States save money with new Medicaid policies for incarcerated population

Three states' initiatives to connect the justice-involved population to Medicaid coverage have produced savings and administrative efficiencies for their Medicaid programs, according to a new issue brief from the Kaiser Family Foundation.

Individuals who are or have been incarcerated have the potential to be high utilizers of medical care, as the population has higher rates of certain diseases and high rates of mental health and substance abuse disorders, the brief notes.

Prior to the Affordable Care Act, most states terminated Medicaid coverage for incarcerated enrollees, but the expansion of Medicaid eligibility and guidance from the federal government has since encouraged many states to instead suspend coverage and/or enroll uninsured individuals in Medicaid prior to release from prison.

Among the states that have altered their policies are:

  • Arizona, which has expanded a pilot program to suspend an incarcerated enrollees' Medicaid coverage and discontinue capitation payments to managed care plans for those individuals until release. As a result of these initiatives, the state reports $30 million in avoided capitation payments in fiscal year 2015.
  • Connecticut, which helps prevent coverage disruption for short-term inmates by waiting 60 days before suspending an incarcerated individual from the Medicaid program and expediting the processing of Medicaid applications for individuals prior to release. Gains in Medicaid coverage among the probation population have since led to savings.
  • Massachusetts, which created a fee-for-service limited inpatient Medicaid benefit for incarcerated patients that reverts to full coverage upon their release from prison. Since the state initiated its efforts in July 2015, it has offset more than $4.2 million in costs for inpatient care provided to prisoners at private hospitals.

Stakeholders in those states also highlighted administrative savings and efficiencies, including the reduction of the volume of applications that must be processed for incarcerated individuals receiving inpatient care, the brief adds.

To learn more:
- read the issue brief

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