Medicaid Funding for Soon-to-Be-Freed Prisoners Eyed in States

Vermont and several other states are asking federal regulators to approve the use of Medicaid funds for health-care services to prisoners shortly before their release, setting up a debate over how much flexibility the states should have in running their Medicaid programs.

Approval by the Centers for Medicare & Medicaid Services would mark the first break in the firewall that has kept Medicaid out of prisons, and would address the problem of interrupted care faced by newly released prisoners suffering from chronic illnesses, mental health problems, or substance use disorder as they transition to life beyond bars, some advocates say.

But some policy groups are asking the CMS to deny the requests, arguing that the agency doesn’t have authority to sidestep the Medicaid statute’s prohibition on using program funds in prisons.

At stake is how the Biden administration will address the health-care needs of newly released prisoners, and how much authority it has to let states experiment with Medicaid through waivers of certain program requirements. And closely linked is a perhaps more difficult question for the administration: whether it is willing to make aggressive use of its waiver authority, knowing that the precedents it sets will be available to future administrations that have very different ideas about how to run Medicaid.

Medicaid officials in Arizona, California, Kentucky, Montana and Utah have also asked the CMS to waive the ban for prisoners about to be released.

Enrolling people while they are still incarcerated, it’s hoped, would help them avoid waiting weeks or even months to connect with care after their release.

“Almost 80 percent of individuals being released from prison or jail have a serious medical issue, whether it be substance use disorder, chronic illness or psychiatric conditions,” said Shannon Scully, senior manager of criminal justice policy at the National Alliance on Mental Illness. “And we know that when we can make sure that people can continue to get care right away when they are released, their outcomes are better and their chances of re-incarceration go down. That’s why this is so important.”

However, Jennifer Lav, senior attorney at the National Health Law Program (NHeLP), said, “We support increased attention on transition services for prisoners, but we don’t think that the Vermont proposal is going about it the right way. The Medicaid statute simply doesn’t allow the secretary to waive the prohibition on services for inmates of jails and prisons.”

Inmate Exclusion

The inmate exclusion was written into Medicaid at its founding in 1965 to prevent cost-shifting for inmate care from state and local governments to the federal government. Inmates have a constitutional right to health care while incarcerated; county governments are generally responsible for covering the cost of inmate health care in jails, and state governments in prisons.

Vermont and California are asking the Department of Health and Human Services to waive the exclusion to allow them to provide Medicaid services to prisoners for 90 days prior to release.

Arizona, Utah, and Montana are seeking to provide services for 30 days prior to release, while Kentucky wants to provide treatment to prisoners with substance use disorders throughout their incarceration.

Under Section 1115 of the Social Security Act, the HHS can waive Medicaid guidelines to allow states to experiment with the program. Waivers have typically been used to expand coverage, modify delivery systems, and restructure financing and other program elements, according to the Kaiser Family Foundation.

But there are limits to the department’s authority to waive Medicaid rules, according to comments on the Vermont request submitted by NHeLP. These include the provision that waivers are permitted only for requirements contained in a particular section of the Social Security Act, 42 U.S.C. § 1396a. The inmate exclusion lies outside that section, and cannot therefore be waived, NHeLP said.

Biden Priorities

The CMS under Biden hasn’t provided the states much guidance concerning its priorities for the Section 1115 program, other than via its rollback of Medicaid work requirements waivers granted to some states under the Trump administration.

Those waivers were seen by many health policy researchers as harmful to beneficiaries and evidence of the need to rein in the HHS’ waiver authority, said Sara Rosenbaum, professor of health law and policy at the George Washington University Law School.

As a policy matter, providing Medicaid coverage to inmates seems “consistent with what the Biden administration would like to do,” Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, said.

Expanding coverage to people currently without insurance is one of the agency’s top three priorities, and Section 1115 waivers have an important role to play, according to a recent policy statement from Chiquita Brooks-LaSure, director of the CMS, and Daniel Tsai, director of the Center for Medicaid and CHIP Services.

“We will use every lever available to protect and expand coverage for all eligible people and to adopt a broad view of access to care that includes provider availability, quality, culturally and linguistically competent care, and reductions in gaps in coverage,” they said Nov. 16 in a joint blog post in Health Affairs.

But that policy preference doesn’t necessarily translate into approval of these waiver requests, said Sara Collins, vice president for health-care coverage and access at the Commonwealth Fund, a private foundation focused on health-care policy.

“I really don’t know what the Biden administration is going to do with these Section 1115 waivers, but I think they do agree with the fact that the secretary of HHS doesn’t have carte blanche with this program, and that the central purposes of the Medicaid statute have to be protected and promoted,” Collins said.

“And I think what has to be taken seriously under any administration is that there need to be much stronger guidelines for what the secretary can do, and stronger safeguards to protect beneficiaries when it comes to these waivers.”

Rosenbaum agreed that the department’s waiver authority is due for a re-examination.

“Some states have been running their Medicaid programs under waivers for decades,” Rosenbaum said. “But these waivers are supposed to be experiments, not alternative programs altogether. That’s the deeper legal question here, because Section 1115 is not a delegation of power to the HHS to let the states run an alternative Medicaid program.”