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Struggling with Medicaid limits on care for incarcerated persons

May 9, 2012
by Dennis Grantham, Editor-in-Chief
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Counties take steps to manage the costs of the inmate exception, even as they hope for change
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From its inception, Medicaid regulations have been clear about one thing: the federal “match,” or the federal share of reimbursement for Medicaid care or services, is not provided when an otherwise eligible person is an “inmate of a public institution.” For practical purposes, the inmate exception means that the nation’s states and counties are solely responsible for the costs of medical and behavioral care extended to individuals in prison or jails and juveniles in detention.

The broad manner in which many states interpret this “inmate exception” is not only detrimental to state and local budgets, but can hurt beneficiaries as well, said Ron Manderscheid, executive director of the National Association of County Behavioral Health and Developmental Disabilities Directors (NACBHDD).

In a recent Washington, D.C., policy conference with county directors, he explained while Medicaid regulations “terminate” the payment of federal match dollars for services to such inmates, the termination of payments was intended to be temporary—lasting only for the period of institutionalization.

Many states, he said, interpreted the regulation illegally to mean that Medicaid eligibility for inmates should be terminated. This has created three major problems:

  1. Individuals are losing benefits even prior to trial, when they retain a presumption of innocence.
  2. Individuals exiting jail or prison find that they have no access to benefits for the months it takes to reapply and restore eligibility.
  3. Given the inability of many states to provide their share of Medicaid match funding due to tight budgets, more counties end up footing most or all of the costs of inmate care.

Salt Lake County shares solutions

In Utah, local officials confronted with overcrowding in the Salt Lake County Jail system and the rising cost of medical and behavioral healthcare for jail inmates adopted a series of approaches that can be used by counties nationwide, said Patrick Fleming, the county’s director of substance abuse services and the current NACBHDD president.

Fleming added that these steps are valuable not only at present, but as “stage setting” steps for the planned Medicaid expansion in 2014. After that time, he estimates that 90 percent of the jail inmates served in Salt Lake County—and many counties nationwide—will have Medicaid as their insurance plan after 2014.

Salt Lake County’s first step was to try a jail overcrowding relief program, which would cap the number of jail beds that would be available to courts and law enforcement. By “capping” the county’s jail population, officials felt that they could relieve some of the financial pressure of inmate care costs—about $33,000 per inmate per year. But officials, said Fleming, found that simply limiting the jail’s population “wasn’t good public policy.”

So, they asked the county’s Criminal Justice Advisory Council (CJAC)—a coordinating body established in 1984 and made up of state, county and city elected officials, and members from criminal justice, social service, political, and community agencies—to examine how the justice system was working and to identify effective alternatives. Fleming noted: “If your county doesn’t already have this type of advisory council, you need to create one.”

In time, CJAC responded with a “Criminal and Social Justice Policy Plan” that developed a range of strategies to help the county better manage the jail population, cope with the costs of inmate care, and realize value for local taxpayers. These strategies included:

Collecting comprehensive inmate and jail data. Among CJAC’s first—and wisest steps—was to begin collecting comprehensive data about all inmates at the county’s 2,300 bed jail. “That’s what makes the lawmakers listen,” said Fleming, who explained, “In our county of 1.1 million people, we spent $7 million on medical services for inmates—including psychiatric, medical, dental, pharmacy, and costs of transport and inpatient admissions at local hospitals. Those inpatient costs were $2.5 million of the total.”

Developing local alternatives to incarceration. Among the most important of these alternatives is the ability to divert non-violent offenders to treatment. This option saves law enforcement the costs of detention and adjudication while it gives non-violent individuals the opportunity to avoid criminal prosecution, retain their Medicaid benefits, and utilize those benefits to obtain specified and appropriate substance use or mental health treatment.

Using available Medicaid benefits for inpatient care. Fleming says that CJAC learned that, according to a 1998 CMS rule, when inmates otherwise eligible for Medicaid benefits are taken to hospitals for inpatient care of 24 hours or more, they were no longer considered “inmates” and that Medicaid would pay their inpatient care expenses.

He said that at present, utilizing this provision of Medicaid law will save approximately 25 percent of the Salt Lake County’s $2.5 million expenditure for inpatient care of inmates. After the 2014 Medicaid expansion, he expects that this percentage will rise dramatically, resulting in much larger savings to the county.

Working with the state to suspend, not terminate, Medicaid eligibility for inmates. “County officials can do this now by contacting their state Medicaid office,” Fleming says. But be prepared for the answer you might receive, he warns. “The state told us that they did not have the Medicaid match money for this,” he explains, noting that in Utah, Medicaid expenditures are split 70 percent federal/30 percent state.