New Guidance for Medicaid-Funded School Health Services

May 19, 2023 | Written By:

Centers for Medicare and Medicaid Services (CMS) released new guidance this week that will make it easier for school districts to bill Medicaid for healthcare services – including mental healthcare – provided to students covered by Medicaid.

“This guidance is a significant step forward for school Medicaid expansion,” said Jessie Mandle, Healthy Schools Campaign (HSC) national program director, noting that it provides states with the flexibility to support school districts in billing Medicaid and enables more efficient and equitable access to Medicaid reimbursement.

The updated guidance was mandated under the 2022 Bipartisan Safer Communities Act, which required a number of actions related to Medicaid-funded school health services to address the youth mental health crisis.

HSC led the charge for new guidance, working with state advocates, Medicaid agencies, and school districts and drawing support from 50 national organizations. The resulting materials represent the work of many stakeholders committed to expanding access to school-based healthcare, including the state teams in HSC’s Healthy Students, Promising Futures Learning Collaborative.

Since 2014, school districts have been allowed to bill Medicaid for health services provided to all students enrolled in Medicaid; previously, reimbursement was limited to services included in a student’s Individualized Education Plan (IEP). But states first need to align their state Medicaid plan with federal policy. 

State policy and guidance documents are critical for supporting this work. CMS last issued a technical assistance guide, which provides an overview of Medicaid and school health, in 1997, and an administrative claiming guide in 2003. The updated information is bundled in one document, “Delivering Service in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming.”

“The new guidance will propel more states to expand access outside the IEP, and gives them options for doing so — all of which will enable school districts to draw down available and sustainable funding,” said Mandle.

HSC provides support to states making this change and offers numerous resources, including a comprehensive “Guide to Expanding Medicaid-Funded School Health Services,” and is co-sponsoring a webinar on June 6 with AASA and NAME to unpack the guidance and explain how states can expand Medicaid reimbursement. 

Speakers include Daniel Tsai, deputy administrator and director of the Center for Medicaid and CHIP Services (CMCS), and Katy Neas, deputy assistant secretary in the Education Department’s Office of Special Education and Rehabilitation Services.

To date, almost two dozen states allow their school districts to bill for services outside of an IEP. Momentum is building: New Mexico and Oregon received CMS approval the same day the new guidance was released, and Illinois received approval in April. HSC’s state activity tracker provides information on how each state to expand health services beyond the IEP has moved forward.

States starting or building on expanding access to school health services will receive increased federal support. In addition to the new guidance, CMS is tasked with establishing a technical assistance center and awarding $50 million in state grants to implement, enhance or expand school Medicaid programs.

The guidance was part of several new announcements by the Biden administration concerning school health services.  The U.S. Department of Education also proposed a new rule that aims to streamline Medicaid billing permissions for students with disabilities. Public comments are due Aug. 1.

“We are thrilled by the progress at the federal level,” said Mandle. “These actions are reflective of the Biden administration’s commitment to children’s health and well-being.”

HSC will provide a detailed analysis of the new guidance and other federal actions in the coming weeks.

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