Department of Education Proposes Rule Changes Regarding Parental Consent to Bill Medicaid for IDEA Services

On May 18, 2023, the Department of Education (“DOE”) issued a notice of proposed rulemaking and invited public comment on regulatory changes that could make it easier for school districts to access a student’s public benefits or insurance, such as Medicaid, to pay for services under the Individuals with Disabilities Education Act (“IDEA”).  Assistance to States for the Education of Children with Disabilities, 88 Fed. Reg. 31,659 (May 18, 2023).  The proposed rule would repeal an IDEA regulation requiring parental consent before a school district can seek payment from Medicaid and other public benefits or insurance for eligible services in a student’s individualized education program (“IEP”).  34 CFR § 300.154(d)(2). 

Under the current regulation, school districts must provide parents with written notice and obtain written consent prior to accessing the student’s or parent’s public benefits or insurance to pay for IEP services.  The notice must be written in language that is understandable to the general public and must include all of the following information:

• A statement regarding the parental consent requirement;
• A statement describing the IDEA’s no-cost provisions, i.e., that the school district may not require the parents to enroll in public benefits or insurance, require the parents to incur an out-of-pocket expense such as a deductible or co-pay, or utilize benefits if doing so would decrease available lifetime coverage, increase premiums or risk the loss of coverage for other public benefits;
• A statement that the parents have the right under the Family Educational Rights and Privacy Act (“FERPA”) and IDEA to withdraw their consent to disclose personally identifiable information to the agency responsible for administering the public benefits or insurance at any time; and
• A statement that withdrawing consent or refusing to provide consent under FERPA or the IDEA to disclose personally identifiable information to the agency responsible for administering the public benefits or insurance does not relieve the school district of its responsibility to ensure that all required services are provided at no cost to the parents.

The DOE’s proposed regulation would remove the parental consent requirement and revise the written notice requirement to include a statement describing the IDEA’s “no-cost” provisions and a statement regarding parental consent to disclose personally identifiable information under FERPA and the IDEA.  Under FERPA, school districts must obtain parental consent before disclosing personally identifiable information to public benefit providers.  The written consent must identify the records to be released, the purpose of release, and the party to whom they may be released.  

The DOE explained in the notice of proposed rulemaking that the revision is intended to remove an unnecessary barrier to accessing public benefits for school-based services.  The DOE noted that the current Medicaid regulations do not require parental consent for public agencies to access public benefits or insurance.  Thus, the current regulation imposes an additional burden on school districts accessing such benefits for students with disabilities compared to nondisabled students.

The DOE further noted that accessing public benefits or insurance frequently requires the school district to share the student’s personally identifiable information with the public agency to access said programs.  Thus, the DOE indicated that the parental consent requirements under FERPA and other IDEA provisions would adequately protect student confidentiality. 

The proposed rule may help school district access Medicaid funding by avoiding confusion over the impact of such access on the student’s or families’ public benefits.  Many families do not realize that Medicaid is a payer of first resort for school-based services.  Thus, families are not required to submit claims to private insurance before Medicaid, like claims for other services.

On the other hand, the proposed rule does not eliminate all parental consent requirements related to Medicaid billing or accessing other public benefits.  School districts will still need parental consent to share personally identifiable information about the student, which is almost always required when accessing a student’s public benefits or insurance.  Therefore, school district staff will still need to be vigilant in collecting written parental consent under FERPA and the IDEA’s confidentiality provisions. 

The public comment period on the proposed rule is open until August 1, 2023. Comments are generally available to the public, so commenters should not include information they do not wish to make public. Those wishing to make comments can do so online through the eRulemaking Portal. 

We will continue to monitor this proposed rule and other regulatory changes that impact school districts to keep our clients informed on the latest developments.