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Medicaid Payment for School-Based Services

Frequently Asked Questions: Eligibility, Billing, and Submitting Claims

What guidance is offered for billing Medicaid for school-based services?

Schools can only bill for "medically related services" that are outlined in the State Medicaid Plan, however, a lack of guidance and confusion over policies for obtaining Medicaid payments for school-based services has created problems.

The Centers for Medicare and Medicaid Services (CMS) has not provided adequate direction to states concerning Medicaid reimbursement for school services, according to recent reports by the U.S. General Accounting Office (GAO). GAO recommends that CMS develop technical guidance (not regulations) to states regarding Medicaid payments for school-based services, including the need for CMS to distinguish between school-based services that are primarily medical versus those that are educational. ASHA maintains that any distinction on medical versus educational speech-language pathology and audiology services is artificial, given that these services frequently correct or ameliorate communication disorders affecting a person's health and education status simultaneously. The U.S. Supreme Court has ruled that the inclusion of a service in a child's IEP does not automatically render the service as educational rather than medical. Guidelines from CMS are expected in the near future.

What speech, language, and hearing services are considered a medical necessity and are covered under Medicaid?

Under Part B and Part C of the Individuals with Disabilities Education Act (IDEA), if assistive technology devices and services are necessary for a child with a disability in order to receive a free and appropriate education; Medicaid must ensure that they are made available.

An assistive technology device is defined as "any item, piece of equipment, or product system, whether acquired commercially off the shelf, modified, or customized, that is used to increase, maintain, or improve the functional capabilities of children with disabilities." Assistive technology services are defined as "any service that directly assists a child with a disability in the selection, acquisition, or use of an assistive technology device."

In addition, hearing aid services (including hearing aids), evaluations for the selection and fitting of Augmentative or Alternative Communication (AAC) devices (as well as training in the use of the devices) are covered for all Medicaid-eligible children under Early and Periodic Screening, Diagnostic, and Treatment (EPSDT). AAC devices are covered as durable medical equipment (DME) as are device repairs after the warranty expires.

For additional information, see:

How do children qualify for Medicaid speech, language, and hearing services in the schools?

Medicaid recognizes the importance of school-based speech-language pathology and audiology services although it is a medical assistance program. The federal Medicaid program actually encourages states to use their Medicaid programs to help pay for certain health care services delivered in the schools if federal regulations are followed.

Section 1903 (c) of the Social Security Act was amended in 1988 to allow Medicaid coverage of health-related services provided to children under the Individuals with Disabilities Education Act (IDEA). Part B of IDEA allows children with disabilities to receive special education and related services, such as speech-language pathology, when they are recommended in the child's Individualized Education Program (IEP). CMS authorizes Medicaid reimbursement for some or all of the costs of health-related services provided under IDEA when the services are (1) provided to Medicaid-eligible children, 2) medically necessary, 3) delivered and claimed in accordance with all other Federal and State regulations, and 4) included in the state plan.

How do I know if a child I am serving is Medicaid eligible?

Your school district Medicaid office can provide this information. It is important to know that Medicaid eligibility is very fluid and can change from month to month. A school district's Medicaid office communicates with the state's Medicaid office in order to obtain current information on a child's eligbility status. Remember that documenation is the bottom line! Medicaid agencies conduct routine audits to prevent fraud and abuse. School-based service providers should always make sure that they keep complete documentation about the services provided regardless of Medicaid eligibility status. Please note that IDEA 2004 requires annual consent from parents to bill third parties for services. A new consent form needs to be signed every year. If a parent refuses to consent, billing to third parties is not allowed.

Can school districts use a third-party billing agency?

Yes. Some school districts choose to hire a third-party billing agency to "code services" and send all required documenation to a state approved Medicaid billing agency. However, districts are not required to use a third-party billing agency and may have their SLPs and audiologists code their services for billing on their own.

What codes are used for Medicaid billing and how do I know which ones to use?

The Centers for Medicare and Medicaid Services (CMS) established a recognized set of codes under the Health Insurance Portability and Accountability Act (HIPAA). The health care services coding systems, which include CPT (Current Procedural Terminology), HCPCS (Healthcare Common Procedure Coding System), and ICD-9-CM (International Classification of Diseases, 9th Revision, Clinical Modification), are used to describe the specific diagnoses, services, and items provided in the delivery of health care. The State Medicaid Plan will outline or list the appropriate codes to use for provided services. For more information on the health care services coding systems, please go to ASHA's Coding for Reimbursement page or CMS's HCPCS Codes for State Medicaid Web page.You will also want to check with your state Medicaid agency or your school district's Medicaid administrator for their billing and coding guidelines.

Is there a deadline for submission of a claim to Medicaid?

Yes, there is a deadline, but it can vary from state-to-state. It is important to know the deadline timeframe for your state. Billing timelines are based on the interagency agreement between the state education agency and the state Medicaid agency.

What can cause rejection of a claim?

A claim can be rejected for a variety of reasons including but not limited to:

  • Incomplete or incorrect documentation (e.g., missing signature, illegible signature, missing or incorrect date, duration, and location of service)
  • Submission of a claim past a billing deadline
  • Ineligibility for Medicaid during the dates of service
  • Missing progress notes for dates of service

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