Area Schools Set To Lose Millions Under Medicaid Policy Changes

P.J. Maddox, chairman of the Department of Health Administration and Policy at George Mason University, said the conflict highlights the challenge schools face with the growing cost of educating children with disabilities. Federal law requires schools to provide services to disabled students, but the federal government gives schools only a portion of the money needed to cover extra costs. Schools, she said, have turned to Medicaid to help offset expenses.

"This Medicaid change cuts off that help, which leaves the school system holding the bag," Maddox said. "Who pays for it? The school system will have to pay for it."

Medicaid officials contended, in their written response to public comments on the rule, that cash-strapped schools have a "strong incentive to shift costs to Medicaid for activities that would have been performed by schools in the normal course of their operation" and that schools should find other sources for money. In recent years, reports from the inspector general of the Department of Health and Human Services have found that schools inappropriately sought reimbursement for school administrators' salaries, capital costs and even such items as antacids and lice combs.

Educators acknowledged some problems with billing but said Medicaid should tighten rules and offer more guidance, not simply cut off the dollars.

Maryland officials are concerned about the fallout for Baltimore and Prince George's schools.

"It's a lot of impact on the two jurisdictions that have the largest numbers of the neediest children," said Carol Ann Baglin, an assistant state superintendent in Maryland. "They are going to have to take funds from somewhere else in a very tight fiscal time and put them into transportation."

Late last month, Los Angeles school officials went to Capitol Hill to lobby against the rule, saying their school system, the nation's second largest, could lose $10 million a year in reimbursement. John DiCecco, director of the system's community partners and Medi-Cal programs, said he expects to lay off 10 outreach workers who have helped enroll thousands of children in Medicaid.

DiCecco said the system also uses Medicaid funds to encourage nonprofit and community groups to donate to help the schools run health clinics and offer vision and dental screenings.

"There's no question if this goes away, at least in Los Angeles, the health status of children will directly suffer," DiCecco said.