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)).
Generally, the TAC goals are to:
- Support SMAs, SEAs, LEAs, and school-based entities seeking to expand their capacity for providing Medicaid SBS.
- Help states reduce administrative burden and simplify billing for, LEAs, in particular small and rural LEAs, and support compliance with Federal requirements regarding billing, payment, and recordkeeping, including by aligning direct service billing and school-based administrative claiming payment systems.
- Support state entities in obtaining reimbursement for providing and expanding Medicaid SBS, including a comprehensive list of best practices and examples of approved methods that SMAs and LEAs have used to pay for, and increase the availability of, assistance under Medicaid, including expanding State programs to include all Medicaid-enrolled students, providing EPSDT services in schools, utilizing telehealth, coordinating with community-based mental health and substance use disorder treatment providers and organizations, coordinating with managed care entities, and supporting the provision of culturally competent and trauma-informed care in school settings
- Ensure ongoing coordination and collaboration between states, ED, and CMS regarding Medicaid SBS.
- Provide guidance with regard to utilization of various funding sources.
Please email the TAC at SchoolBasedServices@cms.hhs.gov for any questions about Medicaid SBS or technical assistance.
Yes, States are expected to apply the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming guidance to all MAC programs for all entities. Both previous guidance documents issued by CMS, including the 1997 School-based Services Technical Review Guide and the 2003 School-based Administrative Claiming Guide, are superseded by the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming.
As stated on page 44 of the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming, if public charter schools are funded predominantly by State and local funds, including local tax revenue or appropriations, similar to other governmental entities, they may be eligible to provide the non-federal share of Medicaid or CHIP expenditures through CPEs.
However, other school entities that are not units of State or local government, including private schools, would not be considered governmental entities under 42 CF.R. § 433.51(b) and § 457.220. Direct payments to private or non-governmental educational institutions for Medicaid and CHIP SBS are available but are typically funded by State appropriations to the Medicaid/CHIP agency. Private and other non-governmental school entities may not participate directly in a CPE. However, an LEA that is a unit of government can contract with providers to provide eligible Medicaid/CHIP services to children in private entities, and CPE the contracted costs, as long as the arrangement adheres to the requirements discussed on page 43 in the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming.
In addition to a cost methodology, LEAs that are units of government may also transfer the non-federal share funds via intergovernmental transfers (IGTs) to the SMA for services provided in private schools as long as the provider receives and retains the entire Medicaid payment described in the Medicaid State plan.
CMS’ longstanding standard policy has been to recommend a 15 percent oversampling for RMTS to ensure a valid response rate of at least 85 percent or include all nonresponses as non-Medicaid and unallowable.
In general, all completed responses should be used in an RMTS. However, CMS allows for the use of an alternate methodology in cases where the TSIP specifies an oversample to ensure an adequate number of valid responses for the treatment of time study nonresponses are achieved. The alternate methodology CMS historically has approved uses an 85 percent valid response rate. CMS recommends an oversample of 15 percent to ensure an adequate number of valid responses are received and to meet the required precision level. Per page 113 of the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming, an oversample may be used only to compensate, not substitute, for the potential number of nonresponses.
If the valid response rate is above 85 percent, nonresponses may be discarded and not included in the time study results. However, if the valid response rate is below 85 percent, regardless of the 15 percent oversample, CMS has required all non-responses to be included and coded as non-Medicaid.