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Published in Print: January 22, 2003, as Schools Decry New Guidance on Medicaid

Schools Decry New Guidance on Medicaid

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A battery of district officials nationwide are alarmed by proposed Medicaid guidelines that they say could mean striking losses in aid for coordinating medical services for needy students, particularly those in special education.

National education groups and administrators in many larger school districts contend the provisions—contained in a guide that does not require congressional approval before becoming final—represent a subterranean attack on Medicaid funding that could cost districts hundreds of millions of dollars a year.

Officials with the Centers for Medicare and Medicaid Services, the office within the Department of Health and Human Services in charge of the federal health-insurance programs, say they wrote the new guide simply to clarify how schools should seek reimbursement for the administrative costs related to serving Medicaid-eligible students. If districts are already following federal requirements, they maintain, the impact on them will be minor.

But school officials say the guide, which with one significant and expensive exception would take effect next school year, would do far more than merely clarify existing law and regulations. Instead, they say, it would create new policies limiting services for which schools could be reimbursed, and lower the reimbursement rates for other services.

"Why are they calling it a 'guide,' if they can still use it to limit our claims and audit us?" said Michael Gonzalez, the director of Medicaid finance for the Houston Independent School District in Texas. "We want to meet whatever requirements there are. But don't call it a guide if there are new requirements."

CMS officials, now reviewing public comments received in November and December, may yet revise sections before making the guide final in a few months.

The idea behind the guide, CMS officials say, was to help, not hurt, districts in collecting federal dollars. In recent years, as more schools began to participate in Medicaid, the CMS promised to put out guidelines to help educators translate federal policies for the program.

The proposed guide is actually the federal agency's second go at drafting such a document. An initial version, released in February 2000, drew so much flak that CMS officials shelved it.

School groups, including those representing special education professionals, principals, urban districts, and school boards, have formed a coalition to fight for congressional intervention if the new version of the guide goes forward.

Sending a Signal?

Medicaid helps cover schools' medical costs for treating low-income students from the general enrollment at school-based health clinics. But the program also covers the broader array of medical services schools must by law provide for students with disabilities who are Medicaid-eligible.

School districts collected $648 million from Medicaid in 1999-2000, the last year for which data were available, according to a study done for the Department of Education by the Center for Special Education Finance, a Palo Alto, Calif., organization.

Medicaid claims from schools amount to a small fraction of the $177 billion Medicaid program, the main source of federal and state health coverage for the poor.

Critics of the new guidelines say the changes would cost districts hundreds of millions of dollars a year, a figure CMS officials say is wildly inflated.

Whatever the guidelines' exact cost to districts, administrators say schools would be left having to make up the difference with state or local money at a time when most states face budget shortfalls and rising Medicaid costs.

And because many of the costliest school-based Medicaid services are for special education—and therefore mandated by federal law—districts typically would feel the brunt of cuts to general budgets, school officials say.

Under the planned new policies, the CMS would not accept claims from schools for the costs of identifying special education students eligible for Medicaid, or of developing plans for their medical care. Schools had hoped they could routinely be reimbursed for such work, which occurs in the course of drawing up such students' individualized education plans—federally required educational road maps that identify students' needs and plan services for them.

Districts say they fear that lack of such reimbursement may result in decreased student participation in the Medicaid program.

But federal officials say that schools identify Medicaid-eligible special education students and create IEPs because they are required to do so by the Individuals with Disabilities Education Act. Those upfront costs should not be borne by Medicaid, they argue.

"The development of the IEP has never been allowed" as reimbursable by Medicaid, one Medicaid official said. "The guide clarifies that Medicaid will pay for services once the IEP is developed."

In the past, many schools had not been successful at collecting money for the cost of drawing up such plans. But some had success collecting money for costs related to developing the IEPs they identified separately as medical, not educational. The policies on how to regard such claims varied among the various CMS regional offices over the years. But drawing up the IEPs is a service that special education advocates had fought to have covered by Medicaid.

"If you can't get reimbursed for finding the kids, testing the kids, and developing a plan for how to care for the kids, what is that?" said Bruce Hunter, a lobbyist for the American Association of School Administrators, based in Arlington, Va. "It's convoluted. It is another signal they don't want us doing this [participating in Medicaid]."

Even without taking comments, CMS officials decided to put one change into effect right away. As of Jan. 1, schools can recover only 50 percent of the costs of administrative work related to serving Medicaid-eligible students done by skilled professionals such as psychologists and speech therapists. Previously, schools could receive a 75 percent reimbursement for administrative work by those considered skilled medical professionals, and 50 percent for such work done by others.

CMS officials say schools don't need the special, and expensive, skills of such professionals to fill out evaluation forms or to document services. In the guide's current draft, the Medicaid agency suggests that schools use their own staff members for such duties.

With those and other changes in the "Medicaid School-Based Administrative Claiming Guide" looming, the 211,000-student Houston district, for example, expects to collect $1.7 million less than the $4 million a year it typically receives from Medicaid, Mr. Gonzalez said.

The proposed guidelines address how schools should file claims for only some of those costs—those related to administrative expenses of providing Medicaid services for the two groups of students.

Some advocates said the guide may be a way for the CMS to make sure schools' participation in Medicaid remains limited. A lack of time and resources to pursue reimbursement has deterred some educators from even seeking the aid, school advocates said.

Such challenges may explain why only 44 percent of districts, a number that includes most large urban districts, are participating in Medicaid, according to the study commissioned by the Department of Education and released last year.

"They have made it so onerous," said Juanita Martinez, an administrator of the health-services-management program for the 440,000-student Chicago public schools, referring to the new guide. "It's like we are back to square one, but with no money."

'Monkey in the Middle'

Mr. Hunter, the lobbyist for the school administrators' group, asserted that the guide was essentially a mechanism for a federal Medicaid budget cut.

"If they knock schools out from claiming, they eliminate the need for the federal match," Mr. Hunter said. "It's not even that much money. They are into shaving everywhere they can."

But CMS officials say the guide has long been in the works and isn't driven by budgetary issues.

Tension between schools and the Centers for Medicare and Medicaid services may be amplified by timing. The guide's release comes at a time when state budgets are bleeding red ink, a problem tied directly to Medicaid costs in many cases. State officials, looking for relief, are clamoring for Uncle Sam to kick in a higher share of rising Medicaid costs.

As Congress prepares to reauthorize the IDEA, the subject of Medicaid is bound to come up, school advocates say.

"IDEA says Medicaid should pay, and Medicaid says IDEA should pay," said Ms. Martinez of the Chicago district. "It's like they are playing 'monkey in the middle,' with the schools in the middle trying to get the federal money."

Vol. 22, Issue 19, Pages 1,11

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