HHS released new Medicaid Reentry Section 1115 Demonstration Guidance for States

On April 17th, the US Department of Health and Human Services (HHS) released a State Medicaid Director Letter entitled “Opportunities to Test Transition-Related Strategies to Support Community Reentry and Improve Care Transitions for Individuals Who Are Incarcerated” (the “SMDL”) to continue implementation of the SUPPORT Act.  The SMDL provides states with Section 1115 Demonstration Waiver guidance for those exploring innovative solutions to promote continuity of care for inmates of a public institution who are soon to be released and are expected or likely to be Medicaid-eligible upon release. Under the current Medicaid Inmate Exclusion Policy, 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.

The SMDL guidance outlines coverage states can provide with federal match funding for up to 90 days prior to the individual’s expected release date for a package of pre-release services that could not otherwise be covered by Medicaid per the current exclusions. In our April edition of HPN, we discussed California’s recent Section 1115 Waiver approval, and the goals they have set forth to ensure care transitions for the formerly incarcerated population.

SMDL Waiver Guidance

The SMDL outlines what this demonstration opportunity seeks to accomplish, as well as the limitations on how the funds can be used by states. While CMS notes that it will review each proposal on its merits – and encourages states to develop innovative approaches – the guidance to help states develop waivers that can be approved.

The stated goals of the waiver include:
  • Increased coverage rates and continuation of care.
  • Improvements in care coordination, including access to services prior to release and smooth transition to community supports post-release.
  • Improved care for those in the carceral setting/community to address physical and behavioral health and social determinants of health.
  • Reduction in mortality rates post release.
  • Reductions in emergency department visits and hospitalizations.
The SMDL outlines high-level expectations for states that seek approval for this sort of demonstration waiver, including:
  • States should engage people with lived experience in the design and implementation of waivers.
  • While the SMDL provides states the ability to target covered populations, including to individuals with enumerated medical conditions, CMS encourages states to define the eligible population broadly. CMS provides guidance for the application of waivers to the federal prison setting.
  • State Medicaid agencies should work with correctional facilities to outreach to and work with soon-to-be released individuals to begin the application process with adequate time.
  • States should be prepared to suspend, not terminate, an individual’s Medicaid during their incarceration to improve continuity of care upon release. CMS notes they understand some states will need to make eligibility system changes to allow for suspension of services, and, as such, they offer a phased-in approach. CMS will allow two years from demonstration approval for the state to make system changes to effectuate eligibility/benefit suspension, and the state may request a 90 percent federal funding match to make necessary system upgrades. The SMDL includes an example for states on how a suspension could work. (see pg. 15)
  • State benefit designs should be robust enough to improve care transitions as contemplated in Section 5032 of the SUPPORT Act and cover at least the minimum set of pre-release services outlined in the SMDL. States may propose to cover these benefits under the Demonstration or describe to CMS in the Demonstration application how the state otherwise ensures that they will be provided to eligible beneficiaries, such as, through the State Plan, immediately upon release.
The SMDL includes the following as the minimum set of pre-release services (see pg. 17):
    • Case management to assess and address physical and behavioral health needs and health risk screening needs.
    • Medication-Assisted Treatment (MAT) services for all types of SUD, as clinically-appropriate, with accompanying counseling; and
    • A 30-day supply of all prescription medications that have been prescribed for the beneficiary at the time of release provided to the beneficiary immediately upon release from a correctional facility.
The SMDL provides a wealth of detailed information to assist states in developing, implementing and evaluating such waivers. Waiver applications should include:
  • A description of the carceral settings;
  • The individuals who are eligible for the Demonstration;
  • The prerelease services to be included in the Demonstration;
  • The timeframe for delivery of prerelease services;
  • For each milestone, the expected key implementation challenges and at a high level how they intend to address these challenges (to be further described in the waiver implementation plan).

The SMDL also includes a list of required elements for waivers (see page 42). Application and submission requirements mirror those of all Section 1115 Waivers.

Current utilization of the waiver can be seen within Rhode Island. The state has implemented a waiver program that provides case management and support services to individuals leaving prison, which has resulted in a significant reduction in recidivism rates. Similarly, this guidance is based on California’s successful waiver application, which allowed the State to use Medicaid funds for treating individuals with substance use disorder who are transitioning back to the community.

Overall, the new waiver opportunity is a promising step forward in improving access to healthcare for people leaving prison. By providing states with the flexibility to design and implement new programs, the waivers can play a critical role in ensuring this population receives the care they need to address underlying health conditions and to manage any new health problems that may arise. This, in turn, can help to reduce recidivism rates and promote better health outcomes for these individuals. As more states begin to explore these opportunities, we can expect to see significant progress in the years ahead.


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