Reimbursement and Infrastructure
Establish reimbursement rates for services provided to individuals with OUD that:
- Are efficient
- Promote accountability
- Account for factors that are unique to correctional facilities
10.1 Reimbursement Rates and Staffing Costs
Why is this important?
A major obstacle to ensuring access to care is the difficulty in recruiting and retaining qualified and motivated staff with OUD competencies in correctional facilities. Safety concerns, lack of exposure to correctional work, the demanding nature of the work, facility locations, and stigma against incarcerated populations often deter staff from working in these environments. As a result, correctional facilities experience high staff turnover rates and frequently face inadequate staffing ratios, further hindering appropriate access to care. Indeed, the parallel behavioral health workforce shortages for providing OUD services observed in the community further exacerbate the ability of jails and prisons to recruit knowledgeable and competent staff.
Strategy
Correctional facilities may need to offer salaries that provide incentives to help recruit and retain staff. Reimbursement strategies may also include other benefits, like health care benefits, student loan reimbursement, pensions, and retirement. To attract and retain a qualified workforce, states and local jurisdictions may consider offering salaries to staff providing OUD services in correctional facilities that are higher than those earned by similar staff in community settings.
Steps to address staffing disparities
States and jurisdictions may take the following steps to resolve disparities in staffing between correctional facilities and community providers offering OUD services:
- Analyze the required correctional behavioral health facility staff compared to the Bureau of Labor and Statistics average for behavioral health professionals in their state’s relevant rural or metropolitan area
- Consider awarding bonuses for recruitment, relocation, retention, and student loan repayment to incentivize clinical staff
- Prioritize filling vacancies based on impact on correctional health operations, and direct recruiting and retention efforts toward filling those roles first
Example #1: California
California prisons increased compensation levels for medical staff by between 5% and 64% to address staffing challenges. These salary increases were expedited through executive authority, which waived state laws based on the urgent need to fill the vacancies.
Example #2: Federal Bureau of Prisons
The Federal Bureau of Prisons secured approval to implement an alternative pay structure that offered additional salary incentives specifically to aid in recruiting psychiatrists.
Check out: Review of the Federal Bureau of Prisons’ Medical Staffing Challenges, pages 7–16
10.2 Operational and Support Costs
Why is this important?
Delivering OUD care inside jails and prisons is often more complex than in the community. Complications include the logistics involved in the movement of individuals throughout a secure facility and getting various health professionals inside the facility.
Additionally, facilities may or may not know their costs for providing additional supports, including the cost of security, information and data sharing, billing, and reimbursement.
Strategy
SMAs can develop a strategy and use reinvestment funds to support eligible operational and support costs. CMS identifies health IT and data-sharing as two investments states can include in reinvestment plans. Addressing the ongoing staffing and security resources needed to expand access to MOUD and improve the quality of services may also be considered as allowable uses of reinvestment funds.
Historically, CMS has provided states with 1115 demonstration reentry waivers capacity grant funds. States awarded these funds to participating jails and prisons, among other agencies, to build capacity and support infrastructure. Federal funding sources, such as CMS Continuity of Care grants, as well as state and local funds may be used to support these facilities in their efforts to address capacity and infrastructure issues.
States may also seek alternative funding sources to finance operational and support costs. For example, several states have used opioid settlement funds to enhance or expand existing MOUD services in prison and jail settings.
Example #1: California
The California Department of Health Care Services is making three rounds of one-time-only grants to local jails to address some of the costs for suspension, eligibility determination, and development of pre-release services.
Explore: Policy and Operational Guide for Planning and Implementing CalAIM Justice-Involved Reentry Initiative, pages 20–29
Example #2: Michigan
The Michigan Department of Health and Human Services is funding a 3-year, $1.5 million contract to provide technical assistance for county jails to implement or expand MOUD services. Up to 24 county jails will receive grants funds to cover costs associated with expanding MOUD.
Example #3: Washington
Washington has invited interested facilities to apply for capacity building awards. The award amounts will be based on the facility’s population size. Facilities can be awarded funds for both capacity building and IT infrastructure. Awardees can’t use capacity building funds for construction or refurbishment — but they can use the funds to support other service accommodations, such as movable walls, desks, and chairs.
Access: 3 Ways a Carceral Facility Can Receive Medicaid Funding
10.3 Consideration: Developing Alternative Reimbursement Methodologies
Why is this important?
There are different ways to structure reimbursement for OUD services within the correctional setting, like fee for service (FFS) or an alternative payment model (APM). These options are modeled in the community setting across different payer types. FFS is generally the structure that most new systems and services start from and then evolve over time as their experience grows.
FFS and APM defined
Fee for service (FFS) is a reimbursement model — generally used in health and behavioral health care — where providers are reimbursed for the volume of services or procedures they perform.
Alternative payment models (APMs) in health care focus on rewarding quality and efficiency rather than the volume of services provided — with the aim of improving patient outcomes and reducing costs.
Notably, the reimbursement methodology can use payment as a lever to incentivize or discourage different actions or behaviors in care delivery.
Strategy
SMAs and their MCO partners can reimburse using FFS, a familiar payment model that’s often used for community-based services. In this model, payments are directly associated with each service provided, which can strengthen oversight of service provision. By reimbursing each service, lab, and medication individually, this model builds in an incentive for volume. In a correctional context, this may increase the reach of OUD services provided to often-underserved individuals.
Alternatively, SMAs or MCOs can consider using an APM for Medicaid OUD services in correctional facilities. This reimbursement model may strengthen operations and link fragmented and disjointed clinical care to improve patient outcomes.
Either FFS or an APM can include bonus payments for achieving or reporting performance measures — incentivizing providers to deliver high-quality care and greater accountability.
Example #1: California
California Advancing and Innovating Medi-Cal (CalAIM) has developed five care management bundled payment approaches to deploy for jails and prisons. These approaches minimize the administrative burden on correctional facilities and streamline billing for flat bundles of care management activities. Each bundle requires documentation and accountable process steps for billing.
Learn more:
Example #3: Maine
In 2023, MaineCare, Maine’s Medicaid program, began piloting an incentive payment that encourages providers to connect with individuals being released from incarceration within 2 calendar days of their release.
Read: MaineCare Announces Post-Incarcerated Incentive Payment Pilot
Develop infrastructure for billing operations like claim submissions to receive reimbursement for OUD services
Why is this important?
Correctional facilities and their health care vendors generally have:
- No or limited claims management systems to bill Medicaid
- Limited EHR capabilities to generate the information needed to develop and submit claims
- No existing systems to track accounts receivable information and ensure alignment between billing and receiving
- Limited data available for monitoring Medicaid performance measures
Strategy
Correctional facilities must determine whether to build internal billing and claiming capacity or procure services through partnerships or vendors. First, facilities must assess whether the state will provide reimbursement to jails and prisons directly or through Medicaid MCOs. The entity or entities the correctional facility must contract for reimbursement will determine the operational capabilities required.
Second, to facilitate billing mechanisms, state and local correctional facilities may leverage existing partnerships with local or county health departments that may already have established Medicaid billing systems. Facilities can formalize these collaborations through interagency agreements or MOUs, allowing them to submit claims and receive reimbursement.
Another option is using a third-party administrator (TPA) to assist:
- Correctional providers that don’t create their own claims management system in submitting information to create claims
- The facility with reconciliating revenues from these claims
In addition, correctional facilities can develop an enhanced closed loop referral system that allows jail and prison providers to refer individuals to community-based services upon release. This system can also potentially support community invoicing processes for billing and claiming.
Example #1: Infrastructure elements
Developing a billing and claiming plan for each facility and detailing specific record procedures, technology capabilities, and policies required to submit claims, receive payments, and report any required measures is a critical task. Following these steps can help:
- Assess the ongoing average volume of individuals who would qualify for Medicaid OUD services
- Determine which current and new services can be billed to Medicaid
- Assess the state requirements for becoming a Medicaid correctional provider, and develop a strategy to pursue qualification directly or through partnership or collaboration
- Determine how to collect and document the required information in an EHR for billing and claiming
- Develop an infrastructure plan with initial start-up costs required for the facility to build capacity to submit and receive claims based on the model chosen
- If using a partnership or intermediary, develop an MOU or contract detailing roles and responsibilities, including the financial arrangement between parties
Example #2: Washington
Washington issued a request for proposals (RFP) in January 2025 soliciting proposals from organizations interested in serving as the TPA for the Health Care Authority’s Reentry Demonstration Initiative. The TPA’s role includes several critical responsibilities. Primarily, the TPA will act as a claims clearinghouse, managing Medicaid billing and reimbursement processes for participating carceral facilities. Additionally, the TPA will provide technical assistance to these facilities, supporting credentialing and ensuring compliance with initiative requirements. This support is designed to ease administrative burdens and facilitate the effective delivery of pre-release services.
Review: RFP for Third-Party Administrator for Reentry Services
Example #3: North Carolina
North Carolina added functionalities to NCCARE360, its referral platform, so that the state can now accept invoices from community providers and create claims for submission to Medicaid.
Check out: Building Community Care Hubs to Address Health-Related Social Needs: Lessons from New York and North Carolina Medicaid, slides 9–12 (5:58–14:15 in the video recording)
Develop a strategy for enrolling correctional facilities or correctional health providers as Medicaid providers
Why is this important?
To bill for Medicaid-eligible OUD services, correctional facilities and their health care vendors must enroll (or be enrolled) as Medicaid providers in the state. However, jails, prisons, and their health care vendors have little to no experience enrolling in state Medicaid programs.
Strategy
For correctional facilities and their health care vendors, SMAs can create new Medicaid provider types specific to jails and prisons that allow greater flexibility.
Community-based Medicaid providers that provide OUD services inside jails and prisons should be required to enroll in Medicaid under existing Medicaid provider types.
Example #1: California
In California, correctional facilities and are enrolled through the state’s enrollment system for FFS providers. Specifically, correctional facilities’ clinics are enrolled as a “clinic exempt from licensure” provider type. However, correctional facilities’ pharmacies enroll as pharmacies using the current Medi-Cal provider type for pharmacy. Therefore, each facility will have 2 enrolled providers: exempt from licensure clinic and pharmacy.
Check out: Policy and Operational Guide for Planning and Implementing CalAIM Justice-Involved Reentry Initiative, pages 135–136