(a) General. A person in a correctional institution under the supervision and control of the Department of Corrections or in a jail operated by local authorities will be ineligible for MA either as a patient in a hospital of the institution or as a patient in any other hospital. A person may not be eligible for MA services provided to him in an institution under the following circumstances:

1. (1) He is an inmate of a public institution, except as a patient in a medical institution.
2. (2) He is a patient in an institution for tuberculosis, and is under age 65.
3. (3) He is a patient in an institution for mental diseases and is between 21 and 65 years of age. However, the persons shall be eligible for the care provided outside the institution by practitioners not on the institutional staff.

(b) Institutional contracts. Institutional contract requirements will be as follows:

1. (1) Between person and institution. A person living in a public or private institution who has a contract with the institution for life care will not be eligible for MA benefits if the institution is financially able to fulfill the provisions of the life care contract. If the institution claims it is financially unable to fulfill the conditions of the life care contract, reference should be made to § 181.23(b)(1) (relating to changes in income, expenses and circumstances). However, if the contract does not specify that the institution is to provide inpatient hospital care, the person may be eligible for MA inpatient hospital care.
2. (2) Between institution and hospital. A person living in an institution, private or public, may not be eligible for MA inpatient hospital care if the institution has a written agreement with a hospital to purchase inpatient hospital care for residents of the institution.