LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
ASSEMBLY, No. 3334
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JUNE 29, 2023
SUMMARY
Synopsis: Requires Medicaid reimbursement for covered behavioral health
services provided by local education agency to student who is eligible
Medicaid beneficiary.
Types of Impact: Annual State and school district revenue increases.
Annual State and school district expenditure increases.
Agencies Affected: Department of Human Services, Department of Education,
Department of the Treasury, and school districts.
Office of Legislative Services Estimate
Annual State Revenue Increase $16.9 million to $23.6 million
Annual State Expenditure Increase Indeterminate
Annual School District Revenue Increase $9.1 million to $12.7 million
Annual School District Expenditure Increase Indeterminate
 The Office of Legislative Services (OLS) estimates that this federal revenue maximization
initiative will increase annual State revenue by $16.9 million to $23.6 million and annual
school district revenue by $9.1 million to $12.7 million.
 The revenue growth represents additional federal Medicaid reimbursements under the Special
Education Medicaid Initiative (SEMI), New Jersey’s school-based Medicaid program. The
revenues will be generated from the State’s newly authorized ability to claim as Medicaid
expenses certain behavioral health services that school districts are already providing to
Medicaid-eligible students without currently receiving a Medicaid reimbursement. The bill
does not require school districts to provide any new services.
 As the universe of claimable Medicaid expenses expands, the State and school districts
may incur additional annual expenditures to file and administer the additional claims.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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BILL DESCRIPTION
This bill authorizes school districts to newly claim as Medicaid expenses certain behavioral
health services that school districts deliver to Medicaid-eligible students, as permitted under
federal law. Under the Special Education Medicaid Initiative (SEMI), New Jersey’s school-based
Medicaid program, these services are currently only reimbursable for students who participate in
an Individualized Education program, 504 Accommodation Plan, Individualized Health Care
Plan, or Individualized Family Service Plan; or when the covered services are provided at a
charge to the students. The bill will take effect on the first day of the sixth month following
any federal approval to secure federal financial participation for the behavioral health services.
The Special Education Medicaid Initiative is jointly operated by the Department of Education,
the Department of Human Services, and the Department of the Treasury along with participating
school districts, and allows for recovery of a portion of costs for Medicaid-covered services
provided to Medicaid-eligible special education students. Currently, 65 percent of federal
Medicaid reimbursements accrues to the State and 35 percent to school districts.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that this federal revenue maximization initiative will increase annual State
revenue by $16.9 million to $23.6 million and annual school district revenue by $9.1 million to
$12.7 million. The revenue growth represents additional federal Medicaid reimbursements under
the Special Education Medicaid Initiative (SEMI), New Jersey’s school-based Medicaid program.
The revenues will be generated from the State’s newly authorized ability to claim as Medicaid
expenses certain behavioral health services that school districts are already providing to Medicaid-
eligible students without currently receiving a Medicaid reimbursement. The bill does not require
school districts to provide any new services to Medicaid-eligible students.
The bill directs that the system to submit Medicaid claims for covered behavioral health
services and obtain Medicaid reimbursements is to overlap with the claims and reimbursement
procedures associated with the existing SEMI program. Currently, this program is financed
through certified public expenditures, which allows school districts to participate in financing the
non-federal share of Medicaid costs. A school district certifies its expenses during a defined period
that constitute a Medicaid expenditure for Medicaid-covered services and allowable activities. The
State claims this amount for federal matching and receives the federal share of allowable
expenditures from the federal government. In New Jersey, the school districts receive 35 percent
of the federal reimbursement and the State retains the remaining 65 percent.
Based upon Medicaid enrollment from May 2023, information from the Kaiser Family
Foundation regarding the number of children nationally who require mental health services, and
the availability of behavioral health services in schools, the OLS estimates that between 12,524
and 17,535 Medicaid beneficiaries currently receive behavioral health services that would be
eligible for a federal Medicaid reimbursement under this bill.
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The chart below lays out the current interim reimbursement rates under the SEMI with each
school district assigned to either group A, B, or C:
Service Group A Rate Group B Rate Group C Rate
Evaluation (per evaluation) $1,788.55 $1,788.55 $1,788.55
Medical Transportation (Round Trip) $29.31 $29.31 $29.31
Service (per diem) $30.99 $61.98 $92.97
Assuming the Group B rate and that each eligible child receives one school based evaluation,
as well as one school-based counseling session per school week (estimated at 38 weeks per school
year), during a school year, the annual amount certified by school districts as Medicaid
expenditures under the bill is estimated between $51.9 million and $72.7 million. This estimate
assumes:
(1) There are no medical transportation costs for these services. To the extent medical
transportation costs are incurred, this estimate would increase;
(2) The cost of the services provided by school districts, and covered under the bill, will be
identical prior to the bill’s implementation and following the bill’s adoption, as the bill does not
require school districts to provide new services to Medicaid-eligible students; and
(3) The interim reimbursement rates reflect the actual cost of services for which school districts
will ultimately be allowed to claim reimbursement.
As the bill allows these current expenditures to be newly claimed as Medicaid expenses, the
State will receive an increase of between $16.9 million and $23.6 million in federal Medicaid
reimbursements under the bill, or 65 percent of the total federal Medicaid reimbursement generated
under the bill. Additionally, school districts will receives between $9.1 million to $12.7 million
in increased revenue, representing the remaining of the 35 percent of the federal Medicaid
reimbursements generated under the bill.
In addition, as the universe of claimable Medicaid expenses expands, the State and school
districts may incur additional annual expenditures to file and administer the additional claims.
Section: Human Services
Analyst: Sarah Schmidt
Lead Research Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).