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Summary

As a condition of accepting funds under IDEA, public schools must provide special education and related services necessary for children with disabilities to benefit from a public education. Generally, states can finance only a portion of these costs with federal IDEA funds. Medicaid, the federal-state program that finances medical and health services for the poor, can cover IDEA required health-related services for enrolled children as well as related administrative activities (e.g., outreach for Medicaid enrollment purposes, medical care coordination/monitoring). However, the link between IDEA and Medicaid has not been seamless. Despite written federal guidance, schools have a difficult time meeting the myriad complex reimbursement rules applicable to all Medicaid participating providers. According to federal investigations and congressional hearings, Medicaid payments to schools have sometimes been improper. The President's FY2007 budget proposal would prohibit federal Medicaid reimbursement for IDEA-related school-based administration and transportation costs. This report will be updated. Under IDEA, public schools are required to provide children with disabilities with a free appropriate public education (FAPE), including special education and related services according to each child's individualized education plan (IEP) or individualized family service plan (IFSP). Related services are those services that enable a child to benefit from special education. States receive some federal aid under IDEA, but are otherwise responsible for the expense of special education and related services. One approach Congress has taken to ease the burden on states and school districts of fulfilling these IDEA requirements is to allow the use of funds available under Medicaid to finance health services delivered to the subset of special education students who are enrolled in the Medicaid program. Medicaid is a federal-state entitlement program providing a broad range of medical and health-related services to certain low-income individuals. Medicaid benefits commonly provided in school-based settings include, for example, physical, occupational and speech therapies, as well as diagnostic, preventive and rehabilitation services.

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