Winners and Losers Emerge with New Medicaid Reimbursement Schedule

PAOLA – Some winners. Some losers.

With just about any change of government policy, it’s expected there will be some of each.

Last week, the Kansas Health Policy Authority announced a Medicaid reimbursement policy change that is expected to benefit many, if not most, Kansas school districts, including U.S.D 259 in Wichita, the state’s largest.

But the small school here at Lake Mary Center, a facility that specializes in care of severely disabled children drawn from across Kansas, comes out a big loser with the new rules and now school and state officials are scrambling to figure out how to deal with that problem.

“We knew we were kind of at risk of being the exception because the overall education funding system is so complicated and more so for specialized schools like ourselves,” said Bill Craig, Lake Mary’s president.

“We’re just trying to make a plan,” said Rod Allen, superintendent of the Paola school district, which partners with the Lake Mary school and provides most of its funding. “It wasn’t until we got the email on Monday or Tuesday (last week) that we finally got word (of the changes). Up until then we hadn’t heard a lot of stuff. It’s a serious situation.”

A quandary

The Lake Mary Center school has an annual budget of about $3 million, Craig said, and about $500,000 of that will no longer be covered by Medicaid as the result of the rule changes, which were announced with little notice last week and became retroactively effective July 1.

Allen said that big a cut after two preceding years of shrinking state aid to schools has left him in a quandary.

The district laid off 30 people last year, including 15 teachers to make ends meet, he said. But the news about the Medicaid changes came after teacher contracts were already signed for the coming school year, so laying off more teachers isn’t an option. The district also has used up its local-option budget authority. Allen said he hasn’t yet figured out if or how the district can make up for the lost money.

“We’ve already made our budget decisions for everybody,” Allen said. “You try to find (places to cut) where you can but you’re not allowed to let teachers go after you’ve signed the contracts. That’s the problem. We needed this information early.”

The school at Lake Mary has about 100 students and virtually all of them have serious enough disabilities to require near-constant attention from the 12 teachers and about 30 attendants or paraprofessionals who assist them. Some of the children are medically fragile. Some require feeding tubes. Some have severe emotional or psychological problems in addition to significant physical problems.

The school is unique in Kansas and draws students from around the state, including many children who are state wards under the protection of the Kansas Department of Social and Rehabilitation Services.

Net gain overall

With the rule changes, public schools will receive increased Medicaid funding for health services they provide children enrolled in special education programs. For the first time, they also will be able to bill for social and psychological work that previously was not reimbursed by the program.

According to health policy authority officials, the changes will mean a net increase in statewide Medicaid funding for school-based, special education related health services somewhere between 5 percent and 10 percent.

But when state officials submitted their amendments to the state’s Medicaid plan to the federal Centers for Medicare and Medicaid Services in an effort to secure better reimbursement for health services related to special education, they were told that payments for attendant care no longer could be covered unless the state also was willing to cover the services in non-school settings.

Health policy authority officials said expanding attendant care coverage wasn’t possible given the state’s ongoing budget problems.

Doing so would cost the state an additional $7.5 million to $9 million a year, according to agency spokesman Peter Hancock.

“We would have to expand the program in a very costly way,” he said. “The state couldn’t afford it. This wasn’t an expansion year.”

Didn’t see it coming

So, with only a few days notice, school districts were informed that reimbursements for attendant care were ending.

“It was late notice for us, late notice for them,” Hancock said, noting that CMS told the agency about its decision late in the process of reviewing the state’s proposed plan changes, which were submitted with the goal of securing more money in order to cover the schools’ actual special education costs.

It’s uncertain still how many school districts will see net gains versus net losses after the changes, though most schools are expected to come out ahead or at least break even.

But it is already clear that no school will be as hard hit as Lake Mary’s.

Several Kansas schools or districts were receiving relatively big state payments for attendant care, but only one received more than Lake Mary Center, which is unusual precisely because it is equipped to deal with the most severely disabled students.

The Lawrence school district, which has the reputation of being one of the best in the state for students with autism, received the most Medicaid money for attendant care the past two years, a total of about $1.6 million.

Lake Mary was paid about $1.4 million for attendant care services the past two fiscal years, according to health policy authority figures.

But the Lawrence district has almost 11,000 students of whom about 14 percent are in special education programs. It is possible the district could come out ahead with the new rules because it might be able to offset the loss of attendant care payments with the new money that will be provided for social work and psychological services.

“We’re still trying to figure it out,” said Kevin Harrell, special education director for Lawrence public schools.

Meanwhile, the Lake Mary Center school has only about 100 students and its partner, the Paola school district, only has about 2,000 students enrolled, which means it is too small to offset the loss of attendant care dollars with the new money allowed for other services.

“Unique population”

SRS Secretary Don Jordan is actively seeking a solution to Lake Mary’s problem.

“Nobody does exactly what Lake Mary does,” he said. “There are others that have designation as a Psychiatric Residential Treatment Facility, but at Lake Mary they serve a pretty unique population. That’s one of the reasons we’re involved. They’re a real important provider to us.”

Jordan said he hoped to pull together people from SRS, Lake Mary, the health policy authority, the Paola school district and perhaps legislators to figure out what might be done to fix the school’s funding problem.

“At this point, Medicaid might be causing the problem,” he said, “but I don’t know that Medicaid is the solution to fixing it. I’m not proposing any solution right now, but we want to understand it and then work with other people to figure out what the right solution would be.”

Health policy authority officials are scheduled to meet Friday in Wichita with various special education directors to discuss the new rules.

Hancock said the agency plans to submit an appeal to CMS asking it to reconsider its stance on attendant care reimbursement after hearing what the special education directors have to say about the new rules.

“The decision not to reimburse for attendant care services came from CMS, not KHPA,” Hancock said. “This was a CMS decision. Our only goal through this whole process has been to get the schools more money and we’ve done that. We’ve gotten them more money.”

Medicaid reimbursements for the services before the rules changed didn’t actually cover the school districts’ actual costs, Hancock said. Now, schools will be able to submit a bill at the end of the school year detailing the discrepancy between actual costs of services and the Medicaid dollars received and the state will make up that difference.