Free Care Rule 101: What Is it and What Can Advocates Do?

December 07, 2016 | Written By: Healthy Schools Campaign

Thanks to a recent federal policy change, known as the “free care policy reversal” there is an emerging opportunity for schools to increase access to and resources for school health services by leveraging Medicaid financing.

Until recently, barriers existed for states and local education agencies to use Medicaid funding to provide health care services in school-based settings. Due to a federal Medicaid policy known as the “free care rule,” states were previously only able to obtain federal reimbursement for services provided to Medicaid-enrolled students who had an Individualized Education Program (IEP) and in other limited situations. As a result, the reimbursement of Medicaid services in schools has historically been limited to a small group of children.

Then, in 2014, there was a big policy shift. CMS issued an important guidance that reversed the “free care rule.”

This guidance means that now states have the option provide physical and behavioral health care services any student who is enrolled in Medicaid—and get federal Medicaid reimbursement for those services. States can get federal reimbursement for services provided to all students if:

• The student is enrolled in Medicaid
• The services provided are covered by the state plan
• Services are delivered by a qualified provider (as outlined in the Medicaid state plan)
• States have appropriate billing mechanisms in place

States will need to take action take advantage of this policy change. Today, many states are in the process of deciding whether to revise their policies. For states that opt to do this, it could mean an important new source of revenue to increase access to health services in schools. However, there are still lots of questions and policies that states will need to untangle before they move forward.

Every state’s policy and regulatory system is different, and every Medicaid program will have its own unique opportunities and challenges. And the path to implementing additional Medicaid services will require different action in each state.

State Departments of Education and Medicaid are deeply engaged in conversations about how to move forward. Healthy Schools Campaign, in partnership with the Trust for America’s Health, are proud to support a growing number of states who are working hard to increase access to school-based services, and we’ve learned a lot of specific needs and ideas already.

For stakeholders and advocates who are trying to understand their state landscape, and for policymakers who need a place to start, there are a number of resources that can help understand the free care policy reversal, ask the right questions and better understand what’s at stake in the state.

We’ve developed a framework that highlights key steps you can take to develop and implement a plan for leveraging the change in the free care policy to support increased access to comprehensive and coordinated school health services. The framework helps you think through how to understand:

• Your state regulatory environment—and what’s already covered by your state Medicaid plan
• Opportunities and barriers for moving forward—and what questions you should consider
• The current school health services environment
• How to successfully advocate for additional school health services

Community Catalyst’s Advocates’ Guide to the Change In The Medicaid Free Care Rule offers five steps for advocates on the implementation of the free care rule clarification:

• Make the case to community and state Stakeholders, including an analysis of data on student need
• Fact Finding! Understanding your state Medicaid plan and what services are offered and may be eligible for reimbursement
• Reach out to Key Health AND Education Decision Makers
• Identify Advocacy partners
• Nurture Consumer Engagement and develop a shared Strategy

In their advocacy, the American Federation of Teachers (AFT) also encourages community engagement and, in particular, uplifting the voices of frontline practitioners in program design, planning, assessment and improvement.

It will take all parties, working towards the common goal of expanding access to health services in schools, to fully realize the potential of this policy change. Advocates and other stakeholders can make a real difference by familiarizing themselves with the existing landscape—and then work in partnership with others to advance this important work.