Student Well-Being

A Medicaid Change Could Make It Easier for Schools to Pay for Special Ed. Services

By Libby Stanford — May 18, 2023 8 min read
Photo of teacher working with special-needs student.
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A change announced Thursday aims to make it easier for schools to bill Medicaid for mental health and medical services they provide to students, a step toward streamlining a highly complicated system and making available new resources for schools to tackle students’ worsening mental health.

The U.S. Department of Education said it is proposing to remove a requirement under the Individuals with Disabilities Education Act that schools receive parental consent before billing public programs such as Medicaid for the first time for services they provide to students at school.

In addition, the U.S. Department of Health and Human Services released a new version of a guide for providing Medicaid services in school settings that hasn’t been updated since 2003.

The updated guide lays out several steps states can take to simplify Medicaid billing for schools, which provide a more limited set of medical and mental health services.

School administrators have long criticized the parental consent requirement for creating a lengthy bureaucratic process that discourages administrators from using money available to help students with mental health and medical needs. Thursday’s announcement will be a major step forward for increasing access to school-based services, said Sasha Pudelski, director of advocacy at AASA, The School Superintendents Association.

“Our belief is that this will lead to transformational change,” Pudelski said. “It really acknowledges the interdependency of a student’s health and a student’s education when we can expand the delivery of Medicaid services to students in schools.”

New rule would ‘cut red tape’ on Medicaid

Medicaid is one of the largest funding streams in districts’ arsenals to provide health services to students. The Education Department estimates that around 300,000 of the 500,000 students annually who qualify for special education services also qualify for Medicaid because of their disability status or family income.

Medicaid pays about $4 billion in school-based services a year, making it the fourth largest federal funding stream for schools, according to AASA.

But current policy makes billing for Medicaid complex, especially for school administrators who aren’t trained on its intricacies. That leads many to simply decide against tapping into a source of funds that could help them provide more services students need.

Right now, schools are required to notify parents the first time they seek to use Medicaid or CHIP benefits to cover the cost of services. (CHIP, the Children’s Health Insurance Program, is another source of publicly funded health coverage for children from families whose income is too high to qualify for Medicaid.) Billing the programs doesn’t involve any cost to parents, but schools are still required to receive the consent.

The requirement places a burden on school administrators and confuses parents, who already give schools consent to serve children through the Family Educational Rights and Privacy Act and other provisions in IDEA, administrators say.

“We already have consent to provide those services, and then we have to get another consent for billing Medicaid, and it is often very confusing to parents,” said Dr. Brigid Bright, a former special education administrator and now the communications director for the Council of Administrators of Special Education. “At times, parents would not want to share that they receive Medicaid support, so districts would not send the bill.”

At other times, schools either have difficulty getting in touch with parents, or parents don’t consent, Bright said.

In a December 2022 AASA survey of administrators, 70 percent said there is a generalized concern among parents about signing any Medicaid consent or release form. In the survey, administrators said they heard parents share concerns that their financial situations would become publicly known or there would be strings attached to the Medicaid billing.

AASA described it as “an unnecessary, time-consuming, and emotionally fraught process for districts and parents.”

“It was an inequitable burden placed on schools to get additional consent for these services that never should have been there,” Pudelski said.

Under federal law, any services schools provide under an Individualized Education Program must be free to the family.

The change also creates more parity between students with disabilities and students who don’t have disabilities but receive health services at school. The same parental consent requirement doesn’t apply to students without disabilities, so removing it allows schools to use the same billing process for both populations.

Removing the parental consent requirement would “help cut unnecessary red tape that schools and districts face in billing Medicaid,” the Education Department said in a news release. It would also help schools and districts meet their obligations to students with disabilities.

Schools will still be required to receive parental consent at multiple points to provide services to students because of other provisions in IDEA and the FERPA. Because of that, the Education Department said it doesn’t see removing initial parental consent to use Medicaid benefits as taking away parental rights or agency.

The proposed rule is already on the Federal Register, the federal government’s database for publishing policy changes. The public will have until Aug. 1 to submit comments on the proposed change, which the Education Department will review before making the change final.

New resource provides long-awaited updates to Medicaid guidance

Also on Thursday, the Centers for Medicare and Medicaid Services released an updated version of its technical assistance guide to delivering services in school settings. The update is the first of its kind in two decades and was mandated in the Bipartisan Safer Communities Act, legislation passed by Congress last June in response to the school shooting in Uvalde, Texas.

The new guide outlines ways for states to significantly streamline the Medicaid billing and reimbursement processes for schools, which don’t have the same infrastructure as hospitals and doctors’ offices to process Medicaid claims.

It encourages states to adopt a billing process that requires schools to track the services they’re billing to Medicaid but doesn’t make them use the same complex set of codes as hospitals and doctors’ offices.

“This gives us the ability to be schools that provide health services and tell you the services that we provided, but not have to be a hospital,” said Sarah Broome, a school Medicaid consultant who used Medicaid to provide services to low-income students at Thrive Academy, a high school she started in Baton Rouge, La. “And that is the reason why so many schools don’t use this program. They look at it and they think, ‘I cannot do that. That is going to be too hard for me.’”

School Medicaid policies are left up to the states, but the guide outlines new processes that states and school districts can use to relieve the administrative burden on school administrators.

It also specifically provides information on how states can simplify billing for school-based services in rural or under-resourced communities, which are often at a disadvantage when it comes to using Medicaid services because of a lack of money and available staff to treat students.

“Small districts just don’t have the startup funds oftentimes to hire the staff or to get it started,” said Jenny Millward, executive director of the National Alliance for Medicaid in Education. “If the billing process is simplified, it won’t be as labor intensive, and hopefully it will be much easier for that small school district to implement and get reimbursed for the services they have to provide for children.”

Medicaid funding can pay for the salaries of school-based health workers, so schools can use it to maintain services even after COVID-19 relief funds that schools have used to pay some of those salaries go away after September 2024. The new guide encourages states to broaden the providers that can bill Medicaid to include counselors, psychologists, and other mental health workers.

That should help districts navigate the end to ESSER funding, Pudelski said.

“As we look at the runway with ESSER getting closer to running out, this funding is going to be even more critical to sustaining those health-based services, particularly behavioral health care services that students desperately need now and will continue to need for the next few years,” Pudelski said.

Tapping into more Medicaid funding could also prove helpful as many districts face rising special education costs that they’re legally obligated to provide.

While the guide has a host of new policy recommendations, it will be up to state agencies—which share the cost of Medicaid with the federal government—to adopt them.

“The ball is now in the states’ courts, and we’re really hoping to see a good number of states step up and take advantage of it,” Broome said.

See Also

A boy sits on a small wooden chair, leaning over a small wooden table to color as he talks to a woman who sits across from him on a low grey sofa.

Policy is among a slate of efforts to support mental health

The proposed policy change is the latest in a list of mental health policy changes the Biden administration has announced this month.

Earlier this week the Education Department’s announced awards for schools, universities, and organizations that aim to boost the supply of mental health workers in schools, estimating that the grants will lead to 14,000 additional school-based counselors, social workers, and school psychologists. The department is also dedicating $2.6 million to a Mental Health Professional Technical Assistance Center, which will provide guidance on strategies for schools to improve mental health services.

In addition, the Bipartisan Safer Communities Act will require the Centers for Medicare and Medicaid Services to provide $50 million in grants to states to help increase school-based services and care. The center will provide more information on those grants in the coming months.

“The guide and the regulation are going to make a huge difference for school-based Medicaid providers and school-based Medicaid programs and, most importantly, the kids who rely on them,” Pudelski said.

See Also

Hands holding a monochromatic head shaped puzzle of a classroom with three colorful pieces of green grass, sunshine, and trees floating around the puzzle . Mental health concept.
Collage by Gina Tomko/Education Week (Images: iStock/Getty Images Plus)


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