Kentucky picks up on federal Medicaid funding for inmates, which will expand when health reform takes full effect

Medicaid now covers care for inmates outside
prisons and jails, and health reform will extend
coverage to most former prisoners upon release.

By Molly Burchett
Kentucky Health News

Kentucky has missed out on millions of dollars from the federal government by not having it help pay for institutional health care of prison inmates outside prisons and jails. When the Affordable Care Act takes full effect Jan. 1, most Kentucky inmates will be eligible for expanded Medicaid coverage of hospitalizations and nursing-home stays, and the state is planning to have the feds pay almost all the cost. That should have benefits beyond saving state and local tax money.

Only a dozen states have taken advantage of the 16-year-old option to stick the federal government with 50 to 84 percent of such costs, and Kentucky is not among them, reports Christine Vestal of Stateline. The option stems from a 1997 ruling by the Department of Health and Human Services that Medicaid could cover care for Medicaid-eligible inmates who leave correctional facilities for at least 24 hours for treatment in qualified hospitals or nursing homes.

State and local governments have legal obligations to provide adequate health care to prisoners; those tapping the federal funds (Arkansas, California, Colorado, Delaware, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, Oklahoma, Pennsylvania and Washington), and some scattered local governments use Medicaid to pay for hospital and nursing-home care for those prisoners qualifying for Medicaid, reports Vestal.

Kentucky has mostly been paying for such care out of the state's General Fund rather than utilizing its ability to spread the cost via Medicaid. For most states and localities, not bothering to seek Medicaid reimbursement for prisoners is an omission "that deprives them of millions of dollars in potential federal reimbursement," writes Vestal.

Fourteen years after the ruling, in September 2011, Kentucky's Cabinet for Health and Services began picking up on the deal, and Medicaid paid for the first hospital stay for a Kentucky prisoner. "Since then, improvements have been made in the processing and coordination with the State Department of Corrections," said Jill Midkiff, the cabinet's director of communications.

Expanded Medicaid makes most inmates eligible

Ever since the 1997 ruling, it has made fiscal sense to get inmates who needed outside medical attention enrolled in Medicaid, which has historically been used for inmates who are pregnant or disabled. Midkiff said Kentucky's program has mostly covered pregnant inmates.  “But in 2014 it really becomes a no-brainer,” Aaron Edwards, a legislative analyst in California who helped get the state’s program started, told Vestal.

That’s when the major elements of the Affordable Care Act take effect, and Medicaid expands in Kentucky to cover individuals at 138 percent of the poverty line -- now $15,856 for an individual or $32,499 for a family of four. Most prisoners will then qualify for Medicaid, said Midkiff. "As a result, all state prisoners requiring a hospital stay who meet requirements for Medicaid eligibility should be covered," she said.

The federal government will pay all the cost of newly eligible Medicaid patients from 2014 to 2017, when Kentucky will increasingly pick up part of the tab, rising to 10 percent by 2020. One of the big changes involves the process to enroll Medicaid eligible inmates, which wasn't standardized before, and the Kentucky Health Benefits Exchange will make that process easier.

The state has projected General Fund cost savings from Medicaid coverage of inmates at $7 million to $8.4 million a year. Local governments will save money, too; the cabinet says it is working to ensure Medicaid enrollment is part of a standardized processes for jails around the state. For county-specific data about Medicaid expansion, click here for information prepared by the cabinet, which includes information about the benefit for county jails.

Prisoners' enrollment in Medicaid impacts the community in other ways. The health law requires coverage of behavioral health services, such as substance-abuse treatment and mental-health services. Upon release from prison, most inmates will have Medicaid coverage and access to these services, and studies have shown that access to services like substance abuse and mental health treatment reduces an inmate’s chances for recidivism, reports Mary Flynn of the California Health Report.

Most prisoners don't have health insurance upon release from prison, and studies show they do not receive treatment for chronic conditions but use expensive emergency rooms instead of primary-care doctors. Now, most will be covered by Medicaid and will have access to preventive services, reports Michael Ollove of Stateline.