By Jessie Mandle, National Program Director of the Healthy Schools Campaign

Since 2014, school districts have been allowed to bill Medicaid for all health services provided to all Medicaid-enrolled students, instead of being limited to reimbursement for services included in a student’s Individualized Education Plan (IEP). However, states have been slow to leverage this opportunity because the original restrictions have been embedded in state policy.

Healthy Schools Campaign (HSC) has been tracking the number of states that have taken action to expand school Medicaid, and 25 states now are making it possible for school districts to receive federal funding for health services provided outside the IEP. Our new report summarizes each state’s actions on expansion and provides related state documents and other resources.

Why is this a big deal? Because it means more schools can receive additional, sustainable Medicaid funds to support physical, mental and behavioral health services for more students. Additionally, funds can be used to reinvest in school health services — helping to cover the salary of a newly added counselor, for example — thereby benefitting all students.

HSC’s companion brief answers key questions about the new federal school Medicaid guidance that CMS released in 2023, which aims to make it easier for states and school districts to expand school Medicaid. The brief helps state Medicaid and education agencies chart a path for Medicaid expansion with input from school districts, health providers and other stakeholders.

Comprehensive vs. Limited Expansion

There is significant variation in how the 25 states HSC identified have expanded their school Medicaid program. Some have adopted comprehensive expansion, meaning they have altered their school Medicaid plan to cover all medically-necessary services provided to all Medicaid-enrolled students. HSC considers this expansion the “gold standard” because it enables schools to maximize funding. Other states have chosen to expand coverage outside of an IEP only for certain groups of students or for specific services (see table below).

Besides suggesting that all states implement policies allowing for maximum expansion, we also recommend additional steps states can take to strengthen their school Medicaid program, including expanding the types of providers and services eligible for reimbursement and implementing new billing flexibilities to reduce the administrative burden. Illinois is an example of a state that used the expansion opportunity to add additional types of services and health providers that can be billed to Medicaid. When submitting a state plan amendment (SPA) to allow for comprehensive expansion, Illinois added licensed clinical professional counselors, licensed marriage and family therapists and school psychologists to its list of Medicaid-eligible providers. The SPA received federal approval in 2023.

School Medicaid Expansions by State

HSC and the Center for Medicare and Medicaid Services (CMS) count states that have expanded their school Medicaid program differently. CMS characterizes a state as having expanded its school Medicaid program if the state submitted a SPA to CMS for approval to cover services outside of an IEP. HSC’s definition includes both states that formally amended their state Medicaid plan and those that changed state policy through legislative or administrative action. If a state has opted to reimburse a school district for delivering health services outside an IEP, that state is counted as having expanded school Medicaid services.

Below are the 25 states that meet HSC’s criteria (see table below).

*CMS does not identify these states as having expanded their school Medicaid program.

Over the past several years, especially as state and federal policymakers have looked for ways to address and support student mental health, more states have shown interest in increasing Medicaid reimbursement, as well as broadening the types of services and providers that are Medicaid-eligible. As states continue to make changes to their school Medicaid programs, these resources can provide insight into how states can best leverage federal Medicaid policy and receive reimbursement for services.