Provider Notice issued 11/06/02

Calculating Cost for Fee-For-Services

In September 2002, you received from the Department a draft cost calculation form that your LEA must complete and maintain to document costs. These forms must be completed and available for review by the Department. The final cost sheets and instructions are attached.

Based on comments we received to the draft, a clarification has been included in determining costs incurred in a group setting. Group costs must be calculated by multiplying the individual rate as determined in your completed cost calculation form, by the group payment differential factor, as described in the attached instructions.

Local education agencies (LEAs) enrolled with the Department to provide Medicaid services to children with individualized education programs (IEPs) may submit claims to the Department for those services in accordance with the instructions found in Chapter U-200, the fee-for-service provider handbook. When submitting a claim for an allowable Medicaid service, LEAs are required to bill the Department the actual cost of providing that service. LEAs may not submit, in lieu of their actual cost, the Department's established maximum for that service. LEAs that submit a claim in excess of their actual, documented cost of providing a service are subject to a disallowance of federal matching dollars claimed on their behalf by the Department.

Effective October 1, 2002, the Department requires that the costs for each service provided by your LEA be determined using a standardized cost calculation methodology. In our previous correspondence, we required that completed cost calculation forms are to be on file by November 1, 2002. Because of the delay in issuing final instructions, that deadline has been postponed until December 1, 2002. LEAs do not need to submit their cost forms to the Department. However, LEAs must have their completed forms (or approved alternatives) and all necessary supporting documentation available for review as of December 1, 2002.