Increasing the dialogue among stakeholders in New Jersey’s special education system

School nurse working with young female student

Medicaid is a successful government-operated, single-payer health program established in 1965 as part of Lyndon Johnson’s “Great Society.” The nation’s largest single source of health insurance, Medicaid covers one out of five Americans with very low income- more than 72.5 million people, including 40% of the nation’s children. In New Jersey, more than 540,000 children receive insurance through Medicaid.

Medicaid and Medicare are sometimes confused: Medicare is a government-run, single-payer universal health insurance program for everyone 65 and older, and is funded through federal payroll taxes. Medicaid is a state and federal program of health coverage for low-income Americans of any age. The program is administered by states under general rules from Washington, D.C. and has become the biggest source of federal funding for states.

For the last 30 years, Medicaid has been extended to help cover the cost of health-related services delivered in a school setting. According to the Centers for Medicare and Medicaid Services (CMS), in 2015, Medicaid paid for nearly $4 billion in school-based ‘health-related’ services for eligible students, including nurses, social workers, physical, occupational and speech therapists, and medical equipment such as walkers and wheelchairs. It also pays for preventive and comprehensive health services for poor children, including immunizations, screening for hearing and vision problems, and management of chronic conditions like asthma and diabetes.

Children who are eligible for Medicaid Health Care Coverage:

  • Do better in school.
  • Miss fewer days due to illness or injury.
  • Are more likely to finish high school, attend college and graduate from college.
  • Have fewer Emergency Room visits and hospitalizations as adults.
  • Earn more as adults.

(from the Center on Budget and Policy Priorities)

Medicaid is a critical part of infrastructure and funding for schools, and helps fund many programs, including its Early Periodic Screening Diagnostic and Treatment (EPSDT) benefit. Under EPSDT, children and adolescents under the age of 21 have guaranteed access to a robust set of comprehensive and preventive health services, including regular well-child exams; hearing, vision and dental screenings; and other services to treat physical, mental, and developmental illnesses and disabilities. The EPSDT benefit also covers medically necessary supplies and equipment that help students in schools, such as hearing aids, eyeglasses, wheelchairs, and other assistive technology to help students hear and see.

Medicaid funding in schools benefits all children, not just those who are enrolled in the program. In a recent survey of school superintendents, almost half reported that they use the reimbursement their districts receive for services provided to Medicaid-eligible children to expand health-related services and supplies. This includes programs that monitor the healthcare needs of eligible children with certain conditions such as asthma and diabetes as well as operating clinics within schools to provide dental care to Medicaid-eligible children.

Medicaid is a significant funding source for special education in the Garden State. According to data released by the Washington DC-based Center on Budget and Policy Priorities, New Jersey spent nearly $287 million on school-based Medicaid services, some $143 million of which came from the federal government and the rest from state dollars, according to the center’s report. Only Texas, Michigan, and Illinois received more federal funding.

Though it makes up a small fraction of federal money that public schools receive, Medicaid is considered a vital funding supplement for schools to provide federally mandated special education services through the Individuals with Disabilities Education Act (IDEA). Adopted in 1975, federal funding for IDEA has fallen short of the congressional promise of “full funding” of 40% of costs – in fact, the federal share in 2015 to help states cover excess costs is roughly $15 billion – just 16% of the cost.

Since 1994, New Jersey has participated in a federal program, Special Education Medicaid Initiative (SEMI). The program assists school districts by providing partial reimbursement for medically related services listed on a student’s Individualized Educational Program (IEP). Under the program, New Jersey school districts are required to maximize their participation in the program. In exchange, districts receive 35% of the federal aid; the remainder goes to the state. The SEMI program focuses on compliance and makes sure Medicaid is billed for certain health-related services considered medically necessary in each student’s Individualized Education Program (IEP), including IEP meetings and evaluations.

What type of services does the School-Based Services program cover?

  • Evaluations
  • Speech Therapy
  • Occupational Therapy
  • Physical Therapy
  • Psychological Counseling
  • Audiology
  • Nursing
  • Specialized Transportation

The New Jersey Medicaid Administrative Claiming (MAC) program augments the SEMI program by recovering some of the costs associated with school-based health and outreach activities, such as client assistance to access Medicaid services, care, planning and coordination for medical or mental health services, and facilitating an application for Medicaid. Such innovations have enabled the state to make local education dollars go further toward meeting the legally required needs of special education students and those with disabilities.

Considerations for Families

In most cases, Medicaid benefits provided at school are a win-win-win for families, students and school districts, but in certain cases, it can hurt families. When children with more severe disabilities receive Medicaid services through what is known as a “Community Care Waiver” (CCW) service hours may be capped. If the school district bills Medicaid for the child’s services while they are at school, services at home – nursing and therapies – can be reduced or curtailed. The New Jersey Department of Education has a policy NOT to bill Medicaid in these situations, but advocates say that problems do occur, and urge parents to understand their Medicaid benefits.

In 2013, the regulations regarding Medicaid parental consent for school-based services changed. Prior to accessing a child’s public benefits or insurance for the first time, school districts must provide parents/guardians written notification and obtain a one-time parental consent, which is valid until such time as the parent takes action to withdraw consent. Advocates advise families to reconsider the issue of consent each year, even if the question does not come up at the IEP meeting. Parents have the right to withdraw consent to allow for Medicaid billing at any time by contacting the school district. Regardless of Medicaid-eligibility status or a parent’s willingness to consent, the school district is required to provide services to each child pursuant to the IEP.

Funding In Peril

Changes to Medicaid have been at the center of political debate around health care reform, and these are of great concern to school leaders. According to AASA, The School Superintendents Association, virtually every student in special education could be affected by cuts to Medicaid.

According to the Center for American Progress, a progressive policy advocacy group, local education agencies and schools might see an average 20 percent drop in federal Medicaid funding over ten years. That would constitute a $600 million reduction over ten years, or $16 million less to N.J. (2.7 percent of the nationwide cuts). The Center for American Progress also projects that 839,382 N.J. students enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) could be affected by proposed cuts to Medicaid. These proposed reductions could support salaries in N.J. for 339 school nurses, 267 school-based social workers, 219 school counselors or psychologists, and 270 speech-language professionals.

One of the proposals for Medicaid reform being considered in Washington is to establish “block grants” which allocate a specific amount of money, rather than the open-ended promise of funding now in place. When states opt for block grants, schools may no longer receive a dedicated source of funding based on reimbursement toward cost of services. Instead they could be forced to compete for a share of an overall statewide funding allotment with hospitals, doctors and health clinics. Advocates fear that schools could lose a guaranteed subsidy and Medicaid recipients in schools might lose a guaranteed right to a robust set of comprehensive and preventive health services, such as early diagnosis and treatment, eyeglasses and assistive technology devices.

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