Arizona’s MSBC Program

Arizona’s Medicaid School Based Claiming Program (MSBC) includes two Medicaid reimbursement program components:  the Direct Service Claiming (DSC) program, and the Medicaid Administrative Claiming (MAC).   These two school-based programs assist participating school districts, referred to as Local Education Agencies (LEAs), including charter schools and the Arizona School for the Deaf and Blind (ASDB), by reimbursing them for Medicaid covered services they provide to eligible and qualified students.  The purpose of the DSC Program is to allow LEAs to receive reimbursement for the cost to provide Medicaid covered medical services to Title XIX eligible students. The purpose of the MAC program is to allow LEAs to receive reimbursement for Medicaid administrative outreach activities that are done routinely within the school setting. 


The Centers for Medicare and Medicaid Services (CMS) is the federal agency that oversees the MSBC Program.  In Arizona, the program is overseen by the Arizona Health Care Cost Containment System (AHCCCS), Arizona’s Medicaid agency.  AHCCCS contracts with a Third Party Administrator (TPA), PCG, to administer the MSBC Program.

The requirements for both the DSC and MAC Programs are a blended result of federal laws and requirements from CMS, state laws and program requirements from AHCCCS, and administrative requirements from PCG. 

Program Methodology

CMS approved the Medicaid State Plan for Arizona to implement the Medicaid cost-based reimbursement for the DSC Program, effective July 1, 2011. This means that the Medicaid reimbursements to LEAs are based on actual costs to provide Medicaid allowable services to students rather than a defined claims fee structure. 

The quarterly Random Moment Time Study (RMTS) is an integral part of the MSBC program as it is used to determine how much time is spent on Medicaid allowable activities for both DSC and MAC.  Specifically for DSC, RMTS is used to determine how much time direct service and personal care providers spend doing Medicaid related services.  For MAC, the RMTS is used to determine the amount of time direct service and administrative staff spends performing administrative and outreach activities that support the proper and efficient operation of the state Medicaid program.  LEAs are only reimbursed for costs of those staff that are included in the RMTS.


The LEA’s DSC reimbursement will be calculated annually through the annual cost report.  Factors that determine the reimbursement amount for the LEA are the cost to provide health related services; percent of time spent doing allowable Medicaid direct services (RMTS results), the unrestricted indirect cost rate, Individualized Education Program (IEP) ratio, and Federal Medical Assistance Percentage (FMAP). 

LEAs are required to continue submitting DSC claims throughout the year to demonstrate that health services continue to be delivered to students.  This supports interim payments for services throughout the school year, prior to the annual cost settlement process. Once the annual cost report is completed, PCG will calculate each LEA’s allowable annual reimbursement amount.  For each fiscal year, total interim payment will be deducted from the reimbursement amount.  Should interim payment be less than the reimbursement amount, the LEA will receive the difference.  If interim payments are higher than the reimbursement amount, the LEA will be required to return funds to AHCCCS.


Similar to the structure of RMTS serving multiple purposes, the quarterly reporting process serves dual purposes for both DSC and MAC.  On a quarterly basis, LEAs report the salary, benefit, purchased professional service (PPS), and any associated federal costs for all staff included in the quarterly RMTS.  The quarterly costs for direct service and administrative staff are used to calculate the quarterly MAC reimbursement. 


Quarterly salary, benefit, PPS, and associated federal costs for all staff included in any of the quarterly RMTS studies will need to be reported in the annual cost report Other transportation costs such as payroll, depreciation, fuel / oil, maintenance, insurance, and depreciation costs will be reported by each LEA on an annual basis.  In addition to reporting allowable costs as previously stated, the LEA must identify other factors such as number of students with one or more related service on their IEP, one-way trip counts, and general versus specialized transportation vehicle costs as all of these components will be used to apportion costs during the cost settlement process.