Advocates for school-administered student health services say new guidance issued by a federal agency last month will allow schools to bill Medicaid for more services they provide to students.
Those additional reimbursements could help bolster tight budgets for school-health programs, allowing them to provide more services, such as immunizations, mental health care, and screenings for conditions like asthma, advocates say.
The change could make a big difference as schools increasingly work to improve student health and well-being. Addressing health issues can clear barriers to learning, such as undiagnosed illnesses, that low-income students frequently face, supporters say.
In the guidance—issued to state Medicaid directors—the federal Centers for Medicare and Medicaid Services said that the so-called “free care rule” does not apply to schools. Under that rule, schools previously could not seek Medicaid reimbursements for services provided to Medicaid-enrolled students if they provided those same services for free to other students.
The rule included two exemptions: services provided to students as part of their plans created under the Individuals with Disabilities Education Act, and services provided under the Maternal and Child Health Services Block Grant.
The Chicago-based Healthy Schools Campaign, a nonprofit organization, has campaigned for years to have the rule changed.
“Low-income and minority students are at increased risk of health issues that can hinder their learning,” Healthy Schools Campaign President and CEO Rochelle Davis said in a statement. “By allowing Medicaid funding to be available to more students, school health services can provide better care for the students who need it the most. This will help more students be healthy and ready to learn.”
The rule was originally included in a 1997 school health guidance created by federal officials. Essentially, it meant that schools that wanted to seek Medicaid reimbursements also had to create administrative structures to bill private insurers and individual uninsured families who weren’t enrolled in Medicaid.
“That was a huge burden and something that was just not practical for schools to do,” said Mark Bishop, the vice president of policy for the Healthy Schools Campaign. “It became such a high hurdle for schools to seek reimbursement that many didn’t try.”
Billing Mechanisms
In a legal opinion prepared for the Washington-based School-Based Health Alliance, a lawyer said the free-care rule was unenforceable because federal officials cited no “statutory or regulatory basis” for the policy when they first mentioned it in guidance.
School-based health centers—clinics that provide primary care services in schools, usually in cooperation with outside healthcare providers—often ensured they could be reimbursed for Medicaid-eligible services by finding ways to avoid providing free care to students who weren’t enrolled in Medicaid, said John Schlitt, the president of the School-Based Health Alliance.
Some schools used sliding fee scales with costs as low as $1 for low-income students. Some billed parents they knew wouldn’t pay.
“To force these programs to collect cash from the kids or to chase down every private insurer is a burden,” Mr. Schlitt said.
The federal Medicaid agency issued the new guidance after several school districts, including the 57,000-student San Francisco Unified School District, successfully challenged their state programs’ refusals to not provide Medicaid payments under the rule in courts and using the federal agency’s administrative appeals process.
Some states may be reluctant to add to their Medicaid costs, said Debra Miller, director of health policy for The Council of State Governments. Medicaid costs have made up growing shares of state budgets, typically rivaling only K-12 and higher education for the top spot.
Medicaid spending reached 25.8 percent of overall state expenditures in 2014, according to a November report from the Washington-based National Association of State Budget Officers.
But advocates insist greater support for school-health programs will ultimately drive down overall health costs and Medicaid budgets.
That’s because schools can work with primary-care providers to coordinate care, and because they are uniquely positioned to catch and address student health issues early, before they grow more costly and difficult to treat, Mr. Bishop said.
