There should be a law against this…oh wait there is…well there are several. But just who is going to investigate and prosecute it?

The Health and Human Services Agency or the DoJ…not so much.

How Schools Use Medicaid Money to Pay for Truancy Officers, Deans and Healthy-Eating Magnets

At a school board meeting in Henrico County, Va., two months ago, a panel of school district officials and board members had been left speechless.

School district officials were in the midst of crafting the district’s budget for 2016, and the five-member board had just heard a presentation from Assistant Superintendent for Finance Terry Stone, who outlined a $1.1 million plan to fund more than a dozen positions at various schools.

The proposal shocked the board members, who expressed their gratitude toward Stone and her team for crafting the plan.

“That’s incredible,” board member Lisa Marshall said. “Thank you. Did you pull that one out of your hat?”

“I find that remarkable and exciting,” John Montgomery Jr., the board’s chair, said.

The additional $1.1 million came from coffers unknown to the school board, but tapped by school districts across Virginia and the country: Medicaid reimbursements.

Stone proposed using the money to hire three psychologists, three social workers, five part-time truancy workers, five part-time deans of students and reimbursements for mileage.

“To the extent that they’re used for [the Medicaid] population, it allows you to bill for additional services and increase your revenue,” Stone said at the February board meeting.

Schools provide many health and social services to students, including those who are Medicaid-eligible. Some districts shoulder the costs of these services, but can actually use Medicaid funding to pay for these services and request reimbursements.

Henrico County, located in southeastern Virginia, first began accepting Medicaid reimbursements in fiscal year 2012. That year, the district received roughly $98,000 in reimbursements. This year, officials estimate reimbursements from the federal program will total more than $1.1 million.

Guidelines for Funding

Medicaid is jointly funded by the federal and state governments, but states are in charge of administering the program. States adhere to Medicaid plans—an agreement between the state and federal government.

Schools can obtain Medicaid reimbursements through three different types of claiming, the most popular being administrative claiming. The administrative claiming program allows states to submit reimbursement claims for administrative activities that “directly support the Medicaid program.”

In order for activities to be reimbursable, they must be “found necessary by the secretary for the proper and efficient administration” of a state Medicaid plan.

Dennis Smith, former director of the Center for Medicaid and State Operations at the Centers for Medicare and Medicaid Services during President George W. Bush’s administration, told The Daily Signal that states are supposed to provide guidance to schools as to how they can use Medicaid reimbursements.

In Colorado, for example, schools must submit a plan for how they want to use the reimbursement funds. That blueprint must then be approved by the state.

However, Smith said it’s unknown whether they’re requiring school districts to adhere to guidelines governing how reimbursements are used.

John Hill, executive director of the National Alliance for Medicaid in Education, said schools are given a good deal of flexibility in how they use Medicaid reimbursements.

“The bottom line is if they wanted to put new bleachers at the football stadium, they can do that. I wouldn’t like to see that happen, but there’s nothing that could prevent it from happening,” said John Hill.

“They can be used for whatever they want to use it for,” Hill told The Daily Signal. “The bottom line is if they wanted to put new bleachers at the football stadium, they can do that. I wouldn’t like to see that happen, but there’s nothing that could prevent it from happening.”

In Henrico County, Stone told school board members that legally, there is nothing binding the funds to a specific purpose. However, the district’s school board agreed the dollars should be used for health and social services.

Smith contends that in specific instances, use of Medicaid reimbursements can be beneficial to students and within the spectrum of what Medicaid should be used for. For example, a school may be a good place for a student with developmental disabilities to receive physical therapy. Smith said it would be reasonable for a large district like Henrico to use reimbursements to hire a physical therapist.

However, administrative claiming opens the door for more abuses of Medicaid dollars. Smith said it would be questionable for a school to use reimbursements to hire deans and truancy officers.

“Medicaid should be paying for treatments and therapies,” he said. “There are bright lines that should be drawn for these things—what clearly Medicaid should and shouldn’t be paying for.”

CMS did not return The Daily Signal’s request for comment.

Controls Put in Place

Despite a claiming guide released in 2003 and guidance provided by states, Smith noted that abuse of Medicaid reimbursements is often found through independent audits conducted by the Centers for Medicare and Medicaid Services and state agencies.

As a result of such audits, school districts have been forced to return money.

In November 2013, an audit conducted by CMS of California’s administrative claiming program examined three educational entities.

The audit found that two of those three—Turlock Unified School District and Turlare County Office of Education—received improper reimbursements from 2010 to 2011.

In one instance, at Turlock Unified School District, two preschool teachers billed Medicaid and indicated that they spent every hour of their workday conducting Medicaid outreach. However, the government found they spent 50 percent of their time on school-related activities and the remaining time on Medicaid administrative activities.

The district alone had filed claims totaling $3.4 million.

According to EdSource, a website that tracks education in California, reimbursements also served to fill budget shortfalls.

Following the audit, CMS requested the state return more than $4 million in “unsupported school-based administrative costs.”

Similarly, a 2000 report from the Government Accountability Office found that “poor controls over what constitutes an allowable administrative activity cost claim have resulted in improper Medicaid reimbursements.”

In Colorado, some districts are using the reimbursements to fund wellness efforts.

Adams 12 Five Star, which serves students in the northeastern part of the state, received $1.2 million in reimbursements in 2013. The money paid for things like suicide prevention training, nursing hours and outreach to students who were uninsured.

Academy District 20, which serves Colorado Springs, used the Medicaid dollars to pay for magnets stamped with healthy snack suggestions.

“It’s been a very consistent and growing source of revenue for districts,” Bridget Beatty, coordinator for health strategies for Denver Public Schools, told Chalkbeat Colorado in 2013. “It is one of the only sources that has been increasing in the last few years.”

Hill of the National Alliance for Medicaid in Education said schools filing claims for Medicaid reimbursements “ebbs and flows” depending on a variety of different factors. However, he noted that the number of schools requesting the funds has held steady over the last four to five years.

When districts find themselves strapped for cash, Hill said, they begin exploring Medicaid reimbursements more deeply.

To rein in Medicaid reimbursements for things outside the program’s realm, Smith, the former CMS administrator, said the lines of what is and what isn’t Medicaid’s responsibility need to be brightened.

“It’s not Medicaid’s job to fund the schools,” he said.