CMS approves three new reentry section 1115 demonstrations

Key Takeaways

On September 23, the Centers for Medicare and Medicaid Services (CMS) announced the approval of three new section 1115 reentry demonstrations for Louisiana, Minnesota and Nevada. The approvals are effective October 1, 2026, and run through September 30, 2031. These approvals now make 22 states that have approved Medicaid waivers to cover services for individuals pending release from jail. The waivers aim to improve the transition of care for people leaving incarceration and returning to the community. 
 

CMS also approved a five-year renewal of Washington, D.C.’s Whole-Person Care Transformation demonstration. The renewal lets D.C. continue receiving federal funding to cover Medicaid services for beneficiaries with a substance use disorder and/or serious mental illness during acute inpatient stays in an Institution for Mental Disease. It also authorizes coverage of certain pre-release services for eligible incarcerated individuals.
Alongside the approvals, CMS released FAQs on the reentry demonstrations. The FAQs explain the demonstrations’ goals, who is eligible for which services, and the monitoring and evaluation requirements.
 

What is reentry? 

Reentry is the period of time when a person leaves jail or prison and returns to their community. The reentry period is considered high-risk, as individuals in incarceration have higher rates of substance use disorders, mental illness, or chronic conditions, and they often leave without active health coverage or a connection to a provider. That raises the risk of overdose, emergency care, and returning to the justice system. Health care and care coordination provided shortly before and after release can make the reentry and transition process safer.

What is Section 1115?

Section 1115 of the Social Security Act allows the Secretary of Health and Human Services (HHS) to waive certain federal Medicaid requirements. These waivers can allow states flexibility in how they run their Medicaid programs. 

For example, in 2023 California became the first state to receive approval for a waiver to partially amend the Medicaid Inmate Exclusion Policy. This waiver allows Medicaid-covered services to be provided to incarcerated individuals transitioning out of prison or jail. This has allowed participating counties the opportunity to target the crucial reentry period when many individuals are at heightened risk for physical and behavioral health complications.  

What is the county impact?

Counties are on the front lines of reentry. Counties run 91 percent of the nation’s jails and often operate or fund the behavioral health, public health, and social service systems people rely on after release. Individuals who are incarcerated experience higher rates of substance abuse disorder, mental illness and chronic healthcare needs than the general population. 
 

Through these CMS demonstrations, states can secure federal Medicaid funding for pre-release services, which opens the door for counties to tap into these federal dollars. Counties can, in turn, provide compensated care to incarcerated individuals up to 90 days prior to release, significantly reducing local healthcare expenses, emergency room visits, and avoidable hospitalizations. This can reduce the financial burden on counties by connecting people to coverage, a care plan and medications before they leave. That continuity matters for both health outcomes and public safety.
 

NACo supports the new approvals by CMS. Waivers are helping counties and states close gaps in care during one of the highest-risk periods in a person’s life. However, waivers are temporary and vary widely from state to state. Counties therefore continue to advocate for permanent legislative solutions, including the Reentry Act (H.R. 2586) and the Due Process Continuity of Care Act (H.R. 3074). These bills would create a durable federal framework for Medicaid coverage for people who are incarcerated or in transition.