HSC Publishes New Report & Advocacy Brief on School Medicaid Expansion

Since 2014, school districts have been allowed to bill Medicaid for all health services provided to all Medicaid-enrolled students, instead of being limited to reimbursement for services included in a student’s Individualized Education Plan (IEP). Yet states have been slow to leverage this opportunity because the original restrictions have been encoded in state policy.

Healthy Schools Campaign has been tracking the number of states that have taken action to expand school Medicaid and is excited to announce a new milestone: 25 states are making it possible for school districts to receive federal funding for health services provided outside the IEP.

Our new report, “School Medicaid Expansion: How (and How Many) States Have Taken Action to Increase School Health Access and Funding,” summarizes each state’s process for expansion and provides related state documents and other resources.

Why is this a big deal? Because it means more schools will receive additional, sustainable funds to support physical, mental and behavioral health services and hire additional health personnel — and that benefits all students. And, since most schools already deliver some of these services (and pay for them with education dollars), bringing in federal reimbursement can supplement scarce education funds and help stretch resources further.

There is, however, significant variation among the states HSC identified. Some have adopted comprehensive expansions — permitted their school Medicaid plan to cover all medically necessary services provided to all Medicaid-enrolled students — while other states have chosen to expand coverage outside of an IEP only for certain groups of students (such as those with a 504 plan) or only for specific services. HSC’s report recommends the steps those states can take to strengthen and/or fully expand their school Medicaid program.

HSC considers the “gold standard” for school Medicaid expansion to be comprehensive expansion because it enables schools to maximize funding. HSC also encourages states to use the expansion opportunity to add additional types of services and health providers that can be billed to Medicaid.

For instance, Illinois, which received federal approval in 2023 for comprehensive expansion, added licensed clinical professional counselors, licensed marriage and family therapists and school psychologists to its list of Medicaid-eligible providers.

HSC also has published a related advocacy brief, “School Medicaid Guidance: What Advocates and State Policymakers Need to Know,” that answers key questions about the new federal school Medicaid guidance the Centers for Medicare and Medicaid Services (CMS) released in 2023. The brief also helps state Medicaid and education agencies chart a path for school Medicaid expansion, with input from school districts, health providers and other stakeholders.

Over the past several years, especially as state and federal policymakers have looked for ways to address and support student mental health, more states have shown interest in increasing Medicaid reimbursement — and in increasing the types of health services and healthcare providers considered Medicaid-eligible. Estimates suggest that states can expect to see significant increases in federal resources after expanding. Here are five examples:

Louisiana
Louisiana was the first state to expand its school Medicaid program, focusing solely on school nursing services. The state’s financial analysis showed a 35% increase in federal revenue since the expansion. The program was such a financial success that the state did a second school Medicaid expansion to include all eligible providers and services.

Colorado
Colorado ran a pilot project to better understand the financial impact of expanding its program. The state began by examining the impact of adding additional Medicaid-eligible providers and, with the inclusion of additional school behavioral providers, estimated an increase of around $12 million, a 30% increase over the current program. Colorado is currently implementing its expansion. In the first phase, despite the challenges of billing during the pandemic, the program expanded to certain services and received $2.75 million in new federal funds for the 2020-2021 school fiscal year. Billing for school psychologists went into effect in October 2022, and it is anticipated that this will further increase federal funding.

Georgia
Voices for Georgia’s Children estimated that the state’s expansion to allow claiming and reimbursement for school nurses would bring in an additional $48.6 million in federal revenue to the school-based Medicaid program.

Michigan
Michigan expanded its program to allow claiming for all Medicaid-enrolled students and added additional providers, including masters-level school psychologists and behavioral health analysts. Billing for masters-level school psychologists alone was projected to lead to an increase of $14 million. Thanks to the comprehensive expansion, the state has seen an increase in reimbursement. In the first two years of expansion (2020-2021), the state received about $12 million new federal dollars for services provided to students without IEPs. And because schools are now allowed to bill for the services of school psychologists, billing for students with IEPs has increased by over $20 million.

North Carolina
North Carolina’s expansion allows districts to access reimbursement for a wide range of services. The state saw a 35% increase year-over-year in Medicaid reimbursements with no financial outlay for the state Medicaid agency.

As the examples above indicate, expanding school Medicaid offers a concrete way to increase the scope of school-based health services and health providers. The result is more children have greater access to the services and care they need.

While it took nine years for 25 states to take at least incremental steps toward expansion, HSC expects that more states will take action soon. In addition to updating federal guidance, CMS is developing a technical assistance center to support states and school districts with expansion and is offering $50 million in state grants to help with implementation.

HSC will continue to report on state progress. Visit HSC’s state activity tracker for the latest updates.

For more information, read HSC’s “Guide to Expanding Medicaid-Funded School Health Services,” which outlines opportunities to advance state policy changes required to access federal funds, and learn about the Healthy Students, Promising Futures Learning Collaborative, an HSC initiative to help states expand school Medicaid.