Q & A: S.D. v. Hood, Medicaid Early and Periodic Screening, Diagnostic and Trea

Executive Summary

This Q&A discusses the importance of the S.D. v. Hood case to EPSDT.

Question: Our office represents children who are insured through the Medicaid program. I understand there is a recent court case that concerns the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) service for Medicaid-eligible children and youth 
under age 21. Can you tell me about the case? 
Brief Answer: On November 15, 2004, the Fifth Circuit Court of Appeals issued a longawaited decision, S.D. v. Hood, __ F.3d __ (2004). The case is available on LEXIS at 2004 U.S. App. LEXIS 23900 and through Westlaw at 2004 WL 2584704. The decision affirms the holding of the United States District Court, 2002 U.S. Dist. LEXIS 23535 (E.D. La. Dec. 5, 2002). 
Discussion: S.D. v. Hood looks at whether the Louisiana Medicaid agency is required to cover necessary disposable incontinence supplies for S.D. as part of the EPSDT service and holds that it is. 
S.D. is a sixteen-year-old Medicaid recipient with spina bifida, a congenital defect characterized by imperfect closure of the spinal column. S.D. has total bowel and bladder incontinence and cannot sense potentially infectious skin irritations resulting from incontinence. Before S.D. moved to Louisiana with his family, he was provided with disposable incontinence underwear by the Virginia Medicaid program. 
In 2002, S.D.?s Louisiana physician prescribed disposable incontinence underwear as health care necessary to ameliorate S.D.?s mental and physical conditions. The physician noted that the underwear draws moisture away from S.D.?s skin and prevents chronic irritation and infection from urine wetness. He also prescribed the underwear because, without it, S.D. would be home bound, isolated and unable to attend school or other activities, thus affecting his mental health. 
The Louisiana Medicaid agency denied coverage on the grounds that the disposable underwear was not medically necessary and was a non-medical supply not covered by the Medicaid program. Without mentioning EPSDT, an administrative law judge upheld the denial because ?diapers? are ?specifically excluded from coverage? under the Louisiana state Medicaid plan for adults. S.D. appealed his case to federal district court. The district court reversed the administrative decision, declaring that S.D. could enforce the federal EPSDT laws and that he was entitled to Medicaid coverage for the prescribed underwear under the EPSDT program. See No. 02-2164-N, 2002 U.S. Dist. LEXIS 23535 (E.D. La. Dec. 5, 2002). 
The Louisiana Medicaid agency appealed the case to the Fifth Circuit Court of Appeals. The agency did not challenge the district court?s determination that S.D. is eligible for the EPSDT program, that S.D. has bladder incontinence resulting from spina bifida, or that disposable incontinence underwear is a health care service necessary to correct or ameliorate S.D.?s conditions. The agency gave other justifications for refusing to cover the prescribed supplies: First, it contended that the underwear did not constitute a health care service, treatment or measure described in 42 U.S.C. § 1396d(a), the section of the Medicaid Act which lists mandatory and optional services. Next, the agency said that Louisiana?s state Medicaid plan, as approved by the Centers for Medicare & Medicaid Services (CMS), excluded coverage of incontinence supplies. Finally, it argued that the EPSDT provisions did not create privately enforceable rights. 
The Circuit Court Decision 
On November 15, 2004, a three-judge panel of the Fifth Circuit Court of Appeals unanimously affirmed the district court. The opinion was written by Judge Dennis, who served on the Frazier v. Gilbert panel which refused to enforce an EPSDT consent decree in Texas. See 300 F.3d 530 (5th Cir. 2002) (also finding certain EPSDT provisions did not create privately enforceable federal rights), rev?d, Frew v. Hawkins, 540 U.S. 431 (2004). In S.D. v. Hood, the Fifth Circuit holds, first, that the EPSDT provisions of the Medicaid Act establish federal coverage rules for EPSDT-eligible children under age 21 and, second, that the EPSDT provisions create privately enforceable federal rights. 
EPSDT?s federal coverage rules 
The Court thoroughly describes the EPSDT treatment statute, 42 U.S.C. § 1396d(r)(5), and its legislative history. It notes that when EPSDT was added to the Medicaid Act in 1967, a broad treatment requirement was not addressed in the statute; rather, the Secretary of Health and Human Services was left to promulgate regulations. In regulations, the Secretary provided for treatment designated as ?discretionary services? and provided that a state plan ?may provide for any other medical or remedial care? defined as medical assistance by the Medicaid Act. See 42 C.F.R. § 441.37. In 1989, however, Congress concluded that EPSDT coverage was disappointing and the statute was not adequate. Therefore, § 1396d(r)(5) was added. This law requires states to provide EPSDT-eligible children ?such other necessary healthcare? described in § 1396d(a) of the Medicaid Act to ?correct or ameliorate? illnesses and conditions discovered by screening services, whether or not such services are covered under the State Medicaid plan for adults. 2004 U.S. App. LEXIS 23900, at *19. The Court concluded that this legislative history is critical because it

? demonstrates Congress intended the health care and treatment available under the EPSDT program to be made more accessible and effective by: removing the Secretary?s express authority to define the means and the standards for its operation; placing the goal, means and standards in the statute itself; and by imposing an obligatory, not discretionary, duty on states to effectuate this aspect of the EPSDT program, ?whether or not such services are covered under the State plan.? 42 U.S.C. § 1396d(r)(5). 
Thus, the plain words of the statute and the legislative history make evident that Congress intended that the health care, services, treatment and other measures that must be provided under the EPSDT program be determined by reference to federal law, not state preferences. 
Id. at *25-26. The Court noted that its reading of the statute is consistent with the statements of CMS and every other federal circuit court of appeals which has examined the scope of EPSDT. 
Thus, the Court flatly rejected the Louisiana Medicaid agency?s argument that the 27 health service categories enumerated in § 1396d(a) are only ?hollow forms? that each state can fill with as few or as many types of health care as the state within its discretion sees fit. Id. Rather, the Court held that ? a state Medicaid agency must provide, under the EPSDT program, (1) any medical assistance that a state is permitted to cover under § 1396d(a) of the Medicaid Act, that is (2) necessary to correct or ameliorate defects and physical and mental illnesses and conditions discovered by screening.? Id. at *30; see also Id. at *43 n.15 (finding that appellate counsel confused the ?disputed question of whether states must provide care or services ?medically necessary? for general recipients under its state plan with the undisputed, more focused EPSTD [sic.] statutory requirement that states must provide medical assistance ?necessary to correct or ameliorate conditions discovered by screening??). 
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