You asked why Connecticut is getting so much less than Massachusetts in federal Medicaid reimbursement under the School-Based Child Health (SBCH) program. You also wanted to know if other states’ SBCH programs are more successful in obtaining federal matching funds.

We are still awaiting information on the states other than Massachusetts and will provide this information in a separate report.

SUMMARY

The SBCH program offers financial assistance to towns that are required by federal and state law to furnish medical services to their special education students. Towns receive Medicaid reimbursement once they submit bills to the state.

In Connecticut, the assistance comes in the form of grant payments to the towns, which are roughly 50% of what the federal government pays in matching funds for Medicaid-covered services. In essence, towns get back about 25% of what they spend on these services, (half of the 50% federal match). (In 2003, the legislature reduced the percentage from 60% to 50% of the match. ) According to the state’s SBCH manager Craig Zimmerman of the Department of Social Services (DSS), this policy, in which the state retains the rest of the federal match, is based on the

concept that the state pays a large percentage of the local education agencies’ (LEAs) educational costs and some of the recovery should accrue to the General Fund.

As of July 2004, 73 of the state’s 166 LEAs were participating in the SBCH program. They received over $ 10. 5 million in state grant payments during the 2003-04 school year. Almost $ 56 million will have been paid during the period running from the 1998-99 school year through the 2004-05 school year, according to a DSS report.

Massachusetts’ SBCH program serves over 300 of the state’s 380 school districts. The program returned over $ 400 million to these districts between FYs 1998-99 and 2002-03. Unlike Connecticut, all of the federal match is turned over to the towns, which is probably the main reason (aside from the obvious difference in the size of the states’ student populations) that the state recoups more money than Connecticut does. Zimmerman also notes that Massachusetts’ program has had “minimal” documentation requirements, which are apparently now under federal review. This may also make the program more attractive to the towns.

SCHOOL-BASED CHILD HEALTH (SBCH)

Background

The federal Individuals with Disabilities Education Act (IDEA) requires states to identify all children with disabilities, regardless of severity, who need special education or “related “services. ” Under Part B of the act, school districts must prepare individualized education plans (IEP), which specify all services needed by each child. LEAs are entitled to Medicaid payment for some of the related health services (essentially, diagnostic, evaluative, and rehabilitative treatment) provided to Medicaid-eligible children if they are services specified in Medicaid law and included in the state’s Medicaid plan. In Connecticut, the state plan includes a provision for these services when they are provided either by or through an LEA.

Connecticut’s Program History

Until July 1, 1994, Medicaid paid towns, through the State Department of Education, directly for Medicaid reimbursable SBCH services. DSS received a bill from a town and reimbursed it based on what Medicaid would normally pay for the service (using a fee schedule). DSS in turn billed the federal government and received a 50% match for what it paid the LEA.

According to a DSS report, few towns participated in the program at that time because (1) the fees were too low, (2) parental permission was required in order for the town to bill Medicaid, and (3) school districts did not necessarily benefit because DSS payments went directly to the towns.

In 1994, the state switched to a “bundled” billing system. Where previously each service was billed separately, under the new system, three all-inclusive rates were established: one for treatment, one for initial evaluations and re-evaluations, and one for durable medical equipment. Instead of reimbursing towns, the legislature established a grant program, run by SDE, that would pay towns on a quarterly basis equaling 60% of the anticipated federal match. For example, if a town billed $ 100,000 in Medicaid-reimbursable claims, its grant would be 60% of the federal match ($ 50,000) or $ 30,000.

School district participation requirements have likewise changed over time. In 1994, only LEAs that had more than 1,000 children between the ages of 3 and 21 enrolled in Medicaid had to participate. PA 95-259 decreased this figure so that only LEAs that had a three-year average of 5,000 or more Medicaid-enrolled children, essentially only the five largest cities, had to participate. Bristol and Meriden voluntarily chose to participate. Approximately 56% of the Medicaid-eligibile children in the state lived in these seven school districts.

Even with the revised program structure, the LEAs found program administration burdensome. So in 1999, the legislature directed DSS and SDE to make additional changes to increase the number of participating LEAs. It made the program voluntary, required schools to complete documentation and bill only for those students who were Medicaid-eligible, and ensured that payments went directly to the school districts instead of the towns. And it made DSS the agency responsible for paying the grants, instead of SDE (PA 99-279).

The most recent change of substance came as part of a larger, budget-cutting measure when the 2003 legislature reduced the LEA share of the federal match from 60% to 50% (PA 03-3, June 30 Special Session).

Massachusetts’ Municipal Medicaid Program

Massachusetts’ Municipal Medicaid program is the state’s SBCH program. By law, the Medicaid “providers” (i. e. , town, public health commission, or regional school district that assumes responsibility for paying the “state’s share” of the Medicaid reimbursable service) pay the state share of the service costs and the state submits “pass through” claims to the federal government for reimbursement. The federal reimbursement goes back to the towns according to a statutory formula. Unlike Connecticut, the towns receive 100% of the federal match (except students placed in residential settings, where the towns get 50% of the match).

According to a slide presentation presented by Massachusetts Medicaid program staff, 330 school districts and municipalities participate in Municipal Medicaid. And towns got back $ 450 million from the federal government between FY 1998-99 and FY 2002-03 for direct services, and $ 163 million in administrative claims.

For most claims, providers use the bundled rate system similar to the one used in Connecticut. But the state also collects funds by billing on a fee-for-service basis for special education team meetings, home assessments, and private duty nursing services.

Potential Participation Obstacles

While the large disparity in federal funds recouped under the programs in Connecticut and Massachusetts can be explained simply by pointing to the difference in state populations, other factors may have contributed, including the limits on what Connecticut LEAs can get and administrative complexities in the state’s program.

LEA Share. Until 2003, the LEAs’ share of the federal Medicaid match was 60%. Section 54 of PA 03-3, June 30 Special Session, lowered this to 50%. Massachusetts towns receive all of the federal match.

Administrative Complexity. Some Connecticut school districts have complained that the program’s billing process is overly cumbersome and that the state unfairly withholds a percentage of the claims, assuming that they will not be eligible for Medicaid reimbursement.

The process works like this. The LEA submits a bill to the state’s collection agency, the Department of Administrative Services (DAS). DAS automatically takes, on average, 10% off the top on the assumption that this percentage of the claims will not be Medicaid-eligible (e. g. , there is private insurance available). DAS then sends the “net” claims (claims minus those eligible for third party insurance) to EDS, the state’s Medicaid claims agent, which submits a paper remittance to towns showing them what the state will attempt to recover from Medicaid, after it verifies Medicaid eligibility and the availability of private insurance.

As we mentioned above, Massachusetts towns have recouped a significant amount in administrative costs since 1998 and the documentation requirements have been minimal. DSS’ Zimmerman reports that DSS has claimed a small amount of administrative costs in its bundled rate system. The agency decided a number of years ago not to pursue separate claims for administrative costs because the federal government was reviewing this billing. DSS continues to review this decision pending the outcome of the federal review.

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