Many school districts still operate under an outdated assumption: that Medicaid reimbursement is only available for services delivered to students with an Individualized Education Program. For years, that was true. But a significant policy shift opened the door much wider, and districts that have not adjusted are likely leaving reimbursement on the table. Understanding the free care policy, and what it allows, is one of the most direct ways to strengthen your school-based Medicaid program and capture revenue your district has already earned.
What the Free Care Policy Actually Changed
Traditionally, only services provided to students with an IEP were billable to Medicaid. The original rule prohibited Medicaid reimbursement for school health services if those same services were provided free of charge to the general student population, unless the services were specifically included in a student’s Individualized Education Program.
That changed with the reversal of what is known as the free care rule. Since the 2014 reversal, districts can bill for services provided to any Medicaid-enrolled student, depending on the state’s approved plan. In practical terms, the reversal essentially allows schools to bill Medicaid-covered services for all enrolled students, even when those students do not have a documented IEP. The name itself is something of a misnomer. The policy did not interfere with care provided for free. It simply removed the restriction that had blocked reimbursement for services offered broadly to students.
For districts, this is a meaningful expansion of what counts as billable. Instead of a narrow slice of the student population, the potential claiming universe now includes the much larger group of students enrolled in Medicaid.
Why This Matters for Your District’s Revenue
The financial implications are substantial. Once schools are able to expand Medicaid billing to all enrolled students, they can see a significant increase in reimbursement, particularly related to nursing services. That matters at a time when many districts are stretched thin. According to the National Association of School Nurses, more than 30% of schools have only a part-time nurse, a shortage that additional reimbursement can help address. In some cases, expanded billing can support hiring more nursing staff, which directly improves the health services available to students.
The range of Medicaid-covered services that may fall under expanded billing is broad. It can include speech therapy, occupational therapy, physical therapy, audiology services, counseling, nursing services, personal care, and behavioral health services. Health advocates have viewed this policy change as an opportunity to build programs that help students understand and manage chronic conditions such as asthma, diabetes, and mental health needs. In other words, the expansion is not just a billing technicality. It can fund services that genuinely improve student wellbeing.
The State-by-State Reality
Here is the important caveat: the free care policy reversal did not automatically expand every district’s program. The way states extend Medicaid’s reach beyond the IEP is state specific, and what a district can actually bill depends on the state’s approved plan.
In Massachusetts, the MassHealth School-Based Medicaid Program outlines the services, provider requirements, and billing processes districts must follow. Massachusetts moved to broaden its program through an effort commonly referred to as Expansion, designed to provide reimbursement for services that may not be tied to an IEP, including additional provider types and services ordered by a physician, nurse practitioner, or physician assistant. Because the specifics vary by state and by approved plan, districts need to understand exactly what their own state permits before assuming a service is billable. Getting this wrong in either direction, either missing billable services or claiming services that are not covered, creates problems.
Turning the Opportunity Into Actual Reimbursement
Expanded eligibility only helps if your district can operationalize it. Capturing reimbursement for a larger population of students means more documentation, more eligibility tracking, and more claims to manage, all of it subject to the same compliance requirements that govern the rest of your program. Student Medicaid eligibility shifts constantly, and the larger the billable population, the more eligibility activity there is to monitor. Without the right systems, the added revenue opportunity can quietly turn into an added administrative burden.
This is where the day-to-day mechanics matter. Every billable service still needs a compliant service note. Eligibility still needs to be confirmed before claims go out. Documentation still needs to align with what was actually delivered. The districts that benefit most from the free care policy are the ones that pair the expanded opportunity with disciplined documentation and claiming processes.
How NEMB Helps Districts Capture Expanded Reimbursement
Making the most of expanded Medicaid billing is exactly the kind of work a specialized partner is built to handle. Through our school-based Medicaid billing services, NEMB takes on the administrative tasks of school-based Medicaid billing, submits and tracks claims, provides regular eligibility reporting so districts know exactly which students are covered and when coverage changes, and helps ensure compliance with ever-changing Medicaid regulations. We are also happy to set up the systems and processes to add new reimbursable services as needed or as state guidelines permit, and we routinely review and pursue other areas of opportunity for maximizing reimbursement.
Technology makes this manageable at scale. SimpleNote, our free proprietary software, simplifies the daily task of IEP service note taking for staff. It is 100% HIPAA and FERPA compliant, meets state and federal guidelines, and can be customized by state, which helps districts capture clean documentation across a broader set of billable services without overwhelming providers.
Since 1993, NEMB has worked with schools to maximize Medicaid reimbursement while maintaining full HIPAA and FERPA compliance. As the billable population expands, that combination of expertise and technology is what turns a policy opportunity into real dollars in your district’s budget.
Do Not Leave Expanded Reimbursement Unclaimed
The free care policy reversal changed what districts can bill for, but the reimbursement only materializes for districts that act on it. If your program is still built around IEP-only billing, there is a strong chance you are capturing less than you could.
To find out how much more your district could be reimbursing under expanded Medicaid billing, schedule a free consultation with the NEMB team or call 888-771-6115 to speak with a specialist today.
