About this project

The U.S. Department of Justice, Bureau of Justice Assistance (BJA) is partnering with Legal Action Center (LAC), Advocates for Human Potential and TASC, Illinois to provide technical assistance to justice and health professionals and share information about innovative strategies to increase health care access and coordination and improve public safety and health outcomes. This project will assist criminal justice systems with adjusting to the new health care environment and taking advantage of it.

Don’t Miss the new Justice and Health Innovation Bulletin, available here.

Why is it important?

Untreated addictions and mental health disorders are common among the justice population. They contribute to crime and recidivism. Prior to health care reform, most of the justice population lacked health coverage to treat these health needs because they could not afford private insurance and were not eligible for Medicaid or other public coverage.

Under the Affordable Care Act, that entire landscape has shifted, especially in states that have expanded Medicaid eligibility. Now, almost all individuals leaving jails and prisons or serving a term of parole or probation in the community will be eligible to receive Medicaid benefits or purchase quality health coverage that is affordable based on their income. Furthermore, although exact coverage details will vary, these plans will cover needed addiction and mental health treatment similarly to how they cover treatments for other health issues.

This presents an extraordinary and unprecedented opportunity to improve health coverage and care in the justice system and provide life-saving and life-changing addiction and mental health treatment and other health services to a large population of individuals who have previously lacked access to such care. This opportunity will lead to improvements in health and well-being for justice-involved people while increasing public safety by reducing the risk of recidivism.

What are we doing?

In addition to providing direct technical assistance and guidance to BJA’s grantees- including courts, prisons and jails, law enforcement agencies, and community-based organizations- LAC, AHP, and TASC-IL have published resources and tools for justice practitioners and others interested in learning about changes to the health care system and ways they can benefit from the new coverage options. These include:

  • A map of state profiles of health care and health system information for criminal justice practitioners
  • The Justice & Health Innovation Bulletin, a newsletter highlighting new health care policies and opportunities and informing readers about innovative health and justice initiatives
  • A rolling list of Frequently Asked Questions from BJA’s criminal justice grantees and answers to them. See below and check back often for updates.

State Profiles of Health Care Information for the Criminal Justice System

The map of State Profiles of Health Care Information for the Criminal Justice System contains links to state profiles with valuable information about the health system and health insurance options available in every state and the District of Columbia. The profiles inform readers about:

  • who the health decision-makers are in their state and how to contact them
  • which health care services/medications are available to newly eligible Medicaid beneficiaries in each state
  • which health care providers in each state bill Medicaid
  • how to connect with mental health and addiction service providers in each state

The information is intended to be particularly useful to criminal justice practitioners who want to learn more about how they can work with the health system in their state and help people under their control or supervision obtain health care and coverage. However, anyone can use the map to find out about key agencies, contacts, and policies in the health system in their state.

Justice & Health Innovation Bulletin

The Justice & Health Innovation Bulletin is a monthly newsletter that profiles advances in programming, highlights financial and technical support opportunities, and keeps readers informed about important federal health and criminal justice policies. The Bulletin connects justice and health practitioners to practice and policy expertise, and technical assistance. It supports and fosters opportunities to exchange information and resources with others working in the field.

Frequently Asked Questions

The following are frequently asked questions and answers about the Affordable Care Act (ACA) and the criminal justice system. Responses are based on the best information currently available. This document will be updated regularly as new questions are asked, and as clarification or new guidance becomes available from the federal government.  If you have additional questions you don’t see answered here, please email [email protected] with the subject “New Frequently Asked Question.”

Frequently Asked Questions

What are the basics of the ACA? What does it do? What difference does it make for the criminal justice system? How does one access coverage and benefits?

The Affordable Care Act is a very large federal law that has wide reach across nearly every aspect of our nation’s healthcare system. The law’s most significant reforms include the creation of state-based exchanges (marketplaces) where individuals and small businesses can pool their health risks and purchase quality insurance coverage, and the Medicaid expansion, which for the first time in most states expands Medicaid eligibility to low-income adults without children.   It also makes health insurance more affordable, provides important consumer protections, lowers the cost of prescription drug coverage for Medicare beneficiaries, and includes several pilot programs and other funding mechanisms intended to lower health care costs.

Perhaps the most important reform in the ACA for those involved in the criminal justice system is the Medicaid expansion. Before the ACA, only low-income parents, children, pregnant women, and certain elderly, blind, or disabled individuals were able to qualify for Medicaid in most states, leaving a majority of the criminal justice population with no options for health coverage. As a result of the ACA, potentially millions more justice-involved individuals will qualify for Medicaid, and will be able to have quality, reliable health coverage, often for the first time. Having access to health care when released from prison or jail can reduce disruptions that have been shown to increase recidivism rates and lead to poorer and more costly health outcomes.

To learn more about your state’s health system and health insurance options, please visit our recently developed resource which includes profiles for every state and the District of Columbia. Here you can learn about:

  • who the health decision-makers are in your state and how to contact them
  • which health care services/medications are available to newly eligible Medicaid beneficiaries in your state
  • which health care providers in your state bill Medicaid
  • how to connect with mental health and addiction service providers in your state

Who is eligible for health insurance coverage under the ACA?

The insurance coverage provisions of the ACA are expected to significantly reduce the number of uninsured individuals. According to estimates by the Congressional Budget Office and the Joint Committee on Taxation, the number of non-elderly individuals with insurance is expected to increase by about 25 million once the law is fully implemented. This includes about 24 or 25 million people who will obtain coverage through the exchanges (marketplaces) and about 12 or 13 million people who will be added to the Medicaid and CHIP rolls. The law is expected to reduce the numbers of individuals who obtain coverage though their employer or the individual market by about 12 million as new options become available.

A central goal of the ACA is to lower health care costs for everyone, and most people, regardless of income, are eligible to purchase a health plan on the exchange. To be able to purchase an exchange plan, an individual must meet the following requirements:

  • Live in the United States
  • Be a United States citizen, national, or be lawfully present
  • Not be incarcerated, unless the individual is being held but not convicted of a crime.

Many people also qualify for premium credits to help make coverage on the exchange more affordable. Premium credits are available for individuals between 100 percent and 400 percent FPL, and the amount of the tax credit varies based on income so someone earning less will qualify for more assistance.

Cost-sharing subsidies are also available to individuals and families up to 250 percent FPL who buy a silver plan on the exchange. Subsidies are available on a sliding-scale and will decrease out-of-pocket costs for qualifying enrollees, making it easier to afford to go to the doctor or access other health care.

Finally, the ACA substantially expands eligibility for Medicaid, including to non-disabled adults without children and higher income parents for the first time in most states. The Medicaid expansion is optional for states, so eligibility will depend on an individual’s state of residence. In those states that choose to expand their Medicaid programs, all qualifying adults with incomes up to at least 133 percent FPL will be able to enroll in Medicaid coverage.

An individual can also apply for Medicaid using any of the options available for applying for exchange coverage or through their state’s Medicaid office.

Can individuals working in prisons and jails help incarcerated individuals enroll in health insurance? Are federal matching funds available for these enrollment activities?

Yes. The final ACA Medicaid eligibility rule states that, “Corrections department employees and others working on behalf of incarcerated individuals are not precluded from serving as an authorized representative of incarcerated individuals for the purposes of submitting an application on such individual’s behalf.”[1] States may also outstation Medicaid eligibility workers to work with incarcerated individuals and enroll them into coverage.

Work to enroll eligible incarcerated individuals in Medicaid can occur inside prisons and jails, and matching federal funds for these outreach and enrollment activities may be available.

Can criminal justice agencies that conduct Medicaid enrollment activities be reimbursed for certain related expenses? How can criminal justice agencies become certified to enroll people in health insurance?

Federal Medicaid law allows states to receive administrative matching funds for certain activities “as found necessary by the Secretary for the proper and efficient administration of the state plan.”[2] Medicaid application assistance and outreach expenses are administrative activities that are eligible for at least a 50 percent federal match, as long as they comply with federal requirements. The Secretary of HHS is the final arbiter of which administrative activities are eligible for a federal match.

Claims for federal matching funds must come directly from the single state Medicaid agency. State Medicaid agencies are also responsible to ensure that appropriate, non-federal funding is used to finance the state’s share of administrative costs.

State Medicaid agencies may choose to contract with outside entities, including other state and local governmental agencies, to conduct certain Medicaid administrative activities on their behalf. These costs are only claimable if the state Medicaid agency has an interagency or other contractual agreement in place with the entity performing the administrative activities. These agreements will define and describe the relationship and responsibilities of the contracting entity. In addition, the requirements of Office of Management and Budget (OMB) Circular A-87—the directive containing cost principles for federal awards to states, local governments, and Indian tribes—apply to Medicaid administrative claiming, and requires that governmental units be “responsible for the efficient and effective administration of Federal awards.” OMB Circular A-87 also prohibits profit or payment above cost.[3]

In order for Medicaid administrative costs to be claimed for federal matching funds, the following requirements must be met, according to CMS:[4]

  • Costs must be “proper and efficient” for administration of the State Plan.
  • Costs related to multiple programs must be allocated in accordance with the benefits received by each participating program (OMB A-87). This is accomplished by developing a method to assign costs based on the relative benefit to the Medicaid program and other programs.
  • Costs must be supported by an allocation methodology that appears in the state’s approved Public Assistance Cost Allocation Plan.[5]
  • Costs must not include funding for a portion of general public health initiatives that are made available to all persons, such as public health education campaigns.
  • Costs must not include overhead costs of operating a provider facility.
  • Costs must not duplicate payment for activities that are already offered or should be provided by other entities, or paid through other programs.
  • Costs may not supplant funding obligations from other federal sources.
  • Costs must be supported by adequate source documentation.

Eligible administrative costs that may receive federal matching funds include outreach and marketing, eligibility determinations, customer service, policy development and research, staff development and training, application assistance, program integrity, and eligibility system operations and maintenance, among other activities.

There may also be Medicaid enrollment opportunities available outside of arrangements that reimburse a criminal justice agency for allowable administrative expenditures. For example, state Medicaid agencies may outstation eligibility workers in criminal justice settings. Medicaid agencies may also help train justice system employees to help them understand more about the Medicaid eligibility and enrollment requirements in the state.

Finally, criminal justice agencies do not necessarily need to be certified by the state Medicaid agency to enroll people in Medicaid. Under federal Medicaid regulations, the state Medicaid agency “must allow an individual or individuals of the applicant’s choice to accompany, assist, and represent the applicant in the application process or a redetermination of eligibility.”[6] CMS has clarified that this protection applies to justice-system employees and others working on behalf of incarcerated individuals and other individuals involved in the criminal justice system (see Question 5 above).

Different states have different processes and policies related to Medicaid enrollment and administration. State and local criminal justice agencies that are interested in partnering with their state Medicaid agencies to enroll and provide other assistance to justice-involved individuals should work with their state Medicaid agency to make appropriate arrangements.

How can Medicaid presumptive eligibility be used in justice settings? What are the other ways of presumptively enrolling individuals in coverage?

Medicaid presumptive eligibility is a policy that allows for temporary coverage of an individual and their family while their Medicaid application is pending, if they appear to be eligible based on basic information provided about their income and household size. The federal government will reimburse states for allowable costs associated with the care provided to presumptively eligible beneficiaries, and healthcare providers will be paid for allowable services as if the presumptively eligible individual were fully enrolled. Presumptive eligibility ends when an individual is found eligible for Medicaid and enrolled in the program or on the last day of the month after the month in which presumptive eligibility was granted, whichever comes first.

States have long had the ability to implement presumptive eligibility to children and pregnant women. Under the ACA, if a state has adopted presumptive eligibility for children and pregnant women, it may also adopt presumptive eligibility for parents and other adults as well as for former foster care youth. Individuals found presumptively eligible for Medicaid will have full access to the Medicaid services available to enrolled individuals in their eligibility group, with the exception of presumptively eligible pregnant women, who are limited to ambulatory prenatal care until they are determined eligible and enrolled in the program.

In addition to state optional Medicaid presumptive eligibility, under the federal health care reform law any hospital that participates in the Medicaid program may choose to make presumptive eligibility determinations, regardless of whether the state has taken up the option. To become a presumptive eligibility entity, a hospital must agree to adhere to state standards and other requirements laid out in regulations. Medicaid eligible individuals can go to a hospital that is a presumptive eligibility entity and quickly and easily enroll in the program and immediately access Medicaid benefits.

The regulations also describe different entities besides hospitals that states may determine to be qualified presumptive eligibility entities. Allowable entities include providers of Medicaid services, Medicaid eligibility entities, and any other entity that the state chooses, as approved by HHS.[7]Criminal justice agencies could become qualified entities to determine presumptive eligibility if the state adopts presumptive eligibility and chooses to allow them that ability. Criminal justice agencies could also partner with a qualified presumptive eligibility entity, such as the Medicaid agency or a hospital, to screen and grant individuals in the justice system presumptive eligibility.

In the case of hospitals, partnerships could be made even in states that have not opted to implement the presumptive eligibly option if the hospital has chosen to do so on its own under the new ACA authority.   Prisons and jails may also partner with hospitals that have the ability to grant presumptive Medicaid eligibility to temporarily enroll incarcerated individuals who need inpatient hospital services.

[1]http://www.gpo.gov/fdsys/pkg/FR-2012-03-23/pdf/2012-6560.pdf

[2] Section 1903(a)(7) of the Social Security Act

[3] OMB Circular A-87, available at http://www.whitehouse.gov/sites/default/files/omb/assets/agencyinformation_circulars_pdf/a87_2004.pdf

[4] http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Financing-and-Reimbursement/Medicaid-Administrative-Claiming.html

[5] 42 CFR 433.34

[6] 42 CFR §435.908

[7] 42 CFR 436.1101

What happens to a person’s coverage if they are already enrolled in Medicaid when they become incarcerated?

Under federal Medicaid law, federal financial participation is not available to pay for care for any individual who is an “inmate of a public institution (except as a patient in a medical institution).”[1] As a result of this “inmate exclusion,” many states have practices or policies in place to terminate an individual’s Medicaid eligibility when they become incarcerated. Terminating eligibility requires the individual to begin the eligibility process over when he or she is released from prison or jail, leading to potentially months-long gaps in health care as the individual is forced to reapply for Medicaid.

Other states have implemented policies to “suspend” Medicaid enrollment during incarceration. Typically, suspensions last until the enrollee’s scheduled redetermination date is missed and their coverage is automatically cancelled. In at least one state, New York, Medicaid enrollment suspensions are indefinite. States can implement policies to suspend Medicaid enrollment during incarceration. There is also no prohibition under federal law against screening all incarcerated individuals and other justice-involved individuals for Medicaid eligibility, enrolling them into the program when they are found eligible, and suspending their enrollment when required.

Finally, the “inmate exclusion” does not apply to an incarcerated individual who is admitted into a community-based facility for inpatient care for at least 24 hours. Inpatient facilities include hospitals, intermediate care facilities, juvenile psychiatric facilities, and nursing homes. When an incarcerated Medicaid enrollee is admitted to one of these facilities, Medicaid can be billed for all medically necessary covered services provided to the individual as an inpatient.

What happens to a person’s coverage if they are already enrolled in private coverage under the ACA when they become incarcerated?

For individuals enrolled in private insurance provided outside the health insurance exchanges, what happens when an enrollee becomes incarcerated will vary based on the plan’s policy. Typically, however, these plans will not cover care provided to incarcerated individuals and will cancel coverage when premium payments stop.

For an individual enrolled in private insurance provided through the exchanges, the enrollee is allowed to remain enrolled during incarceration only pending the disposition of the charges.[2] Once the individual is sentenced, coverage is terminated. However, the regulations implementing the ACA have clarified that reentering the community after incarceration is considered a permanent move and therefore a “qualifying life event” that gives the individual up to 60 days to apply for coverage through the exchange, even if the individual’s release is not during the exchange’s open enrollment period.[3]

Can federal Medicaid dollars finance care provided to individuals living in correctional halfway housing?

 

Section 1905 of the Social Security Act prohibits “payments with respect to care or services for any individual who is an inmate of a public institution (except as a patient in a medical institution).”[4] The statute only applies to federal financial participation; an individual’s Medicaid eligibility and ability to remain enrolled in the program is not affected by the inmate exclusion. In most cases, it is not difficult to determine if an individual is an inmate. However, in some less clear cases the Department of Health and Human Services has clarified whether federal financial participation is available, and according to guidance from HHS, federal financing is not available to cover care for otherwise eligible individuals “involuntarily residing in half-way houses under governmental control.”[5]

In addition to halfway houses under government control, HHS has clarified that federal financial participation is not available when, for example:

  • Individuals (including juveniles) are being held involuntarily in detention centers awaiting trial
  • Individuals are involuntarily residing at a wilderness camp under governmental control
  • Incarcerated individuals are receiving care as an outpatient
  • Incarcerated individuals are receiving care on the premises of a prison, jail, detention center, or other penal setting.[6]

HHS has clarified that federal financial participation is available in the case of

  • Infants living with the inmate in the public institution
  • Paroled individuals
  • Individuals on probation
  • Individuals on home release except during those times when reporting to a prison for an overnight stay
  • Individuals living voluntarily in a detention center, jail, or county penal facility after their case has been adjudicated and other living arrangements are being made for them
  • Inmates who become inpatients of a hospital, nursing facility, juvenile psychiatric facility or intermediate care facility.[7]

The exception that allows for Medicaid to pay for inpatient care requires that the incarcerated individual spend at least 24 hours as an admitted patient in the facility, and applies to all otherwise eligible individuals regardless of the penal facility or setting from which they are being taken, including halfway houses. Once an eligible individual is admitted as an inpatient, all medically necessary Medicaid covered inpatient services can be reimbursed by the federal government.

[1] Section 1905(a)(A) of the Social Security Act

[2] ACA §1312(f)(1)(B).

[3] Federal Register, Final Rule on Establishment of Exchanges and Qualified Health Plans, available at http://www.gpo.gov/fdsys/pkg/FR-2012-03-27/pdf/2012-6125.pdf. See also 45 CFR 155.420.

[4] Section 1905(a)(A)

[5] Letter on “Clarification of Medicaid Coverage Policy for Inmates of a Public Institution” December 12, 1997. Available at http://www.colorado.gov/cs/Satellite?c=Document_C&cid=1245071816815&pagename=HCPF%2FDocument_C%2FHCPFAddLink

[6] December 12, 1997 letter clarifying Medicaid coverage policy for inmates of a public institution

[7] December 12, 1997 letter clarifying Medicaid coverage policy for inmates of a public institution

How can drug courts engage in efforts to identify and enroll eligible individuals in Medicaid and other coverage?

Medicaid guidance and regulations have clarified that individuals may be screened for Medicaid eligibility at all stages of justice system involvement. Guidance is also clear that Medicaid enrollment can be suspended when the individual is incarcerated and reinstated at release.[1]

Drug court personnel should work with the justice system, the state Medicaid office, and their clients to ensure that all drug court participants are screened for Medicaid eligibility or eligibility for a health plan through the exchange. Applications can be submitted on healthcare.gov, by calling 1-800-318-2596, by completing a paper application, with the help of a Navigator or other application assister, or, for Medicaid, through an entity qualified to make presumptive eligibility determinations such as a hospital. Drug court personnel should also familiarize themselves with the Medicaid program in their state, including whether their state has chosen to accept the Medicaid expansion and what benefits are covered for different populations to help ensure drug court participants are able to access the substance use disorder treatment and other healthcare services they need.

How can drug courts, which refer to and work with community-based health care providers, best maximize the opportunities of the ACA?

As the federal health care reform law is implemented and additional people, including justice-involved individuals, gain health insurance coverage, there will be a significant shift in sources of financing of health care services.

There is a significant amount of variability around the country, as different funding sources cover different services for different people in different states. Covered Medicaid services and populations vary from state to state. All states cover pregnant women and children/adolescents below at least 133 percent of the federal poverty level (FPL) in their Medicaid programs, and many states cover pregnant women and children at much higher income levels. In addition, about half of the states have opted to cover parents and adults without children up to at least 133 percent FPL under the ACA, and those states that have not yet expanded adult coverage under the ACA cover parents at least at the very lowest incomes, from about 16 percent FPL to about 110 percent FPL depending on the state.

Drug court participants who are Medicaid beneficiaries will have different health coverage depending on the state and the category under which they qualify for coverage. For children and adolescents under age 21, Medicaid will provide the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit, which covers comprehensive and preventive health services. Based on certain federal guidelines, states are required to provide all Medicaid coverable, medically necessary and appropriate services under EPSDT, which may include substance use disorder and mental health services.

Adults who gain coverage under the ACA will be guaranteed coverage that includes at least the ten categories of Essential Health Benefits (EHB) outlined in the ACA. EHB coverage includes mental health and substance use disorder services, prescription drugs, ambulatory patient services, and hospitalization among other benefits. Depending on the approach chosen by the state, coverage for the expansion population may look similar to what is covered under Medicaid for other covered populations, or it may look similar to what is covered under certain employer-based plans.

Medicaid coverage for parents and pregnant women must include several mandatory services under Medicaid law and may include additional optional services such as prescription drugs, and most states cover most optional Medicaid services. However, there is no requirement under federal law that states provide coverage for substance use disorder or mental health services, and coverage for these illnesses will vary considerably from state to state.

In addition, certain Medicaid coverage must comply with the requirements of the Mental Health Parity and Addiction Equity Act (MHPAEA), depending on what type of Medicaid plan a beneficiary is entitled to or how Medicaid services are delivered. Parity requires that mental health and substance use disorder benefits are offered and provided in a way that is no more restrictive than how similar other benefits are offered and provided. All beneficiaries in the Medicaid expansion population, and others receiving similar “alternative benefit plans,” must have coverage consistent with the MHPAEA requirements. All beneficiaries enrolled in Medicaid managed care plans must also have coverage that meets the requirements of MHPAEA.

For Medicaid covered drug court participants without adequate coverage for SUD services, and drug court participants who are not eligible for Medicaid or do not have access to other sources of treatment funding, the SAPT Block Grant or another funding source such as a state-based program may be able to fund treatment services. Drug court personnel should become familiar with what services Medicaid covers for which beneficiaries and what other treatment funding sources may be available in their state for participants without adequate coverage for SUD.

To learn more about your state’s health system and health insurance options, please visit our recently developed resource which includes profiles for every state and the District of Columbia. Here you can learn about:

  • who the health decision-makers are in your state and how to contact them
  • which health care services/medications are available to newly eligible Medicaid beneficiaries in your state
  • which health care providers in your state bill Medicaid
  • how to connect with mental health and addiction service providers in your state

[1] “Medicaid and Financing Health Care for Individuals Involved in the Criminal Justice System,” Council of State Governments Justice Center. Available at http://csgjusticecenter.org/wp-content/uploads/2013/12/ACA-Medicaid-Expansion-Policy-Brief.pdf

What is the IMD exclusion?

The Medicaid IMD exclusion has long been a barrier to the use of federal Medicaid funds to pay for services provided to patients in residential substance use disorder treatment facilities. The Institutions for Mental Disease (IMD) exclusion is a provision of Medicaid law that prohibits the use of federal Medicaid financing for care provided to patients in residential mental health and substance use disorder facilities that are larger than 16 beds. The exclusion applies to all Medicaid beneficiaries under age 65 who are patients in an IMD, except for inpatient psychiatric services provided to beneficiaries under age 21.

More specifically, the IMD exclusion is found in Section 1905(a)(B) of the Social Security Act, which prohibits “payments with respect to care or services for any individual who has not attained 65 years of age and who is a patient in an institution for mental diseases” except for “inpatient psychiatric hospital services for individuals under age 21.” The law defines IMDs as any “hospital, nursing facility, or other institution of more than 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services.”

How is the IMD exclusion different from Medicaid’s inmate exclusion?

A similar provision of Medicaid law, known as the “inmate exclusion,” prohibits federal Medicaid funding to most otherwise eligible individuals who are “inmate(s) of a public institution (except as a patient in a medical institution).” Both provisions of the Social Security Act are federal payment exclusions that apply to enrollees residing in certain facilities. The inmate exclusion applies to otherwise eligible individuals who are confined in state and federal prisons, jails, detention facilities, or other penal facilities under government control, except when those individuals become patients in a medical institution. An incarcerated individual is considered a patient in a medical institution by Medicaid if they are admitted for inpatient care in a hospital, nursing facility, juvenile psychiatric facility, or intermediate care facility, if the inpatient facility is in the community.

The IMD exclusion is similar to the inmate exclusion in that federal financial participation is not available for covered services provided to otherwise eligible beneficiaries because of their inmate or IMD patient status. In addition, states often unnecessarily terminate an individual’s Medicaid enrollment when they become a patient in an IMD, forcing them to reapply after they are discharged, just like they often unnecessarily terminate Medicaid enrollment when an individual becomes incarcerated. Federal law only requires that federal financing not be used in these situations. However, the inmate exclusion and the IMD exclusion also differ in important ways, including that there is no exception for IMD patients who are admitted as inpatients in hospitals, nursing homes, or intermediate care facilities.

What is the purpose of the IMD exclusion? Who does it impact? How old is the exclusion, and what changes have been made to it over the years?

The IMD exclusion has its roots in the Social Security Amendments of 1950, and has been a part of Medicaid since Medicaid was created in 1965. The purpose of the IMD exclusion was not necessarily to discriminate against individuals with mental health conditions. Rather, congress intended to ensure that states maintained responsibility for mental hospitals, and that states continued to use state funds to pay for inpatient psychiatric services.

The IMD exclusion has experienced very few significant changes over its long history. Originally, federal matching funds were available for nursing home patients but not for care provided to patients in mental hospitals, leading to transfers of elderly mental health patients from psychiatric hospitals to nursing homes. Congress corrected for the shift from IMDs to nursing home care by narrowing the IMD exclusion to only apply to individuals age 65 or younger.

In 1967, shortly after the creation of Medicaid, the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit was added to Medicaid to provide comprehensive health services to children and adolescents. EPSDT required that all medically necessary services that could be provided under the Medicaid program be made available to beneficiaries under age 21, including services that were typically only available in IMDs. As a result, in 1972 congress again amended the IMD exclusion to only apply to individuals between the ages of 21 and 65.

The final significant change to the IMD exclusion came with the Medicare Catastrophic Coverage Act of 1988, when congress added language to define an IMD as a hospital, nursing facility or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases. By placing a lower limit on the size of an IMD—more than 16 beds—congress made clear its support for small, community-based residential treatment facilities, and reaffirmed that it continued to see residential mental health and substance use disorder treatment provided to beneficiaries between the ages of 21 and 65 as a state responsibility.

What makes a facility an IMD?

The Social Security Act provides a broad definition of an IMD as an institution with more than 16 bed that is “primarily engaged” in diagnosing, treating, or caring for individuals with “mental diseases.” In the State Medicaid Manual, the federal Department of Health and Human Services (HHS) interprets the IMD exclusion to include any institution that, by its overall character is a facility established and maintained primarily for the care and treatment of individuals with mental diseases. The guidelines used to evaluate if the overall character of a facility is that of an IMD are based on whether the facility:

  • Is licensed or accredited as a psychiatric facility;
  • Is under the jurisdiction of the state’s mental health authority;
  • Specializes in providing psychiatric/psychological care and treatment, which may be ascertained if indicated by a review of patients’ records, if an unusually large proportion of the staff has specialized psychiatric/psychological training, or if a facility is established and/or maintained primarily for the care and treatment of individuals with mental diseases; or
  • Has more than 50 percent of all its patients admitted based on a current need for institutionalization as a result of mental diseases.

If any of these criteria is met, a thorough IMD assessment will be made. Therefore, a facility is determined to be an IMD based on the character of the institution, including its governance, staffing, and patient population.

Can a residential treatment provider get around the IMD exclusion by building multiple 16 bed complexes? What beds don’t get counted?

In most cases, it’s straightforward what constitutes an IMD. However, in some instances a more in-depth review is required to determine whether the exclusion applies to a residential treatment facility. In cases where multiple facilities are involved, the State Medicaid Manual instructs the review team to consider the following questions:

  • Are all components controlled by one owner or one governing body?
  • Is one chief medical officer responsible for the medical staff activities in all components?
  • Does one chief executive officer control all administrative activities in all components?
  • Are any of the components separately licensed?
  • Are the components so organizationally and geographically separate that it is not feasible to operate as a single entity?
  • If two or more of the components are participating under the same provider category, such as nursing facilities, can each component meet the conditions of participation independently?

The review team may also use other guidelines that it finds relevant to a specific situation. Generally, to be considered independent facilities, the facilities need to demonstrate that either they have different owners, chief medical officers, and chief executive officers, or that they are separately licensed, significantly organizationally and geographically separate, and that they can separately meet the requirements for Medicaid participation. If the components are independent, any IMD review will be conducted separately on each component that is larger than 16 beds. If the components are found to constitute a single entity, then any review will consider the components as a whole.

The State Medicaid Manual makes clear that review teams do not need to determine whether any mental health or substance use disorder care is being provided to count beds against the 16 bed limit. They must not, however, count beds used only to accommodate the patients’ children to determine if a facility is an IMD. Children in beds that are not certified or used as treatment beds are also not subject to the IMD exclusion and can receive Medicaid covered services while outside the facility.

How do the regulations define “mental disease”?

In interpreting whether an individual’s admission to an institution is a result of a “mental disease” for the purpose of applying the “50 percent test,” reviewers will consult the International Classification of Diseases (ICD-9-CM), of which the Diagnostic and Statistical Manual of Mental Disorders (DSM) is a subclass. Because the ICD-9-CM system classifies substance use disorders (SUD) as mental disorders, facilities providing inpatient SUD treatment may be considered IMDs under the law. In its discussion of SUD treatment facilities, the State Medicaid Manual says:

There is a continuum of care for chemical dependency. At one end of the spectrum of care, treatment follows a psychiatric model and is performed by medically trained and licensed personnel. If services are psychological in nature, the services are considered medical treatment of a mental disease. Chemically dependent patients admitted for such treatment are counted as mentally ill under the 50 percent guideline. Facilities with more than 16 beds that are providing this type of treatment to the majority of their patients are IMDs.

The State Medicaid Manual also clarifies that facilities that rely on peer counseling and meetings to promote group support and encouragement, and primarily use lay persons as counselors, are not considered IMDs and the services they provide are not eligible for Medicaid reimbursement because they do not provide medical assistance.

What about more recent Medicaid reforms, such as parity and the Affordable Care Act? Don’t those laws protect beneficiaries that need residential mental health and substance use disorder treatment?

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires that Medicaid managed care plans that cover mental health and substance use disorder services do so in a way that is no more restrictive than how the plan covers other services. The ACA extended the requirements of MHPAEA to all Medicaid alternative benefit plans (ABPs), including the coverage that the ACA made available through the Medicaid expansion, regardless of whether the delivery of alternative benefit plan services is through a managed care or fee-for-service model. Finally, the ACA requires that all Medicaid alternative benefit plans cover essential health benefits (EHB), which includes mental health and substance use disorder services. While the covered EHB services differ slightly from state to state, Medicaid expansion beneficiaries in many or most states are likely to have coverage that includes residential mental health and substance use disorder benefits. These reforms have raised questions about how to effectively implement important new protections while maintaining the IMD exclusion as it has traditionally been interpreted and enforced.

While CMS has made clear in guidance to states that the requirements of MHPAEA apply to Medicaid managed care plans and ABPs, regulations on the application of parity to Medicaid have not yet been released. As a result, specific questions about how parity and the IMD exclusion can be reconciled have not been addressed. However, the November 2013 final parity rule that applies to commercial health insurance strengthened residential treatment protections by clarifying that “intermediate services,” including residential services, are subject to parity and must be included within the parity framework. The potential impact of the application of parity to certain Medicaid plans on the IMD exclusion remains unclear.

The final regulations on how the EHB protections apply to Medicaid made clear that CMS intends to apply the IMD exclusion to ABP enrollees in the same manner it applies the exclusion to all other beneficiaries aged 21 to 65.

What can CMS do to improve access to residential mental health and substance use disorder treatment, within the statutory limits of the IMD exclusion?

There are certain administrative options available to CMS to make it easier for facilities to use Medicaid to finance inpatient mental health and/or SUD services. Specifically, CMS could:

  • Exclude SUD from the definition of mental disease for the purposes of determining if a treatment facility is an IMD. 42 CFR 435.1009 states that “an institution for mental diseases is determined by its overall character as that of a facility established and maintained primarily for the care and treatment of individuals with mental diseases.” CMS could change regulations to state that an inpatient treatment facility that is primarily engaged in providing SUD care falls outside of the definition of an IMD.
  • Similarly, CMS could change the State Medicaid Manual to instruct the review team to not count beds used by individuals receiving residential SUD treatment against the 16 bed limit. The State Medicaid Manual currently instructs the review team to not count individuals with mental retardation, senility, and organic brain syndrome for the purposes of determining if a facility falls under the IMD exclusion, even though these conditions are listed as mental diseases under the ICD-9-CM.
  • CMS could provide more flexibility to allow multiple sites with 16 beds or fewer to be counted independently, even when they are under the same ownership and overseen by one chief medical officer.
  • CMS could determine that the application of parity to certain Medicaid coverage requires that residential SUD treatment be covered, and balance the parity requirements with the IMD exclusion in a way that does not discriminate against individuals with SUD.
  • CMS could give states more flexibility to use waivers to draw down federal Medicaid funding for covered services provided in IMDs, however waivers must meet cost-neutrality requirements and are time limited.

CMS may also have the authority to work with states to develop models of residential treatment that, based on certain criteria such as length-of-stay, would not be limited by the IMD exclusion under defined conditions. Several states have had conversations with CMS about the IMD exclusion over the last few years, and reimbursable models may develop as CMS and states work to better address mental health and substance use disorders through Medicaid policy changes.

What changes to the IMD exclusion would require amending Medicaid law?

Significant changes to the IMD exclusion would require congressional action, and while congress has had opportunities to change the IMD exclusion it has largely not done so. Medicaid law applies the exclusion to individuals ages 21-65 who are patients in an IMD and defines “institution for mental disease” to mean a hospital, nursing facility, or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases. Therefore, any changes to the age of individuals impacted by the exclusion, the 16 bed limit, or the types of facilities to which the exclusion applies would require congress to amend the law.

Congress has passed IMD related legislation as recently as 2010, with a small pilot in the Affordable Care Act. The Medicaid Emergency Psychiatric Demonstration Project is a three year, $75 million pilot for eligible individuals that require a residential level of care to stabilize an emergency psychiatric condition. In addition, with the ACA’s expansion of Medicaid to millions of low-income adults without children, and with the law’s benefit protections guaranteeing the Medicaid expansion population coverage for mental health and substance use disorders at parity, the IMD exclusion has become an even more significant barrier. As a result, there has been more attention from congress to the IMD exclusion recently than in other years; however there is no indication that statutory changes to the IMD exclusion are forthcoming.

If Congress isn’t going to repeal the IMD exclusion anytime soon, what options are available to states to ensure that Medicaid beneficiaries can access needed residential services?

When congress created the IMD exclusion they made clear that they considered psychiatric hospitals to be a state responsibility. But decades later the IMD exclusion is still on the books despite the significant changes in how we treat mental illness and substance use disorders in this country. Many states continue to grapple with the need to ensure that Medicaid beneficiaries have access to MH/SUD care, while budget constraints limit their ability to fill in gaps left by a lack of federal reimbursement for that care when it’s provided in certain medically appropriate settings. States that wish to improve and expand access to residential treatment have some limited options, even as the IMD exclusion continues in its current form. For example:

  • All states should expand Medicaid to their low-income adult populations under the ACA. The Medicaid expansion is funded nearly entirely by the federal government, and states that expand can free up significant resources that were previously being used to finance care for the uninsured.   Freed up state funding could be reinvested into the healthcare system to pay for services that are not covered by Medicaid, including services provided to patients in IMDs.
  • States could use additional state funding to pay for IMD services, including savings to the state from Medicaid waivers or other sources. Investing in treatment can also save money through reduced costs to other systems, including the criminal justice system and the healthcare system.
  • States could reallocate funding from the federal Substance Abuse Prevention and Treatment Block Grant from services now funded by Medicaid or commercial insurance under the ACA to services left uncovered, including residential treatment provided in facilities larger than 16 beds.
  • States could promote the development of residential treatment facilities that are 16 beds or smaller.
  • States could continue to work with CMS to find solutions to the IMD exclusion. While CMS must work within the constraints of Medicaid law, the agency has some flexibility to change policies or approve demonstrations that can improve access to residential services.

The IMD exclusion continues to be a significant barrier to residential MH/SUD treatment for Medicaid beneficiaries. However, even without a repeal of the exclusion, states and federal governments have options available to them to significantly improve access to residential services. States should identify and fill gaps for needed services not covered by Medicaid or other federal programs while working with the appropriate federal agencies and their congressional delegations to ensure that the federal government meets its obligations.

What continuum of services will Medicaid cover in each state plan for the expansion population? Where can this information be found?

 

Medicaid beneficiaries who gain coverage under the Affordable Care Act may receive a different package of benefits than those who have previously been eligible. The Medicaid benefit package available to the expansion population is known as an Alternative Benefit Plan, or ABP, and it may be based on coverage provided under certain health insurance options available to federal or state government employees, the largest HMO plan operating in the state, or any coverage approved by the Secretary of Health and Human Services. The regulations governing Medicaid ABPs make clear that states may also base their expansion benefits on what they cover for previously-eligible beneficiaries.

Regardless of the option chosen by the state to define its ABP for the expansion population, coverage must include the ten categories of EHBs. The EHB categories include:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

In addition to the ten categories of benefits that ABPs must cover, they must provide mental health and substance use disorder coverage that is consistent with the requirements of the Mental Health Parity and Addiction Equity Act, which requires that MH/SUD benefits are at least as generous and access is no more restricted than what is provided for the other benefits covered by the plan. All states that develop Medicaid ABPs, including for their expansion population, do so by amending their Medicaid State Plan.

To learn more about your state’s health system and health insurance options, please visit our recently developed resource which includes profiles for every state and the District of Columbia. Here you can learn about:

  • who the health decision-makers are in your state and how to contact them
  • which health care services/medications are available to newly eligible Medicaid beneficiaries in your state
  • which health care providers in your state bill Medicaid
  • how to connect with mental health and addiction service providers in your state

If coverage is lacking, how can criminal justice system stakeholders work to change what’s covered by Medicaid in their states?

States have a considerable amount of flexibility to develop and design their Medicaid coverage. Within the framework of federal law and regulations, states define their Medicaid benefits and the scope of those benefits in their state plan and occasionally through waivers. It’s important for criminal justice stakeholders to have a general understanding of what Medicaid covers in their state, and to be aware of gaps in coverage of important services, like services related to substance use disorder treatment. As coverage gaps are identified, stakeholders should work with their Medicaid office and perhaps the health committees in their state legislature to expand coverage of benefits and protections to improve the ability of the Medicaid program to meet the health needs of justice-involved beneficiaries.

In states that aren’t currently expanding their Medicaid population, does the ACA provide any assistance for individuals living below the poverty line to get health insurance? 

Childless adults under 133 percent of the federal poverty level in states that choose to exercise their option not to expand Medicaid will not be able to access Medicaid coverage. In addition, individuals below 100 percent of poverty will not qualify for premium tax credits to purchase private health insurance on the exchange.   Beyond purchasing a full cost, unsubsidized exchange plan, something far out of reach for most living below the poverty level, these individuals will be left without health coverage options under the ACA.

For these individuals, including many individuals involved in the criminal justice system, federal and state safety net programs that fund health care services for uninsured or underinsured individuals will continue to be extremely important. One important safety-net for those with substance use disorder (SUD) needs who remain uninsured is the Substance Abuse Prevention and Treatment (SAPT) Block Grant. Other federal block grants may also be used to help pay for mental health (MH) treatment, HIV/AIDS care, family planning services, or certain other services. The SAPT block grant and other block grants also remain important to provide needed services that may not be covered or may not be adequately covered by an individual’s Medicaid or private insurance plan. Stakeholders in the criminal justice and health communities will continue to need to inform key decision-makers about the importance of preserving these safety net programs as the Affordable Care Act is implemented and beyond.

Stakeholders in the criminal justice community will also need to inform decision makers about the opportunities available to better meet the health care needs of the criminal justice population, including opportunities under the ACA. States that do not expand Medicaid will be limited in their ability to improve health coverage for those in the state involved in the criminal justice system.

What is the future of the Substance Abuse Prevention and Treatment (SAPT) Block Grant?

With implementation of the Affordable Care Act, and significant expansions in both public and private insurance coverage, there has been considerable discussion about what will happen to existing funding streams, including the Substance Abuse Prevention and Treatment (SAPT) Block Grant. Since Medicaid and private insurance have historically only financed a small portion of substance use disorder services, the SAPT Block Grant has constituted the foundation of the publicly funded addiction treatment system. The SAPT Block Grant program accounts for approximately 42 percent of funds spent by state substance abuse agencies.

Health care reform presents a great opportunity to better help people with substance use disorder prevention, treatment and recovery support needs to get what they need to become and stay well. Once the law is fully implemented, it is likely that current programs and funding streams will need to adapt to meet new needs.

However, the Affordable Care Act does not define which services constitute each of the essential benefits, including which services must be included in the SUD benefit for plans in the health insurance exchange and the SUD benefit for Medicaid benchmark plans for the expansion population. The benefits that will be covered will likely vary by state and gaps in coverage for SUD services cannot yet be fully identified.

Even with full implementation of the law, by 2022 it is estimated that eight percent of Americans will remain uninsured.[1] It is also likely that certain SU services, interventions, and strategies will not be included in the basic benefit for those who are covered.   In addition, states that have gone toward universal coverage have found that the individuals who remained uncovered are disproportionately people with SUD needs. These individuals will continue to need a strong safety net, including the SAPT Block Grant.

Federal decision-makers have recognized that safety net programs including the SAPT Block Grant will need to continue for those services and people not covered by health care reform. Congress appropriated $1.82 billion for the SAPT Block Grant in FY 2014, a $110 million increase from the 2013 fiscal year. The President’s FY 2015 budget included a request for funding level to the FY 2014 allocation, demonstrating continued support for the program.

[1] Congressional Budget Office “Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision,” July 2012. Available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf

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