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Changes in SHARS Impacting School Districts

The OIG audit delved into the state-level processes of SHARS. Based on our understanding, the decisions rendered during the review were appealed by the state and are now final.

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An audit, conducted by the Office of Inspector General (OIG), centered on an evaluative study of processes at the state level within the School Health and Related Services (SHARS) Medicaid Program, focusing on the state of Texas processes. Initially addressing interim billing practices through a review of two districts, the audit subsequently honed its attention to scrutinizing the cost report, emphasizing the Random Moment Time Study (RMTS). Based on our understanding, the decisions rendered during the review, including the recommended actions, were appealed by the state and are now final.

Key Overview of Issue

  1. Audit and implementation delay: The state underwent an audit in 2010, and although the report was received in 2017, major changes were only recently implemented, with less than two weeks' notice to districts. This was done without providing adequate training or specific details of the changes to the districts.
  2. Concerns with Random Moment Time Study coding: The coding changes were retroactively applied to a nearly closed fiscal year, causing districts to lose millions in reimbursements. These districts had followed the provided guidance in good faith. Unfortunately, there's still a lack of clarity on the nature of these issues and the necessary adjustments for districts.
  3. Lack of communication on further changes: Additional changes affecting another quarter have been poorly communicated by the state. These changes, relevant from FFY 2024, raise questions, especially considering the retroactive application to FFY 2022.
  4. Information and deadline challenges: Following intervention by state associations and the Texas State House, districts are receiving more information. However, no extension has been granted for the rapidly approaching deadline. Considering the recent school closures, exploring options for deadline flexibility is crucial.

Overview of Collective Requests from the Associations

  • Addressing SHARS funding reduction: We hope the state will support districts in adapting to the FFY 2022 changes, ensuring these are the final adjustments and communicated in a timely manner.
  • Transparency in reimbursement calculations: There is a need for clear communication regarding the methodology used for calculating reimbursement rates. Unlike other audits, the Cost Report lacks detailed feedback, making it difficult for districts to appeal or learn from the process.
  • Stakeholder involvement: We advocate for more involvement from districts, stakeholders, state associations, and vendors in SHARS decision-making processes. The current leadership's approach contrasts sharply with previous practices of regular engagement and input.
  • Developing a pathway for district success: We suggest simplifying the Random Moment Time Study to enhance accuracy and reduce administrative burden. Additionally, synchronized efforts between HHSC and TEA are essential to alleviate confusion and help districts comply effectively.

Key Points for Communication

  • Audit and implementation delay: Emphasize the gap between the audit in 2010, audit's completion in 2017 and the recent implementation of major changes, highlighting the lack of adequate notice and training provided to districts.
  • Concerns with RMTS coding: Address the retroactive application of coding changes and its impact on district reimbursements. Stress that districts followed previous guidance in good faith and are now facing financial losses due to a lack of clarity in the new requirements.
  • Lack of communication on further changes: Highlight the poor communication from the state regarding additional changes effective from FFY 2024, especially in light of the retroactive changes already impacting districts.
  • Information and deadline challenges: Discuss the need for more information and flexibility regarding deadlines, considering recent school closures and the short notice provided.
  • Collective requests from associations:
    • Advocate for support from the state to help districts adapt to the FFY 2022 changes.
    • Call for transparency in reimbursement calculations and a detailed feedback process.
    • Stress the importance of involving stakeholders in decision-making processes.
    • Suggest simplification of the RMTS and better coordination between HHSC and TEA.

Key Questions to Consider

  • How will the district manage the financial impact of the retroactive coding changes?
  • What steps can be taken to improve communication and collaboration with state agencies in the future?
  • How can the district prepare for potential future changes in SHARS policies and procedures?
  • What measures can be implemented to ensure compliance with the new requirements while minimizing administrative burdens?
  • How can the district effectively advocate for its needs and concerns at the state level?

These points and questions aim to help districts navigate the complexities of the SHARS changes, advocate effectively for their needs, and maintain transparent and effective communication with their communities and relevant authorities.

Reference: Texas Improperly Received Medicaid Reimbursement for School-Based Health Services, A-06-14-00002 (PDF on 

Questions may be directed to HHSC SHARS staff or TASB School Medicaid Services Division Director, Dr. Karlyn Keller at

This information is provided for educational purposes only to facilitate a general understanding of the law or other regulatory mater. This information is neither an exhaustive treatment on the subject nor is this intended to substitute for the advice of an attorney or other professional advisor. Consult with your attorney or professional advisor to apply these principles to specific fact situations.