Frequently Asked Questions

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.

No, while an RMTS is typically used to identify and allocate cost, it is not the only option. States also have the flexibility to utilize an alternative methodology for reimbursement and/or allocation, provided there is appropriate documentation for CMS review of the chosen methodology. Regulations on personnel expenses in 45 C.F.R. § 75.430(i) require that charges to federal awards must be based on records that reflect the actual work performed. The records must:

• be supported by a system of internal controls that provides reasonable assurance charges are accurate, allowable, and properly allocated,
• reflect the total activity for which the employee is compensated,
• encompass both federally assisted and all other activities for which the employee is compensated, and
• support the distribution of the employee's salary or wages among specific activities or cost objectives.

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.

CMS’s general standard regarding time study notification and response time is up to two-day upfront notification and up to a two-day response period. CMS is also willing to work with States that are not immediately able to meet these standards to work out a plan to eventually get to no more than a two-day upfront notification and a two-day response period. If a State believes that up to two days prior notice and two days response is not achievable, the State can propose an alternative to CMS and provide its rationale. CMS will consider additional time for prior notification and/or response time upon request from a State in such circumstances.

No, if your State's CMS-approved TSIP already adheres to the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming on page 112, then the State does not need to amend its TSIP for error rates. We do recommend States look closely at their previously approved Time Study methodology to ensure full compliance with all applicable Federal requirements as discussed in the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming.

Generally, yes, but how this is achieved is dependent on the reimbursement methodology the State has approved for SBS in its Medicaid State plan. If SBS in a State are paid through fee for service (FFS), then each billed service is claimed and paid as provided in the State plan, regardless of when it occurs.

If a State has a cost methodology in the State plan that uses a time study, the time study must include 100% of providers’ billable time and account for their regular schedules in the methodology and in the time study implementation plan (TSIP). In this case, the providers’ schedules should include after-school hours for programs that are intended to be captured. If these programs are contracted, the contracted costs must also be included in the cost report. If a State does not currently have these programs included in their approved SBS reimbursement methodology, the methodology may have to be amended to capture the additional services. This may include revisions to the SPA, TSIP, PACAP, or other documents, as needed.

In the case of summer activities (i.e., non-regular school days when schools are not capturing any Medicaid services), a time study should be performed to cover these periods. Anytime there are Medicaid services performed and captured in a cost methodology, that time needs to be accounted for in the CMS-approved TSIP, and the allocations explained in the SPA. This is especially true for children with Individualized Education Programs (IEPs) who are eligible for Medicaid and require special education and related services after school hours, on weekends, and/or extended school year services (defined in 34 C.F.R § 300.106). SMAs must have procedures in effect that allow for time studies to capture 100% of providers’ time delivering extended school year services. No estimations of Medicaid services can be calculated for vacation or other periods not covered in the time study.

States should review the 2023 Comprehensive Guide to Medicaid Services and Administrative Claiming to ensure that their current SBS policies are consistent with all federal requirements. States are required to submit any necessary changes to their SPAs, TSIP, MAC Plan, PACAP, etc., to adhere to all applicable federal requirements as discussed in the 2023 Comprehensive Guide as quickly as possible, if changes are needed, with the expectation that any necessary changes will be requested and approved by July 1, 2026. CMS encourages states to start the submission process as soon as possible to allow for optimal time for review and necessary revisions.  If the State has questions about compliance, CMS is available to assist. We encourage them to reach out to the SBS email SchoolBasedServices@cms.hhs.gov to engage in any needed technical assistance.