The Advocate June 2023: New Rules for Medicaid in Schools

In May, the Biden Administration took action to help schools deliver critical health care services to millions of students through two separate, but related agency actions focused on improving a district’s ability to bill Medicaid. 

Specifically, the U.S. Dept. of Education is proposing a new rule that would streamline Medicaid billing permissions for students with disabilities. ED predicts of the 500,000 new students who are found eligible under IDEA each year, nearly 300,000 are likely to be eligible for Medicaid and impacted by this rule. This proposed rule change is one that AASA has asked ED to make for more than 15 years and was the subject of a January report we issued outlining the current flaws with the separate Medicaid consent process under IDEA. 

Under the proposed rule, districts would merely have to notify parents that they are billing Medicaid for Medicaid-reimbursable services in an IEP rather than receive explicit permission. However, this will not provide as much relief as expected because there is a separate requirement, untouched by this regulation, that requires that parental consent be obtained if any personally identifiable information is shared with the state Medicaid agency or a contractor for the state Medicaid agency. 

This means that while the IDEA requirement to obtain consent will be ending, without Congressional action there will still be a separate FERPA requirement on the books that requires parental permission to bill Medicaid for any Medicaid service delivered to any Medicaid-eligible child from any Medicaid provider. AASA is now turning our attention to ensuring legislation is introduced that would amend FERPA so personal identifiable information shared for the purpose of school-based Medicaid billing is not subject to obtaining parental consent.

Separately, and even more significantly, the Centers for Medicaid and CHIP Services (CMS) released a long-awaited new guide on delivering Medicaid reimbursable school-based healthcare services. Throughout the guide, CMS makes it clear that they both encourage states to expand services to all Medicaid enrolled students and they encourage schools to deliver as many different services as possible. CMS has provided as much flexibility as possible in developing school-based services programs that are responsive to the needs of individual states while also expanding access and services in the program. In addition, they encourage State Medicaid agencies to allow school-based providers that are certified by the State Department of Education (such as school counselors, school psychologists, etc.) to ensure they can bill for Medicaid.

Most importantly, the new guide offers flexible and streamlined options to record who is receiving Medicaid services and how frequently. It encourages states and districts to adopt a new methodology (promoted by AASA in our 2019 report) that would allow for very basic information to be captured by a Medicaid provider in a school and extrapolated over the course of a year to determine the reimbursement. 

For example, the new guide allows a provider to simply record (when asked randomly by the state) the number of Medicaid eligible services delivered to the number of Medicaid eligible kids over a particular set of days and then to use that as the basis for the reimbursement over the course of the year. This process means that districts can report much less information to Medicaid and less individual student data would shift hands between the LEA and the State Medicaid agency. 

The combination of making it easier to bill Medicaid, expanding the number of providers that can bill Medicaid and expanding the number of kids who are eligible for Medicaid services will have a transformative impact on the school-based Medicaid program. The next step is for every state to align their program with the flexibilities and expansions promoted in the guide, so LEAs can change and expand their program. 

We are particularly optimistic that small and rural districts, which have traditionally not participated in the Medicaid program due to the administrative burden will be much more likely to do so with these changes. There are too many districts leaving Medicaid money on the table that they can utilize to increase and sustain critical healthcare services, particularly behavioral health services, for students. 

We know the changes to the program won’t happen overnight given that it requires states to amend their state Medicaid plans. We feel confident that in a few years we will see a renewed excitement and interest in the school-based Medicaid program and the reimbursement it provides in every corner of the country.

 If you have any questions, please contact Sasha Pudelski, AASA director of advocacy, at spudelski@aasa.org.