Mass Incarceration – Implications for Medicaid

Originally, Medicaid was interpreted to mean a loss of eligibility status upon imprisonment. Section 1905(a)(A) of the Social Security Act prohibits Federal Financial Participation in funding medical care provided to inmates of a public institution, unless the inmate is a patient in a medical institution. As far back as December 12, 1997, DHS clarified that an inmate may not  be funded by FFP unless the inmate becomes a patient in a medical institution on an inpatient basis (now defined as an inpatient stay of at least 24 hours).  This exception was also extended to those on probation, parole, or home detention. The thinking was that the Eighth Amendment obligation of the correctional facility to provide care should not be shifted to other funding sources under ordinary circumstances. From this perspective, each state or county or other political unit would bear the Constitutional cost of its incarceration policies as well as its Medicaid plan design. 

All of this did not excite too much attention until the passage of the ACA.  Once the dust settled on theNFIB v. Sebelius  reinterpretation of Medicaid expansion under the ACA, it became apparent that now-optional Medicaid expansion states had opened Medicaid eligibility to populations beyond infants, children, pregnant women, people with disabilities, and some seniors.  Many of the incarcerated were, in fact,  newly eligible under expansion Medicaid. The fact that expansion Medicaid offers a FMAP of 100 percent through 2017, probably also helped to catch the attention of some states. The enhanced Medicaid match rules found in the ACA were, after all, meant to be attention getting.

Delaware, Louisiana, and Oklahoma were reported to be the first states to access Medicaid dollars for inmate hospitalization.  Other states have been slower to adapt or slower to broker the necessary cooperation between corrections, Medicaid, and the local social services agency.

Even non-Medicaid expansion states, like North Carolina, appear to have become motivated to identify their Medicaid eligible inmates receiving Medicaid eligible services.  In 2013, for example, roughly three percent of North Carolina's inmates had recorded inpatient stays but only one percent of these were Medicaid allowable inpatient stays. Similarly, in 2013, roughly six percent of California's inmates had inpatient stays with just over two percent of those stays deemed allowable inpatient stays. This means that, in 2013, California drew down $38.5 million dollars for these allowable inpatient services for inmates and North Carolina $2.5 million dollars.

Interestingly, North Carolina found these federal funds so attractive, the state reported hiring or training state prison staff to assist in enrolling inmates — this in a a non-expansion state not historically terribly focused on assisting the rest of its citizens in applying for Medicaid. You can now apply for Medicaid in North Carolina online, however, and this may partly account for the post-ACA North Carolina Medicaid enrollment surge.  North Carolina, instead, has decided to focus on turning Medicaid toward Medicaid managed care, reforming but not expanding Medicaid. But, if you're a hospitalized inmate, apparently they might want to really help you.

Your ability to timely apply for Medicaid as you approach release depends upon your ability to navigate the Medicaid application alone or, if you require assistance,  the quality of the negotiated agreement between your correctional facility and the and the local social services agency. Then, in a sense, you're just like everyone else in North Carolina.

Does all of this make sense?  Ought California be able to shift some of the financial cost of its Three Strikes Sentencing  Law approach to incarceration to the federal fisc —  really other states? Is it defensible as part of a grand bargain to expand Medicaid to much larger populations under the ACA?  And what's North Carolina's narrative? 

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