State Pursuing Medicaid Expansion to Treat Incarcerated People

July 9, 2026

Minnesota is pursuing a new initiative that, if approved by the federal government, will allow state Medicaid programs to cover certain behavioral health services and medical care for chronic health conditions for incarcerated people, for up to 90 days before release.  

The initiative, developed by the Centers for Medicare & Medicaid Services (CMS) in 2023, is called the 1115 Reentry Services Demonstration. Its primary goals are to reduce overdose deaths, improve public safety, and help more people continue getting behavioral health services after release from incarceration.  

The Minnesota Department of Human Services (DHS) is seeking federal approval to participate in this demonstration. Research shows that society benefits when people in correctional facilities receive the behavioral health services that they need. 

The first phase of Minnesota’s demonstration will involve three state prisons, four county jails, and one Tribal detention center. 

DHS is also administering $2.5 million in grant funding to ensure that participating sites have the operational, clinical, and technical capacity to deliver Medicaid-covered services. Grant funds will help establish workflows, train staff, enroll providers, enhance data exchange processes, and support compliant service delivery and accurate Medicaid billing. 

While the demonstration covers the 60 days before a person’s release, the Minnesota Legislature and Gov. Tim Walz recently approved extending services for six months after release, helping ensure people released from incarceration stay stable during their transition back into the community. 

Eighteen states currently have Medicaid re-entry demonstrations. On average, pre-release programs that address a person’s mental health or substance use issues may reduce the cost of crime and long-run incarceration costs by $1.47 to $5.27 per taxpayer dollar, according to the White House’s Council on Economic Affairs.