate payment exclusion is a
Communities Act (SUPPORT Act; P.L. 115-271) prohibits
coverage (not an eligibility) exclusion. However,
states from terminating Medicaid eligibility for “eligible
historically, most states had policies to terminate an
juveniles”; instead, the law allows states to suspend
inmate’s Medicaid enrollment, in part as a way to avoid
Medicaid. Eligible juveniles are defined as individuals
inappropriate billing. If the inmate needed an inpatient
under 21 years of age and former foster youth up to the age
hospitalization, the public institution would need to
of 26 who become incarcerated while enrolled in Medicaid
facilitate Medicaid enrollment of the inmate to bill
or are determined eligible for Medicaid while incarcerated.
Medicaid for the stay. In addition, inmates whose Medicaid
The SUPPORT Act also requires states to redetermine the
was terminated during incarceration would have to reapply
eligibility of eligible juveniles whose Medicaid is
for Medicaid and be deemed eligible by the state to have
suspended, or to accept and make timely eligibility
full Medicaid coverage upon release (statute requires that
determinations on new Medicaid applications for eligible
states accept inmates’ Medicaid applications). Since the
juveniles, to enable full coverage upon release. The
reapplication process could lead to a gap in Medicaid
SUPPORT Act does not change the inmate payment
coverage following incarceration (due to uncertain release
exclusion; Medicaid coverage for eligible juveniles is still
dates, delayed eligibility determinations, etc.), CMS sought
limited to inpatient services. The law generally applies to
to address this issue via guidance that permits states to
eligible juveniles who become inmates of public institutions
suspend Medicaid for incarcerated individuals.
on or after October 24, 2019.
Medicaid Suspension for Inmates
A January 2021 State Medicaid Director Letter (SMD #21-
002) from CMS provides guidance to states on
Early CMS Guidance on Medicaid Suspension
implementation of the SUPPORT Act, advising that for
In 2004 guidance, CMS permitted states to suspend an
eligible juveniles states can (1) suspend Medicaid benefits,
inmate’s Medicaid so that it could be more quickly
(2) suspend Medicaid eligibility, or (3) both of these
reinstated upon release from incarceration (or in the case of
approaches. The guidance details that by suspending
an inpatient hospitalization). The 2016 CMS SHO letter
Medicaid benefits, an eligible juvenile would remain
offered similar direction by recommending that states place
enrolled in Medicaid but coverage would be limited to
“the inmate in a suspended eligibility status” or “suspend
inpatient services. Alternatively, suspending an eligible
coverage by establishing markers and edits in the claims
juvenile’s Medicaid eligibility effectively pauses the
processing system to deny claims for excluded services.”
inmate’s Medicaid entirely, preventing Medicaid coverage
An eligibility suspension effectively pauses an inmate’s
for any services. When eligibility is suspended, states must
Medicaid eligibility without terminating it. A coverage
lift the suspended status to be able to bill and receive
suspension maintains an inmate’s eligibility but limits
federal matching funds for eligible inpatient stays.
coverage to allowable inpatient services. Both suspension
methods can achieve the same end goal of faster
The total number of inmates impacted by the SUPPORT
reinstatement of full Medicaid coverage upon release from
Act is relatively small, and the act’s prohibition on
incarceration. Public institutions, states, and local
Medicaid termination for eligible juveniles does not extend
jurisdictions were not required to actively facilitate
to the majority of the inmate population. However, most
Medicaid suspension (or enrollment) for inmates until
states choose to suspend Medicaid for their adult inmate
recent changes to law required them to do so for certain
populations, as well. According to a state FY2019 Kaiser
inmates (see “Recent Laws and Related Guidance”).
Family Foundation survey, 42 states suspended rather than
terminated Medicaid for jail inmates and 43 states did so for
Timing of Medicaid Suspension
prison inmates.
In general, the process of Medicaid suspension can require
extensive coordination between corrections and the state
Recent Legislation
Medicaid agency, as well as information technology system
Bills that address Medicaid coverage for inmates have been
changes. This, in addition to unique state and local policies
introduced in the 117th Congress. The Medicaid Reentry
and processes, among other factors, contributes to
Act of 2021 (H.R. 955/S. 285) would remove the Medicaid
variability in when states or jurisdictions initiate Medicaid
payment exclusion for Medicaid enrolled inmates
suspension during an incarceration; for example, one
(including juveniles) in the 30 days prior to release from a
jurisdiction could wait 24 hours, whereas another could
public institution. Effectively, it would allow states to
wait 60 days. The full range of when jurisdictions suspend
receive federal matching funds for state plan services
Medicaid is difficult to determine. Similarly, data on the
delivered to Medicaid-enrolled inmates during the specified
average length of time between an inmate entering jail or
time period. Similar bills were introduced during the 116th
state or federal prison and Medicaid suspension are not
Congress.
https://crsreports.congress.gov
Medicaid and Incarcerated Individuals
IF11830
Julia A. Keyser, Analyst in Health Care Financing
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
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https://crsreports.congress.gov | IF11830 · VERSION 1 · NEW