The Potential Cost of Medical Residential Placements to Public School Districts

By: Gabrielle Goham, Esq.

Reprinted with permission from the February 22, 2019 issue of The Legal Intelligencer.© 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

Public school districts are, by definition, not mental health service providers.  However, there are times when a student’s medical needs and educational needs are deemed by factfinders to be so intertwined that students require residential placement to access their education. The decision to place a student in a residential educational program, like all other educational placement decisions, is required under the Individuals with Disabilities Education Act to be made by an Individualized Education Program team (IEP team) comprising professionals from the student's school district of residence and the parents.

That team must decide whether the student requires a residential educational placement in order to receive a Free Appropriate Public Education.  If parents disagree with an IEP team placement decision, they can initiate a special education due process hearing against their school district of residence.

However, without the resident school district’s prior knowledge or input, students are sometimes deemed by Pennsylvania Medical Assistance to require residential clinical treatment due to acute medical necessity. The cost of this medical placement is funded by the insurance carrier for as long as it continues to extend such coverage.

Once the carrier determines that the student no longer requires the medical placement due to acute medical necessity, it notifies the parents that funding will imminently terminate. Parents who disagree and who are concerned about their child returning home without adequate mental health supports often look for an immediate funding source to continue the residential placement. While there may be an appeal process in place for parents to challenge their insurance carrier decisions, parents often choose to initiate a special education due process action. This is a complaint form that is simply filed online with the Pennsylvania Office for Dispute Resolution - against their resident school district, seeking to force it to pick up the residential placement bill at taxpayer expense. 

If a special education hearing officer orders the resident school district to continue funding residential placement for a student, the cost to the school district may be as much as several hundred thousand dollars each year per student. This cost is diverted from educational programming for other school district students (both disabled and non-disabled).

This means that a school district which did not place the student in a residential facility for educational purposes through an IEP team decision may be left footing the full bill for a placement decision made by an insurance company for non-educational purposes once that carrier cuts funding. Because insurance companies decide to place students in medical treatment facilities without consulting the resident school district, the school district has no way of budgeting in advance for the potential number of students to whom it may be required to offer residential placements originating from these third- party medical decisions in any given school year. Thus, they are left having to scramble to find the funds, money which will necessarily be diverted from educational services for all of the students in the school district.

This potential outcome begs several questions. Will the Department of Education increase funding to our school districts so that they can meet the increasing mental health and other expenses of their special education students while still providing quality education to the rest of the student body? Will the mental health system be required to submit to tighter regulation directing it to fund needed mental health support for our youth in a manner equal to the increasingly rigorous standards to which public school districts are held? Moreover, if the answer to these questions is no, at what point will the department and our judiciary recognize that public education simply cannot continue to function if school districts are required to fund services within the purview of other public agencies without increased support?

About the Author: Gabrielle C. Goham joined Delaware County full-service law Raffaele Puppio in 2010 as a Partner and Chair of the Special Education Department. She represents school districts, charter schools, private schools and intermediate units in special education matters.