May 4, 2025

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Audit finds easy change to Medicaid billing for schools could save state $22.5 million

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A recent audit of how schools are reimbursed for school-based health care, found a potential $22.5 million savings.

According to a release from Kansas Attorney General Kris Kobach, a performance audit conducted by Kansas Medicaid Inspector General Steven D. Anderson recently revealed the state of Kansas could save approximately $22.5 million each year, with a change to how schools are reimbursed through Medicaid for school-based healthcare services could save the state millions each year. 

According to the audit, having Managed Care Organizations (MCOs) reimburse schools for healthcare services rather than the state of Kansas reimbursing schools for Medicaid services would net significant taxpayer savings.

“The state of Kansas is directly reimbursing schools for healthcare services provided to Medicaid beneficiaries, when that should be the responsibility of the MCOs,” Anderson said. “Kansans expect Medicaid services to be provided in the most cost-effective way, and the report’s recommendations would be a step in that direction.”

According to the release, MCOs receive monthly payments from Medicaid for beneficiaries. However, rather than reimbursing directly, schools receive fee-for-service payments from the state to provide services to some of those beneficiaries in schools. 

“The monthly payments to MCOs could be used to pay for those services,” the release reads. “The state Medicaid program would also save money by ending the processing of fee-for-service payments by the Kansas Department of Health and Environment and contracted staff.”

The audit also found that logs containing details of services provided and claims do not match, have errors, and are sometimes not processed because of missed deadlines. Many are submitted with incomplete data.

“When logs were compared to claims, two LEAs (Local Education Agencies) did not submit 40% and 28% of their claims, respectively,” the report reads. “Missing claims and errors for one LEA resulted in a 95% loss of projected reimbursement.”

In its response the Kansas Department of Health and Environment agreed with the issues and the recommendations by the auditors, and also stated “Further research identified that school-based services has had no programmatic oversight since approximately 2017.”

KDHE did receive a grant to hire an employee to oversee the program, and one was hired in 2024.

The audit also noted that one school used an invalid National Provider Identifier (NPI) on its claims in the Referring Provider field. The NPI was issued to a former director of business with no medical affiliation and was improperly used on claims for 77% of all beneficiaries. The school was paid a total of $390,542.98 for claims that contained the invalid NPI.

Additionally, the audit revealed that school Medicaid service providers are not subject to routine background checks. Of the 231 providers audited, only 72, or 31%, had proof of completed background checks at the time of the Inspector General’s request for records.

The audit also found that training on how to submit claims is often not available.

“LEAs need training on how to complete the log associated with IEP services, how to submit Medicaid claims, and how to correct and resubmit claims that have been denied due to errors,” the report reads.

Moreover, the audit discovered that services listed on Individual Education Plans (IEPs) were not always performed and/or were not performed for the correct frequency or duration.

The audit additionally found that there are issues with conflicting requirements between KDHE and the Kansas State Department of Education.

“LEAs need to have a clear understanding of what KDHE expects from them in order to bill for Medicaid-approved services,” the report reads. “There are areas of confusion between KDHE and KSDE manuals, handbooks and terminology. For example, KSDE and the LEAs use the term ‘Medicaid Log’ but this term was not mentioned in interviews with KDHE, nor is the term used in the LEA Manual.”

 

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