SAD 17 braces for drastic cuts in Medicaid reimbursements

OXFORD HILLS — SAD 17 has been far ahead of other school districts in trying to deal with dramatic changes to Medicaid revenues.

It remains to be seen whether the district's approach will pay off.

This year, Medicaid will no longer automatically reimburse schools for special education services.

It's a policy change that could cost the district half a million dollars.

At the most recent board meeting, Chair Ron Kugell said that the issue had been discussed at a recent education conference.

"It didn't really make me feel good," said Kugell. "We've gotten significant sums from Medicaid...now, the philosophy, I'll put it in my own words, is that Medicaid is for medical issues, not educational issues. Now Medicaid does not pay, or will not pay, many of the things that we're billing which were really educational components."

Kugell said that it could cost the district as much as $500,000.

"I'm too scared to even think about it," he told the board.

Kugell conceded that it might be the right course from a Medicaid perspective, even as it threatens the district's budget.

"What they're saying makes sense," said Kugell. "I mean, it is Medicaid, and so probably it should be for medical things, but it certainly doesn't help us in trying to accomplish our mission by cutting back on the federal funds."

The cuts are primarily affecting the Educational Technician staff. Under the old billing rules, the services of all 45 of the district's Ed Techs were reimbursed. Now, there is a guarantee for "maybe just six or seven," said Tim Luff, the district's director of special services. 

"You can be sure that those kids currently receiving occupational therapy, physical therapy, speech services will all be reimbursable," said Luff. "The other ones are question marks right now."

Under the previous system, school districts billed Medicaid for a number of services, including Speech, Occupational Therapy, Physical Therapy, Behavioral or Communication services, Behavior Management, Personal Care, Rehabilitation Assistants, and therapeutic mental health services including psychological, and social work.

Last year, the district received $549,000 for these services, according to Luff.

The new system requires districts to bill using a "fee for service" model.

"Given the strict requirements in these regulations, these services are significantly more difficult to bill for and reimbursement is questionable," said Luff.

The district has been pro-active in meeting the challenge. Last year, with the cuts on the horizon, they planned the budget to count on only $50,000 in Medicaid reimbursements for the current year.

"This $50,000 is not guaranteed," said Luff. However, "it's a conservative estimate of what we should be able to receive under these new regulations."

SAD17 diverged from most of the districts in the state by boldly deciding to handle the billing internally.

"We have decided to directly bill MaineCare this year," said Luff. "Many districts are contracting with outside billing agencies."

Negotiating the maze of regulations will likely be difficult, but in the end, Luff hopes it will be worth it.

"If we had done the same, it would have cost us at least $15,000 more dollars," said Luff, "with no guarantee of reimbursement."

Superintendent Rick Colpitts congratulated Luff for being one of the first districts in the state to bill Medicaid for services.

"We were the first district to successfully make some claims under the new system," said Colpitts. "I haven't said we've been approved, but we've made the claims.

Educators from around the state are undoubtedly watching to see the outcome of Luff's internal billing initiative.

"Other districts have not billed, or used outside billing agencies, which are expensive," said Colpitts.

Right now, districts are anxiously awaiting notification that their claims have been approved or denied.

"There is no school district in Maine that has received reimbursement at this point," said Luff.

Even if Medicaid were to fail to approve a dime, the students would still receive the services.

Under special education regulations, "we are required to provide these services for our students," said Luff. "Regardless of the MaineCare impact, these necessary services will continue for our students."

Some of SAD 17's current staff are simply not billable under the new system, because the staff members lack the educational credits to justify the Medicaid reimbursement.

Speaking about one group of seven or eight Ed Techs, Luff says that, in order to bill for their services, "they would need to have to have 90 credit hours and a significant amount of training." 

In another bold move, SAD 17 has made the decision to keep its staff intact.

"At this point, we're choosing to keep our current staff in these programs and not to bill," said Luff. "These staff may not have the necessary qualifications to bill MaineCare, but they are the best people to be working with these students."

Luff said that, in this case, education trumps finances.

"We'll choose to do what's good for kids over how much money we can get for it," he said.

"At this time, there are no Education Technicians that are in danger of losing their jobs based on the MaineCare impact on the FY11 budget," said Luff.

The Medicaid funding is taken into account by the state when it allocates money to schools. The state typically assumes that a district will receive an amount in Medicaid revenues that is similar to the average of those revenues over the past three years.

The state then reduces their funding by that amount, on the assumption that the Medicaid funding will materialize. This year, however, it is certain not to.

"It's doubtful," said Luff. "What is clear is that if districts are audited, it will be us who will have to deal with the consequences."