As a result of the expansion of Medicaid approved by the Legislature this year, Arkansas expects to shift much of the cost of providing hospital care for inmates to the federal government, saving the state millions of dollars a year.
The expansion will extend eligibility for the program - which now covers primarily children in low-income families, pregnant women, and elderly and disabled people - to up to about 250,000 adults with incomes of up to 138 percent of the poverty level.
That threshold, based on2013 federal poverty guidelines, is $15,860 for an individual or $32,500 for a family of four.
Because inmates usually have little or no income, most of the state’s 14,200 Department of Correction prisoners, as well as the 1,600 inmates of minimum-security lockups run by the Department of Community Correction, are expected to qualify for coverage.
And, until 2017, the federal government will pay the full cost of the inmates’ care, as it will for others who become eligible under the expanded program.
For the incarcerated,Medicaid will pay only expenses associated with treatment at a hospital outside the prison gates when an inmate is hospitalized for more than 23 hours.
Federal and state rules don’t allow for Medicaid reimbursement for other expenses, such as treatment at a prison hospital or infirmary.
Still, the change “will save the state a lot of money” - $3 million to $4 million a year, said Sheila Sharp, interim director of the Community Correction Department.
Last year, an average of 32 state inmates were admitted to outside hospitals each month, Correction Department spokesman Shea Wilson said.
County sheriffs, often stuck with the hospital bills for inmates in their care, also are interested in having Medicaid pick up the tab when the expansion kicks in in January.
“Any time you have to go to the hospital, it’s a huge expense,” said Ronnie Baldwin, director of the Arkansas Sheriffs’ Association.
For sheriffs’ offices in small counties, he said, “one instance can wipe out their yearly budget.”
“It’s a tremendous cost burden on the counties.”
The state Correction and Community Correction departments already enroll some inmates in Medicaid when they are taken to outside hospitals for treatment.
Since 2011, the departments have submitted Medicaid applications for pregnant inmates who are taken to hospitals to give birth.
In April 2012, they began submitting applications for inmates who are 65 or older or disabled. Most of the state’s other inmates don’t qualify under the program’s current rules.
For those who do qualify, the federal government pays about 70 percent of the cost of treatment, and the state pays the rest. The federal share will rise to 100 percent for those who become newly eligible under the expanded Medicaid program.
In 2017, the state will begin paying 5 percent of the cost for the newer recipients. The state’s share will then rise every year until it reaches 10 percent in 2020.
Under a 2011 agreement, the state Correction and Community Correction departments pay the state’s 30 percent share of the cost for inmates enrolled in the traditional Medicaid program.
Brentwood, Tenn.-based Corizon Health, which receives a fixed amount for handling inmate medical care for the two departments, then deducts the cost of providing the treatment from what it bills the departments.
So far, the company has deducted $90,400 from what it bills the Correction Department, Wilson said.
The savings are expected to be bigger, however, when more inmates are eligible and the federal government begins paying the full cost of covering them.
In the fiscal year that began July 1, for instance, the Correction Department expects to spend $54.7 million on inmate medical care, down from $57.4 million the previous year.
Wilson said the reduction reflects the fact that the fiscal year includes the first six months of 2014, after eligibility for Medicaid is expanded.
Under the so-called private option approved by the state Legislature this year, most of those who become eligible will enroll in private insurance plans, with Medicaid paying the premiums.
Human Services Department spokesman Amy Webb said inmates who are enrolled likely will not be assigned to a private plan, either because they won’t be in the hospital long enough or because they will be classified as “medically frail” recipients who would be better covered under the traditional fee-for-service program.
According to a report by Stateline, a news service operated by the Philadelphia-based Pew Charitable Trusts, Arkansas is among a dozen states that use Medicaid dollars to pay for inmate hospital expenses.
In 1997, the U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid Services issued a letter clarifying that the practice is allowed, but many states still have rules prohibiting it, said Donna Strugar-Fritsch, a consultant with the Lansing, Mich.-based firm Health Management Associates who has advised states on the topic.
In Arkansas, Sharp said the Human Services Department agreed to change its policy after prison officials learned of a growing number of states that had started using Medicaid to pay for inmate hospital expenses.
“It was just something new for all of us,” Sharp said.
During this year’s legislative session, the Legislature passed two laws allowing prison and county jail officials to apply for Medicaid coverage on behalf of inmates even when the inmates don’t give their consent.
Republican state Rep. Micah Neal of Springdale, a sponsor of the legislation, said sheriffs wanted the authority so that “if someone wasn’t cooperative, the expense wouldn’t fall to the state and the county.”
The state’s Medicaid policy prohibits inmates from being covered, Webb said, because “no county jail facilities have provided us with their policies and procedures that we’d need” to change the policy.
Department officials have met with county jail officials about the topic, she said.
Mark Whitmore, chief legal counsel for the Arkansas Association of Counties, said state health and insurance officials are expected to address the topic at the association’s annual conference next month in Hot Springs.
Counties also are interested in whether the subsidized private insurance plans that will be available under the 2010 federal health-care overhaul law could be billed for some of inmates’ medical expenses, such as prescription drugs.
The Arkansas Hospital Association hasn’t taken a position on enrolling inmates in Medicaid, said Elisa White, the group’s general counsel.
“Our hospitals right now take care of the prison population at the state, county and local levels,” she said. “The source of payment is not going to change the fact that we’re still going to take care of people who need our services.”
Front Section, Pages 1 on 07/21/2013