(a) In this section, “inmate of a public institution” has the meaning stated in Title 42, § 435.1009 of the Code of Federal Regulations (1978 edition).

(b) (1) If an inmate of a public institution is eligible for federally funded Medicaid benefits, the Department shall pay the custodial authority for any medical care that is provided to the inmate during the month when the individual became an inmate.

(2) Payments under this subsection shall be made in accordance with applicable rules and regulations for the Program.

(c) The Department shall be reimbursed for the nonfederal cost of medical care by either the State or local authority that is responsible for the inmate of a public institution.