The following policy actions are recommended for all states to comprehensively expand their school Medicaid program and maximize Medicaid reimbursement for school districts.
These actions align with federal school Medicaid guidance published in 2023 by the Centers for Medicare and Medicaid Services (CMS). The Bipartisan Safer Communities Act required CMS to expand access to Medicaid-covered health services in schools, including behavioral and mental health services, and reduce the administrative burden for states and schools.
A printable version (PDF) of this framework, including all policy details and related resources, is available here.
We also invite you to download and share a larger version of the graphic summarizing each of the 10 policy actions.
Expand School Medicaid
Expand the school Medicaid program, making reimbursement available for all medically necessary services provided to all Medicaid-enrolled students.
Many physical, behavioral and mental health services are offered in a school setting, but these health services often are not included in an individualized education program (IEP) — which means they are ineligible for reimbursement unless the state Medicaid plan specifically covers services outside of an IEP for students enrolled in Medicaid.
More states are moving in this direction. Since 2014, states have had the opportunity to allow school districts to bill Medicaid for all medically necessary health services delivered to all Medicaid-enrolled students, not just those with a special education plan documented by an IEP or section 504 plan. This is due to the “free care” policy reversal, which made clear that schools can bill Medicaid for services provided to students covered by Medicaid even if those services are provided free to the general school population.
The Centers for Medicare and Medicaid Services (CMS) school Medicaid guidance, updated in 2023, strongly encourages states to use this flexibility. It is the foundational step for a strong Medicaid program to improve student health, well-being and health equity.
Numerous states have seen a significant increase in new and sustainable federal funding after updating their state Medicaid plan to include all medically necessary services. And since most schools already deliver a wide range of services (and pay for them with education dollars), bringing in additional federal reimbursement can replace scarce education money and help stretch resources further.
Bottom Line: States should update their state Medicaid plan to allow reimbursement for all medically necessary services delivered to all Medicaid-enrolled students. Expanding Medicaid billing means more federal revenue to the state and more district reimbursement. This is a core principle for student health and well-being and is the foundation on which a strong Medicaid program can be built.
Resources
Federal Publications
- Letter to state Medicaid directors – CMS clarifies payment for school health services
- Delivering Services in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming – CMS school Medicaid guidance; expanding coverage for services beyond the IEP begins on pg. 18
- School-Based Services for Students Enrolled in Medicaid – Medicaid and CHIP Payment and Access Commission
Additional Resources
- Advocates’ Guide to the Change In The Medicaid Free Care Rule – Community Catalyst
- Financial Impact of Expanding School Medicaid Programs – Healthy Schools Campaign
- A Guide to Expanding Medicaid-Funded School Health Services – Healthy Schools Campaign
Focus on Equitable Services
Provide support and guidance on the delivery and reimbursement of culturally and linguistically effective and evidence-informed services.
To address the diverse needs of the entire school community — and improve equitable access and outcomes for all students — school health services should be culturally and linguistically appropriate and evidence-informed.
State Medicaid agencies can advance complementary strategies to support high-quality services while reducing disparities and barriers to care. States should provide clear guidance on evidence-informed services that are, or that could be, covered in the state Medicaid plan, along with the types of providers qualified to deliver these services. Translation and interpretation services delivered in schools can be covered through the administrative claiming program. By identifying Medicaid reimbursement opportunities such as these, states can support schools in delivering more equitable services.
In addition, both the state Medicaid agency and the state education agency (SEA) should make resources and best practices available and support developing a trained, diverse workforce. States must provide grant funding (including up-front, start-up funding), measure data and outcomes to support this work and hold systems accountable when persistent inequities exist.
Bottom Line: Health services must be high-quality and linguistically and culturally appropriate. States and school districts should strengthen their school Medicaid programs with this core principle in mind.
Resources
Federal Publications
- Delivering Services in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming – CMS school Medicaid guidance; claiming for administrative expenditures for translation or interpretation services begins on pg. 82
Additional Resources
- Advancing Equitable School-Based Substance Use Prevention & Early Intervention Approaches – Healthy Schools Campaign; though specific to substance use services, these two reports offer comprehensive recommendations that can create and sustain more equitable physical, mental and behavioral school-based health services
- State Policy Opportunities: Advancing Comprehensive School Mental Health Systems to Support Students – Healthy Schools Campaign
Cover All Health Services
Leverage the EPSDT benefit and other statutory authorities to cover all medically necessary services delivered in a school setting, thereby allowing maximum coverage of services and maximum reimbursement to schools.
To prioritize children’s health and well-being, states should update their state Medicaid plan to cover all medically necessary services delivered by schools. If a covered health service is delivered by a qualified Medicaid provider to a Medicaid-enrolled student, a school should be able to receive federal Medicaid reimbursement. This is how Medicaid operates in other healthcare settings and is a common sense policy for a state to adopt for schools.
The Centers for Medicare and Medicaid Services (CMS) affirms that states can cover all medically necessary services in a school setting, including mental and behavioral health and substance use services. A 2022 informational bulletin notes that the obligation to provide all medically necessary care under EPSDT extends to prevention, screening, assessment and treatment for mental health and substance use disorders. The Bipartisan Safer Communities Act requires CMS to review states’ compliance with the Medicaid EPSDT benefit; there could be audit and/or litigation consequences for states that fail to comply.
While federal policy requires that Medicaid-covered services be “medically necessary,” the federal statute describes a broad standard for coverage and does not offer a specific definition. State definitions of medical necessity vary, but they may not be more restrictive than the federal statute (the National Academy of State Health Policy tracks each state’s definition of medical necessity under the Medicaid EPSDT benefit). States generally define medically necessary services as those that prevent a condition, improve health or lessen the impact of a condition, or restore health.
Some states, however, take a limited approach and cover only specific medically necessary services such as physical therapy and nursing services. Using broad and encompassing language in the state plan allows reimbursement for the broadest array of services.
Bottom Line: Including the full array of Medicaid-covered physical and behavioral health services in the Medicaid state plan means more school reimbursement. Billing Medicaid for services already being delivered in schools can bring in much-needed federal funding that can further support the delivery of health services.
Resources
Federal Publications
Additional Resources
- School Medicaid Expansion: How (and How Many) States Have Taken Action to Increase School Health Access and Funding – Healthy Schools Campaign
- Documenting Medical Necessity Through Plans of Care – Healthy Schools Campaign
Create Clear Documentation Guidelines
Align school Medicaid documentation requirements with CMS’ minimum documentation requirements to relieve the administrative burden on school districts and providers.
Written documentation of medical necessity, signed by a qualified provider, is required for all school health services submitted for Medicaid reimbursement. This can be a significant paperwork burden on school districts and providers, but it can be eased.
Documentation of medical necessity can be fulfilled in several ways, such as through a doctor’s order, individualized education program (IEP), or individual health plan (IHP) that the school implements. Some districts may keep the documentation as part of the student’s record; others use an electronic health record or billing system. Either way, the assumption is that medical necessity documentation exists for all services billed to Medicaid.
The Centers for Medicare and Medicaid Services (CMS) requires the following data for documentation:
- Date of service
- Name of recipient
- Medicaid identification number
- Name of provider agency and the person providing the service
- Nature, extent or units of service
- Place of service (states may have additional documentation requirements to identify the services a child receives at school)
States should establish clear documentation requirements for schools that align with the CMS standard, are not overly burdensome and do not limit coverage for medically necessary care. This must be accompanied by clear and transparent guidance to schools and providers on the information needed to document medical necessity.
Bottom Line: States that publish clear documentation guidelines make Medicaid documentation simpler for school health providers and school administrators. Providers know what is expected of them and school districts can submit claims for payment (if required) knowing that they have the appropriate infrastructure and are meeting clinical practice standards.
Resources
Federal Publications
- Delivering Services in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming – CMS school Medicaid guidance; expanding coverage for services beyond the IEP begins on pg. 18
Additional Resources
- A Guide to Expanding Medicaid-Funded School Health Services – Healthy Schools Campaign
- Documenting Medical Necessity Through Plans of Care – Healthy Schools Campaign
- START: State Tools And Resources To Advance School Medicaid – Healthy Schools Campaign
Prioritize Prevention Services
Provide clear guidelines for covering substance use prevention services in addition to screening and treatment.
Medicaid will cover prevention and early intervention services provided in a school setting. As stated in the Centers for Medicare and Medicaid Services (CMS) informational bulletin “Leveraging Medicaid, CHIP, and Other Federal Programs in the Delivery of Behavioral Health Services for Children and Youth”:
States are required to incorporate age-appropriate screenings and assessments, such as those recommended by the American Academy of Pediatrics and the U.S. Preventive Services Taskforce. Prevention includes routine vaccinations and immunizations to prevent disease, education and counseling programs that help students develop healthy behaviors, and health monitoring, checkups and well-child visits.
State Medicaid agencies can support schools by streamlining and clarifying the process for obtaining reimbursement for behavioral health services and prevention/early intervention services; provide technical assistance and support to school districts on how to document care and seek reimbursement; and provide guidance on how payment can be accessed for linguistically effective and culturally appropriate evidence-informed services.
Bottom Line: Students, classrooms and schools benefit when schools invest in prevention programs that work, yet schools often struggle with how to bill Medicaid for preventive services. With clear guidance at every level, these services should be reimbursable, which can help make them sustainable.
Resources
Federal Publications
- Overview of Medicaid and School-Based Services – CMS Technical Assistance Center
- Leveraging Medicaid, CHIP, and Other Federal Programs in the Delivery of Behavioral Health Services for Children and Youth – CMS/CMCS informational bulletin
- Joint Information Bulletin: Guidance to States and School Systems on Addressing Mental Health and Substance Use Issues in Schools – CMS/Substance Abuse and Mental Health Services Administration (SAMHSA)
Additional Resources
Cover Pre-Diagnosis
Cover prevention and early intervention services before a diagnosis and provide clear documentation guidance, including how medical necessity standards apply to preventive services.
The Centers for Medicare and Medicaid Services (CMS) informational bulletin “Leveraging Medicaid, CHIP, and Other Federal Programs in the Delivery of Behavioral Health Services for Children and Youth” clarifies that states can cover services, including prevention and early intervention services, for children and adolescents who may have mental health conditions or substance use disorders but who do not yet have a diagnosis.
CMS school Medicaid guidance also notes that “hard, fixed, or arbitrary limits on coverage (including based on lists of specific diagnoses) are not permitted.” In June 2024, CMS’ Medicaid School-Based Services Technical Assistance Center published a FAQ that reads in part:
Q: Is a formal diagnosis and treatment plan a prerequisite for accessing Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) services?
A: As specified in section 1905(r)(5) of the Act, the EPSDT benefit entitles most eligible Medicaid-enrolled children and adolescents to services and treatments that fit within any of the benefit categories of Medicaid-coverable services listed in section 1905(a) of the Act if medically necessary, as determined by the State, to “correct or ameliorate” identified conditions. A formal diagnosis is not required according to Federal Medicaid rules. State Medicaid agencies determine medical necessity criteria.
The default policy of all states should be to permit school Medicaid programs to provide coverage even before a formal diagnosis is made. States can do this by expanding coverage to all students enrolled in Medicaid, as services delivered before a diagnosis may not be captured in an individualized education program (IEP). There are no federal requirements for procedure or diagnosis codes (e.g., HCPCS, CPT, CDT, ICD-10). However, most states have requirements beyond the minimum data set.
State Medicaid agencies must clearly define the circumstances under which a student can receive services in a school setting before a formal diagnosis. For example, does the student need to be deemed “at risk”? And if so, by what criteria? Providers working in school settings may have a hard time distinguishing between services that are “medically necessary” and those that are “educationally necessary” or helpful for classroom management, which providers typically do not see as eligible for billing.
For example, in Massachusetts, which expanded reimbursement to cover services outside of the IEP, behavioral health screenings are covered services, and students receiving behavioral health supports from qualified professionals don’t have to be formally diagnosed with a behavioral health disorder. Rather, they can be identified as having “signs and symptoms” or other “concerns” identified through screening or any other method in which the qualified practitioner believes that the student would benefit from their skilled interventions and provides group or individual support. (Services provided by non-qualified behavioral health providers, including teachers, would not be reimbursable.)
Massachusetts’ approach is preferable to California’s, which provides specialty mental health services available without a diagnosis so long as the student is identified as “high risk,” as evidenced by involvement with child welfare or scoring in the high-risk range under a trauma screening tool approved by the department (more information on California’s approach is available in the same CMS bulletin).
Bottom Line: Students may need school health services at any point. If an eligible service is delivered to a Medicaid student, no diagnosis should be required. This is consistent with CMS policy that does not require a diagnosis
to reimburse for care. States can make this policy clear and support school districts as they seek reimbursement for services they provide to all Medicaid-enrolled students.
Resources
Federal Publications
- Delivering Services in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming – CMS school Medicaid guidance; expanding coverage for services beyond the IEP begins on pg. 18
Additional Resources
- A Guide to Expanding Medicaid-Funded School Health Services – Healthy Schools Campaign
- Documenting Medical Necessity Through Plans of Care – Healthy Schools Campaign
Cover Services Before a Plan of Care is Required
Establish specific coverage of crisis services or strengthen existing policies to make clear that services are covered.
Many state Medicaid agencies require students to have a plan of care (POC) before a service is considered eligible for reimbursement in a school. These plans, which must be signed by a qualified Medicaid provider, are used as documentation (and often to document medical necessity). The plan of care may be documented in an individualized education program (IEP) or individualized family service plan (IFSP), or it may be a separate document created specifically to substantiate a diagnosis or demonstrated need.
However, students who need prevention and some early intervention services, as well as crisis intervention services, may not yet have a plan of care. As long as a practitioner is within the scope of practice and practice standards, it is appropriate (and desirable) for Medicaid to reimburse schools for the time that qualified providers spend on these services. State policy determines if the care provided in school for prevention or unplanned services is eligible for Medicaid reimbursement. Some points to consider:
- In states that cover only services included in an IEP/IFSP, prevention and/or unplanned services would not be covered — even if the service is needed for a student with an IEP/ISFP.
- In states that have expanded their school Medicaid program to cover selective services outside of an IEP, the time a qualified provider spends on a prevention/unplanned service is reimbursable if the service itself is covered.
- In states that have expanded their school Medicaid program to cover all medically necessary services, the time a qualified provider spends on an unplanned service should be covered by Medicaid, assuming the service is classified as medically necessary.
Because most states require that Medicaid-reimbursable school health services be provided under an IEP, IFSP or other written POC, state guidance should make clear that unplanned behavioral or physical health interventions that address an acute need are eligible for reimbursement.
Michigan, for example, requires the development of a formal POC only if a student continues needing services more than 30 days after the initial service. Michigan’s policy states, “[w]hen ongoing services are provided in the absence of a POC due to the urgency of the student’s medical needs, the expectation is that a POC will be developed within 30 calendar days from the first date that services are provided for a specific condition.”
This is a very reasonable requirement; it appropriately supports the establishment of a POC for students who need ongoing services while recognizing that coverage should be provided for services to students with only immediate or short-term needs.
Arkansas has a more demanding coverage policy for crisis intervention services. For behavioral health crisis services to be billable, the provider must develop a crisis plan or revise an existing plan, and a mental health diagnosis must be completed within seven days. In practice, this can be a challenge for providers to coordinate, and additional time may be needed.
Bottom Line: Students may experience an unplanned crisis or health emergency. States, therefore, should not restrict school Medicaid payment to services in a plan of care. States can establish policies to ensure appropriate payment for unplanned and emergency services.
Resources
- Medicaid Coverage of School-Based Crisis Services: Analysis and Recommendations Based on a Review of Eleven States – Healthy Schools Campaign; provides specific examples of how states cover unplanned and crisis services through school Medicaid
- Documenting Medical Necessity Through Plans of Care – Healthy Schools Campaign
Cover All Qualified Providers
Include the broadest range of providers in the list of qualified Medicaid providers.
The state Medicaid plan defines the types of providers able to receive Medicaid reimbursement for services delivered in a school setting (subject to state scope-of-practice laws). At the same time, school districts hire a wide range of providers who are licensed and/or credentialed to deliver services in schools through their state and/or through the state department of education.
A problem experienced by school districts is that those two lists don’t always match. Highly trained and credentialed service providers employed by school districts and working in schools may not be recognized under a state’s Medicaid plan, which means they are not eligible to bill Medicaid for services provided, even if the services themselves are covered by Medicaid.
Federal school Medicaid guidance provides flexibility and additional support for states to align their education and Medicaid provider types, and the Centers for Medicare and Medicaid Services (CMS) encourages states to recognize an array of providers, including those working in the school setting, who can maximize access to needed behavioral health services.
To draw down as much federal Medicaid funding as possible to support prevention and treatment services, state Medicaid plans should cover the broadest possible array of provider types that deliver school health services. The first step is to compare the list of providers who are already working in the school setting against the state’s list of Medicaid-qualified providers covered in the state Medicaid plan and identify any misalignment. The state Medicaid agency should update the state plan to include the full list of licensed and/or credentialed providers employed by school districts. Updating the state plan to include the broadest range of providers is essential to increasing the overall reimbursement school districts can receive.
Bottom Line: Aligning the state Medicaid plan and education requirements can support all health providers in a school setting. By including Medicaid-qualified health and behavioral health professionals who are already delivering services in schools in the state Medicaid plan, states can help schools receive reimbursement for the services they deliver.
Resources
- State Medicaid & Education Standards for School Health Personnel: A 50-State Review of School Reimbursement Challenges – Healthy Schools Campaign; demonstrates how alignment between state Medicaid and education standards for school health personnel can reduce barriers to Medicaid reimbursement for school health services (specific state information may be dated)
Implement Administrative Claiming
Support school districts in establishing or strengthening a Medicaid administrative claiming program.
A school Medicaid administrative claiming (MAC) program allows schools to receive reimbursement for certain activities that support the effective administration of the Medicaid program. This can include time school staff spend on family outreach and Medicaid enrollment, application assistance, care and benefits coordination, and training on Medicaid billing and translation services.
Services covered under MAC are not direct healthcare services but have an undeniably positive effect on student health and improving outcomes. Keeping kids and families enrolled in Medicaid makes healthcare more affordable and helps improve access to care. Particularly as states and families face post-COVID Medicaid redeterminations (sometimes called the Medicaid unwinding), students and their families may experience confusion or instability in their coverage.
Providing care and benefit coordination, including with primary care providers and families, helps students access the services they need. Translation services, including to family members, remove barriers to linguistically appropriate care.
Investing in strengthening or establishing a MAC program can mean more school funding for these services. With this funding, schools can make their programs run more efficiently, get more students enrolled in health insurance, and support essential administrative functions.
Bottom Line: Medicaid makes funding available for critical administrative tasks that help keep students and families insured and the school Medicaid program run efficiently. Schools can use this funding to make their health programs run more efficiently, enroll more students in Medicaid or other health insurance programs and support administrative functions.
Resources
Federal Publications
- Delivering Services in School-Based Settings: A Comprehensive Guide to Medicaid Services and Administrative Claiming – CMS school Medicaid guidance; expanding coverage for services beyond the IEP begins on pg. 18
- School-Based Services for Students Enrolled in Medicaid – Medicaid and CHIP Payment and Access Commission
Additional Resources
- A Guide to Expanding Medicaid-Funded School Health Services – Healthy Schools Campaign
Reinvest Medicaid Reimbursement
State Medicaid agencies should require school districts to reinvest Medicaid reimbursement into school health services.
Increased Medicaid reimbursement can significantly boost overall school budgets and help districts stretch local funding for student health. This is particularly important as school districts seek sustainable funding sources for school health services. In addition, this funding can incentivize districts to continue providing and even expand access to these services.
In some states, reimbursement funds can be classified as general funding that can supplement district budgets. Other states either encourage or require schools to invest in school health services.
California, for example, approved legislation in 2015 requiring school districts to “reinvest the federal reimbursement they receive under this program in health and social services for children and families, and develop and maintain a collaborative committee to assist them in decisions regarding the reinvestment of federal reimbursements.”
Almost 20 years earlier, Colorado passed legislation authorizing school districts to use reimbursed Medicaid funds to expand health services and prevention supports for all children based on a local needs assessment and plan.
State policy should require that Medicaid reimbursement be reinvested in student health services and administered with flexibility so that districts can identify effective interventions and promising practices to advance equitable outcomes for students.
Bottom Line: When a school district receives reimbursement for health services, those funds should be reinvested back into Medicaid. This supports school providers and child wellness and health equity.
