Medicaid and Special Education

The Individuals With Disabilities Education Act and Medicaid have the potential to offer various services and equipment that can be critical to the educational development and physical well-being of disabled children. In 1999, the act provided school districts with $4.3 billion to help make special education and related services available to all students with disabilities. Some of the costs of services provided to poor children under the act may be covered by Medicaid. Although Medicaid is traditionally the payer of last resort for health care services, since 1988 Medicaid has been required to reimburse for medically necessary services provided to eligible children under the act. The act is required to coordinate with other federal programs, such as Medicaid, to finance and deliver services to disabled children. However, because the boundaries of operation for the act and Medicare are unclear, concerns have arisen about coordination between these two programs. This report (1) describes how Medicaid and the act interact to meet the needs of poor school-aged children with disabilities and (2) identifies issues that have arisen in coordinating services provided by Medicare and the act in schools.

GAO noted that: (1) Medicaid and IDEA interact differently at the federal, state, and local levels, and the extent and nature of coordination continue to evolve; (2) federal efforts focus on: (a) helping states access funding sources such as Medicaid; and (b) working to develop clear and consistent guidance to help educational entities appropriately claim Medicaid funding for IDEA-related medical services; (3) while charged with ensuring that Medicaid-eligible individuals have access to and receive covered services, the Health Care Financing Administration (HCFA) must also safeguard Medicaid against improper claims; (4) in the states GAO contacted, interagency agreements and agency liaisons are the primary mechanisms of state-level interaction between Medicaid and IDEA; (5) as states and school districts have worked to obtain Medicaid reimbursement for covered school-based services, several concerns regarding coordination with IDEA have arisen; (6) concerns generally revolve around determining which IDEA-related services Medicaid will cover, identifying children who are eligible for both programs, and managing the documentation required for submitting Medicaid claims; (7) these efforts are complex for many reasons, including the need to safeguard the privacy of children with disabilities while ensuring appropriate documentation for claiming Medicaid reimbursement; (8) efforts to coordinate Medicaid and IDEA have also been affected by the lack of clear and consistent federal guidance; (9) inconsistent guidance from HCFA appears to have heightened school district concerns that Medicaid reimbursements will have to be returned to the federal government later because of inappropriate documentation or changes in documentation requirements; (10) recognizing the need for better coordination, HCFA is developing additional guidance, which it plans to issue in 2000; (11) additionally, HCFA has established a position to advise its Administrator on disability policy and to facilitate communication among the Administrator of HCFA, other federal policymakers, including the Assistant Secretary for Special Education and Rehabilitation Services, and the disability community; and (12) while these actions will not solve the difficulties in coordinating Medicaid and IDEA services, state and local efforts could be facilitated by federal guidance in communicating Medicaid's coverage and documentation requirements.