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States Seek Federal Medicaid Reimbursements to Offset Prison Medical Costs

States Seek Federal Medicaid Reimbursements to Offset Pris-on Medical Costs

State prison systems nationwide are looking to federal Medicaid reimbursements to partly offset escalating healthcare expenses for prisoners. The Medicaid law expressly excludes coverage for people who are incarcerated, but since 1997 has provided coverage for cases where prisoners are transported to outside medical facilities and stay at least 24 hours.
Another Medicaid eligibility restriction is that a prisoner’s own “poverty” status may not exceed 133% of the federal poverty guidelines.

“The rule has been around for almost 15 years now, and while it seems straightforward, the mechanics of it are quite complicated,” stated Jeff Archambeau, CEO of Correctional Health Partners, a private company that provides prison medical services.

When seeking Medicaid reimbursement, the state has the burden of investigating and certifying that a prisoner meets the poverty restriction. Unsurprisingly most prisoners have few assets and little income, and thus readily qualify. This leaves the states to determine how much money can be recovered if prison officials go through the process of submitting reimbursement requests to Medicaid. The funding available under the current law provides for 2/3 of medical bills for an outside hospital treatment meeting the 24-hour stay minimum. While this does not cover all costs, the state would have to chip in only the remaining balance to cover the health care provider’s bill.

Some states have recognized that their sickest prisoners are often totally harmless due to their medical conditions, and have laws that allow the transfer of prisoners to outside nursing homes where costs are greatly reduced. Most eligible prisoners are either terminally ill or have serious conditions that require long-term palliative care – which is rarely available in a secure prison setting. Such laws typically include a recovery clause: if the prisoner gets better, he or she goes back to prison to complete their sentence.

The New York DOC estimates it could save up to $20 million annually through Medicaid reimbursements, according to a report issued by the State Comptroller’s Office on December 5, 2012. The Oklahoma DOC calculates that under provisions of Obama’s Affordable Care Act that go into effect in 2014, virtually all of the state’s costs for hospitalizing prisoners would be covered by federal funds – an amount that currently runs around $13 million per year.

“This will be huge for corrections budgets,” said Donna Strugar-fitsch, a consultant with Health Management Associates.

The Texas Department of Criminal Justice, with 158,000 prisoners, is under a governor’s order to cut medical costs by 10% in the new fiscal year. Officials at Texas Tech University and the University of Texas Medical Branch, which provide healthcare in state prisons, complained they have no idea where to make such reductions, and lawmakers fear the cuts will drive Texas into federal medical receivership, similar to California.

Currently, California spends an average of $13,300 per prisoner per year on medical care while Texas spends around $3,100 (this disparity may well be tied to the cost of assigning guards to watch prisoners who are hospitalized, as California prison guards are paid significantly more than their Texas counterparts). Texas state Senator John Whitmire suggested that bedridden prisoners should be released so they would automatically become eligible for Medicaid. Despite the need to reduce prison medical costs, Texas officials have been reluctant to release elderly, disabled and seriously ill prisoners on medical parole. [See separate article on page 22 of this issue of PLN].

Connecticut is the most progressive state in terms of transferring prisoners to outside medical facilities, and passed legislation in 2012 providing that such prisoners will be overseen by parole officers at a forensic nursing home. The public safety concern is low considering that prisoners sent to the facility will be immobile (e.g., paraplegic), in comas, suffering from dementia or bedridden. Connecticut spends $4,780 annually per prisoner on medical care, or $92 million in fiscal year 2010. The state’s use of the forensic nursing home will open up prison medical beds for prisoners who have treatable illnesses, while transferring to Medicaid part of the cost of treating those moved to the facility. The first nursing home for ill and disabled prisoners is expected to open in February 2013, and will be run by a private company.

Oregon prison officials have started to tap into Medicaid funds, too. According to Oregon DOC Health Services Administrator Bill Hoefel, “Most of the research shows that a correctional population is about 10 years older than their chronological age just by virtue of the lifestyles they’ve lived.” He oversees a $208 million prison medical budget for 14,000 prisoners.

Washington, California and North Carolina have already begun filing for Medicaid reimbursements for prisoners who are hospitalized. Colorado is waiting for the 2014 law to go into effect, when all U.S. citizens with incomes up to 133% of the federal poverty guidelines will be “newly eligible” for Medicaid – allowing 100% coverage for three years, followed by 90% coverage thereafter. States may opt out of the expanded Medicaid coverage, though.

Mississippi, Delaware, Louisiana, Michigan, Pennsylvania and Arkansas have started Medicaid reimbursement pro-grams for prison medical care, too; since 2009, Mississippi alone has saved around $10 million. Maine is currently looking into applying for Medicaid funds, but is also cutting medical expenses by taking a more jaundiced eye towards “optional” medical procedures. For example, the Maine DOC recently rejected rotator cuff surgery for a 60-year-old prisoner because he still had good movement in his arm, claiming the procedure was “not medically necessary.”

Interestingly, prisoners must give their consent when receiving medical treatment covered by Medicaid, which gives them some potential leverage over the process.

Sources:,, Tulsa World, Austin American-Statesman,, Na-tional Conference of State Legislatures, Bangor Daily News

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