To protect previously approved State Medicaid plans from changes in Federal payment for school-based health services for Medicaid-eligible children with individualized education programs.

Addresses certain regulations of the Health Care Financing Administration (HCFA) changing HCFA policy under title XIX (Medicaid) of the Social Security Act regarding the use of a bundled rate to pay for medical services provided by local educational agencies to Medicaid-eligible children with individualized education programs. Provides that any State with a rate methodology and documentation system previously approved by HCFA for such services shall be deemed in compliance with such regulations with respect to rate, payment, and reconciliation procedures, if such system: (1) includes case rates based on retrospective analysis of actual costs, adjusted every three years, and the type, amount, duration, and scope of Medicaid-eligible services actually provided to each eligible child on a periodic basis; (2) includes documentation of the type, amount, duration, and scope of Medicaid-eligible services provided to each such child on a periodic basis, and documented in the care instruction in each individualized education program; and (3) permits reconciliation using such documentation.