Modernizing School-Based Medicaid for State Education and Medicaid, and Local Education Agencies

Recent federal guidance and legislative changes have created a pivotal moment for states to modernize their school-based Medicaid programs. The August 2022 CMS informational bulletin and the Bipartisan Safer Communities Act encouraged broader access to health services for all students, not just those with Individualized Education Plans (IEPs). However, the July 2025 federal budget reconciliation bill introduced over $1 trillion in Medicaid cuts, adding new challenges for states and local education agencies (LEAs). These include work requirements, frequent eligibility redeterminations, and caps on provider reimbursements. These changes make stakeholder coordination and training more critical than ever.

Key Takeaways

• Recent federal guidance and legislative changes present a crucial opportunity for states to modernize school-based Medicaid programs.
• Effective modernization requires engaging stakeholders, such as LEAs, SEAs, Medicaid agencies, and service providers, to align goals, maintain compliance, and achieve impact.
• Schools and agencies should proactively adapt to new federal rules, strengthen documentation procedures, and advocate for state-level support to address these changes.

Best Practices to Implement when Modernizing School-Based Medicaid

Engaging stakeholders and training providers is the cornerstone of school-based Medicaid success. As states modernize their school-based Medicaid programs, two foundational elements determine the success of implementation: stakeholder engagement and comprehensive LEA and service provider training. These are not optional components; they are strategic imperatives that maintain compliance, maximize reimbursement, and improve student health outcomes.

Why Stakeholder Engagement Matters

School-based Medicaid programs operate at the intersection of education, healthcare, and public policy. This complexity demands collaboration across diverse stakeholder groups, including:

• Local Education Agencies (LEAs)
• State Education Agencies (SEAs)
• Medicaid agencies
• Managed Care Plans (MCPs)
• Families and caregivers
• Service providers (nurses, therapists, behavioral health professionals)

Engaging these groups early and consistently helps build a shared understanding, align goals, and verify that implementation reflects the realities of service delivery in schools. CMS recommends forming advisory councils and establishing interagency agreements to formalize roles and responsibilities. This model of engagement helps create policy changes rooted in information by frontline experience and administrative feasibility.

Stakeholder engagement should be a collaborative approach, as updating a state Medicaid plan is a complex process. It requires coordination across multiple agencies and stakeholder groups, including:

• Defining Stakeholders: LEAs, SEAs, Medicaid agencies, managed care plans, families, and service providers.
• Establishing Advisory Councils: Involving special education directors, business managers, and provider representatives.
• Setting Clear Goals: Improving access, reducing administrative burden, and enhancing service quality.
• Creating Feedback Loops: Using surveys, listening sessions, and collaborative planning meetings to refine implementation.
• Aligning with Federal Guidance: Leveraging CMS recommendations for interagency collaboration and technical assistance.

How Training Builds Capacity for Compliance and Impact

Even the most well-designed Medicaid plan will falter without trained providers who understand how to document, bill, and coordinate care effectively. CMS mandates several layers of training; each tailored to specific roles. Recommended training includes:

• Random Moment Time Study (RMTS): Verifies accurate reporting of Medicaid-eligible activities. Staff must understand activity codes, response protocols, and documentation standards.
• Administrative Claiming: Covers allowable activities, time study implementation, and claiming mechanisms.
• Billing and Documentation: Focuses on service-level documentation, CPT and ICD-10 coding, and audit readiness.
• Cost Reporting: Equips LEA administrators with tools to reconcile costs and submit accurate reports.
• Specialized Program Training: Offers transportation claims and other specialized reimbursement.

Training must be ongoing, responsive to feedback, and aligned with CMS and FERPA/IDEA requirements. Training plans should be included in the Time Study Implementation Plan when submitted to CMS for approval.

Feedback Loops and Continuous Improvement

Stakeholder engagement does not end with initial planning. States should establish feedback surveys, listening sessions, and advisory meetings to evaluate the effectiveness of training and adjust protocols accordingly. This iterative approach helps training remain relevant and keeps stakeholders invested in the program’s success.

Policy Implications and Strategic Response

Expanding school-based Medicaid services is a transformative opportunity. However, it requires more than a policy change; it demands a culture of collaboration and competence. By prioritizing stakeholder engagement and provider training, states can build Medicaid programs that are compliant, sustainable, and impactful for students.

Preparing for the Impact of Medicaid Cuts

To navigate these changes, school systems and Medicaid agencies should take proactive steps to protect their Medicaid programs and the continuity of care for students:

• Review Medicaid billing practices to determine if they comply with new federal rules.
• Strengthen documentation procedures and audit readiness.
• Invest in training that helps staff understand new eligibility and reporting requirements.
• Advocate for state-level support to offset federal reductions.
• Collaborate with health departments to support students who may lose coverage.

The recent federal budget bill has reshaped Medicaid policy in ways that directly affect schools. New work requirements and eligibility redeterminations will likely reduce the number of students covered. Caps on provider reimbursements and stricter documentation rules mean schools must be more precise in how they bill and report services.

Transitioning Your School-Based Medicaid

Without proactive training and interagency coordination, LEAs risk losing access to vital funding streams. These changes also increase the administrative load on school staff, making ongoing training and support essential. To mitigate potential pitfalls, EisnerAmper’s team can help you navigate this complex process. With ample resources and experience in Medicaid and Medicare, we can equip you with the tools to modernize your school-based Medicaid systems efficiently.

Contact us below to start your journey toward modernization and protect your student health funding.