States that have set up a system for billing Medicaid for external hospital and nursing home stays are reporting millions in savings. Just last week, Ohio said that because of the provision it spent $10.3 million less on healthcare for prisoners in fiscal 2014 compared with 2013. In August, Michigan estimated its plan to begin shifting health costs to the federal government for inmate stays at hospitals would save $16.8 million next year. California could save as much as $70 million a year, according to Pew.
The trend is troubling some hospitals. Ed Epperson, CEO of Carson Tahoe Regional Medical Center, Carson City, Nev., said the state's greater reliance on Medicaid to pay inmates' inpatient costs has dealt the hospital a stiff financial blow.
The Nevada Department of Corrections has for years contracted with third-party insurer Hometown Health Plan for health services to prisoners. Now the department is telling hospitals that they should enroll inmate inpatients in Medicaid, which Epperson said pays about 20% less.
In expansion states, beyond correctional facilities relying on Medicaid to pay for inpatient care, they are also making a greater push to get those leaving the system to enroll in Medicaid. This is especially crucial for prisoners who were being treated for chronic conditions and mental illness.
“Ensuing there is better continuity of coverage and care is critical to helping people and will help lower recidivism rates,” said Gabrielle de la Gueronniere, co-director of policy at the Legal Action Center, an advocacy organization.
This idea is backed by a growing body of research. For example, in Michigan, rates of recidivism fell 25% between 2007 and 2012 after the state began connecting newly released prisoners to a medical home in the community, according to an Agency for Healthcare Research and Quality analysis.
Studies in Florida and Washington found that people with severe mental illness who were enrolled in Medicaid when they were released from jail were more likely to access community mental health and substance abuse services than those without Medicaid. The studies also found that 12 months after release, Medicaid enrollees had 16% fewer detentions and stayed out of jail longer than those who either were not enrolled or had been enrolled for a shorter time. The studies appeared in 2006 and 2007 in Psychiatric Services, a peer-reviewed journal of the American Psychiatric Association.
State Medicaid directors have expressed some concern about the greater reliance of former and current inmates on Medicaid.
“The increase of recently released inmates eligible for Medicaid coupled with the high cost to care for this population is anticipated to put pressure on public budgets,” the National Association of Medicaid Directors says in a posting on its website.
The group plans to track the financial impact and release a series of case studies to educate it members.