School Based Health Services Home

The foundation for the relationship between Medicaid and education was established by the Medicare Catastrophic Coverage Act (Public Law 100-360), as amended in 1988. Illinois has actively supported this relationship since 1992, through the School Based Health Services (SBHS) program.

Effective July 1, 2021, Illinois expanded reimbursement for SBHS to all covered health services provided to all Medicaid-enrolled students. Prior to this expansion, schools could only bill for services part of a student’s Individualized Education Plan (IEP). During state fiscal year 2024, the SBHS program paid for healthcare services to approximately 244,000 Medicaid-enrolled Illinois students.

In Illinois, Local Education Agencies (LEAs) may receive reimbursement for delivering direct services to Medicaid-enrolled students with documented medical necessity. Services must be covered under the Medicaid State Plan or available under the Early and Period Screening, Diagnostic, and Treatment (EPSDT) benefit, such as:

Adaptive behavior support services

Audiology

Counseling services

Developmental assessments 

Medical equipment

Medical services

Medical supplies

Nursing services 

Occupational therapy

Physical therapy

Psychological services

School health aide 

Social work

Speech/language pathology

Transportation

For children with Individualized Education Programs (IEPs), these services are frequently specified as necessary related services in the IEP developed by schools for children with disabilities. 

Schools may also claim some costs for the administration of the program, in addition to direct medical services. Allowable administrative claims include outreach activities designed to ensure that the entire student community has access to Medicaid covered programs and services. LEAs may claim costs for specific administrative activities, as well as costs incurred for implementing and monitoring the Illinois state Medicaid plan.

Beginning with FY22, Illinois moved to a cost settlement reimbursement methodology for services.  Cost settlement is a cost-based reimbursement methodology used to determine the actual cost of delivering school-based health services. The cost settlement methodology calculates the “true” cost of providing a service by determining the percent of actual costs that are attributable to Medicaid services. At the end of the fiscal year, it compares the actual total cost of providing services incurred by Local Education Agencies (LEA) to the interim reimbursement payments received throughout the year. If an LEA’s allowable costs exceed the interim payments received, the LEA will receive a payment for the difference. If an LEA’s allowable costs are less than the interim payments received, the state will then recoup any overpayments directly from the districts by withholding future interim payments until the overpayment has been fully recovered. Adjustments are calculated at the end of the fiscal year upon LEA submission of the Annual Medicaid Cost Report.

Further information about the SBHS program is available by emailing the SBHS office at HFS.SBHS@illinois.gov.