Special Report Legislative Joint Auditing Committee
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Special Report Legislative Joint Auditing Committee June 6, 2014 Review of Arkansas Medicaid Program School Services and Reimbursements Arkansas Department of Education Arkansas Department of Human Services INTRODUCTION This report is issued in response to a request by the Legislative Joint Auditing Committee’s Medicaid Subcommittee for information about Medicaid services and reimbursement practices available to Arkansas public school districts.1 OBJECTIVES The objectives of this report were to: Provide background information related to Medicaid services available in participating school districts. Ascertain compliance with applicable Arkansas Code, federal regulations, Arkansas Department of Education (ADE) rules, and Arkansas Department of Human Services (DHS) guidelines and manuals. Determine Medicaid reimbursement options available to school districts. Analyze reimbursement requests that districts made directly or through a third-party vendor. Assess the oversight and monitoring performed by DHS and ADE of Medicaid services and the reimbursement processes relating to the districts. SCOPE AND METHODOLOGY This review was conducted for the fiscal year ended June 30, 2013. DLA staff reviewed relevant interagency agreements, contracts, Arkansas Code, federal regulations, ADE rules, DHS guidelines and manuals, and Medicaid reimbursement requests and supporting documentation. To analyze Medicaid reimbursement requests, DLA staff selected student files from six school districts of diverse sizes and from a variety of geographic locations within the State. Applicable personnel were also interviewed. 1The term “school districts” or “districts” encompasses the State’s public schools, charter schools, and education service cooperatives. ARKANSAS DIVISION OF LEGISLATIVE AUDIT 172 State Capitol, Little Rock, AR 72201 Phone: 501-683-8600 Fax: 501-683-8605 www.arklegaudit.gov Report ID: SPSR00113 Report Date: May 15, 2014 Special Report – Review of Arkansas Medicaid Program School Services and Reimbursements The information contained in this report has ARMAC reimbursements to each of the not been audited. The data gathered for districts for the three fiscal years ended each district were from a specific point in June 30, 2013, are provided in Appendix A time and, therefore, only reflect information on pages A-1 through A-7. as of and on that date, which varied by district. The amount of Medicaid funding received by each district through MITS reimbursement The methodology used in preparing this for the three fiscal years ended June 30, report was developed uniquely to address 2013, is provided in Appendix B on pages the stated objectives; therefore, this report is B-1 through B-26. more limited in scope than an audit or attestation engagement performed in RULES AND REGULATIONS accordance with Government Auditing Standards issued by the Comptroller General To gain an understanding of MITS, DLA staff of the United States. reviewed applicable Arkansas Code, federal regulations, ADE rules, and DHS guidelines. BACKGROUND Arkansas Code and Arkansas Department Created by Title XIX of the federal Social of Education (ADE) Rules Security Act, Medicaid is a joint federal-state program that provides medical assistance to Ark. Code Ann. § 6-18-1501 states that eligible individuals based on financial need beginning with the 2006-2007 school year, and other factors. DHS regulates and all children in prekindergarten, kindergarten, administers the Medicaid Program in and grades one, two, four, six, and eight and Arkansas. all transfer students shall receive an eye and vision screening. ADE shall ensure the The Medicaid in the Schools Program (MITS) provision of all general revenues necessary was created by ADE in 2006 and is currently to access federal funds for eye and vision administered by the Southeast Arkansas screenings for all qualified federal health Education Service Cooperative (SEARK) in care program recipients. The school district Monticello, with satellite offices in Little Rock shall be responsible for all remaining costs and Paris. Originally, MITS was funded associated with eye and vision screenings. through a federal Individuals with Disabilities Education Act (IDEA) grant. According to ADE’s Rules Governing In addition, SEARK, on behalf of MITS, Standards for Accreditation of Arkansas received 5%, or over $1.5 million, of all Public Schools and School Districts, dated Arkansas Medicaid Administrative Claiming July 2009, Rules 16.03.1 through 16.03.5 (ARMAC)2 funds for operating the program provide that each school district shall have a for the two fiscal years ended June 30, 2012; health services program under the direction as of the end of fiscal year 2012, SEARK no of a licensed nurse. This program shall longer receives ARMAC funds because ADE include screening, referral, and follow-up determined these funds were not needed to procedures for all students, and each school operate MITS. SEARK also began in April shall provide facilities, equipment, and 2011 to receive funding by serving as a third- materials to operate this program. party Medicaid billing company for school As specified in Ark. Code Ann. § 6-18-1005, districts. health services shall include, but are not limited to, the following: 2Established in 2005, the ARMAC federal program enables school districts to be reimbursed for funds expended for Students with special health care completion of certain administrative activities related to Medicaid-covered services provided by the districts. needs, including the chronically ill, 2 Arkansas Division of Legislative Audit medically fragile, and technology- Methods for reimbursement, dependent, and students with other exchange of reports and documenta- health impairments shall have tion, and liaison between the parties, Individualized Healthcare Plans including designation of state and (IHPs). local liaison staff. Invasive medical procedures required “Free Care” Principle by students and provided at the school shall be performed by trained, School districts are required to adhere to the licensed personnel; the regular federal “free care” principle to seek classroom teacher shall not perform reimbursement for services. According to these tasks. federal regulations (Medicaid School-Based Administrative Claiming Guide, published by Custodial health care services CMS), required by students under IHPs shall be provided by trained school The “free care” principle precludes employees other than the regular Medicaid from paying for the costs of classroom teachers. Medicaid-coverable services and activities which are generally available Federal Regulations to all students without charge, and for which no other sources for Interagency Agreements reimbursement are pursued. Thus, Medicaid cannot reimburse for routine According to federal regulations, any school school-based vision and hearing district that receives ARMAC funds must screenings or other primary and have an interagency agreement that preventive services provided free of describes and defines the relationships charge to all students. In order for among DHS, ADE, and the school district. Medicaid payment to be available for These interagency agreements must include: these services, the provider must: Mutual objectives of the agreement. 1) establish a fee for each service that is available; Responsibilities of all the parties to the agreement. 2) collect third party insurance information from all those Activities or services each party to the served (Medicaid and non- agreement offers and under what Medicaid); and circumstances. 3) bill other responsible third Cooperative and collaborative rela- party insurers. tionships at the state and local levels. Federal legislation provides for Specific administrative claiming time exceptions to the above-stated policy study activity codes approved by the with regard to services provided under Centers for Medicare and Medicaid IDEA, the Women, Infants and Children Services (CMS), by reference or (WIC) program and services provided inclusion. by Title V grantees. Specific methodology approved by . Also, Medicaid coverable medical CMS for computation of the claim, by services that are provided to Medicaid reference or inclusion. children under a “section 504 plan” in 3 Special Report – Review of Arkansas Medicaid Program School Services and Reimbursements order to make education accessible to established a system of Medicaid-related these children with disabilities, are not reimbursement for schools that offer medical reimbursed by Medicaid. It is the services to students. These services must be responsibility of the education agency part of a student’s Individualized Education to provide these services, and other Program (IEP) or Individualized Healthcare third-party payors are not generally Plan (IHP) for school districts to obtain billed for these services. Costs of reimbursement from Medicaid for providing related administrative activities for services. Qualifying services must also meet these services are also not allowable all required provider guidelines established in under Medicaid. the Arkansas Medicaid Provider Manuals. the free care provision serves to Initially, participating Arkansas school limit the ability of schools to bill districts were eligible to receive Medicaid Medicaid for covered services provided reimbursement for the following services: to Medicaid-eligible children because schools that provide needed health Occupational therapy. services often provide them to all students free of charge. While