School-Based Health Cost Reporting and Rate Setting

The Centers for Medicare and Medicaid Services (CMS) has begun implementing significant changes to how Medicaid agencies reimburse school health services that are performed in adherence with the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program.

Typically, school districts seek reimbursement for certain school health services such as speech therapy, physical therapy, and occupational therapy, for Medicaid-eligible children under a Fee for Service (FFS) billing model.  Historically, State Medicaid agencies have had considerable flexibility in establishing payment rates for covered health services provided by school districts.  However, CMS recently required a number of states to implement drastic changes to existing reimbursement methodologies in order to implement district-specific and service-specific cost-based reimbursement rates.   These requirements are commonly foreign to school districts, as very few understand the intricacies of Medicaid cost reporting requirements. In addition, these changes are consistent with the recent final rule, published by CMS in May, 2007, that will limit Medicaid reimbursement to public providers to cost. 

The inevitable CMS requirements changes will have a significant impact on school districts and their reimbursement levels.  School districts will be required to file Medicaid cost reports that will serve as a tool to reconcile Medicaid FFS interim payments with the cost of providing these services. 

"A significant risk exists for these states and school districts if rates are not set appropriately.  If interim rates are set above costs, then the state and the school districts will be liable for paying back the federal share of the Medicaid payment.  States and the school districts they represent must ensure that they establish a process for rate setting which improves cash flow, compliance, and revenue generation for the school districts."

 

PCG Expertise

PCG is one of the few firms in the country to have successfully assisted state Medicaid agencies and school districts with implementing new CMS processes.

PCG has an in-depth understanding of OMB Circular A-87, which provides guidance on the permissibility of costs, and has assisted state Medicaid agencies to develop cost reporting forms that successfully capture all of the costs associated with providing health services in a school setting.

Rate development, in turn, must account for differences in volume, area wages, cost ceilings, and outliers.  PCG has developed a proven process which allows providers to maximize cash flows on and interim basis while limiting the districts’ liability at the end of the cost settlement process. 

PCG has been a critical resource in implementing statistical allocation methodologies to apportion costs reasonably and accurately so that school district revenue levels do not suffer.  Call on PCG for unmatched school-based health cost reporting and rate setting services, including:

• Completion of Medicaid cost reporting forms;
• Development of statistical allocation methodologies that optimize the apportioning of costs;
• Implementation and administration of CMS approved Random Moment Time Studies (RMTS);
• Development of interim rates which account for volume, area wages, cost ceilings, and outliers;
• Support throughout Medicaid audits, plus ongoing cost reporting consulting services.

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