States Are Receiving Federal Funds to Expand School Health Services. Here’s How Illinois Can Join Them.

February 02, 2021

Illinois has the opportunity to expand much-needed physical, behavioral and mental school health services, simply by updating its state Medicaid plan to match federal policy.


By Alex Mays, Senior National Program Manager

At a time when school districts are scrambling to meet the increased health needs of their students, especially mental health needs worsened by the coronavirus, there’s a pathway for Illinois to expand access to school health services — at no additional cost to the state.

Through 2014, the Centers for Medicare & Medicaid Services (CMS) permitted reimbursement only for specific health services outlined in a student’s individual education plan, or IEP. CMS then revised the policy, notifying states that reimbursement would be available for all eligible health services provided to all students enrolled in Medicaid.

In Illinois, that means school districts can access federal funds for healthcare delivered to all 800,000 students enrolled in Medicaid, including 235,000 students in Chicago alone, instead of only the 14 percent of Medicaid-enrolled students with an IEP.

But there’s a hitch: Illinois codified the original IEP restrictions in its state Medicaid plan. Six years later, the state still needs to remove those restrictions and submit an amendment to CMS to leverage this opportunity. 

Healthy Schools Campaign is leading a coalition of school districts, health service providers and health and education advocacy organizations urging Illinois to submit what we’ve termed the Healthy Student State Plan Amendment (SPA). Until it does, Illinois is leaving federal money on the table while other states benefit from increased reimbursement.

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There are additional incentives for states to follow through. While updating their Medicaid plans, states can build on the types of physical and behavioral health services eligible for reimbursement — services that are currently provided and paid for with school funds. 

That’s why we’re encouraging the Healthy Student SPA to include these two provisions:

• Allow billing for all medically necessary services outlined in Medicaid’s comprehensive Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit.

• Allow billing for all eligible health providers and recognize additional types of school health providers as Medicaid-eligible.

For children with Medicaid coverage — who have higher rates of chronic health issues and face greater barriers to seeking care — access to health services in a school setting is essential to improving long-term health and, by extension, academic outcomes. Yet many inequities exist, leaving many schools without a full-time nurse or school counselor. 

Additional federal funds can be used as general revenue or reinvested in school health services, enabling districts to add more staff, including school nurses, counselors, social workers and psychologists, to address students’ health needs. 

More than a dozen states so far have brought their Medicaid plans up to date. The number is growing. Here are 10 examples of how states are using the federal policy to improve access to and funding for school health services:

1. Kentucky school districts can bill for services delivered to all Medicaid-enrolled students, and the state is using funds for school counselors and mental health services mandated in the School Safety and Resiliency Act of 2019. (The law did not provide specific funding for mandated services.)

“Approval of this amendment is a game-changer,” said Adam Meier, secretary of the Cabinet for Health and Family Services, when the SPA was approved in 2019. “This will provide additional resources to support increased access to mental health services for students using money already being spent by school districts.”

2. Massachusetts school districts can bill for all Medicaid-enrolled students and for additional services and provider types, including some physician services, respiratory services, optometry services, fluoride varnish services, nutritional services and sports injury assessment. 

In addition, the state figured out how to separate calculations based on a provider’s time spent delivering either IEP or non-IEP services, as well as Medicaid eligibility rates. This important development helped the state ensure appropriate reimbursement for each set of students. Massachusetts also has legislation pending that would funnel Medicaid reimbursement from school-based services back into school nursing programming and services.

3. North Carolina school districts can bill for all Medicaid-enrolled students receiving nursing, counseling, occupational therapy, speech-language therapy and physical therapy services. The school Medicaid program also now allows billing for vision screening and clarifies the definition of hearing services.  

4. South Carolina school districts can bill for eligible services delivered to all Medicaid-enrolled students. South Carolina also focused on expanding nursing services provided by the school districts and behavioral health provided in collaboration with the state Department of Mental Health.  

5. Colorado school districts can bill for services delivered to all Medicaid-enrolled students. Prior to seeking to amend its state Medicaid plan, Colorado conducted an expansion study that bolstered buy-in and convinced legislators of the cost-savings. The state determined that this expansion, coupled with adding school psychologists as an eligible-provider type, would result in a $12 million increase in federal funds. 

6. Michigan school districts can bill for all Medicaid-enrolled students and for all EPSDT services and additional provider types. The latter includes nurse practitioners, physician assistants, clinical nurse specialists, marriage and family therapists, behavior analysts, school social workers and school psychologists.  (Read more about how Michigan is expanding access to mental health services.)

7. Louisiana school districts can bill for nursing services delivered to all Medicaid-enrolled students. With 40 percent of children in Louisiana enrolled in Medicaid, the impact has been substantial: school-based Medicaid revenue has dramatically increased, as has the number of school nurses statewide. The state received permission in 2020 to bill for all medically necessary services delivered to all Medicaid-enrolled students.  

8. Missouri school districts can bill for behavioral health services delivered to all Medicaid-enrolled students. The state also allows community behavioral/mental health providers to provide services in the school setting when a school district determines it is appropriate to do so. 

9. Connecticut school districts can bill for health services provided to all students with a 504 plan. The state also expanded its Medicaid program to cover behavior modification services for students on the autism spectrum and personal care services. 

10. Nevada school districts can bill for services delivered to all Medicaid-enrolled students. The state also added all EPSDT services in the list of eligible health services.

Though each state took a slightly different approach, they all leveraged the opportunity to expand access to covered services and providers. And these successes are only the beginning. Georgia, which is waiting on approval from CMS, projects that implementation would result in more than $48 million in additional revenue for the state.

For more information, visit HSC’s website section on Illinois School Health Services.