With New York City schools facing closures, staff cuts and other budget concessions, it’s a real mind-bender as to how and why the Department of Education (DOE) could walk away from tens of millions of reimbursable dollars for Medicaid services provided to thousands of special needs students, according to a recent article in the New York Times.

After a 2005 audit that found a host of irregularities in claims, including missing documentation and incorrect service dates, the DOE agreed to repay $100 million to the federal government and $332 million to the state, a huge price for bad paperwork.

New filing rules were imposed that the department is also having a difficult time adapting to. As a result, education-related claims are down as much as 60 percent from 2006 to 2010. However, during that same time frame, the city received $302 million in Medicaid reimbursement monies for administrative claims, which, under rules that took effect in September 2009, are now no longer eligible for reimbursement. The city filed no claims related to nursing services, occupational and physical therapy, psychological counseling, audiological evaluations or transportation during that time frame.

According to spokeswoman Barbara Morgan, the demanding requirements of the new rules coupled with a lack of trained staff are to blame for the city leaving thousands of claims unfilled since the new rules took affect. Two-thirds of the city’s 168,000 special needs students qualify for Medicaid, but the city has proper documentation for only 9,000 of them. School districts are required to file claims as medical clinics with accompanying doctors’ orders and specific service codes.

According to Morgan, the city is trying to get its act together by hiring a manger dedicated to handling the claims as well as a Medicaid compliance officer. The city has also hired medical personnel to write the service orders, which must be attached to each claim in order for it to be eligible for reimbursement. The department has also built an $80 million database to make filing claims easier and screened therapists to make sure they meet the certification requirements for reimbursement.

Manhattan Borough President Scott Stringer recently wrote to Schools Chancellor Dennis Walcott criticizing the DOE for forfeiting millions of much-needed funding by its failure to properly file for reimbursement. “Funding for public schools has been cut to the bone, and it’s unconscionable that the DOE will leave millions of dollars on the table,” Stringer said.