HHS to rescind rule cutting Medicaid reimbursement for schools

The Department of Health and Human Services (HHS) has issued a proposed rescission of its December 2007 final rule that would have prohibited federal reimbursement for Individuals with Disabilities Education Act (IDEA)-related administrative and transportation costs for Medicaid-eligible students. Implementation of the rule by the HHS Centers for Medicare and Medicaid Services (CMS) already had been blocked by successive Congressional moratoria. “We previously assumed that, since such activities were within the scope of the overall mission of the schools, the activities would continue with funding from other sources available for educational activities,” CMS states in its new proposed rule. “Because this assumption may be invalid, we are concerned that implementation of the rule could adversely affect Medicaid beneficiaries.” Acknowledging that this concern was suggested by public comments submitted to the rule as proposed in September 2007, CMS indicates that “we may not have been fully aware of the magnitude of the potential adverse consequences.” In addition, “oversight reviews that we cited in issuing the final rule, indicating some deficiencies in procedures for claiming school-based administrative expenditures and necessary transportation, were several years old and based on data collected more than 5 years ago. These claims did not reflect CMS guidance issued after the review data was collected; nor did they reflect the greater administrative oversight and technical assistance that we have made available more recently.” Comments on the proposed rescission are due June 1, 2009.

The decision by HHS caps years of efforts by child advocates, NSBA prominent among them, in the legislative, judicial, and administrative arenas. In 2003 and 2004, NSBA was prepared to file a lawsuit challenging the cuts and had raised the funds for that purpose, but relief has come year by year from other quarters since then. Details from years of Legal Clips updates are available starting from the first NSBA link below. The second NSBA link is to a collection of materials on the issue from NSBA’s Office of Advocacy. A February 2009 report by Congressional Research Service (CRS) on the issue provides another overview of the issues involved.

74 Fed. Reg. 21232 (May 6, 2009)

HHS proposed rule
NSBA School Law pages on elimination of school Medicaid reimbursements
NSBA Advocacy information on school Medicaid claiming
CRS report on Medicaid and Schools