If a service is covered by commercial payers in other settings, but is not covered in the school setting, may a state exempt the service from third party liability (TPL) requirements?

Yes, a state can exempt a service from TPL requirements if it is never covered in the school setting, even if it is otherwise covered by the liable third party. Claims for the service in question delivered in a school setting must always be denied by the third party, and the state needs to maintain annual documentation substantiating that the service is not covered.