CMS Approves First-in-Nation Justice-Involved Reentry Section 1115 Demonstration

• Published date: 01 February 2023
• Subject Matter: Food, Drugs, Healthcare, Life Sciences
• Law Firm: Manatt, Phelps & Phillips LLP
• Author: Kinda Serafi, Virginia E. Morgan and Cindy Mann

The Big Picture

On January 26, 2023, the Centers for Medicare & Medicaid Services (CMS) approved California's request to amend the California Advancing and Innovating Medi-Cal (CalAIM) Section 1115 demonstration. A centerpiece of the amendment is approval for California Medicaid to provide a targeted set of Medicaid services to youth and adults in state prisons, county jails, and youth correctional facilities for up to 90 days prior to release. By providing reentry services to Medicaid-enrolled individuals who are incarcerated, California aims to build a bridge to community-based care for justice-involved enrollees, offering them services to stabilize their physical and behavioral health conditions and establishing, prior to release, a reentry plan for their community-based care. With this 1115 demonstration, California will directly test and evaluate its expectation that providing targeted reentry services to Medicaid-eligible individuals will increase coverage and continuity of coverage, improve care transitions as individuals reenter the community, and reduce morbidity and mortality for beneficiaries post-release.

California is the first state in the nation to get federal authority to offer a targeted set of Medicaid services to incarcerated beneficiaries. Due to a provision of federal Medicaid law known as the "inmate exclusion," without a waiver, inpatient hospitalcareis the only service that can be covered by Medicaid for individuals considered an "inmate of a public institution."¹ CMS' approval allows California to provide targeted services with Medicaid financing.

The majority of incarcerated individuals in Medicaid expansion states would be eligible for Medicaid if not for their incarcerated status. As part of the special terms and conditions (STCs) of California's demonstration approval the state has also committed to set up a process to ensure that individuals in the carceral setting have an opportunity to apply for Medicaid prior to release. Without Medicaid coverage and a standard process to connect justice-involved beneficiaries to community-based providers upon release, many individuals lose access to the health care services they received while they were incarcerated, leading to disproportionately higher rates of physical and behavioral health diagnoses and higher risks of injury or death when compared with people who have never been incarcerated.

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