Medicaid in Schools: Improper Payments Demand Improvements in HCFA Oversight

HEHS/OSI-00-69 Published: Apr 05, 2000. Publicly Released: Apr 05, 2000.
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Highlights

Pursuant to a congressional request, GAO provided information on states' practices regarding Medicaid reimbursement of school-based administrative activities, focusing on: (1) the extent to which school districts and states claim Medicaid reimbursement for school-based health services and administrative activities; (2) the appropriateness of methods states use to establish bundled rates for school-based health services and to assess the costs of administrative activities that their schools may claim as reimbursable; (3) states' retention of federal Medicaid reimbursement for services provided by schools and schools' practice of paying contingency fees to private firms; and (4) the adequacy of the Health Care Financing Administration's (HCFA) oversight of state practices regarding school-based claims, including safeguards employed to ensure appropriate billing for health services and administrative activities.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Health Care Financing Administration In order to improve the development and application of policies for Medicaid reimbursement of claims for allowable school-based health services and administrative activities, the Administrator, HCFA, should allow the use of bundled rates as one of several alternative payment approaches, provided that HCFA establishes consistent principles for bundling that effectively address: (1) provisions for rates that reflect or recognize varying levels of services to accommodate children; and (2) assurances that children receive appropriate and needed services.
Closed – Not Implemented
CMS convened a workgroup which developed a prototype bundling methodology. The methodology and the issues surrounding the use of bundling are under review by staff of the new Administration. No additional action has been taken on these policies since the issuance of GAO's report in 2000.
Health Care Financing Administration In order to improve the development and application of policies for Medicaid reimbursement of claims for allowable school-based health services and administrative activities, the Administrator, HCFA, should develop a methodology to approve and monitor state practices regarding allowable costs for administrative activities in schools that establishes consistent federal requirements for methods of allocating costs to Medicaid and accounting for professionals' time.
Closed – Implemented
CMS issued a final Guide, "Medicaid School-Based Administrative Claiming Guide," in May 2003, effective for all states on October 2003. This guide outlines methods for performing time studies, addressing the administrative time of skilled professionals, and tightening the definition and application of activity codes--the three major concerns that GAO cited in its report (GAO/HEHS/OSI-00-69).
Health Care Financing Administration In order to improve the development and application of policies for Medicaid reimbursement of claims for allowable school-based health services and administrative activities, the Administrator, HCFA, should clarify the agency's policy on specialized transportation, with the goal of establishing policies that offer equitable treatment for children with different types of disabilities.
Closed – Not Implemented
CMS has developed a second State Medicaid Director's letter that specifically identifies the types of transportation eligible for Medicaid reimbursement. The letter is under review by staff of the new Administration. However, the letter has not been signed.

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