Special Needs Transportation

Proposal would save Medicaid payments for transportation

Posted on June 1, 2009

BALTIMORE — The Centers for Medicare & Medicaid Services (CMS) of the U.S. Department of Health and Human Services (HHS) in May issued a Notice of Proposed Rulemaking (NPRM) to repeal a final rule that would have eliminated school districts’ ability to receive federal Medicaid payments for some transportation activities.

On Dec. 28, 2007, CMS published a final rule titled “Elimination of Reimbursement Under Medicaid for School Administration Expenditures and Costs Related to Transportation of School-Age Children Between Home and School” to eliminate federal Medicaid payments for transporting school-age children to and from school when a child is receiving a Medicaid-covered service at school, and for certain administrative and transportation activities performed by school employees or contractors.

The move was based on a finding by the HHS secretary that these activities were not necessary for the proper and efficient administration of the Medicaid state plan and were not within the definition of the optional transportation benefit.

The final rule had not yet been implemented, but CMS officials have decided to rescind it due to concerns raised in Congress about its potential adverse effects.

“Since issuing the final rule, we have become aware that the limitations on federal Medicaid funding under the final rule could substantively affect state outreach efforts in schools, and the availability of Medicaid services for eligible beneficiaries,” the NPRM says.

It goes on to say that since such activities were within the scope of the overall mission of the schools, officials assumed that the activities would continue with funding from other sources available for educational activities. However, because that assumption may be invalid, CMS officials are concerned that implementing the rule “could adversely affect Medicaid beneficiaries.”

The rulemakers are also concerned that there is insufficient evidence demonstrating the need for the approach taken by the final rule.

They note that the oversight reviews cited when issuing the final rule — which indicated some deficiencies in procedures for claiming school-based administrative expenditures and necessary transportation — were several years old and based on data collected more than five years ago.

The claims did not reflect CMS guidance that was issued after the review data was collected, and they did not reflect the administrative oversight and technical assistance that CMS has made available more recently.

“CMS has tools at its disposal to address inappropriate claiming that could arise in any setting, so we will continue to evaluate the efficacy of these tools in addressing any claiming issues,” the proposal says.

In light of their concerns, CMS officials believe rescinding the provisions of the final rule will provide an opportunity to determine the most effective approach to further the objectives of the Medicaid program in providing health benefits coverage to individuals with special needs.

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