Medicaid May Allow States to Save Millions on Prisoner Medical Care
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Home ∠ Medicaid May Allow States to Save Millions on Prisoner Medical Care
Medicaid May Allow States to Save Millions on
Prisoner Medical Care
While working with state clients to implement the Affordable Care Act (ACA) and
Medicaid expansion, I was recently reminded of a June 2013 USA Today article titled
“Medicaid for Prisoners: States Missing out on Millions,” written by Christine Vestal. The
article describes a little-known Medicaid rule from 1997 that allows state Medicaid
programs to cover hospital costs for prisoners that qualify for Medicaid and leave their
correctional facility to be hospitalized for at least 24 hours.
With the rush to expand Medicaid and implement new ACA Modified Adjusted Gross
Income (MAGI) rules, state Medicaid agencies have had their hands full. Now, as states
move into the operations phase of the Medicaid expansion and begin to examine the
broader impact of Medicaid expansion, it may be time to revisit the 1997 Medicaid
prisoner rule.
Prisoner health care costs on the rise
A PEW Charitable Trusts study from October 2013 found that for the 44 states examined,
prisoner health care costs were $6.5 billion in 2008. This total cost is approximately
17.5% of overall corrections expenditures. The study also found that between 2001 and
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2. 2008 health care costs in prisons increased in 42 of the 44 states by a median rate of
52%. These increases, the overall share of health care expenditures in prisons, and their
impact on state budgets cannot be ignored.
Impact of Medicaid expansion on the prisoner population
Medicaid expansion allows single adults between the ages of 19 and 64 with income
below 133% of Federal Poverty Level (just under $1,300/month for a single individual in
2013) to qualify for Medicaid. Under the ACA, the federal government provides states
with 100% funding for the cost of care for these adults between 2014 and 2016. After
2016, the federal match for the adult population declines yearly until it reaches 90% in
2020, where the match remains permanently.
According to the Federal Bureau of Prisons, prisoners earn between 12 and 40 cents per
hour in federal prisons. Although prisoner wages may vary from state to state, the federal
rate of pay offers a baseline to estimate prisoner wages. A wage of 40 cents per hour
while working full time results in an average monthly income well within the range to
qualify for Medicaid in the adult group. Therefore, it is likely that many inmates will meet
the financial requirements for the new adult Medicaid expansion category. When these
individuals are hospitalized—and remain hospitalized for more than 24 hours—states can
enroll them in Medicaid under the adult group, claim the enhanced federal match for the
cost of their care, and potentially reduce the impact of prisoner medical care on state
corrections’ budgets.
New federal rules also require that states cover mental health and substance abuse
services in their Medicaid benefit packages. These covered services offer state
corrections departments an opportunity to obtain federal match on costs associated with
these services when they are delivered in a hospital setting.
What can states do?
To take advantage of the opportunity for these cost savings, we recommend states take
the following steps:
1. Research this opportunity to determine if this is an option for your state
2. Establish detailed requirements to make the program tenable for both Medicaid
agencies and corrections departments
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3. Jamie
Brennan
jbrennan@berrydunn.com
3. Develop memorandums of agreement (MOA) between Medicaid agencies and
corrections departments to establish a foundation based on mutual understanding
and shared responsibilities
4. Develop business processes that satisfy the MOA
5. Establish state policy and system functionality to implement the change
6. Communicate to local hospitals, local public assistance offices, and corrections
facilities about this opportunity
Medicaid and Justice and Public Safety bring together two subjects that are quite familiar
to BerryDunn. Our consultants have the expertise and experience in both areas to bridge
the gap between two state entities that have traditionally served mutually exclusive
populations. Please contact our Government Consulting Group if you have any questions
about the intersection of Medicaid expansion and inmate medical costs.
Topics: Management Consulting & Strategy, Medicaid expansion, corrections, correctional facilities,
health care, Medicaid, prisoner medical care, Affordable Care Act, ACA
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Written by Jamie Brennan
Jamie Brennan is a Senior Consultant in BerryDunn’s Government Consulting
Group. He has nine years of experience working with state and federal
government agencies, and is the lead in BerryDunn’s Medicaid Innovation and
Healthcare Transformation Practice. Prior to joining BerryDunn, Jamie worked as
a Staff Assistant to US Senator Susan Collins and as an Assistant to the Principal
Examiner for the State of Maine Bureau of Consumer Credit Protection.
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