Education Funding

Bill Would Bar Cuts in Schools’ Medicaid Reimbursements

By Christina A. Samuels — August 29, 2006 4 min read

A bill in Congress would bar the federal agency that manages Medicaid from carrying out its plan to trim some of the money it reimburses school districts for providing health services for poor students.

A 1988 law allows districts to apply for reimbursement from Medicaid for certain services they provide to children under the Individuals with Disabilities Education Act—mainly speech, occupational, and physical therapy.

The Department of Health and Human Services’ Centers for Medicare and Medicaid Services, which administers the nation’s health-care programs for the elderly and the poor, estimates it can save $615 million in fiscal 2007, and $3.65 billion over five years, by not reimbursing schools for the costs of transporting students to the services and for administering the program. Payments for the basic services would not be affected. The cuts are included in President Bush’s $199.4 billion proposed Medicaid budget for fiscal 2007.

But the legislation, introduced July 18 by Sen. Edward M. Kennedy, D-Mass., and Reps. John D. Dingell, D-Mich., George Miller, D-Calif., and Edward Whitfield, R-Ky., would keep those payments coming to schools. In addition, the proposal attempts to clarify requirements for states to get payments from the Centers for Medicare and Medicaid Services, or CMS. The legislation is called the Protecting Children’s Health in Schools Act of 2006.

Link to Services

Medicaid and Schools

The federal Medicare Catastrophic Coverage Act of 1988 allows schools to receive payment for certain health services provided to children eligible for Medicaid, the main federal health-insurance program for the poor. These services include:

• Health services related to the Individuals with Disabilities Education Act:
These may include speech, physical, and occupational therapies and other services specified in a student’s individualized education program.

• Section 504-related health services:
Section 504 of the Rehabilitation Act of 1973 requires districts to provide or pay for certain services to make schools accessible for children with disabilities. Many of these services may be similar to those provided to students covered under the IDEA.

• General health-care services:
These are usually mandated by the state or district and may include vision exams, hearing tests, scoliosis exams, or other services provided free to all students. In addition, federal funds are available for the costs of school administrative activities that directly support efforts to identify, enroll, and provide services to Medicaid-eligible students. Districts can also be reimbursed under Medicaid for the costs of transporting students to facilities, including schools, to receive health services.

SOURCE: U.S. Department of Health and Human Services

“These kids deserve and need our help. Their services should not be cut in order to pay for the tax cuts benefiting the wealthiest among us,” Rep. Dingell said in a statement. “Many schools across this country are trying desperately to help these special-needs children, and we should be doing the same.”

Chrisanne L. Gayl, the director of federal programs for the National School Boards Association, in Alexandria, Va., said that the bill is now in the process of attracting co-sponsors.

According to an NSBA fact sheet, schools play an important role in identifying children who are eligible for Medicaid and connecting those children with services. Eliminating the administrative reimbursement would result in services for fewer children, the organization says.

In addition, the NSBA says school districts have used the transportation reimbursement to equip buses with special equipment needed by children with more severe disabilities.

The changes in the Medicaid reimbursement policy can be accomplished through regulatory changes, without congressional approval. They would take place after the Health and Human Services Department’s budget is approved unless Congress specifically blocks the Centers for Medicare and Medicaid Services from enacting them.

Cumbersome Process

The reimbursement program has been troublesome, both for school districts and for the federal government, ever since the Medicare Catastrophic Coverage Act of 1988 spelled out that districts were allowed to receive payment for health services delivered to children with disabilities enrolled in Medicaid.

School districts have said that the program is cumbersome to manage, and that some of the information from the federal government on appropriate billing practices has been conflicting.

“Schools have every right to be annoyed at how hard it is to navigate this,” said Katherine Beh Neas, the Washington-based director of congressional affairs for Easter Seals, an advocacy group for people with disabilities that has its headquarters in Chicago. “I hope that can change, because this is a legitimate source of funding for these children, and schools should not have to work so hard to access these funds.”

One issue of particular concern has been payments that don’t directly relate to providing a service to a particular child.

For example, “general transportation to school is not a Medicaid service,” Mary M. Kahn, a CMS spokeswoman, said in an interview. “The money for those types of things has to come from education budgets.”

However, transporting a child to school where Medicaid services are provided can, in some cases, be reimbursed—and the current rules make it difficult for school districts to know what they can and can’t do, said Bruce Hunter, the chief lobbyist for the American Association of School Administrators in Arlington, Va.

Fixed Costs

“What CMS wants is for us to transport kids to an off-site center and have the services done there, because that fits their view,” Mr. Hunter said. Providing reimbursements to schools, he said, “does not fit the traditional, historic medical model.”

Mr. Hunter acknowledged that districts have had problems administering the program in the past, but he believes those problems are on their way to being solved. The larger issue, however, is that “people don’t want us to be health-care providers,” he said.

Greg Morris, the coordinator for LEAnet, a coalition of local education agencies fighting against cuts in Medicaid funding for schools, said school districts and education leaders plan to continue their support of the pending legislation and to pressure the White House about the cuts. Another option, Mr. Morris said, is to sue the Centers for Medicare and Medicaid Services for establishing a rule that only applies to schools. He noted that districts are not the only organizations that receive reimbursement from Medicaid for administrative costs.

“So why the discrimination against schools?” he said.

A version of this article appeared in the August 30, 2006 edition of Education Week as Bill Would Bar Cuts in Schools’ Medicaid Reimbursements

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