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IDEA and Use of Public Benefits or Insurance

August 19, 2013

By: Sarah A. Geddes and Neda M. Ryan

Many schools are engaged in the legitimate practice of billing Medicaid for various services specified in a student's Individualized Education Program ("IEP").  The Individuals with Disabilities Education Act ("IDEA") permits this practice, provided that certain conditions are met:

  • Schools may not require parents to sign up or enroll in public benefits or insurance as a condition of receiving FAPE;
  • Schools may not require parents to incur out-of-pocket expenses such as deductibles or co-pays;
  • Schools may not use a child's benefits if that use would decrease the child's lifetime benefits, require the family to pay out-of-pocket for benefits utilized outside of school hours that are otherwise covered, increase premiums or lead to discontinuation of benefits, or risk loss of eligibility for waivers based on aggregate health-related expenditures;
  • Schools must obtain the required written parental consent; and
  • Schools must provide written notification to a child's parents before accessing a child's or parent's public benefits or insurance for the first time, and annually thereafter.  34 C.F.R. § 300.154(d)(2).
In June of 2013, the U.S. Department of Education issued a "Suggested Model for Written Notification of Parental Rights regarding Use of Public Benefits or Insurance."  It is strongly recommended that schools use this model notice, in order to ensure compliance with the IDEA.  The model notice is available by clicking here .  Using this model notice will assist your school in defending against claims of IDEA violations regarding the use of public benefits or insurance.

However, even if a school's practices are IDEA-compliant, they could run afoul of Medicaid billing regulations enforced by the U.S. Department of Health and Human Services ("HHS").  A number of school districts in Maine recently found themselves subject to an audit and allegations of violations of HHS regulations regarding their Medicaid billing practices.  One school district is accused of overbilling Medicaid by $847,000.  (Read the news story here )

Because the Federal government funds over half of States' Medicaid programs and because schools are paid with Medicaid monies for IEP services, the Federal government has the authority to audit and regulate school districts under the Federal government's purchasing power as a purchaser of health care.  Audits by the Federal government can arise in any number of ways either based on tips from recipients of the care or school employees, planned audits by one of the offices or divisions within HHS, or audits conducted by HHS contractors.

For years, the HHS Office of Inspector General ("OIG") has audited school districts across the country to determine whether payments for school-based services were reasonable, allowable, and adequately supported in accordance with applicable regulations (including IDEA requirements) and the State's Medicaid plan.  In these audits, the OIG revealed numerous deficiencies, including the following:

  • There was not sufficient documentation to support that services prescribed in the IEP were delivered;
  • Documentation was lacking for such items as place of service, type of service rendered, and units of service provided;
  • School-based health services were furnished by individuals that did not meet the qualifications prescribed by State or Federal regulations;
  • Students did not have a valid IEP for Medicaid billing purposes;
  • Students were absent; and
  • Improper billing of level of services rendered.

Contact your Clark Hill attorney with any questions about IDEA's requirements when using public benefits or insurance for IEP services, or about how to comply with HHS regulations pertaining to public benefits or insurance.

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