Introduction to School-Based Medicaid

By Michael Case, President of the National Alliance for Medicaid in Education, Inc (NAME), Bureau Chief, Division of Medicaid

From a presentation for the 2023 NAME Annual Conference, Dallas, Texas – October 23, 2023

History of Medicaid

As established under Title XIX, Medicaid was intended as a cooperative program funded by both federal and state governments, with the proportion of federal to state funds, known as Federal Financial Participation (FFP), determined by formula, based on changes in State Per Capita Income (Section 1905(b)).

Originally meant as an entitlement for the aged, blind, and disabled individuals, and families that qualified for Aid to Families with Dependent Children (AFDC), now known as Temporary Assistance for Needy Families (TANF).

The federal government has significantly expanded Medicaid eligible populations by mandating that benefits be provided to additional groups.

Originally, Medicaid was primarily cost-based for institutional providers and fee-for-service (FFS) for individual providers.

As of July 1, 2016, the majority of states utilize a Risk-Based Managed Care (MCO) or Primary Care Case Management (PCCM) payment model.

In the 1990s, many states started to examine alternative approaches and funding mechanisms to relieve state budget restrictions and to expand scopes of Medicaid coverage.

The next great expansion of the Medicaid program comes as a result of the 2010 enactment of the Patient Protection and Affordable Care Act, known as the ACA or Health Care Reform.

Implementation of ACA began on January 1, 2014 – 40 states, including DC, expanded Medicaid through the ACA

Children’s Health Insurance Program (CHIP) reauthorized through 2027.

Structure of Medicaid

Medicaid is primarily regulated at the federal level and administered at the state level.

The framework for Title XIX is established, in general terms, through laws, regulations, policies, and guidelines.

This framework sets parameters for eligibility standards, coverage and scope of benefits, delivery models, etc.

Within these parameters, each state selects the scope of its own Medicaid program.

State programs are administered in accordance with an Approved State Plan, a comprehensive written description of the unique state design.

An approved State Plan serves as a contract between the state and CMS.

The Centers for Medicare and Medicaid Services (CMS) has been delegated by the Secretary of Department of Health and Human Services (DHHS) to oversee approval and implementation of state plans, as well as any amendments or changes.

State plans contain detailed descriptions of the state agency organization structure, service detail, assurances related to compliance with federal rules and regulations, and eligibility groups.

Medicare vs Medicaid

Medicare

• Is an insurance program
• Run by the federal government
• It is the same in all 50 states
• Available to Americans aged 65 and older, and sometimes to younger persons with disabilities

Medicaid

• Is an assistance program for individuals who financially qualify
• Run by state and local governments within federal guidelines
• It varies from state to state
• Available to low-income Americans, pregnant women, and people with disabilities regardless of age

*Kaiser Family Foundation Medicaid State Fact Sheets:

Medicaid State Fact Sheets

Medicaid Governing Tenets

• Payer of Last Resort: All other legally liable private coverage and government program sources must meet their obligation to pay claims for medical services. Medicaid will generally deny claims determined to be the responsibility of other payers or do a “pay and chase” with Third Party Liability (TPL) systems.
• Free Care Exclusion: New guidance was issued in the December 15, 2014, State Medicaid Directors Letter.
• Statewide: The benefits of the State Plan must be uniform throughout all geographic areas of the state.
• Comparability: Services must be “equal in amount, scope, and duration” for all beneficiaries, but can be greater for certain groups (e.g., Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) recipients certain waiver populations).

School Based Services – The Medicaid View

To be Medicaid eligible, services must be included among those listed in Section 1905(a) of the Act.

Services must be included in the regular State Plan, which is available to all Medicaid recipients, or be made available under EPSDT in the State Plan, which makes services available to children under 21.

Since there is no category of benefits titled “School Health Services,” the SBS services must be described in terms of the specific item in Section 1905(a).

Reimbursement

• Providers of services submit claims to the Medicaid Agency for services rendered on behalf of Medicaid eligible recipients.
• In the School Based Services arena, the Local Educational Agency is generally the provider to Medicaid, and submits a reimbursement claim to Medicaid.
• Claims submitted are usually of the format Units of Service x Rate Per Unit.
  • Some units are time based and some are event based
  • i.e., reimbursed by Medicaid on a Fee basis
• How the rate per unit is calculated determines the type of reimbursement system:
  • Medicaid Program Fee for Service (FFS) based on a Fee Schedule
  • Community Rate
  • Cost Based Reimbursement
• There are also two separate components to the Total Costs of School Based Services:
  • Direct Medical Services
  • Administrative Claiming

Cost-Based Reimbursement

Throughout the School Year (State Fiscal Year (SFY)), services are billed to and reimbursed from Medicaid using an Interim Rate applied to the Units of Service
delivered.

At the end of the SFY, costs are determined based on data provided through an annual cost reporting and calculation process. The actual costs are then applied to the total interim payments paid to the school district to determine Total Allowable Annual Costs.

If Total Annual Costs are greater than interim payments made, then there is a settlement made to the provider. If Total Annual Costs are less than interim payments made, the difference is recaptured by the Medicaid Agency.

The only approved method for allocating costs to allowable health services is a Random Moment Time Study (RMTS).

Under the governing formulation, there are also threshold response rates required to maintain the “validity” of the sampling method.

In general, only those individuals who are included in the RMTS may have their cost included in the annual cost report.

Allowable costs must then be further allocated based on those services recommended in an Individualized Education Program (IEP).

Administrative Claiming

Medicaid Administrative Claiming (MAC) allows the schools to seek additional reimbursement for expenses related to administrative activities in support of the Medicaid program.

• Medicaid Outreach
• Facilitating Medicaid Eligibility Determination
• Transportation-Related Activities in Support of Medicaid Covered Services
• Translation Related to Medicaid Services
• Program Planning, Policy Development & Interagency Coordination Related to Medical Services
• Medical/Medicaid-Related Training
• Referral, Coordination & Monitoring of Medicaid Services

Districts must participate in Direct Services billing in order to participate in MAC.

May 2023 CMS Medicaid School-Based Administrative Claiming Guide.

Costs are also allocated based on the RMTS.

Typically done through quarterly claims.

States must have a CMS-approved MAC Implementation Plan that will set the state-specific requirements for the RMTS and claim submission.

Centers for Medicare and Medicaid Services (CMS)

CMS School-Based Administrative Claiming Guide – https://www.medicaid.gov/resources-for-states/medicaid-state-technical-assistance/medicaid-and-school-based-services/index.html