HD7 - Reimbursement of Educational Services within the Medicaid Residential Treatment Rate


Executive Summary:
Coverage of educational services delivered as part of an approved treatment plan involving residential placement under the Medicaid program could result in two outcomes to the Commonwealth’s programs for children in need of these services. First, the utilization of federal funding for educational services would serve to relieve some fiscal stress at the local level. As the Comprehensive Services Act for At-Risk Children and Youth (CSA) program is currently the only venue for state funding of educational treatment for these children, localities must provide approximately one-third of the necessary funding. With federal money utilized for these services, the amount of local funding required would be reduced.

Secondly, the inclusion of educational services as a Medicaid-covered service would allow more children in need of educational services, and residential treatment, to access these services by a determination of Medical eligibility rather than through local decision-making, the outcomes of which may vary from locality to locality. While increased access at a reduced price (due to the use of federal funding) is a benefit to the Commonwealth, the state portion of the costs of increased utilization will most likely offset any general fund savings that would otherwise be achieved through the use of federal funds for education and residential services.

These outcomes, however, also have policy challenges. The challenges are that Medicaid funding could drive placement decisions, more localities may circumvent the CSA process to avoid paying the local share, and local control over education would be diminished as the state assumes a larger role. The Secretary of Health and Human Resources and the State Executive Council will need to carefully monitor the Medicaid funding of educational services in order to reduce the unintended consequences of the change.