California’s Section 1115 Re-Entry Demonstration Waiver : An Indicator for States

In January 2023, the Centers for Medicare and Medicaid Services (CMS) approved California’s Section 1115 Re-Entry Demonstration Waiver, the first waiver of its kind to receive approval from the agency. The waiver addresses the federal Medicaid Inmate Exclusion Policy, under which states are prohibited from using Medicaid dollars to provide health care services to individuals who are incarcerated even if they would otherwise meet Medicaid eligibility requirements. In practice, states enforce this rule by terminating or suspending Medicaid coverage while individuals are incarcerated and until they reenter their communities.  

In recent years, a number of states have sought workarounds to the inmate exclusion in order to begin providing Medicaid reimbursable services to individuals pre-release and better coordinate care and services upon release. Justice-involved populations are disproportionately affected by mental health and substance use disorder (SUD) and other chronic conditions, including HIV/AIDS and Hepatitis C. Suspension or termination of Medicaid coverage makes it challenging for individuals to re-engage in needed care upon release. The weeks and months immediately following release from jail and prison –when there are often gaps in coverage and care due to this exclusion – can prove particularly dangerous for individuals at risk of overdose and death by suicide, and those experiencing homelessness. 

Illinois and DC both applied for waiver of the inmate exclusion in 2018 and 2019, respectively, but were denied by CMS. Currently, 14 states (AZ, KY, MA, MT, NH, NJ, NM, NY, OR, RI, UT, VT, WA, and WV) have pending requests to CMS for waiver authority to cover re-entry services for individuals who are incarcerated. California is the first state to receive approval of a re-entry waiver. An overview of the approved waiver, as well as pending waivers from other states, may provide guidance to other states seeking to provide similar access to care. 

Overview of California’s Approved Demonstration Waiver 

Under its waiver authority, California will begin providing covered services to individuals 90 days prior to their release from state prisons, county jails, and youth correctional facilities, with the goal of improving re-entry transitions and supporting continuity of care for individuals with complex health care needs. Pre-release services will be available to individuals who would be eligible for Medicaid or CHIP except for their incarceration status and who meet one or more health-related criteria, including: confirmed or suspected mental health diagnosis, SUD, chronic condition or significant non-chronic clinical condition, intellectual or developmental disability, traumatic brain injury, HIV/AIDS diagnosis, and current pregnancy/fewer than 12 months postpartum. Youth in correctional facilities are eligible without meeting these clinical criteria.  

The services that will be covered during this time period include:  
  • In-reach (pre-release) case management 
  • Physical and behavioral health clinical consultation services, provided in-person or via telehealth 
  • Lab and radiology services 
  • Medications and medication administration 
  • Medication Assisted Treatment (MAT) for all types of SUD, with accompanying counseling 
  • Services provided by Community Health Workers and community navigators with lived experience. 
  • Pre- and post-release care management to support re-entry, including: 
    • Enhanced care management 
    • Behavioral health linkages 
    • Warm handoffs 

Implementation & Goals:

California anticipates that provision of these pre-release services will “prevent unnecessary disruption in care, reduce emergency department visits and inpatient hospital admissions, reduce decompensation, suicide-related death, overdose, overdose-related death and all-cause death; and lead to improved health outcomes in general.” 

Specifically, California hopes to better meet the physical health, behavioral health, and social needs of individuals who are incarcerated upon release by: 
  • Improving coordination among siloed systems – specifically, correctional systems, Medicaid systems, community-based providers, and community services providers.  
  • Providing evidence-based medications to reduce suicide-related deaths and overdose deaths post-release. 
  • Reducing acute care use (e.g., emergency department visits and inpatient hospitalizations) post-release. 

Overview of Pending Requests from Other States 

As outlined above, an additional 14 states have submitted similar waiver requests to CMS since 2020. Under most of these waivers, services would begin 30 days pre-release, although a few would begin between 60- and 90-days pre-release. The majority of these proposals are targeted towards a subset of justice-involved individuals who are deemed “high risk” based on their health care and social needs. Several focus on providing treatment and coordination services for individuals with SUD and mental health disorders, preventing and planning for mental health crises, and providing supportive housing and preventing homelessness. Some states have requested to provide the full spectrum of State Plan Medicaid benefits to individuals pre-release, while others have proposed to provide a much more limited set of services.  

The following is a non-exhaustive list of pre-release and post-release services that have been proposed for inclusion in these pending waiver requests:  
  • Service coordination and linkage to physical and behavioral health providers (including peer supports)  
  • Case management services 
  • Coordination of relocation into stable housing upon release and assistance with obtaining housing  
  • Behavioral health care prevention and recovery through linkage to peer supports  
  • Mental health crisis plan preparation  
  • In-reach care management services 
  • 30-day supply of medication (as appropriate) for re-entry into the community and coverage of medications for chronic conditions (e.g., SUD, HIV, and Hepatitis C)  

Some of these waivers also include a pre-release transition to chosen Medicaid Managed Care Organization prior to release to better coordinate community-based referrals and assessments.  

The Office of the Assistant Secretary for Planning and Evaluation (ASPE) published an overview of publicly available pending Section 1115 Demonstration requests in January 2023.  

Implications for States 

States with pending waiver requests or interested in submitting requests to provide pre-release services under Medicaid should consider the aspects of the California’s successful waiver request that might align with the local landscape and the feedback California received from CMS. In particular, CMs noted that California generated significant stakeholder engagement, and, in particular, with justice-involved individuals, through the process of developing its proposed re-entry demonstration.  

In addition, the state’s proposal was very consistent with CMS’s Re-entry Section 1115 Demonstration Initiative, about which it recently released a State Medicaid Director Letter (SMDL) that offers guidance to states interested in submitting similar proposals In this guidance, CMS indicates that it expects states to at least offer case management services to support physical and behavioral health needs, MAT for all types of SUD, and a 30-day supply of prescribed medications as part of their proposed Re-entry Section 1115 Demonstration. Health Policy News will be featuring a more in-depth look at the new SMDL in an upcoming edition. 

States can also look to the best practices identified by the stakeholder group convened under the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Community Act (SUPPORT Act) of 2018.  
  • Length of time: Some stakeholders indicated that “30 days may be insufficient for coordinating and transition care, particularly for individuals with SUD.” States seeking to provide pre-release services to incarcerated individuals with SUD, including opioid use disorder, may want to consider a long runway pre-release.  
  • Eligibility: Stakeholders cautioned against limiting eligibility to certain populations since application of eligibility criteria would be ultimately determined by the prison or jail.  
  • Scope of services: Several stakeholders encouraged states to “cover the full set of benefits as well as all optional benefits, which include recovery supports, supportive housing and employment and rehabilitation supports.”  
  • Design process: Stakeholders noted the value of including justice-involved individuals in the demonstration design and planning phases, in addition to engaging people with lived experience as direct service providers.  

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