Frequently Asked Questions About the Illinois State Plan Amendment

October 01, 2021 | Written By:

In order to increase access to, and reimbursement for, Medicaid-funded school health services, the Illinois Department of Healthcare and Family Services (HFS) submitted a state plan amendment (SPA) on Sept. 30, 2021, to the Centers for Medicare & Medicaid Services. The SPA was approved on April 18, 2023. Read HSC’s press release.

The following FAQ explains the benefits and changes affecting school districts.


How many more children are eligible for reimbursement under the new state Medicaid plan?

School districts can access federal Medicaid reimbursement funds for all eligible health services provided to all 800,00 students enrolled in Medicaid throughout the state, including 235,000 children in Chicago.

Before the reversal of the “free care” policy, school districts could seek reimbursement only for the health services specified in a student’s Individual Education Plan (IEP) or under other specific conditions. That limited reimbursement to about 112,000 students, or 14 percent of Medicaid-enrolled students.

Which health services and providers are considered eligible for Medicaid reimbursement?

School districts in Illinois can bill Medicaid for “all medically necessary services” delivered to Medicaid-enrolled students. This includes any service covered by Medicaid’s comprehensive Early, Periodic, Screening, Diagnosis, Treatment (EPSDT) benefit.

All current school-based licensed and qualified practitioners already involved in Medicaid claiming are still Medicaid-eligible. In addition, the following practitioners would be added: licensed clinical professional counselors; licensed marriage and family therapists; orientation and mobility specialists; licensed clinical psychologists; and registered behavior technicians.

Expanding services and allowing billing for additional types of providers helps schools build their capacity to meet the health needs not only of students enrolled in Medicaid but of the entire student population.

When will the state plan amendment (SPA) be implemented?

Upon approval, school districts can retroactively bill Medicaid for services provided dating back to July 1, 2021.


Are there any costs involved with expanding billing?

The proposal to expand billing for school health services is considered a budget-neutral policy change for Illinois; it does not increase Medicaid or other healthcare costs.

Does the SPA require any legislative changes?

The amendment process does not require any state or local legislative changes. HFS will continue to serve as the pass-through agency for Medicaid reimbursement to school districts, with HFS receiving a 4-percent administrative fee, the same as it does now.

How will the SPA affect Medicaid revenue and spending?

CMS reimburses states for a portion of the services that are billed, and each state passes all or some of the money back to schools and districts. When a state increases the number of eligible services that are billed to Medicaid, the state gets back more money from CMS.

The converse is also true: Not billing for otherwise eligible services that are already being provided in schools means leaving federal dollars unclaimed. When that happens, state taxpayers bear the entire cost of services. This makes Medicaid a very important source of funding for school health services — and for state health and education budgets overall.

Can school districts use this reimbursement as general revenue?

Generally speaking, yes — school districts can designate it as general funding. In other words, a dollar of reimbursement for school nursing services is not necessarily a dollar reinvested in school nursing. Additional funding can be a significant boost for school budgets and helps districts stretch scarce local funding.

Some states, however, have opted to require school districts to reinvest Medicaid reimbursement in school health, and this investment has proven beneficial for school health services overall.


Are schools required to provide health services for students?

For students with special needs, medical and behavioral health services that are listed in a student’s IEP must be provided to help with learning preparedness. These services often include physical therapy, speech therapy, occupational therapy and mental health counseling.

Now that the SPA is approved, are all school districts immediately expected to take part?

No; there is no mandate for school districts to take part, but those that do can seek additional reimbursement, thereby recouping a greater portion of their spending. Some states that have updated their Medicaid state plan have created rollout plans to ensure implementation is manageable and effective. School districts can collaborate with each other to learn the best implementation and billing practices and move forward when they are ready.

HSC leads the Medicaid Expansion for School Health Learning Collaborative, which offers free training, technical assistance and peer learning opportunities to support school districts in expanding Medicaid billing for school health services. HSC also publishes resources to assist school districts with this process.

How will expanding billing affect schools with a school-based health or mental health clinic?

This SPA will complement and build on the school healthcare models currently in place by providing new federal funds for health and mental health services provided to students covered by Medicaid. School districts will maintain their flexibility to design school health programs to meet their unique needs, including further investments in school-based Medicaid and partnerships with school-based health and mental health centers and other school-based health services by community-based providers.

Schools would not be required to implement any changes to their program or billing policies if the school does not find it beneficial.

What happens with children with private insurance?

If a health service is offered to all students in schools, such as vision and dental screenings, those with Medicaid could be billed and those with private insurance would be free of charge. Allowing Medicaid billing for some students makes it possible for all children to have access to some important health screening and services without needing to get insurance information from parents or leaving school for appointments.

How will this impact Medicaid managed care organizations?

School health services are currently carved out of Illinois’ Medicaid managed care contracts, which means school districts bill the state for Medicaid-eligible health services, not managed care organizations (MCOs).

Expanding access to school health services can help MCOs meet accountability metrics, particularly around the management of chronic illness and addressing mental health needs. These services are not duplicative of the services enrollees are entitled to through their MCOs and instead help ensure students receive the care they need.

Schools can also play a key role in Medicaid enrollment, thus ensuring all Medicaid-eligible students have coverage. Finally, school health providers play a critical role in care coordination by referring students and families to follow-up care in the community following screenings and evaluations conducted in schools. Strengthening this infrastructure and ensuring the school health providers are in place that are necessary to do this work directly supports Illinois’ commitment to Medicaid-managed care.


Do all states need to amend their state Medicaid plan to take advantage of this opportunity?

States that codified the older federal policy allowing reimbursement only for Medicaid-enrolled students with an IEP need to submit a state plan amendment. Other states are able to implement this change administratively without a SPA. More information on state procedures and progress is available in this state activity tracker.

How many states have expanded school health services for students covered by Medicaid?

As of April 2023, 19 states, including Illinois and states such as Massachusetts and California, are able to leverage federal funds and expand the types of services and providers eligible for reimbursement. More states are in the process of applying for CMS approval; there is an especially strong interest in leveraging the opportunity to support mental health services.

Here are some examples of how states have benefited from expanding their school Medicaid program:

Michigan: Estimated an increase of $14 million from billing for services delivered by school psychologists — a provider group not previously included under eligible providers. Michigan also added nurse practitioners, physician assistants, clinical nurse specialists, marriage and family therapists, behavior analysts and school social workers, and the state now permits billing for all medically necessary services included in Medicaid’s EPSDT benefit.

**Michigan and Illinois are in the same CMS region, so the same office that approved Michigan’s SPA is reviewing Illinois’ SPA.

Louisiana: After receiving approval in 2015 to expand nursing services, Louisiana increased the number of school nurses by nearly 15 percent statewide and tripled revenue. The state then submitted a second SPA request and received approval in April 2020 to expand billing for all eligible providers and services.

Colorado: Colorado conducted an expansion study that convinced legislators of the cost-savings. By adding school psychologists to the eligible provider list, Colorado predicted the state would receive $12 million in new federal Medicaid funds. The SPA was approved in 2020.

Kentucky: With SPA approval in 2019 to expand billing for all Medicaid-enrolled students, the state used funds to add school counselors and mental health services — services that were mandated under a new school safety law that lacked dedicated funding. The state applied for a second SPA in 2020 to update reimbursement methods.

Georgia: Similar to Louisiana, Georgia’s (pending) SPA focuses on expanding school nursing services. The state projects that implementation will result in more than $48 million in additional revenue for school nurses. Read more examples in this blog post.

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