Area Schools Set To Lose Millions Under Medicaid Policy Changes

Educators nationwide are protesting a Bush administration move to curtail hundreds of millions of dollars in Medicaid funding for disabled students that could force some schools already in budget straits to trim health services or cut back instructional programs.

The shift in federal reimbursement policy threatens to strip about $635 million from schools in the next academic year and $3.6 billion over five years, with Washington area schools in line to lose millions of dollars. The rule, to take effect in June unless Congress intervenes, will bar schools from billing Medicaid for busing special education students to and from school and for certain administrative expenses, including enrolling children in Medicaid and coordinating and scheduling services.

Administration officials said schools, required under federal law to provide education to children with special needs, should pick up the bill for expenses that are part of their "educational mission." But educators said it would further strain schools in a time of lean budgets, hitting big city and poor rural systems hardest.

D.C. schools would lose about $5 million in the first year in busing reimbursement, according to a spokeswoman for Mayor Adrian M. Fenty (D). Virginia has recouped $31 million in Medicaid dollars over the past five years for services that would no longer be covered, with Fairfax County schools alone projecting a $1.8 million loss next year. That's the equivalent of employing 25 teachers. The county's schools this year face a range of budget cuts that would pare back summer school and raise average class size.

Maryland school officials estimate that nearly $1 million in federal funding would dry up statewide next year under the rule, with the greatest impact in Baltimore, which recouped about $593,000 in one recent year, and Prince George's County, which was reimbursed $106,000.

Educators in states including California, Mississippi and North Carolina wrote the government to protest the rule. Officials of some schools said absorbing such expenses could mean dipping into general education programs or cutting back on school nurses or counselors. In one letter, Virginia state Superintendent Billy K. Cannaday Jr. said school systems will continue to help enroll children in Medicaid and coordinate services but will have to "shift funds from other areas in their budgets to cover the costs or raise taxes if this proposal becomes a reality."

The Centers for Medicare and Medicaid Services proposed the rule in September, and it was made final in December. But congressional Democrats slipped a six-month moratorium into legislation passed before the end of the year.

Dennis G. Smith, director of the federal Center for Medicaid and State Operations, said the change will help reign in a system in which federal auditors have found improper billing in some states. He emphasized that schools will still be reimbursed for direct medical services, such as physical or speech therapy, as well as for transporting children to a doctor's office or therapy session if it is scheduled off campus during the school day.

"This is not about medically necessary services," Smith said. "We will continue to pay for those types of services. Medicaid was being used simply to leverage revenues for activities that had very little to do with serving children on Medicaid. Schools already have responsibility to transport all children, not just Medicaid children, to school. That should not be billed to Medicaid."

Health advocates and Democratic lawmakers criticized the change as a rash shift that ultimately could result in fewer needy children connecting with health services.

"This is a huge change in law," said Sara Rosenbaum, chairman of the Department of Health Policy at the George Washington University School of Public Health and Health Services. "This could have an impact on the number of children enrolled in the program and the number of children who are assisted in getting health care. Whatever concerns there were about schools administering Medicaid . . . are totally outweighed by what [the administration] has done here."

Rep. John D. Dingell (Mich.), the senior Democrat in the House, called on the administration to "reconsider this misguided rule and start working with Congress to better serve and support America's most vulnerable children." Dingell and other lawmakers have introduced a bill to reverse the rule, requiring Medicaid to cover certain administrative costs for schools and the cost of transporting children with disabilities who go to school in specially equipped or staffed buses.