A look at impacts, opportunities and barriers in school-based Medicaid

Over a third of all children in the United States are covered by the Medicaid program and nearly all of them go to school. A few months ago, over five hundred Medicaid and education leaders convened to identify new strategies to use Medicaid to improve the health, wellness, and education for more than forty million children in the United States.

Historically, school-based Medicaid supports Medicaid-enrolled children who have an individualized education plan (IEP). In other words, it allows children who have a disability to obtain health-related special education services (e.g., speech pathology, occupational therapy, physical therapy, etc.) at school to improve access to care and so that the student can focus on being a kid. More recently CMS sought to streamline the process by which states can provide school-based Medicaid to Medicaid enrolled children regardless of whether they have an IEP (e.g., mental health counseling, nursing services). Schools are often providing health services through grants, or other limited funds, but school-based Medicaid can help schools build capacity and expand access to school health services for low-income students, specifically for primary care and behavioral health services. For instance, the administration provided additional flexibilities on provider qualifications and cost settlement methodologies, which recognize and address the operational realities schools and Medicaid agencies must operate under. In addition, the administration’s technical assistance center and grant opportunities can support and provide the necessary resources states and local authorities need to address long-standing challenges with this part of the program.

School-based Medicaid is one of myriad strategies Medicaid programs are exploring to enhance access to care for children, which is a shared priority for all state Medicaid programs. In this blog, we’ll take a look at the current landscape around child well-being and school-based Medicaid, what we know about the impacts of school-based Medicaid, what we know about new opportunities within school-based Medicaid, and where we see continued challenges.

What we know about the current landscape

Congress first allowed Medicaid to cover school-based services in the late 1980s. School-based Medicaid comes with unique challenges because it is an incredibly complex part of Medicaid policy. This area of the program bridges together local, state, and federal partners across expertise levels, non-traditional provider types, and financing mechanisms that can be quite convoluted.

At the same time, key Medicaid and education policymakers are acutely focused on supporting child well-being, which creates new opportunities for school-based Medicaid. The COVID-19 pandemic illuminated and exacerbated key structural challenges for child-serving agencies, providers, and organizations. Even before the COVID-19 pandemic, children and youth experienced increasing rates of poor mental health outcomes. For instance, the proportion of high school students who reported persistent feelings of sadness or hopelessness increased by 40 percent between 2009 and 2019, and between 2011 and 2015, there was a 28 percent increase in youth psychiatric visits to emergency departments for depression, anxiety, and behavioral challenges. When the pandemic began, children were forced into social isolation, experienced unprecedented levels of stress/grief, and lost access to in-person healthcare and education. As a result of the COVID-19 pandemic:

• Depressive and anxiety symptoms doubled during the pandemic
• In 2023, 44 percent of public-school students started the school year behind a grade level in at least one subject
• There was more than 50 percent increase in emergency department visits for suspected suicide attempts among girls

While these trends are alarming, children can be incredibly resilient and with enough support, children are able to thrive. Consequentially, we’ve seen rapid movement in this past year to establish and implement more policies and innovations to support children. States/territories are identifying strategies that reflect the needs of their children, unique health care landscape, and their geographic realities. All states began providing 12-month continuous coverage for children in 2024, and a few state Medicaid programs negotiated longer periods of continuous coverage for some children. Some Medicaid programs began providing additional services for children (e.g., screenings, services, and supports for adverse childhood events). States worked with their managed care organizations to improve quality of care (e.g., through performance improvement plans, quality withholds, etc.). Finally, more Medicaid programs are also exploring additional ways to leverage school-based Medicaid.

Meanwhile, in response to the increase in need, schools and school districts invested in the school-based health care workforce, including a wide range of highly trained providers such as school nurses, social workers, behavioral health providers, and more. Children are more than six times more likely to access healthcare at school. These services are funded through a variety of funding streams, and as COVID one-time investments are ending in 2024, school-based Medicaid plays an even more important role to maintain access to enhanced services.

Underpinning the urgency around child well-being are major advancements in cross-agency collaboration and partnerships across child-serving agencies. This includes the partnership between schools and Medicaid, which can be a powerful force to improve the health and wellness of children.

What we know about the impacts of school-based Medicaid

About half of all children in the United States are covered by public health insurance, including nearly all children involved in the foster care system or the juvenile justice system.  Medicaid plays an invaluable role in promoting health, wellness, and access to care for kids across the country and is an important tool in promoting access to health care services and in reducing health disparities. Among many different strategies, school-based Medicaid can impact children’s behavioral health outcomes, education outcomes, and continuity of coverage.

Children’s behavioral health

Medicaid is the largest source of coverage for children with significant behavioral health needs and intellectual developmental disabilities (ID/DD). Specifically, Medicaid covers the subset of high needs children that have complex co-occurring behavioral health and medical needs that touch multiple systems (e.g., schools/special education/early intervention, child welfare, behavioral health, etc.). Many of these children have rising acute needs that often result in emergency department (ED) visits or placement into residential treatment facilities. Leveraging school-based services is one way – among myriad strategies – that Medicaid leaders using to move upstream in supporting children.

For instance, Illinois recently expanded school-based Medicaid to allow the program to cover more services for Medicaid-enrolled students, including crucial behavioral health services for children and youth. This partnership between Medicaid and schools is further exemplified in Illinois’ Children’s Behavioral Health Transformation Initiative, which includes programs such universal behavioral health screenings in educational settings, community-based therapeutic mentoring, and partnerships between the state Medicaid and education agencies to support children transitioning out of residential facilities and back into the community and in schools.

Educational attainment

School-based Medicaid can have profound impacts on a child’s educational attainment. Health and education are deeply interrelated. Medicaid ensures covered children can access wheelchairs, gait trainers, and other equipment that support mobility for students. The program also provides access to equipment and technology to support students in seeing and hearing at school. Notably, children who are enrolled on Medicaid perform better academically, graduate high school and college at higher rates, and earn higher wages in adulthood.

Continuity of coverage

Medicaid and education leaders continue to build on their partnership to ensure eligible children stay connected to their Medicaid coverage through the renewal process. Throughout unwinding (the nationwide mandate to redetermine eligibility for the 90 million Medicaid members who retained Medicaid coverage during the COVID-19 public health emergency), we’ve seen an all-hands effort to ensure eligible people, notably eligible children, retain Medicaid coverage.

As part of its unwinding efforts, Medicaid programs are working with schools on communications campaigns. Because schools and teachers play such an important role in a child’s life, they’ve been instrumental in providing high-touch support to ensure families renew their Medicaid eligibility, even if the family may have missed the mail, the notice letter from Medicaid did not make sense to them, and/or missed text messages about their renewal forms. For instance, Missouri’s Medicaid agency worked with school districts to keep computer labs open for families that didn’t have access to the internet. They also staffed the computer lab with a navigator who helped families complete the renewal form along with educating school district staff on how to assist families in completing the renewal form by phone and online.

Ultimately, the partnership between Medicaid and education plays a critical role in setting up children for a healthy and prosperous future.

What we know about new opportunities in school-based Medicaid

Recently, the Center for Medicaid and CHIP Services (CMCS), in partnership with the Department of Education, released guidance aimed at addressing longstanding barriers around school-based Medicaid. Here are a few.

• Streamlining Technical Support—In May of 2023, CMCS released an updated policy guide for school-based Medicaid, which instituted a single source that outlines the various subregulatory components for this part of the program. This includes financing options for Medicaid programs, approved billing methodologies, and required reporting/data collection. Moreover, CMCS and the Department of Education established a new technical assistance (TA) center to support state and local agencies in implementing school-based Medicaid. While technical guidance and assistance can feel seemingly banal, many of the challenges around school-based Medicaid center around the obscurity of what is allowable and negotiable from the federal perspective. By streamlining technical support, it may help address some of the policy and operational challenges state/territory and local leaders face with delivering school-based Medicaid.
• Modernizing Provider Qualifications— Federal regulators also recently allowed Medicaid programs to establish provider qualifications that are unique to school-based providers, if those providers are still delivering Medicaid-covered services. This may be a helpful option for states/territories where certain providers like school psychologists and school social workers are highly trained and licensed or credentialed to provide care for children but may only be a provider type that realistically will serve in a school.
• Flexibilities Around Cost Settlement—States/territories, local agencies, and providers will also have new flexibilities surrounding cost settlement methodologies. Notably, state/territories will no longer need to collect as many datapoints for their random moment in time study, which is the primary mechanism for providers to claim for services they delivered, and for Medicaid programs to reimburse for those services. This may help alleviate some of the operational challenges and audit risks Medicaid programs take, when delivering school-based Medicaid. Providers will also have more time to complete random moment time studies, which could reduce some of the barriers rural providers face completing these studies online.

Where we see continued challenges

While there are exciting opportunities within school-based Medicaid, there continues to be challenges in operationalizing this complex part of the program. Particularly, state and local leaders still face barriers with program implementation, including engaging schools as nontraditional provider types, cross-agency collaboration, and workforce shortages.

Program implementation

Reiterating the complexity of school-based Medicaid, program implementation continues to be quite demanding. For example, financing this part of the program can be a challenge, and given some of the inherent complexities with administrative claiming there can be significant audit risks within school-based Medicaid.  Compounding this are the countless documentation requirements, multiple consent forms, and reports (that are often paper based), Medicaid relies on to make these payments. For instance, Medicaid programs must collect documentation like bus logs, which must be overlaid on appointments dates/times, which are also overlaid on a child’s IEP, to cover transportation or special transportation equipment (e.g., special seatbelt) under the Medicaid program.

It is also worth noting that schools are not health care systems. The reality of delivering health services in schools presents a range of challenges. For instance, schools are not staffed in the same way that a medical facility would be staffed. Many of those involved in the Medicaid reimbursement process in schools have other duties such as administrative assistants and bookkeepers. This can pose a significant problem in very small districts with few support staff. Challenges around program implementation underscores the importance of new opportunities the federal government, states, and territories are undertaking to invest in technical assistance.

Cross-agency collaboration

Despite a shared goal to support child health and wellness, it can be incredibly challenging to collaborate across the state/territory Medicaid agency, the state/territory education agency, and the local education agency. This can be a result of competing and differing priorities and limited resources across these agencies, challenges around establishing governance, and lack of a shared language. These challenges around building and expanding cross-agency collaboration can take time, and they often rely on individuals, office culture, systems, operations, and policy. Making progress on cross-agency collaboration across the state/territory Medicaid agency, the state/territory education agency, and the local education agency is foundational to all aspects of school-based Medicaid.  This progress begins with child-serving agencies coming together to align around shared goals and then identifying strategies to collaborate around those shared goals.

Workforce shortages

We are experiencing unprecedented workforce shortages within government, schools, and the healthcare workforce. According to NAMD survey data, on average, one in six positions are vacant within a Medicaid agency. Because the intersection between Medicaid and education policy is incredibly complicated, there is typically one expert in a Medicaid agency or in a local education agency, who knows how to navigate it all. When that person leaves or retires within the Medicaid agency or the local education agency, it can significantly disrupt school-based Medicaid operations. This is just one example of why schools and state/territory agencies are investing in efforts to build institutional knowledge.

Many of these barriers are longstanding institutional challenges that can take time and may require state/territory and local-specific solutions. States/territories continue to find innovative solutions to address these challenges, and they are making exciting advancements for child health and well-being, as well as sharing these lessons with one another. The urgency to improve child wellness, along with recent federal action aiming at facilitating the use of school-based Medicaid, are creating opportunities for Medicaid and education leaders to consider school-based Medicaid as one potential tool to improve continuity of coverage, child behavioral health, and educational attainment.