Federal Support for School Medicaid Expansion

The Centers for Medicare & Medicaid Services (CMS) has been very supportive of states’ efforts to expand access to school health services, engaging directly with state Medicaid agencies to support the development of state plan amendments and moving quickly to approve them.

In May 2023, CMS released new guidance on school Medicaid that is a clear victory for school health and student health. “Delivering Services in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming” affirms that states have flexibility in their school-based Medicaid program to allow school districts to bill Medicaid for health services delivered to all Medicaid-enrolled children, not just students with a special education plan such as an Individualized Education Plan (IEP) or Individualized Family Service Plan (IFSP).

The Guide offers pathways states can take to leverage Medicaid funding — all of which are designed to improve efficiency and reduce administrative barriers — so more school districts can access sustainable funds for school-based healthcare, including mental health services. It builds on years of work by school health professionals, advocates and policymakers and launches a new era of collaboration — state Medicaid agencies, in partnership with state education agencies (SEAs), are encouraged to expand and/or strengthen their school Medicaid program in a way that works for all parties involved: school districts (or local education agencies, LEAs), healthcare providers and students.

Developed in consultation with the U.S. Department of Education, the Guide combines and replaces the older administrative and direct services claiming guides and offers more detail on how states can use the so-called “free care” policy reversal of 2014 to expand access to school health services. It also explains the policies and new flexibilities intended to ease the administrative burden associated with billing and payment.

In conjunction with the release of the Guide, CMS released an informational bulletin, “Information on School-Based Services in Medicaid: Policy Flexibilities and Guide on Coverage, Billing, Reimbursement, Documentation and School-Based Administrative Claiming.” This statement of administrative policy introduces and summarizes the new guidance and emphasizes the critical role schools play in promoting students’ health. It enthusiastically encourages states to take action on school Medicaid investments and affirms that CMS is on standby to help.

What the New Guidance Includes

CMS’ priorities are to simplify the school Medicaid program, allow for as much federal reimbursement to flow to school districts as possible, and reduce the administrative burden on schools and providers.

While encouraging states to expand access to and funding for school health services, the new guidance makes clear that states have the option to cover all Medicaid-eligible health services provided to all students enrolled in Medicaid or covered by CHIP — including services delivered to general education students. In addition:

  • All medically necessary services, including prevention, physical and mental health, and substance use disorder (SUD) services, can be covered by a Medicaid state plan.
  • States and schools can expand their offering of school-based services to meet Early and Periodic Screening, Diagnostic and Treatment (EPSDT) requirements.
  • States can expand their list of Medicaid-eligible providers to include a wide range of health providers, including mental health counselors.
  • Key underlying Medicaid principles, including documentation and medical necessity, are still requirements; documentation of medical necessity is a federal standard required for the reimbursement of all services.

As of October 2023, 25 states have expanded their school Medicaid program to include health services provided outside an IEP. However, even some of these states could improve their programs further.

Timeline for Compliance

This information is included in the new Guide and in a CMCS informational bulletin:

If States are not already adhering to applicable federal standards and requirements as discussed in this guide, CMS expects that States submit SPAs, administrative claiming plan amendments, and/or amendments to time study implementation plans to comply as soon as possible, but no later than the start of the first quarter at least three years after the publication date of the guide. If States need assistance to submit SPAs, administrative claiming plan amendments, and/or amendments to time study implementation plans to comply with the comprehensive guide, or to take advantage of new policy flexibilities, CMS encourages States and school-based providers to use the SBS Technical Assistance Center to aid with their compliance efforts.

While this indicates a deadline of July 2026, we expect CMS to provide additional details sometime in the next year about the terms of compliance.

Related Reading

resources School Medicaid Guidance: What Advocates and State Policymakers Need to Know

In May 2023, the Centers for Medicare and Medicaid Services released new school Medicaid guidance affirming that states have flexibility in their school-based Medicaid program to allow school districts to bill Medicaid for health services delivered to all Medicaid-enrolled children.

This brief answers key questions about the guidance and highlights what policymakers and advocates need to know — and how to get involved — to ensure states are best positioned to leverage federal opportunities increasing children's access to the services they need.

news New Federal Grants Mark Critical Opportunity for States to Expand School Health Services
February 1, 2024

The Centers for Medicare and Medicaid Services (CMS) recently announced it will award $50 million in state grants to help connect millions more children to essential school health services, including much-needed mental healthcare.

resources School Medicaid Expansion: How (and How Many) States Have Taken Action to Increase School Health Access and Funding

As of October 2023, Healthy Schools Campaign has identified 25 states that have expanded their school Medicaid program to cover services outside of an IEP/IFSP using the “free care” policy reversal.