“Free-Care” Rule Clarification Would Improve Health Services for Low-Income Children

Schools serve as a critical place for millions of low-income children in the United States to receive health services. Aside from convenience and efficiency factors, many students would not have access to healthcare if not for school-based health services. Among the services schools often provide are vaccinations, vision and hearing screenings, asthma management, nutrition guidance and counseling. These services are vital for keeping kids healthy and avoiding future medical costs that result from delays in getting needed care.

For low-income students enrolled in Medicaid, schools often serve as a primary access point for essential care. While schools providing care should be eligible for reimbursement from Medicaid (for services provided to Medicaid-eligible students), a technical assistance guidance issued by the Centers for Medicare and Medicaid Services (CMS) in 1997 has blocked schools from being able to bill Medicaid, cutting off a major source of funding and restricting care available to eligible children.  At issue, the 1997 CMS guidance included the so-called “free care rule,” barring schools from getting reimbursed for Medicaid services unless the school also billed other private insurance providers for services provided to non-Medicaid students. The free-care rule means that schools would have to track down each student’s individual insurance provider and send individual bills to each of them in order to obtain Medicaid reimbursements for Medicaid-enrolled students.

Schools simply do not have the resources to implement the complicated billing arrangement system envisioned by the guidance and this hurdle has become a deterrent for schools to provide these services. Importantly, through legal challenges to the free-care rule, it has been determined that schools are not required by law to meet such a burdensome requirement in order to bill Medicaid.  When the free-care rule was challenged in 2005, the Health and Human Services (HHS) Appeals Board ruled that CMS did not have the legal authority to deny services through the 1997 technical assistance guidance.  The Appeals Board articulated that there are no express conditions on the availability of Medicaid funds in the law. However, despite the favorable ruling (and subsequent similar rulings in other jurisdictions), the “free care” rule continues to be applied and schools are still unable to receive Medicaid payments for services provided to millions of low-income children.

The Childhood Asthma Leadership Coalition (CALC) has been working on this issue and recently sent a letter to CMS stressing the importance of clarifying the “free care” rule in the hopes that more schools will be able to receive Medicaid reimbursements allowing more health services to be available for our most vulnerable students. CALC also conducted a webinar discussing the reimbursement opportunities and obstacles in the school setting. We will continue to urge the Administration to take action as soon as possible to clarify the regulations so that children throughout the United States will be able to gain access to important health services in their schools.


See article at Childhood Asthma Leadership Coalition…