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FAQ: Medicaid in Education

November 3, 2021 | Madison Moe

Our team of Medicaid billing experts can get your school reimbursed an average of $5,500 per student, per year for special education services.

While Medicaid has been linked to special education funding for decades—and is viewed by many as a valuable resource for schools since it supports the provision of medically necessary services—there is still a lot of confusion surrounding the role of Medicaid in education.

Why is Medicaid in education so confusing for schools?

A big source of confusion centers around the fact that Medicaid rules and regulations are continuously changed and updated.

While Medicaid is federally regulated, each State's Medicaid Plan is controlled on the state level and not the federal level; this leads to differences in Medicaid rules and regulations from state to state.

With these state-by-state differences, combined with the continual updates to Medicaid policy, it's no wonder that schools nationwide are seeking clarity about:

  • The best way for them to seek Medicaid reimbursement funding for their school or district
  • How to properly document IEPs (Individualized Education Programs), IFSPs (Individualized Family Service Plans), and 504 Plans (e.g. how to do so in a way that their claims won't be denied)
  • How can schools figure out in advance the benefits to them for participation (e.g. what they will gain by properly documenting and submitting claims)

Frequently Asked Questions

Why are schools seeking reimbursement money from Medicaid in the first place? Aren't they already receiving funding for special education?

School-based services include health-related and rehabilitative services that are provided to children with disabilities—many of whom receive these services under the Individuals with Disabilities Education Act (IDEA). Recognizing that schools provide medically necessary services—and that the IDEA funding they receive typically covers less than 20% of the average per-student costs for special education—Congress amended federal law in 1988 so that schools had access to funding to help cover the other 80%.

Schools can bill Medicaid to offset any additional costs that they incur in relation to the provision of these medically necessary services to students.

Are schools required to bill Medicaid?

Quite simply put: No.

Schools are not required to participate in their state's Medicaid reimbursement program. Billing and reimbursement procedures for the provision of school-based health services are guided by each state's State Medicaid Plan. Schools, LEAs, and districts that choose to participate in their state's Medicaid in education programs are considered to be "the provider" of the health-related services and thus are able to bill Medicaid for the provision of health services to their students.

Revenue Cycle Management (RCM) programs—such as the one provided by ARIA School Billing—help to ensure that schools who choose to participate in their state's Medicaid billing program have lower denial rates on the claims they submit. These types of programs help schools to minimize errors that lead to claim denial, which allows them to maximize their time, resources, and revenue.

If a school isn't billing Medicaid, will that limit/impact the services that a child receives?

No: schools are federally required to provide services dictated within a student's IEP/IFSP/504 and they must provide these services to students whether or not they are receiving Medicaid reimbursement funding for the provision of these services.

What services can schools bill Medicaid for then?

As of right now, schools can only submit claims to Medicaid that are related to medical services provided to students (which are outlined in each student's IEP, IFSP, or 504). Schools can only receive reimbursements that are directly related to the provision medically necessary services to these students.

Each state's Medicaid Plan outlines the ways in which reimbursement funding can be utilized. It's best to check with your State's Medicaid Plan if you're unsure about whether or not something is eligible to be claimed for reimbursement funding.

In general, the services for which a school may bill Medicaid include (but are not limited to):

  • audiologist services
  • evaluation and testing
  • nursing services
  • occupational therapy
  • physical therapy
  • speech therapy
  • psychological services
  • social work services
How can schools use the money they get from Medicaid? Are schools that participate in the program making a profit?

In essence: schools are already paying to provide these services to students (the services that might be eligible for Medicaid reimbursement funding). Schools are legally required to provide these services to students. Since they're already paying for these services, then any money they receive from Medicaid simply offsets the costs they're already paying and gives much-needed relief to districts that have to spend a large portion of their funding to properly care for students with special needs.

So no: schools are not making a profit from Medicaid billing—they're just balancing the scales a bit.

Schools can use the reimbursement funding that they get back from Medicaid in numerous ways. They can choose to leverage their Medicaid funds to stretch scarce healthcare resources or even to make reinvestments in their school-based health care programs.

Two-thirds of districts report using Medicaid reimbursement to support the work of health professionals and other specialized instructional support personnel (e.g. speech-language pathologists, audiologists, occupational therapists, school psychologists, school social workers, and school nurses) who provide comprehensive health and mental health services to students.

For example, school districts that receive Medicaid reimbursements can choose to put the funding into the district's general fund, where it can then be used in a variety of ways that include, but are not limited to:

  • expanding the availability of a wide range of health and mental health services available to students
  • purchasing and updating specialized equipment
  • performing care-coordination activities and connecting Medicaid-enrolled students with physicians outside of school

Do you have any additional questions about Medicaid in education? Let us know! Contact us today.


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