Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
June 17, 1999
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1979 words
HEADLINE:
TESTIMONY June 17, 1999 SALLY RICHARDSON DIRECTOR CENTER FOR MEDICAID AND STATE
OPERATIONS SENATE FINANCE MEDICADE AND SCHOOL-BASED SERVICES
BODY:
Testimony of SALLY RICHARDSON, DIRECTOR
CENTER FOR MEDICAID AND STATE OPERATIONS HEALTH CARE FINANCING ADMINISTRATION on
MEDICAID COVERAGE OF SCHOOL-BASED SERVICES before the SENATE FINANCE COMMITTEE
JUNE 17, 1999 Chairman Roth, Senator Moynihan, distinguished Committee members,
thank you for inviting us to discuss Medicaid funding for school- based
services. I want to emphasize the important role school- based services play in
assuring that children receive needed health care. School-based programs can
also play a powerful role in identifying and enrolling children who are eligible
for Medicaid, as well as the new State Children's Health Insurance Programs. We
strongly support Medicaid funding for school-based health services to children
enrolled in Medicaid. I have had the privilege of working closely with your
Committee to understand the recent growth of Medicaid reimbursement in the
schools. We recently sponsored a site visit for key Committee staff to see first
hand the essential role school-based services play in ensuring that
Medicaid-eligible children receive needed care while minimizing disruption to
the education process. However, your Committee, our staff, and now the General
Accounting Office have identified serious concerns with Medicaid payments for
school-based care in a handful of States. These include: "bundled" payment for
groups of services to disabled children without documentation of the actual
delivery of services or their costs; billing for transportation costs that
Medicaid does not cover; and billing for administrative activities that Medicaid
does not cover. We believe we must act now to clarify issues, eliminate any
inappropriate practices that exist, and protect the integrity of Medicaid
funding for school-based services. We, therefore, sent State Medicaid Directors
a letter May 21, 1999 that modifies and clarifies policy in these areas.
Specifically: we will no longer approve federal Medicaid matching funds for
bundled payments for school-based services; we will only pay transportation
costs for children with special transportation needs; and we will issue guidance
this Summer on Medicaid covered administrative costs. We also will continue to
work with Congress and the States to ensure that school-based services covered
by Medicaid are billed appropriately and provided efficiently and effectively.
BACKGROUND Many school-based health programs provide a broad range of services
that are covered by Medicaid, affording access to care for children who
otherwise might well go without needed services. And, as mentioned above,
school-based programs also can play a powerful role in identifying and enrolling
children who are eligible for Medicaid, as well as the new State Children's
Health Insurance Programs. For Medicaid to cover school-based services, they
must be primarily medical and not educational in nature. They must be provided
by a qualified Medicaid provider to children in families that meet Medicaid
income eligibility requirements. And they must be considered medically necessary
for the child. The services can include: routine and preventive screenings and
examinations; diagnosis and treatment of acute, uncomplicated problems;
monitoring and treatment of chronic medical conditions; and provision of medical
services to children with special needs under the Individuals with
Disabilities Education Act. Medicaid funding for school-based services
was limited to coverage for routine screenings and treatment of acute,
uncomplicated problems until 1988. Then Medicaid's role in supporting
school-based health care was greatly expanded under the Medicare Catastrophic
Coverage Act. It stipulates that Medicaid -- not the Department of Education --
pays for medical services provided to Medicaid-eligible children with special
health care needs. Each child must have an Individualized Education Plan, in
accordance with the Individuals with Disabilities Education
Act, in order for Medicaid to pay for their school-based care. There
has been a surge of State interest in Medicaid reimbursement for school-based
health services, mostly for Medicaid-eligible children with special needs under
the Individuals with Disabilities Education Act. We have
encouraged this because of the potential for school-based services to support
"mainstreaming" children with disabilities into regular schools while continuing
to ensure that they get the care they need. As mentioned above, however, three
major areas of concern have begun to emerge. We strongly believe we must address
these issues now to make sure that taxpayer funds are spent appropriately, to
protect the integrity of school-based health care programs, and to ensure that
the potential of school-based services to maximize opportunities for children
with disabilities is not compromised. Bundling Bundled payment for school-based
services creates a real potential for Medicaid to pay too much or to pay for
care which has not been provided. We have, therefore, told States in a May 21,
1999 letter that we will stop providing federal Medicaid matching funds for
bundled payments. Several Medicaid programs have been paying for school-based
services with a bundled rate. This means that States make weekly or monthly
payments to schools based on a package of services that are needed by children
within various categories of disabilities, rather than paying separately for
each individual service. Many services may be included in the bundled rate, such
as physical therapy, speech therapy, and vision services. The cost for the
bundled rate is based on the average historical cost of services for children in
each disability category. The payment is the same regardless of the number of
services actually furnished or the specific costs of services involved. However,
in most States that make bundled payments to schools, school-based providers are
not maintaining adequate documentation for bundled payments. In fact, most do
not have the administrative structure for maintaining such documentation. Also,
State Medicaid agencies are not conducting periodic reviews to reconcile claims
to services delivered and plan approved costs. Without proper documentation of
services included in bundled rates, there is no reliable basis for determining
whether the needed service was delivered at a reasonable rate. This creates the
potential for States to obtain Federal matching funds for care which has not
been provided. That is why our May 21, 1999 letter to State Medicaid Directors
made clear that we will no longer recognize bundled rates for school-based
health services. States that currently pay bundled rates for school-based
services must develop and prospectively implement an alternative reimbursement
methodology. We will meet with a workgroup of States, the Department of
Education, and other interested parties to discuss ways to pay for school-based
services that provide full accountability and administrative efficiency. In the
meantime, our regional offices also will actively work with States to assist in
the development and implementation of non-bundled rates. We recognize that
changing payment methods may require authorization or action by the legislature
in some States, and that the work may have to compete with State efforts to make
information systems Year 2000 compliant. We will not ask States that have been
using bundled rates to give back federal matching funds for school-based
payments made before our May 21 letter. However, we expect States to make
necessary changes within a reasonable time frame. If they do not, we will take
appropriate enforcement actions allowed under the law. Transportation Some
school-based health care programs have inappropriately billed Medicaid for
transportation costs that are not related to medical care. Medicaid covers the
cost of transportation to and from school for children with specialized
transportation needs identified in their Individualized Education Plan on days
when they receive a medical service in school. In addition, if a child with
special health care needs requires specialized transportation to and from school
for a medical service but lives in an area that does not have routine school bus
service, that transportation also may be billed to Medicaid. In all situations,
Medicaid funding is reserved for specialized transportation to school on a day
when a child is receiving a medical service. However, several States have been
claiming federal Medicaid matching funds for transportation costs not covered by
this policy. Therefore, our May 21 letter to State Medicaid Directors says
explicitly that children who ride the regular school bus to school with other
non-disabled children in the neighborhood should not have transportation listed
in their Individualized Education Plan, and the cost of that bus ride should not
be billed to Medicaid. The letter also makes clear that: States must describe
the methodology used to establish the transportation rate in the State's
Medicaid plan; States must require documentation of each transportation service,
usually in the form of a trip log maintained by the provider of the specialized
transportation service, when claiming these costs as a direct service; and
States must develop a cost allocation methodology to ensure that Medicaid only
pays for transportation- related administrative costs attributable to Medicaid
beneficiaries when claiming these costs as an administrative service. Our
regional offices also will provide technical assistance to help States in
properly claiming Federal matching dollars for Medicaid-covered school-related
transportation costs. Administrative Claiming Some school-based health programs
may have billed Medicaid for administrative expenses that Medicaid does not
cover. Medicaid covers administrative expenses incurred by schools in providing
Medicaid services, such as outreach and case management. However, we again have
identified important concerns about how these expenses are being accounted for
and claimed. Specifically: some school-based providers are not adequately
documenting Medicaid administrative claims; some school-based providers are
including administrative activities related to services that Medicaid does not
cover or for services to children who are not eligible for Medicaid; and some
school-based providers may have claimed the same administrative costs twice by
including activities that have already been paid for as part of the Medicaid
service itself or by the State or local school district under the
Individuals with Disabilities Education Act. We are working
diligently with States to foster a better understanding of when school-based
administrative activities are eligible for Medicaid coverage. We plan to issue a
written guide related to the requirements for school-based administrative
activities this Summer. CONCLUSION We are committed to supporting school-based
health care services and promoting their potential to afford access to children
who otherwise might go without needed care. We must, however, make sure that
Medicaid payments for school-based services are appropriate. Thanks to the
support and cooperation we have received from this Committee, we have identified
and are addressing the concerns that have emerged. Our joint work on this issue
is an example of how the Administration and Congress can work together to
identify a potential problem, develop an understanding of the practice, and
establish sound policy to protect the long-term interests of both taxpayers and
beneficiaries. We will, of course, continue to closely monitor the situation.
However, the actions we are taking should halt inappropriate billing and protect
the integrity Medicaid funding for school- based health care. I thank you for
holding this hearing, and I am happy to answer your questions.
LOAD-DATE: June 18, 1999