A State-By-State Look at a Key Barrier to Medicaid School Health Services

October 26, 2016 | Written By: Healthy Schools Campaign

A regulatory change to the free care rule in 2014 allowed states to use Medicaid funding to provide services to all Medicaid-enrolled students in schools, but there are state policy challenges that must be untangled in order to move forward. Healthy Schools Campaign was a strong advocate of this policy change and is now working to support states, schools and others in implementing this policy.

One challenge identified by states and advocates is the structure of their state Medicaid plans and if a state plan amendment (SPA) is needed to move forward on expanding school health services through Medicaid.

States are structuring school health under Medicaid in a variety of ways, and some state Medicaid plans include specific limitations to reimbursement for school-based services. The provision of the state Medicaid plan may directly or indirectly prohibit reimbursement of Medicaid school-based services. States that include this language in their state Medicaid plan must seek an SPA.

As part of ongoing work in support of the Healthy Students; Promising Futures Learning Collaborative, the National Health Law Program (NHeLP), a national advocacy organization, analyzed state Medicaid plans to better understand how many states likely need to seek an SPA.

In a new analysis, Medicaid’s “Free Care Policy”: Results from Review of State Medicaid Plans, NHeLP reviewed 43 state Medicaid plans and found:

• 3 state Medicaid plans included language that expressly excluded coverage of services otherwise provided free of charge (“free care exclusion”).
• 22 state Medicaid plans did not expressly exclude coverage of free care, but had other provisions that could present a barrier preventing coverage.
• 6 state Medicaid plans included coverage provisions related to Early and Periodic Screening, Diagnostic and Treatment services that could present a barrier to coverage.
• 13 state Medicaid plans included no free care exclusion and no provisions related to coverage of services in schools that would present a barrier to coverage.

So, what does this mean for expanding school health services? While only three states explicitly prohibit coverage of services under the “free care policy,” many states have provisions in their state plans that may present a barrier to expanding services to all Medicaid-enrolled students. These states will need to develop a plan to address these barriers and will likely need to submit a SPA to Centers for Medicare & Medicaid Services (CMS).

That sounds daunting—but state Medicaid departments routinely develop and submit SPAs. The Medicaid Department, in partnership with the Education Department, local education authorities and other stakeholders will undergo a detailed examination of existing state policy to determine what and how they will move forward with expanding services. Both California and Louisiana have already developed and submitted state plan amendments to clarify their “free care” policy. Louisiana’s has already been approved and the expansive California proposal is awaiting CMS approval now.

It is important to note that a state plan amendment is just one factor in the process to increasing Medicaid reimbursement for school-based services. There may be other laws or policies in each state that prevent reimbursement. There are also other pathways to expanding coverage outside of this traditional Medicaid pathway, including innovative partnerships with managed care companies. Healthy Schools Campaign has toolkits and resources to help understand and address a whole host of factors that are at play.

For more information about the NHeLP analysis, or to see the analysis of your state’s Medicaid plan, please see the state-by-state tables in the NHeLP publication: Medicaid’s “Free Care Policy”: Results from Review of State Medicaid Plans.