U.S. flag

An official website of the United States government

Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.


The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Medicare Payments for Services Provided to Incarcerated Beneficiaries in the Commonwealth of Virginia," (A-03-02-00003)

July 31, 2002

Complete Text of Report is available in PDF format (425 KB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of this review was to determine whether Medicare fee-for-service claims paid in Virginia during the 3-year period of January 1, 1997 through December 31, 1999 for incarcerated beneficiaries were in compliance with federal regulations and Centers for Medicare & Medicaid Services (CMS) guidelines.  The Commonwealth of Virginia was one of the 10 states selected for review. 

We found 81 claims in our 100-claim sample were for beneficiaries who were found to be not guilty by reason of insanity (NGRI) and were in State-operated psychiatric hospitals.  Virginia law deems these beneficiaries to be “patients” rather than “prisoners”.  As such, under Virginia law these beneficiaries are responsible for their health care costs.  Under current CMS guidelines, a distinction in legal status of groups of beneficiaries is permissible.  The Medicare program will be responsible for coverage as long as there is a law requiring the individual in custody to pay for medical services and the government entity enforces the requirements for all individuals in custody with the same legal status.  This separation of beneficiaries by groups can result in Medicare coverage for one group (in Virginia this group would be the NGRIs deemed to be patients) and the non-coverage of another group (in this case those in State or local correctional facilities).  Because of this dichotomy, we found the majority of payments in our review were allowable.