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             Con   gressionl Research Service
             Informning Ih legis19tive debate sin ce 1914



Medicaid and Incarcerated Individuals


Medicaid is a joint federal-state means-tested entitlement
program  that finances the delivery of primary and acute
medical services, as well as long-term services and
supports, for a diverse low-income population. States that
operate their programs within broad federal rules are
entitled to federal Medicaid matching funds. (See CRS
Report R43357, Medicaid: An  Overview.)

The Patient Protection and Affordable Care Act (ACA; P.L.
111-48, as amended), and a subsequent Supreme Court
decision (National Federation of Independent Business v.
Sebelius), made it optional for states to expand Medicaid
coverage to non-elderly adults with income up to 133% of
the federal poverty level beginning in 2014. In states that
expanded  Medicaid, many individuals transitioning into and
out of incarceration-a population that tends to have higher
rates of substance use disorder, mental illness, and chronic
disease than the general population-were eligible for
Medicaid for the first time. This In Focus describes how
incarceration can impact the availability of federal
Medicaid payment  and an individual's Medicaid coverage.

Medicaid Inmate Payment Exclusion
Historically, Medicaid has not been a major source of
funding for the health care of incarcerated individuals. This
is mainly because federal Medicaid statute generally
prohibits the use of federal Medicaid funds to pay for the
health care of an inmate of a public institution
(hereinafter referred to as the inmate payment exclusion)
except when the individual is a patient in a medical
institution that is organized for the primary purpose of
providing medical care. Additionally, pre-ACA, many
incarcerated individuals did not meet Medicaid eligibility
criteria, so when the inmate was a patient in a medical
institution, the stays were not billable to Medicaid (see
Medicaid Payment  During Incarceration).

Inrmates of Public Institutions
Generally, an individual detained in a local jail, state or
federal prison, detention facility, or other setting that is
organized for the primary purpose of involuntary
confinement is an inmate of a public institution for the
purposes of Medicaid. Public institution is defined in
federal regulation as an institution that is the responsibility
of a governmental unit or over which a governmental unit
exercises administrative control, with exceptions for types
of settings such as medical institutions, among others.
Federal regulations define inmate as someone living in a
public institution, with certain exceptions for individuals
living in public educational/vocational institutions to secure
education or vocational training or individuals residing in a
public institution temporarily (e.g., pending arrangements
for community residence).


Updated August  24, 2023


In a 2016 State Health Official (SHO) letter, the Centers for
Medicare  and Medicaid Services (CMS) provided
additional guidance on the definition of inmate, stating,
CMS   considers an individual of any age to be an inmate if
the individual is in custody and held involuntarily through
operation of law enforcement authorities in a public
institution. Thus, for the purposes of Medicaid, CMS
generally does not distinguish between individuals who are
detained in a public institution pending disposition of
charges and those who are incarcerated post-sentencing (for
an exception, see Special Rules for Eligible Juveniles).
Individuals are not considered inmates for the purposes of
Medicaid if they have freedom of movement (e.g., ability
to work outside a facility, to seek health treatment in a
community  setting). Therefore, individuals on probation or
parole, under home confinement, residing in halfway
houses under the jurisdiction of state or local governments,
etc., are generally not considered inmates.

Medicaid Payment During Incarceration
Public institutions are required to provide medical care to
inmates as a consequence of the 1972 Supreme Court ruling
Estelle v. Gamble, which found that deliberate indifference
to a prisoner's serious injury or illness constitutes cruel and
unusual punishment. Inmate health care can be costly for
state and local governments, and billing Medicaid can
offset a portion of these expenses for coverable services
when  eligible inmates are inpatient for 24 hours or longer in
a medical institution. CMS provides guidance on which
settings qualify as medical institutions in its 2016 SHO
letter, stating that medical institutions can include hospitals,
nursing facilities, and intermediate care facilities for
individuals with an intellectual disability that are certified
Medicaid providers, also serve members of the general
public, and house and provide treatment based on medical
need rather than incarceration status, among other criteria.

Services provided to inmates in medical institutions on an
outpatient basis still are subject to the inmate payment
exclusion. Similarly, any inpatient and outpatient medical
services provided in settings that primarily or exclusively
treat inmates are subject to the inmate payment exclusion
because they are considered correctional (not medical)
settings. Separate 2016 CMS guidance provides that such
settings can, among other things, limit personal privacy,
restrict choice of physician, and use nonmedical restraint,
all of which would disqualify them from obtaining
certification as a Medicaid provider.

Medicaid's patient in a medical institution exception
applies to federal inmates, but the Bureau of Prisons
chooses to retain responsibility for the payment of health
care services for its inmates, so in practice, the policy is not
applied to inmates in federal prisons.

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