The Transformation of Medicaid in Public Schools
By Devon Day, DHS, MS, PA-C
When thinking of the government, tax funded program, Medicaid, K thru 12 schools don’t typically come to mind. However, Medicaid has contributed to the reimbursement of medically necessary devices and/or services for students whose special education plan falls under the Individuals with Disabilities Education Act (IDEA) (Authors S. Bachman and S. Flanagan Medstat Group, 1999). Examples of medical services covered under IDEA and reimbursed through Medicaid include physical therapy, speech therapy and occupational therapy. However, the recent push for schools to manage the mental health of their young students has been funded and incentivized by the Center for Disease Control (CDC) and the US Department of Education through Medicaid.
The traditional school model that required parental consent for a school nurse to administer Tylenol, has begun a subtle transformation into an all-inclusive school-based health clinic model. The CDC website states that U.S. public schools have “direct daily contact with more than 15.4 million students attending grades 9-12” and “recommends actions that school districts and schools can take to ensure students have access to key school health services through on-site services at schools.” (2023, March 31). On May 3, 2022, the US Department of Health and Human Services (HHS) announced 25 million would be funded through the Health Resources and Services Administration (HRSA) to “ improve and strengthen access to school- based health services in communities across the country” and “support local partnerships between schools and health centers to provide children and youth the comprehensive physical and mental health care they need” (Assistant Secretary for Public Affairs (ASPA), 2023). In a letter to every state Governor, dated March 24, 2022, the Biden administration announced their intent to “provide additional technical assistance, resources and support that will provide guidance on the federal funding available for school-based physical and behavioral health services, including how Medicaid can support the delivery of these services” (US Department of Ed, 2022).
While the CDC, Biden administration and the Department of HHS have publicized their goal to establish school-based health clinics in public schools across the nation, the question on how school-based health clinics receive funding requires a more in-depth investigation. At the heart of both the HHS announcement and the Biden Administration’s letter to state governors, Medicaid appears to be the primary source of such funding. In an August 18, 2022, informational bulletin with the subject “Information on School-Based Services in Medicaid: Funding, Documentation and Expanding Services” was released by HHS and the Center for Medicaid & Chip Services (CMS). In this bulletin, the Deputy Administrator and Director of CMS, Daniel Tsai, wrote, “school setting provides a unique opportunity to enroll eligible children and adolescents in Medicaid and the Children’s Health Insurance Program (CHIP), furnish Medicaid-covered services, including behavioral health services (mental health and substance use disorder (SUD) services) to eligible children, and help children who are enrolled in Medicaid access the services they need” (Tsai, 2022).
The released bulletin identifies the collaboration between CMS and the US Department of Education to establish technical assistance, reduce administrative burden, and offer both payment support and guidance to local school agencies looking to expand their school-based health services (Tsai, 2022). An addition to the 25 million issued by HHS to fund the expansion of Medicaid services, the Bipartisan Safer Communities Act (BSCA) has directed CMS to issue 50 million in discretionary grant funding to states willing to expand such services (Tsai, 2022). Understanding the process public schools use to submit claims for reimbursement through Medicaid, is not as clear cut as one might expect. School-based Medicaid claims are not typically associated to a specific International Statistical Classification of Diseases and Related Health Problems (ICD), nor Current Procedural Terminology (CPT) codes. According to a 2019 joint issued bulletin released by CMS and Substance Abuse and Mental Health Services Administration (SAMHSA), a large majority of school-based services covered by the Medicaid program are submitted and reimbursed based off a “reconciled cost methodology” (McCance- Katz & Lynch, 2019). Submitted either quarterly or annually by individual school districts, the reconciled cost methodology reports are used to compile and total out the cost of services provided (McCance-Katz & Lynch, 2019). Once organized, these costs are then designated as provided to Medicaid-enrolled students and non-Medicaid enrolled students (McCance-Katz & Lynch, 2019). Medicaid allowables are then broken down into either direct and indirect costs. Direct costs are typically associated with direct medical services (i.e. speech therapist, social workers, physical therapist), medical supplies and services, but may also include salaries and benefits of school personnel that do Medicaid administrative activities (Medicaid.gov 2023). Indirect costs are established and updated annually by the department of education in each individual state. Indirect cost allows for reimbursements to cover school expenses associated to any room designated for Medicaid-covered services; this includes the cost of utilities (Medicaid.gov 2023). Other Medicaid reimbursed expenses that fall under indirect costs may include the promotion of school related and educational activities such as social services, healthy lifestyle campaigns, staff training, staff travel and other administrative expenses (Medicaid claiming program guide - AHCCCS 2009). Though still in the early phase of my Medicaid research, it appears that indirect costs may be the unspoken incentive driving the widespread push toward various social emotional learning models in public schools.
Prior to 2015, Medicaid reimbursement for school-based services was primarily limited to Medicaid enrolled students with an Individual Education Program (IEP) (Medicaid.gov 2023). On December 15, 2014, CMS withdrew the “free care” policy, allowing “Medicaid-covered services be delivered to all Medicaid-enrolled students in school settings, and not just those with an IEP or Section 504 plan” (Medicaid.gov 2023). This reversal also allowed for the reimbursement of services that are “not included in a student’s IEP or 504 Plan… including mental health and SUD services… such as medication monitoring and counseling” (Medicaid.gov 2023). According to the School Superintendent Association’s Healthy School Campaign, “the reversal of the free care policy at the federal level created tremendous potential for school districts to use Medicaid funds to support and enhance health and behavioral health services offered in schools. States can now permit school districts to receive Medicaid reimbursement for Medicaid eligible services provided to all Medicaid- enrolled students in school-based settings” (O'Rourke, 2019). Concerns related to the reversal of free- care are mainly due to the suspected Medicaid incentives offered to public school districts nationwide, to implement various behavior modification programs. Student behavior modification programs that include Positive Behavior Modification (PBIS), Multi-tiered System of Support (MTSS), Restorative Practice (RP) and Comprehensive school mental health systems (CNMHSs) all fall under the Social Emotional Learning (SEL) umbrella and are promoted and supported by Medicaid (McCance-Katz & Lynch, 2019). School district have been encouraged by CMS to “utilize third party reimbursement mechanisms (i.e., Medicaid, Children’s Health Insurance Program (CHIP) and private insurances)” in addition to applying for public grants, the SAMHSA System of Care grant, formular grants such as ESSA and many others (McCance-Katz & Lynch, 2019).
The Federal government has been encouraging public school districts to become the primary mental health recorder, supervisor, and manager of our country’s youth. The push to eliminate the influence of parents, family, community, and church, starts and ends with our public schools. In the past, CMS has used its power to determine medical reimbursement fees across every insurance company, forcing healthcare providers and hospitals to remain submissive to government control over healthcare. It appears CMS has been utilizing a similar approach through Medicaid incentives to reshape the entire structure and role of our public schools.
Arizona Health Care Cost Containment System . (2009). Medicaid claiming program guide - AHCCCS. Medicaid Administrative Claiming Program Guide. https://www.azahcccs.gov/PlansProviders/Downloads/RFPInfo/YH10/School- BasedClaimingGuide_draft.pdf
S. Bachman and S. Flanagan Medstat Group. (1999). Medicaid Billings for idea services: Analysis and policy implications of site visit results. ASPE. https://aspe.hhs.gov/reports/medicaid- billings-idea-services-analysis-policy-implications-site-visit-results-0
Assistant Secretary for Public Affairs (ASPA). (2023, January 23). HHS awards nearly 25 million to expand access to school-based health services. HHS.gov. https://www.hhs.gov/about/news/2022/05/03/hhs-awards-nearly-25-million-expand- access-school-based-health-services.html
Centers for Disease Control and Prevention. (2023, March 31). Health Services for teens. Centers for Disease Control and Prevention. https://www.cdc.gov/healthyyouth/healthservices/index.htm#:~:text=CDC%20recommends%20actions%20that%20school,community%2Dbased%20health%20service%20providers
Centers for Medicare & Medicaid Services, & Tsai, D., CMCS Informational Bulletin 1–19 (2022). Baltimore , MD; Centers for Medicare & Medicaid ServicesB.
The Centers for Medicare and Medicaid Services (CMS). (2023). Medicaid.gov. Delivering Services in School- Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming. https://www.medicaid.gov/sites/default/files/2023-07/sbs- guide-medicaid-services-administrative-claiming-ud.pdf
McCance-Katz, E., & Lynch, C. (2019, July 1). GUIDANCE TO STATES AND SCHOOL SYSTEMS ON ADDRESSING MENTAL HEALTH AND SUBSTANCE USE ISSUES IN SCHOOLS. https://store.samhsa.gov/sites/default/files/d7/priv/pep19-school-guide.pdf
O’Rourke, L. (2019, March). Medicaid 101 for School Superintendents. Alexandria ; The School Superintendents Association .
US Department of Education (ED). (2022, March 24). March 24, 2022 -- joint letter with secretary Xavier Becerra of HHS to governors regarding school based health services. Home. https://www2.ed.gov/policy/gen/guid/secletter/220324.html