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(WBIR) Counties across Tennessee spend millions of dollars every year on health care for prisoners, but a new state law passes some of those costs to the federal government.

The General Assembly passed Public Chapter No. 926 earlier this year.

Currently, TennCare goes away the moment a person enters a state or local jail. Once a prisoner is released, it can take him/her months to get insurance coverage back. The new law suspends a prisoner's coverage, but does not terminate it.

"Most of those people who have drug or alcohol problems, once you get them cleaned up, you get them stabilized, you release them from the jail. Without this legislation, they're on their own," said Bill Nolan, a lobbyist for Public Chapter No. 926.

Some East Tennessee leaders attended a press conference on Monday at the Helen Ross McNabb Center, concerning the new legislation.

The announcement included Anderson County Mayor Terry Frank who started brainstorming ideas, more than a year ago, to help with jail overcrowding issues. Mayor Frank estimates the county spends about half a million dollars every year on prisoners' health care. The county's tax dollars recently picked up the tab for a prisoner.

"His health bill alone was $84,000 and Anderson County had to write that check. We are mandated to care for people and cover their hospitalization. We have an insurance policy in place for inmates so the insurance company picked up about $60,000 on that. So you can imagine that's a big cost with just one inmate," Mayor Frank said.

Through the new law, state and local governments can seek reimbursement under Medicaid for Medicaid-eligible inmates who need outside health care, including those who are admitted to inpatient health care facilities for more than 24 hours.

Mayor Frank clarified the new law does not expand health care coverage but only helps cover costs for those who had TennCare prior to a prisoner's incarceration.

"States have been losing millions of dollars every year without moving to this program," Nolan said.

With the extra money, counties will have more money to spend on other issues, like programs targeted at substance abuse and mental health. Mayor Frank said as much as a quarter of the jail population includes people with mental health issues.

"That is my hope that this legislation will also help empower some of that programming and get a large segment of our population out of that addiction cycle," Mayor Frank said.

Nolan added, "Now we have some support system for these people and most importantly, we have a way to pay for that system."

The new law will also help cut on transportation and prescription costs. County jails will be able to purchase prescription drugs through the state's reduced prices.

In its first year, Mayor Frank estimates the state's counties could collectively save $2 million.

Similar legislation in North Carolina saved taxpayers more than $100 million in health care costs for prisoners.

The legislation came about after a brainstorming session sponsored by the Tennessee Association of Professional Bail Agents in East Tennessee late last year.

The new law goes into effect April 1, 2015.

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