Opportunity for States


The “free care” rule clarification presents an important opportunity for states to: 1) support school districts, or local educational agencies (LEAs), in drawing down additional Medicaid funding for school health services; and 2) increase access to school health services.

Many states are also using this opportunity to get Medicaid to recognize the role of additional providers who are delivering services in schools — and to increase the types of school-based physical and behavioral health services that are reimbursed by Medicaid. This presents a tremendous opportunity to expand access to and resources for school health services.

When a state increases the number of eligible services that are billed to Medicaid, the state gets back more federal dollars. The converse is also true: not billing for otherwise eligible services that are already being provided in schools means leaving federal dollars unclaimed.

When that happens, state taxpayers bear the entire cost of services. This makes Medicaid a very important source of funding for school health services — and for state health and education budgets overall.

States can make decisions about what their school-based Medicaid program will include. Will school districts be allowed to bill for services delivered to all Medicaid-enrolled students, or just for services included in IEPs or IFSPs? Will more states expand the types of covered services — or the list of providers qualified to seek reimbursement for school-based services?

Expanding billing for more students — as well as expanding the types of services and providers being reimbursed — could mean more federal revenue to the state and more reimbursement to districts. And since most schools already deliver some of these services (and pay for them with education dollars), bringing in federal reimbursement can replace scarce education money and help stretch resources further.

Federal funds can be used to increase provider capacity, add additional services, or plug budget holes to keep school health services strong. As a result, this can help ensure ongoing investment in and support for the delivery of school health services to students enrolled in Medicaid. And it could ultimately help schools expand the staffing needed to provide physical and behavioral health services to students.