DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop: S2-26-12 
Baltimore, Maryland   21244-1850 
 
 
 
                SMD# 23-003 
 
RE:  Opportunities to Test 
Transition-Related Strategies to 
Support Community Reentry and 
Improve Care Transitions for 
Individuals Who Are Incarcerated 
 
April 17, 2023 
 
Dear State Medicaid Director: 
 
The Centers for Medicare & Medicaid Services (CMS) is issuing the following guidance for 
designing demonstration projects under section 1115 of the Social Security Act (the Act) (42 
U.S.C.  1315) to improve care transitions for certain individuals who are soon-to-be former 
inmates of a public institution (hereinafter referred to as incarcerated individuals, except when 
quoting from statute) and who are otherwise eligible for Medicaid.  This letter also provides 
guidance to interested states about development and submission of the associated section 1115 
demonstration application.  
 
This guidance continues to implement section 5032 of the Substance Use-Disorder Prevention 
that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT 
Act) (Pub. L. No. 115-271), Promoting State Innovations to Ease Transitions Integration to the 
Community for Certain Individuals.  As mandated in section 5032, the Department of Health and 
Human Services (HHS) convened a stakeholder group to develop best practices for states to ease 
health care-related transitions for incarcerated individuals to the community and to develop a 
Report to Congress (RTC).  On December 1, 2022, HHS transmitted the RTC to Congress.1  
Additionally, section 5032 directs the Secretary of HHS, through the Administrator of CMS, to 
issue this State Medicaid Director Letter (SMDL) regarding opportunities to design 
demonstration projects under section 1115 of the Act to improve care transitions for incarcerated 
individuals exiting a public institution and who are otherwise eligible for Medicaid, and to base 
this guidance on best practices identified in the RTC.   
 
As provided in section 1115 of the Act, the Secretary of HHS may waive certain provisions of 
section 1902 of the Act and/or provide authority for federal matching of expenditures that 
otherwise would not be eligible for federal financial participation (FFP) under section 1903 of 
the Act, where the Secretary determines that the demonstration project is likely to assist in 
promoting the objectives of Medicaid.  While CMS reviews every section 1115 demonstration 
                                               
 
1 https://aspe.hhs.gov/sites/default/files/documents/d48e8a9fdd499029542f0a30aa78bfd1/health-care-reentry-
transitions.pdf. 
 
 
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application individually and based on its merits, CMS anticipates that a demonstration that 
increases access to coverage or covered services for low-income individuals and does not restrict 
access to coverage or care, generally will be likely to assist in promoting the objectives of 
Medicaid.  Demonstrations consistent with the approach described in this guidance will test 
innovative approaches to coverage and quality to improve care transitions, starting pre-release, 
for individuals who are incarcerated, thereby facilitating improved continuity of care once the 
individual is released.  Further, improving care transitions will likely help these individuals 
access high-quality, evidence-based, coordinated, and integrated care during reentry. 
 
This guidance encourages states to implement an innovative service delivery system to facilitate 
successful reentry transitions for Medicaid-eligible individuals leaving prisons and jails and 
returning to the community.  It is informed by best and promising practices described in the RTC 
and offers states an opportunity to apply for demonstration authority to receive FFP for 
expenditures for certain pre-release health care services furnished to individuals who are 
incarcerated and otherwise eligible for Medicaid.  Such expenditures otherwise would not 
qualify for FFP, but will receive FFP under this demonstration opportunity to improve care 
transitions and increase the likelihood that individuals participating in the demonstration will 
access needed care upon release from incarceration.  This continuity of care will likely result in 
associated improvements in health outcomes.  For simplicity, this demonstration opportunity will 
be referred to as the Reentry Section 1115 Demonstration Opportunity throughout this letter.   
 
Background2 
 
Incarceration in the United States 
 
The United States has the highest incarceration rate of any country in the world.3  On any given 
day, using the most recently available data, generally from 2020 or 2021, 1.9 million individuals 
were incarcerated nationwide in federal and state prisons (facilities for the confinement of 
individuals convicted of a serious crime, usually for a sentence over one year in length, or a 
felony), local jails (short-term confinement facilities that typically hold individuals awaiting trial 
or other proceedings, as well as convicted offenders serving sentences of one year or less) and 
other correctional settings.4,5  Approximately 1.2 million individuals were held in federal or state 
                                               
 
2 This document contains links to non-United States Government websites.  We are providing these links because 
they contain additional information relevant to the topic(s) discussed in this document or that otherwise may be 
useful to the reader.  We cannot attest to the accuracy of information provided on the cited third-party websites or 
any other linked third-party site.  We are providing these links for reference only; linking to a non-United States 
Government website does not constitute an endorsement by CMS, HHS, or any of their employees of the sponsors 
or the information and/or any products presented on the website.  Also, please be aware that the privacy protections 
generally provided by United States Government websites do not apply to third-party sites. 
3 https://www.prisonstudies.org/sites/default/files/resources/downloads/world_prison_population_list_ 
13th_edition.pdf. 
4 https://www.prisonpolicy.org/reports/pie2022.html. 
5 Government data on incarcerated individuals has lagged in recent years, an issue made worse by the COVID-19 
pandemic (https://www.prisonpolicy.org/reports/pie2022.html), and data are generally limited on the health care 
services available in carceral settings, as well as how much prisons and jails spend on that health care.  Throughout 
 
 
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prisons as of the end of 2020, and 549,100 were held in local jails as of mid-year 2020.6,7  In 
2020, there was a notable reduction of 15 percent of individuals incarcerated in federal or state 
prisons, and a reduction of 25 percent of individuals incarcerated in local jails, that is largely 
attributable to COVID-19 delaying court trials and sentencing of individuals.8,9  A 2020 analysis 
of data from 2010 to 2017 showed an increase in the average length of stay in jails to a 26-day 
national average, an increase of 22 percent.10  Increases in length of stay may be attributable to 
factors such as high bail costs and individuals who committed more serious crimes staying in 
jails longer.11 
 
A 2021 county-level analysis identified a strong association between jail incarceration and 
increases in premature death rates from infectious diseases, chronic lower respiratory disease, 
drug use, and suicide.12  In addition, pregnant women in a carceral system primarily designed for 
men bring specific challenges for addressing these womens health care needs.13  It is also 
noteworthy that from 2011 to 2012, approximately 37 percent of people in state and federal 
prisons and 44 percent of people incarcerated in jails had a history of mental illness.14  A 
November 2020 issue brief based on 2017 data identified that individuals who are incarcerated 
have higher rates of mental illness and chronic and other physical health care needs, including 
hypertension, asthma, tuberculosis (TB), Human Immunodeficiency Virus (HIV), Hepatitis B 
and C, arthritis, and sexually transmitted diseases, than the general population.15  Further, 
according to a 2020 report, although the exact rate of substance use disorders (SUD) in 
individuals who are incarcerated is difficult to determine, it may be as high as 65 percent in 
prisons nationally.16  In some states, it is even higher.  For example, Minnesota reported in 2019 
that approximately 90 percent of the states incarcerated population had been diagnosed with an 
SUD.17   
 
 
                                               
 
this SMDL, we have tried to cite the most recently available data on these topics, which, at times, has necessitated 
reporting on research and data that were compiled a number of years ago. 
6 https://bjs.ojp.gov/content/pub/pdf/p20st.pdf. 
7 https://bjs.ojp.gov/library/publications/jail-inmates-2020-statistical-tables. 
8 https://bjs.ojp.gov/content/pub/pdf/p20st.pdf. 
9 https://bjs.ojp.gov/library/publications/jail-inmates-2020-statistical-tables. 
10 https://www.pewtrusts.org/en/research-and-analysis/articles/2020/03/27/why-hasnt-the-number-of-people-in-us-
jails-dropped. 
11 https://datacollaborativeforjustice.org/work/confinement/understanding-trends-in-jail-populations-2014-2019-a-
multi-site-analysis/. 
12 https://www.publichealth.columbia.edu/public-health-now/news/incarceration-strongly-linked-premature-death-
us. 
13 https://jaapl.org/content/early/2020/05/13/JAAPL.003924-
20#:~:text=Incarcerated%20women%20frequently%2[...]20risk,and%20low%20birth%2Dweight%20infants. 
14 https://www.bjs.gov/content/pub/pdf/imhprpji1112.pdf. 
15 https://www.commonwealthfund.org/publications/issue-briefs/2020/nov/medicaid-role-health-people-involved-
justice-system. 
16 https://www.drugabuse.gov/download/23025/criminal-justice-
drugfacts.pdf?v=25dde14276b2fa252318f2c573407966. 
17 https://mn.gov/doc/assets/Substance%20Use%20Disorder%20Treatment_tcm1089-413914.pdf. 
 
 
  Page 4  State Medicaid Director 
 
Health Needs and Outcomes for Justice Involved Individuals Re-Entering the Community 
 
Formerly incarcerated individuals with physical and mental health conditions and SUDs18 
typically have difficulty succeeding upon reentry because of obstacles present immediately at 
release, such as high rates of poverty and/or high risk of poor health outcomes.19  They face 
stigma and legal barriers when seeking to obtain housing, education, employment, government 
benefits, and health care access, and can be confronted with negative community perceptions and 
corresponding lack of support that hinder successful reentry.20  Additionally, without access to 
affordable health care services post-release, individuals who were formerly incarcerated often do 
not seek outpatient medical care, including needed SUD or mental health treatment and are at 
significantly increased risk for emergency department (ED) use and hospitalization.21,22  
Individuals reentering the community from correctional facilities are also at a greater risk of 
overdose death as compared to the general population, especially in the first two weeks post-
release.23,24  Studies have also concluded that individuals with SUD or substance-related criminal 
charges who are reentering the community are at greater risk of criminal re-involvement and 
recidivism, underscoring that addressing public health needs may help advance public safety 
outcomes.25,26 
 
People from racial and ethnic minority groups are disproportionately represented among the 
carceral population.  Black people are incarcerated in state prisons at nearly five times the rate of 
white people, and Latino people are incarcerated in state prisons at 1.3 times the rate of non-
Latino white people.27  The rates of incarceration for Black people in jails from 2010-2019 was 
more than three times that of white people.28  Racial disparities in incarceration further 
exacerbate health disparities for Black people, Indigenous people, and people of color upon 
release.29   
 
Individuals who are part of the lesbian, gay, bisexual, transgender, queer, and other sexual 
minority (LGBTQ+) community are disproportionately represented in the carceral system.  
Individuals who are transgender are incarcerated at a rate of more than twice that of the 
                                               
 
18 Throughout the SMDL, we use the term behavioral health conditions to encompass mental health conditions 
and SUDs. 
19 https://www.aafp.org/about/policies/all/incarceration.html. 
20 https://www.apa.org/pi/ses/resources/indicator/2018/03/prisons-to-communities. 
21 https://bmcemergmed.biomedcentral.com/articles/10.1186/1471-227X-13-16. 
22 https://www.aafp.org/about/policies/all/incarceration.html. 
23 https://www.kff.org/medicaid/issue-brief/how-connecting-justice-involved-individuals-to-medicaid-can-help-
address-the-opioid-epidemic/. 
24 Binswanger I.A., Stern M.F., Deyo R.A., et al. Release from prison--a high risk of death for former inmates. New 
England Journal of Medicine, 2007 Jan 11; 356(2):157-165. 
25 https://ascpjournal.biomedcentral.com/articles/10.1186/s13722-019-0136-6. 
26 https://www.kff.org/medicaid/issue-brief/how-connecting-justice-involved-individuals-to-medicaid-can-help-
address-the-opioid-epidemic/.  
27 https://www.sentencingproject.org/publications/color-of-justice-racial-and-ethnic-disparity-in-state-prisons/. 
28 https://bjs.ojp.gov/content/pub/pdf/ji19.pdf. 
29 https://www.aafp.org/about/policies/all/incarceration.html. 
 
 
  Page 5  State Medicaid Director 
 
population as a whole, while sexual minorities are incarcerated at a rate of three times that of the 
population as a whole.30  Many people who are LGBTQ+ experience significant discrimination 
in carceral settings, which can negatively impact their health and well-being.31   
 
Additionally, individuals who have communication disabilities, may, upon release, experience 
barriers to services.  Also, individuals with limited English proficiency face barriers related to 
services that are not available in multiple languages.32  For instance, the Federal Bureau of 
Prisons notes that Spanish-speaking women who are incarcerated experienced a barrier to 
participating in its trauma program that is currently only available in English.33,34  
 
Health Needs and Outcomes for Justice Involved Youth 
 
Youth who are incarcerated have a very high incidence of adverse childhood experiences, with 
as many as 90 percent of such youth having experienced trauma.  They are also at higher risk for 
having experienced sexual and physical abuse and for having behavioral health disorders.35,36  
Further, they are often multi-system involved, with a significant overlap between youth in foster 
                                               
 
30 https://transequality.org/sites/default/files/docs/resources/TransgenderPeopleBehindBars.pdf. 
31 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8430972/. 
32 Providers have an obligation to comply with nondiscrimination requirements under various federal civil rights 
laws, including Title VI of the Civil Rights Act, Section 504 of the Rehabilitation Act 1973, and Section 1557 of the 
Affordable Care Act.  Individuals with disabilities are entitled to communication that is as effective as 
communication for people without disabilities, including through the provision of auxiliary aids and services.  See 
45 C.F.R. 84.52(d)(1); 45 C.F.R. 85.51(a); 28 C.F.R. 35.160; 45 C.F.R. 92.102; 28 C.F.R. 35.104.  Additionally, 
covered entities must take reasonable steps to provide meaningful access to individuals, with limited English 
proficiency, including through the provision of interpreting services and translations.  See 45 C.F.R. 80 as 
interpreted by Lau v. Nichols, 414 U.S. 563 (1974); 45 C.F.R. 92.101; 45 C.F.R. 92.101(b)(2). 
33 https://oig.justice.gov/reports/2018/e1805.pdf. 
34 Additional resources for supporting language and disability access needs as part of an individuals reentry to the 
community can be found at the following: National Standards for Culturally and Linguistically Appropriate Services 
(CLAS) in Health and Health Care: https://thinkculturalhealth.hhs.gov/clas; Guide to Developing a Language 
Access Plan: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Language-Access-Plan-
508.pdf; Providing Language Services to Diverse Populations: Lessons from the Field: https://www.cms.gov/About-
CMS/Agency-Information/OMH/Downloads/Lessons-from-the-Field.pdf; Modernizing Health Care to Improve 
Communication Accessibility for Individuals who are Blind or Low-vision: 
https://www.cms.gov/files/document/omh-visual-sensory-disabilities-brochure-508c.pdf; Modernizing Health Care 
to Improve Communication Accessibility for Individuals Who Are Deaf or Hard of Hearing: 
https://www.cms.gov/files/document/audio-sensory-disabilities-brochure-508c.pdf; Modernizing Health Care to 
Improve Physical Accessibility Primer for Providers: 
https://www.cms.gov/files/document/cmsmodernizinghealthcare.pdf; Resource Inventory: 
https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH-Modernizing-Health-Care-
Physical-Accessibility.pdf; Plans, providers, and state/local governments may find the following resource to be 
helpful: 
https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Issue-Brief-Physical-
AccessibilityBrief.pdf. 
35 Baglivio M, Epps N, Swartz K, Huq M, Sheer A, Hardt N. The prevalence of adverse childhood experiences 
(ACE) in the lives of juvenile offenders. Journal of Juvenile Justice, 2014; 3(2):1-23. 
36 Underwood L.A., Washington A. Mental Illness and Juvenile Offenders. International Journal of Environmental 
Research and Public Health, 2016 Feb 18; 13(2):228. 
 
 
  Page 6  State Medicaid Director 
 
care and those involved in the juvenile justice system.  Depending on how broadly multi-system 
involvement is defined, it is possible that as high as 50 percent of youth referred to the juvenile 
justice system are also involved with the child welfare system.37  The length of stay in youth 
correctional facilities is typically short, with a median period of 64 days in 2019.38  Like adult 
carceral facilities, youth correctional facilities are variable in terms of health care provided, from 
very robust and comprehensive care to limited care.39  As with adults in the carceral system, 
there is a disproportionate rate of incarceration for youth of color.40  
 
Linkages to care for youth who move between the correctional and foster care systems are 
extremely important to promote continuity of care and treatment, particularly for youth with 
mental health needs and SUD.  Providing screening for physical and behavioral health needs 
while incarcerated and facilitating linkages to physical and behavioral health care in the 
community will support youth who are incarcerated in transitioning more successfully back to 
the community.41  Emerging research shows that youth do better emotionally, physically, and 
educationally when placed in home-based family settings and the use of more restrictive 
congregate care placements are limited, when possible and appropriate.42,43  Attachment 
disruptions from primary caregivers may underlie some youths mental health issues; thus, 
studies have shown that it is fundamental to incarcerated youths mental health and well-being to 
build strong relationships with a caregiver.44  Correctly diagnosing SUD in youth is critical and 
may be complicated by youth self-medicating for emerging mental health symptoms/disorders, 
such as anxiety and depression, in order to fit in with peers and avoid stigma associated with 
having mental health needs.45  Female youth who are incarcerated have higher rates of 
unintended pregnancies than same-age peers, so providing family planning services is critical as 
well.46 
 
                                               
 
37 Thomas D., Siegel G., Wachter A., Deal T., Rackow A., Vessels L., Halemba G., Hurst H. When Systems 
Collaborate: How Three Jurisdictions Improved their Handling of Dual-Status Cases. Pittsburgh, PA. National 
Center for Juvenile Justice; 2016.  Available at: 
http://www.ncjj.org/pdf/Juvenile%20Justice%20Geography,%20Policy,%20Practice%20and%20Statistics%202015/
WhenSystemsCollaborateJJGPSCaseStudyFinal042015.pdf.  
38  https://www.ojjdp.gov/ojstatbb/corrections/qa08405.asp?qaDate=2019.  
39 Gallagher C.A., Dobrin A. Can Juvenile Justice Detention Facilities Meet the Call of the American Academy of 
Pediatrics and National Commission on Correctional Health Care? A National Analysis of Current Practices. 
Pediatrics, 2007 Apr; 119(4):991-1001. 
40 Developmental Services Group, Inc. Disproportionate Minority Contact. Washington, DC: Office of Juvenile 
Justice and Delinquency Prevention, Office of Justice Programs, US Department of Justice; 2014.  Available at: 
https://www.ojjdp.gov/mpg/litreviews/Disproportionate_Minority_Contact.pdf. 
41 American Academy of Pediatrics. Health Care for Youth in the Juvenile Justice System. Pediatrics, 2011; 
128(6):12191235.  Available at: https://publications.aap.org/pediatrics/article/128/6/1219/31060/Health-Care-for-
Youth-in-the-Juvenile-Justice.  
42 https://theacademy.sdsu.edu/wp-content/uploads/2016/03/alternatives-congregate-care-feb-2016.pdf. 
43 Childrens Bureau (2015). A National Look at the Use of Congregate Care in Child Welfare. Retrieved from: 
https://www.acf.hhs.gov/sites/default/files/documents/cb/cbcongregatecare_brief.pdf. 
44 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6703996/. 
45 https://childmind.org/article/mental-health-disorders-and-substance-use/#full_article. 
46 https://childsafety.losangelescriminallawyer.pro/juvenile-delinquency-and-teen-pregnancy.html. 
 
 
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Health Care in Carceral Settings 
 
All carceral authorities are constitutionally obligated to provide needed health care for inmates in 
their custody, regardless of the carceral setting (i.e., local or state jail, state or federal prison).  
However, the provision of health care within carceral systems is widely variable.  The standard 
of adequate care47 may be defined at the state, county, or facility level.  Even initial health care 
screenings and provision of life-sustaining or life-prolonging services are implemented very 
differently across states, counties, and facilities.48  Despite the high rates of chronic physical and 
mental illnesses and SUD among individuals who are incarcerated, access to health care services 
in prisons and jails can be limited.  In 2017, of the 5,100 prisons and jails in the United States, 
fewer than 30 offered methadone or buprenorphine, two common, safe, and effective medication 
assisted treatment (MAT) medications for SUD.49  Health care in a carceral environment varies 
in practice in almost every way, including the services provided (e.g., assessment; care 
management; and delivery of preventive, acute, or palliative care), setting (e.g., availability of 
onsite care, coordination of services while in custody), the providers who render services (e.g., 
contracted vendors or state agency staff), as well as the number and type of licensed and 
unlicensed professionals per facility (e.g., enrollment status in the state Medicaid program, 
registry in the National Plan and Provider Enumeration System), or state scope of practice and 
provider prescribing authority.  This variation leaves some carceral settings only providing the 
most basic care for acute illnesses and injuries. 
 
The costs of health care provided to individuals who are incarcerated also vary widely.  In 2015, 
the typical state spent $5,700 annually on health care services for an individual incarcerated in a 
state prison, with California spending the most on health care at approximately $20,000 per 
individual per year, and Louisiana spending the least at $2,100 per individual per year.50   
 
While data are available on the costs of health care provided in state prisons, data about health 
care costs in jails are not readily accessible.51  Local jail funding may be derived from a 
patchwork of local governmental agencies and sources, and these revenue streams are not always 
reflected in jails operating budgets and public disclosures.  Further, disaggregating the portion 
of the jail funding dedicated to health care is made more complicated by lack of clarity around 
the full costs to operate jails.  A 2015 survey of jails indicated that anywhere from 1 percent to 
more than 53 percent of total jail costs were paid by another government agency, and a majority 
of these costs, which were outside of jail budgets, tend to be for employee benefits and health 
care for incarcerated individuals.52   
                                               
 
47 In Estelle v. Gamble, 429 U.S. 97 (1976), the Court stated that the government has an obligation to provide 
medical care for those whom it is punishing by incarceration, and that deliberate indifference to serious medical 
needs of prisoners is proscribed by the Eighth Amendments prohibition of cruel and unusual punishment. 
48 https://www.ojp.gov/pdffiles1/nij/grants/189735.pdf. 
49 https://store.samhsa.gov/sites/default/files/d7/priv/pep19-matusecjs.pdf. 
50 https://www.pewtrusts.org/en/research-and-analysis/articles/2017/12/15/prison-health-care-spending-varies-
dramatically-by-state. 
51 https://www.vera.org/downloads/publications/price-of-jails.pdf. 
52 https://www.vera.org/downloads/publications/price-of-jails.pdf. 
 
 
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The average overall annual cost of holding a person in jail in 2017 was about $34,000, according 
to a 2021 report.53  In comparison, the average annual cost of holding a person in a state prison 
in 2020 was roughly $31,58054, and the average annual cost of holding a person in a federal 
facility in 2020 was $39,158.55  The portion of a jails budget spent on health care can vary 
widely by county even within the same state, such as in Virginia, where local jails spend 
anywhere from 2.5 to 33 percent of their budgets on health care.56  Although health expenses for 
incarcerated individuals are often paid through a jail budget, about half of the reporting jails in a 
2015 survey indicated that another county agency paid at least a portion of an incarcerated 
individuals medical costs and that this practice is most prevalent in large counties.57  The 
aforementioned information points to the inadequacy and variability of available data on jail-
related health care expenditures.  The data on health care spending in both jails and prisons also 
highlights the disparities in health care investments, depending on the state and/or the local 
jurisdiction in which an individual is incarcerated. 
 
There is also limited information on the availability of health care services in carceral settings 
and insufficient information on the quality of those services.  Further, little beyond anecdotal or 
isolated local data are available regarding the transition process for individuals, including youth, 
exiting the carceral system and linkages with health care services in the community.  Data on 
necessary elements for a successful transition are not readily available, particularly related to 
jails where people may cycle in and out relatively rapidly, with little time for transition planning. 
 
Medicaid Eligibility in Carceral Settings 
 
Incarceration status does not render an individual ineligible for Medicaid, as it is not a factor of 
eligibility.  Individuals who are held involuntarily in a public institution may be eligible for and 
enrolled in Medicaid, but federal Medicaid funds may not be used to pay for services for such 
individuals while they are incarcerated, except when they are inpatients in a medical institution 
as provided in paragraph (A) following the last paragraph of section 1905(a) of the Act, 
hereinafter referred to as the inmate payment exclusion.  Qualifying inpatient stays would be in 
facilities, such as hospitals, nursing homes, psychiatric residential treatment facilities or other 
medical institutions for an expected duration of 24 hours or more58, in which there is an 
admission of the individual to the facility as an inpatient.  In 2016, CMS provided guidance to 
states regarding facilitating access to covered Medicaid services during and after a stay in a 
                                               
 
53 https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2021/01/local-spending-on-jails-tops-$25-billion-
in-latest-nationwide-
data#:~:text=The%20average%20annual%20cost%20of,capital%20challenges%20to%20local%20budgets. 
54 https://nicic.gov/state-statistics/2020/2020-national-averages.  
55 https://www.federalregister.gov/documents/2021/09/01/2021-18800/annual-determination-of-average-cost-of-
incarceration-fee-coif.  
56 https://www.pewtrusts.org/en/research-and-analysis/reports/2018/01/jails-inadvertent-health-care-providers. 
57 https://www.vera.org/downloads/publications/price-of-jails.pdf. 
58 42 CFR 435.1010 Definitions relating to institutional status and 
https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/sho16007.pdf. 
 
 
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correctional institution, including states authority to suspend, rather than terminate Medicaid 
eligibility for individuals who are incarcerated.  Suspending rather than terminating eligibility 
maintains enrollment for Medicaid-eligible individuals who become incarcerated, while 
complying with the inmate payment exclusion.59  Since then, section 1001 of the SUPPORT Act 
prohibited states from terminating Medicaid eligibility for eligible juveniles.60  Suspending 
rather than terminating an individuals Medicaid coverage during incarceration facilitates timely 
reinstatement of coverage upon release from a public institution.  Timely reinstatement of 
coverage upon release from incarceration directly impacts when care is received and is a 
contributing factor for early identification of treatable medical conditions, continuity of care, 
reduction of medical crises, and mortality, and ensuring individuals who were incarcerated have 
the resources required for successful reentry into the community.61,62 
 
For states that adopted the Affordable Care Acts Medicaid expansion for the adult group, most 
incarcerated individuals are eligible for Medicaid.  Many states are seeking to put in place 
policies and processes to ensure that Medicaid-eligible individuals are enrolled prior to release 
and able to receive Medicaid-covered benefits and services as quickly as possible after release.63  
States that maintain enrollment during incarceration with suspended coverage also use this 
strategy to facilitate claiming of FFP in expenditures for services provided to incarcerated 
beneficiaries while they are inpatients in a medical institution.64 
 
Summary of Section 5032 Stakeholder Group Meeting and Report to Congress on Best 
Practices 
 
On August 20, 2021, HHS convened a meeting of a federal advisory committee established 
under section 5032 of the SUPPORT Act.  This group included representatives from managed 
care organizations, Medicaid beneficiaries, health care providers, the National Association of 
Medicaid Directors, and other representatives from local, state, and federal jail and prison 
systems, as required by the statute.  The group did not produce consensus recommendations. 
Rather, stakeholders identified promising practices, as well as areas for consideration, to promote 
seamless transitions to the community and inform CMS development of the required SMDL and 
Reentry Section 1115 Demonstration Opportunity.  The stakeholder input also provided insight 
on reentry planning for individuals in the carceral system. 
                                               
 
59 See April 28, 2016, State Health Official Letter # 16-007 RE: To Facilitate successful reentry for individuals 
transitioning from incarceration to their communities found at https://www.medicaid.gov/federal-policy-
guidance/downloads/sho16007.pdf and January 19, 2021, State Medicaid Director Letter # 21-002 RE: 
Implementation of At-Risk Youth Medicaid Protections for Inmates of Public Institutions (Section 1001 of the 
SUPPORT Act) found at https://www.medicaid.gov/Federal-Policy-Guidance/Downloads/smd21002.pdf. 
60 https://www.medicaid.gov/Federal-Policy-Guidance/Downloads/smd21002.pdf.  
61 https://counciloncj.org/issue-brief-1/.  
62 https://counciloncj.org/harp-issue-brief-2/. 
63 https://www.commonwealthfund.org/publications/issue-briefs/2019/jan/state-strategies-health-care-justice-
involved-role-
medicaid#:~:text=Medicaid%20expansion%20makes%20most%20individuals,is%20effective%20prior%20to%20re
lease. 
64 https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2016/08/how-and-when-medicaid-covers-people-
under-correctional-supervision. 
 
  Page 10  State Medicaid Director 
 
The RTC, which was informed by the section 5032 stakeholder group feedback, identified 
challenges related to the transition of individuals reentering the community.  These challenges 
include individuals receiving needed health care when there are competing needs for other social 
supports, continuity of care, access to care including access to post-release MAT, stigma, and 
understanding the scope of covered benefits and costs, among others.  The RTC noted that 
prisons, jails, and health care providers face challenges in data sharing and cross-systems 
communication and coordination for transitioning individuals.  Additionally, the RTC describes 
how sharing information on the health care provided during incarceration with community-based 
clinics, physicians, and other providers can be an important part of treating chronic illnesses and 
behavioral health conditions, because it allows for treatment continuity, reduces duplicative care, 
and facilitates communication about the individuals health needs.  The report also describes data 
sharing challenges between correctional systems and state Medicaid agencies, as well as 
managed care organizations, that include additional non-health data such as anticipated or 
updated release dates and reentry information, and Medicaid enrollment.  The RTC further 
describes best and promising practices for health care, eligibility, enrollment, and coverage-
related practices, and key considerations for a section 1115 demonstration opportunity. 
 
CMS considered the feedback and insight provided by stakeholders in the design of this Reentry 
Section 1115 Demonstration Opportunity. 
 
Reentry Section 1115 Demonstration Opportunity  
 
As noted above, section 1115(a) of the Act authorizes the Secretary of HHS to waive certain 
statutory provisions and to match expenditures that otherwise would not qualify for federal 
matching in order to permit states to conduct experimental, pilot, or demonstration projects that, 
in the judgment of the Secretary, are likely to assist in promoting the objectives of title XIX of 
the Act.  While CMS will consider each section 1115 demonstration application on its own 
merits, the Reentry Section 1115 Demonstration Opportunity discussed in this SMDL is intended 
to help states submit proposals that would advance the goals of the Medicaid statute to provide 
medical assistance to vulnerable and low-income populations and ensure high quality care for 
communities and populations served.  States are encouraged to submit applications for 
demonstrations that would test innovative practices that are likely to assist in promoting the 
objectives of Medicaid.  In this demonstration opportunity, states may provide coverage for 
certain Medicaid services to incarcerated individuals who are soon to be released from 
incarceration, consistent with the statutory directive in section 5032 of the SUPPORT Act. 
 
While states applications may propose to make certain carceral health care services that are 
currently paid exclusively with state and/or local dollars eligible for FFP, the Reentry Section 
1115 Demonstration opportunity is not intended to shift current carceral health care costs to the 
Medicaid program.  Section 5032(b) of the SUPPORT Act makes clear that the purpose of this 
demonstration opportunity is to improve care transitions for certain individuals who are soon-
to-be former inmates of a public institution and who are otherwise eligible to receive medical 
assistance under title XIX.  This demonstration opportunity does not absolve carceral 
authorities of their constitutional obligation to ensure needed health care is furnished to inmates 
in their custody and is not intended as a means to transfer the financial burden of that obligation 
from a federal, state, or local carceral authority to the Medicaid program.  Accordingly, CMS 
  Page 11  State Medicaid Director 
 
does not expect to approve state proposals to receive federal Medicaid matching funds through 
the Reentry Section 1115 Demonstration Opportunity for any existing carceral health care 
services that are currently funded with state and/or local dollars unless states agree to reinvest the 
total amount of new federal matching funds received for such services under the demonstration 
into activities and/or initiatives that increase access to or improve the quality of health care 
services for individuals who are incarcerated (including individuals who are soon-to-be released) 
or were recently released from incarceration, or for health-related social services that may help 
divert individuals from criminal justice involvement.  Consistent with this expectation, states will 
need to commit at the time of the demonstration approval to a reinvestment plan, and will 
develop and submit the plan for CMS approval during the post-approval period.  The plan will 
outline how the federal matching funds under the demonstration will be reinvested throughout 
the demonstration period.  Additional information regarding the reinvestment plan requirements 
are provided on pages 32-33.  
 
In general, to meet the statutory purpose of improving care transitions for soon-to-be released 
incarcerated individuals who are otherwise eligible for coverage, the services covered under this 
demonstration opportunity should aim to improve access to community resources that address 
the health care and health-related social needs of this population, with the aims of improving 
health outcomes and reducing ED visits and inpatient hospital admissions for both physical and 
behavioral health (mental health and SUD) issues once they are released and return to the 
community.  A brief summary of the Reentry Section 1115 Demonstration Opportunity expected 
features, described in detail below, is provided in Appendix 1. 
 
Overarching Demonstration Goals  
 
CMS expects that demonstration applications for the Reentry Section 1115 Demonstration 
Opportunity will address the following goals: 
  Increase coverage, continuity of coverage, and appropriate service uptake through 
assessment of eligibility and availability of coverage for benefits in carceral settings just 
prior to release; 
  Improve access to services prior to release and improve transitions and continuity of care 
into the community upon release and during reentry;   
  Improve coordination and communication between correctional systems, Medicaid 
systems, managed care plans, and community-based providers;  
  Increase additional investments in health care and related services, aimed at improving 
the quality of care for beneficiaries in carceral settings and in the community to maximize 
successful reentry post-release;  
  Improve connections between carceral settings and community services upon release to 
address physical health, behavioral health, and health-related social needs (HRSN);65 
  Reduce all-cause deaths in the near-term post-release; and 
                                               
 
65 As discussed in a letter to State Health Officials issued on January 7, 2021, https://www.medicaid.gov/federal-
policy-guidance/downloads/sho21001.pdf, addressing Social Determinants of Health can more effectively improve 
population health, reduce disability, and lower overall health care costs in the Medicaid program.  While social 
determinants of health is a broad term that relates to the health of all people, HRSN relates more specifically to an 
individuals adverse conditions reflecting needs that are unmet and contribute poor health. 
  Page 12  State Medicaid Director 
 
  Reduce number of ED visits and inpatient hospitalizations among recently incarcerated 
Medicaid beneficiaries through increased receipt of preventive and routine physical and 
behavioral health care. 
 
Quality and Health Equity  
 
Health equity means the attainment of the highest level of health for all individuals, where 
everyone has a fair and just opportunity to attain their optimal health regardless of race, 
ethnicity, disability, sexual orientation, gender identity, socioeconomic status, geography, 
preferred language, or other factors that affect access to care and health outcomes.66 
 
The Reentry Section 1115 Demonstration Opportunity supports CMS vision to serve the public 
as a trusted partner and steward, dedicated to expanding coverage, advancing quality and health 
equity, and improving health outcomes.  By design, this Reentry Section 1115 Demonstration 
Opportunity focuses on providing coverage for high-quality services furnished to certain 
incarcerated individuals, a group of individuals who have been historically underserved, 
marginalized, and adversely affected by persistent poverty and inequality.  States demonstration 
designs should be cognizant of and include proposed approaches for improving quality of 
coverage and care for all Medicaid demonstration beneficiaries, thereby reducing disparities and 
improving health equity for eligible Medicaid beneficiaries.   
 
Based on the recommendations in the RTC, CMS strongly encourages states contemplating 
submitting a demonstration application to engage individuals with lived experience who were 
formerly incarcerated in both the design and implementation of a states Section 1115 Reentry 
Demonstration proposal.  Inclusion of people with lived experience has been identified as an 
important feature by the section 5032 stakeholder group, gathering practical insight and 
perspective that recognizes the voices of those who could be served by the demonstration.  Such 
engagement increases the potential for this section 1115 demonstration opportunity to improve 
care transitions and quality of care to best meet individuals needs, regardless of their 
backgrounds or circumstances. 
 
Breadth of Carceral Settings 
 
Section 5032 of the SUPPORT Act makes no distinction between incarcerated individuals 
exiting federal, state, and local prisons and jails.  The Reentry Section 1115 Demonstration 
Opportunity offers flexibility to states to provide coverage for certain pre-release services 
furnished to individuals in state and/or local jails, prisons, and/or youth correctional facilities.  
The types of carceral settings included, e.g. state prisons, local jails, etc., as well as limitations 
relating to the ability of individual carceral facilities in the state to participate, are at the states 
discretion to propose.  States may outline a phased approach to adding additional carceral 
facilities throughout the life of the proposed demonstration. 
 
When an individual is incarcerated in a federal prison, the federal Bureau of Prisons (BOP) is 
responsible for providing and paying for all physical and behavioral health care.  Federal 
                                               
 
66 https://www.cms.gov/pillar/health-equity. 
  Page 13  State Medicaid Director 
 
prisoner health care costs are the responsibility of a federal agency and not the state in which the 
federal prison is located.  Additionally, since many federal prisoners are incarcerated outside of 
their home state, they often will need to apply for and enroll in Medicaid in a different state than 
where they are incarcerated in order to ensure coverage upon release.  States may process 
applications from incarcerated individuals, prior to release, who apply for Medicaid coverage in 
the state in which they will reside, with the effective date of eligibility the date the individual 
arrives in their state of residence.  CMS encourages state Medicaid agencies to assist individuals 
who are incarcerated in federal prisons in their states by directing them to Medicaid application 
information for the state in which they intend to reside upon release so that federal prison social 
workers can help federal prisoners submit a Medicaid application prior to release.  CMS expects 
states to refrain from including federal prisons as a setting in which demonstration-covered pre-
release services are provided under the demonstration, given the existing role of BOP, as another 
federal agency, in providing and paying for all health care for federal prisoners during 
incarceration.  
 
Eligible Individuals 
 
The SUPPORT Act indicates that this demonstration opportunity includes certain individuals 
who are soon to-be former inmates of a public institution and who are otherwise eligible to 
receive medical assistance under title XIX[.] 
 
The section 5032 stakeholder group recommended that the individuals eligible for demonstration 
coverage should include individuals who are incarcerated with a broad array of chronic health 
conditions that may be related to physical and/or behavioral health.  Available data indicate that 
individuals incarcerated in jails and prisons have a higher likelihood of having a wide variety of 
chronic conditions, including but not limited to behavioral health conditions such as SUD and/or 
mental illness.67  Further, lack of treatment for these chronic conditions often leads to poor 
health outcomes and more frequent ED and inpatient hospital use post-release.   
 
CMS encourages states interested in the Reentry Section 1115 Demonstration Opportunity to 
propose a broadly defined demonstration population that includes otherwise eligible, soon-to-be 
former incarcerated individuals.  States have the flexibility to target the population(s) covered by 
the demonstration, for example, to individuals with specific conditions, and should establish 
identification criteria.  As states develop criteria and processes for identification of individuals 
who may be included in the Reentry Section 1115 Demonstration Opportunity, including those 
with specific conditions, states should be mindful of establishing identification criteria for 
individuals who may have a condition that is currently undiagnosed.  
 
Medicaid Eligibility and Enrollment 
 
Section 5032(b)(1) requires that the demonstration opportunity provide assistance and education 
for enrollment under a State plan under the Medicaid program[.]  Consistent with this provision, 
in order to ensure individuals are able to access services in the period in which pre-release 
demonstration services are available, demonstration states should work with their correctional 
                                               
 
67 https://bjs.ojp.gov/content/pub/pdf/mpsfpji1112.pdf. 
  Page 14  State Medicaid Director 
 
facility partners to start the application process and assist incarcerated individuals who are not 
already enrolled in Medicaid to apply for Medicaid upon the individuals incarceration, 
throughout the period of incarceration and no later than 45 days before the individuals expected 
date of release.  In addition, section 5032(c) clarifies that nothing under title XIX of the Act or 
any other provision of law precludes a state from reclassifying or suspending (rather than 
terminating) the eligibility of an individual for medical assistance under title XIX of the Act 
while such individual is an inmate of a public institution.   
 
CMS expects that demonstration states will make pre-release outreach well in advance of the 30-
day pre-release period, along with eligibility and enrollment support, available to all individuals 
incarcerated in the facilities in which the demonstration is functioning.  Without outreach and 
support to assist all interested individuals to apply for Medicaid coverage or renewal, it is 
generally not possible to assess who may be eligible for Medicaid and limit outreach and 
enrollment support to a subset of individuals who are incarcerated. 
 
Consistent with CMS priority to expand access to quality, affordable health coverage and 
care68 and the recommendation of the section 5032 stakeholder group, CMS does not expect to 
approve a Reentry Section 1115 demonstration unless the state suspends, rather than terminates, 
an individuals Medicaid eligibility, when an individual becomes incarcerated for the duration of 
their incarceration.  Ensuring enrollment in health coverage is an essential component of 
improving care transitions between carceral settings and the community.  A straightforward 
strategy to better ensure enrollment for newly released, Medicaid-eligible individuals is to adopt 
a suspension approach, instead of termination, so the individual does not have to submit a new 
application upon release.  The states priority in implementing a suspension strategy is to support 
maintenance of enrollment for Medicaid beneficiaries.  Consistent with that goal, CMS 
encourages states to submit applications that describe alternative policies and procedures to 
ensure that only allowable benefits are covered and paid for during incarceration while also 
providing coverage and payment for full benefits as quickly as possible upon release.  While 
recognizing the importance of suspension (rather than termination), we understand that some 
states that are not currently using a suspension approach will need time and resources to modify 
systems to make changes to their eligibility and enrollment systems.  Therefore, depending on a 
states readiness and its demonstration proposal, we will offer a glide path of up to two years 
from demonstration approval for the state to make system changes to effectuate eligibility/benefit 
suspension.  A state may request CMS approval for a 90/10 enhanced federal matching rate for 
the design, development, and implementation of certain Medicaid systems (or improvements to 
such systems) to support eligibility determinations and enrollment (including suspension 
strategies).    
 
CMS previously released sub-regulatory guidance that outlines permissible suspension strategies, 
including benefits and eligibility suspension approaches, and how a state may effectuate these 
                                               
 
68 https://www.cms.gov/cms-strategic-plan. 
 
 
  Page 15  State Medicaid Director 
 
suspension approaches.69,70  Under a benefits suspension, an eligible individual continues to be 
enrolled in Medicaid, but Medicaid coverage is limited to services furnished to the individual 
while admitted to a medical institution for at least a 24-hour inpatient stay,71 in accordance with 
the inmate payment exclusion.  One way to effectuate a benefits suspension is for the state to 
make edits in their Medicaid Management Information System (MMIS) to limit payable benefits 
to only services furnished while the beneficiary is an inpatient, for the duration of the 
incarceration.   
 
The eligibility suspension strategy involves the state suspending the individuals eligibility so 
that they are no longer eligible to receive Medicaid benefits for the duration of the incarceration; 
the state must lift an eligibility suspension when an eligible incarcerated person becomes an 
inpatient in a medical institution so that Medicaid may pay for services furnished to the 
beneficiary as an inpatient, which are not subject to the inmate payment exclusion.72  There are 
several ways a state can effectuate an eligibility suspension.  States may make eligibility systems 
edits to place the individual in a suspended eligibility status or the state may make MMIS edits 
to place the individual in a no pay or other status that ensures claims are not paid for the 
eligible individual.  If an individual is determined eligible for Medicaid while incarcerated and 
the individual otherwise satisfies the definition of an eligible individual, the state must treat this 
individual as it would an eligible individual who was enrolled in Medicaid at the time of 
incarceration and place the individual in a suspended eligibility or benefits status, except during 
periods when the individual is an inpatient in a medical institution, as discussed above.  
 
Recognizing the brief timeframe that some individuals will remain in jail and the potential 
uncertainty about when they will leave, presumptive eligibility (PE) can be a useful tool for 
quickly connecting individuals with coverage for a temporary period of time.  CMS encourages 
states to consider utilizing PE for individuals who are anticipated to have short-term stays and 
enroll individuals who are likely eligible under a states Medicaid eligibility guidelines for a 
temporary period of time.  Permitting local jails and prisons to serve as qualified entities would 
allow them to make determinations of PE prior to a persons release, providing immediate access 
to health coverage upon reentry while the individual applies for Medicaid or waits to learn if they 
qualify for Medicaid.  While states may not require an individual to fill out a full Medicaid 
application to receive a PE determination or before a PE period begins, individuals should be 
informed that filing a full Medicaid application is necessary for coverage to continue, and states 
may require that local jails or prisons serving as qualified entities assist individuals determined 
presumptively eligible in completing a full Medicaid application during the PE period prior to 
release.  For individuals with longer-term stays, it is preferable for states to work with their 
correctional facility partners to assist individuals who are not already enrolled in Medicaid to 
apply for Medicaid no later than 45 days prior to the individuals expected date of release.   
 
                                               
 
69 https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/sho16007.pdf. 
70 https://www.medicaid.gov/Federal-Policy-Guidance/Downloads/smd21002.pdf. 
71 42 C.F.R.  435.1010. 
72 When a state effectuates an eligibility suspension, a state is not required to conduct regular annual renewals or 
redetermine eligibility based on changes in circumstances.  If a state is not conducting regular annual renewals or 
determining eligibility based on changes in circumstances while eligibility is suspended, the state may need to 
complete a renewal or redetermination at the time an inmate becomes an inpatient.  
  Page 16  State Medicaid Director 
 
Scope of Health Care Services 
 
Section 5032 does not define the scope of health care services to be provided to demonstration-
eligible individuals prior to release through the section 1115 demonstration opportunity.  The 
section 5032 stakeholder group recommended including sufficient services in the demonstration 
opportunity to promote successful health care transitions.  Stakeholders had differing 
perspectives on how broad the pre-release package of covered services should be, particularly 
given that incarcerated individuals often lack access to needed health care services in carceral 
settings.  Some section 5032 stakeholder group members thought that broad Medicaid coverage 
(e.g., coverage for full state plan benefits) was necessary to provide needed health care that may 
not be provided adequately or at all by the carceral system.  Other members thought the coverage 
should focus on the services necessary to transition people to care in the community once out of 
prisons and jails and should not supplant the obligations of prisons and jails to provide needed 
health care.  Still other members highlighted the importance of providing supports to address 
HRSN, such as bridge housing assistance and employment supports, noting that without support 
to obtain housing and a job, it is difficult for individuals returning to the community to address 
their underlying health issues.   
 
With the wide variation in section 5032 stakeholder group members perspectives about an 
appropriate pre-release benefit package and the respective roles and responsibilities of the 
Medicaid program and carceral system regarding health care, CMS anticipates that interested 
states may propose a range of benefit designs in their applications for the Reentry Section 1115 
Demonstration Opportunity.  However, CMS expects that state proposals for benefit designs will 
be sufficiently robust to be likely to improve care transitions as contemplated in section 5032 of 
the SUPPORT Act and as discussed in this letter, including by covering at least the minimum set 
of pre-release services discussed below. 
 
The goal of the pre-release benefit package design is to support the proactive identification of 
both physical and behavioral health needs and develop a plan to address health and HRSN for 
soon-to-be released incarcerated individuals who otherwise meet Medicaid eligibility criteria and 
Reentry Section 1115 Demonstration Opportunity eligibility criteria.  The benefit package, 
therefore, should promote coverage and quality of care to improve transitions for individuals 
being released from jails or prisons and returning to their communities.  It should also address 
the overarching demonstration goals described above, which were informed by available 
research and the section 5032 stakeholder group and are discussed in greater detail in the RTC.  
While states may propose to exceed the minimum benefit package described below, states should 
collaborate with their participating carceral facilities to ensure the feasibility of providing all 
proposed benefits in the states benefit package to incarcerated beneficiaries, which provide 
stabilizing services that will enhance public health outcomes and support reentry. 
 
CMS recognizes that many individuals exiting prison and jail systems, including youths, may not 
have received sufficient health care to address all of their physical and/or behavioral health care 
needs while incarcerated; however, the purpose of this demonstration opportunity is to provide 
short-term Medicaid enrollment assistance and pre-release coverage for certain services to 
facilitate successful care transitions.  Therefore, the demonstration benefit package should be 
designed to improve identification of health and HRSN and connection to providers with the 
  Page 17  State Medicaid Director 
 
capacity to meet those needs in the community, during the period immediately before the 
individuals expected release.  Demonstration-covered services also may help improve the health 
of demonstration beneficiaries prior to reentry, support improved health outcomes upon release, 
and increase the likelihood of a successful transition to the community.  Once beneficiaries are 
released, the coverage for which the individual is otherwise eligible must be provided consistent 
with all requirements applicable to such coverage.  
 
Minimum Benefits for the Reentry Section 1115 Demonstration Opportunity 
 
As part of the Reentry Section 1115 Demonstration Opportunity, CMS does not expect to 
approve a states proposal unless the pre-release benefit package includes at least: 1) case 
management to assess and address physical and behavioral health needs and HRSN; 2) MAT 
services for all types of SUD as clinically appropriate, with accompanying counseling; and 3) a 
30-day supply of all prescription medications that have been prescribed for the beneficiary at the 
time of release73, provided to the beneficiary immediately upon release from the correctional 
facility.  States may propose to cover these benefits under the demonstration or describe to CMS 
in the demonstration application how the state otherwise ensures that they will be provided to 
eligible beneficiaries, such as, through the state plan immediately upon release (e.g., 30-day 
supply of prescription medications), through another state-only program or by the carceral 
system directly (e.g., MAT).   
 
It is important to note that, to the extent the state chooses to provide prescribed drug coverage 
under demonstration authority in a manner that would provide less coverage for prescribed drugs 
than under the optional Medicaid benefit described at section 1905(a)(12), consistent with 
sections 1902(a)(54) and 1927 (the Medicaid Drug Rebate Program), the state may not seek 
federal nor supplemental state specific rebates under section 1927 of the Act for any of the pre-
release drugs provided under the demonstration.  This would apply to MAT drugs and the 30-day 
supply of medications upon release (as clinically appropriate based on the medication dispensed 
and the indication), if those drugs are covered through section 1115 expenditure authority prior 
to the individual formally being released from incarceration, as well any additional pre-release 
covered outpatient drugs, such as hepatitis C drugs.  Therefore, in order for states to be permitted 
under this demonstration opportunity to seek rebates, they must include all covered outpatient 
drugs pre-release and meet the Medicaid Drug Rebate program section 1927 requirements.  
States may include utilization management tools consistent with their approved Medicaid state 
plan. 
 
As noted in the background section of this letter, compared to the general population, individuals 
who are incarcerated have a higher incidence of chronic physical and behavioral health 
conditions and disease burden, including high blood pressure, asthma, cancer, arthritis, and 
                                               
 
73 The 30-day supply of prescription medications should be dispensed as clinically appropriate based on the 
medication and the indication. 
 
 
  Page 18  State Medicaid Director 
 
infectious diseases, such as tuberculosis, hepatitis C, and HIV, to name a few.74  Youth 
incarceration is independently associated with worse adult physical and mental health.75  CMS 
strongly encourages states to cover pre-release services, such as family planning services and 
supplies for both men and women, and screening for common health conditions within the 
incarcerated population, such as blood pressure, diabetes, Hepatitis C, and HIV. 
 
Benefit #1: Case Management to Assess and Address Physical and Behavioral Health Needs, 
and HRSN 
 
Case management is expected to be a major component in the Reentry Section 1115 
Demonstration Opportunity and should be provided to all beneficiaries in the demonstration.  As 
stakeholders emphasized in the RTC, case management is a lynchpin for the successful transition 
of reentering individuals.  Medicaid case management facilitates services that assess and meet an 
individuals health needs, including behavioral health needs and HRSN.76   
 
Case management services include the following activities: 1) comprehensive assessment and 
periodic reassessment of individual needs, to determine the need for any medical, educational, 
social, or other services; 2) development (and periodic revision) of a specific care plan based on 
the information collected through the assessment; 3) referral and related activities (such as 
scheduling appointments for the individual) to help the eligible individual obtain needed 
supportive and stabilizing services, including activities that help link the individual with medical, 
social, and educational providers or other programs and services that are capable of providing 
needed services to address identified needs and achieve goals specified in the care plan; and 4) 
monitoring and follow-up activities, including activities and contacts that are necessary to ensure 
that the care plan is effectively implemented and adequately addresses the needs of the eligible 
individual and which may be with the individual, family members, service providers, or other 
entities or individuals and conducted as frequently as necessary.77  Case management assists 
individuals in getting connected to services and providers, not only for physical and behavioral 
health needs, but also for HRSN.  For instance, if the state includes youth and/or youth 
correctional facilities in the demonstration, a case manager might also work with state children 
and youth agencies for children who are involved with the foster care system. 
 
Pre-release case management is expected to actively build a bridge to post-release Medicaid 
services, addressing needs beyond merely identifying and listing out potential services and 
resources.  The pre-release case manager is expected to connect individuals to needed services 
by setting up appointments with post-release community providers and ensuring a warm hand-off 
to the post-release case manager, if different, for follow up on receipt of services once the 
individual is released from incarceration.   
 
                                               
 
74 https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-
summaries/incarceration#:~:text=Studies%20have%20shown%20that%20when,%2C%20hepatitis%20C%2C%20an
d%20HIV. 
75 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5260153/. 
76 https://www.cms.gov/Regulations-and-
Guidance/Legislation/DeficitReductionAct/downloads/moratoriumsummary.pdf. 
77 https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-440/subpart-A/section-440.169. 
  Page 19  State Medicaid Director 
 
Case managers are not expected to provide services to a particular individual on a daily basis 
throughout the entire pre-release period during which a beneficiary is receiving demonstration 
coverage.  Instead, case managers should use that period of time to develop a connection with the 
individual, assess their needs, plan effectively for any Medicaid or demonstration-covered 
services and supports that the reentering individual may receive on a pre-release basis, and 
arrange for any covered services that the beneficiary may need post-release (including 
scheduling initial post-release appointments with providers, as appropriate).  Building trust 
between case managers and their clients occurs over time and through learning about the 
incarcerated individuals lived experience prior to and during incarceration, as well as aspirations 
for and obstacles to their clients future success upon release back into the community. 
 
A key function of the case manager is to perform a comprehensive assessment by gathering and 
assimilating information from an array of sources, likely documented in multiple systems and 
across different formats, to ascertain the health needs of an individual who is incarcerated.  The 
assessment may include any past medical history, medical records, assessments, screenings, 
diagnostic services, information available from the corrections system, interviews with the 
individual, and information from health plans, state Medicaid agencies and providers, or other 
sources that may be available to the case manager.78 
 
Another key function of the case manager is the incorporation of the information from the 
comprehensive assessment into an actionable person-centered care plan that engages the 
individual at the center of decision making.  States may need to work with their correctional 
agency partners to establish agreements to share data and information to facilitate the ability of 
the case manager to effectively create a person-centered care plan and to successfully make 
connections to enable the beneficiary to obtain needed services both pre- and post-release.  The 
person-centered care plan should encompass all needs related to physical and behavioral health, 
and primary and specialty treatment to be provided either pre-release, or post-release in the 
community.  This includes addressing in the person-centered care plan, as appropriate, family 
planning services and supplies for both men and women, and screening and lab work for 
common health conditions (blood pressure, diabetes, mental health conditions, Hepatitis C and 
HIV).  
 
The role of case managers and the person-centered care plan are to examine past needs and 
services, and to document and facilitate current and future needs and services.  In this Reentry 
Section 1115 Demonstration Opportunity, case management is provided pre-release, and will 
consider the delivery of services pre and post-release by:  
  Ensuring needs identified in the care plan include services which will be received during the 
post-release period, and facilitating those future services by 
  Helping individuals to identify providers of services post-release; 
o
  Making referrals for and scheduling appointments for services post-release; and 
o
                                               
 
78 This list is a sampling of potential sources and is neither an exhaustive nor a list of sources that necessarily must 
be consulted.  Case managers and information custodians should take care to observe all applicable legal 
requirements concerning the protection of personally identifiable information and protected health information, 
including obtaining consent or an authorization from the individual, where appropriate.  
  Page 20  State Medicaid Director 
 
  Transitioning between pre- and post-release case managers, when another case 
o
manager will assume case management longer-term through post-release coverage 
(Medicaid or other) via a warm handoff process; 
  Ensuring the states approved Reentry Section 1115 Demonstration benefit package of 
services is provided to individuals who are eligible during the pre-release period (e.g., MAT) 
as appropriate, and attempting to coordinate receipt of these services with the individuals 
receipt of other services provided directly by the carceral authority or otherwise that are not 
part of the approved Section 1115 Reentry Demonstration project; and  
  Communicating with correctional health care providers about health care conditions that 
have been identified and that may require treatment prior to release, whether such treatment 
is covered under the demonstration or by the carceral health care delivery system or 
otherwise. 
 
Additionally, the person-centered care plan should address social, educational and other 
underlying needs, such as vocational services or employment.  Many Medicaid beneficiaries face 
challenges related to HRSN,79 which can be particularly challenging for individuals who were 
formerly incarcerated as they rebuild their lives in the community.  HRSN can have an impact on 
health, including but not limited to access to nutritious food, affordable and accessible housing, 
convenient and efficient transportation, safe neighborhoods, strong social and familial 
connections, quality education, and opportunities for meaningful employment.  There is a 
growing body of evidence that indicates that these challenges can lead to poorer health outcomes 
for beneficiaries and higher health care costs, and can exacerbate health disparities.80  To help 
ensure that beneficiaries HRSN are met, states are strongly encouraged to establish partnerships 
and communication lines with state and local social service agencies to promote access to 
affordable housing and nutrition opportunities for beneficiaries returning to the community. 
 
To illustrate how a case manager may address HRSN in the carceral setting, an individual may 
be having difficulty securing safe and stable housing.  A case manager can assist in identifying a 
community-based provider whose area of expertise involves helping individuals connect to safe 
and stable housing.  The case manager will make the connection to the providers to enable the 
individual to understand housing options, or other supportive services essential to success during 
reentry, as well as follow-up with the individual to ensure the connections are effective.   
 
While the person-centered care plan is created in the pre-release period and is part of the case 
management pre-release service to assess and address physical and behavioral health needs and 
HRSN, the scope of the plan extends beyond release and should include the full array of 
Medicaid-covered services and other needed supports.  As previously indicated, some of the 
services identified in the person-centered care plan may be provided pre-release, while others 
will be provided post-release.  The case manager creates linkages by arranging for and 
scheduling appointments for services pre-release and post-release in the community.  Because 
the scope of the person-centered care plan includes both pre- and post-release periods, it may 
include a vast array of services and items for comprehensive physical and behavioral health care 
as appropriate, such as: physical exams, consultation, lab work, screening for suicide risk, 
                                               
 
79 https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/incarceration. 
80 https://www.medicaid.gov/federal-policy-guidance/downloads/sho21001.pdf. 
  Page 21  State Medicaid Director 
 
screening for overdose risk, MAT, peer support services, medications; linkages with housing, 
employment, and/or other HRSN providers; connection to integrated care models such as 
Medicaid health homes for individuals with chronic conditions; linkages to long-term services 
and supports needed to remain in the community upon release; and other health care services, 
supplies, and appliances beneficiaries may need upon release (e.g., wheelchair, walker, glucose 
meter and diabetic test strips, etc.). 
 
Case managers will need to:  
  develop a relationship characterized by respect, dignity, and trust with each individual who is 
incarcerated and assigned to the case manager; 
  assess the individual comprehensively by acquiring and synthesizing information regarding 
their needs; 
  offer information in an easy to understand and actionable person-centered care plan; 
  make linkages to services pre-release, with other linkages to post-release services; and  
  provide a warm hand-off to post-release case managers who will provide services under the 
Medicaid state plan or other waiver or demonstration authority. 
 
States and managed care plans, if applicable, should consider training requirements and 
competencies for case managers to address the medical and social complexities and challenges 
individuals who are currently or were recently incarcerated may experience and lay the 
foundation for a trust relationship such as: 
  trauma-informed approaches, which recognize individuals life experiences within and 
outside of incarceration, as individuals who are incarcerated have significantly higher rates of 
trauma and adverse childhood experiences than the general population;81   
  person-centered care planning, which puts the individual at the center of the conversation and 
includes them in decision-making; 
  intrapersonal and person-centered approach to acknowledging cultural experiences and 
environments, recognizing how individuals past, current, and future cultural experiences and 
environments inform individuals needs;  
  support for individuals communication needs related to language or disability,82  which is 
essential for building understanding, safety, and trust, as well as ensuring quality in person-
centered care planning and coordination; 
  knowledge, experience, and understanding of complex physical and behavioral health needs 
and health-related social needs, and individuals with undiagnosed conditions or needs that 
may not have been treated or met; 
  understanding of the unique needs of the incarcerated population they will be serving, as well 
as the additional hurdles these individuals are likely to face upon reentry, based on chronic 
                                               
 
81 Wolff N, Shi J. Childhood and adult trauma experiences of incarcerated persons and their relationship to adult 
behavioral health problems and treatment. Int J Environ Res Public Health, 2012 May; 9(5):1908-26.  Available at: 
https://www.mdpi.com/1660-4601/9/5/1908. 
82 Web-based training resources that may be useful for cultural competency/cultural humility skills as case managers 
work with individuals with limited English proficiency, individuals with disabilities, and individuals from LGBTQ+ 
communities are available at: https://www.cms.gov/outreach-and-education/medicare-learning-network-
mln/mlnproducts/webbasedtraining.  States can also consider staff with similar needs who may be able to better 
engage individuals and build a strong rapport. 
  Page 22  State Medicaid Director 
 
health conditions, complex health-related circumstances, interaction with the foster care 
system, the stigma associated with incarceration, and the supportive services necessary to 
address underlying employment, housing, and other underlying needs; and 
  skills related to making a trust connection and building a strong rapport with reentering 
individuals, based on respect.   
 
Individuals who are incarcerated may be moving or returning to communities far from where 
they have been incarcerated.  As such, case managers will need to be knowledgeable or inform 
themselves about community resources in the areas to which individuals are returning in order to 
arrange for needed services.  Case managers who provided pre-release services, depending on 
the states proposal, may continue to provide post-release case management under the Medicaid 
state plan authority or other waiver or demonstration authority.  They may also need to 
coordinate with other case managers in the communities where incarcerated individuals will be 
moving to facilitate a smooth transition and warm hand off if there will be more than one case 
manager involved with an incarcerated individuals transition to the community.  States will need 
to ensure appropriate case management coverage is available to work with formerly incarcerated 
individuals post-release.  CMS is available for state technical assistance to add state plan 
coverage for targeted case management or to provide case management under other Medicaid 
authorities, as may be needed. 
 
Planning for post-release services begins with case management through this demonstration, but 
reassessment, monitoring and follow-up will likely continue after the individual is released from 
incarceration, through the post-demonstration Medicaid benefits to which the beneficiary is 
entitled.  Whether case management is provided in fee-for-service or through a managed care 
plan, CMS expects case managers to work with the individual on an ongoing basis post-release 
to help ensure access to care, continuity of care, and receipt of needed services post-release.  
Case managers working with reentering individuals who will be enrolled in a managed care plan 
should also ensure that they educate the individuals on how to access covered services, including 
how to determine whether a provider is in the plans network.  
 
Since many incarcerated individuals, upon reentry, will be required to meet conditions of parole 
or probation, case managers may need to facilitate effective communication with parole or 
probation officers to coordinate health care services, as well as address HRSN in the community.  
 
Benefit #2: Medication Assisted Treatment (MAT) 
 
For purposes of this demonstration opportunity, MAT includes medication in combination with 
counseling/behavioral therapies, as appropriate and individually determined, and should be 
available for all types of SUD as clinically appropriate, not just OUD.  CMS also recognizes that 
in many instances, prisons and jails are not providing MAT or are only providing limited forms 
of MAT.  Despite these limitations, CMS expects that MAT coverage will be accessible to 
demonstration beneficiaries with SUD.  MAT may be covered as a demonstration benefit under 
the Reentry Section 1115 Demonstration Opportunity, or it may be provided under existing state-
only programs or by the carceral system.  In cases where MAT benefits may be limited or not 
easily accessible, such as when provided by a state-only program or by the carceral system 
  Page 23  State Medicaid Director 
 
directly, demonstration coverage may be used to enhance the benefit to help ensure robust 
coverage and access to MAT services for beneficiaries for whom they are appropriate.   
 
As noted earlier in the background section of this letter, rates of SUD among individuals who are 
incarcerated are extremely high.  Additionally, many individuals are incarcerated for crimes 
involving drugs or drug use.83  Data also show that MAT is underutilized in the carceral system 
for a variety of reasons, including pressure from other incarcerated individuals while in a 
carceral setting; stigma; and perceptions that using MAT to treat an SUD is just trading one drug 
for another drug, that individuals who are incarcerated may not be able to continue treatment 
post-release or will be likely to resume drug use to cope with environmental stress after release, 
and that correctional facilities may not have capacity to provide or cannot afford to provide 
MAT.84   
 
In addition to greater access to illegal drugs once released, individuals may be returning to 
settings and communities in which they were using drugs prior to incarceration, as well as 
encountering new or aggravated life stressors due to the obstacles to securing services and 
supports to address underlying needs.  High rates of death from opioid overdose shortly after 
release from incarceration are well documented, with a 2018 study of individuals released from 
North Carolina prisons from 2000 to 2015 experiencing overdose deaths during the period two 
weeks post-release at a rate that was 40 times higher than overdose deaths in the general North 
Carolina population.85  In two Washington state studies, drug overdose was the most common 
cause of death and was responsible for over a quarter of deaths after release from prisons, with 
the greatest risk of death immediately after release from prison.86   
 
Given these alarming statistics, the importance of providing MAT coverage for the carceral 
population with SUD is critical to ensuring the quality of care for reentering individuals and the 
likelihood of successful transitions to the community.  Medicaid coverage is available for all 
U.S. Food and Drug Administration (FDA) approved medications for opioid use disorder 
(MOUD), including buprenorphine, methadone, and naltrexone as well as acamprosate and 
naltrexone for alcohol use disorder.  All of these approved MOUD and alcohol use disorder 
medications have been shown to be safe and effective when used in accordance with their FDA-
approved labeling.  Patients on naltrexone who discontinue its use or relapse after a period of 
abstinence may have a reduced tolerance to opioids.  Therefore, taking the same, or even lower 
doses of opioids than used in the past can cause life-threatening consequences.  CMS encourages 
states to cover the full array of FDA-approved medications, including buprenorphine and 
methadone.  States should encourage providers, including those practicing in correctional 
                                               
 
83 https://nida.nih.gov/publications/drugfacts/criminal-justice. 
84 https://store.samhsa.gov/sites/default/files/d7/priv/pep19-matbriefcjs_0.pdf. 
85  Ranapurwala, S. et al., Opioid overdose mortality among former North Carolina inmates: 2000-2015. American 
Journal of Public Health, 2018 Sept; 108(9):12071213.  Available at: 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6085027/. 
86 http://www.hca.wa.gov/assets/program/SOR-workgroup-meetingmaterials-202009.pdf 
 
 
 
  Page 24  State Medicaid Director 
 
facilities, to utilize the medication that is most appropriate for each individual, with a focus on 
MAT induction, stabilization, and maintenance of treatment, including post-release.87   
 
The Reentry Section 1115 Demonstration Opportunity may present an opportunity to increase 
provision of MAT within the carceral system.  In line with research demonstrating the 
effectiveness of MAT,88,89 CMS expects state Medicaid agencies participating in this 
demonstration opportunity, along with their correctional agency partners, to use all available 
levers in their states to increase the availability of MAT as clinically appropriate within prisons 
and jails to appropriate individuals.   
 
Benefit #3: 30-day supply of all prescription medications provided to the beneficiary 
immediately upon release from the correctional facility 
 
States and stakeholders have shared that a prison or jail providing a prescription for medication 
that an individual is taking is often inadequate to ensure near real-time receipt of the medication 
in the community when a person is released from incarceration, and therefore is often inadequate 
to ensure adherence to a prescribed course of medical treatment.  Providing a 30-day supply of 
prescription medication that has been prescribed for a beneficiary immediately upon release (as 
clinically appropriate based on the medication dispensed and the indication) can reduce one 
barrier to meeting ongoing medical needs upon reentry and may prevent unnecessary use of an 
ED and/or inpatient hospitalization.   
 
Provision of medication upon release may be as either a pre-release demonstration service or as a 
post-release Medicaid service furnished outside the scope of this demonstration.  Some states 
may choose to cover the medications through section 1115 expenditure authority prior to the 
individual formally being released from incarceration.  In other states, the individual may receive 
the medications under their state plan Medicaid benefit package as they are leaving the carceral 
facility.  Regardless of the approach selected by the state, CMS expects the Reentry Section 1115 
Demonstration Opportunity to facilitate the provision of a 30-day supply of any prescription 
medication(s) (as clinically appropriate based on the medication dispensed and the indication) for 
physical and behavioral health conditions, including MAT prescription(s), at the point of release. 
 
Flexibility for Additional Physical and Behavioral Health Services  
 
Due to the variability in health care services currently provided in jails and prisons, the Reentry 
Section 1115 Demonstration Opportunity allows state Medicaid agencies to scope a proposed 
common benefit package across carceral facilities to best accomplish the demonstration goals by 
improving care transitions for incarcerated individuals.  In addition to the services of case 
management, MAT coverage for all types of SUD, and 30 days of prescription medication upon 
release90, we recognize that there may be other important physical and behavioral health services 
                                               
 
87 https://www.samhsa.gov/medication-assisted-treatment/medications-counseling-related-conditions/naltrexone.  
88 https://pubmed.ncbi.nlm.nih.gov/30797392/.  
89 https://www.ncbi.nlm.nih.gov/books/NBK538936/. 
90 The 30-day supply of prescription medications should be dispensed as clinically appropriate based on the 
medication and the indication.  
  Page 25  State Medicaid Director 
 
that states may request to cover on a pre-release basis, such as family planning services and 
supplies, behavioral health or preventive services, including those provided by peer supporters/ 
community health workers with lived experience, or treatment for Hepatitis C.  CMS is also open 
to states requesting section 1115 expenditure authority to provide medical supplies, equipment, 
and appliances prior to the individual formally being released from incarceration, so that 
individuals transition to the community with needed items, such as walkers, diabetic supplies, 
etc.  Because of operational variations between states, some individuals may be able to receive 
these items immediately upon release as part of their state plan or other waiver or demonstration 
project benefit package as they are leaving the carceral facility.   
 
States may also wish to leverage existing and new initiatives to improve health outcomes for 
individuals who are incarcerated returning to the community, similar to the Strategies to Address 
the Opioid Epidemic (SUD)91 and/or Opportunities to Design Innovative Service Delivery 
Systems for Adults with a Serious Mental Illness or Children with a Serious Emotional 
Disturbance (SMI/SED)92 section 1115 demonstration opportunities.  There are also many 
models and best and promising practices to draw upon that are in place in public and private 
health systems.  One best practice for reentry supports includes relying on trained peers or 
community navigators who have similar lived experiences as recently released beneficiaries who 
can act as mentors to help navigate health and reentry challenges.  Having a trained peer 
supporter can provide another long-lasting, trusting relationship post-release.  Individuals may 
feel more comfortable relaying a personal challenge, health concern, or environmental issue or 
conflict, including a relapse, to a peer rather than a medical professional or parole or probation 
officer.93  
 
Models like the Transitions Clinic Network leverage community health workers who are part of 
the integrated care team to further promote high quality, equitable health care and cultural 
responsiveness in clinics that serve reentering individuals in the neighborhoods most impacted 
by incarceration.94  Additionally, hub-and-spoke95 and OTPs are two examples of evidence-
based model options for prison and jails.  Prisons and jails can contract with providers in the 
community or become certified OTPs.  Hub and spoke models rely on hub providers to act as 
responsible providers who facilitate and/or provide treatment with shared resources and 
                                               
 
91 https://www.medicaid.gov/federal-policy-guidance/downloads/smd17003.pdf. 
92 https://www.medicaid.gov/federal-policy-guidance/downloads/smd18011.pdf. 
93 https://nationalreentryresourcecenter.org/resources/formerly-incarcerated-peer-mentoring-can-offer-chance-give-
back. 
94 https://transitionsclinic.org/. 
95 Department of Justice (DOJ), Bureau of Prisons (BOP) is working with the Substance Abuse and Mental Health 
Services Administration (SAMHSA) and the Drug Enforcement Administration to implement Opioid Treatment 
Programs (OTP) in federal institutions and is also working to implement a hub and spoke model that will allow all 
BOP-managed institutions to directly provide all three U.S. Food and Drug Administration approved MOUD 
medications.  Hubs will provide direct oversight of the program, ensuring that individuals have access to 
medications, while some medications are provided by community providers. For more information, see: 
https://www.ojp.gov/first-step-act-annual-report-april-2022. 
 
 
  Page 26  State Medicaid Director 
 
responsibilities extending to spoke interdisciplinary community team members such as 
physical and behavioral health providers and care coordinators.96   
 
Reentering individuals may also benefit from integrated provider delivery models, such as health 
homes,97,98 to provide whole person primary, acute, and behavioral health care, and long-term 
services and supports to members with chronic conditions in the community under one umbrella.   
Health homes can be especially helpful for returning community members who 
disproportionately experience physical and behavioral health problems including SUD.99  
Under the optional Medicaid Health Homes benefit at section 1945 of the Act, states can cover 
certain services for Medicaid beneficiaries with at least two chronic conditions (including 
SUDs), with at least one chronic condition and who are at risk of having another, or with at least 
one serious and persistent mental health condition.  The services that states can cover under this 
benefit are comprehensive care management, care coordination and health promotion, 
comprehensive transitional care from inpatient to other settings, patient and family support, and 
referral to community and social support services (if relevant).  States can opt to add this Health 
Home benefit to their state Medicaid plan. 
 
States that want to add pre-release services beyond the minimum benefit package should base 
these additional services on the needs of the carceral populations they are proposing to serve and 
the carceral settings included in their demonstration.  Such services would be otherwise 
coverable state plan services, if not for the inmate payment exclusion.  These states should 
provide justification in their section 1115 demonstration applications for how such services 
would be likely to promote the objectives of the Medicaid program and facilitate meeting the 
demonstration goals, consistent with section 5032 of the SUPPORT Act. 
 
Pre-Release Services Providers 
 
During the pre-release period, states may choose to cover in-person health care services, services 
delivered to individuals who are incarcerated via telehealth, or use some combination of both 
modalities.  CMS expects Medicaid agencies to work with the respective correctional systems 
and facilities to ensure access to demonstration-covered health care services and to facilitate 
access into correctional facilities for community health care providers, including case managers, 
in person and/or via telehealth.  State Medicaid agencies should also collaborate with 
correctional entities to ensure the availability of appropriate technology that may be needed for 
health care services that are delivered via telehealth, as well as procedures to ensure appropriate 
privacy during telehealth visits, consistent with any applicable federal and state confidentiality, 
privacy, and security requirements.  This privacy is critical in facilitating a trusting relationship 
between individuals who are incarcerated and their health care providers during the pre-release 
service delivery period and is expected to help ensure better health outcomes upon release.   
                                               
 
96 https://store.samhsa.gov/sites/default/files/d7/priv/pep19-matusecjs.pdf. 
97 https://www.medicaid.gov/federal-policy-guidance/downloads/cib112719.pdf. 
98 https://www.medicaid.gov/resources-for-states/medicaid-state-technical-assistance/health-home-information-
resource-center/guide-medicaid-health-home-design-implementation/index.html. 
99 https://aspe.hhs.gov/sites/default/files/documents/d48e8a9fdd499029542f0a30aa78bfd1/health-care-reentry-
transitions.pdf. 
  Page 27  State Medicaid Director 
 
While provision of in reach pre-release services by community-based providers is the preferred 
approach to build trust with individuals who are incarcerated and strengthen the connection to 
the community upon release, CMS recognizes the operational complexities inherent in providing 
services to an incarcerated population, and that many states have provider shortages, which are 
particularly acute in rural areas.  States may choose to rely on carceral health care providers for 
delivery of some or all of the pre-release services.  
 
Generally, states that rely on carceral health care providers to furnish pre-release services 
authorized through the demonstration must ensure that they comply with Medicaid provider 
participation policies set by the state Medicaid agency.  
 
The demonstrations evaluation efforts will be expected to include an examination of pre-release 
carceral and community providers, including challenges encountered, as they develop 
relationships and coordinate to facilitate transition of individuals into the community. 
 
Pre-release Timeframe 
 
Section 5032(b) of the SUPPORT Act states that, the Secretary of Health and Human Services, 
through the Administrator of the Centers for Medicare & Medicaid Services, shall issue a State 
Medicaid Director letter, based on best practices developed under subsection (a)(1), regarding 
opportunities to design demonstration projects under section 1115 of the Social Security Act (42 
U.S.C. 1315) to improve care transitions for certain individuals who are soon-to-be former 
inmates of a public institution and who are otherwise eligible to receive medical assistance under 
title XIX of such Act, including systems for, with respect to a period (not to exceed 30 days) 
immediately prior to the day on which such individuals are expected to be released from such 
institution - (1) providing assistance and education for enrollment under a State plan under the 
Medicaid program under title XIX of such Act for such individuals during such period; and (2) 
providing health care services for such individuals during such period.  For the reasons outlined 
below, the Reentry Section 1115 Demonstration Opportunity can include flexibility for states to 
offer coverage for certain pre-release services for up to 90 days before the incarcerated 
individuals expected date of release. 
 
The section 5032 stakeholder group and a number of states have suggested that 30 days prior to 
release is not a sufficient period of time to begin supporting incarcerated individuals to best 
enable their successful transition back to their communities.  They point out that 30 days may be 
insufficient for coordinating and transitioning care, particularly for individuals with SUD.  
However, Congress has expressed its judgment in section 5032(b) of the SUPPORT Act that this 
demonstration opportunity should provide coverage for health care services furnished to 
demonstration beneficiaries for a period that specifically does not exceed 30 days prior to the 
expected date of release.  Although that time limitation does not apply to the Secretarys general 
authority to approve demonstration projects and associated expenditure authorities under section 
1115 of the Act, we must abide by Congress determination that demonstration projects under 
the opportunity described in section 5032(b) of the SUPPORT Act to improve care transitions for 
certain soon-to-be released individuals must not begin to cover services subject to the inmate 
payment exclusion before the date that is 30 days immediately prior to the individuals expected 
release date. 
  Page 28  State Medicaid Director 
 
CMS welcomes state proposals to provide demonstration coverage for certain pre-release 
services for a period up to 90 days immediately prior to the individuals expected release date, 
but such demonstrations must have a demonstration purpose and related experimental hypotheses 
that go beyond improving care transitions for soon-to-be released individuals.  That is, the 
demonstration must not be limited in its test to the matter that Congress directed should be 
evaluated during a period not to exceed 30 days immediately prior to the expected release date, 
but should include one or more additional tests that the Secretary has discretion to approve under 
section 1115 of the Act with respect to the period over 30 days and up to 90 days immediately 
prior to the expected released date. 
 
Under Secretarial authority at section 1115 of the Act, and in keeping with the objective of the 
Medicaid program to furnish medical assistance, CMS will consider state requests that exceed 
the 30-day period for pre-release services, for up to a 90-day pre-release period.   
 
Administrative Information Technology (IT)  
 
State Medicaid agency IT system expenditures100 incurred in the implementation of the Reentry 
Section 1115 Demonstration Opportunity may be eligible for enhanced FFP.  For states 
interested in receiving such funding, CMS reminds states of the following:   
  Approval for enhanced match requires the submission and approval of an Advanced Planning 
Document (APD).  A state may submit an APD requesting approval for a 90/10 enhanced 
federal match for the design, development, and implementation of their Medicaid Enterprise 
Systems (MES) initiatives that contribute to the economic and efficient operation of the 
program.  This can include technology that supports data sharing between state Medicaid 
agencies, state correctional agencies and participating correctional facilities, such as systems 
to support eligibility determinations and enrollment (including suspension strategies).  
  Interested states should refer to 45 CFR Part 95, Subpart F  Automatic Data Processing 
Equipment and Services-Conditions for FFP for the specific provisions contained therein 
related to APD submission.  
  As a condition of receiving enhanced federal funding for technology, 42 CFR  
433.112(b)(12) requires alignment with, and incorporation of, industry standards adopted by 
the Office of the National Coordinator for Health IT in 45 CFR part 170, subpart B.  Subpart 
B contains potentially helpful standards for coordination care between carceral settings and 
community providers (e.g., direct messaging, the Fast Healthcare Interoperability Resource 
application programming interface, public health standards including electronic case 
reporting for more granular overdose reporting and/or COVID reporting, and syndromic 
surveillance standards to potentially coordinate Hepatitis C or HIV care coordination, etc.). 
  States may also request a 75/25 enhanced federal match for ongoing operations of CMS-
approved systems.  Interested states should refer to 42 CFR Part 433, Subpart C  
Mechanized Claims Processing and Information Retrieval Systems for the specific provisions 
contained therein related to systems approval. 
 
                                               
 
100 https://www.medicaid.gov/medicaid/data-systems/health-information-exchange/federal-financial-participation-
for-hit-and-hie/index.html. 
  Page 29  State Medicaid Director 
 
State Medicaid agency expenditures that may be eligible for this enhanced administrative match 
include, but are not limited to, the following examples: 
  Establishing State Medicaid Agency systems and/or improving data integration with other 
electronic data sources and/or systems to support eligibility determination, enrollment 
(including suspension), and case management of Medicaid beneficiaries, as well as 
connections between carceral settings, state Medicaid agencies, state correctional agencies, 
Medicaid providers, and other systems (e.g., housing or other HRSN data systems/sources); 
  Developing and implementing software applications that facilitate communication among 
Medicaid providers and correctional staff involved with care furnished to incarcerated 
beneficiaries;  
  Adding additional data fields and data matching logic for Medicaid program components 
such as eligibility and enrollment, services, prior authorization or claims processing in 
additional to new fields that may be added through this demonstration such as length of 
incarceration, expected dates of discharge from incarceration, and other data elements 
specific to the carceral environment; 
  Adding new or existing system processes or enhancements for routine file exchanges and 
updates, and processes for matching, notification, and delivery of files to facilitate the 
necessary data exchanges to identify individuals and deliver services as well as tracking of 
participation in the demonstration and delivery of services; and 
  Implementing or improving MES accessibility technologies for users with disabilities. 
 
If there are questions related to IT topics and IT system expenditures, CMS encourages states to 
contact their MES State Officer. 
 
States are also asked to consider the technical requirements for coordinating care between 
carceral settings and community providers and public health entities.  The electronic health 
records (EHR) used by correctional health providers may not necessarily be certified to criteria 
in the Office of the National Coordinator for Health Information Technologys (ONC) Health IT 
Certification Program (Certification Program),101 which is a voluntary certification program 
established to provide for the certification of health IT.  Requirements for certification are 
established by standards, implementation specifications and certification criteria adopted by the 
Secretary of Health and Human Services.  Given the variance in capabilities of EHRs in carceral 
settings, and the need to coordinate care with community providers post-release, states may wish 
to consider multiple approaches: 
 
1.  States may consider requiring or recommending that participating correctional health 
providers use EHRs that have been certified to criteria within the ONC Certification 
Program, such as EHRs that meet the definition in 45 C.F.R.  170.102 for 2015 Edition 
Base EHR.  
                                               
 
101 https://www.healthit.gov/topic/certification-ehrs/about-onc-health-it-certification-program. 
 
 
  Page 30  State Medicaid Director 
 
2.  States may consider requiring or recommending that participating correctional health 
providers are able to perform certain activities related to coordinating care irrespective of the 
certification status of any carceral EHR system, such as: 
a.  Ability to electronically share a core set of clinical and demographic information 
about each patient with community providers, as defined by the most appropriate 
edition of the United States Core Data for Interoperability (USCDI).102  
b.  Ability to bi-directionally share data with public health entities and community 
providers for purposes of activities related to coordinating care for HIV (including 
Pre-Exposure Prophylaxis or PreP testing) and Hepatitis C.  
c.  Ability to share necessary clinical information with community providers for 
establishing or continuing MAT post-release. 
d.  Ability to share necessary clinical information with Medicaid SUD treatment 
providers post-release. 
e.  Ability to share necessary clinical information with Medicaid behavioral health 
providers post-release. 
f.  Ability to share results of screening for HRSN with appropriate community providers 
and public assistance agencies.   
 
3.  States may consider requiring or recommending that correctional health providers and 
community providers connect to some national networks to facilitate activities related to 
coordinating care, such as: 
a.  Connecting to the eHealth Exchange103 to facilitate the exchange of data across 
disparate systems, including pharmacy and lab data;  
b.  Connecting to the Centers for Disease Control and Prevention Immunization 
Gateway104 to facilitate the exchange of immunization data across jurisdictions; or 
 in the future, when available under the Trusted Exchange Framework and Common 
Agreement (TEFCA), by participating as a signatory to a Framework Agreement (as 
that term is defined by the Common Agreement for Nationwide Health Information 
Interoperability as published in the Federal Register and on ONCs website105) in 
good standing (that is, not suspended) and enabling secure, bi-directional exchange of 
information to occur, in production, for every patient encounter, transition or referral, 
and record stored or maintained, in accordance with applicable law and policy. 
 
Transitional, Non-Service Expenditures 
 
CMS will consider requests for time-limited support in the form of FFP for certain new 
expenditures through section 1115 demonstration authority to support necessary changes 
required by states, correctional facilities, and health care providers to implement and expand 
                                               
 
102 https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi. 
103 https://ehealthexchange.org/. 
104 https://www.cdc.gov/vaccines/programs/iis/iz-
gateway/overview.html#:~:text=The%20Immunization%20Gateway%20(IZ%20Gateway,provider%20organization
s%2C%20and%20consumer%20applications. 
105 https://www.healthit.gov/topic/interoperability/policy/trusted-exchange-framework-and-common-agreement-
tefca. 
  Page 31  State Medicaid Director 
 
service provision and coordination with community providers, to support the implementation of 
the Reentry Section 1115 Demonstration Opportunity.  Examples include the following: 
 
  Development of new business and operational practices and related health IT to support 
the coordination of pre- and post-release services that would improve alignment in 
documentation and billing between Medicaid and  the carceral setting; 
  Hiring and training of staff to assist with working effectively and appropriately with 
justice-involved individuals receiving services authorized under the demonstration; and 
  Outreach, education, and stakeholder convening to advance collaboration between 
correctional facilities, Medicaid agencies, and other organizations involved in supporting 
and planning for the Reentry Demonstration. 
 
CMS recognizes there are significant upfront and/or one-time non-service costs required to bring 
necessary linkages to Medicaid operations and IT capabilities into the carceral settings.  FFP for 
such expenditures authorized through a Reentry Section 1115 Demonstration must be new 
spending.  In their applications, states should clearly describe the specific transitional, non-
service activities necessary to support the successful implementation of the Reentry Section 1115 
Demonstration, and should justify the projected expenditures associated with each activity.  In 
order to justify approval, states should document how these expenditures are new as a result of 
implementation activities necessary for the Reentry Section 1115 Demonstration and not an 
offset of existing or otherwise planned expenditures.  When incurred expenditures support both 
Reentry Section 1115 Demonstration and non-Demonstration activities, states must apply cost 
allocation principles consistent with federal regulations at 45 CFR Part 75 in order to properly 
identify the amounts that may be claimed for FFP.  As with other components of a state 
demonstration application, CMS will review each request for expenditure authority individually 
and on its merits.  If authorized, such expenditures will be subject to any limitations, as well as 
regular reporting, monitoring, and evaluation requirements, to be described in the relevant 
expenditure authorities and demonstration STCs.   
 
Data-Sharing, Confidentiality, Privacy, and Security Considerations 
 
CMS understands data related to carceral status, release and reentry details, Medicaid eligibility, 
and the health care needs of individuals who are incarcerated and returning to the community 
may reside in fragmented systems, including non-electronic systems.  This may present some 
challenges in data sharing for purposes of case management and collection of data for this 
Reentry Section 1115 Demonstration Opportunity.  States are reminded, and should be 
cognizant, of the laws and regulations regarding confidentiality, access, storage, and handling of 
certain information, including but not limited to: Section 1902(a)(7) of the Act;106 42 CFR Part 
431, Subpart F; 42 CFR Part 2;107 and the Health Insurance Portability and Accountability Act of 
1996 (HIPAA) Privacy, Security, Breach Notification, and Enforcement Rules (the HIPAA 
                                               
 
106 https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-431/subpart-F. 
107 For more information about the requirements in 42 CFR Part 2 regarding confidentiality of SUD patient records, 
see: https://www.samhsa.gov/about-us/who-we-are/laws-regulations/confidentiality-regulations-faqs. 
 
 
  Page 32  State Medicaid Director 
 
Rules).108,109  These laws and regulations should not be barriers for health care personnel to 
coordinate patient care among organizations or for audit, monitoring, and/or evaluation activities, 
but they may require the data to be used and safeguarded in accordance with the applicable rules, 
and may require patient consent or authorization under certain circumstances.  To operationalize 
data sharing for this demonstration opportunity, CMS recommends that state Medicaid agencies 
engage their partner corrections agencies early on to establish vehicles, such as appropriate and 
comprehensive consent/authorization forms, if required, for information sharing and Memoranda 
of Understanding to facilitate information sharing with appropriate information protections and 
compliance with, as applicable, 42 CFR Part 2; the HIPAA Rules; 42 CFR Part 431, Subpart 
F;110 and any other applicable requirements under federal and state law for data sharing, 
confidentiality, privacy, and security.   
 
Reinvestment Plan 
 
As noted above, CMS does not expect to approve state proposals to receive federal Medicaid 
matching funds through the Reentry Section 1115 Demonstration Opportunity for any existing 
carceral health care services that are currently funded with state and/or local dollars unless the 
state agrees to reinvest the total amount of federal matching funds received for such services 
under the demonstration into activities and/or initiatives that increase access to or improve the 
quality of health care services for individuals who are incarcerated (including individuals who 
are soon-to-be released) or were recently released from incarceration, or for health-related social 
services that may help divert individuals from criminal justice involvement.  Any investment in 
carceral health care must add to and/or improve the quality of health care services and resources 
for individuals who are incarcerated and those who are soon to be released from carceral settings, 
and not supplant existing state or local spending on such services and resources.   
 
Interested states should develop and submit as part of their implementation plan a reinvestment 
plan for CMS review and approval outlining how the funds will be reinvested.   
 
The reinvestment plan should align with the goals of the Reentry Section 1115 Demonstration 
Opportunity.  It should detail the states plans to increase access to or improve the quality of 
health care services, as well as address HRSN of individuals who are incarcerated (including 
those who are soon-to-be released), those who have recently been released, and those who may 
be at higher risk of criminal justice involvement, particularly due to untreated behavioral health 
conditions.  States have flexibility to identify particular activities and/or initiatives in their 
reinvestment plan, based on the focus of the states proposal and the needs of individuals in their 
state.  Reinvestment funds should be used to support the successful transition of beneficiaries to 
the community, e.g. investments to facilitate the provision of pre-release services, such as case 
                                               
 
108 45 CFR Parts 160 and 164.  For more information on the HIPAA Rules, see: https://www.hhs.gov/hipaa/for-
professionals/index.html. 
109 42 CFR Part 2 currently imposes different requirements for SUD treatment patient records protected by Part 2 
than the HIPAA Rules impose for protected health information (PHI).  These statutory and regulatory schemes apply 
to different types of entities and create dual obligations and compliance challenges for HIPAA covered entities and 
business associates that maintain PHI and Part 2 records, and thus are subject to both sets of rules. 
110 https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-431/subpart-F. 
  Page 33  State Medicaid Director 
 
management, or expansion of community-based capacity, e.g. increasing or improving mental 
health and SUD services.  The reinvestment plan should describe the activities and/or initiatives 
the state has selected to invest in and a timeline for implementation.  For example, the 
reinvestment plan could include investments aimed at achieving the following: 
  Improved access to behavioral and physical health care services in the community.  This 
may result in expansion of Medicaid services such as adding or expanding mobile crisis 
services, trained peer supports, Medicaid health homes, and long-term services and 
supports to beneficiaries with chronic conditions and complex health-related 
circumstances.   
  Improved access to and/or quality of carceral health care services, including by covering 
new, enhanced, or expanded pre-release services authorized via the Reentry Section 1115 
Demonstration Opportunity. 
  Improved health information technology and data sharing. 
  Increased community-based provider capacity that is particularly attuned to the specific 
needs of and able to serve justice-involved or individuals at risk of justice involvement. 
  Expanded or enhanced community-based reentry services and supports, including 
services and supports to meet the HRSN of the justice-involved population.   
 
The states share of expenditures for new, enhanced or expanded pre-release services approved 
under the demonstration can be considered an allowable reinvestment.  CMS would not approve 
a reinvestment plan under which funds would be used to build prisons, jails, or other carceral 
facilities or pay for prison or jail-related improvements other than those for direct and primary 
use in meeting the health care needs of individuals who are incarcerated.  States seeking to 
reinvest funds in activities in jails or prisons should describe in their reinvestment plan, which is 
subject to CMS review and approval, whether privately-owned or -operated carceral facilities 
would receive any of the reinvested funds and, if so, the safeguards the state proposes to ensure 
that such funds are used for the intended purpose and do not have the effect of increasing profit 
or operating margins for privately-owned or -operated carceral facilities. 
 
Demonstration Milestones 
 
The Reentry Section 1115 Demonstration Opportunity offers states flexibility to design 
demonstrations that are aimed at making significant improvements on a number of milestones 
with associated actions.  When submitting proposals for the Reentry Section 1115 Demonstration 
Opportunity, states will be expected to commit to a number of actions to improve care transitions 
for reentering individuals, including by helping eligible individuals gain or maintain Medicaid 
enrollment and access high quality covered services.  These commitments should be linked to 
state actions that build on the demonstration goals described earlier in this letter.  They should 
include actions to ensure continuity of coverage and care, to cover and ensure access to the 
minimum set of pre-release services for individuals who are incarcerated, to facilitate better 
transitions and address physical and behavioral health conditions, to ensure access to services 
post-release to meet the needs of the reentering population, and to ensure cross-system 
collaboration.  The milestones and associated actions are: 
 
1.  Increasing coverage and ensuring continuity of coverage for individuals who are 
incarcerated 
  Page 34  State Medicaid Director 
 
  Implement a state policy for a suspension strategy during incarceration (or implement an 
alternative proposal to ensure that only allowable benefits are covered and paid for during 
incarceration, while ensuring coverage and payment of full benefits as soon as possible 
upon release), with up to a two-year glide path to fully effectuate. 
  Ensure that any Medicaid-eligible person who is incarcerated at a participating facility 
but not yet enrolled is afforded the opportunity to apply for Medicaid in the most feasible 
and efficient manner and is offered assistance with the Medicaid application process in 
accordance with 42 CFR  435.906 and  435.908.  This could include applications 
online, by telephone, in person, via mail or common electronic means in accordance with 
42 CFR  435.907.  All individuals enrolled in Medicaid during their incarceration must 
be provided notice of any Medicaid eligibility determinations and actions pursuant to 42 
CFR  435.917 and  431.211. 
  Ensure that all individuals at a participating facility who were enrolled in Medicaid prior 
to their incarceration are offered assistance with the Medicaid renewal or redetermination 
process requirements in accordance with 42 CFR  435.908 and  435.916.  All 
individuals enrolled in Medicaid during their incarceration must be provided notice of 
any Medicaid eligibility determinations and actions pursuant to 42 CFR  435.917 and  
431.211. 
  Implement a state requirement to ensure that all Medicaid-enrolled individuals who are 
incarcerated at a participating facility have Medicaid and/or managed care plan cards or 
some other Medicaid and/or managed care enrollment documentation (e.g., identification 
number, digital documentation, instructions on how to print a card, etc.) provided to the 
individual upon release, along with information on how to use their coverage 
(coordinated with the requirements under milestone #3 below).   
  Establish processes to allow and assist all individuals who are incarcerated at a 
participating facility to access and complete a Medicaid application, including providing 
information about where to complete the Medicaid application for another state, e.g., 
relevant state Medicaid agency website, if the individual will be moving to a different 
state upon release.  
 
2.  Covering and ensuring access to the minimum set of pre-release services for individuals who 
are incarcerated to improve care transitions upon return to the community 
  Implement state processes to identify individuals who are incarcerated who qualify for 
pre-release services under the states proposed demonstration design (e.g., by chronic 
condition, incarceration in a participating facility, etc.). 
  Cover and ensure access to the minimum short-term, pre-release benefit package, 
including case management to assess and address physical and behavioral health needs 
and HRSN, MAT services for all types of SUD as clinically appropriate with 
accompanying counseling, and a 30-day supply of medication (as clinically appropriate 
based on the medication dispensed and the indication) provided to the beneficiary 
immediately upon release, to Medicaid-eligible individuals identified as participating in 
the Reentry Section 1115 Demonstration Opportunity.  In addition, the state should 
specify any additional services that the state proposes to cover for beneficiaries pre-
release.  The state should describe the Medicaid benefit category or authority for each 
proposed service. 
  Page 35  State Medicaid Director 
 
  Develop state process to ensure case managers have knowledge of community-based 
providers in communities where individuals will be returning upon release or have the 
skills and resources to inform themselves about such providers for communities with 
which they are unfamiliar.  
 
3.  Promoting continuity of care 
  Implement a state requirement that individuals who are incarcerated receive a person-
centered care plan prior to release to address any physical and behavioral health needs, as 
well as HRSN and consideration for long term services and supports (LTSS) needs that 
should be coordinated post-release, that were identified as part of pre-release case 
management activities and the development of the person-centered care plan. 
  Implement state policies to provide or facilitate timely access to any post-release health 
care items and services, including fills or refills of prescribed medications and medical 
supplies, equipment, appliances or additional exams, laboratory tests, diagnostic, family 
planning, or other services needed to address the physical and behavioral health care 
needs, as identified in the course of case management and the development of the person-
centered care plan. 
  Implement state processes to ensure, if applicable, that managed care plan contracts 
reflect clear requirements and processes for transfer of the members relevant health 
information for purposes of continuity of care (e.g., active prior authorizations, care 
management information or other information) to another managed care plan or, if 
applicable, state Medicaid agency (e.g., if the beneficiary is moving to a region of the 
state served by a different managed care plan or to another state after release) to ensure 
continuity of coverage and care upon release (coordinated with the requirements under 
milestone #1 above).   
  Implement state processes to ensure case managers coordinate with providers of pre-
release services and community-based providers, if they are different providers.  
Implement a state policy to require case managers to facilitate connections to community-
based providers pre-release for timely access to services upon reentry in order to provide 
continuity of care and seamless transitions without administratively burdening the 
beneficiary, e.g., identifying providers of post-release services, making appointments, 
having discussions with the post-release case manager, if different, to facilitate a warm 
handoff and continuity of services.  A simple referral is not sufficient.  Warm hand-offs 
to a post-release case manager and follow-up are expected, consistent with guidance 
language in the case management section. 
 
4.  Connecting to services available post-release to meet the needs of the reentering population 
  Develop state systems to monitor individuals who are incarcerated and their person-
centered care plans to ensure that post-release services are delivered within an 
appropriate timeframe.  We expect this generally will include a scheduled contact 
between the reentering individual and the case managers that occurs within one to two 
days post-release and a second appointment that occurs within one week of release to 
ensure continuity of care and seamless transition to monitor progress and care plan 
implementation.  These short-term follow-ups should include the pre-release and post-
release (if different) case managers, as possible, to ensure longer term post-release case 
management is as seamless as possible.  In keeping with the person-centered care plan 
  Page 36  State Medicaid Director 
 
and individual needs, CMS is providing these general timeframes as suggestions, but 
recognizes that depending on the beneficiarys individualized needs and risk factors, a 
case manager may determine that the first scheduled contact with the beneficiary should 
occur, for example, within the first 24 hours after release and on a more frequent cadence 
in order to advance the goals of this demonstration. 
  Develop state processes to monitor and ensure ongoing case management to ensure 
successful transitions to the community and continuity of care post-release, to provide an 
assessment, monitor the person-centered care plan implementation and to adjust it, as 
needed, and to ensure scheduling and receipt of needed covered services.   
  Develop state processes to ensure that individuals who are receiving services through the 
Reentry Section 1115 Demonstration Opportunity are connected to other services needed 
to address LTSS and HRSN, such as housing, employment support, and other social 
supports as identified in the development of the person-centered care plan. 
  Implement state policies to monitor and ensure that case managers have the necessary 
time needed to respond effectively to individuals who are incarcerated who will likely 
have a high need for assistance with navigating the transition into the community. 
 
5.  Ensuring cross-system collaboration 
  Establish an assessment outlining how the states Medicaid agency and participating 
correctional system/s will confirm they are ready to ensure the provision of pre-release 
services to eligible beneficiaries, including but not limited to, how facilities participating 
in the Reentry Section 1115 Demonstration Opportunity will facilitate access into the 
correctional facilities for community health care providers, including case managers, in 
person and/or via telehealth, as appropriate.  A state could phase in implementation of 
pre-release services based on the readiness of various participating facilities and/or 
systems.  
  Develop a plan for organizational level engagement, coordination, and communication 
between the corrections systems, community supervision entities, health care providers 
and provider organizations, state Medicaid agencies, and supported employment and 
supported housing agencies or organizations.   
  Develop strategies to improve awareness and education about Medicaid coverage and 
health care access among various stakeholders, including individuals who are 
incarcerated, community supervision agencies, corrections institutions, health care 
providers, and relevant community organizations (including community organizations 
serving the reentering population). 
  Develop systems or establish processes to monitor the health care needs and HRSN of 
individuals who are exiting carceral settings, as well as the services they received pre-
release and the care received post-release.  This includes identifying any anticipated data 
challenges and potential solutions, articulating the details of the data exchanges, and 
executing related data-sharing agreements to facilitate monitoring of the demonstration, 
as described below. 
 
Implementation, Monitoring, and Evaluation 
 
CMS expects a state with an approved Reentry Section 1115 Demonstration to submit an 
implementation plan, a monitoring protocol, quarterly/annual monitoring reports, a mid-point 
  Page 37  State Medicaid Director 
 
assessment report, an evaluation design, and interim/summative evaluation reports, consistent 
with typical expectations and requirements for a section 1115 demonstration project.  States with 
an approved Reentry Section 1115 Demonstration will be expected to complete all 
implementation activities necessary to achieve the milestones discussed in this letter and 
included in the approved Special Terms and Conditions (STC) governing the states 
demonstration project.  The monitoring and evaluation expectations will align with the goals and 
milestones of the approved demonstration project, including state-specific policy nuances that 
the state requests and CMS approves.  CMS will provide individual state technical assistance on 
the monitoring and evaluation expectations.  
 
Implementation Plan 
 
A state with an approved Reentry Section 1115 Demonstration will develop an implementation 
plan per CMS guidance that describes the activities and associated timelines for achieving the 
demonstration milestones.  Among other things, a state will be expected to identify for each 
milestone what it anticipates to be the key implementation challenges and the states specific 
plans to address these challenges.  Similarly, a state should note in its implementation plan how 
it will drive positive changes in health care quality for all demonstration beneficiaries, thereby 
reducing disparities and improving health equity.  The state must also describe in the 
implementation plan its approach to ensure that coverage and payment for full benefits is in 
place as soon as possible upon release.  A state may submit this plan as part of its application, 
during the approval process with CMS, or as a post-approval protocol.  As a state develops its 
implementation plan, and as mentioned in the RTC, the state may wish to engage individuals 
who were incarcerated with lived experience in the planning, design, and implementation of the 
Reentry Section 1115 Demonstration Opportunity.  If a state plans to phase in implementation of 
its demonstration, it should describe its approach in the implementation plan, including how it 
will leverage the phased approach to support creating comparison groups in the evaluation.  
Regardless of whether the implementation plan is submitted as part of a states application or as 
a post-approval protocol, FFP for services provided during individuals stays in carceral settings 
will be contingent upon CMS approval of the states implementation plan. 
 
As a states implementation of an approved Reentry Section 1115 Demonstration progresses, the 
state will be expected to include information in its section 1115(a) demonstration monitoring 
reports that details the states progress toward meeting the milestones, specifically in the context 
of the timeframes specified in the states implementation plan.  
 
The implementation plan must also include a reinvestment plan.  The reinvestment plan should 
align with the goals of the Reentry Section 1115 Demonstration Opportunity specified in section 
5032(b) of the SUPPORT Act, as discussed earlier in this document.  
 
Monitoring Protocol and Quarterly and Annual Monitoring Reports 
 
Consistent with 42 CFR  431.428, states must undertake monitoring of their section 1115 
demonstrations.  The goal of monitoring is to identify risks associated with demonstration 
implementation, and proactively identify any needed mid-course corrections.  To support 
monitoring activities, a state with an approved Reentry Section 1115 Demonstration will be 
  Page 38  State Medicaid Director 
 
expected to include information in its demonstration quarterly and annual monitoring reports 
that, among other things, details performance measures representing key indicators of progress 
toward meeting the milestones for the demonstration.  CMS expects such metrics to include, but 
not be limited to: administration of screenings to identify individuals eligible for pre-release 
services, participating pre-release services providers, utilization of applicable pre-release and 
post-release services (e.g., primary, behavioral, MOUD, case management), provision of health 
or social service referral pre-release, participants with established care plans at release, and take-
up of data system enhancements among participating carceral settings.  Additionally, the state 
will be expected to report quality of care and health outcomes metrics known to be important for 
closing key quality and health equity gaps in Medicaid/CHIP (e.g., the National Quality Forum 
(NQF) disparities-sensitive measures) and prioritizing key outcome measures and their clinical 
and non-clinical (i.e., social) drivers of health.  In coordination with CMS, the state is expected 
to select such measures for reporting in alignment with a critical set of health equity-focused 
measures that CMS is finalizing as part of its upcoming guidance on the Health Equity Measure 
Slate.  Not all measures on the list will be applicable based on a states demonstration design.  
The state and CMS will collaborate to determine the appropriate measures the state will report.  
The monitoring reports will also be expected to include qualitative information that will align 
with the milestones outlined above, including but not limited to the states progress on data 
development and exchange. 
 
CMS will provide guidance to each participating state to develop a monitoring protocol that will 
describe the plan for how and what the state will report in quarterly and annual monitoring 
reports.  The information will include, but not be limited to, agreed upon performance measures, 
measure concepts, and qualitative narrative summaries.  The state will also describe its plans for 
collecting and reporting stratified data throughout the life-cycle of the demonstration.  States that 
utilize managed care plans for this demonstration must ensure that all managed care plan 
contracts include sufficient requirements for plans to provide all required information and data.  
Any deviations from CMS guidance the state wishes to make will be documented in the 
monitoring protocol.  A timeframe for submitting the monitoring protocol and quarterly and 
annual monitoring reports will be included in the STCs of each demonstration.  
 
Mid-point Assessment 
 
Between years two and three of the demonstration implementation, we will expect an 
independent assessor to use data reported by the state to inform a mid-point assessment 
describing the states progress in meeting the milestones and performance measure targets.  A 
state at risk of not meeting the milestones will be expected to describe the mid-course corrections 
it will undertake, including any modifications to its demonstration implementation.  For 
example, the mid-point assessment should include an examination of how the state is progressing 
on data development and exchange, as a critical component to successfully monitoring and 
evaluating the demonstration.  The mid-point assessment should indicate if the state is on track 
as per its implementation plan, any challenges the state is encountering, and how the state is 
planning to overcome those challenge and apply lessons learned.  Furthermore, FFP for 
demonstration expenditures may be withheld if a state is not making adequate progress on 
meeting the milestones as evidenced by the approved performance measures.  Additionally, 
  Page 39  State Medicaid Director 
 
achievement of the milestones will be taken into consideration by CMS if a state is to request an 
extension of its demonstration. 
 
Evaluation Design and Interim and Summative Evaluation Reports 
 
A state will also be expected to conduct independent and robust interim and summative 
evaluations.  To guide the evaluation efforts, the state will develop an evaluation design, with 
technical assistance from CMS, to be submitted within 180 days of the demonstration approval.   
The evaluation design will include detailed analytic plans and data collection and reporting 
details, and will be subject to CMS approval.  The evaluation design should be mixed-methods 
and might include how the state will test whether the demonstration improved care transitions for 
individuals who are released from incarceration, including but not limited to, whether and how 
the demonstration improves coverage and quality of care.  Outcomes of interest could include, 
but are not limited to, measurement of cross-system communication and collaboration, 
connections between carceral settings and community services, provision of preventive and 
routine physical and behavioral health care, and avoidable ED visits and inpatient 
hospitalizations, as well as all-cause deaths.  Furthermore, the state should conduct a 
comprehensive cost analysis to support developing estimates of implementing the demonstration, 
including covering associated services.  In instances where the state is testing services beyond 
the minimum benefit package identified above and/or providing coverage for a period over 30 
days and up to 90 days immediately prior to a beneficiarys expected release date, the state 
should incorporate additional hypotheses to describe those tests. 
 
CMS underscores the importance of the state undertaking well-designed provider, carceral 
facility, and/or beneficiary surveys and/or interviews to assess, for instance, key implementation 
challenges for case managers, providers and carceral facilities and their understanding of 
beneficiary experience, as well as to directly explore beneficiary understanding of and 
experience with transitioning out of the carceral setting.  To the extent feasible, the state will be 
expected to collect data to support analyses stratified by key subpopulations of interest (e.g., by 
sex, age, race/ethnicity, primary language, disability status, geography, and sexual orientation 
and gender identity).  Such stratified data analyses will provide an understanding of existing 
disparities in access to and quality of care and health outcomes, and help inform how the 
demonstrations various policies might support reducing such disparities.  Additionally, if a state 
plans to phase in implementation across different carceral facilities, the state and its evaluator 
should leverage that approach in evaluation to create comparison groups.   
 
The state will be required to submit the interim evaluation report one year before expiration of 
the demonstration or when the state submits a proposal to extend the demonstration in 
accordance with transparency requirements at 42 CFR  431.412(c).  The state will be required 
to submit the summative evaluation report within eighteen months after the demonstration period 
ends. 
 
Budget Neutrality  
 
CMS will continue to require, as a condition of section 1115 demonstration approval, that 
demonstrations be budget neutral, meaning the federal costs of the states Medicaid program 
  Page 40  State Medicaid Director 
 
with the demonstration cannot exceed what the federal governments Medicaid costs in that state 
likely would have been without the demonstration.  In requiring demonstrations to be budget 
neutral, CMS is constantly striving to achieve a balance between its interest in preserving the 
fiscal integrity of the Medicaid program and its interest in facilitating state innovation through 
section 1115 demonstration approvals.  In practice, budget neutrality generally means that the 
total computable (i.e., both state and federal) costs for approved demonstration expenditures are 
limited to a certain amount for the demonstration approval period.  This limit is called the budget 
neutrality expenditure limit and is based on a projection of the Medicaid expenditures that could 
have occurred absent the demonstration (the without waiver (WOW) costs).   
 
CMS is available to provide technical assistance to states to facilitate understanding and 
application of the budget neutrality approach.111  
 
Submission Process for Section 1115 Demonstration Projects 
 
States may submit a new section 1115 demonstration application or amend an existing section 
1115 demonstration in order to seek section 1115 expenditure authority under the Reentry 
Section 1115 Demonstration Opportunity. 
 
To facilitate CMS review of applications for Reentry Section 1115 Demonstrations, state 
proposals should address the key elements discussed in the greater detail above, including a 
description of the carceral settings, individuals who are eligible for the demonstration, pre-
release services to be included in the demonstration, and the timeframe for delivery of pre-
release services.  States should also identify for each milestone what they expect to be the key 
implementation challenges and at a high level how they intend to address these challenges, with 
the expectation that they will be further described in the implementation plan. 
 
States should follow the usual process for submitting a section 1115 demonstration proposal in 
accordance with the transparency requirements outlined in 42 CFR  431.412 for new 
demonstrations or in accordance with the states STCs for proposals to amend an existing 
demonstration to add authorities for the Reentry Section 1115 Demonstration Opportunity.  This 
includes completing public notice and tribal consultation, as applicable, prior to submission to 
CMS in accordance with the applicable notice requirements for section 1115 proposals.  For 
more information about the section 1115 demonstration application process, states may contact 
their CMS Section 1115 Project Officer or refer to the 1115 Application Process webpage on 
Medicaid.gov at https://www.medicaid.gov/medicaid/section-1115-demonstrations/1115-
application-process/index.html.   
 
 
 
                                               
 
111 States may wish to review recent demonstration approvals for an explanation of specific budget neutrality 
considerations.  While CMS reviews each demonstration application individually, these approvals may be helpful 
reference documents.  See: https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/az-hccc-
ca-10142022.pdf; https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ma-masshealth-
ca1.pdf.   
  Page 41  State Medicaid Director 
Conclusion 
CMS encourages states to apply for the Reentry Section 1115 Demonstration Opportunity to 
improve care transitions for Medicaid beneficiaries exiting carceral facilities, including by 
providing demonstration coverage for time-limited pre-release services, and acknowledges that 
several states currently have proposals pending with CMS that include requests for authority to 
provide coverage for pre-release services.  CMS believes that provision of pre-release services to 
eligible individuals who are incarcerated may not only improve the health and reentry outcomes 
of individuals who are leaving carceral facilities, but may also benefit the Medicaid program and 
society at large through potential reduced drug-related deaths, decreased use of EDs and 
hospitalizations, and reductions in health disparities experienced by people of color.  States with 
proposals already pending should review those proposals against the guidance in this letter, and 
should continue to engage with CMS about the states proposed approach and any changes the 
state may wish to make to its proposal.  Questions regarding this guidance may be directed to 
Alissa DeBoy, Director, Disabled and Elderly Health Programs Group, at 
Alissa.Deboy1@cms.hhs.gov.  We look forward to continuing our work together on these 
important issues. 
Sincerely,
/s/ 
Daniel Tsai 
Deputy Administrator and Director  Page 42  State Medicaid Director 
 
Appendix 1 - Summary of Elements in Reentry Section 1115 Demonstration Opportunity 
  Quality  states should consider how the demonstration design could advance quality 
(including but not limited to health equity) through its approaches to promoting access to 
coverage, care, transitions to the community, and quality of services, and addressing 
HRSN. 
  Carceral Settings  states may include state and/or local jails, prisons, and/or youth 
correctional facilities for pre-release services.  States may include individuals in federal 
prisons in the Reentry Section 1115 Demonstration Opportunity to help federal prisoners 
submit Medicaid application(s).  However, CMS expects states to refrain from including 
federal prisons as a setting in which pre-release services are provided under the 
demonstration. 
  Eligible Individuals  states may include individuals currently incarcerated who are 
otherwise Medicaid eligible, soon-to-be former incarcerated individuals.  States have the 
flexibility to target the population.  
  Medicaid eligibility and enrollment  states will be expected to suspend and not terminate 
eligibility, but will have a glide path of up to two years to implement this fully. 
  Scope of Health Care Services  states will be expected to include case management to 
assess and address physical and behavioral health needs and HRSN, MAT services for all 
types of SUD as clinically appropriate, and a 30-day supply of all prescription 
medications (as clinically appropriate based on the medication dispensed and the 
indication) provided to the beneficiary immediately upon release from the correctional 
facility, as a minimum scope of services and may propose to cover additional services. 
  Pre-release Timeframe  states generally will be expected to cover demonstration 
services beginning 30 days immediately prior to the individuals expected date of release; 
however, CMS will consider approving demonstration authority to begin coverage as 
early as 90 days prior to the expected release date, depending on the states 
demonstration purpose and design.  In the event the state requests a pre-release service 
coverage timeframe longer than 30 days, the state should incorporate into its statement of 
the demonstration purpose one or more elements to be tested in addition to improving 
care transitions.  If CMS approves a coverage timeframe longer than 30 days, relevant 
hypotheses that the longer timeframe is needed to test will be required to be incorporated 
into the states evaluation design. 
  Administrative Information Technology (IT) System Costs  state Medicaid agency IT 
System costs may be eligible for enhanced FFP through an APD, including IT systems 
that support data sharing between state Medicaid agencies and participating correctional 
facilities. 
  Transitional, Non-Service Expenditures  states may request time-limited support in the 
form of FFP for certain new expenditures through section 1115 demonstration authority 
for necessary changes required by states, correctional facilities, and health care providers 
to implement and expand service provision and coordination with community providers, 
such as development of new business or operational practices, workforce development 
and outreach, education, and stakeholder convening. 
  Reinvestment Plan  states are expected to include in the implementation plan, a 
reinvestment plan that outlines the aggregate amount of federal matching funds that is 
being requested and where reinvestments will be made, as discussed in this letter.