Impact of Medicaid Expansion on Maricopa County

Impact of Medicaid Expansion on Maricopa County The ACA provides that beginning January 1, 2014, or sooner at the State s option, states must expand Medicaid to certain adults who are under age 65 with income up to 133% of the federal poverty level (FPL). This provision expands Medicaid to include childless adults who do not have a disability determination, a group that is not generally eligible for Medicaid. The provision also raises Medicaid s income eligibility level for parents and childless adults to 133% of the FPL (138% FPL including a standard 5% income disregard) 1. As a result of the U.S. Supreme Court's ruling in National Federation of Independent Business v. Sebelius, Medicaid expansion is now optional for states. Medicaid expansion has been endorsed by Governor Brewer and is being considered by the Arizona state legislature. Medicaid Rules regarding Incarcerated Individuals Individuals do not lose their Medicaid eligibility based on incarceration alone. Section 1905(a)(A) of the Social Security Act specifically excludes Medicaid for medical care provided to inmates of a public institution, except when the inmate is a patient in a medical institution. Because the statute generally prohibits Medicaid funding for incarcerated individuals, it is often misinterpreted that the person is no longer eligible for Medicaid. In fact, the law does not specify, nor imply, that Medicaid eligibility is precluded for those individuals who are inmates of a public institution. Accordingly, inmates of a public institution may be eligible for Medicaid if the appropriate eligibility criteria are met. A state may enroll, or continue enrollment of, an inmate of a public institution who is otherwise eligible for Medicaid into a Medicaid MCO. However, in most instances, it is more practical and appropriate either not to enroll or to disenroll that individual from the Medicaid managed care program in order to avoid paying per member per month rates to the MCO since only costs for inpatient services delivered outside of the penal institution are reimbursable while the individual is incarcerated. In other words, it is not practical for a state Medicaid agency to pay the MCO a monthly capitated rate for an individual when they know the individual is not going to be accessing Medicaid covered services. It is generally for this reason, not eligibility reasons, that Medicaid agencies want to terminate or suspend the individual s Medicaid while they are incarcerated. By suspending or terminating the individual s Medicaid, the agency can cover inpatient hospitalizations in a medical institution on a fee-for-service basis. In some cases, incarceration impacts an individual s eligibility status by affecting other circumstances in the person s life upon which eligibility is contingent. For example, under 1 42 U.S.C. 1396a(a)(10)(A)(i)(VIII), codifying ACA 2001(a)(1). The ACA also provides for a standard income disregard of 5% FPL, effectively extending Medicaid eligibility to 138% FPL. ACA 2002(a), adding 42 U.S.C. 1396a(e)(14)(I). 1

current Medicaid rules, low-income adults may be eligible if they are parents and a dependent child resides in their home. If incarceration results in the parent losing custody of the child, the individual may lose Medicaid eligibility as he/she no longer meets the requirement of having a dependent child living in their home. Although Medicaid will not pay for services when an individual is in jail, it will pay for institutional services if the individual becomes a patient of an institution such as a hospital or nursing facility. In addition, if Medicaid is suspended rather than terminated when the individual is in jail, coverage can be activated more quickly upon jail release, thereby allowing the individual access to needed medical and behavioral health services. The following rules describe when Medicaid funding is and is not available for individuals in correctional settings. Medicaid funding is not available for services under the following circumstances: Services provided to adults involuntarily held in public penal institutions and juveniles held in detention facilities 2 Medical care and services provided to inmates in a public institution or detention facility Medicaid funding is available when the following circumstances are met: Adults or juveniles are on probation or parole outside of a public institution The adult or juvenile resides in a penal institution/detention center but is not being involuntarily detained (e.g., awaiting transfer to a community residence) Adults or juveniles are on home release except during times when reporting to prison for an overnight stay Adults or juveniles are patients in a medical institution outside of the penal system and are no longer involuntarily held (e.g., released to a medical institution while on parole or probation or completed sentence) Adults or juveniles out on bail awaiting trial Pre-trial status, Medicaid eligibility and payments for Medicaid services The following summarizes what Medicaid will and will not pay for services for individuals in a pre-trial status. Outpatient services Medicaid will pay for community services if the individual is in pre-trial status, has posted bond and is awaiting trial while residing in the community. Medicaid will not pay if the individual is being involuntarily held in the penal institution because he/she cannot pay bond. 2 The exception is that infants born to incarcerated mothers may receive Medicaid funded services while in a penal institution. 2

Inpatient If the inpatient care is provided in a medical institution outside the penal institution, Medicaid will pay for services if the individual was not placed in the medical institution and it was not an extension of the state s or county s penal/correctional system. Medicaid will not pay to the extent that a public penal institution furnishes inpatient care onsite. The individual would be considered to be in the public institution on an involuntary basis and therefore, Medicaid would not pay. If the individuals is awaiting trial in a medical institution that is not an extension of the penal/correctional system (nursing facility, hospital, juvenile psychiatric residential treatment facility, intermediate care facility for the mentally retarded), Medicaid will pay for services. ACA Impact on Medicaid Rules The ACA does not change the Medicaid rules described above. Medicaid payment for inpatient hospitalizations in a non-correctional facility continues to be the only exception to the prohibition of payment for medical services for incarcerated individuals. However, the ACA does significantly impact the Medicaid program by allowing the expansion of Medicaid to include new groups of people, i.e. non-disabled childless adults, and expanding eligibility for both childless adults and parents up to 133% FPL (with standard income disregard of 5% so, in reality, up to 138% FPL). The expansion of the Medicaid program would impact incarcerated individuals by expanding eligibility to all adults up to 138% FPL, regardless of disability or parental status. As a result, many childless adults not currently eligible will be able to enroll in Medicaid, and many individuals who today lose eligibility due to changes in their household composition will be able to maintain Medicaid enrollment, e.g. parent who loses custody of dependent child upon incarceration. The increase in Medicaid enrollment for individuals incarcerated in Maricopa County jails will allow the County to use Medicaid funds for coverage of inpatient hospitalizations in a non-correctional facility. An analysis of the potential fiscal impact is provided below. A recently initiated IGA between the County and AHCCCS allows individuals to have their Medicaid eligibility suspended rather than terminated during incarceration. Pursuant to this IGA, the County electronically transmits a listing of all individuals booked or released from the Maricopa County jails for the preceding 24 hour period. AHCCCS uses this information to query its member database. If there is a match (an individual on the County listing is also in the AHCCCS member database), AHCCCS suspends (for a new booking) or reinstates (for an individual being released) the individual s Medicaid eligibility. AHCCCS provides an electronic copy of the day s query results to the County identifying the results for each individual listed (match, no match, partial match) and, for matches, the individual s AHCCCS renewal dates. Using the AHCCCS response file submitted to the County, 18,500 individuals were booked or released in the jail during the period of February 6 April 22, 2013. Of those, 2,363 were Medicaid eligible. Another 8,517 individuals were a match in the AHCCCS database but not 3

currently enrolled in Medicaid. These individuals are believed to have been Medicaid eligible in the past but not currently enrolled, such as through the childless adult program. This data shows that 12.73% of individuals recently in incarcerated in Maricopa County jail are Medicaid eligible and 46% were Medicaid eligible at one time. The AHCCCS childless adult program was closed to additional enrollment in July 2011. At that time, individuals currently enrolled were grandfathered in the program but were disenrolled if determined to no longer meet eligibility requirements or failed to perform the required renewal procedures. Since June 2011, the number of people enrolled in the childless adult program has dropped from 225,000 to approximately 63,000. It is likely that the majority of the 46% of inmates who were previously enrolled in Medicaid were eligible through the childless adult program. While studies of incarcerated populations report that most inmates are poor and male, there is a paucity of data citing the poverty level of jail inmates. The most recent national data, from the 2002 Profile of Jail Inmates from the Bureau of Justice Statistics, shows that 59.1% of jail inmates reported having personal income of less than $999 a month. However, only 63.2% of inmates reported having income from wages or salary, with the remaining identifying family/friends, illegal sources, welfare and other sources of compensation such as SSI and unemployment insurance, as the source of personal income. Individuals with monthly income up to $1,321.33 (household of one) 3 will be eligible for Medicaid as of January 1, 2014, if Arizona expands Medicaid. Estimates of the jail population that may be eligible for Medicaid should the state expand is at least 60% based on the national data and AHCCCS-Maricopa County data exchange described above. AHCCCS estimates that 300,000 state residents would qualify for Medicaid with incomes up to 133% FPL under the ACA Medicaid expansion provision. From July 2011 through June 2012, there was an average daily population of 7,495 inmates in the County s jail. Assuming 60% 4 would be eligible should Arizona expand Medicaid, the County could expect that approximately 4,500 inmates would be Medicaid eligible for during any given month. Comparison of current services and post ACA with Medicaid expansion and without In FY 2012, the County spent $3,214,777 for inpatient medical care of 459 inmates by outside providers. Assuming 60% of the jail population will be Medicaid eligible if Medicaid expansion occurs, Maricopa County could achieve significant cost-savings through Medicaid coverage of inpatient hospitalizations in a non-correctional facility. Through an IGA with AHCCCS, Maricopa County is responsible for the state share of the match for the federal dollars. Currently, the match rate is 32.77%. If Arizona implements Medicaid 3 Based on 2013 HHS Poverty Guidelines of monthly income at 138% FPL (133% FPL with 5% standard income disregard) 4 58.73% assumed to be Medicaid eligible at 100% FPL based on AHCCCS daily file exchange with Maricopa County. Assumes up to a total of 60% eligible for Medicaid when expanded to 138% FPL. 4

expansion, the federal contribution for the newly eligible group will substantially increase, reducing the amount of match required by the County. Medical service Cost of inpatient hospitalization FY 12 FY 12 Costs Pre-ACA potential costsavings from costsharing of federal funds (billing Medicaid for inpatient hospitalizations) $3,214,777 No increased opportunity Post-ACA with no Medicaid expansion No increased opportunity Post-ACA with Medicaid expansion potential costsavings from cost-sharing of federal funds with Medicaid expansion* $1,928,901** *Assumes average cost per inpatient hospitalization of $7,004 based on 459 inmates hospitalized in FY 12. ** Total savings would be reduced by cost of state match funds paid by the County. A second, longer-term fiscal impact of Medicaid expansion on Maricopa County correctional services is the anticipated reduction in recidivism due to increased access to health services for individuals with serious behavioral health conditions upon release. The prevalence of serious behavioral health conditions and poor health amongst the jail population has led to numerous studies looking at the impact of access to health services on successful community reentry. An example of one such study looked at jail reentry planning and continuity of health care in the San Francisco County jail and found that successful planning for community reentry increased the access to health services upon the individual s release. 5 Another California study that analyzed the cost, benefits and effectiveness of drug and alcohol recovery services in the community found major declines from before treatment to after treatment in the use of alcohol and drugs, which decreased by two-fifths, and in the level of criminal activities, which declined by about two-thirds. There were also significant improvements in health and corresponding reductions in hospitalization by about one third. 6 The capped enrollment of Arizona s childless adult program (eligibility to 100% FPL) has impacted access to mental health services for thousands of adults, including Maricopa County inmates post release. AHCCCS reports that between October 1, 2010 and September 30, 2011, there were 75,737 individuals who received mental health services as enrollees in the childless adult program. As of April 2013, enrollment in the program has significantly declined and, as a result, the estimated number of individuals in April 2013 able to access mental health services through the program was reduced to 21,645. Based on declining enrollment trends, AHCCCS projects that by December 2013 only 17,300 individuals will be able to access mental health services through the childless adult program. 7 Reduced access to community-based mental 5 E. A. Wang et al., "Discharge Planning and Continuity of Health Care: Findings from the San Francisco County Jail," American Journal of Public Health, 98, no. 12 (2008): 2182-84. 6 Dean R. Gerstein et al., Evaluating Recovery Services: The California Drug and Alcohol Treatment Assessment (CALDATA) General Report (Sacramento, CA: California Department of Alcohol and Drug Programs, (1994), p. ix.http://sociology-data.sju.edu/2295/2295mr.pdf. 7 Profile of Childless Adults by Diagnosis, Found at http://www.azahcccs.gov/shared/news.aspx#coverage 5

health services is believed to have increased the demand for mental health services in the jail. Since the closure of the childless adult program in 2011, CHS has seen a 20% increase in demand for mental health services through the County s jail. 8 In FY 12, the County spent over 12.2 million in providing mental health services for inmates. An increase of 20% demand from FY10 to FY12 is estimated to have cost the County $2.4 million. 9 A study conducted for Monterey County, California in January 2005 looked at the impact of mental health treatment following jail release on recidivism. The study found that the group of inmates who received treatment post release had an annualized measure of jail days of 13.82 days as compared to 65.56 days for the control group (non-treatment group). 10 Additionally, the National Association of Counties (NACo) and the Bureau of Justice Assistance looked at effective county jail reentry programs and their impact on public safety and county jail funds. 11 The report provides useful information to Maricopa County on potential savings that could be achieved long-term through increased access to services as a result of expanded Medicaid. Of particular note is a study from Macomb County, Michigan which focuses on successful transition of non-violent offenders with mental health and substance abuse issues. The Michigan program, which started in 2004, resulted in an average reduction in jail stay of 78 days for program participants, with cost savings of $733,200 per year. Program outcomes also include a significant reduction in the average time between incarcerations. Prior to the implementation of the program, the average time between incarcerations was 128 days; post program implementation the time was extended to 309 days. Approximately 20% of individuals booked in the County s jail are referred for mental health services. Cost per day for inmate housing is $78.84 12. If the County achieved a reduction in jail stay days of 20% of pre-adjudicated inmates by 51 days, consistent with the results of the Monterey County study, the County would save over $4,000 per year for each individual with a reduced jail stay. A reduction of 78 days, consistent with the Michigan study, would achieve a cost-savings of over $6,150 per individual with a reduced jail stay. For the first five months of FY13, there has been an average of 222 admissions to the mental health unit. Assuming half of those individuals would have a reduced jail stay through access to mental health services post release, the County could expect to achieve cost-savings of $444,000 to $682,650 over a five month period based on the results of previous studies. 8 CHS mental health admission data for FY10 and FY12. 9 Assumes 20% of the FY12 costs attributed to increase in demand for services. 10 J.B Ashford, K. Wong, K. Sternbach: Monterey County Mentally Ill Offender Crime Reduction Evaluation Report,, Mercer Government Human Services Consulting, January 2005 11 Reentry for Safer Communities: Effective County Practices in Jail to Community Transition Planning for Offenders with Mental Health and Substance Abuse Disorder, A publication of the Community Services Division of the County Services Department, NACo and Bureau of Justice Assistance, September 2008. 12 Information provided by Maricopa County. 6

Another effective program noted by NASo is the Allegheny County Jail Collaborative in Allegheny County, Pennsylvania. 13 This program showed an overall reduction in recidivism of 15% as a result of implementation of a comprehensive reentry planning. In FY12, there were 106,494 bookings in the Maricopa County jail. At a cost of $251.53 per booking 14, a reduction of 15% would save the County over $4 million per year. Under current Arizona Medicaid rules, slightly more than 12% of individuals booked in Maricopa County are eligible for Medicaid 15. Under the proposed Medicaid expansion, it is estimated that the number of Medicaid eligible incarcerated individuals will increase from 12% to approximately 60%. If Arizona expands Medicaid, five times the number of inmates released from jail today will have access to behavioral health care services through Medicaid reentry. Based on numerous studies, it is anticipated that the increase to access to behavioral health services through the Medicaid program would reduce incidents of re-offending and subsequent incarcerations, resulting in an overall improvement in public safety. In addition to fiscal savings that would be achieved through reduced incarcerations, access to community behavioral health services could also reduce the length of treatment for mental health and substance abuse services during incarceration, as the availability of follow-up community treatment could impact mental health holds and inpatient hospital days. Maricopa County spent over $8 million in FY 12 on mental health services for inmates ($6.2 million to provide inpatient mental health services and $1.9 million in outpatient mental health services). Based on numerous studies and as described in this report, is expected that a significant increase in access to community-based behavioral health treatment could result in reduced expenditures for Maricopa County. 13 Reentry for Safer Communities: Effective County Practices in Jail to Community Transition Planning for Offenders with Mental Health and Substance Abuse Disorder, A publication of the Community Services Division of the County Services Department, NACo and Bureau of Justice Assistance, September 2008. 14 Information provided by Maricopa County. 15 Data from AHCCCS response file, February 6, 2013 April 22, 2013. 7