It has come to the attention of the Department of Human Services, Division of Medical Services (State Medicaid Office) and the Arkansas Department of Education, Special Education Office that there are purported irregularities in the Medicaid billing with regard to the provision of the match funds for therapy service(s) mandated as part of a student's Individualized Education Program (IEP). The purpose of this memorandum is to provide appropriate guidance on this issue to Local Education Agencies (LEA) and Education Services Cooperatives (ESC) that are responsible for the provision of related services stated in a student's IEP that are billable to Medicaid for eligible students.
The Arkansas Departments of Education and Human Services are bound through an interagency agreement of long-standing to effectively administer the coverage of IEP-mandated, medically necessary related services through Medicaid. It is in the interest of all parties involved that medically necessary services for students with disabilities be appropriately and accurately accounted for through the Medicaid billing process.
LEAs and ESCs are responsible for providing the state match whenever the service to be billed is provided to fulfill a Medicaid-eligible student's IEP requirements. The service may be provided in the following manner:
1. The LEA or ESC directly provides the IEP related service to a Medicaid-eligible student and bills Medicaid for reimbursement; or
2. The LEA or ESC enters into a fee-for-services contract/agreement with a private provider to supply the related service stated in the student's IEP for which the student is Medicaid eligible. The LEA or ESC must be enrolled as a provider and must be the entity that bills Medicaid for reimbursement, not the private provider. The LEA or ESC will pay the private provider for the service, in accordance with the contract/agreement.
Under either of these conditions, the LEA or ESC is responsible for providing the state match funds. In the case of LEAs, each quarter the Special Education office bills the LEAs for the state match. For the ESCs, the match funds come from set-aside funds included in the state line item appropriation for the provision of early childhood special education services.
The current problem relates to condition #2, when a private contractor is used by the LEA or ESC to provide the needed service(s). The LEA or ESC must be the billing entity, not the private provider. The proper codes must be entered on the billing forms in order to ensure that the LEA or ESC is thus identified as the entity responsible for provision of the state match. As stated previously, the LEA or ESC responsible for the provision of the IEP related service(s) needed by the Medicaid eligible student must be enrolled as a Medicaid provider and be the billing entity, even when contracting for the service(s) with a private provider.
In the Medicaid Manual for Occupational, Physical, and Speech Therapy Services, the following sections address the enrollment and billing issues noted above:
General Information, Section 201.100, Page II-2, Group Providers of Therapy Services
General Information, Section 201.110, Pages II-2 and II-3, School districts and Education Service Cooperatives
Billing Procedures - Paper Claims, Section 311.400, Pages III-31 and III-32, Completion of HCFA - 1500 Claim Form, Item 19
Please refer to these sections of the Medicaid Manual for instructions as to the appropriate billing codes to be used to indicate that the services rendered are in fulfillment of an Individualized Education Program for a student with disabilities.
Questions regarding this or other matters pertaining to Medicaid billing should be directed to the Medicaid Office, 501-682-8292.