August 31, 2015
Medicaid and Inmates of Public Institutions
Medicaid is a means-tested entitlement program that
finances the delivery of primary and acute medical services,
as well as long-term services and supports, to eligible, lowincome individuals. Medicaid is a joint federal-state
program that provided health care services to an estimated
63 million individuals at a total cost of $494 billion in
FY2014, with the federal government paying $299 billion
(about 61%) of that total. This enrollment figure represents
average monthly enrollment. It differs from ever enrolled
counts, which measure the number of people covered by
Medicaid for any period of time during the year. Each state
designs and administers its own version of Medicaid under
broad federal rules. State variability is the rule rather than
the exception in terms of eligibility levels, covered services,
and how those services are delivered. (For more
information about Medicaid, see CRS Report R43357,
Medicaid: An Overview.)
This report describes Medicaid policy with respect to
inmates of public institutions, including prisoners. In
general, no federal financial participation, meaning federal
matching dollars, is available to states for medical services
delivered to inmates of public institutions. Inmates of
nonfederal correctional facilities are wards of the state.
Thus, states—not the federal government—are responsible
for their care. This inmate exclusion rule delineates when
the federal government will not share in the cost of
Medicaid services and is not tied to an individual’s
Medicaid eligibility status. The federal statute
(§1905(a)(29)(A) of the Social Security Act) and the
implementing regulation (42 C.F.R. 435.1009) provide an
exception to the prohibition on federal matching funds
when a Medicaid-eligible inmate becomes an inpatient in a
medical institution (e.g., hospital).
General Medicaid Eligibility and Coverage
Historically, to be eligible for Medicaid, a person must (1)
be a member of a “coverable” group (e.g., parents, children,
pregnant women, persons with disabilities, the elderly) and
(2) meet the applicable financial requirements (e.g., have
low income). As a result of the Patient Protection and
Affordable Care Act (ACA; P.L. 111-148, as amended) and
the recent Supreme Court decision in NFIB v. Sebelius,
beginning in 2014, states have the option to expand
Medicaid eligibility beyond the historical eligibility groups
to non-elderly adults, who are not otherwise eligible for
Medicaid, with income at or below 133% of the federal
poverty level, or FPL (effectively 138% of FPL, based on
an additional 5% disregard of income).
Similar to this ACA Medicaid expansion group, other
Medicaid eligibility pathways also have upper income
standards tied to a percentage of FPL (e.g., 133% of FPL
applicable to pregnant women and children through the age
of 18). In general, states must redetermine Medicaid
eligibility with respect to circumstances that may change at
least every 12 months. For individuals whose Medicaid
eligibility is based on modified adjusted gross income
methods, an assessment of continued eligibility must be
renewed every 12 months, and no more frequently than
once every 12 months (as per 42 C.F.R. 435.916).
Traditional Medicaid state plan coverage includes a number
of both mandatory services (e.g., inpatient hospital care, lab
and x-ray services, physician care, nursing facility services
for individuals aged 21 and over) and optional benefits
(e.g., prescribed drugs, personal care services, clinic
services, physical therapy, and prosthetic devices).
Medicaid also provides coverage in alternative benefit plans
(ABPs) that meet the ACA essential health benefits
requirements. There are 10 EHBs that include, for example,
emergency services, hospitalization, prescribed drugs, lab
services, and pediatric services, including oral and vision
care. In general, states may enroll certain Medicaid
beneficiaries in ABPs that include four choices: (1) the
standard Blue Cross/Blue Shield preferred provider plan
under the Federal Employees Health Benefits Program; (2)
a plan offered to state employees; (3) the largest
commercial health maintenance organization in the state;
and (4) other coverage appropriate for the targeted
population, subject to approval by the Secretary of Health
and Human Services.
Inmates of Public Institutions
For Medicaid purposes, an individual in a jail or prison is
considered to be an inmate of a public institution when
certain conditions are met. While serving time for a
criminal offense or confined involuntarily, no federal
matching funds are available to pay for Medicaid services
delivered to that inmate. This exclusion applies to both
traditional Medicaid state plan coverage and coverage
provided in ABPs that meet the ACA essential health
benefits requirements.
Additional federal regulations (42 C.F.R. 435.1010(a)-(b))
further specify that an inmate of a public institution means a
person who is living in a public institution. An individual is
not considered an inmate if he or she is (1) in a public
educational or vocational training institution or (2) in a
public institution for a temporary period pending other
arrangements appropriate to his or her needs. A facility is a
public institution when it is under the responsibility or
administrative control of a governmental unit.
The Government Accountability Office (GAO) recently
investigated inmate eligibility for Medicaid in response to a
congressional committee request. For this analysis, GAO
defined inmates to mean individuals incarcerated in state
prisons (typically individuals sentenced to more than one
year); local jails (typically individuals with a sentence of
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Medicaid and Inmates of Public Institutions
less than one year or who are awaiting adjudication); or
facilities under contract with states or local authorities, such
as counties. GAO did not include federal prisoners in its
analysis because officials from the Federal Bureau of
Prisons indicated that the bureau is not enrolling prisoners
in Medicaid for purposes of obtaining federal Medicaid
funds for inpatient services that qualify for such funds. (For
additional details, see GAO, Medicaid: Information on
Inmate Eligibility and Federal Costs for Allowable
Services, GAO-14-752R, publicly released on October 6,
2014.)
Inmates and the ACA Medicaid Expansion
The ACA’s optional Medicaid eligibility expansion was
implemented by 27 states in 2014. Since 2014, four more
states have implemented the expansion. GAO concluded
that the majority of inmates in these states were likely to
have income that would qualify them for Medicaid, a
circumstance that did not generally exist prior to the
implementation of the ACA Medicaid eligibility expansion.
The implications of this analysis are twofold.
First, in these 27 states, there could be an increase in the
number of inmates in state prisons, local jails, and facilities
under contract with states or local authorities who are
eligible for hospital services while they are inmates in a
public institution. Because more inmates in states that have
implemented the expansion are eligible for Medicaid, the
percentage of inmates receiving allowable services (e.g.,
inpatient hospital stays) is likely to increase. However, the
increases to federal Medicaid expenditures are likely to be
limited because only a small portion (i.e., 5% or less) of all
inmates are likely to have inpatient stays.
Second, eligibility changes made by the ACA could include
inmates once such individuals are no longer inmates.
Information from the National Academy for State Health
Policy provides state-specific examples relevant to this
issue, three of which are summarized below.
In Illinois, after the Governor’s Health Care Reform
Implementation Council was created in 2010, there was
early recognition of the importance of looking at the
justice-involved population independently because there
was a high volume of individuals in this population who
were newly eligible for Medicaid via the ACA.
In North Carolina, legislation was passed in 2010 requiring
the state’s Department of Corrections to consult with the
state’s Medicaid office to develop protocols allowing those
prisoners who would be eligible for Medicaid if they were
not incarcerated to access Medicaid services while in
custody or under extended limits of confinement.
In Rhode Island, the majority of discharged inmates with
medical or behavioral health needs were eligible for
Medicaid via the ACA Medicaid eligibility expansion. The
state modified its Medicaid enrollment assistance contracts
to include working with the Department of Corrections
discharge planners.
For more state-specific information, see the 2014 resources
available at the National Academy for State Health Policy
(www.nashpcloud.org) website.
According to an analysis in the March 2014 Health Affairs
publication entitled “Medicaid Expansion: Considerations
for States Regarding Newly Eligible Jail-Involved
Individuals,” states’ decisions on whether to expand
Medicaid will have significant implications for adults
involved in the criminal justice system, particularly the 10
million people moving through local jails. As reported in
the same article, 90% of people who enter county jails have
no health insurance.
The ACA eligibility expansion has the potential to
significantly increase access to care for such people when
they are released from jail, which in turn could improve
health outcomes and lower rates of recidivism. The jailinvolved population is largely male, members of a minority
group, and poor. Such individuals also have high rates of
mental and substance abuse problems. These individuals are
expected to comprise a substantial portion of the new ACA
eligibility group in states that have implemented this
enrollment pathway into Medicaid.
The Health Affairs article also suggests that states could
ensure connections to needed services upon release from
jail and could help inmates to determine their eligibility for,
and to enroll in, the applicable state Medicaid program.
States could also take advantage of federal grants to
automate systems that determine eligibility, and they could
include an array of behavioral health services in their
Medicaid benefit packages. Finally, the article notes that in
most states, new partnerships between Medicaid and
corrections agencies at both the state and local levels would
be needed to support these activities.
Evelyne P. Baumrucker, Specialist in Health Care
Financing
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IF10285
Medicaid and Inmates of Public Institutions
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