The request came after an audit found that Texas improperly billed the federal government for reimbursements related to Medicaid-eligible students.
After years of legal battles, federal authorities are seeking $16 million in restitution from Texas schools that used the Medicaid reimbursement program for special education services, alleging they were incorrectly billed.
The Texas Health and Human Services Commission sent an email this month to 552 school districts across the state informing them that they would have to pay the department between $100 and $800,000 for services billed in 2011. The charges stem from a 2017 federal health department audit that found Texas improperly billed the agency 238 times for services under the School Health and Related Services Program. .
The SHARS program reimburses schools that provide services such as psychotherapy, physical therapy, nursing, and testing to Medicaid-eligible students. According to the Texas School Boards Association, nearly 950 of the state’s more than 1,200 school districts are currently enrolled in SHARS programming.
The 238 errors identified by the federal government concerned services deemed ineligible for reimbursement. The Office of Inspector General also found that more than 94% of billed services, including those covered, lacked required documentation.
The audit warned the Texas Health and Human Services Commission that the district would be required to repay money paid for ineligible services, but a series of appeal attempts delayed repayment. The district had to return more funds, but an appeal by the state of Texas and a review by the Centers for Medicaid and Medicare Services reduced the number of ineligible claims.
The district will have six weeks to decide whether to repay the loan all at once or apply for installment payments, according to HHSC. The federal agency is not requiring states to take funds directly from school districts, leaving open the option of using state funds to pay the bills.
“It is up to states to withdraw from individual school districts if they so choose,” said a spokesperson for the Office of Inspector General for Health and Human Services.
The Texas Health and Human Services Commission said in a statement that the department has already paid $16 million to the federal government and is required by law to recoup those costs. The statement added that HHSC has “filed every possible denial and request” to contest the charges.
Because annual school budgets are fixed, Texas school districts say they have little wiggle room to move funds toward repayments.
“This would be done in the middle of the budget year, making it virtually impossible to plan for schools,” said Brian Woods, advocacy director for the Texas Association of School Administrators. “If this clawback had been known before the school approved its budget in summer 2024, we could have at least planned for it, right?”
Leander School District Chief Financial Officer Pete Pape called the charges “the tip of the iceberg” and expressed frustration with the Texas Department of State Health Services’ lack of support for the district and its programs. In 2023, a federal appellate judge pointed out that the only evidence Texas submitted in its appeal was a spreadsheet created by CMS listing services that were wrongly billed, and Texas disputed the agency’s findings. He said he had not submitted “anything” to advocate.
“If we acted like this as a school district, we would be criticized,” Pape said. “It seems like they just want to check a box so they can say to the community and the council, ‘Yes, we appealed.’ So that’s frustrating.”
The Leander district is owed about $99,000. Pape said he plans to appeal the matter, but the repayment notice the district received did not say whether it could be appealed.
The $16 million repayment request comes after Texas cut more than $607 million to SHARS funds after the state imposed strict limits on the types of services that school districts can repay. Some school officials believe the move is an overcorrection on the part of the state for mistakes made in 2011, which led some small schools to withdraw from the program altogether.
Woods, a former superintendent of San Antonio’s Northside School District, said the repayments are “significant” because even the largest districts are already extremely cash-strapped.
Northside ISD will repay more than $420,000, one of the largest repayments required by the federal government.
More than 40 schools owe more than $100,000. However, more than half of the schools listed have less than $10,000 in debt. The Houston and Austin school districts will pay the most, each expected to pay more than $780,000.
For many school districts, the notification comes as officials face budget shortfalls exacerbated by inflation, pandemic relief funds expiring, and no significant increases in public school spending from the state in five years. I was disappointed.
“I don’t think I’ve heard a consistent programmatic plan. Most of what I hear is, ‘Are you kidding me?'” Woods said of the district’s response. “This is another proposed reduction on top of the multi-million dollar cuts we spent much of the fall talking about.”
District officials are hopeful that lawmakers will provide relief after the SHARS cuts. Several special education funding bills have already been introduced ahead of the state legislative session, which begins next month. Woods said no lawmaker will serve as a “designated champion” for special education funding, but added there is still time to highlight the issue before the legislative session begins.
“Parents and members of the public who are concerned can simply contact their representatives and express that they believe the situation needs to be rectified,” Woods said.
Source: Aiden Runnels, Texas Tribune
Photo: Federal authorities are asking 573 Texas school districts to repay $16 million they received since 2011. Federal authorities say the state of Texas improperly charged reimbursement money it provided to schools for services provided to students eligible for Medicaid. Credit: Jordan Vonderhaar of The Texas Tribune
