Free Care Rule Regulatory Change: New Opportunities for Medicaid Reimbursement in Schools

Why are school health services so important for low-income children with asthma? Many children come to school needing access to preventive health services, support for emotional development, care for acute illnesses, and help with managing chronic conditions. Almost half of public school children live in families at or below the federal poverty level, and many live in medically underserved communities with limited access to health care. For these children, schools become an important venue for receiving necessary health care services.  School health services are especially important for the more than 7 million US children with asthma who depend on access to school nurses and other health providers for appropriate management of their condition while at school.  As Medicaid-eligible populations are more likely to have asthma and less likely to have their condition well-controlled, offering asthma programs in low-income school districts is important for insuring that underserved children with asthma have access to the care they need.

How did the free care rule limit access to school health services for children with asthma?  Suppose a school had a large population of students with uncontrolled asthma and wanted to implement a comprehensive asthma management program for their students following National Asthma Education and Prevention Program (NAEPP) guidelines. If the school implemented such a program – including elements such as maintaining an asthma action plan for students and providing asthma education to help with self-management skills – the school would not be able to seek any Medicaid reimbursement for asthma management services rendered to Medicaid beneficiaries if the same services were provided to other students for free.  Application of the free care rule prevented Medicaid funds from flowing to schools even though medically necessary services (medical assistance to students experiencing asthma symptoms) and health education and anticipatory guidance (asthma self-management education) are covered generally by Medicaid and reimbursable under other circumstances. Without the opportunity to seek Medicaid funding, many schools in disadvantaged areas have been unable to deliver or maintain asthma management services for their students.

How does the rule change improve opportunities for school health services?  The recent withdrawal of the free care rule by CMS removes a major barrier to accessing funding for school health services. This shift in Medicaid policy has the potential to greatly change the health service landscape in schools that serve predominantly low-income, Medicaid-eligible students.  Upon implementation of this rule change, schools will have access to a dependable, sustainable source of reimbursement for the Medicaid-eligible services they provide or may want to provide.  The accessibility of Medicaid dollars opens doors to schools to address student health needs – high rates of asthma, diabetes, behavioral health issues, etc. – by implementing evidence-based programs school-wide.

What are next steps in implementation and what challenges exist?  CMS has now cleared the way for Medicaid reimbursement for school health services, but it is up to states and school districts to implement this rule change. Many states have integrated the free care rule into state regulations and these will need to be updated to enable schools to start seeking reimbursement from the state Medicaid plan. Resolving outdated state regulations is just the first step: the education sector needs to be informed about the rule change to help school districts overcome assumptions that they cannot bill Medicaid. Furthermore, schools will need to acquire the staff and technology infrastructure necessary to bill Medicaid for health services rendered.  These factors will take time and resources.  

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