Are Hawaii schools giving up millions in federal reimbursement dollars?

Hawaii's Department of Education may be forgoing millions of federal dollars while it brings infamy down upon the state for cutting a full day from our school week.  The point of the Friday Furloughs (as they're called) was to save the state about $117 million, part of the total $227 million in budget cuts Hawaii Governor Lingle mandated.

Going through DOE's expenditures for FY2010 (which is not over yet), I was able to identify at least $113 million in expense that could be reimbursed by Medicaid.  Medicaid pays seventy-five cents of every dollar spent by schools on health services.  The state should have been able to collect about $85 million from Medicaid, but a DHS budget document shows DOE is only getting about $1.3 million in Medicaid reimbursements.

The expenses I identified as reimbursable through Medicaid include:

Autism services                                              $41 million
Speech pathologists                                       $18 million
Occupational therapists                                  $ 4 million
Physical therapists                                          $ 4 million

Contracted special ed services                       $ 3 million
School health aides                                         $ 6 million
School based mental health services             $  2 million
School based behavioral health services       $35 million

DOE can also receive 75% reimbursement from Medicaid for administrative time spent managing the above services.  What proportion this might represent of the $170 million spent on special education salaries I do not know.


Less than a month before she resigned, Hawaii Superintendant of Schools Patricia Hamamoto reported to the legislature that the state's endeavors to collect from Medicaid were going well.  An outside contractor had been hired in 2006, and DOE was so happy with them the contract was continued until June 2010.  Total collected to date appears from the report to be just over a million dollars, with another seven million projected by 2013. 

CDREA calls for Hawaii state audit of DOE spending of Medicaid funds

Children's Disability Rights Education Association President Summer Harrison and Vice President Linda Nuland-Ames on Thursday called for a full state audit of Medicaid spending by the Hawaii Department of Education. Harrison and Nuland-Ames were at the annual Kauai DD Committee Legislative Forum, presenting the results of their past several months of research into Hawaii's Medicaid programs. The subject of the DOE furlough Fridays, the first of which was due to happen the next day, came up. Harrison pointed out that DOE services that were paid for by Medicaid could still take place on Fridays. Harrison had established that her daughter's paraprofessional service through Nursefinders was likely a Medicaid financed service since it was to continue on the furlough Fridays. Nuland-Ames asked how many parents at the meeting knew that DOE could bill Medicaid directly on behalf of their children. No one was. A few years ago, Medicaid told inquisitive parents that it wasn't any of their business, Nuland-Ames noted. Within the past week, Harrison had contacted her daughter's school to demand an accounting of all services and items billed to Medicaid by DOE on Hannah's behalf. She asked for the accounting by Friday, October 23. Her district office emailed to say she would be hearing from someone, but as of the writing of this post, still hasn't responded. Some but not all parents remembered the letter they had received from DOE in December 2008 stating that failure to return the letter would be permission for DOE to bill Medicaid on their children's behalf. According to research done by CDREA and published on their website, it would appear that the Hawaii DOE letter meets none of the federal requirements for parental notification of and permission for DOE billing of Medicaid on their child's behalf. Harrison reminded the state legislators in attendance of the Hawaii auditor's report on DOE's procurement office, published in February 2009. The auditor's office

revealed an organizational culture of disregard for procurement rules in the Office of School Facilities and Support Services (formerly known as the Office of Business Services and referred to herein as the “Office of School Facilities”). That culture has allowed office directors, managers, and staff to believe they have the discretion to unilaterally determine whether compliance with procurement laws and rules is in the best interest of the department.

She pointed out that while she didn't know if any Medicaid billing went through the procurement office, or if that was done someplace else in DOE, the fact that the schools couldn't give a parent an accounting within five days raised concerns. Given the current economy, the public furor over furlough Fridays which are intended to help the governor balance the state budget, and the issues raised about Hawaii's two for-profit Medicaid companies, CDREA's request for a state audit of DOE use of Medicaid funding was met favorably.