modify the Medicaid benefit package;            

 restrict access to family planning providers; and

 restrict access to FQHC services (although the state can restrict access to FQHCs).

One specific type of 1915(b) waiver is the 1915(b)(4) waiver.  These are sometimes referred to as selected contract waivers.  This waiver restricts the number of providers who can participate in the Medicaid program.  For example, a state may choose to limit the providers who are permitted to provide mental health services through this waiver authority and only one provider may be available in a given geographic area.

Another type of waiver is the 1915(b)(3) waiver.  This waiver, used in conjunction with other waiver types, permits states to use the savings from one waiver to provide non-Medicaid services.  For example, if this waiver is in the area of mental health, savings may be used to provide recreational activities, parenting classes or family therapy if the parents are not Medicaid-eligible.  Basic Medicaid services to Medicaid beneficiaries must have been provided before these additional services may be offered.

In general, most states request a combined 1915(b)(1) waiver, which restricts recipients to certain provider, and a 1915(b)(4) waiver, which restricts the providers that may participate in the Medicaid program.  This is done to guarantee access while controlling costs.  Federal approval of 1915(b) waivers is granted for a two year period and may be subsequently renewed for two year periods.  States are required to provide HCFA with documentation on areas related to recipient access to care, quality of care and the cost effectiveness of the waiver with each initial and renewal waiver application.

(2) Section 1115 Research and Demonstration Waivers

Section 1115 of the Act provides the Secretary of the Department of Health and Human Services with broad authority to authorize “experimental, pilot or demonstration project(s) which, in the judgement of the Secretary, are likely to assist in promoting the objectives of the Medicaid statute.”  The following lists common characteristics of 1115 waivers, some provisions states generally waive and what states cannot waive:

Common characteristics of Statewide 1115 health care reform waivers

 the state expands its use of managed care through Federally or state qualified HMOs, partially capitated systems, primary care case managers or other entities;

 savings are projected as one of the outcomes of increased managed care;

 savings are expected to finance coverage to individuals previously ineligible for Medicaid, and

 the demonstrations are expected to be budget neutral for the life of the project (generally 5 years).  This means that the waiver does not cost the Federal government any more than if the state were operating under their Medicaid program without the waiver.

Among the Provisions States Can Waive Are:

 statewide uniformity, or statewideness;

 comparability requirements;

 eligibility, permitting states to revise Medicaid eligibility standards and criteria;

 the definition of qualified managed care organizations, permitting recipients to receive services through alternative delivery systems not recognized through existing Federal and state requirements, and

 reimbursement, allowing reasonable alterations in Medicaid payment requirements.

States Cannot Waive:

 unnecessary utilization and access safeguards.  Section 1902(a)(30) of the Act requires safeguards against unnecessary utilization of services as well as ensuring that payments are sufficient to enlist enough providers to make services as available as they are to the general population.  Such safeguards must be maintained under these waiver programs;

 quality assurance - states are expected to enhance quality assurance processes; and

 EPSDT provisions.  Under the terms and conditions of the 1115s, states must submit to HCFA their plans for ensuring that the full range of EPSDT services, including outreach and preventive care, are provided by plans participating in the demonstration as well as assurances that access to these services is not restricted by the demonstration.  The plan should also address the coordination of medical and non-medical services.

States must submit to HCFA a description of their plan for receiving public input  either before an 1115 demonstration is submitted or at the time the proposal is submitted. The public input process ensures that interested parties have an opportunity to review and comment on the proposal before HCFA review.  After states submit their 1115 proposals, HCFA reviews and identifies issues and questions.  States then respond in writing to the issues and questions identified by HCFA.  HCFA and the states discuss the outstanding issues and negotiate a resolution.  Terms and conditions are developed and the waivers are generally approved.

Many states, in formulating their waivers and moving Medicaid beneficiaries into mandatory managed care, generally do not include the disabled population and related “long term care services” in their waivers.  In the future, many states intend to incorporate this population into the waiver, or formulate another waiver to deal specifically with this population and the difficult issues associated with moving them into managed care.  Therefore, many of the Medicaid-covered IDEA services, such as rehabilitation, are not included in the waiver and continue to be provided in the Medicaid fee-for-service program.  As such, if these services are carved out of the waiver, schools, who traditionally provide Medicaid-covered services under an IEP or IFSP, can continue to provide them and bill the Medicaid program directly.  However, primary and preventive services such as EPSDT screens, provided mainly in school-based clinics, are usually among the services provided under managed care plans in the waiver.  Therefore, depending on the services provided by the school-based provider and the services covered (or carved-out) in the waiver, the role schools play in providing and/or coordinating services and receiving Medicaid reimbursement when states move Medicaid beneficiaries into managed care will vary.

Issues for School Health Providers and Medicaid Managed Care

The pursuit of Medicaid reimbursement for school health services is complicated by the recent growth in Medicaid managed care.  A school provider who becomes accustomed to the Medicaid rules under the “traditional” Medicaid fee-for-service practice may find the system and accompanying requirements completely changed if a state decides to move its beneficiaries into Medicaid managed care.  Because a state that mandatorily moves Medicaid beneficiaries into managed care does so under a waiver, there are no specific statutory requirements for states to establish relationships between school-based providers and managed care entities.  HCFA policy is to strongly encourage states, upon submission and negotiation of their waivers, to promote relationships between the managed care entities and school-based providers.  HCFA also encourages schools and school districts to get involved with the state and/or managed care entities during the formation of the waivers in order to establish relationships and ensure a place in the new health delivery system.  In this manner, provision of medical services can be coordinated by the school-based providers and the managed care entities in order to ensure children receive necessary services and care is not duplicated.

There are many types of arrangements that states put in place under their waivers to promote and assure the coordination of care between managed care entities and school-based providers.  Some states have instituted state laws which require coordination between managed care organizations and school-based health providers.  In addition, some school-based health providers have developed formal arrangements, including legal contracts; protocols for referral and treatment; authorization for school based providers to provide services to managed care enrollees and bill Medicaid directly; and commitments to expedite the treatment of patients referred by school-based health providers.  Some states, in their waivers, “carve-out” school-health services and reimburse those services under the “traditional” Medicaid fee-for-service program.  However, as discussed earlier, most states carve-out Medicaid-covered IDEA services in their waivers, and place the responsibility of primary and preventive services with the managed care entity.  While formulating such arrangements with MCOs often entails an administrative burden and can be a cumbersome process, schools and school-based health centers that serve Medicaid beneficiaries in states that move their beneficiaries into managed care must secure a role in the managed care system if they are to be reimbursed for the services provided to children.  

  Examples of Relationships

States, managed care providers and school-based services providers have taken different approaches to ensure the coordination of services and information between schools and managed care entities.  In order to give schools an idea of how coordination can be accomplished, the following examples describe how arrangements for providing services to Medicaid beneficiaries were achieved in these states.

OREGON

A 1991 Oregon state law requires prepaid managed care plans to contract with county health departments and other providers of services to children and adolescents.  Contracts must cover immunizations, diagnosis and treatment of sexually transmitted diseases, and testing and treatment for communicable diseases.  Under this state law, Medicaid managed care plans are required to reimburse school-based health centers for the provision of these services.  Plans are also encouraged to contract with school-based health clinics for provision of other health care services, such as maternity case management, well-child care and prenatal care.

SAN FRANCISCO, CALIFORNIA

Balboa High School operates a primary care clinic, funded primarily by the San Francisco Department of Public Health, as an authorized Medi-Cal provider.  Many of the school’s students are enrolled with Kaiser Permanente, either privately or through the Medi-Cal program.  Accordingly, Balboa has established an informal referral process with Kaiser.  In this system, Balboa performs a basic triage function.  That is, the school provides primary or acute care to Kaiser enrollees, referring them to Kaiser when care needs exceed the clinic’s capabilities.  In these situations, Balboa schedules Kaiser appointments to ensure continuity of care.

Balboa shares patient information with Kaiser only when referring students for emergency care, follow-up visits, or additional services not available at Balboa.  Although the information exchange is informal, all patient information released by the clinic to places other than the San Francisco Department of Public Health requires specific patient release. 

MASSACHUSETTS Under its 1915(b) waiver, Massachusetts includes coordination of care with school-based health centers as a requirement in each HMO contract.  The school-based health centers operate according to a guideline of written quality standards and clinical protocols so that the managed care providers are assured that primary care services are delivered according to acceptable standards.  The state includes this coordination as a part of the managed care providers performance measures in order to ensure the two providers are coordinating the care provided to Medicaid beneficiaries.

RHODE ISLAND Under the Rhode Island 1115 waiver, RIte Care, all Medicaid-covered services under an IEP or IFSP under the IDEA are considered “out of plan” services and carved out of the waiver.  As such, these services are provided in the school settings and billable to Medicaid under the fee-for-service reimbursement methodology.  The state has three school-based clinics that provide a wide range of primary and preventive care services.  The managed care contract is required to include these three school-based clinics in its network for delivery of RIte Care covered services available at the school-based clinic.  The state retains the right to change the number of clinics included in the network during the term of the contract.

BALTIMORE, MARYLAND

The Baltimore City Health Department operates school-based health centers in middle and high schools to provide a range of primary and preventive care services to students.  The school-based health centers are staffed by nurse practitioners or physician assistants, a community health nurse, a medical office assistant and a health aide.  While nurse practitioners and physician assistants are the primary providers of clinical services, they work under written agreement with an adolescent medicine physician who is onsite part-time every week and accessible by phone at all times.

Many Maryland Medicaid beneficiaries in schools are enrolled in Medicaid managed care plans.  The school-based health centers have a formal agreement with Total Health Care, a managed care plan operated by a federally qualified community health center.  Reimbursement is made at Medicaid rates by Total Health Care for authorized services provided in school-based centers.  There is no specific arrangement for reimbursement for services provided by the school-based provider by other Medicaid managed care plans.

The managed care provider is recognized as the medical home for the students.  When a student has an acute medical need, the nurse practitioner at the school-based health clinic tries to arrange an appointment at Total Health Care, or with whichever managed care entity the child is enrolled in.  If an appointment cannot be arranged the same day, Total Health Care authorizes the school-based health center to treat the student.  The other managed care providers have the same choice of whether to authorize the school-based health center to treat the student.

The school-based health centers provide EPSDT services for those students enrolled in Total Health Care who have never been to their facility.  These students are identified through a computer cross walk.  EPSDT screenings are performed by Total Health Care for other enrolled students.

When services are provided at the school-based health centers, a bill for the services and a medical report are forwarded to Total Health Care which is responsible for reimbursing the school-based health center.  If the school provides services to a student in another managed care entity, they are billed as well, but there is no formal agreement in place which ensures reimbursement.  When scheduling appointments, Total Health Care gives priority to students referred by school-based health centers, and the school-based health centers are notified of completed referrals.  Under the state’s 1115 waiver, which went into effect July 1, 1997, IDEA services are carved out of the waiver. Children are permitted to self-refer to school-based health centers, and the managed care providers must reimburse the school-based clinic based on established Medicaid rates.

BROOKLYN, NEW YORK

The Sunset Park Family Health Center Network of the Lutheran Medical Center operates a 12 site school-health program to provide medical, dental and psychological services to children in school districts 15 and 20 in southwest Brooklyn.  Sunset Park started Health Care Plus, a managed care plan for Medicaid clients.  The school-based health centers are the primary care providers for students enrolled in Sunset Park who choose them.  Thus, the managed care entity itself runs the school-based health clinics.  The Sunset Park sites are all electronically linked to facilitate the accessibility of information.

ST. PAUL, MINNESOTA

Health Start, a non-profit corporation, operates school-based health centers in six St. Paul high schools, serving over 3,000 students annually.  Since approximately half of the students treated at these clinics are covered by Medicaid, Health Start has been a fee-for-service provider since its inception. 

Minnesota has encouraged its managed care providers to coordinate with school-based health care centers.  As a result, RamseyCare (the largest Medicaid managed care provider in Ramsey County, where St. Paul is located) and Health Start executed a contract making the school-based health centers primary care clinic providers and care coordinators for adolescents enrolled in RamseyCare.  Under the contract, RamseyCare reimburses Health Start on a fee-for-service basis, using the Medicaid reimbursement rates plus 15%.  Health Start also bills RamseyCare for EPSDT services provided to patients and for confidential services provided at the school-based health centers, such as mental health services.

The school-based health centers provide medical information to RamseyCare through their billing for services.  In addition, RamseyCare must give prior authorization for all speciality services.  In turn, RamseyCare notifies school primary care clinics whenever emergency room visits are used.  In order to assure quality, Health Start clinics participate in RamseyCare quality assurance and utilization review programs.

In summary, schools need to work with their state Medicaid agencies, during the formation and implementation of their 1915(b) and 1115 waivers, in order to forge a role in the managed care arena and with managed care providers.  Schools should aim to make formal arrangements with the managed care providers through contracts, which specifically lay out each entities’ responsibility regarding services provided and reimbursement received.  These arrangements will depend on the local configuration of the delivery of services to the populations served by both the school-based health providers and the managed care providers.  The examples listed for coordination will be a guide depending on the distinct circumstances in each state and locality.  While HCFA encourages coordination between the state, school-based health providers and managed care providers, it is the responsibility of each party involved to form a relationship to ensure the provision and coordination of services provided to Medicaid eligible children.

RECOMMENDED RESOURCES/PUBLICATIONS

The following lists some recommended resources and publications that provide further information and insight into the relationship of schools to Medicaid managed care.  In addition, specific information regarding Medicaid managed care enrollment

can be accessed via the Internet at <<www.hcfa.gov>>.

PUBLICATIONS

(1) A Partnership for Quality and Access: School-Based Health Centers and Health Plans.

The School Health Policy Initiative

Division of Adolescent Medicine

Department of Pediatrics

Montefiore Medical Center

111 East 210th Street

Bronx, New York 10456-2490

(718) 654-4190

(2) Hacker K.  Integrating School-Based Health Centers into Managed Care in Massachusetts, J. School Health, 66(9) November 1996, 317-321.

RESOURCES

(1) The National Assembly on School-Based Health Care.

6728 Old McLean Village Drive

McLean, VA 22101-3906

(703) 556-0411

(2) Making the Grade, State and Local Partnerships to Establish School-Based       Health Centers.

     George Washington University

     Suite 505

     1350 Connecticut Ave., NW

     Washington, D.C.  20036

     (202) 466-3467

     Website: <<www.gwu.edu\~mtg   

With the Medicaid program funding an increasing amount of school-health services nationwide, schools, school districts, and LEAs have had to deal with the often challenging world of Medicaid payment.  Federal Medicaid law provides the general framework regarding payment for covered services but states will also have specific guidelines regarding payment methodologies. This section details and explains the Federal Medicaid payment requirements, including the state plan process as it pertains to payment for school health services, Medicaid provider responsibilities, allowable payment methodologies, and necessary documentation. 

Payment Requirements           

When a Medicaid provider furnishes a covered service to a beneficiary, that provider normally files a claim for payment with the state Medicaid agency.  Payment can be obtained either through prepaid arrangements, such as a capitated rate (as discussed in the section of guide on Medicaid Managed Care), or as a result of filed service claims, such as cost-based or fee-for-service arrangements.  State Medicaid agencies will then file claims with HCFA for the FFP for medical services or the administrative expenditures made by the state.

Often states amend their state plans by submitting new language to HCFA in the form of state plan amendments (SPAs).  Amendments are necessary when there is a significant change in the coverage or scope of services provided and/or a substantial change in the reimbursement methodology.  When the change to the state plan is statewide and significant with respect to the methods and standards used in setting payment rates, public notice is also required. 

The following are general principles dictated by Federal Medicaid law for payment of covered services under Medicaid state plans:

Flexibility, which generally means states have broad discretion to operate Medicaid programs within Federal guidelines;

Efficiency, economy and quality of care; which means striking a balance in payment amount such that payment is not excessive, but sufficient to ensure provision of high quality services and adequate access to care;

Reasonableness, which is a standard which individual states define; and

Allowable, reasonable and allocable cost reimbursement to public providers. 

The specific principles of allowable, reasonable, and allocable cost reimbursement apply only when payment is based on the costs incurred for delivering the service or when an interagency agreement exists between the state and the LEA/school for administrative activities.  The effect is that rates are limited to no more than actual cost of providing the service. 

There are also several specific state plan requirements states must abide by as well.  First, for every service in the state plan, there exists a corresponding rate methodology.  Because school-health services are not a statutorily defined Medicaid service, individual services must be described individually in an applicable coverage section of the state plan.  If the services and provider information are already covered in a state plan, a new state plan amendment is not required.  However, it may be desirable for the state to describe the schools’ role as providers in a SPA to assure compliance with relevant Federal Medicaid rules.  As such, the state Medicaid agency may create a new rate unique to the provision of school-based services.

Second, the state plan must carefully describe the policy and methods used to set payment rates.  This means that the rates should be clear and well defined.  The rates must be supported by information on elements such as: the factors used to create the rate; how each factor was determined (e.g., historical data, time study, etc.); and if the rate is subject to change, who makes the changes and how the change is made (e.g., yearly adjustments for inflation based on appropriate inflation index).  The state Medicaid agency must maintain documentation of these payment rates to be made available to HCFA on request.

Third, the actual payment rates must be adequate to obtain sufficient access to providers.  State agency payments must be sufficient to enlist enough providers so that services under the state plan are available to Medicaid beneficiaries at least to the extent that those services are available to the general population.  This requirement, in effect, sets a minimum limit on the amount a provider may be reimbursed by Medicaid, ensuring that beneficiaries receive adequate access to Medicaid providers. 

On the other hand, there are also regulations on the maximum amount a provider may be reimbursed.  Upper limit requirements which apply to outpatient hospital and clinic services provide that Medicaid can not reimburse for the services any amount more than payment that would be made for those services under Medicare under comparable circumstances.  Upper limits for non-hospital outpatient

facilities provide that the state may not pay more than prevailing charges in the locality for comparable circumstances. These limits apply when the outpatient hospital, clinic, or outpatient facility is the provider billing for the services.   When the reimbursement system takes the form of a prepaid capitation plan, different upper limits apply.  States must provide assurances that these upper limits are not violated by the state’s proposed methodology.

Establishing Payment Rates

Rates for medical services are established by the state Medicaid agency and described in the state plan. Schools/LEAs may use the rates already established by the state in the state plan, or the state Medicaid agency may prefer to develop unique payment rates for school-based providers that more closely reflect the costs incurred by such providers, as long as those rates are consistent with efficiency, economy and quality of care.  In creating a new rate, the state must use statistically accurate and valid data to justify the rate amounts. 

There are general rate principles that state Medicaid agencies, in conjunction with education entities, need to consider when developing rates.  Payments must be reasonable and adequate to meet the costs incurred by efficiently and economically operated providers in conformity with state and Federal laws, regulations, and quality and safety standards.  HCFA must approve these rates based on the assurances of the state that its findings for the particular settings and the adjustment of rates meet the requirements set in the regulations and applicable cost principles. 

Most rate methodologies already include administrative overhead.  It would not be appropriate for the school districts to add an administrative or processing fee to the amounts they pay, since that amount would not be for medical assistance.  If some processing were required, the Medicaid agency could contract with the school districts to provide those administrative services, which would be reimbursed at the administrative rate (see section on Administrative Claiming).

The following is a discussion of three types of payment methodologies currently utilized by states for school health services:

(1) Bundled or Per Diem rate system.  Bundled payments are fee-for-service rates for a grouping of separately covered Medicaid services under one rate.  Under this methodology, each service component must be calculated separately to determine the overall payment level, and each service component must have a corresponding description in the services section of the state plan. If the payment methodology for each service is altered in any way from the current methodology in the state plan, a SPA is necessary.  This grouped rate may not reasonably exceed the amount payable under the methodology applicable to other providers, since this could exclude providers who would be willing to furnish the service under the same terms as the school-based provider.

The bundled rate is usually utilized as one charge per child per school-day.  If a child does not attend school on a given day, the Medicaid program may not be billed for those services.  Under the bundled methodology, the number of Medicaid eligibles may not be estimated for the purposes of billing. (Although if creating a rate according to actual cost, an estimate of eligibles receiving the services may be factored into the rate to obtain the cost of the services provided.  However, this rate may then only be billed on a per child basis).  Also, the bundled rates may not include elements other than the cost of covered services.  Finally, if the bundled rates involve risk-based contracting, then the state must determine whether the entity meets requirements for Federal participation as a HMO or PHP.

Unless a state has obtained a waiver (discussed in more detail in the section in this guide on Managed Care), the schools may not require that a Medicaid recipient receive services from the school, as this violates freedom of choice requirements. Therefore, the rate cannot be based on the assumption that the beneficiaries will be obligated to use the school-based providers. Beneficiaries are permitted to use any qualified providers, even on the same day as they go to a school-based provider.

EXAMPLE State Y has found that the majority of students who receive Medicaid service A also receive Medicaid service B.  Both of these services fall under the same recognized Medicaid coverage category.  To simplify billing, the school has established a bundled rate to combine the cost of providing the two services.  To ensure freedom of choice, the school also retains the flexibility to bill under a fee-for-service rate in the event a child does not receive both services on a given day.  This bundled rate has been incorporated into the state plan, using the two current methodologies already in the plan for the two services. In the event the pattern of these services being provided together changes, the state has measures in place to adjust the rates accordingly.

(2) Per unit, or per service package.  Per unit rates are utilized by schools to cut down on the administration and paperwork associated with billing directly every time a service is rendered for a Medicaid beneficiary.  To establish a rate, schools/LEAs engage in extensive historical cost gathering using time studies, interviews, and cost reports.   Once this information is collected, the costs to the provider (school/LEA) of furnishing individual services to the Medicaid population of children is established. Rates for services are developed that specify the methodology for each specific service and provider type or practitioner which is a component of the calculation and fully explain how the average per unit or per service package rate is determined. 

Often an interim rate based on sampling is established.  In the event interim reimbursement is used, there must be a reconciliation or adjustment at some point in the future based on actual costs.  To obtain actual costs, the state maintains eligibility data, proper accounting for services, types of services, types of facilities, types of practitioners/providers, with cost reports at the end of the cost reporting periods.  These cost reports may result in upward or downward adjustment in the succeeding rate-setting period and there must be a mechanism for making these changes.  In addition, as with any other rate, upper limit payment requirements must be satisfied when applicable.

Also, the requirement for the payment methodology are that the state per unit rate methodology will be multiplied by the actual number of recipients receiving services.  The state should not estimate the number of recipients used in establishing the per unit rate unless the rate is an interim one which the state will adjust at a set time to reflect the actual services furnished to individual recipients. 

In the event the per unit rate takes the form of a prepaid capitation plan, both risk contracts and non-risk contracts are subject to upper limit requirements based on what the services would have cost on a fee-for-service basis.

(3) Unique payment mechanisms.  States and school districts are encouraged to use the flexibility inherent in the Federal Medicaid regulations to come up with new and innovative payment methodologies allowable under applicable requirements.

The Role of Medicaid Providers

In order to receive reimbursement for school-health services, there must be a provider agreement between the state and the actual provider of services (see the Coverage section of this guide for more information regarding provider qualifications).  The provider agreement, along with any contractual arrangement between the state and the school/LEA or between schools and providers, governs how and by whom Medicaid is billed for services and to whom reimbursement may be made.  Payment is generally made only to the provider of services.      If a

school/LEA enrolls as a Medicaid provider, it may receive reimbursement directly for Medicaid-covered services provided to eligible beneficiaries.  It is important to note that provider status also includes the responsibilities of ensuring that claims are processed expediently, that all liable third parties are billed, that all free care issues are addressed, and that all necessary documents are kept in the event of an audit.

Billing for Medicaid reimbursement sometimes requires more administrative work than schools have the time and personnel to invest.  As a result, schools as providers sometimes share the billing requirements with LEAs or with the state Medicaid agency, or schools may contract with an independent billing agency to handle billing.  Regardless, billing is not reimbursable as a separate service; rather, it is considered part of the rate for medical services.  Many schools hire contractors to develop systems for billing for Medicaid services.  However, schools may not bill the Medicaid agency for services of contract employees at rates higher than they are paid, or for mark-ups which pay a “factoring” agent, such as a percentage of the funds recovered by the school district, are not allowable.  Furthermore, while these contractors can provide valuable advice, schools should first consider contacting their state Medicaid agency, the Department of Education, and HCFA Central and Regional offices, for free technical assistance in developing a school-based services program. State Medicaid agencies can distribute provider manuals and assist schools with other necessary information and development regarding the state’s billing requirements for school health services.

Under the timely claims processing provisions, state Medicaid agencies require that providers submit all claims no later than 12 months from the date of service (some states may allow even less time for providers to bill).  This is an important consideration before retroactive billing is attempted by the school or school district.  Once the claims of the providers are received by the state, the state agency then has additional time (generally two years) to submit those claims to HCFA. Provider agreements must be in place at the time the claims are submitted, Medicaid provider qualifications must be met at the time the services are furnished, and requirements for billing third parties must be satisfied at the time the claims are submitted for FFP (see the section of the guide on Third Party Liability and Free Care for more information).  Furthermore, there is no authority for the state to enroll providers and to pay for services furnished during prior periods before the provider agreement was in effect. 

Documentation

A school, as a provider, must keep organized and confidential records that details client specific information regarding all specific services provided for each individual recipient of services and retain those records for review.  In addition, all of the screening elements of an EPSDT screening must be documented as it is not sufficient to indicate just one of the elements.  Relevant documentation includes the dates of service, who provided the service, where the service was provided, any required medical documentation related to the diagnosis or medical condition of the recipient, length of time required for service if relevant, and third party billing information.  This information will be necessary in the event of an audit and will also be helpful in the event it is necessary to adjust the rates in the future.

One of the barriers to schools claiming Medicaid reimbursement for Medicaid

covered services is the issue of billing for these services.  While the reimbursement

section of this guide explains how states determine reimbursement rates for covered

services provided and innovative methods in how states can claim reimbursement

for school‑health services, this section explains other requirements for billing of Medicaid services, such as the issue of "free care" and third party liability requirements as it pertains to school-based services.  The issue of Medicaid billing is especially problematic because schools are not well acquainted with operating as medical service providers or the specific Medicaid requirements associated with seeking reimbursement for Medicaid-covered services.  The requirements that Medicaid does not reimburse for free care (the free care policy) and that payment must be sought from any liable third party before Medicaid can make payment (third party liability) are two separate principles for Medicaid billing that are distinct and often confused.

Free Care   An important requirement related to billing for Medicaid covered school‑based services is the issue of "free care."   From the outset of the Medicaid program, a principle basic to public assistance has applied to Title XIX, in that Medicaid funds may not be used to pay for services that are available without charge to everyone in the community.  Free care, or services provided without charge, are services for

which there is no beneficiary liability and for which there is no Medicaid liability.

In applying the free care principle to determine whether medical services are provided free of charge and, thus, there is no payment liability to Medicaid, a determination must be made whether both Medicaid and non‑Medicaid beneficiaries are charged for the service.  Providers of Medicaid services must have the authority to charge for their services and utilize this authority, before Medicaid will make payment.  If only Medicaid recipients or their third parties are charged for the service, the care is free and Medicaid will not reimburse for the service.

Schools may employ certain methods to ensure the care is not considered free, allowing Medicaid to be billed.  The services would not be considered free if the following conditions are met.  The provider:

(1) Establishes a fee schedule for the services provided (it could be sliding scale to accommodate individuals with low income);

(2) Ascertains whether every individual served by the provider has any third‑party benefits, and

(3) Bills the beneficiary and/or any third parties for reimbursable services.

Exceptions to Free Care

For purposes of the provision of school-based health services, there are two exceptions to the free care rule, described below. 

(1) IDEA.  Section 1903(c) of the Act prohibits the Secretary from refusing to pay or otherwise limiting payment for services provided to children with disabilities which are funded under the IDEA under an IEP or IFSP.  Under these circumstances, Medicaid is the primary payer to the Department of Education.  As such, Medicaid-covered services provided under an IEP or IFSP are exempt from the free care rule.  This means that school providers may bill Medicaid for Medicaid-covered services provided to children under IDEA even though they may be provided to non‑Medicaid eligible children for free.  However, as discussed in more detail below, the requirements to bill all liable third parties for services still apply.  Therefore, although the services would be exempt from the free care rule, the school would still have to pursue any liable third party insurers for reimbursement.

(2) Title V.  Another exception to the free care policy which relates to school‑based health services includes services provided by Title V of the Social Security Act.  Title V of the Act is the Maternal and Child Health Services Block Grant, which provides a lump sum of funds to states for the provision of health services and related activities to mothers, children and adolescents for the reduction of infant mortality, preventable diseases, and access for to necessary health services. 

Federal Medicaid regulations at 42 CFR 431.615 define Title V grantees as

agencies, institutions, or organizations that receive Federal funding for part or all of

the cost of providing maternal and child health services, services to children with special health care needs, maternal and infant care projects, children and youth projects and projects for the dental health of children under Title V of the Act.  Schools may be able to qualify for funding under Title V as grantees, whether they contract with health providers or are a provider themselves.  Medicaid regulations specify requirements for cooperative agreements and arrangements between Title V grantees and state Medicaid agencies.  Medicaid-covered services provided by Title V are exempt from both the free care rule and the policy of Medicaid as the payer of last resort in that Medicaid will pay before Title V for Medicaid-covered services.  Again, although the services would be exempt from the free care rule, the school would still have to pursue any other liable third party insurers for reimbursement before billing Medicaid.

Impact of  Free Care on School‑Based Health Services

This policy on free care somewhat limits the ability of schools to bill Medicaid for covered services provided to Medicaid eligibles unless the school charges all students for the services provided or meets one of the exceptions above.  For example, many schools have a school nurse on staff to provide necessary health services to all students without charging them for the care provided.  However, the school cannot charge the Medicaid program for the services of the school nurse, if she furnishes care to all students (not solely Medicaid eligibles) without also charging non‑Medicaid students.  While there are exceptions to this free care requirement for Title V and Medicaid-covered services provided under the scope of an IEP or IFSP under IDEA, many schools provide a wide range of health services which would not fall under either exception.

Third Party Liability (TPL)

A third party is any individual, entity or program that is or may be liable to pay all

or part of the costs for medical assistance for Medicaid-covered services

furnished under the state plan (42 CFR 433.136).  Under Medicaid law and

regulations, Medicaid is generally the payer of last resort.  The Congress intended that Medicaid, as a public assistance program, pay for health care only after a beneficiary’s other health care resources have been exhausted.

State Medicaid agencies are required to take reasonable measures to determine the legal liability of the third parties who are liable to pay for services furnished under the state plan (section 1902(a)(25) of the Act and implementing regulations at 42 CFR 433.138) .  Such measures, include specific requirements to identify and recover payments from liable third parties.  States are required to integrate pursuit of TPL payments with mechanized claims processing and information retrieval systems used to administer Medicaid programs.  Furthermore, states must require Medicaid applicants to assign to the state their rights to medical support and third‑party payments as a condition of Medicaid eligibility.  Applicants for Medicaid must cooperate in identifying and providing information to assist the Medicaid agency in pursuing third parties who may be liable to pay for care and services under the plan, unless the individual establishes good cause for not cooperating. 

Payment of Claims

There are specific requirements in the Federal Medicaid statute and regulations

regarding the payment of claims by the state Medicaid agency if it is determined

that TPL exists.  If the state Medicaid agency finds that TPL exists and that the third party will pay within a reasonable time, the agency must pay only the amount, if any, by which the allowable Medicaid claim exceeds the amount of the third party liability (42 CFR 433.139).  However, the agency cannot withhold payment if TPL or the amount of such liability cannot be determined or if the third party payment will not be available within a reasonable period of time.  

If TPL exists but does not cover the specific Medicaid services provided, the provider would have to furnish documentation to the state Medicaid agency that although TPL generally exists for the beneficiary, there is no coverage for the services provided.  After such documentation is given, the provider would not have to continually pursue TPL for the services provided which are not covered. Thus, the claim is submitted to the state and would be paid.  The provider would need to establish annually thereafter that coverage for those non-covered services has not changed.  Many services covered by states under their Medicaid programs are not covered by liable third parties of Medicaid beneficiaries.  As such, the provider would not need to pursue TPL every time the service was furnished as long as it was demonstrated such coverage is not available by otherwise liable third parties.

If the probable existence of third party liability cannot be established or third party

benefits are not available to pay the recipient's medical expenses at the time the

claim is filed, the agency must pay the full amount allowed under the agency's

payment schedule.  However, if the state Medicaid agency learns of the existence

of a liable third party after a claim is paid, the agency must seek recovery of

reimbursement within 60 days after the end of the month in which payment is made

unless the agency has a waiver of this requirement. 

There are two methods states must utilize if probable TPL is established at the time

the claim is submitted to the state Medicaid agency.  Generally, states are required to use the cost avoidance method. There are some exceptions to using the cost avoidance method whereby the state uses the pay and chase method.

Cost Avoidance

Federal regulations at 42 CFR 433.139(b)(1) concerning the cost avoidance

requirements state, "if the state Medicaid agency establishes the probable existence

of third party liability at the time the claim is filed, it rejects the claim and returns to

the provider for determination of the amount of liability.  The establishment of third

party liability takes place when the state receives confirmation from the provider or

a third party resource indicating the extent of the third party liability.  When the

amount of liability is determined, the state pays the claim to the extent that payment

allowed under their payment schedule exceeds the amount of third party’s payment."

The cost avoidance method of payment of claims is considered to be cost‑effective

because the state saves administratively from using fewer Medicaid resources and dollars to pursue third party payment.  Furthermore, this ensures that the liable third party is pursued for payment before Medicaid pays the claim so that Medicaid dollars are not outstanding while waiting for third party reimbursement to materialize. 

Federal regulations at 42 CFR 433.139(e) permit states to obtain a waiver of cost

avoidance method of payment of claims and instead use the pay and chase method.  To do so, the state has to demonstrate that the pay and chase method is as cost effective as the cost avoidance method.

“Pay and Chase

Using the “pay and chase” method, the state Medicaid agency pays the claims submitted by providers and then seeks reimbursement from the liable third parties.  Reimbursement must be sought unless it is determined that recovery of reimbursement would not be cost effective in accordance with threshold amounts that have been established by the state.  If the probable existence of a third party cannot be established or third party benefits are not available to pay the beneficiary’s medical expenses at the time the claim was filed, the state will pay the full amount allowed under their payment schedule.  If the existence of a third party is determined after the claim is paid, or benefits become available from a third party after the claim is paid, recovery for reimbursement is sought to the limit of legal liability within 60 days from the end of the month in which the existence of the third party is determined.

There are specific circumstances in which states are required to use the pay and

chase method of payment, even though there is a probable or known third party at the time the claim is filed.  One circumstance impacting school-based health services where states are required to pay and chase involves claims for Medicaid beneficiaries obtaining prenatal and preventive pediatric services.  Another way to use the pay and chase method without this exception is through a cost avoidance waiver.

Prenatal and Preventive Pediatric Services

States must use pay and chase when the claim is for prenatal services or preventive pediatric services (some of these services include EPSDT services) that are covered in the state plan.  The intent of this requirement is to alleviate the administrative burden associated with third party liability efforts so as not to discourage participation in the Medicaid program by physicians and other providers of these types of services, since beneficiaries in need of such services already often have difficulty finding providers in many communities. The State Medicaid Manual (SMM), which is gives guidance to states on how to implement Federal regulations and requirements in their state Medicaid programs, includes a list of diagnosis codes that, at a minimum, states are required to pay and chase.  Diagnoses included in this list are for immunizations, screening tests for congenital disorders, well child visits, preventive medicine visits, preventive dental care, and screening and preventive treatment for infectious and communicable diseases.  States are given discretion to define the list more broadly.  For instance, states should pay and chase for additional diagnoses whenever using the cost avoidance method would discourage provider participation.  Although states are not mandated to pay and chase all EPSDT services, HCFA allows flexibility to permit states to pay and chase a range of Medicaid covered services provided to Medicaid recipients in schools using the rationale of not discouraging provider participation.  

Although states are permitted to use pay and chase for more pediatric preventive care services than those specified in the SMM, many states choose not to because it undermines the collection of TPL recoupments if there is existence of a probable third party payer.  Schools, as providers, should check with their state Medicaid agency to determine its policy on paying and chasing school‑based services claims for more than the required diagnoses stated in the SMM.

States are also required to pay and chase rather that use the cost avoidance method  in situations in which there is a third party derived from a non-custodial parent under a court order to provide medical support.  This requirement would impact schools providing Medicaid-covered services to these children.

Exceptions to Medicaid as the Payer of Last Resort

There are exceptions to the provisions of Medicaid as the payer of last resort

which allow Medicaid to be the primary payer to another Federal or Federally

funded program for services covered under Medicaid when specifically required by

Federal law, and only after other liable third party payments have been established.

One such exception is Title V as mentioned earlier in the discussion of free care.

In addition, section 1903(c) of the Act permits an exception to the TPL requirements in that, for Medicaid-covered services listed on a Medicaid eligible child's IEP/IFSP, Medicaid will pay primary to IDEA.  This means that Medicaid will pay prior to DOE for Medicaid-covered services listed in a child's IEP/IFSP.

Although the Medicaid program pays first to DOE for covered IDEA services, these services are still subject to the TPL requirements applicable to any other services furnished under the state Medicaid program.  In other words, this exception does not provide any exemption from pursuing OTHER liable third party payers, such as private insurance.  Medicaid is still secondary to all other sources of payment. Neither IDEA nor Medicaid was changed in any way by Congress that would relieve the Medicaid program of actively pursuing any liability of third parties, including private insurance, in order to minimize Medicaid outlays.

Impact of the TPL Requirements on School Providers

IDEA requires a school/school district to provide a free and appropriate education to every eligible child.  The Medicaid statute was amended by Congress in order to facilitate payment for the health-related services under the IDEA.  However, as stated above, although Medicaid pays primary to DOE, it still pays secondary to any liable third parties.  IDEA statutory and regulatory provisions on health-related services do not create exceptions to Medicaid requirements and procedures, or expand the scope of Medicaid responsibility or coverage. Therefore, schools or their health practitioners who seek to bill the Medicaid program for reimbursement for health services must meet Federal and state Medicaid provider qualifications including requirements to bill third parties. 

In addition, schools must abide by the payment of claims provisions at 42 CFR 433.139 where liable third parties are involved.  This means that, as a Medicaid provider, schools may be required to bill the beneficiary’s health insurance first before billing Medicaid to determine the extent of the insurer's payment liability.  If, under Medicaid, the services meet one of the regulatory exceptions or the state has obtained a waiver of the cost avoidance requirements, the state may pay in full and seek recovery of reimbursement from the liable insurer.  This removes the administrative burden of seeking TPL for services from the school provider and places it on the state Medicaid agency.  For preventive pediatric care services, the school provider may bill the state Medicaid agency, which will pay the claim, and the state will seek reimbursement from a liable third party.  However, unless the state interprets the typical treatment services under the scope of an IEP or IFSP such as the speech or physical therapy, to fall under the preventive pediatric services exception to the cost avoidance method of payment of claims, the school provider will have to pursue any liable third parties before billing Medicaid.

Because under IDEA children are entitled to a free and appropriate public education, whether a school would actually choose to bill private insurers for

services covered under an IEP or IFSP would depend on the school's policies

regarding health insurance billing and the potential for an associated cost to the

family.  Under Federal education policy on the use of parents' insurance proceeds, the requirements that a free and appropriate public education be provided without

charge or without cost means that DOE may not compel parents to file an

insurance claim when filing the claim would pose a realistic threat that the parents of

children with disabilities would suffer a financial loss not incurred by similarly

situated parents of other children.[2]  As such, private insurance of parents could not be billed for IDEA services, unless the parents agreed to such a cost.  Because the TPL provisions requires Medicaid to pay after private insurance, Medicaid could not be billed for these services either.

Medicaid does not have an interest under its third party liability requirements concerning which person, organization or agency pays the third party's liability. Thus, if the state education agency elects to pay the third party's liability through its own funds, that is permissible under the Medicaid statute.  For example, if a particular service, such as physical therapy, is billed at $50 and any private

insurance coverage is available to meet $40 of that payment, then Medicaid's payment is the difference between the Medicaid payment rate and third party payment, assuming the Medicaid rate is higher.  The state education agency may elect to meet the $40 liability.  If, however, Medicaid erroneously paid the $50 in the first instance and later discovered the beneficiary had private insurance coverage, the Medicaid agency must pursue recovery from the third party. If the state or LEA assumes the liability of the third party, Medicaid payment could be made minus the amount assumed on behalf of the third party payer.

In order to simplify billing, schools in some states, such as Alabama, contract out the billing process.  In other states, such as Michigan and Texas, schools use billing agents. In Oregon, over 60% of the schools' medical providers contract with a billing agency.  Washington, Wisconsin and Indiana use billing contractors in some cases.

We acknowledge that these requirements and policies regarding third party liability

and free care are problematic for school‑based providers.  Schools typically do not

have the staff, experience or equipment to run an efficient billing operation.  HCFA

has considered alternatives to these requirements but as yet, no changes have

been made.  Therefore, schools will have to learn and abide by these requirements

in order to bill the Medicaid program and receive reimbursement for Medicaid covered services provided.

Title XIX of the Act provides for the availability of FFP for states’ claims for administrative expenditures that are found to be necessary by the Secretary for proper and efficient administration of the Medicaid state plan.  Schools and school districts may perform activities that support administration of the Medicaid state plan, and FFP for the cost of such activities may be claimed as Medicaid administration under certain conditions.  Medicaid-reimbursable related activities performed by schools districts and schools may include items such as Medicaid outreach, eligibility intake, information and referral, coordination and monitoring of health services, and interagency coordination.  FFP for states’ claims for Medicaid administration expenditures is available at the rate of 50 percent. 

The statutory, regulatory and administrative requirements for the performing of claiming for administrative activities differ from those for providing and claiming for medical assistance services.  For example, reimbursement requirements pertaining to the provision of medical services such as provider qualifications, comparability, freedom of choice of providers, statewideness and free care are not relevant to claiming for administration.  Under administrative claiming, schools and school districts may perform certain Medicaid administrative functions without having to meet provider requirements.  This obviates the need to document and submit individual claims for services rendered.  However, schools and school districts do need to be aware that when providing both administrative claims and medical services, the medical service requirements must still be met.  Furthermore, when claiming under both aspects of the Medicaid program, some activities that may be claimed as administration may not be allowable as separate medical services claims once the school or school district becomes a Medicaid provider.

Guiding Principles of Administrative Claiming

In determining whether or not an activity qualifies for administrative FFP, the focus is on the state plan.  If the activity in question is performed in support of the eligibility determination process, or in support of any service covered under the state plan (such as a prior authorization determination, transportation to medical providers, assistance in completing the application of eligibility, state oversight in connection with ensuring the quality of services provided, marketing (such as hotlines, school bus posters, distribution of pamphlets) etc.), the activities necessary to administer such functions may be eligible for FFP.  However, an activity unrelated to the Medicaid program, even if performed in the best interest of the beneficiary, is generally not allowable (such as assistance in locating suitable housing, assistance in locating a free food pantry, or baby-sitting which enables the mother to attend classes at the local community college).  The supported activity must be in the approved Medicaid state plan for its related administrative costs to be eligible for Federal matching funds under the Medicaid program.  The following are some additional guiding principles applicable for determining the allowability of  administrative claims:

(1) No Duplicate Payments- In determining allowable administrative costs, the basic principle is that duplicate payments are not allowable.  That is, payments for allowable administrative activities must not duplicate payments that have been or should have been included and paid as part of a rate for services, part of a capitation rate, or through some other state or Federal program.  Furthermore, in no case should a program or claiming unit in a local jurisdiction be reimbursed more than the actual cost of that program or claiming unit, including state, local, and Federal funds.  The state would need to provide and maintain appropriate documentation and assurances that claims to HCFA for administrative activities are not duplicative of other claims or payments.

(2) Accurate Submission of Claims and Contracting- It is the state's responsibility to present Local Governmental Agency's (LGA) claims in readily reviewable form to HCFA for review, and after HCFA's approval, to submit those approved claims on the appropriate Form HCFA-64. 

(3) Provision of Technical Assistance- It is HCFA's responsibility to provide the state with any technical assistance required to develop and establish a system for making administrative claims under Medicaid for allowable activities.  Such technical assistance could relate to resolution of claims for prior periods, claims during a transition period and for prospective claims.  HCFA is available to provide guidance and all necessary approvals at each step in these processes, and to review and approve allowable claims and expedite (for the resolution and transition periods only) the payment to the state of those allowable claims. 

(4) Relation to the State Plan  - Activities for which administrative claims are made must directly relate and support the Medicaid state plan or waiver services.  Allowable administrative costs do not include gaining access to or coordinating non-Medicaid services even if such services are health-related.  However, the cost of gaining access to or coordinating non-Medicaid services may be claimable as targeted case management services if applicable state plan requirements for such services are met.  The Secretary, rather than the state, is the final arbiter of which activities fall under the proper and efficient administration of the state plan.  HCFA exercises the Secretary’s authority to make these determinations, and has consistently held that allowable claims under this authority must be directly related to the administration of the state Medicaid program. 

(5) Relation to Medical Services - Expenses cannot be claimed as administration if they are an integral part or extension of a direct medical or remedial service, such as patient follow-up, patient assessment, patient education, counseling, development of the medical portion of an IEP or IFSP, or other physician extender activities.  Such services are properly paid for as part of the payment made for the medical or remedial services.  Because Medicaid providers have agreed to accept service payment as payment in full, such providers may not claim an additional cost as administrative costs under the state plan.

(6) Not for General Health Initiatives - Administrative claims may not include funding for a portion of general public health initiatives that are made available to all persons, such as public health education campaigns, unless the campaign is explicitly for the purpose of assisting Medicaid-eligible individuals to access the Medicaid program.  Similarly, activities directed toward services not included under the Medicaid program, although such services may be valuable to Medicaid beneficiaries, are not necessary for the administration of the Medicaid program, and are therefore not administrative costs.

(7) Operating Costs - Administrative claims may not include the operating costs of an agency whose purpose is other than the administration of the Medicaid program.  If a government agency such as a school district, directs some fraction of its efforts exclusively to Medicaid claimable administrative services and can accurately identify that fraction, it may claim an appropriate portion of its operating costs to support that function if all other criteria for administrative claiming are satisfied.  For direct providers of services, administrative claims may not include overhead costs of operating a provider facility, such as the supervision and training of providers.  Moreover, additional claims for activities reimbursable under the medical assistance rate may not be submitted as administrative expenses, much like a physician may not submit claims for expenses incurred when a nurse calls to remind a patient of an appointment; as the expense is considered in the rate for the medical service provided.

General Administrative Services

There is much flexibility in what services may be properly claimed as administrative, and some activities can be billed as either medical services or administration.  Typical activities that can be claimed as administrative costs by schools or LEAs are:

 Medicaid eligibility determinations and redeterminations;

 Medicaid outreach:

(1) activities to inform or persuade beneficiaries to enter into care through the Medicaid system;

(2) activities to inform or persuade potential beneficiaries to apply for Medicaid;

(3) LEAs may only conduct outreach to the populations served by their school districts, i.e., students and their parents or guardians.

 EPSDT administrative activities/case management activities, such as

informing all program eligibles about the EPSDT benefit:

(1) providing or arranging for the provision of EPSDT screening services;

(2) arranging for (directly or through referral to appropriate agencies,         organizations, or individuals) corrective treatment;

(3) assisting families in identifying and choosing Medicaid providers;

(4) conducting follow-up to ensure children receive needed diagnosis and         treatment; and

 activities related to obtaining third party liability.

As described earlier, how these activities are claimed depends on the specifics of the services themselves, whether any interagency agreements are in place governing these activities, and in some cases, how the state prefers to provide the activities.  For example, if a state pays for case management as a medical service claim, case management services provided to the same population may not then claimed to HCFA as an administrative cost.  Again, this is because when a school becomes a Medicaid provider, general overhead expenses become part of the rate for the particular service provided.

Percentage of Allowable Activities

When claiming for allowable administrative activities that are performed with respect to a population consisting of both Medicaid-eligibles and non-eligibles, payment may only be made for the percentage of time actually attributable to the Medicaid-eligible individuals.  This distinction is applicable when the school or school district performing the service is performing the same service to non-Medicaid-eligible children.  Often, time coding systems are used for the purpose of identifying the percentage.  States ensure that state and local agency time coding systems used to determine Medicaid utilization are designed to appropriately distinguish allowable administrative costs from non-allowable expenses.  These time coding systems must also be approved by HCFA prior to state and local implementation and must meet the simplicity of administration requirements under the Act.

Because distinctions are necessary between medical services claims and administrative services claims, school districts must establish a mechanism to identify students receiving services that could be considered under either category.  For example, schools providing targeted case management services to children as a medical service must ensure that a method is established to preclude duplicate billing as administration.  When submitting claims for similar administrative case management services. (See the Case Management section for more specific information regarding this issue).

Once administrative activities are identified, costs must be included in a cost allocation plan that is submitted by the state Medicaid agency, approved by HCFA, and supported by a system which has the capability to properly identify and isolate the costs which are directly related to the support of the Medicaid program from all other costs incurred by the agency.  Cost allocation plans distinguish between direct and indirect costs, and must abide by the cost allocation principles described in the Office of Management and Budget Circular A-87 which requires that costs be “necessary and reasonable” and “allocable” to the Medicaid program.  States often negotiate contracts with local school districts, or the state’s DOE for the provision of Medicaid administrative services prior to submitting a formal plan to HCFA.  However, administrative claims reimbursement is subject only to the terms negotiated in the final approved submission by the state Medicaid agency. 

The FFP rate for state administrative expenditures is generally 50%.  An enhanced FFP rate of 75% is available for skilled professional medical personnel. These skilled medical professional staff must have appropriate credentials as skilled medical professionals, and the activity performed must require their level of training and credentialing (which are specified at 42 CFR 432.506).

Since the inception of the Medicaid program, states have been required to arrange for transportation of beneficiaries to and from necessary medical care, recognizing that unless needy individuals can actually get to providers of services, the goals of a state Medicaid program in providing necessary medical services are inhibited at the start.  Federal Medicaid regulations at 42 CFR 431.53 incorporate this requirement by stipulating that a state plan must “specify that the Medicaid agency will ensure necessary transportation for recipients to and from providers and describe the methods that the agency will use to meet this requirement.”  The Medicaid program’s requirements for transportation emanates from several statutory authorities.  Title XIX laws and regulations specify mandated medical services and optional medical services, as well as necessary administrative requirements which must be met under a state’s Medicaid plan.  Although states are required to provide non-emergency transportation to their Medicaid beneficiaries, states can cover transportation in two ways, or using a combination of both of these two methods.  Transportation costs can be covered as an optional medical service or as an administrative expense.  Depending on whether a state covers transportation as an administrative expense or an optional medical service, different requirements apply.

Transportation as an Optional Medical Service

Aside from the specified mandated medical services and the administrative requirements, Federal Medicaid law and implementing regulations also provide for optional medical services.  These optional services are either specified in the Act, or authorized by the Secretary under section 1905(a)(25) of the Act which specifies “any other medical care or remedial care recognized by state law and specified by the Secretary.”  Transportation has been included under the latter authority since the beginning of Title XIX and implemented at Federal regulations at 42 CFR 440.170(a). This regulatory authority defines the coverage of transportation services which includes “expenses for transportation and other related travel expenses determined to be necessary by the agency to secure medical examinations and treatment for a recipient.” States that choose to cover transportation as an optional medical service would receive FFP at the medical services or FMAP rate.

In order for transportation to be an optional medical service, it must be provided by a vendor to whom direct payment can be made by the state Medicaid agency.  In general, FFP is not available for direct reimbursement to the beneficiary of the services except under certain limited conditions.  As is the case for all services provided under the Medicaid program, in covering transportation as an optional medical service, the freedom of choice principles apply. The beneficiary must have the freedom to choose among all qualified providers unless the state is granted a freedom of choice waiver.

Transportation as an Administrative Expense

States may also choose to cover transportation as an administrative expense, and thus receive FFP at the 50% administrative rate.  The state has more flexibility in covering transportation under this method.  Arrangements may include the use of vendors, or other transportation alternatives, such as direct reimbursement to the beneficiary in the form of vouchers or tokens, or cash reimbursement for needed transportation with supporting documentation (e.g., a receipt).  Furthermore, the freedom of choice principles do not apply, which allows the state to restrict the providers from which a beneficiary can obtain transportation or the type of transportation provided.

Whether transportation is covered as an administrative expense or an optional medical service, generally Federal Medicaid law authorizes Medicaid payment only where transportation is otherwise not available.  Thus, the state is obligated to utilize all available sources of free transportation services (such as relatives, friends and otherwise available school transportation) before authorizing Medicaid payment.  Furthermore, the Federal Medicaid requirement that states administer their Medicaid programs properly and efficiently requires the state to use the least costly means, appropriate with the medical condition of the beneficiary, when multiple methods exist.

Medicaid Coverage of Transportation to School-Based Health Services

As a general rule, Medicaid funds are not available for reimbursing the transportation of Medicaid recipients to school even though Medicaid-covered school-based health services may be provided in the school during part of the day.  This is because education is the primary purpose of attending school, while any medical services rendered are secondary.  Moreover, transportation to school is provided free of charge to all students attending school, and HCFA policy generally prohibits the use of Medicaid funds for services provided at no charge (see the section of the guide on Free Care for more information on HFCA’s free care policy).

There is an exception to the exclusion of Medicaid reimbursement for transportation to onsite school-based services which applies for children receiving services under IDEA.  Section 1903(c) of the Act provides that HCFA may not “prohibit or restrict payment ... for medical assistance for covered services ... because such services are included in the child’s IEP or IFSP.”  Therefore, the Medicaid program can pay for transportation to school based services for children under IDEA when both of the following conditions are met:

1)   The child receives transportation to obtain a Medicaid-covered service (other than transportation), and

2)   Both the Medicaid-covered service and the need for transportation are included in the child’s IEP or IFSP.

On any day the above two conditions are met, Medicaid payment for transportation to and from the school is available.  HCFA policy is that this applies whether the state covers transportation as an administrative expense or an optional medical service.

However, depending on which method in which the state covers transportation (administrative expense or optional medical service), different requirements apply for reimbursement for children under IDEA receiving Medicaid-covered school-based services.  If the state covers transportation as an optional medical service, the statute and regulations on reimbursement for Medicaid services apply, which means the provider of transportation is reimbursed based on the transportation reimbursement methodology stipulated in the state plan (please see the section of the guide on Reimbursement for more detailed information on these requirements).

Alternatively, if a state covers transportation as an administrative expense, the Medicaid reimbursement rules for services do not apply. Instead, the principles for administrative service reimbursement must be followed.  Federal cost principles are contained in Office of Management and Budget (OMB) Circular A-87 for determining allowable costs of programs administered by state and local governments.  Under OMB Circular A-87, costs must be “necessary and reasonable” and “allocable” to the Medicaid program for Medicaid payment to be available.  Allocation of costs may be required in accordance with principles of OMB circular A-87  to ensure that the Medicaid program only pays for that portion of transportation that would be necessary for the medical service.  As such, the Medicaid program would not be replacing the cost burdens of school transportation allocable to states and local governments, but only paying for the portion of the transportation that could be allocated to the Medicaid service received.  Cost allocation plans must be approved by HCFA.

States are allowed flexibility in determining the method when formulating their cost allocation plans for reimbursing transportation to school-based services as an administrative expense.  One example of a cost allocation plan is according to time units.  Under a time unit method of cost allocation, if a student with an IEP receives a Medicaid-covered service on school premises during the school day, the percentage of time spent receiving a Medicaid-covered service would be the same percentage reimbursed from the total cost of transportation to and from school.  That is, if 60 percent of the day for a child covered under IDEA was for education, 20 percent for medical services and 20 percent for other activities, Medicaid would pay only 20 percent of the cost of transportation because that is the portion properly allocated to the receipt of the Medicaid-covered service.

Furthermore, if the child receives a Medicaid-covered IDEA service at an off-site facility during the school day, the cost of transportation from the school to the facility and back to the school would be reimbursable in full by Medicaid whether the state covers transportation as a service or as an administrative expense. However, in that situation, no cost of transportation to and from the child’s home and school would be reimbursable.  If a beneficiary does not receive a Medicaid covered service during the school day, transportation to and from school is not reimbursable for that day.  Finally, although Medicaid pays primary to DOE for Medicaid-covered services in a child’s IEP or IFSP, all other liable third parties of the beneficiary should be billed primary to Medicaid for the provision of transportation services.

Therefore, while Medicaid coverage for transportation to school-based services is generally not allowable, there is an exception in the Medicaid statute which permits Medicaid coverage of transportation for children under IDEA only when receiving a Medicaid-covered service, and only when both the covered service and the transportation are listed in the IEP/IFSP.  Depending on what method in which a state covers transportation, the reimbursement to transportation providers varies.

Case management is an activity which assists individuals eligible for Medicaid in gaining and coordinating access to necessary care and services appropriate to the needs of an individual.  Coordination is essential to preventing duplication of services while maximizing children’s access to needed services.  Schools can play an important case management role in identifying children’s health problems and are well situated to provide a linkage among the family, health services, and social services, since they have access to the majority of children and adolescents in the country on a daily basis.  Among other activities, case management can be used to assist families in identifying and choosing providers, scheduling appointments, accessing transportation, maintaining records, helping families to maintain contact with providers, and conducting follow-ups to ensure that children receive needed diagnosis and treatment.

States set their own specific provider qualifications, within broad Federal guidelines, as well as licensing or certification requirements and limitations.  The qualifications established for the providers of case management services must be reasonably related to the case management services they are to perform.  Any individual or organization, including schools or school districts, which meets the established provider qualifications and which undertakes to provide case management services may enroll as a Medicaid provider.

Case management takes many forms.  In establishing a unique Medicaid program, each state has the flexibility to provide case management type services in any or all of the following ways:

 as an administrative activity necessary for the proper and efficient administration of a State’s Medicaid plan;

 as a medical service under the authority of section 1905(a)(19) of the Act;

 as an integral and inseparable part of a Medicaid covered service included in a state’s approved Medicaid state plan;

 in connection with the implementation of a primary care case management system under section 1915(b) of the Act;

 as a service which can be provided under a home and community based services waiver under the authority of section 1915(c), (d), or (e) of the Act; and

 as an optional targeted case management service under a state’s Medicaid plan.

FFP for case management services may come from either administrative matching funds, or from medical assistance matching funds, depending on how the case management service is characterized.  In some instances, the case management is appropriately reimbursed from either source.  In cases where an activity may qualify as either a medical service or an administrative activity, states have the latitude to classify the function in either category.  This decision should be made prior to claiming FFP because of the different rules that apply to each type of function under the Medicaid program.

Differences in how case management is claimed will affect the requirements for obtaining reimbursement.  For example, while forms of documentation such as time studies, random moment sampling and cost allocation plans may be appropriate for claiming administrative FFP for activities in support of the state plan, these modes of documentation are not acceptable as a sole basis for Federal participation in the costs of Medicaid services.  Medical service match requires an identifiable charge related to an identifiable service provided to a recipient.  Furthermore, states cannot restrict provider participation, e.g., schools/school districts, or recipient participation, if these case management costs are claimed as medical assistance costs.  Once the reimbursement is obtained, the funds are distributed according to any agreements between the school and the state Medicaid agency.  In some instances, schools receive the Federal matching funds, and it is then up to the school to determine how Medicaid funds will be used to enhance current services.

Under section 1915(g)(2) of the Act, case management services are beneficiary-based activities, which have their purpose in the linking of eligible individuals with the most appropriate providers of care and services, regardless of the funding source of the care and services.  Case management performed as an administrative activity however, is primarily concerned with the proper and efficient administration of the Medicaid program.

The determining factor in ascertaining whether a case management activity could qualify for administrative FFP is its relationship to the functioning of the Medicaid state plan.  If the activity has a direct link with the appropriate operation or utilization of the Medicaid plan, it is considered necessary for the proper and efficient administration of the Medicaid program.

The following discussion clarifies the particular situations in which case management services may be furnished under Medicaid and highlights those program issues which typically arise when efforts are made to bring school-based providers into the Medicaid program.

Administrative Case Management   

Case management can be provided as an activity found necessary for the proper and efficient administration of a state’s Medicaid plan.  This type of case management includes such activities as Medicaid utilization review, prior authorization for medical services or supplies, and Medicaid preadmission screening.  Case management provided in this fashion must be limited to activities directly related to the administration of the Medicaid program and may not be used to help a person gain access to items and services outside Medicaid (such as special education services), even though these services may be necessary to the well-being of the person. 

The state may restrict the providers of administrative case management.  For example, case management activities in general administrative support of the state may be performed by employees of the state Medicaid agency.  Case management activities may also be performed by a designee of the Medicaid agency.  The designee could be another state agency such as Title V, the Health Department, or an entity with which the Medicaid agency has a contractual agreement.  Such administrative case management, when limited to coordination of access to Medicaid funded medical services (42 CFR 441.61 and 441.62) may be found necessary for the proper and efficient administration of the state plan.  Payment made for administrative case management services is made at the rate determined under section 1903(a) of the Act (that is, the 50 percent administrative match or if appropriate, one of the premium match rates provided in that section).  With regard to any allowable administrative claim, payment may only be made for the percentage of time spent which is actually attributable to Medicaid-eligible individuals.

Because allowable administrative claims must be directly related to the administration of the Medicaid program and because the majority of services provided by schools will most likely be covered under medical service matching funds, most schools and school districts will play a very small part in administrative claiming.

Case Management as a Medical Service

Section 1905(r) of the Act requires states to provide any services included in section 1905(a) of the Act, when medical necessity for the service is shown by an EPSDT screen, whether or not such services are covered under the state plan.

Care coordination, including aspects of case management, has always been an integral component of the EPSDT program.  The purpose of case management in the EPSDT program is to assist children in arranging and obtaining health and related services in their communities.  Since EPSDT screening, diagnosis, and treatment activities are frequently not conducted at one time or in one place, case management is critical to ensure that a child receives appropriate services on a timely basis.  Schools provide an ideal setting for EPSDT case management services, as they are often the first to be aware of the specific medical needs of a child.

Case management may be used to reach out beyond the bounds of the Medicaid program to coordinate access to a broad range of services, regardless of the funding for the services to which access is gained.  As an example, case management services could be used to help an adolescent with an abusive, alcoholic parent gain access to Alateen.   Alateen is not a covered Medicaid service.  However, a case manager could help the child gain access to the organization and its meetings.

Payment for case management services furnished under section 1905(a)(19) of the Act is as medical service at the FMAP rate.  Claims should be fully documented for case management as a medical service.  Claims should also include date of service, name of recipient, name of provider agency, name of the person providing the service, nature, extent or units of service, and place of service.

Lastly, we would note that states may elect the case management benefit under section 1905(a)(19) of the Act as a distinct state plan benefit, available to all recipients, regardless of the EPSDT program.  However, at this time, we are unaware of any states who have elected this option.

Case Management Under Medicaid Waivers

With the inception of managed care and the increasing popularity of implementing Medicaid waivers, case management services have become an important element in service delivery.  However, managed care settings can present unique complications in the provision of case management services by schools.  In authorizing states to offer case management services, Congress recognized the potential for duplicate payments, due to the same or similar services provided to children under both the managed care plans and the schools or school districts.  As a result, under Federal law, Medicaid case management services may not duplicate payments by other programs to public agencies or private entities for the same purpose.  Only in mutual collaboration can the provision of case management services be of a high quality and efficient and economic for all entities involved.

To diminish the threat of duplication, there are several approaches a school or school district can take.  One approach would be for the state to request that school-related health services be exempt from the applicable managed care waiver.  Although this approach allows schools to continue in their service provision without having to operate through a managed care organization, there still must be some coordination between the managed care entity and the school to establish the responsibilities of each.

The different types of waivers under which case management services are provided are discussed below.

(1)Freedom of Choice Waivers, Section 1915(b) - Freedom of Choice waivers authorized by section 1915(b) of the Social Security Act allow a state to request that the Secretary waive the freedom of choice requirements, in order to implement a primary care case management system (as described in 42 CFR 431.55(c)).  (Please refer to the Managed Care section of the guide for more information on these types of waivers).

(2)Home and Community-Based Services (HCBS) Waivers, Section 1915(c) - Under section 1915(c) of the Act, states may request waivers of certain Federal requirements which impede the development of Medicaid financed community-based treatment alternatives.  Federal regulations permit HCBS waiver programs to serve the elderly and disabled, the physically disabled, the developmentally disabled, or the mentally retarded or mentally ill.  Section 1915(c) programs may also be targeted to individuals with a specific illness or condition, such as technology-dependent children or individuals with AIDS.  Types of requirements that may be waived are statewideness, comparability, and community income and resource rules. 

Case management is one of the many services that may be provided under a 1915(c) home and community-based waiver.  In order to provide case management, the state must define it as part of a waiver request, and identify the qualifications of the providers.  Under such a waiver, case management services must be provided under a written plan of care which is subject to the approval of the state Medicaid agency. Schools should contact the state Medicaid agency if they are interested in developing case management services under a HCBS waiver, or to see if such a waiver is already implemented in the state.  

(3)Research and Demonstration Waivers - Research and Demonstration Waivers are waivers granted under section 1115 of the Act.  Depending on the structure of the 1115 waiver, case management services may be one of the many services offered to the 1115 population.  Please see the managed care section the guide for more information on 1115 waivers.

Targeted Case Management

Most medical services providers routinely perform case management type services to some degree.  As a result, case management services such as reminder calls for appointments, treatment plans, some referral costs, and patient education, are often provided as a component of a Medicaid-covered medical service.  These case management services are not usually billed separately.  However, when a distinct population is in need of more substantial case management services than typically provided by a physician, these activities may be covered as independent services. 

In 1986, Congress recognized case management as a separate and distinct medical service eligible for reimbursement at the FMAP rate. Since then, Targeted Case Management services, often referred to as TCM, have been utilized to cover services which assist the individual in gaining access to needed medical, social, and educational services provided under a state’s Medicaid program.  Under TCM, states can waive the statewideness and comparability requirements.  Therefore, under TCM, the state can target individuals by different criteria such as age, degree of disability, illness, or condition.

TCM must be provided to the targeted group of high risk individuals identified and characterized in the state plan.  There is no limit to the number or size of target groups to whom a state may provide case management services.  The target group may be the state’s entire Medicaid population, or may focus on groups such as individuals with AIDS or HIV related disorders, pregnant women and infants up to age one, and developmentally disabled persons as defined by the state.  Some states have approved TCM programs for children with disabilities, and for children under an IEP or IFSP.  Geographically, states can also provide TCM on a less-than-statewide basis. 

The receipt of case management services must be at the option of the individuals included in the target population.  A beneficiary cannot be forced to receive case management services for which he or she might be eligible.  Similarly, the state plan may not restrict the service choices of the individual.  If a Medicaid beneficiary chooses to use a Medicaid-covered service, then the case manager must help the individual access that particular service.  Providers also share in some protections.  TCM cannot place restrictions on qualified providers (eligible individuals must be free to receive case management services from any qualified provider of TCM services) except for the chronically mentally ill (CMI) and the developmental disabled (DD).  Still, in these instances the state can define “reasonable provider,”which in effect limits the pool of providers.  If the state does intend to restrict providers for the CMI or DD population in this manner, it must indicate this in the state plan.  CMI and DD individuals still retain free choice of any providers the state determines as qualified.

When case management services, as defined in section 1915(g)(2) of the Act, are also mandated under Early Intervention in IDEA, and furnished to an eligible individual (that is, a Medicaid eligible child who is included in the target group specified by the state in its approved Medicaid state plan) by a Medicaid participating provider, Medicaid may properly make payment for these services.  This is because of section 1903(c) of the Act, which provides that HCFA may not “prohibit or restrict payment for medical assistance for covered services because such services are included in an IEP or IFSP.”  Therefore, as long as all other Federal requirements are met, FFP may be available for case management services, furnished under the authority of either section 1905(a)(19) or section 1915(g) of the Act, when these services are provided under IDEA.

Coverage of TCM remains an option to individual states.  However, if a state does choose to cover TCM, the state must submit a SPA specifying the target group, the geographic area to be served, the service to be furnished, provider qualifications, and the arrangement under which providers will be paid.  If these elements differ for subgroups, the state must submit separate amendments.  When obtaining reimbursement, information that will be requested or documented by the state for claim submissions or case records of TCM include: date of service, name of the recipient, name of the provider agency, name of the person providing the service, nature and extent or units of service, and place of service delivery.  In addition, providers must maintain case records which indicate all contacts with and on behalf of beneficiaries.

Because TCM activities are often confused with medical services or allowable administrative expenses, the following is a list of frequently misunderstood services that are not acceptable TCM services:

 assessment costs for determining the individual’s need for a physical or psychological examination or evaluation;

 the provision of any medical treatment or service;

 discharge planning from an institution (this is already required as a condition of payment of a hospital, IMD and ICF/MR - however TCM is an allowable activity within the last 30 days of institutionalization);

 administrative activities such as eligibility determination, screening, intake, outreach and utilization review;

 formal advocacy and developing new provider resources;

 payment for the cost of the administration of other services or programs to which a recipient is referred. (e.g., education services, juvenile programs);

 general administrative expenses of the Medicaid program; and

 “prior authorization” of services.

In both the administration of the state plan and provision of Medicaid services, Medicaid law and regulations stipulate that preserving confidentiality of beneficiaries is of utmost importance.  In addition, the confidentiality provisions of the Federal Family Education Rights and Privacy Act prohibit a computer match of Education and Medicaid data bases (except for the purposes of determining eligibility in which case DOE can submit information which can be matched to Medicaid information).  While both the Medicaid confidentiality requirements and the DOE confidentiality requirements are in place as a safeguard to beneficiaries’ privacy, these requirements can pose a barrier in the provision of Medicaid-covered school-based health services.  This section explains the Medicaid confidentiality requirements, in addition to providing examples of how the provision of Medicaid-covered school-based health services has been achieved within these requirements.

Administration of the Plan

Section 1902(a)(7) of the Act requires that state Medicaid plans “provide safeguards which restrict the use and disclosure of information concerning applicants and recipients to purposes directly connected with the administration of the plan.” Therefore, disclosure of information concerning applicants and beneficiaries must be limited to purposes directly connected with the administration of the state Medicaid plan, which includes the delivery of medical services. 

Purposes related to plan administration include establishing eligibility; determining the amount of medical assistance; providing services for recipients; and conducting or assisting an investigation, prosecution, or civil or criminal proceeding related to the administration of the plan (42 CFR 431.302).  Therefore, release in permitted of information necessary for a provider to know which services, if any, Medicaid will pay for, and to what extent the provider should bill Medicare or other third-parties before billing Medicaid.

EPSDT

Because Medicaid law requires states to provide or arrange for the provision of EPSDT services, these services are considered activities directly connected with the administration of the plan.  Activities such as outreach, informing, assistance with transportation, and scheduling appoints for services are also activities directly related to state plan administration. 

The disclosure of medical information is privileged and may only be released with the patient's or in the case of children, parent or guardian’s permission.  Section 5320 of the SMM provides for the circumstances under which Medicaid information may be released, without the consent of the individual, to EPSDT providers and under interagency agreements relating to EPSDT.  When the school is a qualified Medicaid provider, information regarding Medicaid eligibility may be collected by the school at the time a child registers for classes, or prior to receiving services.

An agency or provider with a written interagency agreement to perform EPSDT services that include outreach and/or assistance with transportation or scheduling appointments is considered an extension or arm of the Medicaid agency.  Without his/her consent, an individual's name, address, medical assistance number, and related information may be furnished to such an agency or provider that meets specified confidentiality requirements as follows:

 the entity must have criteria that specify the conditions for release and use of information about applicants and beneficiaries that are at least as restrictive as the standards applicable to the state itself;

 Information access is restricted to persons or agency representatives subject to legal sanctions or standards of confidentiality at least comparable to those of the Medicaid agency;

 The release of names of applicants and beneficiaries which may be used by outside sources is prohibited, and

 Written permission is obtained from a family or individual before responding to a request for information from an outside source.

Standards of Confidentiality

Federal Medicaid regulations regarding confidentiality require that those receiving released recipient information must have standards of confidentiality comparable to those of the state Medicaid agency itself.  This requirement is an additional condition for the release of information.  However, a provider is not entitled to additional information simply because it is bound by contract and administrative regulations to protect confidentiality.

Releases of Information

Every exchange of information outside a discrete organizational entity or agency is considered a release.  HCFA cannot authorize releases of recipient information unless there is a specific and direct connection to a Medicaid-covered service. To permit release of additional information to providers,  there must be some basis to assure that the release meets the statutory and regulatory requirement of serving a purpose directly related to state plan administration.  In addition, the entity receiving the Medicaid information may not release the information except as permitted by the SMM.

The beneficiary’s consent is not necessary for releases which are not in response to outside requests but are, instead, essential to plan administration or service delivery.  The requirement for recipient consent applies to requests for information from an outside source, not releases which are essential to ordinary program operations.  Such consent was given at the time of application for Medicaid.

A school, as a Medicaid provider, may receive only the following information in reply to a query regarding a Medicaid-eligible:

 Beneficiary's name;

 Beneficiary's medical assistance identification number;

 Beneficiary's Medicare health insurance claim number;

 Social security number (if the individual agreed to the release of information when signing the application for assistance);

 Date of birth;

 Indication that the individual is eligible for the date or range of dates queried;

 The scope of services for which the beneficiary is eligible;

 Third party insurers, including policy number and type of coverage;

 Service prior authorization requirements;

 Copay amounts to be satisfied;

 Lock-in/lockout restriction on the recipient record;

 Unit or dollar limits and the portions/amounts;

 Capitation plan enrollments, and

 Names and telephone numbers of primary care physicians or case managers if the beneficiary is in a primary care case management plan.

Accessing Data

Providers may access the Medicaid eligibility information only by entering the beneficiary's Medicaid identification number or two or more of the following data elements:  (1) beneficiary's full name, including middle initial; (2) beneficiary's date of birth, and (3) beneficiary's social security number; and by entering date or dates of service(s).  

Dates of Released Information

Requests for release of information to providers must include the date or a span of dates of service.  This date (or dates) cannot be more than 12 months prior to the date of query.  There is no known valid purpose connected to plan administration which can justify release of information over 12 months prior to the date of the inquiry.  Provider claims must be submitted no later than 12 months from the date the service was provided.  Assuming that a provider inquiry is related to a claim which the provider intends to file (which should be the only reason it makes an inquiry), eligibility information over 12 months old would therefore not be relevant.

Confidentiality and School-Based Services

Schools cannot receive a list of children who are Medicaid beneficiaries or eligibles, as the Medicaid Agency may not submit lists of eligibles to other agencies.  In order to compile such a list, the school or school system must first submit to the Medicaid Agency a list of children receiving services for Medicaid Agency confirmation.  The Medicaid Agency may then run lists from an education agency against its own files with replies to Education only for those children found to be already eligible for Medicaid.

State Examples

Several Medicaid agencies and school systems have solved the confidentiality problem in specific ways as discussed below.

THE DISTRICT OF COLUMBIA

The District of Columbia, in its new managed care program through an 1115 waiver for children and youth with special health care needs, asks the parent or guardian to sign permission for release of records at the time of enrolling in the managed care program.

MASSACHUSETTS

In Massachusetts, for students receiving special education services, as the student’s IEP is being developed, some schools attempt to receive parental permission to bill Medicaid and the child’s Medicaid identification number.  Massachusetts sends a mailing to the parents explaining that  parental permission is required for the schools to bill Medicaid.  Most parents give consent.

NEW YORK

New York’s application for medical assistance is an example of how one state has solved the problem of confidentiality.  The eligibility form has been revised to give permission for release of information.  The form permits the release of any information regarding the educational records necessary for claiming Medicaid reimbursement for health-related educational services.

School-based health care is an efficient method in providing necessary medical care to Medicaid-eligible children and youth.   From HCFA’s standpoint, schools present a valuable opportunity to provide medical services to beneficiaries in a setting with ideal access.  For schools, the Medicaid program presents an opportunity for funding medical services provided to children both under and apart from the IDEA.

As noted throughout the guide, collaboration between schools and the Medicaid program is a difficult process.  Although the Federal requirements for the Medicaid program apply in all states, because Medicaid is a joint Federal/state program, each state program has its own unique characteristics.  Under broad Federal guidelines, each state not only develops its own requirements but also designs and develops its own system for providing medical services to Medicaid-eligible children.  While this guide attempts to explain the Federal requirements associated with obtaining Medicaid funding for school-based services, the state is the primary source for specific information on its Medicaid requirements for school-based services.  HCFA encourages schools, school districts and LEAs to work collaboratively with the State Medicaid Agency, for the provision of Medicaid-covered services to eligible children.

Definitions

Amount, Duration and Scope (42 CFR 440.230) - Extent of coverage of services available in the state as stipulated under the state plan.  The amount, duration and scope of services in a state Medicaid plan must be sufficient to achieve their purpose. 

Capitation Payment - A method of paying participating providers (generally managed care organizations) a fixed amount per member per month for each beneficiary assigned to or enrolled with the provider.  For these payments, the provider is obligated to provide or arrange for a defined range of health services to these members.

Code of Federal Regulations (CFR) - The Federal regulations of the Medicaid program derive from Title XIX of the Social Security Act, found primarily under Public Health, Volume 42.

Comparability - Requires states, subject to certain exceptions or potential waivers, to cover the same amount, duration and scope of a service to beneficiaries within an eligibility group and to all beneficiaries in certain eligibility groups. 

Early and Periodic Screening, Diagnosis and Treatment Program (EPSDT) - Mandatory Medicaid benefit for children under the age of 21 which at a minimum, must include screening services, vision services, dental services, hearing services and other necessary diagnostic and treatment services within the Medicaid statute whether or not the services are generally included under the state’s Medicaid plan.

Federal Financial Participation (FFP) - The amount of Federal money a state receives for expenditures under its Medicaid program.  For most administrative expenditures, states receive FFP at a rate of 50%.  For medical assistance percentages (that is, payment for the cost of medical care and services) states receive FFP at a rate referred to as the Federal Medical Assistance Percentage (FMAP). The FMAP is determined by a formula which compares the state’s per capita income level with the national average for per capita income (ranging from 50% - 83%). 

Freedom of Choice - The Medicaid statute and regulations stipulate that recipients may obtain services from any qualified Medicaid provider that undertakes to provide services to them.  A state may obtain a waiver of this requirement.

Health Care Financing Administration (HCFA) - Federal Agency responsible for the oversight and administration of the nation’s two main public health programs, Medicare and Medicaid.  HCFA administers the Medicare and Medicaid programs through 10 Regional Offices located throughout the country.  States deal with the HCFA Regional Offices assigned to their state regarding any policy and operational questions.  The Regional Offices, if necessary, will often involve Medicaid staff in HCFA’s Central Office in Baltimore on issues of importance that arise on the administration of their states’ Medicaid programs.

Health Maintenance Organization (HMO) - An entity that contracts on a prepaid, capitated risk basis to provide comprehensive health services to beneficiaries.

Individuals with Disabilities Education Act (IDEA) - Formally called the Education of the Handicapped Act, it contains two parts: Part B of IDEA was designed to ensure that school-aged children with special education needs receive a free, appropriate public education.  Under Part B, schools must prepare and Individualized Education Plan (IEP) as appropriate for a child which specifies all of the special education and “related (health) services” needed by the child.  Part H of IDEA, provides for early intervention programs that include all of the available developmental services needed by a toddler or infant and the development of an Individualized Family Education Plan (IFSP).  Medicaid can potentially pay for some of the health-related services in and IEP and IFSP as discussed in this guide.

Office of Management and Budget (OMB) Circular A-87 - Federal government publication which contains the cost principles for determining allowable costs of programs administered by the states and local governments.  It requires that costs be “necessary and reasonable” and “allocable” to the Medicaid program to ensure Medicaid does not supplant other allocable programs and only pays for the portion of the service that is appropriate.

Managed Care Organization (MCO) - An entity that combines the health care delivery and financing of services.  The entity is generally paid a prepaid, capitated premium and assumes financial risk for the services to be provided to or arranged for enrolled beneficiaries.  MCO models included fully-capitated, partially capitated and primary care case management.  

Medical Necessity - A term used to refer to the appropriateness of medical intervention and treatment for certain medical conditions.  There is no Federal Medicaid definition of medical necessity.  States determine medical necessity for the purposes of making coverage decisions under their own individual Medicaid programs.  In order for FFP to be available, Medicaid services must be medically necessary.

State Medicaid Agency - The organization in each state directly responsible for the administration of the Medicaid program.  Each state must designate a “single state agency” for purposes of accountability to HCFA, even though a number of states (and local) agencies may help the program and/or function as medical providers.

State Medicaid Manual (SMM) - Manual issued by HCFA used to assist states in implementing specific requirements in their Medicaid programs.

State Plan - Document between the states and Federal government which details the scope of the Medicaid program in the state by listing the services offered, any applicable requirements and limitations and the payment rates for those services.  The state plan consists of preprinted material that covers the basic requirements, and individualized content that reflects the characteristics of the particular state Medicaid program.  The state plan is submitted by the state and subject to approval from HCFA.

State Plan Amendment (SPA) - States may, at any time, submit amendments to their State Plan in order to change the coverage of services or the payment rates for covered services.  The amendments are reviewed and processed according to specific statutory timelines by the Regional Offices with consultation and review by Central Office staff, if necessary.

HCFA REGIONAL OFFICE AND STATE MEDICAID OFFICES

REGION I  - BOSTON

HCFA - Boston Regional Office

John F. Kennedy Federal Bldg., Room 1309

Boston, MA 02203

617-565-1289

MAINE                                                           NEW HAMPSHIRE

Bureau of Medical Services                              Office of Medical Services

Department of Human Services                         Division of Human Services

State House Station 11                                     6 Hazen Drive

Augusta, ME 04333                                         Concord, NH 033101-6521

207-287-2674                                                 603-271-4353

207-287-2675                                                 Fax: 603-271-4376

VERMONT                                                     MASSACHUSETTS

Office of Health Access                                    Division of Medical Assistance

Department of Social Welfare                           600 Washington Street

103 South Main Street                                      Boston, MA 02111

Waterbury, VT 05671-1201                            617-348-5690

802-241-2880                                                 Fax: 617-348-8590

Fax: 802-241-2974

RHODE ISLAND                                            CONNECTICUT       

Department of Human Services                         Department of Social Services

600 New London Avenue                                25 Sigourney Street                             

Cranston, RI 02920                                          Hartford, CT 06106                

401-464-5274                                                 203-424-5167

Fax: 401-464-3350                                          Fax: 203-951-9544

REGION II - NEW YORK

HCFA - New York Regional Office

26 Federal Plaza, Room 3811

New York, NY 10278

212-264-2775

NEW YORK                                                   NEW JERSEY

Department of Social Services                          Division of Medical Assistance and Health Services

40 North Pearl Street                                       CN-712, 7 Quakerbridge Plaza

Albany, NY 12237                                           Trenton, NJ 08625

518-474-2482                                                 609-588-2600

Fax: 518-473-6210                                          Fax: 609-588-3583

PUERTO RICO                                               VIRGIN ISLANDS

Medicaid                                                          Bureau of Health Insurance and Medical Assistance

Office of the Economic Assistance to the           Department of Health

Medically Indigent                                            210-3A Altona, Suite 302

Department of Health                                        Frostco Center                        

G.P.O Box 70184                                            Charlotte Amalie, VI 00802

809-765-1230                                                 809-774-4624

Fax: 809-766-2240                                          Fax: 809-774-4918

REGION III - PHILADELPHIA

HCFA - Philadelphia Regional Office

3535 Market St., Room 3100

Philadelphia, PA 19104

215-596-4515

PENNSYLVANIA                                          MARYLAND

Medical Assistance Programs                           Department of Mental Health and Hygiene

Department of Public Welfare                           Herbert R. O’Connor Bldg.

Room 515                                                        201 W. Preston St, 5th Floor

P.O. Box 2675                                                 Baltimore, MD 21201

Harrisburg, PA 17105-2675                             410-225-6505

717-787-1870                                                 Fax: 410-225-6489

Fax: 717-787-4639

DELAWARE                                                   VIRGINIA

Department of Health and Social Services         Department of Medical Assistance Services

1901 North Dupont Highway                            600 East Broad St., Suite 1300

New Castle, DE 19720                                    Richmond, VA 23219

302-577-4901                                                 804-786-7933

Fax: 302-577-4899                                          Fax: 804-371-4981

WEST VIRGINIA                                           WASHINGTON D.C.

Bureau for Medical Services                             Department of Human Services

Department of Health and                                 2100 ML King, Jr., Ave., S.E., Suite 302

Human Resources                                             Washington D.C.  20020

7012 McCorkle Ave SE                                   202-727-0735

Charleston, WV 25304                                    Fax: 202-610-3209

304-926-1700

Fax: 304-926-1776

REGION IV - ATLANTA

HCFA - Atlanta Regional Office

101 Marietta St.

Atlanta, GA 30323

404-331-0065

KENTUCKY                                                  TENNESSEE

Department for Medicaid Services                    Medicaid Operations

Third Floor                                                       Department of Finance and Administration

275 East Main St.                                             729 Church St.

Frankfort, KY 40621                                       Nashville, TN 37247-6501

502-564-4321                                                 615-741-0213

Fax: 502-564-3232                                          Fax: 615-741-0882

NORTH CAROLINA                                     SOUTH CAROLINA

Division of Medical Assistance                          Department of Health and Human Services

Department of Human Resources                      P.O. Box 8206

1985 Umstead Drive                                        Columbia, SC 29202-8206

P.O. Box 29529                                               803-253-6100

Raleigh, NC 27626-0529                                 Fax:  803-253-4137

919-733-2060

Fax: 919-733-6608

GEORGIA                                                       MISSISSIPPI

Department of Medical Assistance                    Division of Medicaid

2 Peachtree St, NW                                         Office of the Governor

27th Floor, Suite 100                                        Suite 801, Robert E. Lee Bldg.

Atlanta, GA 30303-3159                                 239 N. Lamar St.

404-656-4479                                                 Jackson, MS 39201-1399

Fax: 404-651-6880                                          601-359-6056

Fax: 601-359-6048

ALABAMA                                                     FLORIDA

Alabama Medicaid Agency                               Agency for Health Care Administration

501 Dexter Ave.                                               P.O. Box 13000

P.O. Box 5624                                                 Tallahassee, FL 32317-3000

Montgomery, AL 36103-5624                         904-488-3560

205-242-5600                                                 Fax: 904-488-2520

Fax: 205-242-5097

REGION V - CHICAGO

HCFA - Chicago Regional Office

105 W. Adams St.

Chicago, IL 60603-6201

312-353-8720

OHIO                                                              MICHIGAN

Office of Medicaid                                            Department of Social Services

Department of Human Services                         P.O. Box 30037

30 E. Broad St., 31st Floor                              Lansing, MI 48909

Columbus, OH 43266-0423                             517-335-5001

614-644-0140                                                 Fax: 517-335-5007

Fax: 614-752-3986

INDIANA                                                       ILLINOIS

Medicaid Policy and Planning                            Division of Public Aid

Family and Social Services Administration         201 S. Grand St., East, 3rd Floor

Room W382                                                    Springfield, Il 62762

402 W. Washington St.                                    217-782-2570

Indianapolis, IN 46204-2739                           Fax: 217-524-7232

317-233-4455

Fax: 317-232-7382

WISCONSIN                                                  MINNESOTA

Department of Health and Social Services         Department of Human Services

1 West Wilson St., Room 250                          444 Lafayette Rd., 6th Floor

Madison, WI 53701                                         St. Paul, MN 55155-3852

608-266-2522                                                 612-297-3374

Fax 608-266-1096                                          Fax: 612-297-3230

REGION VI - DALLAS

HCFA - Dallas Regional Office

1200 Main Tower Bldg., Room 2000

Dallas, TX 75202

214-767-4461

LOUISIANA                                                   ARKANSAS

Bureau of Health Services Financing                  Division of Medical Services

Department of Health and Hospitals                  Department of Human Services

P.O. Box 91030                                               P.O. Box 1437, Slot 1100

Baton Rouge, LA 70821-9030                         Little Rock, AR 72203-1437

504-342-3890                                                 501-682-8292

Fax: 504-342-3893                                          Fax: 501-682-8013

TEXAS                                                            OKLAHOMA

Health and Human Services Commission           Health Care Authority

P.O. Box 13247                                               4545 N. Lincoln Blvd., Suite 124

Austin, TX 78711                                             Oklahoma City, OK 73105

512-424-6517                                                 405-530-3439

Fax: 512-424-6585                                          Fax: 405-530-3470

NEW MEXICO

Medical Assistance Division

Human Services Department

P.O. Box 2348

Santa Fe, NM 87504-2348

505-827-3106

Fax: 505-827-3185

REGION VII - KANSAS CITY

HCFA - Kansas City Regional Office

New Federal Office Bldg.

601 E. 12th St., Room 235

Kansas City, MS 64106

816-426-3406 Ext. 3318

MISSOURI                                                     IOWA

Division of Medical Services                             Division of Medical Services

Department of Social Services                          Department of Human Services

615 Howerton Court                                        Hoover State Office Bldg., 5th Floor

P.O. Box 6500                                                 Des Moines, IA 50319

Jefferson City, MO 65102-6500                      515-281-8794

314-751-6922                                                 Fax: 515-281-4597

Fax: 314-751-6564

NEBRASKA                                                   KANSAS

Medical Services Division                                 Department of Social and Rehabilitation Services

Department of Social Services                          Docking State Office Bldg.

301 Centennial Mall South, 5th Floor                Room 628 South

Lincoln, NE 68509-5026                                 915 Harrison St.

402-471-9718                                                 Topeka, KS 66612

Fax: 402-471-9092                                          913-296-3981

Fax: 913-296-4813

REGION VIII - DENVER

HCFA - Denver Regional Office

Federal Office Bldg.

1961 Stout St., Room 576

Denver, CO 80294-5358

303-844-4024 ext. 381

COLORADO                                                  UTAH             

Health and Medical Services                             Division of Health Care Financing

Department of Health Care Policy and              Department of Health

Financing                                                          P.O. Box 16700

1575 Sherman St., 4th Floor                             Salt Lake City, UT 84116-0700

Denver, CO 80203-1714                                 801-538-6406

303-866-6092                                                 Fax: 801-538-6099

Fax: 303-866-2803

WYOMING                                                    SOUTH DAKOTA

Division of Health Care Financing                      Medical Services

Department of Health                                        Department of Social Services

6101 Yellowstone Rd.                                      Richard F. Kneip Bldg.

Cheyenne, WY 82002                                      700 Governors Drive

307-777-7531                                                 Pierre, SD 57501-2291

Fax: 307-777-6964                                          605-773-3495

Fax: 605-773-6834

NORTH DAKOTA                                         MONTANA               

Department of Human Services                         Department of Social and Rehabilitation Services

600 E. Boulevard Ave.                                     P.O. Box 4210

Bismarck, ND 58505-0261                              111 N. Sanders

701-328-2321                                                 Helena, MT 59604-4210

Fax: 701-328-2359                                          406-444-4540

Fax: 406-444-1861

REGION IX - SAN FRANCISCO                            

HCFA - San Francisco Regional Office

75 Hawthorne St., 5th Floor

San Francisco, CA 94105

415-744-3579

CALIFORNIA                                                ARIZONA

Medical Care Services                                      Arizona Health Cost Containment System (AHCCS)

Department of Health Services                          801 E. Jefferson St.

714 P St., Room 1253                                     Phoenix, AZ 85034

Sacramento, CA 95814                                    602-271-4422 ext. 4053

916-657-1425                                                 Fax: 602-252-6536

Fax: 916-657-1156

NEVADA                                                        HAWAII

Welfare Division                                               Department of Human Services, Med-QUEST

Department of Human Resources                      P.O. Box 339

2527 N. Carson St.                                          Honolulu, HI 96809-0339

Carson City, NV 89710                                   808-586-5391

702-687-4867                                                 Fax: 808-586-5389

Fax: 702-687-5080

GUAM                                                            AMERICAN SAMOA

Dept. Of Public Health and Social Services       Department of Health

P.O. Box 2816                                                 LBJ Tropical Medical Center

Agana, GU 96910                                            Pago Pago, AS 96799

011-671-734-7269                                          011-684-633-4590

Fax: 011-671-734-5910                                  Fax: 011-684-633-1869

REGION X - SEATTLE

HCFA - Seattle Regional Office

2201 6th Ave

Mail Stop RX-40

Seattle, WA 98121

206-615-2400

WASHINGTON                                             OREGON

Department of Social and Health Services         Department of Human Resources

P.O. Box 45080                                               500 Summer St., NE

Olympia, WA 98504-5080                              Human Resources Bldg., 3rd Floor

206-753-1777                                                 Salem, OR 97310-1015

Fax: 206-586-5874                                          503-945-5881

Fax: 503-373-7823

IDAHO                                                            ALASKA                               

Division of Welfare Administrative Office          Department of Health and Social Services

Department of Health and Welfare                    P.O. Box 110660

Towers Bldg., 2nd Floor                                   Juneau, AK 99811-0660

P.O. Box 83720                                               907-465-3355

Boise, ID 83720-0036                                     Fax: 907-465-2204

208-334-5747

Fax: 208-334-0657