The Pediatric Specialty Care EPSDT Case

Executive Summary

This fact sheet discusses advocact tips for pediatric specialty care EPSDT cases.

Question: My client is the parent of a four-year-old girl who is at risk for developmental delay. The child has been receiving speech and physical therapy and early intervention day treatment six hours per day. Medicaid has covered these services. However, the client recently received a letter from the state Medicaid agency stating that the day treatment program is being reduced to two hours per day. I think the state?s policy is based on overall budget concerns, rather than any change in the child?s condition or the medical literature. What can I do? 
Answer: As discussed in our November 2004 Q&A (regarding S.D. v. Hood), the Medicaid Act requires the state Medicaid agency to assure that children who are eligible for Early and Periodic Screening, Diagnostic and Treatment (EPSDT) services receive the care and treatment necessary to correct or ameliorate their health conditions. See 42 U.S.C. §§ 1396a(a)(10)(A), 1396a(a)(43), 1396d(a)(4)(B), 1396d(r) (2005). The across-the-board reduction in day treatment announced by the State does not comply with this mandate. An ongoing case from Arkansas, Pediatric Specialty Care v. Knickrehm, is quite similar to your situation. A series of rulings in the case reinforce the role of EPSDT in assuring necessary care and treatment and illustrate how important it is for you to investigate why the State is implementing a service reduction. The case is discussed below. 
Pediatric Specialty Care concerns repeated attempts by the Arkansas Department of Human Services (ADHS) to reduce Medicaid coverage of Child Health Management Services (CHMS). CHMS is the health care delivery model that has been used by the Department to provide early intervention diagnostic and therapy services to children between the ages of six months and six years. These children have or are at risk for chronic physical, developmental, behavioral, or emotional conditions and require health and related services beyond that required by children generally. Children are eligible for CHMS if they have a medical diagnosis, such as AIDS, cystic fibrosis, or Down Syndrome; a developmental diagnosis, such as autism or cerebral palsy; blindness, deafness or impairments of vision or hearing; developmental delay; or mental retardation. 
CHMS are comprehensive in nature. Following referral from a physician, CHMS clinics use a multi-disciplinary approach to perform diagnostic and evaluative assessments of the child. A CHMS physician then prepares an individual treatment plan and prescribes needed care, which is provided at CHMS clinics across the State. Treatments include nutrition services, behavior therapies, speech and language pathology services, psychological services, and early intervention day treatment. Early intervention day treatment is a type of day care program which reinforces the skills learned in therapy and is operated by early childhood specialists and overseen by a medical staff. 
In November 2001, ADHS issued a press release announcing that it would significantly alter CHMS by ending Medicaid coverage of therapeutic services and early intervention day treatment and remove the listing of those treatments from the state Medicaid plan. The diagnostic and evaluation component of CHMS would remain intact. In response to the announcement, Pediatric Specialty Care, a CHMS clinic, along with other clinics and the parents of three recipients, filed Pediatric Specialty Care, Inc. et al., v. Arkansas Dep?t of Human Serv., No. 4:01CV00830WRW (E.D. Ark.). The complaint, filed pursuant to 42 U.S.C. § 1983, alleges that the ADHS is violating the Plaintiffs? federal right to EPSDT services and their procedural and substantive due process rights. 
Pediatric Specialty Care I: Federal Statutory Rights 
The Defendants responded to the complaint by arguing that they were complying with the law and that the Plaintiffs lacked standing to bring the suit. Following a full hearing, the federal district court found that the proposed CHMS changes would cause children to lose early intervention day treatment services altogether, because the only way children could receive the services under the state Medicaid plan was to be enrolled in the CHMS program. Moreover, while the children could obtain therapy services from other providers, therapy services not provided in conjunction with CHMS day treatment services would fail to maximize their treatment. According to the court, the cutbacks violated the EPSDT statute?s requirement that states cover services listed in 42 U.S.C. § 1396d which are needed to ?correct or ameliorate? a child?s health condition. The court found the day treatment and therapy services met the definition of rehabilitation services within section 1396d(a)(13) because they were needed for ?maximum reduction of disability and for restoration [of a developmentally delayed child] to the best possible functional level.? Pediatric Specialty Care v. Arkansas Dep?t of Human Serv., No. 4:01CV00830WRW, slip op. at 10 (E.D. Ark. Dec. 10, 2001). 
The district court also held that categorically needy children who require medical assistance covered under section 1396d(a)(13) and for whom a physician recommends early intervention day treatment have a federally enforceable right to the treatment. It permanently enjoined the CHMS cutbacks and ordered the ADHS to continue to list the CHMS services in its state Medicaid plan. ADHS appealed to the Eighth Circuit Court of Appeals. 

The Circuit Court upheld the district court in most respects. 293 F.3d 472 (8th Cir. 2002) (Pediatric Specialty Care I). First, it held that the EPSDT statutes created federal rights that the Plaintiffs could enforce pursuant to section 1983. Id. at 477-79. In a ruling issued ten days after Gonzaga Univ. v. Doe, 536 U.S. 273 (2002),2 the Eighth Circuit, without mentioning Gonzaga, applied the three-prong enforcement test and determined that: (1) the plaintiffs are the intended beneficiaries of the EPSDT statutes, 42 U.S.C. §§ 1396a(a)(10)(A) and 1396a(a)(43), as defined by §§ 1396d(a)(4)(B) and 1396d(r); (2) the statute is written with sufficient clarity to be judicially enforceable; and (3) the statute creates a binding obligation on ADHS to create a state plan that includes the provision of EPSDT services as they are defined in section 1396d(r).3 Id. The Court added that ?even without individual standing, the provider plaintiffs . . . have standing to assert the rights of their CHMS patients.? Id. at 478 (citing Singleton v. Wulff, 428 U.S. 106 (1976)). 
Next, the Court upheld the district court?s substantive findings, noting that ?early intervention day treatment services provide numerous benefits to children, including increased IQ levels, reduction in developmental disabilities, and a decreased chance of being placed in special education classes.? Id. at 479. The Court also agreed that the Medicaid Act requires the ADHS to reimburse early intervention day treatment services when a physician prescribes them as medically necessary for the maximum reduction of a disability. Id. (citing §§ 1396d(r) and 1396d(a)(13)). Because CHMS clinics were the only providers of early intervention day treatment, the Court ordered ADHS to reimburse those clinics. Id. at 480-81. However, the Court reversed the district court to the extent that it had required CHMS early intervention day treatment services to be specifically listed as a service in the state Medicaid plan. Id. at 480. 
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