New CMS Guidance on the Provision of Medicaid and CHIP Services to Incarcerated Children and Youth: Requirements and Considerations for States

Jul, 26, 2024

New CMS Guidance on the Provision of Medicaid and CHIP Services to Incarcerated Children and Youth: Requirements and Considerations for States

Kinda Serafi, Patti Boozang, Chris Cantrell, and Gini Morgan, Manatt Health

On July 23, 2024, the Centers for Medicare & Medicaid Services (CMS) released a State Health Official (SHO) letter, “Provisions of Medicaid and CHIP Services to Incarcerated Youth.” The SHO letter provides implementation guidance on sections 5121 and 5122 of the Consolidated Appropriations Act, 2023 (CAA), which: (1) require states to provide targeted case management (TCM) and screening and diagnostic services for Medicaid and Children’s Health Insurance Program (CHIP) enrolled children and youth who are incarcerated and post-disposition (e.g., children and youth who are incarcerated after conviction); and (2) offer states the option to provide full scope Medicaid and CHIP services to eligible children and youth who are incarcerated and pre-disposition (e.g., children and youth who are incarcerated prior to conviction). Eligible children and youth are defined as under 21 years of age, or between the ages of 18 and 26 and eligible for Medicaid under the mandatory former foster care eligibility group. The SHO letter lays out the expectations and timelines for states to operationalize the required and optional provisions of the law and provides important clarifications on CHIP eligibility policy. All provisions related to Medicaid and CHIP services for incarcerated children and youth are effective January 1, 2025.

Until now, due to a provision of federal Medicaid law known as the “inmate exclusion,” inpatient hospital care was the only service that could be covered by Medicaid for individuals considered “inmates of a public institution.”[1] With the new CAA requirements and flexibilities, states can draw down federal financial participation to improve health outcomes by providing services to children and youth who are leaving incarceration and have disproportionately higher rates of physical and behavioral health needs than those who have not been incarcerated. Incarcerated children and youth are more likely to have an untreated substance-related needs, be at higher risk for having experienced sexual and physical abuse, and experience suicidal ideation than children and youth in the general population.[2]^,[3],[4],[5] Race and sexual orientation further exacerbate these disparities. The rate of incarcerated Black children and youth is more than six times that of White children and youth, while lesbian, gay, bisexual, transgender, and queer (LGBTQ+) children and youth represent almost 15 percent of the incarcerated population.[6]^,[7]

All states now face a significant amount of policy and operational planning work to implement these new requirements. Over the next six months, states will need to, at a minimum: develop state policies and operational plans; coordinate with and provide technical assistance to correctional facilities so that they can enroll as providers and establish billing and claiming processes; ensure smooth information sharing processes between facilities and state Medicaid agencies for Medicaid/CHIP enrollment, suspension, and delivery of services; and submit and obtain approval for state plan amendments (SPAs). The 24 states with either approved or pending section 1115 reentry initiative demonstrations may be better positioned to implement these requirements, but many will need to expedite their current planning and prioritize correctional facilities which serve children and youth to meet the compliance effective date of January 1, 2025.[8] Based on the experience of other states already planning to provide targeted services to inmates, delivering Medicaid and CHIP services within correctional facilities is a complex endeavor that requires considerable time and state resources to support correctional facilities that do not have previous experience with Medicaid or CHIP.

Section 5121: Mandatory Requirement to Provide Targeted Case Management and Screening and Diagnostic Services

Per section 5121 of the CAA, states must provide, with federal match, screening and diagnostic services in the 30 days prior to release (or no later than one week post-release) as well as TCM in the 30 days prior to release, and for at least 30 days post-release for children and youth who are being held post-adjudication.[9] The SHO letter clarifies requirements for states as they prepare to meet the January 1, 2025 implementation deadline. Key issues and considerations include the following:

Carceral Settings: Correctional facilities that are subject to the requirements are defined as all types of carceral facilities where eligible children and youth are incarcerated, including: state prisons, local jails, tribal jails and prisons, and juvenile detention and youth correctional facilities. CMS noted that state Medicaid agencies will need to determine a mechanism to identify the former foster youth population who are post-adjudication, as they will likely be held in adult facilities. Federal prisons are not among the facility types subject to the requirements, through CMS noted that it intends to provide further guidance on whether and how federal prisons may be subject to the mandatory requirements.
Scope of Screening and Diagnostic Services:
- For Medicaid-eligible incarcerated children and youth and former foster care youth, states must provide medical, behavioral, and dental screening and diagnostic services. CMS clarified that states have flexibility in defining the scope of screening and diagnostic services, as long as the state-determined screening and diagnostic services include minimum Early and Periodic Screening, Diagnostic, and Treatment (ESPDT) standards for those under the age of 21. EPSDT requirements include medically necessary:
  - Screening services, in accordance with sections 1905(r)(1)(A) of the Social Security Act (SSA), which must include, at a minimum: comprehensive health and developmental history, comprehensive unclothed physical examinations, appropriate vision and hearing testing, appropriate laboratory tests, and dental screening services.
  - Diagnostic services, in accordance with section 1905(r)(5) of the SSA, which must include diagnosis of defects in vision and hearing, dental care, and appropriate immunizations.
- For states with separate CHIP programs, CMS clarified that states must provide screening and diagnostic services available under the CHIP state plan or waiver. For states that elect to provide EPSDT services for CHIP enrollees, the state must provide all medically necessary screening and diagnostic services consistent with EPSDT requirements.
TCM Services: For Medicaid enrollees, CMS clarified that required TCM services include:
- Comprehensive needs assessments, including for health, behavioral health, and health-related social needs.
- Development of a person-centered care plan—including social, educational, and other underlying needs, such as developing safe decision-making skills or building relationships.
- Referrals and related activities (e.g., appointment scheduling) to link individuals to needed services when in the community.
- Monitoring and follow-up activities (e.g., follow-up with service providers) to ensure the care plan is implemented.

For CHIP enrollees, CMS noted that CHIP regulations do not define case management services and encouraged states to align CHIP requirements with Medicaid.

Per the CAA, TCM must continue for at least 30 days post-release. CMS clarified that if the pre-release case manager is unable to continue services in the post-release period, a warm handoff must occur between the pre-release care manager, eligible children or youth, and the new post-release care manager.

Eligible Providers: States have flexibility to leverage community-based and/or carceral providers for delivering services to Medicaid and CHIP enrollees in the pre-release period; participating providers must comply with Medicaid and CHIP provider participation and enrollment requirements and follow applicable data sharing requirements.[10] While pre-release services may be provided by carceral healthcare providers, CMS noted preference for leveraging community-based providers to build trust and strengthen connections to community; if carceral providers furnish pre-release services, CMS reiterated the requirement for carceral health providers to complete warm-hand-off to community-based providers prior to release.
Delivery Systems: States have flexibility to use either fee-for-service or managed care delivery systems. For states that use a managed care model, they will need to develop capitation rates and effectuate any necessary contract amendments with managed care organizations (MCOs).
State Operational Plan: CMS clarified that while states are required to have an internal operational plan in place by no later than January 1, 2025, they are not required to submit plans to CMS except upon request. Among other requirements, operational plans must detail system changes, policies and procedures, training programs, and other actions the state will take to implement CAA requirements.
Process for SPA Submissions: CMS will release SPA templates for states to attest that they have an operational plan in place and will provide mandatory services as required under section 5121. CMS will also release SPA templates for states to obtain coverage authorization for required services, such as for TCM for states that do not have TCM SPA authority, and related payment methodologies, as needed. States will need to submit their SPAs no later than March 31, 2025, for an effective date of January 1, 2025.

Section 5122: State Option to Provide Full Scope Medicaid and CHIP Services

States have the option to provide full scope Medicaid and CHIP benefits to incarcerated children and youth who are otherwise ineligible and pending disposition (i.e., incarcerated children and youth who do not yet have a conviction, but otherwise meet Medicaid or CHIP eligibility requirements). This option allows states to provide all mandatory and optional Medicaid and CHIP benefits authorized under the state plan and/or section 1115 demonstrations, which includes EPSDT services for Medicaid enrollees under age 21.

While many states may be interested in this state option as a mechanism for leveraging federal matching dollars to provide healthcare services, it will be crucial to assess whether correctional facilities will be able to ensure that all eligible pre-disposition children and youth have access to the full scope of Medicaid and CHIP services. State Medicaid agencies will need to work with correctional facilities to identify all state plan covered services and develop a process for ensuring those services—including those that traditionally have not been provided on a regular basis, such as dental services, physical therapy, and speech therapy—are provided to eligible individuals.

Clarifications to CHIP Eligibility Policy

Unlike in Medicaid, an individual’s incarceration status is an eligibility factor for CHIP, meaning they can be denied eligibility on the basis of their incarceration. While CMS clarified in prior guidance that the CAA requires states to provide CHIP children under age 19 with 12-months continuous eligibility (CE), states must terminate CHIP eligibility for incarcerated children and youth once the CE period ends. In the SHO letter, CMS provided several important clarifications that bring CHIP eligibility policy under the CAA more in line with Medicaid, including:

States may not terminate CHIP eligibility for incarcerated children and youth if they would otherwise be eligible if not for their incarceration status, including in situations where the individual’s CE period ends while they are still incarcerated (effective January 1, 2025).
States have the option to either suspend CHIP coverage or continue to provide state plan services to incarcerated children and youth. For states that opt to suspend coverage during the incarceration period, states may choose to effectuate a benefits suspension (i.e., limit coverage to state plan services not provided by the carceral facility) or an eligibility suspension (i.e., pause the individual’s CHIP coverage until they are released). This requirement aligns with Medicaid requirements under the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, which requires states to suspend rather than terminate Medicaid eligibility for incarcerated individuals.
States must conduct CHIP eligibility redeterminations prior to release in certain circumstances. CMS clarified that states that suspend CHIP coverage must redetermine eligibility prior to release, without requiring a new application, if a redetermination has not been conducted for 12 months or longer. States are also required to reinstate CHIP benefits without a redetermination for children and youth who are released before their CE period ends (effective January 1, 2024).
Incarcerated children and youth who are within 30 days of release may be found eligible for CHIP services. CMS clarified that incarcerated children and youth who are within 30 days of release may be found eligible to receive pre-release services under the CAA and states must process any applications for full CHIP benefits upon the individual’s release from a carceral facility.

Looking Ahead

With CMS’ eagerly anticipated guidance released so close to SUPPORT Act implementation, states will need to move quickly to put into place the foundational policy and operational processes necessary to comply by January 1, 2025. States need to identify the correctional facilities that house post-disposition children and youth so that they can size the eligible population and begin implementation planning. States will then need to ensure there are Medicaid and CHIP enrollment and suspension processes in place in those correctional facilities, including bi-directional information sharing on incarceration and release dates. States will need to develop policies on the scope of covered services and eligible providers and provide technical assistance to correctional facilities so that they understand how to enroll as providers and bill for services, as needed. In addition to submitting and getting approval for the CAA 5121 SPA, states must assess if they have the appropriate legal authorities to deliver services including submitting TCM SPAs and amending managed care contracts. States will also need to develop operational plans and engage stakeholders—correctional facilities, community-based providers, MCOs, and individuals with lived experiences—on its proposed implementation approach. The subset of states that are also implementing or pursuing reentry section 1115 demonstration waivers to provide Medicaid services to incarcerated youth and adults will need to evaluate the scope of their pre-release services to ensure they meet minimum service provision requirements so that the CAA requirements can be subsumed under the demonstration. All states will need to work shoulder-to-shoulder with their correctional facility partners to ensure successful implementation.

[1] While incarcerated adults and youth may be eligible for Medicaid, states cannot claim Medicaid match for individuals who are considered inmates except for inpatient hospital stays of 24 hours or more, as defined in Social Security Act 1905(a)(30)(A); 42 C.F.R. 435.1009; 42 C.F.R 435.1010. Unlike Medicaid, incarcerated youth are generally ineligible for a separate CHIP, as defined in section 2110(b) of the Act and 42 C.F.R. § 457.310.

[2] Heaton, Leanne L. Racial/Ethnic Differences of Justice-Involved Youth in Substance-Related Problems and Services Received. American Journal of Orthopsychiatry 88, no. 3 (2018): 363–75. https://doi.org/10.1037/ort0000312.

[3] Baglivio, Michael T., Nathan Epps, Kimberly Swartz, Mona Sayedul Huq, Amy Sheer, and Nancy S. Hardt. The Prevalence of Adverse Childhood Experiences (ACE) in the Lives of Juvenile Offenders. Journal of Juvenile Justice 3, no. 2 (2014): 1-23. https://www.proquest.com/scholarly-journals/prevalence-adverse-childhoodexperiences-ace/docview/1681541057/se-2.

[4] Underwood, Lee A., and Aryssa Washington. Mental Illness and Juvenile Offenders. International Journal of Environmental Research and Public Health 13, no. 2 (2016): 228. https://doi.org/10.3390/ijerph13020228.

[5] Abram, Karen M., Jeanne Y. Choe, Jason J. Washburn, Linda A. Teplin, Devon C. King, Mina K. Dulcan, and Elena D. Bassett. Suicidal Thoughts and Behaviors Among Detained Youth. US Department of Justice, Office of Justice Programs, Office of Juvenile Justice and Delinquency Prevention, 2014. https://ojjdp.ojp.gov/sites/g/files/xyckuh176/files/pubs/243891.pdf.

[6] OJJDP, Residential Placement Rates by Race/Ethnicity. Washington, DC, 2023. https://ojjdp.ojp.gov/statistical-briefing-book/special_topics/faqs_fairness/qa11801.

[7] OJJDP, LGBTQ Youths in the Juvenile Justice System. Development Services Group, Inc., Washington, DC, 2014. https://ojjdp.ojp.gov/model-programs-guide/literaturereviews/lgbtq_youths_in_the_juvenile_justice_system.pdf.

[8] The twenty four states include ten states with approved reentry initiative waivers and fourteen states with pending waivers. Approved states include: California, Illinois, Kentucky, Massachusetts, Montana, New Hampshire, New Mexico, Oregon, Utah, Vermont, and Washington; pending states include: Arizona, Arkansas, Colorado, Connecticut, Hawai’i, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Washington D.C., and West Virginia.

[9] Screening and diagnostic services must meet reasonable clinical standards in accordance with EPSDT requirements.

[10] Laws and regulations regarding confidentiality, access, storage, and handling of certain information include but not limited to: section 1902(a)(7) of the SSA; 42 C.F.R. Part 431, Subpart F; 42 C.F.R § 457.1110; 42 C.F.R. Part 2, and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy, Security, Breach Notification, and Enforcement Rules as well as state-level regulatory requirements.