Free Care Rule Regulatory Change: New Opportunities for Medicaid Reimbursement in Schools

Since 1997, the “free care” rule has stated that Medicaid will not pay for services that are offered to the general public free of charge. The rule has stood as a significant barrier for schools to receive Medicaid reimbursement for health services provided to students enrolled in Medicaid. On December 15, 2014, the Centers for Medicare and Medicaid Services (CMS) issued a letter to State Medicaid Directors informing them of a decision to withdraw prior regulatory guidance on the free care rule. This Q&A explains how this important reversal of Medicaid policy will impact coverage of school-based interventions for low-income children with asthma.