Why Florida is missing out on $200 million a year in Medicaid funding for schools

Miami Herald

26-07-2025

Florida lawmakers reached a rare consensus after the deadly Parkland school shooting: More money was needed for mental health counseling at schools.
'We haven't put enough resources into mental health issues,' said then-Sen. Kathleen Passidomo, R-Naples. 'And look what happens.'
Two years later, lawmakers passed a bill allowing Medicaid dollars assigned to school districts to be used for more types of care for kids, including counseling.
But state officials didn't adopt the changes. And they have refused to comply with federal guidelines that would help school districts provide that care.
Florida schools have missed out on about $200 million a year in Medicaid funding — a total of $2.2 billion since 2014 — to support children's mental health counseling, physical therapy and other services, advocates say.
Their calls to recoup funding come as schools face multimillion-dollar shortfalls in the budget year that began July 1 — and as kids struggle with the fallout from the COVID-19 pandemic.
They say the problems lie with the Florida Agency for Health Care Administration, which oversees Medicaid in the state and reports to Gov. Ron DeSantis. Documents show that for more than a decade, the agency hasn't followed federal reimbursement guidelines for school-based services — one of the few areas of Medicaid the Trump administration and Congress have not targeted for reductions.
The federal program provides in-school medical care and instruction for school-age children with physical or developmental disabilities who qualify for Medicaid. About 2 million children in Florida are on Medicaid, which provides free or low-cost health care to people who qualify.
Without the money, school districts have struggled to find therapists, nurses and others to treat children. Some kids experienced lower-quality care or had that care delayed during critical periods of their lives, observers say.
The state agency strayed from federal guidelines in 2014, when the U.S. government changed its rules regarding the reimbursements. Experts consulted by the Times said Florida is one of the few states, and perhaps the only one, that is using the outdated payment method.
The federal Center for Medicaid and Children's Health Insurance Program Services warned the agency in 2020 that it was 'not in compliance with current financing rules,' but no substantial action followed.
Over that time, instead of collecting $2.2 billion from federal coffers to cover school-based expenses, the state received about $250 million. With money tight, school officials want the agency to make the necessary fixes.
'This is a significant agency failure,' said Ken Kniepmann, former state assistant deputy secretary for Medicaid Policy and Quality at the agency. He was hired in part to improve the system but said he was later instructed to stop. 'It's really unconscionable. Nobody should be OK with this.'
A spokesperson for the agency said it did not have sufficient funding to update its reimbursement method until this year's legislative session, and it is committed to getting it done next year.
Kniepmann said the agency had not asked the Legislature for permission to draw down the federal dollars needed to enact the changes until this year.
The Hillsborough County school board held a workshop in April to address the Medicaid funding gap. Hillsborough received about $6 million in Medicaid reimbursements a year ago for the services it provided, specialist Deneen Gorassini told her board, but would have gotten about $10 million more if the state agency followed federal guidelines.
It's money that could have expanded medical and mental health services in schools.
Other districts experienced similar-sized gaps, according to Kniepmann's calculations.
'If we can get (the agency) to do their job and submit a (state plan amendment), we could start getting reimbursed based on our expenses, which are way more than what we are getting reimbursed now,' Gorassini told the board.
Since 1997, the state has been reimbursing school districts for services — such as counseling or speech therapy — based on a flat rate.
In 2014, the federal government required states to reimburse school districts based on the actual costs of those services, which is much higher.
Five years ago, federal officials wrote Florida telling them it hadn't adopted the change, and the state had 90 days to comply.
'Please note that you may not pay a rate from a fee schedule and use this as a certification of cost,' Center for Medicaid and CHIP Services acting director Todd McMillion wrote Florida officials in March 2020.
The center said it is working with the state to resolve the concerns listed in that letter.
Florida is still paying schools a flat rate that has changed little since 1997.
Karen Thomas, a Medicaid specialist for Leon County schools for more than 20 years, said that while the formulas are complex, the solution should be 'extremely simple.'
'We're 90% there, maybe 95% already, in the way we are doing things,' Thomas said of districts' processes for collecting receipts and monitoring providers' time. 'They have everything they need to be in compliance with federal payment methodology. They just need to change the invoice, one line on the invoice. ... The fault is squarely in the agency's failure to come into compliance.'
The state has shown it can make the switch, Thomas said. She pointed out that when federal authorities ordered county health departments to start billing for actual costs instead of flat rates in 2020, the state quickly shifted.
She noted that school-based services are 'a very niche portion' of the state's Medicaid budget — somewhere in the neighborhood of 1% — and that over time agency officials have paid less attention to them, decreasing communication with school districts and reducing staff dedicated to the service.
The issue shouldn't be a side note, as it affects the lives of some of Florida's neediest children, she said. And the pandemic made kids' mental health a national crisis.
'Kids used to miss school because of asthma,' Thomas said. 'Now they're missing school because of anxiety and depression.'
After the 2018 Parkland attack, state lawmakers wanted to make sure students were getting proper mental health assistance in schools. In 2020, they passed legislation allowing schools to use Medicaid dollars for other types of care. DeSantis signed it into law.
But his Agency for Health Care Administration never rewrote the agency's rules to allow school districts to use the new law.
'The law was very clear,' said retired Sen. Bill Montford, D-Tallahassee, who sponsored the 2020 bill. 'Why they didn't do it I don't know.'
Rep. Christine Hunchofsky, a Democrat who represents Parkland in the House, repeatedly has asked agency officials if the state is doing all it can to leverage federal money for student services. The issue comes up frequently on the Commission on Mental Health and Substance Use Disorder, to which Hunchofsky was appointed by the Republican House speaker.
She said the agency has provided few clear answers. Meanwhile, she's heard plenty from the school districts, and said she plans to pursue the questions further.
Montford, also executive director of the state's superintendents association, said agency officials have told his group that they are preparing a rule revision to go into effect in mid-2026. That's when states are supposed to comply with an updated 2023 federal guidance on school-based services.
But Kniepmann, who worked as associate director for health at the Florida Conference for Catholic Bishops before moving to the health agency, argued the state is stalling for reasons that remain unclear to him. He said the 2023 guidance was not intended to be a way for Florida to further delay implementing rules put in place more than a decade ago.
Every holdup, he and others said, means less money available to pay for medical and related services.
'Eleven years and $2.2 billion is not a little thing,' he said.
Hillsborough district officials, also leery of the state's ability to pull off a new rule by mid-2026, said they are looking into a different approach to bring in more Medicaid money.
Gorassini told the board that her department would conduct a rate study for each service it provides and submit the updated amounts to the state for inclusion on the existing reimbursement schedule. Kniepmann said it's a long-shot effort that requires a lot of work at the district level, adding that the agency has discouraged such an approach.
It's worth a shot, though, Gorassini told the Hillsborough school board.
'We'll never get what we spend,' she said. 'But in the meantime we're going to try to maximize our reimbursement.'
What's really at stake is student health, said Thomas, the Leon County Medicaid specialist who also serves on the National Alliance for Medicaid in Education leadership team. Her district stands to reap about $2 million more per year if the change is made.
'That is the difference between being able to hire actual medical professionals who have the ability to recognize actual medical issues, and purchase medical equipment, actual things that could help the children that are most medically needy in this county,' she said. 'When I can't afford to pay for a nurse, all kids suffer.'