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Medicaid in Schools Coverage, Reimbursement, and Time Studies Current Issues and Hot Topics

Medicaid in Schools Coverage, Reimbursement, and Time Studies Current Issues and Hot Topics. Centers for Medicare & Medicaid Services Melissa Harris – Health Insurance Specialist Linda Tavener – Technical Director Judi Wallace – Health Insurance Specialist.

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Medicaid in Schools Coverage, Reimbursement, and Time Studies Current Issues and Hot Topics

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  1. Medicaid in SchoolsCoverage, Reimbursement, and Time Studies Current Issues and Hot Topics Centers for Medicare & Medicaid Services Melissa Harris – Health Insurance Specialist Linda Tavener – Technical Director Judi Wallace – Health Insurance Specialist NAME Conference October 2006

  2. Coverage of School Based Services Melissa Harris Disabled and Elderly Health Programs Group NAME Conference October 2006

  3. There are Three Facets to SBS: NAME Conference October 2006

  4. Legislative BackgroundThree Federal Laws Have Impacted Medicaid Coverage of Children in Schools • 1965. The Early and Periodic Diagnostic, Screening, and Treatment Service (EPSDT) • 1975. The Education for All Handicapped Children Act (now the Individuals with Disabilities Education Improvement Act of 2004 – IDEA 2004) • 1988. Section 1903(c) of the Act – Medicaid payment for IDEA services NAME Conference October 2006

  5. Medicaid Rules • There is no service category in Medicaid entitled “school-based services,” or “early intervention services,” or Individualized Education Program (IEP) services • To be eligible for payment by Medicaid, services must be included among those listed in Title XIX, section 1905(a) • Services must be in the regular State plan, which is available to all Medicaid beneficiaries, or available under the EPSDT service in the State plan, which makes services available to children 0-21 • Health services delivered in schools covered by Medicaid must be defined in terms of Medicaid’s statutory and regulatory requirements NAME Conference October 2006

  6. School Rules • IDEA 2004 provides children with disabilities with a “free and appropriate public education,” including special education and “related services,” which could include speech-language pathology and audiology services, psychological services, physical and occupational therapy, social work services, school nurse services, etc. • Under IDEA, these are aimed “to assist a child with a disability to benefit from special education” NAME Conference October 2006

  7. Sometimes, the twain shall meet • As long as Federal Medicaid requirements are met, Medicaid may pay for medical services available in schools, provided pursuant to an IEP. • Some of these Medicaid services may be offered as part of a disabled child’s free and appropriate public education. NAME Conference October 2006

  8. Medicaid Services that might be delivered in the school setting • Physical therapy • Occupational therapy • Services for individuals with speech, hearing, and language disorders • Rehabilitative services • Preventive services • Screening services • Private duty nursing services • Personal care services • Case management services NAME Conference October 2006

  9. PAYOR OF LAST RESORT • Medicaid has always been intended to make payment for the health care costs a person actually incurs, and would be unable to meet in the absence of such coverage • As a public assistance program, Medicaid will pay for services only after a beneficiary’s other health care resources are depleted • because Medicaid is the…”payor of last resort” NAME Conference October 2006

  10. What is Third Party Liability? • Third party liability is based upon the premise that another entity or program, in addition to Medicaid, is legally liable to reimburse for Medicaid covered services. • Examples of third parties which may be liable to pay for services include employment-related health insurance, court-ordered health insurance derived by non-custodial parents, workers' compensation, long-term care insurance, and other State and Federal programs (unless specifically excluded by Federal statute) • States are required to take all reasonable measures to ascertain the legal liability of third parties to pay for care and services available under the State plan NAME Conference October 2006

  11. EXCEPT when Medicaid is not the payor of last resort • Exceptions to the payor of last resort are exceptions to Medicaid’s Third Party Liability (TPL) rules • Section 1903(c) – Medicaid is not precluded from paying for Medicaid covered services even though they are listed in an IEP or Individualized Family Service Plan (IFSP) • DOE funds are not required to pay for those Medicaid-covered services. NAME Conference October 2006

  12. What is Free Care? • Free care - Items or services that are generally furnished without any charge or fee to individuals who are not Medicaid recipients, and Medicaid is the only entity charged for the items or services. Free care includes items or services that are furnished without charge or fee by operation of Federal, State, or local law. NAME Conference October 2006

  13. What about the Government Accountability Office (GAO)? • GAO identified Medicaid in 2003 as a “high risk program” for waste and exploitation • GAO has reported on topics that include Medicaid in schools - States’ use of contingency fee consultants - Oversight of Medicaid in schools - Questionable practices in schools providing Medicaid services NAME Conference October 2006

  14. Components of SPA Review • Coverage • Reimbursement • Administrative Claiming Time Study • Expansion of the Time Study, to include a direct medical services time study component NAME Conference October 2006

  15. Hot Issues – Coverage • Provider qualifications • Therapy providers must meet requirements of 42 CFR 440.110 • Under the direct supervision • Provision of 1905(a) services • Role of IEP • IEP may only serve as basis for medical necessity if IEP team providers are qualified Medicaid providers to make that determination in accordance within their scope of practice • Schools provide many Educational services NAME Conference October 2006

  16. More Hot Issues - Coverage • Freedom of choice of providers • School providers vs. Community providers • Comparability • School services vs. Community services NAME Conference October 2006

  17. What OIG Findings for coverage and reimbursement have been identified in schools? • Services are not properly documented for Medicaid purposes • Medicaid was charged when a student was absent • Medicaid provider qualifications were not met • Incorrect billing – a child did not receive a service even though it already appeared to have been dispensed • Medicaid was billed when school was not in session • Services not covered by Medicaid were billed to Medicaid • Transportation was insufficiently documented for Medicaid purposes • Prior authorization criteria set by the State Medicaid Agency was not met • Clerical errors contributed to Medicaid payment NAME Conference October 2006

  18. Reimbursement Methodology for School Based Services – In Brief Linda Tavener, Leader Non Institutional Payment Team Centers for Medicare & Medicaid Services NAME Conference October 2006

  19. CMS’s policy on the rate Because schools are public providers and because, in general, third party payers other than MA do not reimburse for services provided in the schools, MA requires that States demonstrate that rates paid for SBS are no higher than the actual cost of providing these services. NAME Conference October 2006

  20. Funding the non Federal share of school based services • Certified public expenditures (CPEs), • Intergovernmental transfers (IGTs), or • Appropriations to the State Medicaid Agency Most States use CPEs to fund the non-Federal share. NAME Conference October 2006

  21. CPEs Rate must be based on actual cost (no community rates). Annual reconciliation (identifying the difference between payment and cost) is required. In the case of overpayment, the State must settle to cost. Cost settlement cannot occur as an adjustment to future rates. IGTs or Appropriations Rate can be based on cost trended for a limited period of time. No reconciliation required. Community rates can be used. Current policy – IGT must be made prior to payment by the Medicaid Agency. Provider must retain the entire payment. Funding and the rate methodology NAME Conference October 2006

  22. Funding and permissible rates IGTs or Appropriations The fee for service community rate paid to non SBS providers may be paid when services are funded by IGTs or appropriations. When using something other than the community rate, the State must demonstrate that the rate does not exceed cost. NAME Conference October 2006

  23. How is Cost identified? • Cost is recognized using OMB Circulars • The cost principles in A-87 are for the purpose of cost determination and are not intended to identify the circumstances or dictate the extent of Federal or governmental unit participation in the financing of a particular program or projects. NAME Conference October 2006

  24. How is cost identified? • CMS permits the inclusion of costs in light of “economy and efficiency”. • Not all costs recognized by OMB Circulars are considered economic or efficient by CMS. • The State should only include cost that has been recorded through its general ledger system, which supports its audited financial statements. NAME Conference October 2006

  25. CMS’s current policy on cost • SBS cost is composed on direct and indirect costs. • Direct cost is limited generally to personnel and identifiable medical supplies used to deliver services. • CMS reviews individual items of cost. NAME Conference October 2006

  26. How is indirect cost identified? • Under OMB Circular A-87, CMS is required to recognize indirect costs through the use of the cognizant agency indirect cost rate. • CMS does not permit States to include indirect costs, including administrative or educational costs, outside of this rate. NAME Conference October 2006

  27. How is cost treated when CPEs are used? • When services are funded using CPEs, cost must be reported at the level of the individual provider, which is usually the school district or LEA. • Cost reports must be prepared and completed by each LEA. • The LEA as provider must certify the total amount of cost including the non Federal and Federal share. NAME Conference October 2006

  28. CMS policy on personnel cost • The direct services cost pool may include only those practitioners to whom a service would normally be attributed through fee for service billing in a community setting. Supervisors, coordinators, and administrative staff, for example, may not be included. • Providers must identify salary and benefit cost of individual practitioners that meet the criterion for inclusion in the direct services cost pool. NAME Conference October 2006

  29. CMS policy on personnel cost (continued) • Personnel cost is included in the medical rate up to the percentage of direct services time identified through the CMS-approved time study. (Please note that this cost is further adjusted by the Medicaid Eligibility Rate.) NAME Conference October 2006

  30. Conducting an SBS rate review • May be lengthy and detailed ... • State is required to provide a finalized cost report, cost report instructions, documentation on the time study methodology and a copy of the certification of expenditures form (for CPE-funded programs only). NAME Conference October 2006

  31. Methodology changes • A State’s methodology will be documented to the greatest possible extent in the State plan. • CMS has not approved retroactive changes proposed by States asserting that their plan language is vague enough to permit the change. NAME Conference October 2006

  32. SBS Rate Methodology-Summary • Rate methodology, coverage, and the time study are reviewed at the same time. • Reimbursement methodology cannot be approved without a valid time study. • Rate methodology is linked to funding of non-federal share. NAME Conference October 2006

  33. SBS Rate Methodology – Summary (continued) • Rate may be no higher than cost, regardless of the funding source. • State is required to provide documentation for any cost based rate methodology. • State must have a valid CMS approved time study. NAME Conference October 2006

  34. Time Study Issues Judi Wallace Division of Financial Management NAME Conference October 2006

  35. The Relationship Between Administrative Claiming and Direct Services Time Studies • The time study can be used to serve as the basis for allocating costs for direct services personnel. • States must use a CMS-approved Administrative Claiming Time Study methodology. NAME Conference October 2006

  36. Overlap of the Administrative Time Study and Direct Services • The MA Administrative Claiming time study should be used as the basis to identify all SBS time. • The creation of a second time study to capture all the direct service costs for rate setting purposes. • CMS must review the State’s proposed time study if the State is not claiming school-based administrative costs. • Time studies are used for allocating costs for direct services with cost-based payment methodologies (especially CPE-related) NAME Conference October 2006

  37. Direct Service and Administration Time Study Description The time study will utilize two mutually exclusive time studies associated with two mutually exclusive cost pools, respectively: • The first time study and associated cost pool is comprised of direct service staff, including those who conduct both direct services and administrative activities as well as direct service only staff, and the respective costs for these staff.  • The second time study and associated cost pool is comprised of administrative staff only and the respective costs for these staff.  NAME Conference October 2006

  38. Time Study • Primary mechanism for identifying and categorizing activities • Measures 100% of provider time • All activities are coded NAME Conference October 2006

  39. Operational Principles-Must capture 100 % of time • The time study/sampling methodology must reflect all of the time and activities (whether allowable or unallowable under Medicaid) performed by employees participating in the Medicaid Administrative Claiming program. • The codes must capture and distinguish between direct services and administrative activities, Medicaid and non-Medicaid activities. NAME Conference October 2006

  40. Operational Principles-Parallel Coding Structure • The time study activity codes must distinguish Medicaid activities from similar activities that are not Medicaid reimbursable. • A Medicaid and non-Medicaid code must exist for each activity. • Examples to distinguish between Medicaid/non-Medicaid must be included in the training materials. NAME Conference October 2006

  41. Review and Approval of Program Implementation Plans and Codes by CMS • Federal regulations require that the single State agency have an approved public assistance cost allocation plan (CAP) on file with DHHS. • The public assistance CAP must make explicit reference to the methodologies, claiming mechanisms, interagency agreements and other relevant issues pertinent to the allocation of costs. NAME Conference October 2006

  42. Criteria for Time Studies • Statewide Time Study • Uniform, unified set of codes • Random Moment Time Study methodology • Simultaneous time study (one time study for admin/direct services) • One direct services code for all disciplines NAME Conference October 2006

  43. Allocable Share of Costs • The time study methodology uses activity codes to capture whether or not costs are attributable to Medicaid. • Cost categories include: • Unallowable under Medicaid • 100% Medicaid share • Proportional Medicaid share • Reallocated activities NAME Conference October 2006

  44. Steps of the Review Process • State submits proposed Implementation Plan • CMS ROs work with CO • Conference calls held with State & RO • CO concurrence with decision • Approval granted is often conditional • Process the same whether in Schools, Health Depts, MH/MR, Tribes, etc. NAME Conference October 2006

  45. What does CMS look for in anImplementation Plan? • Time Study Methodology • Oversight/Monitoring Process • Capture 100% of Time • Description of Activities (i.e., review of proposed codes) NAME Conference October 2006

  46. Time Study Documentation • Time usually recorded by: - continuous time study log (worker log) • random moment sampling (RMS) • CMS is moving all States to RMS. • Sufficiently detailed to determine whether activities are necessary for the “proper and efficient administration of the state plan” NAME Conference October 2006

  47. More…documentation principles • Documentation related to salaries and wages is required. • Accounting records should be supported by the source documentation of these financial records. • Documentation related to the CPE process. • Documentation showing reconciliation to actual costs. NAME Conference October 2006

  48. Time Study Documentation • Documents 100% time & percentages for each activity • Source documentation maintained related to salaries and wages required related to time study participants (ie, position description, salary and wages) • Rationale for staff in sample NAME Conference October 2006

  49. Indirect Costs • Indirect costs may only be claimed if there is an indirect cost rate approved by the cognizant agency responsible for approving such rates, according to OMB Circular A-87. • For school-based administrative programs, the cognizant agency is the U.S. Department of Education or its delegate. • For tribal governments, the cognizant agency is the Department of Interior (Attachment E, D.1., c.) NAME Conference October 2006

  50. Time Study Cycle Participants Identified each Quarter Participants Entered into State-wide Pool 1 2 Data is calculated on State-wide basis 4 Random Moments Selected 3 NAME Conference October 2006

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