Requires the DOE to establish and implement a federal revenue maximization program for all medicaid-eligible claims for school health services.

A BILL FOR AN ACT

SECTION 1. The purpose of this Act called the "Fiscal Responsibility for Equity in Educational Access Act of 2005" is to require the department of education to establish and implement a federal revenue maximization program for all medicaid-eligible health services that the Department of Education provides to Hawaii's school-age children.

The department of education provides important health services to Hawaii's school-age children including such services as:

The federal government provides funding for such services under the medicaid program authorized by Title XIX of the Social Security Act, and strongly encourages states to seek appropriate medicaid reimbursement for eligible services provided. The federal Centers for Medicare and Medicaid Services has even provided states with a blueprint which specifically outlines the processes for claiming federal medicaid reimbursements in their publication, "Medicaid and School Health: A Technical Assistance Guide."

Currently, the department of education does not submit any claims for federal reimbursement for medicaid-eligible services, a large portion of which are provided for children covered by the consent decree in Felix v. Cayetano. The result is that the taxpayers of Hawaii are bearing a heavy and unnecessary financial burden that strains the State's ability to fund a quality public school system for our children.

A proposal for the development and maintenance of a federal revenue maximization system submitted by the University of Massachusetts to the department of education in September 2002 included projections for federal revenue maximization for both the department of education's administrative costs and medicaid-eligible school health services. The University of Massachusetts proposal to the department of education was for a contingency-fee contract, with no up-front cost to the State. The total federal reimbursement as projected in the University of Massachusetts proposal was, conservatively, $10,500,000 for every federal fiscal year going forward, plus retroactive federal reimbursement for eight preceding quarters totaling an additional $21,000,000.

The University of Massachusetts proposal's projection for administrative costs was $7,200,000 per year in federal dollars that the department of education is not currently claiming. The Centers for Medicare and Medicaid Services subsequently issued guidance related to administrative claiming that would reduce the University of Massachusetts revenue projection by 20-25 per cent. Accordingly, in October 2004, the University of Massachusetts revised its projection to conservatively project that there is still available to the department of education, as much as $5,400,000 per year in federal dollars for their administrative costs ($7,200,000 minus 25 per cent or $1,800,000 equals $5,400,000).

The University of Massachusetts proposal in September 2002 also included two federal reimbursement projections for medicaid-eligible school health services. The first projection of $6,370,230 assumed that 100 per cent of backup documentation was available to support claiming requirements. The second projection of $5,089,915 assumed 80 per cent documentation. According to the University of Massachusetts proposal, during discussions with the department of education, the University of Massachusetts understood that there were difficulties in capturing the necessary documentation, which is why two projections were provided. Even using the conservative projection, there is still available to the department of education, as much as $5,100,000 in federal dollars for medicaid-eligible school health services.

Additionally, the Centers for Medicare and Medicaid Services allows for retroactive claiming as far back as two years. Since federal reimbursement claiming is done quarterly, the longer that the department of education fails to implement a federal revenue maximization program to increase the State's access to federal medicaid funds, the more money the State will lose each fiscal quarter in federal medicaid funds for administrative costs and school health services that arose beyond the last eighth quarter of the retroactive claiming period.

At a time when the State's fixed costs are on the rise, the department of education, as a state agency, has an obligation and responsibility to the taxpayers of Hawaii to exercise fiscal prudence by taking advantage of all opportunities to utilize alternative funding sources in order to ensure that we can provide a quality public school system for our State's children.

The department of education has inexplicably failed to take advantage of three opportunities for purposes of accessing and utilizing sources of school health funding other than State funds. Even before the University of Massachusetts proposal to the department of education in September 2002, another company, MAXIMUS, submitted a proposal dated November 2000, at the request of the department of education, to establish a federal revenue maximization program for the department of education under a contingency-fee contract, with no up-front cost to the State, for federal medicaid reimbursement. Again, in February 2003, MAXIMUS submitted another proposal, titled "School-Based Medicaid Funds Recovery Opportunities," for the department of education to implement a federal revenue maximization program.

For over four years now, the department of education has failed to enter into any contract for these services, despite having professed to MAXIMUS, the department of education's "intent to enter into a multi-year contract with a consulting company to initially design and develop the personnel and documentation infrastructure necessary to support the claiming initiatives" (executive summary of the November 2000 MAXIMUS proposal).

Both the University of Massachusetts and MAXIMUS have submitted detailed proposals, which even address specific concerns expressed by the department of education regarding accountability, simplicity, and cost effectiveness, to enable the department of education to recover the maximum allowable federal medicaid funds.

Both proposals have also clearly stated that federal revenue maximization can be done utilizing the department of education's existing information technology system, without the need for department of education to implement major system enhancements, and without diverting the department of education's time and attention from its mission to educate Hawaii's children. To date, no action on any federal revenue maximization program proposals has been taken, resulting in the State's loss of tens of millions of dollars that are claimable in federal reimbursement.

SECTION 2. (a) The department of education, in collaboration with the department of human services, shall establish a federal revenue maximization program to identify medicaid-eligible health services being provided through the department of education to students, directly or through its contracted providers, and to submit claims for such services through the department of human services, the single State medicaid agency, for federal reimbursement. The department of education shall contract with a third party to administer this program. The third party contract shall be established either at no cost to the State or on a contingency-fee basis and with no up-front costs to the State, including, but not limited to costs to train staff, adapt data collection systems and comply with the federal health insurance portability and accountability act.

(b) In establishing this federal revenue maximization program, the superintendent of education and the director of human services shall execute a memorandum of agreement to develop and implement a federal revenue maximization program for medicaid-eligible school health federal reimbursement.

(c) The federal revenue maximization program shall identify, at a minimum, the service recipient and medicaid number, the service provider (either the department of education in total or by contracted provider), the services received, when, where, and for what diagnosis, and the billing charges for the services provided.

(d) By no later than October 31, 2005, the department of education shall procure and contract for the development, implementation and maintenance of this program, including any required information technology system or interfaces with the department of education's existing system. The department of education shall claim the maximum allowable under medicaid for both administrative costs and school health services beginning January 1, 2006, for administrative costs and school health services arising on and after January 1, 2006. Further, as soon as possible after October 31, 2005, but no later than January 1, 2006, the department of education shall claim retroactively for the preceding eight quarters as permitted by available documentation or other back-up that can be reasonably obtained.

(e)The department of human services shall provide technical assistance and support to the department of education in its efforts to obtain federal medicaid school-health reimbursements.

SECTION 3. The department of education shall provide quarterly reports to the legislature on the amount of medicaid federal reimbursement received for the federal fiscal years 2004-2005 to 2009-2010. The department of education shall identify in its report the additional funding that has been secured, claims pending, projected additional federal funding to be secured over the next five years, and plans for the reinvestment of those additional federal funds to expand needed services to the children of Hawaii. The department of education shall also submit an annual report to the legislature no fewer than twenty days prior to the start of the regular sessions in the state fiscal years 2005-2006 to 2009-2010.

SECTION 4. This Act shall take effect on July 1, 2005.