Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.
Frequently Asked Questions
No, States generally are not required to submit an updated SPA for third-party liability adjustments, because this policy is a clarification, rather than a change. However, if the State plan includes specific language on TPL, there may need to be an updated SPA. If recovery would not be cost-effective pursuant to 42 C.F.R. § 433.139(f), States may suspend efforts to seek reimbursement from a liable third party, including for IDEA or plan services under section 504 of the Rehabilitation Act. This could ease the administrative burden for schools.
Services not included in a student’s IEP are not considered the same as IDEA services under section 1903(c) of the Act. CMS does not consider LEAs to be legally liable third parties to the extent they are acting to ensure that students receive needed medical services to access a “free appropriate public education” (FAPE) consistent with section 504 of the Rehabilitation Act. Therefore, LEAs may bill Medicaid for non-IEP services students receive only after they bill any outside legally liable third parties (pursuant to Social Security Act § 1902(a)(25)). States, however, may exempt certain items or services from TPL requirements when submission of claims for those items or services would always result in denial because the general insurance industry does not cover them. CMS requires the State to have clear and convincing annual documentation of non-coverage by insurers. If a State has documentation, 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 is found at 42 C.F.R. § 433.139(b)(1), which states that “the 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.” For more information on third-party liability, please refer to pages 103-107 of the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming.
According to page 105 of the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming:
“If TPL exists but does not cover the specific Medicaid services provided, the provider would have to furnish documentation to the State Medicaid agency that, although TPL generally exists for the beneficiary, there is no coverage for the services provided. After the documentation is given, the provider does not have to continually pursue TPL for the services provided which are not covered by the third party. At this point, the claim could be submitted to, and paid by, the State Medicaid agency. The provider would need to establish annually thereafter that coverage for those non-covered services has not changed. Many services covered by State Medicaid agencies under their Medicaid programs are not covered by otherwise liable third parties of Medicaid beneficiaries. As such, the provider would not need to pursue TPL every time the service was furnished as long as it was demonstrated such coverage is not available by otherwise liable third parties.”
“If the probable existence of TPL cannot be established or third-party benefits are not available to pay the recipient's medical expenses at the time the claim is filed, the agency must pay the full amount allowed under the agency's payment schedule.”
“Reimbursement must be sought unless it is determined that recovery of reimbursement would not be cost effective in accordance with threshold amounts that have been established by the State Medicaid agency.”
There are some circumstances, however, under which a state Medicaid agency may pay a claim even if a third party is likely liable and then seek to recoup that payment from the liable third party. This is referred to as “pay and chase.” Specifically, pay and chase is required or permitted in the following circumstances:
Medical Support Enforcement: State Medicaid agencies must pay and chase if the claim is for a service provided to an individual on whose behalf child support enforcement is being carried out if (1) the third party coverage is through an absent parent and (2) the provider certifies that, if the provider has billed a third party, the provider has waited up to 100 days from the date of service without receiving payment before billing Medicaid (42 CFR § 433.139(b)(3)(ii)). This requirement is intended to protect the custodial parent and the dependent children from having to pursue the non-custodial parent, his/her employer, or insurer for third party liability.
Preventive Pediatric Services: State Medicaid agencies must pay and chase for claims for preventive pediatric services (including EPSDT) (42 CFR § 433.139(b)(3)), unless the state has made a determination related to cost-effectiveness and access to care that warrants cost avoidance for up to 90 days.
After a state Medicaid agency pays a claim using the pay and chase method, it must then seek to recover from the liable third party, unless the recovery of reimbursement would not be cost-effective or documentation exists that there is no coverage for the services by the liable third party.
The 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming provides information pertaining to school-based services covered through separate CHIP, Title XXI-funded Medicaid expansion CHIP, and Medicaid. Information about the options and requirements for school-based services provided through separate CHIPs is provided throughout the guide. There is also a dedicated CHIP section on pages 38-39 of the guidance that specifically addresses what is available under separate CHIPs.
Generally, any separate CHIP-covered service may be provided in a school setting to children enrolled in the State’s separate CHIP. There are no limitations on the delivery system states may use to provide separate CHIP-covered services to separate CHIP-enrolled students.
CMS is still exploring possible arrangements for SBS under separate CHIPs. For questions about the applicability of specific policies outlined in the SBS Guide to separate CHIPs, please reach out to the CMS SBS Technical Assistance Center for additional information. We encourage States that are interested in expanding separate CHIP claiming in schools to discuss their plans with CMS to help determine the best mechanism to accomplish the State’s goals.
Part B of IDEA provides Federal funds to SEAs, and SEAs subgrant a majority of IDEA funds to LEAs and school districts. IDEA funds assist SEAs and LEAs in providing a free appropriate public education (FAPE) to eligible children (generally ages 3 through 21) with disabilities through the provision of special education and related services. As explained below, Medicaid is a funding source for special education and related services for Medicaid enrolled children.
An Individualized Education Program (IEP) is a written statement for a child with a disability that is developed, reviewed, and revised in accordance with IDEA’s requirements in 34 C.F.R. §§ 300.320 through 300.324. A child’s IEP addresses, among other things, the nature, frequency, duration, and location of a child’s special education, related services, supplementary aids and services, and program modifications and supports for school personnel. Services provided under IDEA Part B are provided at no cost to the child’s parents.
For Medicaid-enrolled children who receive services under IDEA Part B, IDEA specifically requires States to create an interagency agreement or other mechanism that must include provisions stating that the State Medicaid agency financial responsibility precedes the financial responsibility of the LEA (or the State agency responsible for developing the child's IEP). Therefore, Medicaid is payer of first resort (as between Medicaid and LEAs or the State agency responsible for developing the child's IEP for Medicaid-covered services included in the IEP (see section 1903(c) of the Act and IDEA sections 612(e) and 640(c), codified at 20 USC 1412(e) and 1440(c); 34 C.F.R. § 300.154(h); and 42 C.F.R. § 433.139)).
The TAC welcomes all inquiries related to Medicaid School-Based Services in our mailbox at SchoolBasedServices@cms.hhs.gov. We will provide all the technical assistance we can and will advise contacting the State Medicaid or Education agency if further guidance is needed due to State-specific regulations.
The TAC’s upcoming events with registration information can be found here: Upcoming Events | Medicaid. Registration links will also be provided via email. Individuals from SMAs, SEAs, LEAs or school-based entities are invited to email the TAC at SchoolBasedServices@cms.hhs.gov to be added to the distribution list. For those unable to attend, recordings of webinars will be posted two weeks after the event here: Past Events | Medicaid. Those registered for the webinar will be sent the recording when it becomes available.
Per 45 C.F.R. § 75.430(i)(5), a Random Moment Time Study (RMTS) is a type of “substitute system” used for determining and documenting time spent on, and therefore the costs of, Medicaid administrative and direct service activities. Per page 108 of the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming, a RMTS is a statistically valid sampling methodology that can be used by States and LEAs to determine how much time eligible staff spend performing Medicaid reimbursable work activities. The RMTS is used to determine a statistic that is applied to salary and fringe benefits for qualified providers and reported on a cost report for direct medical services. A RMTS is generally used in an allocation of a cost pool to allowable medical, administrative (if applicable), and unallowable moments that is further allocated to Medicaid using a Medicaid Eligibility Ratio (MER). The RMTS and supporting documents become part of the documentation for the claim. The RMTS is used to determine a statistic that is applied to salary and fringe benefits for qualified providers and to other payable costs that are reported on a cost report for direct medical services.
A RMTS must reflect all of the time and activities (whether allowable or unallowable under Medicaid) performed by school employees. The RMTS sample universe (or Participant List) should include all staff who potentially perform Medicaid direct services or administrative activities. LEAs should consider both job title and job function when determining which individual staff members should be included in which cost pool.
The TAC is working to compile best practices from States and work with SEAs, LEAs, and SMAs to come up with ways to expand school-based services. EPSDT is a guarantee of coverage for certain benefits for EPSDT-eligible beneficiaries, but not an independent Medicaid service. The TAC plans to cover the subject of EPSDT during webinar in 2024. Additional information on the EPSDT benefit can be found here: Early and Periodic Screening, Diagnostic, and Treatment
The TAC is actively collaborating with SMAs, advocates, and LEAs to gather insight and opinions on various topics, with the aim of formulating best practices for SBS policies. Through a series of webinars and virtual meetings, the TAC will explore and address a diverse range of subjects to inform best practices in Medicaid SBS and service implementation. Additionally, the TAC is in the process of creating resource materials to aid LEAs and SEAs in effectively managing SBS programs.