Mandatory Coverage of Certain Pre-Release Services for Medicaid and CHIP Eligible Youth

States have just a handful of months left to come into compliance with new requirements related to coverage of “pre-release services” for Medicaid and CHIP-eligible youth under the SUPPORT for Patients and Communities Act (SUPPORT Act) and the Consolidated Appropriations Act of 2023 (CAA, 2023). Beginning in January 2025, states must cover certain pre-release and post-release services for young people who are or were recently incarcerated. In order to do so, most states will need to develop State Plan Amendments in the coming months. To assist states, the Centers for Medicare and Medicaid (CMS) released guidance in a State Health Official Letter (SHO) last month. This article outlines important considerations for states as they approach these requirements.  

Background

Young people with mental health and substance use disorders are both disproportionately represented within the U.S. criminal legal system and commonly have their behavioral health conditions significantly exacerbated while incarcerated. Compounding these realities is the fact that – both during and after incarceration – individuals can face significant challenges to accessing consistent and lasting behavioral healthcare services. Although physical and behavioral health status can be negatively impacted by time spent in prison or jail as a youth, health outcomes overall can be improved through timely screenings and provision of appropriate services. 

To help mitigate these challenges and better address the needs of youth who are incarcerated, the Federal government has recently altered the rules governing eligibility and reimbursement for Medicaid and CHIP services for young people who are incarcerated. Pursuant to the SUPPORT Act and the CAA, 2023, states are required to suspend, rather than terminate, Medicaid and CHIP eligibility for individuals under 21 and former foster care youth under 26 who are incarcerated. While Medicaid and CHIP generally do not cover services for individuals while they are incarcerated, under the CAA, 2023, states must also begin offering specific services for youth transitioning out of the juvenile justice system, as outlined below.  

Mandatory Coverage Post-Sentencing 

States are required to provide certain services to eligible individuals after they have been tried and sentenced, including services both pre- and post-release from incarceration, though the timelines and populations vary across the services and coverage types. Services must be provided in correctional institutions, which includes state prisons, local jails, tribal jails and prisons, and all juvenile detention and youth correctional facilities. 

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 Medicaid Services 

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 CHIP Services 

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Optional Coverage Pre-Sentencing

Historically, states have been precluded from using Federal Medicaid funds to pay for services provided to individuals who are incarcerated. Children who are incarcerated are likewise deemed ineligible for CHIP services. Pursuant to the CAA, 2023, and the SHO, states may now provide all covered Medicaid services to eligible individuals who are incarcerated prior to being tried and sentenced and receive FFP for such services. Similarly, states may consider youth who are incarcerated and awaiting adjudication as CHIP-eligible, rather than ineligible by virtue of incarcerated status.  

 Considerations for States 

• • Medicaid State Plan Amendments (SPA): States must submit Medicaid SPAs by March 31, 2025, with an effective date of January 1, 2025. States should look for a SPA template being developed by CMS and expected to be released in the coming months but should begin planning for the policy change now. 

• • Develop Internal Operational Plan: While SPA submission is a critical step for authorization and is not required until the end of the first quarter of 2025, states must be prepared to implement coverage effective January 1st. Under the SHO, states must develop and implement an internal operational plan by January 1, 2025, in order to ensure provision of pre-release and post-release services in a timely fashion. The implementation plan must address coordination of providers and policies to support provision of these services, and effective communication and data exchange between Medicaid agencies and carceral facilities. CMS may request the operational plan. 

• • Collaborate with Correctional Facility Partners: States should plan to conduct pre-release outreach well before the 30-day pre-release period and provide eligibility and enrollment support to all youth who are incarcerated. States will also need to develop a process through which to identify, and assess Medicaid eligibility for, former foster care youth. Collaborating with correctional facility partners early on and developing policies and procedures, including data sharing agreements, that support eligibility assessment and enrollment applications will help states stay ahead of the curve. 

• • Service Delivery: States may rely on telehealth and in-reach services to ensure provision of and access to services, although technological and confidentiality requirements, provider supply, and logistical complexities may make these service delivery methods challenging. 

• • Managed Care Authority: Before choosing to use a managed care delivery system to provide services to eligible individuals, states must assess whether they have the requisite managed care authority to do so, amend State Plans and section 1915(b) waivers accordingly, and update managed care contracts and rates. CMS notes in its SHO that unique capitation rates should be developed for individuals eligible for these State Plan services and that it will be available to provide technical assistance to states. 

• • Crosswalk with Approved and Pending Re-Entry Demonstration Waivers. Several states with approved Re-Entry Demonstration Waivers have been given the green light by CMS to cover mandatory State Plan service for eligible youth under their Re-Entry Demonstration initiatives, rather than under a SPA, for purposes of administrative ease and smoother implementation. States with approved and pending Re-Entry Demonstration Waivers should compare eligibility, services, and settings under their waivers with what will be required under State Plan authority to ensure comprehensive coverage for all eligible youth.  

PCG will continue to track this developing policy issue over the next several months. Please contact our team if you need more information or assistance in developing your State Plan Amendment at HealthPolicyNews@pcgus.com.  

For states considering submitting or amending broader re-entry demonstration waivers, click here for PCG’s toolkit.