In California, Medicaid Can Now Pay for Correctional Health Care

New funding stream will help people with chronic or serious health conditions transition back to their communities

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In California, Medicaid Can Now Pay for Correctional Health Care
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For the first time, the Centers for Medicare & Medicaid Services (CMS) will allow federal Medicaid dollars to pay for select health care services delivered in California jails, prisons, and juvenile correctional facilities. Now, Medicaid-eligible adults with documented health care needs—such as chronic mental illness, opioid use disorder, or hepatitis C—and youth who are soon to be released from incarceration will receive care paid for by Medi-Cal, the state’s Medicaid program.

Since its inception in 1965, Medicaid has been barred from covering any health care services for individuals who are incarcerated. For more than half a century, state and county funds have covered all state prison and county jail correctional health care costs. But under CMS’ 1115 demonstration project, California was granted permission to cover specific services in jails and prisons. State policymakers designed the changes to help manage people’s chronic or otherwise serious health conditions prior to their release from incarceration, as well as provide follow-up care to support individuals’ reentry into their communities. The CMS demonstration program allows states to implement pilot programs using Medicaid dollars.

As of January 2023, 14 other states had petitioned CMS to use Medicaid funds to pay for select correctional health care services. California is the first to be approved to do so. 

Under the state’s demonstration project, individuals will receive Medicaid-covered care coordination services—typically a health screening, medication management plan, and health care transition plan—within the 90-day period before expected release from jail, prison, or a juvenile correctional facility. Once back in the community, patients will receive public health and behavioral health consultations. Notably, they will also receive a 30-day supply of prescribed medications—a step intended to address the medication gap that newly released individuals often face while waiting for a primary care medical appointment.

“Individuals recently released from jails, prisons, and other correctional settings have multifaceted needs that must be addressed in order to ensure their successful reintegration into their communities,” CMS officials noted in their approval of the project in late January. “By improving connections and coordination between the correctional, health care, and social service systems, California’s reentry demonstration initiative aims to address the needs of incarcerated beneficiaries as they near the end of their incarceration and reenter the community.”

Beyond supporting community reentry, CMS’ approval of California’s demonstration project could also help lessen the financial burden that states face in providing health care services for Medicaid-eligible individuals who are soon to be released from incarceration. CMS and California officials hope that providing Medicaid coverage for even a limited number of services may encourage jurisdictions to improve pre-release health services and transition planning. According to the CMS approval letter, such services are critical to improving “care transitions for beneficiaries as they reenter the community and reduce morbidity and mortality in the near-term post-release, all of which will advance public health and public safety outcomes for individuals and their communities.” 

Allowing California to use Medicaid dollars to pay for correctional health care represents a significant policy shift for CMS and has the potential to improve health care outcomes for people throughout the country who are reentering communities following incarceration. Among those that will benefit the most from this policy shift are places that have expanded Medicaid coverage—39 states and the District of Columbia—and their populations who have become involved with the criminal legal system. Under current rules, relatively few people who are incarcerated in nonexpansion states are eligible for Medicaid coverage.

CMS is expected to release guidance for all states, including those that have not expanded Medicaid coverage, regarding how they could use Medicaid funds in similar ways. More widespread use of these dollars has the potential to help people successfully transition from incarceration back to their communities while addressing their chronic physical and mental health needs.

Alexandra Duncan is a senior officer and Maria Schiff is a consultant with The Pew Charitable Trusts’ substance use prevention and treatment initiative.

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