School-Based Fee-for-Service Medicaid Reimbursements

Does KDHE have an effective system for processing and tracking school-based Medicaid FFS claim reimbursements?

Does KDHE have adequate policies and procedures that promote effective and efficient school-based Medicaid programs?

Does KDHE/KSDE have sufficient oversight processes in place to ensure IEPs are complete, and support medical necessity when services are billed to Medicaid?

Invalid NPIs used on claims; one LEA paid $596,882.86 for 242 of 316 beneficiaries (77%) with an NPI assigned to a former LEA official with no medical affiliation, resulting in noncompliance with 42 C.F.R. § 455.440 and $573,139.04 in invalid payments (7% of claims) due to NPI issues.

Missing Parent Consent for Medicaid Reimbursement; over the audit period, an average of 70% of test beneficiaries’ IEPs lacked Parent Consent; applying 70% error rate projects $32,778,551.33 invalid payments based on $46,826,501.90 paid across LEAs.

Missing or invalid Referring Provider NPIs; 7% of all LEA claims had Referring Provider NPI issues; 313 distinct Referring Provider NPIs identified, with 7 not enrolled in KMAP; payments totaling $182,596.06 paid on claims with missing NPIs.

Capitation vs FFS payments; potential savings of $46,826,501.90 over 25 months if services paid by MCOs instead of FFS and additional savings from ending FFS processing; $1,873,060.07 monthly.

Lack of routine background checks for Medicaid service providers; 72 of 231 providers (31%) lacked proof of background checks at the time of record request; only 10 of 231 files showed background checks completed after the request; 96% noncompliance with the LEA Manual requirement to search state Medicaid exclusions.

Physician orders required for therapies often missing or unsigned; 58 beneficiaries received individual therapy, but only 6 had signed orders (90% noncompliance); 57 beneficiaries received group therapy, with signed orders for only 11 and 46 files lacking orders (81% noncompliance).

Claims do not reliably identify the performing (hands-on) provider; zero claims contained an identifier for the direct-service provider; logs maintained by the performing provider are used to identify the hands-on provider, but KMMS did not capture these logs; this undermines verification of service delivery.

Under-reporting and missing claims in test beneficiaries; LEA 11 missed 10 months (40% of audit period) and LEA 13 missed 7 months (28%); combined missing 203 claims across LEAs 11 and 13; under-billing led to significant lost payments.

Variable reimbursement rates by delivery model; independent LEAs achieved an average 96% reimbursement, co-ops/interlocals averaged about 91% before co-op fees; some interlocals had as low as 77-81% before fees; after fees reductions, rates drop further (e.g., Interlocal D scenario).

Missing or inconsistent CPT codes; 0.1% of paid claims contained invalid CPTs; three CPTs (92507, 92508, 97530) accounted for 87% of total paid; unclear billing for therapy assistants (CO, CQ modifiers) across LEAs.

Overlap of services within and outside LEAs; 41% of beneficiaries had services outside LEAs on overlapping dates; some overlaps occurred but were not clearly resolved; duplication potential.

Place of service distribution shows 96% of services occurred in schools; remaining in homes or telehealth; potential duplications when billed with multiple places of service.

Move school-based Medicaid payments from the Fee-For-Service model to Managed Care Organization capitation where medically appropriate to reduce duplication and potential improper payments; consider ending KDHE’s FFS processing for these services.

Strengthen provider credentialing and background checks; require routine background checks for all Medicaid service providers, require verification against HHS/OIG Exclusion List, and ensure NPIs are valid and enrolled in KMAP; ensure non-validated NPIs are not used.

Require and document physician orders for therapy services (92507, 92508); ensure orders are on file, signed, and issued by an appropriate physician and updated within required timeframes; ensure compatibility with IEPs and CMS requirements.

Ensure Parent Consent for Medicaid Reimbursement is obtained, documented, and maintained on file; implement annual renewal and verification processes; ensure compliance with KSDE handbook and LEA Manual.

Improve NPI and claim data integrity; ensure Referring Provider NPIs are present and enrolled; capture the performing provider NPI (hands-on service), and fix discrepancies between KMMS fields (24j vs 33a).

Improve a comprehensive documentation and logs system; require logs to document date, time, provider identity, specific service, duration, progress, and be readily comparable to claims; ensure logs are maintained in KMMS or equivalent system and accessible for audit.

Address missing claim months and under-reporting; implement controls to ensure all months within the audit period have claims and that logs and claims align; rectify gaps identified in LEAs 11 and 13.

Standardize and monitor CPT usage and therapy assistant modifiers (CO, CQ) to verify supervision requirements; enhance training for LEAs on CPT usage and supervision requirements.

Align KDHE/KSDE policies with CMS guidance and update LEA Manual Appendix to remove contradictions and ensure NPI requirements are consistently applied across all services.

Improve oversight by KDHE/KSDE; implement risk-based monitoring, regular reconciliations between logs, claims, and IEPs; update and harmonize policies; provide targeted training to LEAs and providers.