AUSTIN (KXAN) – Texas Health and Human Services is asking hundreds of school districts to return the money they received through a state Medicaid reimbursement program over a decade ago after the federal government found it was billed incorrectly.
The request comes after a 2017 federal audit reviewed expenditures claimed on behalf of Austin Independent School District and Dallas Independent School District from fiscal year 2011.
Inspectors said they found more than 238 instances where service costs, which the state’s Medicaid reimbursement program SHARS claimed on behalf of those school districts, were coded incorrectly.
As a result of the audit, the Centers for Medicare and Medicaid directed HHSC to refund $16.2 million, but years of appeals from the state agency postponed the repayment.
On Dec. 10, the agency emailed over 500 school districts that received SHARS funding in fiscal year 2011, requiring them to return money to HHSC “so it can be repaid to CMS.”
In the notice, HHSC gave school districts the option to return the money in full, request the agency offset future claims to the Medicaid reimbursement program, or enter a six-week payment plan.
HHSC records provided to KXAN show school districts’ re-payments range from $100 to over $800,000. The request comes as districts across the state are already cutting programs and facing budget shortfalls.
Leander ISD’s Chief Financial Officer Pete Pape is set to repay more than $99,000 to HHSC based on the 2017 audit. The district passed a budget with a $13 million deficit this summer and sent more than $11 million back to the state through Recapture.
“You can bend so, so much and then then you get to the point, you start breaking or you start taking from other programs or other services,” Pape said.
The SHARS Medicaid program covers medical services, including therapy and screenings, for special education students who are eligible for Medicaid. Districts are legally required to provide these services.
“It was 2011. Nothing said [HHSC] had to take those findings and those, you know, from two districts in the state and extrapolate that across the whole state. And they did it six years later,” Pape said.
In a statement to KXAN, HHSC officials said the agency already repaid the federal government $16.2 million, and that it is required by law to recoup the amount overpaid to districts. The agency also instituted an administrative fee in 2017, which withheld 1% of participating districts' total Medicaid reimbursement into an audit reserve fund.
HHSC officials did not provide further information on which law requires recoupment.
“Since 2017, HHSC worked diligently with our federal oversight partners to maintain SHARS funding and overturn the decision to deny the funding. It was a federal decision to not maintain SHARS funding, not a state decision,” HHSC officials said in a statement to KXAN.
A spokesperson for CMS said the Biden-Harris administration is committed to expanding access to healthcare services in schools and reducing the administrative burden of seeking Medicaid payment for school-based services.
“We refer you to the state’s Medicaid agency for questions about their actions […] and steps the state has taken to comply with audit findings,” a CMS spokesperson said in response to KXAN asking if it required HHSC to collect refunds from participating school districts.
