In Decision No.1924, dated June, 14, 2004, the U.S. Department of Health and Human Services (DHHS) Departmental Appeals Board (DAB) ruled that the “free care principle”, as that term has been defined and applied to school districts by the Centers for Medicare and Medicaid Services (CMS) is not valid and that CMS cannot enforce the principle against school districts. DAB decisions are binding on CMS until appealed to and overturned by the DAB or a federal court. In response to CMS's request for reconsideration, the DAB denied the request and affirmed Decision 1924.
The DAB ruling means that that reimbursement is available to school districts for services provided to Medicaid-eligible students in accordance with the Early and Periodic Screening, Diagnostic, and Treatment Services Act (EPSDT). EPSDT services include:
- Health screenings and evaluations
- Diagnostic services
- Medically necessary treatment services
Physician referrals are not required for EPSDT screenings/evaluations and diagnostic services. However, a physician referral and a determination of medical necessity are required for treatment of conditions identified through EPSDT screening/diagnostic services. Prescriptions and referrals may be provided by a physician or other licensed practioner of the healing arts within the practitioner's scope of practice under state law.
The DAB decision may also have a positive financial impact on administrative claiming to the extent that reimbursement has not been allowed for Medicaid administrative activities related to EPSDT services. Providing Medicaid coverage for students without IEP/IFSP will require an amendment to the state plan for Medicaid.
Prior to initiating any changes in Medicaid billing, school districts should coordinate with their respective state Medicaid agencies to verify: (1) The process and timeline for implementation; (2) whether FFS rates will need adjustment; and (3) the opportunity for retro-active billing. School districts must keep in mind that, in the absence of an IEP, therapeutic services billed to Medicaid must be supported by some other documentation of medical necessity. The state may allow the individualized service plan to determine the medical necessity of services provided to students covered by Section 504, however, this should be verified with the state.
To review the DAB decisions, please use the links below.
2009_7_DAB 1924 Decision.pdf (67.08 kb)
2009_7_DAB 1924 Reconsideration Ruling.pdf (457.48 kb)