Medicaid in the Schools

Medicaid Toolkit

In 1988, federal law was amended to allow Medicaid payment for services provided to children under the Individuals with Disabilities Education Act (IDEA).

There are five conditions that must be met for Medicaid to reimburse for IDEA-related services.

  • The child receiving the service must be enrolled in Medicaid.
  • The services are medically necessary.
  • The services must be covered in the state Medicaid plan or authorized by the federal Medicaid statute.
  • The services must be listed in the child's individualized education program (IEP).
  • The school district or local educational agency (LEA) must be authorized by the state as a qualified Medicaid provider. 

Medicaid does not pay for screening services that are provided free of charge to non-Medicaid beneficiaries in schools. When a speech-language or hearing screening is provided free of charge to all students, schools may not bill Medicaid for the screening, because it falls under this free-care provision. However, according to the School-Based Administrative Claiming Guide [PDF], if the screening leads to a child being identified as having a disability under IDEA and the development of an IEP, Medicaid could pay for services provided in the IEP. Audiology and speech-language pathology services are generally covered under the early and periodic screening, diagnostic, and treatment (EPSDT) benefit and include both evaluation and therapy.


State-by-State Differences

Some states require that schools bill for Medicaid-eligible services; other states consider billing optional. State Medicaid agencies may have specific requirements for billing when services are provided in the schools. For example, each state plan outlines the use of National Provider Identifier (NPI) numbers by those billing Medicaid. Although some states may require school-based providers to obtain and use their individual NPI numbers when billing for services rendered, other states allow providers to bill under the local education agency (e.g., school district) identifier. School-based professionals should check with state and local administrations to determine whether an individual NPI number is required. Generally, speech and language services included in a child's IEP that are delivered in a group or individual treatment setting are eligible for Medicaid billing.

The most common differences between state Medicaid programs include group size limits, documentation requirements, supervision requirements, and provider requirements. There may also be differences related to documentation for services provided "under the direction of"—including "sign off" by qualified personnel—and the payment rates for school-based providers.

Medicaid Administrative Claiming

School or school district employees may perform administrative activities that directly support the Medicaid program. Some or all of the costs of these administrative activities may be reimbursable under Medicaid. In order to determine the cost for these activities, states must indicate the methodology used for determining costs. The time study is the primary mechanism for identifying and categorizing Medicaid administrative activities performed by school or school district employees. The time study also serves as the basis for developing claims for the costs of administrative activities that may be properly reimbursed under Medicaid.

An interagency agreement, which describes and defines the relationships between the state Medicaid agency, the state department of education, and/or the school district or local entity conducting the activities must be in place in order to claim federal matching funds. The School-Based Administrative Claiming Guide [PDF] specifies that interagency agreements may only exist between governmental (i.e., public) entities and cannot extend to private contractors or consultants. Billing can be done by the state or local education agency, the health department, or a private company based on the agreement with the state Medicaid agency.


The Centers for Medicare & Medicaid Services (CMS) encourages education agencies to develop close working relationships with state Medicaid agencies. Professionals and state associations can collaborate with state  agencies and advocate for changes, such as reducing the paperwork burden and/or caseload size, and clarifying documentation requirements and covered services.


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