NH subcommittee examines special-education 'catastrophic' aid, Medicaid billing and data gaps

A legislative subcommittee on special education convened to hear local special-education directors and service providers on how New Hampshire districts identify and bill for high-cost students and how Medicaid reporting interacts with state catastrophic special-education aid.

The panel heard that districts use different software and practices to capture service-delivery time and costs, that participation in the Medicaid-to-schools program is voluntary and uneven across the state, and that the state’s current aid formula and reporting systems make it hard to predict the fiscal impact of lowering the threshold where state aid begins.

Why it matters: State lawmakers are weighing whether to change the special-education aid formula (commonly discussed as moving the local “first dollar” threshold from 3.5 times the state average student cost to a lower figure such as 2.5). The subcommittee was told many districts must choose, on a per-student basis, whether to pursue Medicaid reimbursement or to rely on the state catastrophic-aid calculation — a choice that can materially change whether a student’s net cost reaches the state threshold that triggers additional state aid.

District directors described three large cost drivers that most commonly push student costs above the state threshold: one-to-one paraeducators (including benefits and employer costs), specialized transportation, and out-of-district/residential placements. Esther Kennedy, director of student services for Guilford, said her district records every staff “touch” with a special-education student so she can decide “what is our better bang for the buck? Do I put them in as Cat A because I can get more money back? Or do we just keep them in Medicaid where I know that I can't double bill into the state system?”

Process and differences across districts

Speakers described different technical approaches. Lisa Horn, assistant director of special services for the Bedford School District, said Bedford uses a service-delivery logging system (EDMS) to capture each related-service contact and then compiles invoices that are uploaded to the state’s special-education reporting system for catastrophic-aid consideration. Jess Bickford, assistant superintendent for student services at SAU 53, said her SAU separates Medicaid billing and special-education aid billing and uses the state NESIS database for the official state reporting points.

Dan Korder, general counsel at Boothby Therapy Services, summarized the legal framing for Medicaid and special-education billing and cited RSA 186-C:25, which defines the program’s scope. Korder told the committee that “this subdivision is intended to provide Medicaid funding for services that qualify as special education or related services,” and added that Medicaid’s covered-services universe is a narrower subset of the broader special-education services universe — meaning districts must take care to bill only for Medicaid‑eligible, medically necessary services.

Funding shortfalls and data gaps

Members recapped the recent fiscal year when the state allocated roughly $34 million for special-education aid while actual claims totaled about $50.1 million, leaving roughly a $16 million shortfall and requiring proration of payments. Districts reported uneven Medicaid recovery: one director summarized the program’s yield as roughly $8.8 million in Medicaid reimbursement statewide but said some districts do not bill Medicaid at all and that another “half again as much” may be going unclaimed.

Directors warned that the mechanics of billing change incentives. As one director explained, when a district bills Medicaid before calculating its special-education aid claim, the Medicaid payments can lower the district’s reported net cost and may make the student fall below the catastrophic threshold — which could reduce overall district reimbursement from the state. That creates a practical tension between pursuing Medicaid revenue and preserving eligibility for state catastrophic aid.

Recordkeeping and staffing burdens

Speakers described labor-intensive recordkeeping. Several districts said they track dozens to a few hundred students as candidates for catastrophic aid each year and submit detailed invoices and attendance/service logs to the state. Bedford said it tracks 60–80 students for potential aid and uploads finalized invoices in July; Guilford estimated hundreds of special‑education students overall but typically calculates several dozen candidates for catastrophic review.

Several directors urged stronger centralized supports. They described denials and coding changes that require follow-up by specialized billing staff and noted that many small SAUs lack the staffing capacity to pursue Medicaid claims and to manage audits. One director suggested a shared co-op or centralized billing resource and expanded training so small districts could participate without incurring larger administrative costs.

Systems and reporting

NESIS (New Hampshire Special Education Information System) is the state’s required reporting system for the 16 federally required data points for identified students, but several directors said districts use other local systems for IEP drafting and daily service logs. Jessica (last name not specified) noted NESIS is slated to be replaced in 2027 and urged that any replacement be developed with active field input to ensure usability.

Legal and policy considerations

Committee members discussed alternatives used in other states. The Arkansas model provided in subcommittee materials was cited repeatedly: Arkansas allows an initial high-cost threshold lower than New Hampshire’s, specifies eligible/ineligible costs, and in practice requires districts to document attempts to secure other revenue (Medicaid, private insurance) before drawing from its high-cost fund; it also caps state reimbursement per student in ways that do not map cleanly to New Hampshire’s higher out-of-state placement costs.

Federal rules were referenced on private-payor sequencing and parental protections. Korder and other speakers noted that federal guidance (34 CFR 300.154(d)) permits — but cautions about — billing private insurance for services provided pursuant to an IEP, adding that using private insurance can affect family premiums and is operationally complex.

Committee direction and next steps

The subcommittee set several nonbinding follow-ups: invite the Department of Education special-education director to the next meeting (scheduled April 28 at 10:00 a.m.), gather the Special Education Aid Manual and other state guidance for review, and request specific data from the Department on the number of paraeducators statewide and counts of 504 plans and IEPs that might inform any change in the aid threshold. Members also asked staff to compile comparative models from other states (via the Education Commission of the States) for further study.

What was not decided

No statutory changes were voted on or adopted. The session produced no formal motions; committee members asked staff and the Department of Education to return with more data and recommendations.

Ending

Directors and providers told the committee that resolving the policy questions will require better, unified reporting, clearer rules on how Medicaid and state aid interact, and investment in administrative capacity — especially for smaller SAUs — before the legislature considers lowering the aid threshold or otherwise altering the funding formula.