DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard, Mail Stop S2-26-12
Baltimore, Maryland 21244-1850

CENTERS FOR MED ICARE & MEDICAID SERVICES

CENTER FOR MEDICAID & CHIP SERVICESCMCS Informational Bulletin
DATE:

August 18, 2022

FROM:

Daniel Tsai, Deputy Administrator and Director
Center for Medicaid and CHIP Services

SUBJECT: Information on School-Based Services in Medicaid: Funding, Documentation andExpanding Services.
School-based services (SBS), which are Medicaid-coverable services provided to children andadolescents in a school setting, play an important role in the health and well-being of children
and adolescents, particularly for those enrolled in the Medicaid program. The Early and Periodic
Screening, Diagnostic and Treatment (EPSDT) is a Medicaid benefit that mandates coverage ofservices described in section 1905(r) of the Social Security Act (the Act), which include a rangeof services including medical, dental, personal care, and long-term services and supports,
regardless of whether the particular services are covered under the state plan. 1
Although schools are primarily providers of education, the school setting provides a unique
opportunity to enroll eligible children and adolescents in Medicaid and the Children’s Health
Insurance Program (CHIP), furnish Medicaid-covered services, including behavioral healthservices (mental health and substance use disorder (SUD) services) to eligible children, and help
children who are enrolled in Medicaid access the services they need. Schools are uniquely
positioned to increase health equity and to help ensure that all children have access to necessary
health care services. This includes services provided through a formal Individualized Education
Program (IEP) and Individualized Family Service Plan (IFSP) under the Individuals with
Disabilities Education Act (IDEA), or other plan and services provided outside of those plans
Section 1905(r)(5) of the Act - Such other necessary health care, diagnostic services, treatment, and other measuresdescribed in section 1905(a) to correct or ameliorate defects and physical and mental illnesses and conditions
discovered by the screening services, whether or not such services are covered under the State plan.
Nothing in this title shall be construed as limiting providers of early and periodic screening, diagnostic, andtreatment services to providers who are qualified to provide all of the items and services described in the previous
sentence or as preventing a provider that is qualified under the plan to furnish one or more (but not all) of such items
or services from being qualified to provide such items and services as part of early and periodic screening,
diagnostic, and treatment services. The Secretary shall, not later than July 1, 1990, and every 12 months thereafter,
develop and set annual participation goals for each State for participation of individuals who are covered under theState plan under this title in early and periodic screening, diagnostic, and treatment services.

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CMCS Informational Bulletin – Page 2
where the services are made available without charge to the beneficiary, including when theservices are available without charge to other students not enrolled in Medicaid. 2
CMS and the US Department of Education (ED) are supportive of school-based health programs
and, where possible, we encourage states to ease administrative burden placed on school-based
health providers to promote their participation in the Medicaid program and thereby increase
access to Medicaid-covered services for Medicaid-enrolled students, while also maintaining
fiscal and programmatic integrity of the Medicaid program. We are issuing this informationalbulletin to remind states of the applicable federal regulations and policies related to Medicaidcovered SBS 3, and to help states and school-based providers implement, maintain and expand
their school-based programs in the most efficient manner possible. Specifically, this bulletin
directs states to relevant existing guidance and strategies to consider, in the form of a “checklist,”
which is intended to assist states in developing proposals that are consistent with federal
requirements and policies. The checklist highlights existing state flexibilities and best practices
for maximizing Medicaid coverage for services furnished to beneficiaries in schools.
This guidance is one of several steps CMS is taking to support access to Medicaid SBS. Section
11003 of the Bipartisan Safer Communities Act (P.L. 117-159) builds upon the efforts CMS has
underway, and specifies several actions for the Department of Health and Human Services(HHS) to take in support of this goal. In the coming months, CMS intends to issue additional
guidance and resources for states, including the release of an updated SBS guide that will
provide more detailed information regarding payment for Medicaid-covered services furnished inschools. This updated SBS guide will encompass an update to the existing Medicaid SchoolBased Administrative Claiming Guide and Medicaid and Schools Technical Assistance Guide inaccordance with Section 11003 of the Bipartisan Safer Communities Act. While this CIB
addresses school-based health services under Medicaid, including M-CHIP, the upcoming guide
will also address CHIP issues related to school-based services. Additionally, the Bipartisan
Safer Communities Act requires CMS, in collaboration with the US Department of Education, toestablish a technical assistance center to support State Medicaid agencies, local educational
agencies and school-based entities seeking to expand their capacity for providing Medicaid SBS,
by reducing administrative burden, supporting such entities in obtaining payment for providing
Medicaid SBS, and providing guidance with regard to utilization of various funding sources.
Background
Since the inception of the Individuals with Disabilities Education Act (IDEA) in 1975, SBS havebecome an important and growing resource for Medicaid-enrolled IDEA eligible children andtheir families in the provision of medically necessary services. The 1988 amendment to IDEA,
included in the Medicare Catastrophic Coverage Act, clarified that Medicaid funds could be used
to pay for Medicaid-coverable services that are part of the eligible child’s IEP. IEP services aredelivered without cost to the child’s family. It is important to note that IEP/IFSP services, suchas speech therapy, are designed to assist a child’s success in school or to advance theirdevelopment. A child with an IEP may also need Medicaid-covered services, such as speechwww.medicaid.gov/federal-policy-guidance/downloads/smd-medicaid-payment-for-services-provided-withoutcharge-free-care.pdf

2Unless stated otherwise, all references to Medicaid beneficiaries also include beneficiaries enrolled in
Medicaid-expansion CHIPs.

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CMCS Informational Bulletin – Page 3
therapy, for medical reasons. Thus, State Medicaid agencies are encouraged to work withschools and families to ensure that both the special education and medical needs of the child are
addressed.
SBS have become an important and growing resource for Medicaid-enrolled children to get thehealth care they need. CMS is committed to increasing access to health care services and quality
education in ways that can narrow disparities in rates of care, promote achievement, and build areliable system of support for every young person. This recognizes research that consistently
demonstrates a positive link between scholastic attainment and improved health outcomes while
also acknowledging that the educational environment is an optimal place to promote wellbeing.
We encourage state Medicaid agencies looking to advance SBS to partner with State Education
Agencies (SEAs), Education Services Agencies (ESAs), Local Education Agencies (LEAs)
including charter schools that are LEAs, public boards of education or other public authorities
within a state that maintain administrative control of public elementary or secondary schools in acity, county, township, school district, or other political subdivision of the state.
Medicaid covers many services provided through schools to students enrolled in Medicaid. This
includes services provided by school-based health centers, which can significantly improve key
health and educational outcomes among students. State Medicaid agencies, SEAs, ESAs and
LEAs can work together to explore opportunities to obtain payment for Medicaid-covered
services for Medicaid-enrolled students. Many services such as immunizations, healthscreenings, oral health care, substance use disorder treatment, and behavioral health care can becovered by Medicaid in schools and may be eligible for Medicaid coverage and payment. As
discussed in further detail in the managed cared section of this CIB, states are encouraged toensure proper coordination of services and care.
Federal law allows states to set payment rates for Medicaid-covered services in a manner that is
consistent with section 1902(a)(30)(A) of the Act and its implementing regulations in 42 C.F.R.
§447. Below, we provide a basic overview of the parameters for Medicaid coverage andpayment of services furnished in schools:
o There is no benefit category in Medicaid called “school-based services.” SBS are
Medicaid-covered services that are provided in school settings by qualified Medicaid
providers enrolled in the Medicaid program.
o To receive payment for providing Medicaid covered services, SBS providers must be
enrolled in the Medicaid program and must meet specific federal and state requirements
regarding provider qualifications for participation in the Medicaid program.
o To be eligible for payment by Medicaid, services must be included among those listed in
Title XIX of the Act, such as those described in section 1905(a) of the Act, and coverable
under the State plan (or waiver of such plan).
o Like services furnished elsewhere, Medicaid-covered services provided in schools mustmeet applicable statutory and regulatory requirements.
o Generally, the Medicaid statute requires Medicaid to be the payer of last resort.
o Section 1903(c) of the Act provides that Medicaid may cover services in an IEP or IFSP
under the IDEA. IDEA requires special education be delivered at no cost to the child’s
family. Families must not be subject to copays or other fees.

CMCS Informational Bulletin – Page 4
School-Based Health Services Checklist
The following checklist includes strategies and guidance state Medicaid agencies can follow to
implement or enhance SBS.
1. Medicaid “Free Care” Policy 4
In State Medicaid Director Letter (SMDL) #14-006, CMS announced a new policy regarding theavailability of Medicaid payment for services covered under a state’s Medicaid plan to aneligible Medicaid beneficiary when the services are made available without charge to thebeneficiary (including when the services are available without charge to members of thecommunity at large). Such services sometimes are referred to as “free care.” Before 2014,
Medicaid payment generally was not allowable for services that were available without charge tothe beneficiary, with limited exceptions. However, SMDL #14-006 withdrew the previous “freecare” policy and announced that Medicaid payment would be available for Medicaid-covered
services furnished to Medicaid beneficiaries, regardless of whether there is any charge for theservice to the beneficiary (or to a member of the community at large). This policy is not limited
to services identified in an IEP; however, generally applicable Medicaid coverage and payment
requirements must be met, including that services must be furnished by a qualified, Medicaidparticipating provider.
For example, a qualified and Medicaid-enrolled audiologist that comes into the school andprovides hearing assessments for the entire student body can now bill Medicaid for thoseservices whether or not other third-party payers are also billed for the hearing assessment.
Likewise, if a school nurse administers fluoride treatment to the entire student body, so long asthat nurse or the school is enrolled as a Medicaid provider, the fluoride treatment could be
eligible for Medicaid payment. Some states have not taken the opportunity to incorporate thesetypes of activities in their payment methodology specific to school-based services in their
Medicaid program, as discussed in section eight of this informational bulletin. Providers in thecommunity that provide Medicaid services, and bill under their own licensure, can bill forservices directly according to the state plan specified Medicaid fee schedule. However, mostoften, an employee or contractor of the school is acting as the provider with the school
submitting a bill to Medicaid, and states have payment methodologies specific to the school
setting and those states may need to consider submitting a plan amendment to include the nonIEP/IFSP services in the payment methodology.
Since the issuance of SMDL #14-006, approximately sixteen states 5 have received approval ofState Plan Amendments (SPAs) to allow Medicaid payment for covered services furnished in aschool setting by a Medicaid participating provider. CMS encourages states to promote the useof schools as a setting in which to provide Medicaid-enrolled children and adolescents withmedically necessary Medicaid-covered services, where appropriate to the student’s needs and the

See State Medicaid Director Letter #14-006, “Medicaid Payment for Services Provided without Charge (FreeCare)” (Dec. 15, 2014), https://www.medicaid.gov/federal-policy-guidance/downloads/smd-medicaid-paymentfor-services-provided-without-charge-free-care.pdf
45
California, Nevada, Arizona, Colorado, Minnesota, Missouri, Louisiana, Michigan, Kentucky, Florida, Georgia,
South Carolina, North Carolina, Connecticut, Massachusetts, and New HampshireCMCS Informational Bulletin – Page 5capabilities of the setting and practitioners, thereby promoting access to needed care andpromoting health equity.
CMS reminds states and stakeholders of the following:o Medicaid payment is available for covered services that are provided to Medicaid enrolled
beneficiaries, regardless of whether there would otherwise be any charge for the service tothe beneficiary (or to a member of the community at large).
o Medicaid payment can be made (and federal financial participation is available) for
Medicaid-covered services, including those identified in students’ IEPs, IFSPs, andindividual service plans per section 504 of the Rehabilitation Act of 1973, commonly called a
Section 504 plan.
o Covered services may include, but are not limited to, EPSDT services like screenings,
vaccinations, check-ups, and other EPSDT services. See number “3. Providing EPSDTServices” below for more information. 6
o Services not in a child’s IEP can also be covered including behavioral health services andnursing services, such as nutrition services, medication monitoring, and counseling.
o Services provided to Medicaid-enrolled students must satisfy applicable medical necessity
criteria, be coverable under a Medicaid coverage authority (e.g., the Medicaid state plan or asection 1115 demonstration project), and be furnished by a qualified, Medicaid-participating
provider.
o Covered services may be delivered to all Medicaid-enrolled children in school settings, notjust those with a special education plan documented in an IEP, IFSP, or Section 504 plan.
2. Ensuring Every Medicaid-Eligible Child is Enrolled and Has Access to Services
CMS encourages all states to ensure that every eligible child is enrolled in Medicaid coverage
and able to receive covered SBS. Research strongly suggests that when young people have
health coverage and receive necessary and preventive health care, their academic and otherimportant life outcomes improve. One study, for example, found that compared with children
who were uninsured, children who were enrolled in Medicaid were more likely to do better inschool, miss fewer school days due to illness or injury, finish high school, graduate from college,and earn more as adults. 7 One study found that, although access to health coverage for uninsured
individuals has increased as a result of the Patient Protection and Affordable Care Act(Affordable Care Act), the number of children who are eligible for, but not enrolled in Medicaid
remains high. In 2019, 2.3 million children were eligible for, but not enrolled in Medicaid or
CHIP. 8 Schools can be a valuable resource for states to help ensure that Medicaid-eligible
children and families are enrolled and connected to Medicaid-covered services:6
https://www.hhs.gov/guidance/document/epsdt-guide-states-coverage-medicaid-benefit-children-andadolescents.

Cohodes, S. et al. (2014). The Effect of Child Health Insurance Access on Schooling: Evidence from Public
Insurance Expansions. (No. w20178). National Bureau of Economic Research
7

Haley, J. et al. (2021). Uninsurance Rose among Children and Parents in 2019. Urban Institute.
https://www.urban.org/sites/default/files/publication/104547/uninsurance-rose-among-children-and-parentsin-2019.pdf
8CMCS Informational Bulletin – Page 6
o LEAs can use school registration processes to help eligible students and family members
enroll in Medicaid or CHIP, or if ineligible, to apply for financial assistance for a plan
through the Health Insurance Marketplace. States should look to outreach and enrollment
resources such as the Connecting Kids to Coverage National Campaign to assist inaccomplishing enrollment and coverage goals. 9 Expenditures for administrative activities insupport of these school-based services, including outreach, may be claimed as costs ofadministering the Medicaid state plan. States can receive federal financial participation(FFP) at the applicable administrative match rate for outreach and enrollment activities.
o While Medicaid-enrolled students do not need an IEP to receive coverage for SBS, statesshould establish a process to determine coverage for particular services, including, forexample, whether applicable medical necessity criteria are met. Any medical necessity
criteria or other utilization management controls that a state implements must be consistent
with 42 CFR § 440.230, and should not establish unreasonable or arbitrary barriers toaccessing the required coverage.
o Medicaid is focused on “whole child care,” and we encourage integrating and coordinating
any care provided in school with care provided across other settings and within the family
unit. A care plan developed in the school should consider how care provided in a schoolbased setting, including, for example, behavioral or other care interventions, may besupported outside of school and within the family setting. School-based providers should
coordinate with primary care and other community-based providers as well as members of
the household who may be able to reinforce and provide continuity of care. For more
information on creating a coordinated system of care, please see guidance from the Substance
Abuse and Mental Health Services Administration (SAMHSA), The Comprehensive
Community Mental Health Services for Children with Serious Emotional Disturbances
Program. 10
o Screening and diagnostic services provided in schools may indicate the need for further
evaluation of a child’s health, and the child should be appropriately referred for diagnosis
and treatment without delay. Ultimately, the goal of the EPSDT benefit is to assure thatchildren get the health care they need, when they need it – the right care to the right child, atthe right time, in the right setting.
3.

Providing EPSDT Services

The Medicaid program provides most enrolled children and adolescents with a unique benefit
known as the EPSDT benefit. EPSDT provides a comprehensive array of prevention, diagnostic,
The Connecting Kids to Coverage National Campaign is a national outreach and enrollment initiative originally
funded under the Children's Health Insurance Program Reauthorization Act (CHIPRA), the Affordable Care Act(ACA), and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This program motivatesfamilies to enroll and renew their children in Medicaid and CHIP and provides outreach guides and toolkits that canhelp states conduct successful outreach activities. More information about this program here:
https://www.insurekidsnow.gov/campaign-information/index.html and https://www.medicaid.gov/state-resourcecenter/downloads/kids-coverg-outreach-enrolmnt-retention-strategies.pdf
10
The Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances
Program, Report to Congress 2017, was written by staff at Westat pursuant to a contract (contract number 283- 121105) under the direction of the Child, Adolescent and Family Branch, Center for Mental Health Services,
Substance Abuse and Mental Health Services Administration, U.S. Department of Health and Human Services.
https://store.samhsa.gov/sites/default/files/d7/priv/cmhi-2017rtc.pdf
9CMCS Informational Bulletin – Page 7
and treatment services for most low-income individuals under age 21. As specified in sections
1902(a)(10)(A) and 1905(a)(4)(B) of the Act, EPSDT is a mandatory benefit, which is defined in
section 1905(r) of the Act. Section 1902(a)(43) of the Act requires that states must inform all
EPSDT-eligible beneficiaries of the availability of these services, as well as provide or arrange
for the provision of EPSDT screening services when requested, and arrange for corrective
treatment as indicated based on the screening services. States are encouraged to leverage schools
as providers of services in meeting EPSDT coverage obligations.
o Section 1905(r) of the Act defines the EPSDT benefit to include certain minimum screening,
vision, dental, and hearing services, as well as “[s]uch other necessary health care, diagnostic
services, treatment, and other measures described in section 1905(a) of the Act to correct orameliorate defects and physical and mental illnesses and conditions discovered by screening
services, whether or not such services are covered under the State plan.”o Most beneficiaries under age 21 are entitled to EPSDT services, regardless of whether they
are enrolled in a managed care plan or receive services in a fee-for-service (FFS) delivery
system.
o Determinations of medical necessity are made by the state or, under delegated authority, by
the managed care plan and must be made on a case-by-case basis, considering the individual
child's or adolescent’s particular needs and guided by information from the child’s healthproviders.
o Hard, fixed, or arbitrary limits on coverage for services (e.g., based on dollar amounts,
standard deviations from the norm, or lists of specific diagnoses) are not permitted; however,states may set reasonable limits based on criteria such as medical necessity or appropriate
utilization control, see 42 C.F.R. § 440.230(d).
o Medicaid-covered services furnished in schools must fit under an applicable state plan
benefit category or waiver or demonstration authority, and must be furnished by a Medicaidparticipating provider who meets the provider qualification requirements associated with theparticular benefit.
o If a state pays for services of a particular provider type, that Medicaid provider type shouldmeet certification, registration, credentialing, education, training, and other state-specificrequirements consistent with the rules of the benefit category.
o Providers of therapy services (physical therapy, occupational therapy, speech therapy,
audiology) must meet federal provider requirements in 42 C.F.R. § 440.110, regardless of thesection 1905(a) benefit category under which these services are covered.
o States should work with SEAs and LEAs to determine specific federal and state requirements
regarding provider qualifications specific to participation in the Medicaid program,procedures for enrollment with the state Medicaid agency, and the scope of practice laws forprovider types furnishing SBS.
o CMS shares with states the same goal of ensuring that Medicaid services provided in theschools are of high quality, and states should establish qualifications of school providers
consistent with those of providers in the community.
o Medicaid-participating practitioners in school-based settings are also subject to the screening
requirements in section 1866(j)(2) of the Act and 42 C.F.R. §§ 455.400 – 455.470. See
section 1902(a)(77) and (kk) of the Act.

CMCS Informational Bulletin – Page 8
o Claims for payment for Medicaid-covered items or services that were ordered or referred fora beneficiary must include the National Provider Identifier (NPI) of the physician or otherprofessional who ordered or referred such items or services.
4. Medicaid SBS through Managed Care 11
About 76 percent of Medicaid beneficiaries (over 61.7 million) are enrolled in managed care. 12
CMS encourages states that use managed care delivery systems for Medicaid-covered services towork with managed care plans (MCPs) including managed care organizations (MCOs), prepaid
inpatient health plans (PIHPs), and prepaid ambulatory health plans (PAHPs), as well as schools,
to aid in the provision of and payment for SBS.
o States may elect to deliver some services through the MCPs and retain some services underfee-for-service delivery.
o An MCP contract must clearly describe which services are included, with enough specificity
to avoid confusion about what the benefit includes and whether the MCP is responsible forcovering it to ensure that eligible individuals under age 21 have access to the full EPSDT
benefit.
o Any EPSDT services not covered under the MCP contract remain the responsibility of thestate Medicaid agency, and states must ensure that EPSDT-eligible individuals under age 21
have full access to the EPSDT benefit.
o When designing and implementing a managed care delivery system, states should include
schools as integral partners to promote the effective and efficient delivery of services inschool-based settings. Where managed care is already established, states should include
schools during MCP re-procurement and contracting processes to provide states with
opportunities to shape new, or revisit existing, MCP requirements.
o States should consider requiring MCPs to establish relationships, strengthen partnerships, andcoordinate care with school-based providers, including school-based health centers, inmanaged care contracts and/or through managed care performance standards. These
expectations can be established in a variety of ways, including through performance
improvement projects, MCP incentive programs, and quality improvement initiatives, as
appropriate.
o To improve care coordination activities between MCPs and ensure access to covered
services, states should consider:• Developing formal arrangements, such as including school-based clinics in MCP
provider network requirements:
 States may establish specific network adequacy requirements, such as requiringthat MCPs contract with all, or a specified percentage of, qualified school-based
providers.

11
www.medicaid.gov/federal-policy-guidance/downloads/cib010517.pdf This figure includes comprehensive MCOs
and limited benefit plans (PIHPs and PAHPs) and excludes PCCMs. Medicaid Managed Care Enrollment andProgram Characteristics, 2020.
12This figure includes comprehensive MCOs and limited benefit plans (PIHPs and PAHPs) and excludes PCCMs.
Medicaid Managed Care Enrollment and Program Characteristics, 2020.
https://www.medicaid.gov/medicaid/managed-care/downloads/2020-medicaid-managed-care-enrollment-report.pdf

CMCS Informational Bulletin – Page 9
In areas where there are several MCPs operating, LEAs might need to contract
with several different plans to ensure Medicaid payment is available for services
furnished to all students who are Medicaid beneficiaries.
Establishing referral and treatment protocols between schools and the MCPs’ othercontracted providers for instances in which care needs exceed the capabilities ofproviders in the school-based setting.
Promoting school participation in MCP quality assurance and utilization review
programs. SBS can help MCPs achieve Federal and state-specific quality metrics for their
Medicaid populations, including many child-specific measures (e.g., child vaccination
rates and well-child visits).
Facilitating the development of coordination of care programs between schools and
MCPs in which, for example, schools provide MCPs with written medical reports whencare is provided in the school-based setting, and when care is needed beyond the schoolbased setting and a referral has been provided. MCPs can notify school-based providersof completed referrals (i.e., a child has received services for which the school has referredthem).
Facilitating coordination between MCPs and cooperating on back-to-school healthcoverage enrollment events, health fairs, and vaccination efforts.


•
•

•

•

5. Providing Medicaid Services in Schools via a Telehealth Delivery Systems
CMS encourages states to consider telehealth options as a delivery mechanism to increase accessto care in schools. States have broad flexibility to cover and pay for Medicaid services delivered
via telehealth, including to determine which telehealth modalities may be used to deliver
Medicaid-covered services.
o States are encouraged to facilitate appropriate care within the Medicaid program using
telehealth technology to deliver services covered by the state.
o CMS allows states the flexibility to design and establish program parameters defining whenand how services are covered when delivered via telehealth and encourages the use offlexibility inherent in federal Medicaid law to create innovative payment methodologies forservices that incorporate telehealth technology.
• States should review the range of providers and practitioners authorized to bill
Medicaid in their state, including those delivering services in school settings. Not
every provider, practitioner, or direct support professional can deliver every service
via telehealth. However, states are encouraged to maximize the use of telehealth,including in school-based settings, to address the service needs of students andmitigate gaps in service continuity.
• States should establish which services can be delivered appropriately via one or moretelehealth modalities.
• States should consider whether a provider’s professional scope of practice precludes
them billing for a service delivered via telehealth, and whether any changes to that
scope of practice are warranted.
o States are not required to submit a SPA or an amendment to a waiver or demonstration
authority to pay for services delivered via telehealth if payments for services furnished via

CMCS Informational Bulletin – Page 10

o

o
o

o

telehealth are made in the same manner as when the service is furnished in a face-to-facesetting.
A state would need an approved state plan, waiver, or demonstration payment methodology(and thus, might need to submit a SPA or an amendment to a waiver or demonstration) toestablish rates or payment methodologies for telehealth services that differ from those
applicable for the same services furnished in a face-to-face setting.
States are strongly encouraged to include costs associated with providing services via
telehealth within Medicaid payment methodologies and ensure rates are adequate to facilitate
access to telehealth services.
Supplementary costs associated with the site where the beneficiary is located may beincorporated into fee-for-service rates or separately reimbursed as an administrative cost by
the state when a Medicaid service is delivered, as specified in an approved state plan, waiver,or demonstration payment methodology that specifies the supplementary costs andcircumstances when those costs are payable.
It is important for states to adopt clear and consistent guidelines for paying for Medicaidcovered services that are furnished via telehealth technologies to Medicaid-eligible children
and adolescents, and to ensure Medicaid-participating providers are aware of the guidelines.

For more information about state flexibilities to cover and pay for Medicaid services delivered
via telehealth, see the Medicaid and CHIP Telehealth Toolkit.
6. Clear and Consistent Documentation Guidance to LEAs through Outreach and
EducationFederal regulations require that providers maintain documentation that covered Medicaid
services have been provided to beneficiaries. However, CMS understands that most schoolbased settings are not traditional health care providers with a sophisticated billing infrastructure
in place. Recently, a number of HHS Office of Inspector General (OIG) audits have noted that
schools have not been adequately documenting the services provided in school settings. In
particular, these findings have noted a lack of clear and consistent billing requirements listed instate provider billing manuals.
Current Documentation Requirements:o Minimum Claim Documentation Requirements 13 in Medicaid for each claim for FFP include:• Date of Service• Name of Recipient• Medicaid Identification Number• Name of Provider Agency/Person Providing the Service• Nature, Extent or Units of Service• Place of Serviceo Other Requirements:

13

Section 2500.2 of the State Medicaid Manual.

CMCS Informational Bulletin – Page 11
For services provided under IDEA, states must maintain records of a signed IEP/IFSP
documenting that the school-based provider provided services pursuant to the
IEP/IFSP. 14• For transportation services provided under an IEP/IFSP, states must document thatthe transportation was to and/or from a medical appointment and required in the
IEP/IFSP.
o Examples of the types of documentation and materials that can be used or combined as the“Minimum Claim Documentation” described above and should help states in meeting thevarious documentation requirements needed to create a proper audit trail. These
documentation materials can include:• Attendance Records 15• Prior Authorizations• Medical Records• Clinical notes of the service performed 16• Service Claims• Time Study Logs
• Payroll Records and Contracts• Transportation Logs 17•

o The state must ensure compliance with applicable federal audit and documentation
requirements, including but not limited to, regulations described at:• 42 C.F.R. § 431.107 Required provider agreement• 45 C.F.R. § 447.202 Audits• 45 C.F.R. § 75.302 Financial management and standards for financial management
systems
Potential Best Practices and Approaches for Meeting Requirements for Documentation:
To ensure clear and consistent billing and documentation standards and to help alleviate burden
on school-based providers, states should:
o Review and update their provider billing manuals to make sure the billing and documentation
requirements for providers are clear and concise, and reasonably can be met by providers
furnishing services in school-based settings.
o Conduct front-line training to school-based providers on Medicaid documentation standards
and audit processes.
o Ensure LEAs have adequate funding to support necessary Medicaid billing infrastructure andtraining. When such investments and activities are undertaken as Medicaid administrative
activities, federal matching funds can be available.
Section 1903(c) of the Social Security Act.
Attendance records can generally be used to document the student was present on the day a Medicaid service wasrendered or the student was present on a day they were included in transportation logs as receiving transportation toreceive a needed Medicaid service.
16
Written IEP/IFSP alone is not an adequate record of Medicaid services provided.
17
Transportation logs can be used, in conjunction with attendance logs, to show that a student was in school on the
day in which the student was transported off-site to medical care.
14
15

CMCS Informational Bulletin – Page 12
o Consider increasing Medicaid payment rates for services provided in school-based settings toaccount for higher overhead costs associated with services provided in school settings,
including staffing and training needs at the LEA or school.
o Track services provided in school-based settings using MMIS systems. These claims areimportant to document that covered services were actually delivered to an eligible
beneficiary and can be used to trigger interim payments to LEAs under a cost-based
Medicaid payment methodology.
o Work directly with CMS and the US Department of Education to align state and federal
documentation requirements, where feasible.
School-based providers must maintain adequate documentation to allocate costs to the Medicaid
program. For instance, providers using a Medicaid Enrollment Ratio (MER) to allocate costs to
Medicaid for services furnished pursuant to an IEP or IFSP must maintain adequate
documentation to support the use of the MER. The MER is an allocation statistic that is theresult of all children at one specific time in the school that has an IEP/IFSP divided by the total
number of Medicaid enrolled children in the same school, at the same specific time, that have an
IEP/IFSP.
MER = # of Medicaid-enrolled children in the school with an IEP/IFSP
Total # of children in the school with an IEP/IFSP
Adequate documentation would include an LEA-specific record of both the number of children
enrolled in all IEPs/IFSPs and those enrolled in Medicaid with IEPs/IFSPs.
7. Evaluate Random Moment Time Study (RMTS) Methodologies
When using a cost-based methodology, states are required to use statistically valid
methodologies to allocate costs for SBS per 45 CFR 75.430(i)(5). Allocation methodologies
may include, but are not limited to, random moment sampling (i.e., via RMTSs), worker day
logs, case counts, or other quantifiable measures of work performed. A time study is a costallocation methodology used to ascertain the portion of time spent on activities that are related tovarious programs. Federal regulations permit the use of "substitute systems" for allocatingsalaries and wages to Federal awards in place (or in addition to) work records as specified in 45
CFR 75.430(i)(1), when employees work on multiple activities or cost objectives. Any such
system must meet acceptable statistical sample standards and be approved by CMS.
Regulations in 45 CFR 75.430 require that charges to federal awards must be based on records
that reflect the actual work performed. Those records must:o Be supported by a system of internal controls that provide reasonable assurance charges areaccurate, allowable, and properly allocated,o Reflect the total activity for which the employee is compensated,o Encompass both federally assisted and all other activities for which the employee iscompensated, ando Support the distribution of the employee's salary or wages among specific activities or cost
objectives.

CMCS Informational Bulletin – Page 13
When a RMTS is used, the only staff who can be exempted from mandatory participation in the
RMTS are those whose activities are entirely (100%) for the direct benefit of the Medicaid
program, or entirely (100%) for the benefit of some other program or payer. The RMTS mustreflect all of the time and activities (whether allowable or unallowable under Medicaid)
performed by employees performing activities in support of the Medicaid program. The RMTS
must carefully document all work performed by the staff subject to the RMTS over a set periodof time and include all days on which school is in session.
Because the time study must capture 100% of the time spent by staff participating in the RMTS,
activity codes must be designed to reflect all administrative activities and direct services that
may be performed, regardless of whether activities are reimbursable under Medicaid. The time
study methodology is used to capture the time spent on administration, direct services, and allother activities. To avoid duplication of costs claimed, the same RMTS should be used toallocate costs of both administrative activities and direct services.
When designing an RMTS, states and stakeholders should consider the following:o The HHS Office of Inspector General (OIG) has expressed concerns about staff participatingin the RMTS given any advance notice of their assigned random moment, and the potential
bias that could be created by providing advance notice. To avoid such concerns, participantsin the RMTS should record their responses at the exact time of their assigned random
moment (i.e., the participant should not be notified until the exact time and date of his or her
moment and should complete the random moment activity documentation at that exacttime). 18 CMS also recommends no prior notification to staff participating in an RMTS but
has approved RMTS methodologies that allow staff participating in the RMTS up to 2
business days to respond with information about their activity at their assigned random
moment to accommodate circumstances in which a participating staff member may not beable to respond immediately to the RMTS request. This policy is intended to help ensure thereliability of the RMTS results. CMS believes that the more time that has passed from thesampled moment, the more likely the participant’s recall of his or her activity performed
during the assigned moment may be compromised.
o Oversight and monitoring of the RMTS system are the responsibility of both the state and theindividual claiming entity (e.g., the LEA) to ensure compliance with state and federal
requirements. Sufficient resources should be allocated to ensure that only those costs that areproperly allocable to the Medicaid program are claimed for Medicaid payment.
o The state and/or claiming entity (e.g., LEA) should have a system of controls in place toensure the compliance with applicable laws and regulations.
8. Work with LEAs to Determine Payment Methodology Options that Work Best to
Promote School-Based Services.
The vast majority of school-based providers are reimbursed under the Medicaid state plan at theiractual cost to render Medicaid SBS. This is because many localities and states finance SBS
through the use of Certified Public Expenditures (CPEs) which are based on local governments
HHS Office of Inspector General Audit (A-02-17-01006), issued November 8, 2019.
https://oig.hhs.gov/oas/reports/region2/21701006.asp

18

CMCS Informational Bulletin – Page 14
funds to support the actual cost of providing services. When using CPEs, public entities mustaccount for and certify that they spent funds on Medicaid covered items or services that are
eligible for federal matching funds. In these cases, schools may submit interim bills to states thatare reconciled to the provider’s incurred Medicaid SBS cost. However, states have additional
options to finance SBS. As schools are often units of state or local governments, in addition toCPEs, states have the option to finance Medicaid payments through the use of permissible
Intergovernmental Transfers (IGTs) as well as CPEs and appropriations from state general funds.
States are encouraged to consider financing SBS through IGTs and/or state general fundappropriations and to pay providers using a rate methodology if a certified cost process is too
burdensome for schools and LEAs to complete.
Options to Financing the Non-federal Share of Medicaid Payments:
Medicaid is jointly financed by the federal and state governments, with most Medicaid service
expenditures matched at the state-specific, statutorily defined federal medical assistancepercentage. Section 1903 of the Act and implementing regulations in 42 C.F.R. § 433.51
describe allowable sources of the non-federal share and specific mechanisms that may be used byunits of state and local governments to participate in financing the non-federal share. Suchallowable sources include:o State legislative appropriations –•States can use general revenue fund appropriations to pay school-based providers
for services rendered. Typically, with this funding, the state will pay a rate (e.g.,under the state’s fee schedule) for school-based services. However, theappropriation from the state general revenue fund must be under theadministrative control of the state Medicaid agency and, once payment is made to
the provider, the provider generally must retain 100 percent of the payment.
Retention of less than 100% could trigger a net applicable credit with return ofassociated FFP to CMS. See section 1903(d)(3) of the Act for information
regarding overpayments.

o Intergovernmental Transfers (IGTs) –••Units of state or local government, including but not limited to public schools andLEAs, can participate in the financing of the non-federal share of Medicaid
expenditures through IGTs, provided all applicable requirements are met.
When IGTs are used to support payments to school-based providers, the publicschool or LEA must make the IGT(s) to the state Medicaid agency before theMedicaid agency pays the school-based providers for services furnished, as IGTs
are transferred from other public agencies (including Indian tribes) to the State or
local agency and under its administrative control in accordance with 42 C.F.R. §433.51(b). If IGT funds are transferred after a Medicaid payment is paid to theprovider, then the provider may not be receiving or retaining the full Medicaid
payment rate for services under the state plan.

CMCS Informational Bulletin – Page 15•

Once payment is made to the school-based provider, the school-based providers
generally must retain 100 percent of the payment. Retention of less than 100%
could trigger a net applicable credit with return of associated FFP to CMS.

o Certified Public Expenditures (CPEs) –
•

•
•
•

CPEs refer to a unit of state or local government’s expenditures for the provisionof Medicaid-covered services to beneficiaries. The unit of state or local
government must certify the actual amount of the expenditures that were incurred
providing allowable Medicaid services to the state Medicaid agency. Based on
the state Medicaid agency’s claim for FFP, the federal government provides the
FFP associated with the certified expenditures to the state Medicaid agency.
Units of state or local government, including but not limited to public schools andLEAs, can participate in financing the non-federal share through CPEs, provided
all applicable requirements are met.
Provider payments supported by CPEs must be made according to a reconciled
cost payment methodology in the approved state plan, which is explained in moredetail below.
The state Medicaid agency is not required to pass the federal share of the certified
expenditures down to the school-based provider, and CMS acknowledges that thestate may choose to direct some or all of this FFP to the school-based provider.
However, CMS strongly encourages states to pass on the federal share of any
costs claimed as expenditures for which the non-federal share is supported by a
CPE certified by a public school or LEA to the school-based providers, as
additional funding and investment will help to support additional efforts toimprove the delivery and administration of SBS. Please note that federal funds
cannot be used to match other federal funds, except as authorized by federal law,see 42 C.F.R. § 433.51(c).

Options for Paying School-Based Service Providers
Section 1902(a)(30)(A) of the Act requires that states “assure that payments are consistent withefficiency, economy, and quality of care and are sufficient to enlist enough providers so that careand services are available under the plan at least to the extent that such care and services areavailable to the general population in the geographic area.” As such, states have considerable
flexibility in how the provider payment rates are set. Generally, states’ options to pay SBS
providers include:o State plan rates established for services provided outside of school settings:••

States may use the existing state plan payment rates for the same services
provided in settings other than the school-based setting when those services areprovided by practitioners in schools, as these practitioner rates are approved under
the Medicaid state plan as economic and efficient payments for Medicaid
services.
State Medicaid agency may also opt to develop unique payment rates for schoolbased providers that more closely reflect the costs incurred by such providers. The

CMCS Informational Bulletin – Page 16
state will be asked to document the rate calculations for these services in theschool settings and assure that those rates are consistent with efficiency, economy
and quality of care.
o Cost-based rates specific to schools:• States may use cost-based rates that are not reconciled to the actual cost ofproviding services.
• For instance, states can use prior year cost reports from LEAs to establish current
or future cost-based rates.
• States may also consider the salaries of the individuals providing care andoverhead associated with the services provided to establish a general cost perservice amount for services provided in school-based settings.
o Actual Cost of Providing Medicaid-Covered Services to Beneficiaries (required for
CPEs)
•
•

•

•
•

To determine the portion of the actual cost of furnishing SBS that can be certified
to the state Medicaid agency for use as non-federal share, states generally require
school-based providers to use a uniform cost report.
The amount that may permissibly be certified by a public school or LEA as a CPE
is the portion of the incurred cost that is properly identified and allocated to
Medicaid via the school-based provider’s cost report.
The state must develop a cost identification and allocation methodology thatmeets the requirements of 45 C.F.R. Part 75 and the school-based provider’s cost
report must appropriately identify and allocate all direct and indirect costs
associated with the provision of Medicaid-covered services provided in schoolbased settings.
Through the cost report, the school-based provider must first identify 100 percent
of all actual direct and indirect costs to be allocated to the Medicaid program cost
objective(s) and to other cost objectives.
To ensure proper identification of costs, most school-based providers use audited
financial statements as the first step to develop their cost reports. The audited
financial statements will include an adjusted trial balance. This adjusted trial
balances lists all the expenses incurred and the applicable revenues received by
the school-based provider. These balances are then transferred to the cost report tobe apportioned and allocated until Medicaid’s portion of allowable cost is
identified. Cost reports must clearly include the following:

Clear and understandable cost report instructions.
Direct Cost Identification - 45 C.F.R. § 75.413(a) defines “direct costs” as
those costs that can be identified specifically with a particular final cost
objective, such as a Federal award, or other internally or externally funded
activity, or that can be directly assigned to such activities relatively easily
with a high degree of accuracy. Costs incurred for the same purpose inlike circumstances must be treated consistently as either direct or indirect(facilities & administration) costs.

CMCS Informational Bulletin – Page 17Indirect Cost Identification – Indirect (facilities & administrative (F&A))
costs (45 C.F.R. § 75.2; see also § 75.414) means those costs incurred for
a common or joint purpose benefitting more than one cost objective, andnot readily assignable to the cost objectives specifically benefitted,
without effort disproportionate to the results achieved. Indirect cost pools
must be distributed to benefitted cost objectives on bases that will produce
an equitable result in consideration of the benefits derived.
• Indirect Cost Rate - Appendix VII to Part 75 - States and Local
Government and Indian Tribe Indirect Cost Proposals 19
o States have options for determining the allocation ofindirect costs, using the following procedures:- Use an approved federally-recognized indirect cost
rate negotiated between the subrecipient and theFederal Government.
- Develop an allocation of indirect costs to the total
direct cost using a methodology approved by
CMS. 20- Use a rate negotiated between the pass-throughentity (in this case, the state Medicaid agency) andthe subrecipient of the federal grant award (in thiscase, the school-based provider), in compliancewith 45 C.F.R. § 75.352.
- Use a de minimis indirect cost rate as provided in
45 C.F.R. § 75.414(f).
Once the states and/or provider elects the method of indirect costfinding, the selected indirect cost rate is multiplied by the total
direct cost amount to determine the allowable indirect cost.
Apportionment of cost to identify Medicaid’s portion of allowable cost,
may include:• Application of Random Moment Time Study statistics to personnel
cost. (See previous section)• Application of other applicable allocation statistics based on thenature of the cost or the item being allocated. For instance, where
medical services occur in a dedicated space in the school, a square
footage statistic can be used to identify the portion offacilities/indirect cost that should be allocated to Medicaid relative
to the rest of the school building. The cost of electricity to thatroom, for example, could be allocated based upon the percentage
of square footage in that dedicated room relative to the square
footage of the rest of the school.

Appendix VII to Part 75 - https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-A/part-75/appendixAppendix%20VII%20to%20Part%2075
19

20
One such methodology is described in the “Certified Community Behavioral Health Clinic Cost Report Instructions” (OMB
#0398-1148) published on December 14, 2015, Chapter 7. https://www.hhs.gov/guidance/sites/default/files/hhs-guidancedocuments/ccbhc-cost-report-instruction.pdf

CMCS Informational Bulletin – Page 18
Application of a statistic to allocate to cost to specific payers, suchas Medicaid. (See previous discussion regarding the MER.) Certification Statement – A form on which the portion of the publicschool’s or LEA’s cost of furnishing SBS that is properly allocated to
Medicaid is certified by the public school or LEA to the state Medicaid
agency for use as the non-federal share of Medicaid expenditures.
It is highly recommended that states which use CPEs or reconciled cost
methodologies develop interim payments for Medicaid-covered services provided
to beneficiaries in school-based settings. These interim payments can then bereconciled and settled based on actual costs that are identified and allocated via
the cost report.
••

9. Third-Party Liability for Medicaid SBS
Generally, the Medicaid statute requires Medicaid to be the payer of last resort, which means
state Medicaid agencies are required to take reasonable measures to identify and recover
payments from third parties that are liable to pay for services furnished under the state plan.
Section 1903(c) of the Act, however, permits an exception to the Third-Party Liability (TPL)
requirements in that, for Medicaid covered services listed on a Medicaid eligible child’s
IEP/IFSP, Medicaid is primary for IDEA-related services. This means that Medicaid will pay
primary to the ED for Medicaid-covered services listed in a child’s IEP/IFSP even if a liablethird party is likely liable. After the state Medicaid agency makes the primary payment on aclaim for an IEP/IFSP service, it will then seek to recoup that payment from any liable third
party (this is known as “pay and chase”). This removes the burden of seeking TPL for services
from the school provider and places it on the state Medicaid agency.
With respect to services that are not part of a child’s IEP/IFSP, the IDEA exception does notprovide any exemption from pursuing other liable third-party payers, such as private insurance,
before billing Medicaid. This is known as “cost avoidance” and generally occurs when a state
Medicaid agency rejects a claim because of a known or suspected TPL. Therefore, for thesechildren, schools or their school-based providers must meet federal and state Medicaid provider
requirements, including billing the beneficiary’s third-party health insurance first (whereapplicable), before billing Medicaid, to determine the extent of the insurer’s payment liability.
Whether or not an individual has an IEP/IFSP under the IDEA, the state Medicaid agency may
suspend or terminate efforts to seek reimbursement from a liable third party if they determinethat the recovery would not be cost-effective per the requirements set forth in 42 C.F.R. §433.139. Additionally, states may exempt certain items or services from TPL requirements whensubmission of claims for those items or services would always result in denial because theygenerally are not health care services covered by health insurers. The state must have clear andconvincing documentation of non-coverage by insurers. If a state has adequate documentation of
non-coverage, there is no need to further verify by submitting claims because there would be no
liable third party and Medicaid TPL rules would not come into play. The controlling regulation isfound at 42 C.F.R. § 433.139(b)(1), which states that "[t]he establishment of third-party liability
takes place when the agency receives confirmation from a provider or a third-party resource
indicating the extent of third-party liability."

CMCS Informational Bulletin – Page 19
o States may suspend or terminate efforts to seek reimbursement from a liable third party ifthey determine that the recovery could not be cost-effective pursuant to 42 C.F.R. §433.139(f), including for IDEA or 504-plan services. This could ease administrative burden
at schools.
• States may exempt certain items or services from TPL requirements when submission ofclaims for those items or services would always result in denial.
• State may elect not to identify or follow up on specific diagnosis and trauma codes, basedon experience that the codes are not productive of recovery from third parties.
• State Medicaid agencies do not need to submit a SPA or TPL Action Plan to change thecodes subject to diagnosis and/or trauma code editing. However, CMS still requires thatthe state plan reflect how frequently the state Medicaid agency completes diagnosis andtrauma edits and also outlines a procedure for identifying the trauma codes that yield thehighest third-party collections and giving priority to following up on those codes. State
Medicaid agencies set threshold amounts for recoveries and may accumulate billings
until it would be cost-effective to seek payment.
 A state may specify in its state plan the threshold amount or other guideline to use
in determining whether to seek payment from a liable third party or describe theprocess it uses to determine whether recovery would be cost-effective. The statemust submit documentation to CMS supporting that recovery would not be costeffective below those thresholds.
 A state may specify in its state plan a dollar amount or period of time for which
the state Medicaid agency will accumulate billing with respect to either anindividual Medicaid beneficiary or a particular third party.
o State education agencies can elect to pay a third party’s liability using its own funds.
o States may use billing agents or other contractors to assist with billing.
Conclusion
As noted above, the Bipartisan Safer Communities Act directs CMS to provide additional
guidance to states in the near future related to Medicaid-covered SBS. For example, CMS in
consultation with the US Department of Education and other relevant federal agencies, will issue
updates to the Medicaid School-Based Administrative Claiming Guide and the Medicaid andSchools Technical Assistance Guide. In addition, CMS, in consultation with the US Departmentof Education, is tasked with establishing a Technical Assistance Center for Medicaid-covered
SBS. Finally, the BSCA directs CMS to issue $50 million in discretionary grant funding to statesin support of implementing, enhancing, or expanding the provision of medical assistance throughschool-based entities under Medicaid or CHIP.
CMS is available to provide technical assistance to states to best implement their programs.
States interested in receiving technical assistance should email CMS at:
SchoolBasedServices@cms.hhs.gov.