P.O. BOX 2120




December 20, 2002




Division Superintendents



Jo Lynne DeMary

Superintendent of Public Instruction



Medicaid Billing Opportunities


Department of Education (DOE) staff members have been working with staff from the Department of Medical Assistance Services (DMAS) to create new Medicaid billing opportunities for school divisions.


Currently, school divisions can bill for certain services provided to children eligible for special education (speech-language pathology services, occupational therapy, physical therapy, nursing, psychological services). Approximately half of Virginias school divisions are billing, receiving 100 percent of the federal reimbursement (approximately 50 percent of the billed rate). Divisions certify local funding for the state share on a quarterly basis to VDOE. Divisions may bill directly or may use a billing agent.


A number of changes will be made in the special education billing program. Some can be made immediately; others require changes in DMASs state plan and will require more time. The following changes are anticipated: obtaining parental consent when parents apply for Medicaid, increase in billing rates, and increase in the number of services that can be billed to Medicaid. DMAS is also exploring ways to minimize the administrative burden associated with obtaining physicians approval as well as prior authorization for the services. DMAS will be offering a free Medicaid billing service through Health Management Systems/University of Massachusetts Medical School (HMS/UMMS), which has significant experience in Medicaid billing in the New England states. Initial projections suggest that the special education billing in Virginia can increase from approximately $1.5 million to more than $50 million annually.


DMAS is also adding administrative claiming. This program will enable school divisions to claim federal reimbursement for administrative expenses associated with activities that support Virginias Medicaid program. These activities include, but are not limited to, case management, review of health records, immunization tracking and referral, coordination of benefits, and outreach to enroll new students. Administrative claiming expenses are calculated based on a one-week time study per quarter for all applicable staff. The billing agent (UMMS) will calculate expenses based on information provided by the division regarding salary, benefits, capital, equipment, and indirect costs. Initial projections suggest the administrative claiming in Virginia can generate at least $20 million annually in Medicaid revenue.


In the near future, superintendents will be receiving correspondence from Mr. Patrick W. Finnerty, director of the Department of Medical Assistance Services, offering further details about the changes in the special education billing and administrative claiming initiatives. That correspondence will include a School Division Participation Agreement and Amendment. The language in these agreements has been reviewed by the Office of the Attorney General to ensure compliance with the Family Education Right to Privacy Act (FERPA) and the Individuals with Disabilities Education Act (IDEA). Divisions that are currently billing Medicaid only need to submit the amendment to the School Division Participation Agreement to participate in administrative claiming. Divisions that have not already enrolled as a Medicaid provider (who are not now or have not billed for special education services) will need to complete both the School Division Participation Agreement and the amendment. VDOE encourages divisions to complete and return the agreement or amendment promptly to take full advantage of the billing opportunities.


DOE and DMAS will offer significant training opportunities to school divisions electing to participate in these programs. Please direct any questions about these Medicaid billing opportunities to Amy Edwards, medicaid specialist at VDOE ( or (804) 692-0150), Gwen Smith, school health specialist ( or 804/786-8671) or Lissa Power-deFur, director, student services ( or (804) 225-2818).