(a) The department may pay medical assistance under this chapter to a school district on behalf of an eligible child with a disability for rehabilitative and other mandatory and optional services covered under this chapter that are furnished or paid for by the school district if

(1) the school district and the department have entered into an agreement requiring the school district to reimburse the department for any state financial share required by the federal government;

(2) the rehabilitative and other mandatory and optional services are

(A) included in the child's individualized education program developed under AS 14.30.278; and

(B) otherwise eligible for reimbursement under this chapter;

(3) the child is a child with a disability who

(A) is eligible for medical assistance under this chapter for the services; and

(B) complies with all applicable provisions of this chapter for that assistance;

(4) the school district fully complies with billing, auditing, and reporting required under the approved state plan described in AS 47.07.040;

(5) reimbursement of payment for the rehabilitative and other mandatory and optional services under this section does not exceed reimbursement allowable for the services under this chapter; and

(6) all other requirements of federal and state law are met.

(b) Notwithstanding any contrary provision of state law, the school district shall allow the department access to medical, financial, and other records of the child that are in the possession of the school district in order to verify eligibility for services under this chapter. The department shall keep information received under this subsection confidential to the same extent as the school district is required to keep the information confidential under law.

(c) The department may adopt regulations to carry out this section.

(d) In this section, unless the context otherwise requires,

(1) “child with a disability” has the meaning given in AS 14.30.350;

(2) “rehabilitative services” has the meaning given in 42 C.F.R. 440.130;

(3) “school district” has the meaning given the term “district” in AS 14.17.990, but includes a state boarding school established under AS 14.16.010.