Medicaid in Schools

Schools are an important service delivery and outreach point for Medicaid because one-third of those eligible for Medicaid are school-aged children. Even when schools do not directly provide Medicaid-covered health services, they can help identify, refer, screen, and assist in enrolling Medicaid-eligible children. Outreach and identification activities help ensure that the most vulnerable children receive routine preventive health care, primary care, and treatment. Most states are seeking Medicaid funds to help them provide medically related services to disabled children and direct children to appropriate health services. However, controls over the various approaches to submitting claims for Medicaid reimbursement for school-based health services and administrative activities are poor. Oversight by the Health Care Financing Administration has failed to ensure an appropriate balance between the states' demands for flexible, administratively simple systems and the need to account for whether federal funds being used as intended. The result is confusing and inconsistent guidance across the regions and failure to prevent improper practices and claims in some states. Without adequate controls and consistent oversight, Medicaid is vulnerable to paying for unneeded and undelivered services and activities. Weak agency oversight has created an environment ripe for opportunism and fraud.

GAO noted that: (1) nearly all states reported Medicaid expenditures for school-based activities, which totalled $2.3 billion for the latest year of available state data; (2) the majority of payments--about $1.6 billion--were for health services provided by schools in 45 states and the District of Columbia, and about $712 million was for administrative activities billed by schools in 17 states; (3) three states--Illinois, Michigan, and New York--accounted for over 60 percent of total school-based claims; (4) New York accounted for 44 percent of all health services payments, while Illinois and Michigan together accounted for 74 percent of all administrative activity payments; (5) Medicaid payments to schools ranged from a high of nearly $820 per Medicaid-eligible child in Maryland to less than 5 cents per child in Mississippi, reflecting in part variation in the proportion of states' school districts that submitted claims for Medicaid services and activities; (6) some of the methods used by school districts and states to claim reimbursement for school-based services do not ensure that health services are provided, or that administrative activities are properly identified and reimbursed; (7) bundled rate methods used by school districts to claim Medicaid reimbursement for school-based health services have failed in some cases to take into account variations in service needs among children and have often lacked assurances that services paid for were provided; (8) in two states, monthly payments ranging from $141 to $636 per child were made to schools solely on the basis of at least 1 day's attendance in school, rather than on documentation of any actual service delivery; (9) with regard to administrative activities, poor controls have resulted in improper payments in at least two states, and there are indications that improprieties could be occurring in several other states; (10) Medicaid costs shared by the federal government and the states could fall under one of the two following categories: (a) medical assistance; and (b) administrative duties; (11) each state program's federal and state funding shares of health services payments are determined through a statutory matching formula; (12) this formula results in federal shares that range from 50 to 83 percent, depending on a state's per capita income in relationship to the national average; and (13) over 95 percent of Medicaid's $177 billion in total expenditures in FY 1998 was spent on health services.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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