Schools could have an easier time paying for special education services under a proposed new rule.

Currently, schools can bill Medicaid for health-related services like speech, occupational and physical therapy that are provided through individualized education programs to students with disabilities who are enrolled in the government health care program. But to do so, educators must first get consent from the child’s parents.

Under a proposal this month from the U.S. Department of Education, schools would no longer need to get clearance from families to seek payment from Medicaid.

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The change would “help cut unnecessary red tape that schools and districts face in billing Medicaid and meet their obligations to ensure students with disabilities receive a free, appropriate public education in accordance with their IEP,” the Education Department said.

Of the roughly 500,000 students who are newly eligible each year for services under the Individuals with Disabilities Education Act, federal education officials said that nearly 300,000 also qualify for Medicaid, so the financial impact of the regulation could be substantial.

The proposed rule would establish “a uniform process applicable to all Medicaid enrolled children, regardless of disability,” the Education Department said. It would not alter the requirement that special education services be provided to children at no cost to families and federal officials noted that anything billed to Medicaid by a school for services rendered under a child’s IEP cannot reduce other Medicaid-reimbursable services.

School administrators have long sought to do away with the consent requirement for billing Medicaid for IDEA services. A report earlier this year from AASA, The School Superintendents Association, as well as the National Alliance for Medicaid in Education and the Association of Educational Service Agencies found that over 70% of school leaders reported that parents are skittish about signing any sort of consent or release related to Medicaid billing. As a result, they indicated that a substantial number of forms remain incomplete leaving schools unable to bill Medicaid for many services that should qualify.

In a recent blog post, Sasha Pudelski, director of advocacy at AASA, called the move by the Education Department “a huge step forward.”

Alongside the proposed rule, the Centers for Medicare & Medicaid Services released a guide for schools to help them deliver and seek payment for health care services provided to students covered by Medicaid.

“These new resources and proposed rules will help schools live up to the promise that all students, including those with disabilities, receive a free, appropriate public education,” said Secretary of Education Miguel Cardona. “Ultimately, more children and youth will gain access to the physical and mental health services they need to succeed in school and in life as a result of the actions the Biden-Harris administration is taking.”

The proposed rule is up for public comment through August 1.

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