Medicaid Coverage of Behavioral Therapy for Children with Autism (Jan. ’09)

Executive Summary

This document provides a useful analysis of Applied Behavioral Analysis (ABA) therapy in the treatment of children with autism.

Q & A
 Medicaid Coverage of Therapeutic Treatment for Children with
Autism1
Produced by Sarah Somers
National Health Law Program
January 2009
Q. My client is a Medicaid-eligible child with autism. Our state
Medicaid agency has taken the position that therapy services for
treatment of autism can only be covered through a home and
community-based waiver. But, I have heard that a recent court
decision held that Applied Behavior Analysis Therapy (ABA) must
be covered for all Medicaid-eligible children. Is this true?
A. Yes. The decision is Parents League for Effective Autism
Services, et. al. v. Jones-Kelly, 565 F. Supp. 2d 905 (S.D. Ohio
2008) stay den. 2008 WL 2796744 (July 17, 2008). The court held
that Medicaid?s Early and Periodic Screening, Diagnostic, and
Treatment (EPSDT) provisions require that ABA therapy be
covered when necessary to correct or ameliorate a child?s
condition. The plaintiffs are represented by Ohio Legal Rights
Services, Ohio?s P & A. The decision has been appealed to the
Sixth Circuit Court of Appeals, which will almost certainly address
the scope of services that can be covered for children with
behavioral health needs.
Discussion
Autism is a complex, neurodevelopmental disability that generally
manifests during the first three years of life. It disrupts the normal development

of the brain, causing impairments in social interaction, verbal and non-verbal

communication, leisure and play activities, and learning.2 The category Autism
Spectrum Disorders (ASD) includes autism as well as Asberger?s disorder and
pervasive developmental disorder not otherwise specified, which manifest similar
symptoms. Autism and the other ASDs are classified as mental disorders under
the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition.
Autism is also, however, classified as a developmental disability3 and, under
Medicaid regulations, considered a ?related condition? to mental retardation.4
 Applied Behavior Analysis (ABA)
ABA therapy is an intensive behavioral intervention program for children
with autism spectrum disorders. It is based on a one-on-one teaching approach
relying on reinforced practice of various skills.5
 The American Academy of
Pediatrics defines it as:
[t]he process of applying interventions that are based on the principles of
learning derived from experimental psychology research to systematically
change behavior . . . ABA methods are used to increase and maintain
desirable adaptive behaviors, reduce interfering maladaptive behaviors or
narrow the conditions under which they occur, teach new skills, and
generalize behaviors to new environments or situations.6
ABA programs are generally conducted under the supervision of a behavioral
psychologist and have been shown to be most effective at intensive levels ? at
least 25 hours per week, up to 40 hours per week.7
 ABA therapists are only
certified after significant training. 8
 Thus, the therapy is costly. State Medicaid
agencies are likely to balk when payment for the service is requested.
Medicaid Policy
Medicaid?s Early and Periodic Screening, Diagnostic and Treatment
EPSDT requires coverage of all Medicaid services that are necessary to ?correct
or ameliorate? a physical or mental condition of beneficiaries under age 21.9
 This includes any service that falls into one of the categories listed in the federal
statute at 42 U.S.C. § 1396d(a), regardless of whether the state chooses to cover
the service for adults. These categories include physician services, hospital
services, private duty nursing, personal care services, physical therapy, and
others. One of the categories of services covered, sometimes referred to as the
?rehabilitation? option, is:
Other diagnostic, screening, preventative and rehabilitative services,
including any medical or remedial services (provided in a facility, home, or
other setting) recommended by a physician or other licensed practitioner
of the healing arts within the scope of their practice under State law, for
the maximum reduction of physical or mental disability and restoration of
an individual to the best possible functional level.10
Medicaid also allows states to offer home and community-based services to
people who are at risk of institutionalization through programs known as
?waivers.?11 These programs enable states to cover a range of services including
services that can otherwise be covered under Medicaid as well as certain special
services, including housekeeping and respite.12 Waivers may also cover
?habilitation? services ?designed to assist individuals in acquiring, retaining, and
improving the self-help, socialization and adaptive skills necessary to reside
successfully? in community settings.13 CMS has stated that habilitation services
are not regular state plan services and cannot be covered under EPSDT.14
Parents League for Effective Autism Services v. Jones-Kelly
Plaintiffs, an association of parents and families with children diagnosed
with autism sued to enjoin Ohio?s Medicaid agency, the Ohio Department of Jobs
and Family Services (ODJFS), from implementing rules that would have
excluded coverage for ABA therapy services. Plaintiffs are represented by Ohio
Legal Rights Services (OLRS). They argued that this exclusion would violate
EPSDT requirements. The Court agreed, denying Defendant?s motion to
dismiss15 and issuing an order preventing the state rules from going into effect.16
The Court also brought in the federal Centers for Medicare and Medicaid
Services (CMS), which oversees the Medicaid program, as a defendant.
For a number of years, Ohio had covered ABA therapy services through
EPSDT. In 2005, CMS sent a letter to the state Medicaid director informing her
that some of the services the state was proposing to cover under the
rehabilitation option were actually habilitative and could not be covered outside of

a waiver program. In 2007, CMS proposed regulations that would narrow the

scope of services that could be covered under the rehabilitation option.17
Congress has placed a moratorium on these regulations.
Shortly after CMS issued the rehabilitation regulations, ODJFS proposed
rules that would narrow the definition of community mental health services: They
could only be covered if they provided for ?the maximum reduction of mental
illness and are intended to restore an individual to the best possible functional
level.?18 CMS later wrote to ODJFS stating that it ?generally views treatment for
autism as habilitative rather than rehabilitative? and stated that it might not
reimburse some of the payments that ODJFS had made to ABA providers.19
The Court granted the injunctive relief. It held that the Plaintiffs were likely
to succeed on the merits because they had ?provided sufficient evidence that
ABA therapy, when recommended by a licensed practitioner of the healing arts,
is a medically necessary service . . . [thus] the proposed [state] rules will
effectively cut off funding for medically necessary services,? violating the
Medicaid Act.20
First, the Court discussed ?the extremely broad EPSDT obligation,?
emphasizing that
while a state has discretion in determining which medical services, beyond
the mandatory [ones], it will cover for adults, states are bound, when it is
medically necessary, to make available to Medicaid-eligible children all of
the twenty-eight types of care and services included as part of the
definition of medical assistance in the Act.21
In addition, ?the fact that a state plan does not mention a particular service does
not mean it is not a covered EPSDT service.? 22
ABA therapy services are covered within the scope of the rehabilitation
option, the Court held, rejecting the argument that the services were
habilitative.23 The Court reasoned that
Unlike the definition of ?rehabilitative? services, the definition of
?habilitative? services does not contain the requirement that the services
be ?medical or remedial? and ?recommended by a physician or other
licensed practitioner of the healing arts.? Moreover, habilitation services
are not . . .recommended for the ?maximum reduction of physical or
mental disability and restoration of a recipient too his best possible
functional level.? What truly differentiates ?habilitative? and ?rehabilitative?
services is the ?medical necessity of those services.?24
 In particular, the Court took issue with ODJFS? claim that in order to be
rehabilitative, a service would have to restore skills that a child previously had.
?Taken to its logical conclusion, such a restrictive interpretation . . . would mean
that no child who is born with a disability, could ever receive rehabilitative
services. This does not comport with the broad coverage afforded under the
EPSDT mandate.?25 The Court also noted that section 1396a(a)(13) provided for
coverage of ?preventive? services as well as rehabilitative services and opined
that the ABA services at issue ?may well be ?preventative? as well as
?rehabilitative.??26 The Court also found that the other requirements necessary to
issue an injunction were satisfied.
In addition, the Court held that it was not required to refrain from deciding
the case under the Burford abstention doctrine.27 Under Burford, federal courts
should decline from exercising jurisdiction over actions challenging the validity of
a state administrative order.28 The doctrine applies only when there are difficult
questions of state law related to important policy problems, or where federal
review would disrupt state efforts to establish policy related to an important public
concern. And, in a separate opinion, the Court also held that the EPSDT
requirements were enforceable through Section 1983 and that the association
had standing to bring an action on behalf of its members.29
ODJFS appealed the decision to grant the injunction to the Court of
Appeals for the Sixth Circuit.30 It did not appeal the denial of the motion to
dismiss or the rejection of the Burford doctrine. It also requested a stay of the
injunction, which the Court rejected in another written opinion.31 In addition to
reiterating its earlier holding that ABA services are not habilitative, the Court also
pointed out that the state had impermissibly attempted to limit coverage of
rehabilitative services only for those with mental illness.32
In asking for a stay, Defendants argued that the Court should defer to
CMS? determination habilitative services could not be covered by Medicaid. The
Court rejected this argument on the basis that Plaintiffs had shown that ABA

therapy services were not habilitative.33 The Court did not discuss the letter from

CMS that stated that treatment for autism was generally habilitative. However, a
representative from CMS appeared at the hearing. The judge pressed him to
state whether ABA therapy services were habilitative, but he refused, stating that
?all coverage and eligibility and reimbursement issues are in play? with regard to
whether ABA services would be covered.34 It is likely that the Court gave the
CMS letter no weight in light of this conflicting statement of position.
Next Steps
The appeal has been fully briefed. An amicus brief was filed on behalf of
Plaintiffs by a group of health care providers, public interest law firms, and
protection and advocacy programs, including NDRN, the Disability Law &
Advocacy Center of Tennessee, Michigan Protection & Advocacy Service, Inc.,
and Kentucky Protection and Advocacy. Oral argument has not yet been
scheduled.
CMS has, thus far, taken a very passive approach to this litigation. It
remains to be seen whether this will change with a new administration.
The rehabilitation regulations are still subject to a moratorium. It is hoped
that the Obama administration will withdraw them entirely. Advocates are also
hopeful that there will be more clarification about coverage of services for
children with developmental disabilities and ASDs.
Advocates should monitor NDRN and NHeLP?s website for further
developments in connection with the lawsuit and with the rehabilitation
regulations. For more information about the case, advocates may want to
contact Michelle Atkinson or Susan G. Tobin at OLRS,
http://olrs.ohio.gov/ASP/HomePage.asp.

 

1 Produced by the National Health Law Program with a grant from the Nathan
Cummings Foundation, NC IOLTA, and the Training Advocacy Support Center (TASC), which is
sponsored by the Administration on Developmental Disabilities, the Center for Mental Health
Services, the Rehabilitation Services Administration, the Social Security Administration, and the
HealthResources Services Administration. TASC is a division of the National Disabilities Rights

Network (NDRN).

2 Parents? League for Effective Autism Services, Inc. v. Jones-Kelly, 565 F. Supp. 2d 905, 907 (S.
D. Ohio 2008).
3 See, e.g., Dep?t Health & Human Servs., Centers for Disease Control and Prevention, ?Autism
Information Center,? at http://www.cdc.gov/ncbddd/autism/ (last visited Jan. 24, 2009).
4 42 C.F.R. § 435.1010.
5 565 F. Supp. 2d at 908.
6 Scott Myers et al., American Academy of Pediatrics, Management of Children with Autism
Spectrum Disorders, 120 PEDIATRICS 1162, 1163 (Nov. 2007).
7 Id., 565 F. Supp. 2d at 908.
8 See, e.g., Behavior Analysis Certification Board, Inc., at www.bacb.org (last visited Jan. 27,
2009).
9 42 U.S.C. § 1396d(r)(5).
10 Id. § 1396d(a)(13).
11 42 U.S.C. § 1396n(c).
12 42 U.S.C. § 1396n(c)(4)(B).
13 42 U.S.C. § 1396n(c)(5)(A). See also Sarah Somers, NHeLP, ?Q & A: Habilitation Coverage
and Medicaid Services,? October 2006, available from NDRN and NHeLP.
14 Id.
15 565 F. Supp. 2d 895 (S.D. Ohio 2008).
16 565 F. Supp. 2d 905 (S.D. Ohio 2008).
17 See Sarah Somers, NHeLP, ?Fact Sheet: Proposed Medicaid Rules: Rehabilitation Services,?
(Sept. 2007), available from NHeLP or NDRN.
18 565 F. Supp. 2d at 910.
19 Id., citing Letter, CMS to Helen Jones-Kelly (March 21, 2008).
20 565 F. Supp. 2d at 917.
21 565 F. Supp. 2d at 911-912 (internal quotations omitted).
22 565 F. Supp. 2d at 912.

23 565 F. Supp. 2d at 915.

24 565 F. Supp. 2d at 916.
25 565 F. Supp. 2d at 916.
26 Id.
27 565 F. Supp. at 913-914.
28 Id. at 914, see also [abstention Q & A]
29 565 F. Supp. 2d 895.
30 No. 08-3931(6th Cir.)
31 No. 2:08-cv-421, 2008 WL 2796744 (S.D. Ohio July 17, 2008).
32 Id. at *2.
33 Id.

34 Record, Tr. Trans. At 239-241 (available from NHeLP)

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