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Congressional Testimony
April 5, 2000, Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 6054 words
HEADLINE:
TESTIMONY April 05, 2000 TIMOTHY WESTMORELAND DIRECTOR CENTER FOR MEDICAID &
STATE OPERATIONS SENATE FINANCE MEDICAL PAYMENTS TO SCHOOLS
BODY:
April 5, 2000 Statement of TIMOTHY
WESTMORELAND, DIRECTOR CENTER FOR MEDICAID & STATE HEALTH CARE FINANCING
Chairman Roth, Senator Moynihan, distinguished Committee members, thank you for
inviting me to discuss Medicaid funding for school-based services. I would also
like to thank the General Accounting Office for helping us to ensure that these
payments are appropriate. School-based health services play an important role in
making access to certain health care services available to children who
otherwise might go without needed services. We believe that these services play
an important role in supporting and enhancing children's progress in schools.
Schools also offer unique advantages and opportunities to reach children and
encourage their families to enroll in the Medicaid and State Children's Health
Insurance Programs. We strongly encourage schools to provide services and
conduct outreach, and we are committed to ensuring that all eligible children
are enrolled in these programs and receive the services they need. States have
been leading the way in developing and implementing programs that effectively
utilize schools to increase access to services for children. However, in some
instances, there has been confusion and possible disregard of the restrictions
on claiming federal funds for school- based services. Problems identified
include: - "bundled" payment for groups of services to children with
disabilities without documentation of the actual delivery of services or their
costs; - payment for services to children who are not eligible for Medicaid; -
billing for transportation costs that Medicaid does not cover; and - billing for
administrative activities that Medicaid does not cover. - We are taking action
to address these concerns and prevent improper claims for federal Medicaid
funds. - We are no longer approving proposals to use bundling methodologies and
identified key issues that need to be addressed. - We have clarified
transportation issues and will provide further clarification where needed. - We
are circulating a draft Medicaid School-Based Administrative Claiming Guide
intended to help schools correctly bill for the Medicaid services they provide
by consolidating and providing a consistent national statement of existing
requirements. - We will provide training and technical assistance to schools and
school districts on how to use existing guidance to claim for administrative
services and how to use the guide once it is final. - We also have taken action
to defer inappropriate claims. We agree with the GAO that payment methodologies
should balance the need to ensure the proper expenditure of Federal Medicaid
funds and the flexibility of States to expend such funds without being unduly
burdened. This, however, has not proven to be easy. As the GAO observed in their
testimony last year, "Striking a balance between the stewardship of Medicaid
funds and the need for flexible approaches to ensure the coverage and treatment
of eligible children is difficult." We are working to improve the collection and
analysis of data on State Medicaid school-based program expenditures so we will
have a clearer picture of the needs and challenges before us. We are also
reviewing our oversight and monitoring in this area. We are committed to working
with States and school districts to overcome remaining challenges and ensure
that all parties understand their opportunities and obligations with regard to
the provision of school-based Medicaid services. Background Medicaid covers
school-based services when they are primarily medical and not educational in
nature. They must be provided by a qualified Medicaid provider to
Medicaid-eligible children, and cannot be provided free to all students. For
services included under the Individuals with Disabilities Education
Act, they must be considered medically necessary for the Medicaid-
eligible child and they must be listed in the child's Individualized Education
Program. The services provided in schools can include: - routine and preventive
screenings and examinations; - diagnosis and treatment of problems found; -
monitoring and treatment of chronic medical conditions; and - speech,
occupational, or physical therapy, or other services provided to children 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 expanded under the Medicare
Catastrophic Coverage Act. That law stipulates that Medicaid -- not the
Department of Education or local school districts -- pays for services provided
to Medicaid-eligible children with disabilities. In order for Medicaid to pay
for their school-based care, such children must have an Individualized Education
Program, in accordance with the Individuals with Disabilities Education
Act. 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 contribute to the growth and development of school age children,
allowing them to progress better in school and participate with their
non-disabled peers. Because of concerns about potential improper claiming, we
issued a letter to State Medicaid Directors last May clarifying existing policy
and halting certain practices. Underlying the May 1999 letter is a very simple,
but critical, principle -- Medicaid funds must only be used to provide Medicaid
covered services to Medicaid-eligible children at a reasonable cost. There are
key additional activities of Medicaid, such as outreach and enrollment
assistance, but the general rule for services is clear. However, it has not been
easy to balance our program integrity goals with the need to ensure that
children receive necessary services. While we have taken several important steps
toward clarifying our policy and implementing additional monitoring efforts, we
also recognize that additional measures are needed. We are committed to working
with States, schools, the Department of Education, the IG, GAO and Congress to
determine and achieve the right balance so children receive the care they need
and Medicaid funds are spent appropriately in accordance with the law. Bundling
Under a bundling system, 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 individual services. Rates
for these payments are usually based on a survey of the service needs of
children in various disability categories. Many services may be included in the
bundled rate, such as physical therapy and speech therapy. Often, the payment is
the same regardless of the number of services actually provided or the specific
costs of the services involved. HCFA initially approved some bundling
methodologies because they seemed an efficient way to give States and schools
both the funding and the flexibility they need. However, schools have not had
the types of data readily available that are necessary to support bundling. We
agree with GAO that existing bundling methodologies may have placed Medicaid at
risk for improper claims because they do not ensure that services have been
provided or are eligible for coverage. That is why, in our May 1999 letter, we
informed States we would no longer approve bundling methodologies. This
suspension has allowed time to explore ways to balance the need for flexibility
with our obligation to protect Medicaid program integrity. With our partners, we
have identified several outstanding challenges. Key among these is finding the
appropriate balance between the need for, and the burden of, using and
maintaining appropriate documentation. As noted by the GAO report, school- based
providers usually do not use such documentation of the services actually
provided in developing bundled billing methodologies. They may not maintain
adequate or readily available documentation of the services actually provided
for bundled payments. They may not have the administrative infrastructure needed
to do so. Also, all States do not conduct periodic reviews to reconcile claims
for services delivered and costs for those services. Without proper
documentation, there is no reliable basis for determining whether the needed
service was delivered at a reasonable rate. States could obtain Federal matching
funds for services that have not been provided. And it is possible that States
could claim funds for services that are not covered by Medicaid. This could
violate the Social Security Act, which requires that States have methods and
procedures to assure that Medicaid payments are consistent with efficiency,
economy, and quality of care. We believe the processes that have been used for
developing bundled rates have been inconsistent with economy, since the rates
were not designed to accurately reflect true costs or reasonable fee-for-service
rates. The processes were not consistent with the efficiency requirement, since
they would require substantial Federal oversight to establish the accuracy and
reasonableness of State expenditures. As a result, there is no reliable basis
for determining that the bundled payment rate is related to the actual cost. To
help us address these issues, we created a workgroup in July 1999 with
representatives of State Medicaid Agencies, the Department of Education, local
education agencies and the Office of Management and Budget. The workgroup heard
a variety of perspectives, and played a key role in helping us to define several
issues that should be considered in bundled payment methodologies for school
based services. These issues include: - Documentation that goes beyond requiring
simple "assurances." States need to provide detailed information at the provider
or school level to establish auditible records and develop methods for the
maintenance of documentation. - Retrospective reconciliation or other safeguards
to assure that the bundled payment methodology continues to reflect the services
that are delivered. - Reasonable payment rates derived from identification of
reasonable costs for specific services included in bundled payments, and
recognizing varying levels of services needed by children with different needs.
- Statistically valid sampling methodologies to accurately identify services
provided to Medicaid-eligible children with disabilities who have an
Individualized Education Program. The sampling methodology should take into
account the medical needs of children with varying disabilities and geographic
distribution of children with disabilities. Any methodology that does not
address these issues could place the Federal government at risk for expenditures
not permitted by law. We are now testing statistical sampling methodologies and
working with Department of Education colleagues and others to better identify
what documentation schools have or could reasonably maintain. We also are
considering use of outside expert contractors to help us develop appropriate
reimbursement methodologies and requirements, as we have done for other
prospective payment systems. Transportation Schools can be reimbursed for a
variety of transportation costs that are related to provision of Medicaid
services. We agree with the GAO that policies for reimbursement of
transportation costs should offer equitable treatment for children with
different types of disabilities. We issued a letter to State Medicaid Directors
in May 1999 to clarify several issues: - Transportation to and from school may
be claimed when the child receives a medical service in school on a particular
day and when the need for medically necessary specialized transportation is
specifically listed in a student's Individual Education Plan. - If a child
requires transportation in a specially adapted vehicle, including a specially
adapted school bus, that transportation may be billed to Medicaid only on days
when the child receives a Medicaid-covered service. - Transportation from school
to a provider in the community may be billed to Medicaid. - States must provide
documentation of transportation service, usually in the form of a trip log
maintained by the provider of the specialized transportation service. - States
must describe the methodology used to establish the transportation rate in the
State Medicaid plan. - States must develop a cost allocation methodology to
ensure that Medicaid only pays for that portion of the specialized
transportation (and regular bus transportation with an aide) attributable to
Medicaid beneficiaries. We agree with the GAO that the May 1999 letter has not
eliminated all confusion on transportation matters. We will issue additional
guidance on coverage of transportation when an aide or other medical
professional accompanies a child. We also plan to further clarify transportation
services, including the specific types of vehicles, staff, characteristics, and
purposes of service that may be claimed for children with Individualized
Education Programs. And we will work with our regional offices to assure that
there is a uniform understanding and application of these policies.
Administrative Claiming Schools are allowed to bill Medicaid for administrative
costs related to outreach, enrollment, and provision of Medicaid services.
However, there has been confusion regarding precisely which administrative
services qualify for reimbursement and how to calculate such things as the share
and value of professional staff time. We agree that there must be a uniform
national statement of requirements for claiming the costs of school-based
administrative activities. That is why we developed the draft Medicaid
School-Based Administrative Claiming Guide. The Guide is intended to help
schools provide Medicaid services by consolidating and clarifying existing
requirements for claiming related administrative costs. When final, it will
provide a consistent national statement of these requirements. It will not
establish new policies. It will serve as a reference on all aspects of
school-based administrative claiming, and allow States to feel comfortable that
they are submitting claims in compliance with the law. For example, it includes
a thorough discussion of claiming for administrative activities performed by
skilled professional medical personnel. It addresses time study sampling
methodologies, which are the primary mechanism for identifying and categorizing
administrative activities performed by school employees that may be properly
reimbursed under Medicaid. And it provides standard activity codes that may be
further tailored to reflect local differences and other appropriate accounting
methods allowed. Such an approach addresses the need for a balance between
State/local flexibility and consistency within and across States. We released a
draft of the Guide in February to solicit comments from States, schools, and
other interested parties. We have asked interested parties to give us feedback
by April 3. The draft is available on the HCFA web site at www.hcfa.gov. Once we
have reviewed the feedback we expect to make changes before issuing a final
Guide. At that time, we will work to help all relevant parties understand how to
use it, particularly small school districts that would otherwise have difficulty
claiming. This will include technical assistance, regional conference calls, and
a national training session in Baltimore. Schools and school districts will be a
critical part of our training effort. We have already begun working with school
districts to foster an understanding of related policy. We also will incorporate
the Guide into formal financial management tools, procedures, review guides, and
manuals on the oversight of school-based services and administrative activities.
We will review existing Medicaid expenditure reporting and work with States to
identify additional data that should be gathered. We will work prospectively as
partners with States to ensure that proper claiming methodologies are used and
to ensure that any future changes in claiming procedures by States will be part
of a formal review and approval process. And, consistent with our legal
authority and responsibility, we will recoup funds inappropriately claimed by
States. We share the concerns expressed by the GAO and several members of
Congress that private firms who receive a percentage of reimbursement as payment
for consulting and billing services, rather than a fixed fee, have an incentive
to maximize the amount of reimbursement claimed, and we will further review
claims to ensure that no consultant's contingency fees are included. We also
share GAO concerns about States retaining a share of Federal funds related to
schools' claims. However, this practice is allowable under current law and can
only be changed by the Congress. CONCLUSION We recognize that many challenges
remain in striking the balance between ensuring fiscal integrity and providing
appropriate school-based Medicaid services. We are committed to taking all
necessary steps to ensure proper and efficient operation of school-based
programs. We will work with our Federal, state, and local partners to continue
to address these issues. I thank you again for holding this hearing, and I am
happy to answer your questions.
LOAD-DATE: April 10,
2000, Monday