Think fast: What the third largest stream of federal funding flowing into public schools? Since this is Say Ahhh!, you’re probably guessing Medicaid, and you’d be right.

School districts across the country receive an estimated $4.5 billion in federal Medicaid dollars every year. That’s less than 1 percent of federal Medicaid spending, but in terms of federal dollars for schools, only Title I funding for schools with concentrated poverty and IDEA money for students with disabilities provide more.

Much of the Medicaid funding is also for students with disabilities, but regulatory changes are opening up opportunities to seek reimbursement for school nurses, behavioral health counselors and more services for eligible students.

A recent webinar by the Healthy Schools Campaign provided an update on the progress among states seeking to expand services under changes reversing what’s known as the “free care rule.” While federal law once blocked school districts from receiving Medicaid dollars for services offered for free to all students, a 2014 policy change has allowed for broader use.

Two states – Missouri and South Carolina – have expanded use of Medicaid without needing an amendment to their state Medicaid plans or legislation. Five states – Florida, Louisiana, Massachusetts, Michigan, and North Carolina – have received approval for state plan amendments to expand their school health billing options. Four more – California, Georgia, Kentucky and Nevada – have applications for amendments pending before the federal Centers for Medicare and Medicaid Services. And two others –Colorado and Minnesota – are developing amendments. Three states – California, New Hampshire, and Utah – have made necessary legislative changes. Florida and Massachusetts have pending legislation.

The webinar also shed light on who is using this mechanism to pay for student health services.

Slightly more than half of all public-school districts received Medicaid funding, but the distribution is a bit uneven, according to data presented by the National Association of School Nurses.

• Urban school districts are far more likely to seek Medicaid reimbursement than their rural counterparts. About 53 percent of urban districts tap Medicaid funds compared to 32 percent of rural districts.
• Districts in the South are more likely to seek reimbursement (60 percent), than those in the Northeast (39 percent). In the Midwest, 43 percent of schools seek reimbursement, and in the West it’s 55 percent.

Medicaid is a key tool for school districts seeking to provide the health services their students need to succeed, especially since about a third of school-age children receive coverage through Medicaid and CHIP. Reimbursement can be complicated, meaning some smaller districts struggle to use this tool. But the work of the Healthy School Campaign and other partners can help ensure more schools and students receive the support they need.