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Districts, Insurers Spar Over Cost of Spec.-Ed. Services

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Scottsdale, Ariz.--School systems trying to recoup from insurers some of the staggering costs of providing special services to disabled students are being thwarted, experts said here last week, by the diminishing health coverage available to many handicapped children.

While more and more states and school districts look for ways to tap Medicaid and private insurance for the noneducational expenses of special education, they said, schools continue to shoulder almost exclusively the burden of paying for so-called "related" services, such as physical therapy.

And trends in health-care coverage offer little indication that relief is in sight, they said.

"In education, you have the concept of 'free, appropriate, public education,' for the handicapped," said Josephine Gittler, co-director of the National Maternal and Child Health Resource Center at Iowa State University. "But among health providers, the concept of 'free' services is not accepted and it may even be anathema to some of them."

Ms. Gittler spoke last Tuesday during the annual meeting of the National Association of State Directors of Special Education here. She was joined by John Butler, assistant professor of health policy at the Harvard Medical School and a research associate at Children's Hospital in Boston.

Nationwide, Mr. Butler said, about 80 to 85 percent of all children, including those with disabilities or chronic medical problems, are continuously insured for any given year.

But the percentage declines, he said, among the "near-poor"--those families whose incomes are just a notch above the federal poverty line. Only 44 percent of children who fall within that group are privately insured. And in most states, such families also do not qualify for Medicaid coverage.

While the problem of missing or inadequate health coverage has significance for all schoolchildren, the two researchers said, it poses special difficulties for the 11 percent of students who are handicapped.

An estimated 73 percent of employer-paid insurance plans automatically exclude disabled children, they said, by either refusing coverage altogether or restricting their reimbursements for medical services that stem from "pre-existing medical conditions."

"You're born with a genetic defect," Ms. Gittler said. "No coverage."

Handicapped children are beingserved no better by the health-maintenance organizations proliferating around the country, the reseachers asserted.

"Hmo's work well with healthy populations," said Mr. Butler, "but, basically, they don't like high-cost patients, like handicapped kids."

Mr. Butler and Ms. Gittler said the problem becomes more critical as the nation moves to a service-based economy, where less extensive health-insurance benefits--and part-time jobs without health coverage--are trends among employers.

One example of such diminishing coverage is the tendency in some group plans to place lower thresholds on the amount of medical expenses the insurer will fund over the course of the client's life.

"For a chronically ill child, it's amazing how fast a $1-million lifetime limit can be exhausted," Ms. Gittler said.

Fewer Doctor Visits

Mr. Butler examined the problem in detail in a study he conducted with three other researchers at Harvard and Children's Hospital.

They looked specifically at the insurance coverage of special-education students in five school systems: the Charlotte-Mecklenburg (N.C.) Schools; the Houston Independent School District; the Milwaukee Public Schools; the Rochester (N.Y.) City School District; and the Santa Clara (Calif.) County Office of Education.

Of the more than 2,800 handicapped students in the study, 11 percent had no insurance coverage at all. And, as is generally thought to be the case nationwide, the bulk of the special services provided were paid for by the school systems.

Mr. Butler said schools in the study funded 92.3 percent of the cost of speech therapy, 77.8 percent of the physical- and occupational-therapy expenses, and 65.9 percent of child-counseling services.

"The lesson here for me is that what is mandated by education is being paid for by education," he said.

But perhaps more important, Mr. Butler said, was the finding that insured students in the study were more than 1.8 times as likely as their uninsured peers to have seen a doctor in the last year.

A Closely Watched Case

The issue of who pays for the related services provided special-education students was one that domi8nated much of the discussion at the meeting here.

State special-education administrators and advocates for the handicapped here as elsewhere said they were watching in particular developments in a Massachusetts case in which a federal appeals court's decision favorable to schools has been contested by the Reagan Administration. (See Education Week, June 10, 1987.)

In its ruling in Commonwealth of Massachusetts v. Secretary of Health and Human Services, the U.S. Court of Appeals for the First Circuit allowed education agencies to bill the Medicaid system for some of the "medically related" services provided to handicapped students. A specific service cited in the case, for example, was teaching a mentally retarded child how to eat.

On Oct. 30, federal officials filed a petition asking the U.S. Supreme Court to review the decision--not on the basis of whether Medicaidshould pay for such services but because, the officials contend, the case may not have been heard in the proper court.

"That means this decision is going to stand," said Ms. Gittler, who also has a law degree. "It's of precedential value."

The closely watched case is especially timely, according to those in the field, because it follows the passage one year ago of the Education of the Handicapped Amendments Act of 1986, P.L. 99-457, which has been viewed by some as a vehicle for forcing the resolution of disputes over who pays for what services.

Language included in the law prohibits states from substituting its newly authorized funds for public medical-assistance payments the family of the handicapped child may already be receiving.

Moreover, the law provides strong incentives for states to serve handicapped infants and toddlers and will thus introduce a younger--and more medically needy--population into special-education programs in many states.

"One of the more critical needs for these younger kids is going to be for medical services," Mr. Butler said.

In the meantime, nasdse has launched a new program designed to help its 57 members retrieve some of the cost of related services from private insurance companies.

The organization has contracted with Trans-Allied Medical Education Services Inc., a nonprofit organization that processes and tracks insurance claims made by schools against a parent's insurer or Medicaid.

But as one Congressional staff member warned the group last week, applying pressure to public and private insurers is only a partial answer to the growing cost of special-education services.

"You can ask parents to use their insurers to pay for those services," said Robert Silverstein, staff director of the Senate Subcommittee on the Handicapped. "But you can't require them."

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