Skip to main content

Who Pays Hospital Costs for Patients in Police Custody?

 |  By  
   January 30, 2013

News that Medicare improperly paid about $33 million for healthcare services to thousands of incarcerated patients between 2009 and 2011 should motivate hospital leaders to strengthen or establish relationships with local law enforcement authorities, a healthcare billing and legal expert says.

The Office of Inspector General announced this month that the Centers for Medicare & Medicaid Services made Medicare payments totaling $33.6 million to healthcare providers for services to approximately 11,600 incarcerated beneficiaries during calendar years 2009 through 2011.

CMS did not have policies and procedures that would have enabled it to detect such improper payments after the payments were made, OIG reported; nor did it notify its payment processing contractors to recoup any such payments.

CMS in April plans to implement a process for detecting and recouping improper payments for previously paid Medicare claims, according to the OIG.

While CMS is revisiting its policies, healthcare leaders should, too. Even if a hospital is not part of this particular recoupment process, it's a good time to review policies and procedures regarding incarcerated patients and even consider contracting with local law enforcement authorities regarding such patients.


"The C-Suite needs to be in communication and have good relationships with local county authorities," says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc. in Danvers, MA. "Obviously, if a hospital is near a prison, you know you will be treating prisoners, but for other hospitals, you never know if your county sheriff will bring in someone. You need to know the boundaries for who pays what. Get it all worked out in a contract and establish what the rates are."

Hoy recalled a case when an out-of-state patient brought into a hospital by law enforcement authorities subsequently received about a month's worth of treatments for kidney failure.

Ultimately, the man was not charged with a crime. But because he was technically never in the custody of law enforcement, the county was not responsible for his medical charges. The hospital was on the hook for services rendered.

Hoy, who has served as legal counsel for a California hospital, says whoever has the patient in custody pays for their services. Prison inmates are generally not a problem, she says, because they are generally clearly in the custody of the prison.

"Although I did hear of some prisons furloughing prisoners to get expensive surgeries and then re-incarcerating them to get around paying," Hoys says.

A bigger issue, for example, is when a person is arrested and taken to the emergency department for medical clearance either because of odd behavior, or suspected intoxication. As long as the patient is in custody, the custodian (county or state law officers, etc.) is responsible for payment of medical charges. A proviso in many states is that the patient is responsible for reimbursing those costs.

Hoy has seen patients "unarrested" and left to receive the care, while they were in actuality still in "custody" and not free to leave the healthcare facility according to the sheriff.

"The local authorities wanted us to police these people with our security guards and then tell law enforcement when they were ready to go so they could come take them directly to jail," Hoy recalls. "All to get out of paying for their care."

Hospitals staff should ask certain questions answered before a potential incarcerated patient presents:

  • Was the patient charged at the time of arrival to the hospital?
  • Was the patient charged during his stay?
  • Was he arrested upon discharge?
  • Who is responsible for paying for the services rendered for each circumstance?


"The C-Suite may not realize this is going on and has become an issue," says Hoy. "The point-of-care staff may not realize it's an issue either. This can be a lot of money. From the C-Suite standpoint, I think they need to have a dialogue with their local and state authorities and clear contracts for when they will and won't pay."

"I think that hospitals that are close to a prison already generally have this," says Hoy, "but other hospitals don't always think of it because it's not your every-day thing that occurs. But when it does, they are really going to be stuck if they haven't met and negotiated with the city and county and/or jail authorities in advance."

The OIG also announced January 24 that CMS made payments totaling $91.6 million to healthcare providers for services to approximately 2,600 unlawfully present beneficiaries during calendar years 2009 through 2011.

CMS, in a statement released to HealthLeaders Media, said that "for cases where Medicare is informed of patients' unlawful presence after claims have been paid, we are working with OIG to implement a process for quickly and completely recouping these improper payments."


Dom Nicastro is a contributing writer. He edits the Medical Records Briefings newsletter and manages the HIPAA Update Blog.

Tagged Under:

Get the latest on healthcare leadership in your inbox.