This paper reports on a project which analyzed the possibility of using Medicaid funding to provide reimbursement for some services needed by students with disabilities who are being served by public schools in Colorado. Six school districts or boards of cooperative services were selected to participate in a pilot program as recipients of Medicaid reimbursement. Reasons for special education directors' reluctance to participate in the study are noted. The project found that a new provider type had to be developed in order for public school administrative units to become Medicaid vendors. Necessary changes to rules are proposed, involving creation of a provider category under Early Periodic Screening and Diagnosis Treatment, providing such services as speech/language therapy, audiology, and physical and occupational therapy. The six administrative units estimated the number of handicapped children eligible for Medicaid services at 17% of the handicapped children they serve. The number of Medicaid-eligible handicapped children is estimated to be 12% of the total number of children eligible for Medicaid services. The project concluded that the six administrative units should begin to bill for Medicaid services after completing negotiations, providing staff training, establishing a billing process, and attending to other administrative details. Various administrative materials are attached to the report, including Article 82. (JDD)