Virginia Law

A. Definitions. The following words are terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"CMS" means Centers for Medicare and Medicaid Services.

"DMAS" means Department of Medical Assistance Services.

"FAMIS" means Family Access to Medical Insurance Security Plan.

"FFP" means Federal Financial Participation.

"IDEA" means Individuals with Disabilities Education Act.

"IEP" means Individual Education Plan.

"LEA" means Local Education Agency.

"MMIS" means Medicaid Management Information System.

B. Effective for services on or after July 1, 2006, the following methodology will determine the reimbursement for Local Education Agency (LEA) providers. The methodology described below applies to reimbursement for the following services delivered by LEA providers. These services are described in 12VAC30-50-135.

1. Speech therapy;

2. Audiology and hearing services;

3. Physician services for medical evaluation services;

4. Occupational therapy;

5. Physical therapy;

6. Psychiatric and psychological services;

7. Personal care services;

8. Skilled nursing services; and

9. Special transportation.

C. Medical services provided by LEA providers for special education students. The following methodology will determine the reimbursement for (LEA) providers.

1. For each of the IDEA-related school-based medical services covered under the State Plan other than specialized transportation services, the LEA provider's actual cost of providing the services shall be certified and the FFP shall be paid to LEA providers based on the methodology described in subdivisions 2 through 7 of this subsection. For the rate year ending June 30, 2007, cost will be reported on a cash basis; for all succeeding years cost will be reported on an accrual basis. All costs to be certified and used subsequently to determine reconciliation and final settlement amounts as well as interim rates are identified on the CMS-approved Medical Services Cost Report. Final payment for each school year is based on actual costs as determined by desk review and/or audit for each LEA provider.

2. Step 1: Develop the personnel cost base for medical services. Total salaries and benefits paid as well as contracted (vendor) payments shall be obtained initially from each LEA's payroll/benefits and financial system for each quarter of the fiscal year. This data shall be reported on the DMAS Medical Services Cost Report form for all direct service personnel (i.e., all personnel providing medical services covered under the State Plan). Total computable personnel costs are reduced by any reimbursement that is not from state or local funding sources. The personnel cost base does not include any amounts for staff whose compensation is 100% reimbursed by a funding source other than state or local funds. The application of Step 1 results in total adjusted salary cost.

3. Step 2: Determine medical services personnel cost using a time study. A time study that incorporates the CMS-approved time study methodology shall be used to determine the percentage of time medical service personnel spend on IEP-related medical services and general and administrative (G&A) time. This time study shall assure that there shall be no duplicate claiming relative to claiming for administrative costs and no more than 100% of practitioner time is reported. G&A time shall be allocated to medical services based on the percentage of time spent on medical services. To reallocate G&A time to medical services, the percentage of time spent on medical services shall be divided by 100% minus the percentage of time spent on G&A. This shall result in a percentage that represents the medical services with appropriate allocation of G&A. This percentage, which shall be determined quarterly, shall be multiplied by the personnel cost base as determined in Step 1 to allocate personnel cost to medical services. The product represents medical services personnel cost for all payers and not just Medicaid. A sufficient number of medical service personnel shall be sampled to ensure time study results that will have a confidence level of at least 95% with a precision of plus or minus 5.0% overall. The time study is CMS-approved and may not be modified unless prior approval is received from CMS. Quarterly personnel costs are summed for the fiscal year and reported on the DMAS Medical Services Cost Report.

For claims submitted after the effective date of July 1, 2006, and prior to the implementation of the CMS-approved time study only, cost will be identified in accordance with a methodology developed by the department and approved by CMS that utilizes the quarterly results of the prospectively approved time study and applies them to the prior period claims.

4. Step 3: Develop medical services nonpersonnel costs. Nonpersonnel costs used in the delivery of medical services, detailed as line items on the CMS-approved cost report, shall be obtained from each LEA's financial system. Capital costs must be equal to or exceed $5,000 and have a useful life greater than two years. The straight line method of depreciation is used for capital costs. Total computable nonpersonnel costs shall be reduced by any reimbursement that is not from state or local funding sources.

5. Step 4: Determine indirect costs. Indirect costs shall be determined by multiplying each LEA's unrestricted indirect rate assigned by the cognizant agency (the Department of Education) by total direct costs as determined under Steps 2 and 3. No additional indirect costs shall be recognized outside of the indirect costs determined by Step 4.

6. Step 5: Total medical services costs. Total medical services costs shall be determined by adding costs from Steps 2, 3 and 4.

7. Step 6: Allocate total medical services costs to Medicaid, Medicaid expansion and FAMIS. To determine the Medicaid, Medicaid expansion, and FAMIS medical services costs to be certified, total medical services costs shall be multiplied by the ratios of Medicaid, Medicaid expansion and FAMIS recipients with an IEP to all students with an IEP.

D. Special transportation services provided by LEA providers for special education students.

1. The participating LEA's actual cost of providing special transportation services shall be claimed for Medicaid FFP based on the methodology described in subdivisions 2 through 6 of this subsection. Special transportation refers to transportation on buses modified and dedicated for special education. All costs to be certified and used subsequently to determine the reconciliation and final settlement amounts as well as interim rates shall be identified on the CMS-approved Special Transportation Cost Report. Final payment for each school year shall be based on actual costs as determined by desk review or audit for each LEA provider.

2. Step 1: Develop special transportation nonpersonnel costs. The costs for special transportation includes fuel, repairs and maintenance, rentals, contract vehicle use costs, and other costs as approved by CMS and shall be obtained from the LEA's general ledger and reported on the Special Transportation Cost Report form. Nonpersonnel costs shall be reduced by any reimbursement that is not from state or local funding sources. All costs shall be reported on an accrual basis.

3. Step 2: Develop special transportation personnel costs. Total annual salaries and benefits paid as well as contract costs (vendor payments) for special transportation services shall be obtained from each LEA's payroll/benefits and financial systems. This data shall be reported on the Special Transportation Cost Report form for all direct service personnel. The included personnel are specified on the approved CMS cost report.

To the extent that any allowed cost for transportation is reported as shared between regular and specialized transportation, there must be an allocation of cost between the programs. For example, a mechanic may work on buses for both programs but his salary may not be reported as such in the accounting records. In these instances, the provider should allocate cost using the ratio of specialized buses/vehicles owned by the provider to total regular transportation buses/vehicles owned by the provider.

4. Step 3: Determine indirect costs. Indirect cost shall be determined by multiplying each LEA's unrestricted indirect rate assigned by the cognizant agency (the Department of Education) by total special transportation costs as determined under Steps 1 and 2. No additional indirect costs shall be recognized outside of the indirect costs determined by Step 3.

5. Step 4: Total special transportation costs. Total special transportation services costs shall be determined by adding costs from Steps 1, 2 and 3.

6. Step 5: Allocate total special transportation services cost to Medicaid, Medicaid expansion, and FAMIS. Special transportation drivers or other school personnel shall maintain logs of all students transported on each one-way trip. These logs shall be used to calculate reimbursable percentages for Medicaid, Medicaid expansion and FAMIS. The denominator shall be the total annual one-way trips on special buses. The numerator shall be Medicaid, Medicaid expansion or FAMIS special transportation one-way trips. To qualify as a special transportation trip, the student must be eligible for Medicaid, Medicaid expansion or FAMIS; transportation must be included in the IEP; and the student must have received a covered medical service on the day of the special transportation. To allocate special transportation costs to Medicaid, Medicaid expansion and FAMIS, total special transportation cost as determined under Step 4 shall be multiplied by the reimbursable percentages described above.

E. Reconciliation of the total computable interim payment for medical costs to total incurred cost.

1. Each LEA provider will complete the Medical Services and Special Transportation Cost reports and submit the cost reports no later than five months after the end of the LEA's fiscal year. All cost reports shall be reviewed and reconciled to final costs within 180 days (11 months from the end of the rate year) of the receipt of a completed cost report . DMAS may conduct additional desk or field audits up to two years after the fiscal year-end based on risk assessment developed by DMAS. LEA providers may appeal audit findings in accordance with DMAS appeal procedures.

2. DMAS shall issue a settlement notice at the time of the reconciliation that denotes the amount due to or from the LEA provider. This reconciliation shall be inclusive of both medical services and special transportation services provided by the LEA provider. The state will settle with each provider, using one of the methods described below for either under- or overpayment associated with school-based services. Settlement will be limited to recovery or payment of only the federal financial participation associated with total computable cost.

a. If the interim payments exceed the FFP of the certified costs of an LEA's Medicaid, Medicaid expansion or FAMIS services, DMAS shall recoup the overpayment in one of the following methods:

(1) Offset all future claim payments from the affected LEA until the amount of the overpayment is recovered;

(2) Recoup an agreed upon percentage from future claims payments to the LEA to ensure recovery of the overpayment within one year; or

(3) Recoup an agreed upon dollar amount from future claims payments to the LEA to ensure recovery of the overpayment within one year.

b. If the FFP of the certified costs exceed interim payments, DMAS shall pay the difference to the LEA provider.

F. Interim rates. At the end of each settlement, interim rates for each LEA provider shall be determined by dividing total medical services cost and special transportation services cost by an estimate of the number of units of service. For the initial interim rates or for new providers, interim rates shall be based on pro forma cost data. Interim rates shall be provisional in nature pending completion of the cost report.

G. Billing. Each LEA provider shall submit claims in accordance with the school division manual and shall be paid an interim rate for approved claims.

H. State monitoring. If DMAS becomes aware of potential instances of fraud, misuse or abuse of services and funds, it shall perform timely audits and investigations to identify and take the necessary actions to remedy and resolve the problems.

I. Other services. EPSDT well child screenings provided to Medicaid, Medicaid expansion, and FAMIS recipients and described in 12VAC30-50-130 shall be reimbursed according to the agency fee schedule for all providers. These costs shall not be reimbursed through the cost report.