Cost-Saving Strategies for Correctional Health Care

Starting in 2014 a new provision of the Patient Protection and Affordable Care Act (ACA) has created opportunities for correctional facilities to offset the cost of inmate medical claims.

In 2014, a new provision of the ACA has changed the criteria for individuals to be eligible for Medicaid. The ACA allowed states to expand Medicaid eligibility effective January 1, 2014, to include all adults under age 65, including adults without children, with incomes up to 133 percent of the federal poverty level (FPL) based on

modified adjusted gross income. This new criteria would qualify the majority of inmates for Medicaid. For inmates who would be considered newly eligible for Medicaid in 2014 based on these new criteria, the federal government would reimburse the treating correctional facility or prison 100 percent of all medical claim costs from 2014 to 2017. Beyond 2017, states would be responsible for a small share of the cost of inmate medical care. That percentage would increase to a maximum liability of 10 percent by 2020. Given the new Medicaid eligibility criteria and potential federal claim reimbursement dollars, correctional facilities and prisons are poised to benefit financially now more than ever before, making the need to overcome administrative burdens to enrollment imperative.

States and localities have a constitutional obligation to provide adequate health care to correctional facility inmates. Such medical care must be paid for out of the facility’s own budget. What some facilities may not know is that a law has been in place for over 15 years that may allow for federal reimbursement dollars associated with these inmate claim payments. Under the early interpretations of the law that created Medicaid in 1965, incarcerated state prison and correctional facility inmates lost their Medicaid eligibility status upon incarceration. In 1997, however, the U.S. Department of Health and Human Services (HHS) issued a federal ruling which established that if an inmate leaves a state or local facility for at least 24 hours in order to receive treatment at a local hospital or nursing facility, the medical claims associated with that stay qualify for Medicaid reimbursement if the prisoner who incurred the services was Medicaid eligible at the time services were incurred. Between 1997 and 2014, in most states, only prisoners who were pregnant, disabled or frail and elderly qualified for Medicaid coverage when they needed outside medical care. In addition, since the process of enrolling inmates into Medicaid was burdensome, many states and counties did not pursue Medicaid reimbursements for their inmate populations.

County correctional facilities and state prisons should develop internal processes for the administrative enrollment of inmates who are newly eligible for Medicaid reimbursement as of January 1, 2014, and should make the Medicaid and exchange screening and application processes part of the standard inmate intake program moving forward. Proper staffing of correctional facility and jail resources should be the first step in the planning process. Many inmates with limited literacy and/or computer skills will need individual assistance in completing a Medicaid or exchange application. The ACA does establish a Navigator program that provides funding to entities that provide assistance with exchange applications, such as county human services agencies.

To learn about how correctional facilities can further reduce claim costs by partnering with an expert claims administrator, download our white paper, “Cost-Efficient Inmate Claims Administration.”