Luzerne County school districts have collectively seen well over $1 million evaporate from special-education funding in the past year.
In a bit of irony not lost on area administrators, it’s a case of a federal money being cut while the federal mandate the money helps fund remains.
“We have not received $450,000 from the beginning of this school year to date,” Hazleton Area Superintendent Francis Antonelli said of a steep drop in federal Medical Assistance money used for special-needs students. “When the money is cut and yet the programs are mandated, it’s a dilemma for school districts. You want to continue to provide services, but this makes it very difficult,” he said.
In a recent webinar hosted by the Pennsylvania School Boards Association, state Acting Secretary of Education Carolyn Dumaresq blamed two federal changes in how Medicaid money can be used in schools, calling it “a perfect storm.”
It was a phrase used independently by Anthony Grieco, executive director of the Luzerne Intermediate Unit, an agency that provides special-education services to most local districts.
A better analogy might be pincers, choking off money from Medical Assistance at two points, hitting districts with reductions that have run close to 90 percent in some cases.
Medical Assistance — commonly referred to as ACCESS in Pennsylvania, after the name of plastic cards issued to eligible users — has long been legally offsetting medical-related special-education costs for low-income students. The money pays for things such as occupational and physical therapy, or for aides needed to help a student with disabilities.
Districts have also sought and received reimbursements for “indirect services,” such as drawing up a student’s “Individual Education Plan” at the core of special education.
Grieco said two things happened in rapid succession: A federal audit determined the money cannot be used for indirect services, and a new mandate required proof that all other insurance — “third-party liability” — was exhausted before the federal money could be used.
The LIU and districts were pretty much prepared for the loss of indirect services money, Grieco said. When 2013 started, “we expected to take a hit of about 20 to 30 percent from the prior year.”
Hanover Area School District Business Manager Tom Cipriano said the amounts for indirect services tend to be small, but add up. “For every IEP preparation, we were reimbursed $40. If you have 500 IEPs, you are down $20,000, and that’s very significant.”
The changes due to the third-party liability issue, on the other hand, was a surprise that more than doubled losses, Grieco said.
The money for indirect services is almost certainly gone for good, Grieco said, but losses for third-party liability may be reversed.
“Some of the biggest insurance providers in the state have submitted letters of blanket denial, saying they will not support any reimbursement for services provided in schools,” Grieco said. “We’ve been told 32 to 34 letters had been sent in as of January.”
Once those letters are processed, claims that were denied because of third-party liability will be resubmitted.
Grieco and other administrators said the third-party liability issue developed after the state contracted a new company to handle claims submitted by districts.
For years, Leader Services, part of Leader Data Processing in West Hazleton, handled the claims here. In the summer of 2012, the state switched to Boston-based Public Consulting Group.
“Leader Services seemed to deal with the third-party liability issue,” Grieco said. Since the switch, the responsibility seems to have fallen on school districts.
“A lot of that wasn’t explained to us,” Cipriano said. “In fairness to PCG, I don’t think they had the answers, therefore we didn’t get the answers.”
“There are two schools of thought,” Grieco said: One says districts should assure third-party liability issues are resolved before submitting claims. The other says the state or the company it contracts should handle the issues because they set the rules.
The flap has been going on for about a year, and the shortfall in money is becoming acute. Along with the $450,000 Hazleton Area didn’t receive, Wilkes-Barre Area has gone from receiving a total of nearly $500,000 in 2011-12 to $16,681 last school year, according to Business Manager Leonard Przywara.
Dallas Business Manager Grant Palfey said Medical Assistance money has dropped from about $50,000 to $12,000. Northwest Area Superintendent Ronald Grevera said the district normally gets about $100,000 a year and, to date, received $6,000 this year.
Most districts handle some special-education services in-house and submit bills for Medicaid payments themselves, but also rely on the LIU for additional services.
At the LIU, Grieco noted, a separate ACCESS account is set up for each member district. The LIU provides the service and submits claims, putting any Medicaid money received into that district’s account. The district then draws on the account to pay the LIU for its services.
Since January 2013, Grieco said, the combined accounts of the 12 member districts have received about $500,000 less in Medicaid money than expected.
Whether the costs were incurred directly or through the LIU, districts have been forced to use money from their general funds to make up the difference.
Cutting the special-education services isn’t really an option. Devising and following an IEP is mandated under the federal Individuals with Disabilities in Education Act, and reducing services could lead to lawsuits from parents and sanctions from the federal government, Grevera noted.
And if the special-education costs can’t be cut and the federal money isn’t restored, it could mean less money for other district costs, Grevera said. “I think parents and children are going to suffer ramifications.”
During the webinar, Dumaresq voiced cautious optimism that at least some of the funding will be restored. “It’s been awful,” she said. “I know our schools are owed money and we’re working to get that money to flow out. It’s not for a lack of effort by the Department of Education.”
But Cipriano summed up frustration voiced by others.
“There’s millions of dollars involved in this,” he said. “We’ve been beating the drum on this, and it just doesn’t seem to be going anywhere.”