Introduction to Medicaid: Eligibility, Federal Mandates, Hearings and Litigation
Copyright  2003 Southern Disability Law Center.  All rights reserved.

Maureen O'Connell
Sidney Watson
Bernadine Butler
April 2, 2003

This document updated in 2004 at  Introduction to Medicaid: Eligibility, Federal Mandates, Hearings and Litigation

I.       Introduction to Medicaid

A.   History and Purpose

In 1965, Congress enacted Title XIX of the Social Security Act to establish the voluntary federal-state health care program known as Medicaid. Today, this program provides an entitlement to medically necessary health care to approximately 40 million low income elderly individuals, families, and to certain people with disabilities. 1

According to the Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Services (HHS), "Medicaid is the largest program providing medical and health-related services to America's poorest people."

The purpose of Medicaid is clearly stated in the Act. This program allows states "to furnish rehabilitation and other services to help such families and individuals attain or retain capability for independence or self care. 42 U.S.C.§1396. See, Meyers v. Reagan, 776 F.2d. 241, 243 (8^th Cir. 1985). In addition to providing services that support the independence of those who participate in the program, the Medicaid Act requires that each state medical assistance program be administered in the "best interests of the recipients." 42 U.S.C. §1396a(a)(19). See, S.Rep.No.404, 89^th Cong. 1^st. Sess., reprinted in [1965] U.S. Code Cong. & Admin. News, 1943, 2104. Given the remedial nature of this legislation, both the Act and its implementing regulations must be liberally construed in favor of Medicaid beneficiaries seeking medically necessary health care. Cristy v. Ibarra, 826 P.2d. 361 (Court of Appeals, Co. 1991).

B.    Funding

Federal funding is available to state Medicaid programs for both the provision of health care services and various administrative functions. The amount of federal funding available to a state is referred to as federal financial participation (FFP) and is determined by comparing a state's per capita income to the national average. 42 C.F.R. §433.10. The FFP for any state will range from 50 - 78%, depending on this per capita income formula.

C.       Health Care Delivery Under Medicaid

Over half of all Medicaid beneficiaries are enrolled in managed care organizations rather than fee-for-service programs. Nearly all states have some Medicaid managed care programs. Major Medicaid managed care models include:

Risk-Based Plans - In risk-based managed care, a health plan is paid a fixed monthly fee per enrollee and assumes the financial risk for the delivery of a specified package of services.

Fee-for-Service Primary Care Case Management (PCCM) - In a PCCM plan, a provider, usually the patient's primary care physician, is responsible for acting as a "gatekeeper" to approve and monitor the provision of services to beneficiaries. These gatekeepers do not assume financial risk for the provision of services and are paid a per-patient monthly case management fee.

II.      Administration of Medicaid Programs

A.       Medicaid State Plan

Although participation in Medicaid is voluntary, once a state chooses to participate in the Medicaid program, it must administer its program in a manner consistent with the requirements of the Medicaid Act. 42 U.S.C. § 1396a(b) See, Wilder v. Virginia Hospital Association, 496 U.S. 498, 110 S. Ct. 2510, 110 L.Ed.2d 455 (1990); Harris v. McRae, 448 U.S. 297, 301, 65 L.Ed. 2d 784, 100 S. Ct. 2671. To meet these requirements, each state must develop a Medicaid state plan that includes both a description of the administration of the program as well as the health care services provided through the program.

The Medicaid state plan includes a variety of information that may be useful to the new Medicaid advocate. Most importantly, the plan must identify the required and optional health care services that are available through the state Medicaid program. The state plan also must describe how beneficiaries, advocates, and others can review and obtain copies of all current policies and rules governing the operation of the Medicaid program. 42 C.F.R. § 431.18.

B.       Single State Agency

Each state plan must also designate a single state agency to administer and supervise implementation of the Medicaid plan. 42 U.S.C. § 1396a(a)(5). This single state agency is ultimately responsible for the unlawful denial of Medicaid services even when the decision to deny health care is made by a sub-agency. Once designated as the single state agency for Medicaid, this agency may not delegate the administration of the program or any activities related to rule-making and policy development to any entity other than its own officials. 42 C.F.R. § 431.10.

C.       Medical Care Advisory Committee

The state plan must also establish a medical care advisory committee to participate in both policy development and program administration. 42 C.F.R. § 431.12. Testifying before the medical care advisory committee can be an effective way to challenge proposed rules or policies that do not further the interests of Medicaid beneficiaries.

D.       Center for Medicare and Medicaid Services

Although each state is responsible for the operation of its Medicaid program, CMS is the federal agency charged with administrative oversight of all Medicaid programs. In this capacity, CMS promulgates regulations, develops policy, and guides states in the operation of their Medicaid programs. CMS also must approve each state plan, all state applications for Medicaid waivers, and any amendments to either the plan or to waiver programs.

III.     Eligibility for Medicaid

          Medicaid covers more Americans than Medicare or any other health insurer, yet many people living in poverty are not eligible for this program. This is because Medicaid covers only those people who fit into special categories of eligibility and who meet the program's stringent income eligibility requirements. Examples of several of these categories include:

A.       Children and Pregnant Women

Low income pregnant women and children through age 18 may be eligible for Medicaid. The income guideline for pregnant women and children under the age of 6 is 133% of the federal poverty guideline. Children ages 6 through 18 are eligible if their family incomes do not exceed 100% of the federal poverty guideline.

B.       Parents

Low income parents and other caretakers of children may qualify for Medicaid.

C.       People with Disabilities

People who receive SSI because of disability or because they are 65 years of age or older are automatically eligible for Medicaid in thirty-nine states. Eleven states, including Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New Hampshire, Oklahoma, and Virginia, are known as 209(b) states and each can set its own eligibility criteria for Medicaid that is different than the SSI criteria.

In addition, individuals who meets the level of care requirement for nursing home care and whose incomes do not exceed 300% of the SSI benefit amount may be eligible for Medicaid nursing home services or Home and Community-Based Waiver Services.

D.      Children in Foster Care

Children in foster care under Title IV-E of the Social Security Act and certain recipients of adoption assistance are eligible for Medicaid. In addition, youth between the ages of 18 and 21 who were in foster care may be eligible for Medicaid through the Foster Care Independence Act of 1999.

E.       Medicare beneficiaries

Certain Medicare beneficiaries with low incomes and limited resources may be eligible to receive full Medicaid benefits. Other Medicare beneficiaries whose income exceeds the level for full Medicaid eligibility may be eligible to receive limited Medicaid benefits to cover some Medicare cost-sharing expenses such as premiums, deductibles, and coinsurance.

F.       Medically Needy Individuals

Medically needy programs provide Medicaid coverage to some individuals who have income or resources above the required limits set by their state but who have incurred or paid sufficient medical expenses to allow them to meet the "spend down" test.

IV.    Medicaid Services

The Medicaid Act identifies numerous categories of medical services for which federal reimbursement is allowed, however, these broad categories of services do not describe specific medical treatments or procedures. Given the breadth of these categories, a specific medical treatment or health care service may fall within more than one category of service. These categories of service are classified as either mandatory or optional services.

A.       Mandatory Services

States are required to cover approximately fourteen categories of services. Each of these required services is defined in federal regulations. The following is a list of required or mandatory services. See, 42 C.F.R. Part 440.

• Inpatient hospital care
• Outpatient hospital care
• Physician's services
• Nurse midwife services
• Pediatric and family nurse practitioner services
• Federally qualified health center ("FQHC")
• Laboratories and x-ray services
• Rural health clinic services
• Prenatal care
• Family planning services
• Skilled nursing facility services for persons over age 21
• Home health care services for persons over 21 who are eligible for skilled nursing services (includes medical supplies and equipment)
• Early and periodic screening, diagnosis, and treatment for persons under age 21 ("EPSDT")
• Vaccines for children
• Transportation

B.       Optional Services

In addition to the required services that each Medicaid program must provide, a state may choose from more than thirty optional services to include in its state plan. Once an optional service is identified in the state plan, this service must be provided consistent with all federal requirements. Doe v. Chiles, 136 F.3d 709 (11^th Cir. 1998)

The optional services authorized by the Medicaid Act include those listed below. Since 1989, Medicaid's EPSDT program has required states to cover all medically necessary services, including both mandatory and optional services, for Medicaid eligible children under the age of 21. 42 USC § 1396d(r).

• Podiatrists' services
• Optometrists' services and eyeglasses
• Chiropractic services
• Private duty nurses
• Clinic services
• Dental services
• Physical therapy
• Occupational therapy
• Speech, hearing and language therapy
• Prescribed drugs
• Dentures
• Prosthetic devices
• Diagnostic services
• Screening services
• Preventive services
• Rehabilitative services
• Services for persons age 65 or older in mental institutions
• Intermediate care facility services
• Intermediate care facility services for persons with MR/DD and related conditions
• Inpatient psychiatric services for persons under age 22
• Christian Science schools
• Nursing facility services for persons under age 21
• Emergency hospital services
• Personal care services
• Hospice care
• Case management services
• Respiratory care services
• Home and community-based services for individuals with disabilities and chronic medical conditions

C.       Understanding the Categories of Services

1.       Federal definitions

For most coverage categories, the federal regulations provide an explicit definition of covered services. The following are a few examples:

Home Health Services, include not only home health nursing services, but also home health aides; medical supplies, equipment and appliances suitable for use in the home; physical therapy, occupational therapy, and speech pathology and audiology services provided by a home health agency or facility licensed to provide medical rehabilitation services. 42 C.F.R. § 440.70.

Mandatory Home Health Services: nursing services, home health aid services, and medical supplies, equipment and appliances. 42 C.F.R. § 440.70(b).

Optional Home Health Services: physical therapy, occupational therapy, and speech pathology and audiology services provided by a home health agency or facility licensed to provide medical rehabilitation services. 42 C.F.R. § 440.70(b).

Rehabilitative Services. This category of service includes "any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts . . . for maximum reduction of physical or mental disability and restoration of a recipient to his best functional level." 42 C.F.R. § 440.130(d).

Speech, hearing and language therapy. In addition to the services of a licensed therapist, this category of service includes "any necessary supplies and equipment." 42 C.F.R. § 440.110(c).

Prosthetic devices. The federal definition of this service includes "replacement, corrective, or supportive device prescribed by a physician or other licensed practitioner of the healing arts . . . [which will] prevent or correct physical deformity or malfunction; or support a weak or deformed portion of the body." 42 C.F.R. § 440.120(c).

2.        Services lacking a federal definition

When a category of service is not defined in federal law, it is necessary to look to state law. The state definition of a category of servicemust be consistent with all provisions of the Medicaid Act and its implementing regulations.

Durable Medical Equipment. Many states define DME as equipment that has one or more of the following characteristics:

(1) can withstand repeated use;
(2) is primarily and customarily used to serve a medical purpose;
(3) is generally not useful to a person in the absence of illness or injury; or
(4) is appropriate for use in the home.

Some states may include an additional eligibility requirement that an individual be homebound in order to obtain durable medical equipment. This restriction on access to any home health services, including durable medical equipment and supplies, violates both the comparability requirement of the Medicaid Act. 42 U.S.C. § 1396a(a)(10)(b); 42 CFR § 240(b) and the prohibition on diagnosis-based decision making, 42 C.F.R. § 230(c). See, State Medicaid Director Letter, July 25, 2000, Attachment 3-G.

V.      Medicaid Services for Children and Youth

         EPSDT is Medicaid's comprehensive and preventive child health program for individuals under the age of 21. EPSDT has always been part of the Medicaid regulations, however, many states were slow to implement these provisions. To correct this problem, Congress amended the Medicaid Act in 1989 to make EPSDT a statutory requirement. See, Omnibus Budget Reconciliation Act of 1989 (OBRA 89). Today, EPSDT is the most comprehensive child health program in either the public or private sector.

EPSDT requires states to provide Medicaid-eligible children and youth with periodic screening, and vision, dental, and hearing services. It also requires states to provide all medically necessary health care that falls within the scope of services listed at 42 U.S.C. § 1396d(e) to a child, even though the service may not be available under a state's Medicaid plan to adults.

A.      Early and Periodic  

EPSDT requires states to assess a child's health needs through initial and periodic examinations and evaluations to assure that health problems are diagnosed and treated before the problem becomes more complex and the treatment more costly. States must perform medical, vision, hearing, and dental check-ups according to standardized schedules, called "periodicity schedule. By statute, states must consult with recognized medical organizations to determine the appropriate scheduling. In addition, "interperiodic screens"ā€“ones outside the periodicity scheduleā€“must also be conducted, as medically necessary.

B.       Screening

Screenings - or well-child checkup - are the foundation of the EPSDT program. By statute, the state "must provide or arrange for" four separate screens: medical, vision, hearing, and dental. 42 U.S.C. § 1396a(a)(43). This means that the state must assure that children receive the check-ups required by EPSDT. See, Salazar v. D.C., 1997 WL 306876, at 8 (D.D.C). (Court order requiring the District of Columbia to establish a tracking system to assure that Medicaid- eligible children receive all age-appropriate screens and services as well as follow-up treatment.)

Screenings must include the following components listed at 42 U.S.C. § 1396(r)(1)(B):

• Comprehensive health and developmental history, including assessment of both physical and mental health development;
• Comprehensive unclothed physical exam;
• Appropriate immunizations according to age and health history;
• Laboratory tests including a lead toxicity screening;
• Health Education, including anticipatory guidance;
• Vision and hearing screens; and
• Dental screens

Westside Mothers, et al. v. Haveman, 289 F.3d 852 (6^th Cir., May 15, 2002). In 1999, welfare rights organization brought Section 1983 action, alleging systemic deprivation of EPSDT services under its Medicaid program. The district court granted summary judgment to defendants, dismissing the action. The Sixth Circuit reversed in part, affirmed in part and remanded, holding, inter alia, that Medicaid program adopted by state was not merely contract between state and federal government, but rather had force and effect of federal law; that Medicaid Act's medical screening and treatment provisions created rights privately enforceable against state officials through § 1983; and that professional medical organizations had standing to assert claim against state officials for violations of the Medicaid Act.

Antrican v. Buell, 158 F.Supp.2d 663, (E.D.N.C. Apr. 17, 2001), aff'd 290 F.3d 178 (4^th Cir. May 9, 2002), cert. denied Odom v. Antrican, 123 S.Ct. 467, McCree v. Odom, No. 4:00-CV-173(H)(4) (E.D.N.C. Nov. 26, 2002). In November 2000, six minor Medicaid beneficiaries filed suit alleging violation of their federal rights by the state in the provision of dental care. On April 17, 2001, the court rejected defendants' attempt to have the case dismissed and found that the state was not immune from suit under the Eleventh Amendment and that plaintiffs could maintain a cause of action under Section 1983. The Fourth Circuit affirmed that the state was not immune from suit but declined to exercise jurisdiction over the scope of plaintiffs' §1983 rights. Ruling on several motions brought by the parties, the court granted: (1) plaintiffs' motion to amend the complaint to add seven new Medicaid beneficiaries; (2) denied defendants' motion to dismiss the claims of plaintiff McCree based on mootness (finding that she has a "legally cognizable interest" in the litigation "because it is highly likely that she will be eligible for Medicaid in the future"; (3) dismissed plaintiffs' claims under 42 U.S.C. § 1396a(a)(1) (requirement for statewide application of Medicaid plan) pursuant to Gonzaga analysis; (4) upheld its prior decision that 42 U.S.C. §§ 1396a(a) §§(8), (10), (30) and (43) - reasonable promptness; eligibility categories and standards for assistance; efficiency, economy, quality of care, availability of providers; and notice of availability of EPSDT services - all conferred individual rights on Medicaid beneficiaries.

Oklahoma Chapter of American Academy of Pediatrics, et al. v. Fogarty, 205 F.Supp.2d 1265 (N.D.Ok. May 21, 2002). Nonprofit organizations and thirteen individual plaintiffs filed a class action suit pursuant to §1983, alleging that state officials responsible for implementing state Medical Assistance program denied child beneficiaries equal access to medical services in violation of the Medicaid Act. Allegations include: 67% of eligible children and youth in the year ending on September 30, 1999 did not receive any comprehensive screening examination, only 10% of enrolled beneficiaries received a dental evaluation and treatment, and "access to pediadontists for eligible children is virtually non-existent." The district court held that the suit was not barred by the Eleventh Amendment, that federal statutory provisions related to states' use of Medicaid managed care programs conferred federal rights, and that nonprofit organizations had standing.

C.       Diagnosis and Treatment

EPSDT also requires states to provide treatment. 42 U.S.C. § 1396a(a)(43)(C). While health care must be made available to treat, correct or ameliorate defects and physical and mental illnesses or conditions discovered by the screening services, conditions need not be newly discovered during a screen. All conditions must be treated.

States are required to cover all medically necessary services listed in the Medicaid statute at 42 U.S.C. § 1396d(a) "whether or not such services are covered under the State plan." 42 U.S.C. § 1396d(r)(5). This means that EPSDT must provide all optional Medicaid services for children, even if the state does not cover these services for adults.

Rosie D. v. Swift, 310 F.3d 230 (1^st Cir., Nov. 7, 2002) Nine medicaid eligible children, diagnosed with severe psychiatric or behavioral conditions, seek home-based psychiatric care as medically necessary for effective treatment under EPSDT mandates in Massachusetts. The district court denied defendants' motion to dismiss and defendants filed an interlocutory appeal based on Eleventh Amendment immunity. The First Circuit held that the Eleventh Amendment does not prevent Medicaid beneficiaries from seeking prospective injunctive relief against state officials in federal court, thereby allowing plaintiffs to proceed.

Emily Q. v. Bonta, 208 F.Supp.2d 1078 (C.D.Ca. March 30, 2001). Seven plaintiff children eligible for Medi-Cal allege that they were denied mental health benefits (therapeutic behavioral services- TBS) covered by the Medicaid Act. Ruling on the plaintiffs' motion for a permanent injunction, the court granted, inter alia, plaintiffs' request to require defendant to: provide class members with adequate notice about TBS and other available mental health services; do an immediate assessment of all class members in two state hospitals in order to provide compensatory TBS as a form of equitable relief; establish minimum standards for mental health staff; monitor all new requests for TBS and their approval/denial for three years commencing on March 30, 2001; and provide a description of corrective measures taken when any mental health provider has no class members or a disproportionately low number of class members approved for TBS.

Pediatric Specialty Services v. Arkansas Department of Human Services, 293 F.3d 472 (E.D. Ark. Dec. 18, 2001). The district court held that EPSDT beneficiaries for whom a physician recommends early intervention day treatment have a federal right to the treatment and granted a permanent injunction prohibiting budgets cuts for the agency (CHMS) providing early intervention day treatment. The Eighth Circuit held that plaintiffs have a federal right, enforceable in a §1983 action, to EPSDT services. The court found that the state must pay "part or all of the cost of treatments to ameliorate conditions discovered" by the EPSDT screening process when such treatments meet the definitions in the EPSDT mandate. Since only CHMS clinics provide early intervention day treatment, the court ordered the state to reimburse those clinics and reminded the state of its duty to inform Medicaid beneficiaries of EPSDT services and to arrange for prescribed corrective treatments.

D.      States Must Assure That Children Receive EPSDT Services

1. Outreach and Informing

The EPSDT provisions contain outreach requirements. The state must seek out eligible children and their families, inform them of the benefits of prevention and the health services and assistance available, and help them use health services. 42 U.S.C. § 1396a(a)(43) EPSDT also requires states to do more than merely offer to cover services. States are obligated to actively arrange for treatment, either by providing the service itself or through referral to appropriate agencies, organizations or individuals. 42 U.S.C. § 1396a(a)(43)(C)

Chisholm v. Hood, Civil. Action No. 97-3274 (E.D.La. Feb. 16, 2000) Stipulation and Order of Partial Dismissal). As part of a settlement agreement, the state agreed to mail notices of the availability of case management services to Medicaid-eligible families.

Chisholm v. Hood, 110 F. Supp. 2d 499, 508 (E.D.La. 2000). EPSDT requires the state to assure that children who need personal care services actually receive them. The court refused to order the state to create a tracking system to monitor referrals for treatment because a new case management system had only been in place for seven months and the court wanted to give the system a chance to work. The court noted that only 109 out of 3,381 children with MR/DD were using personal care services. The opinion provides details about Louisiana's case management system.

Chisholm v. Hood, 133 F.Supp.2d 894 (E.D.La. 2001). The district court held that Louisiana's Medicaid program did not adequately provide community-based behavioral and psychological services to class members (all current and future Medicaid recipients under the age of 21) who were diagnosed with autism. The court ordered the parties to submit a proposed remedy for these violations of the Medicaid Act.

Frew v. Gilbert, 109 F. Supp. 2d 579 (E.D.Tx 2000), vacated and remanded sub nom. Frazar v. Gilbert, 300 F.3d 530, 546 (5^th Cir. 2002), cert granted, March 2003. This reported decision concerns an action to enforce a consent decree. The original action challenged, inter alia, the state's failure to meet its informing, outreach, screening and treatment obligations under EPSDT. The parties entered into a lengthy consent decree to address plaintiffs' allegations. In addition, the state agreed to develop a case management system for children"who have a health condition or risk, have special health care needs, or whose physical conditions are medically complex or medically fragile." Two appeals were taken from the district court's subsequent enforcement order of the consent decree wherein the Fifth Circuit discussed at length the notice and outreach requirements, and the use of statistical reporting to assess compliance with EPSDT. The Fifth Circuit found that the Medicaid Act EPSDT provisions only require "informing all [eligible persons] of the availability of [EPSDT] services." The Medicaid Act "does not expressly require ā€˜effective' conveyance of information, and does not require outreach programs that extend beyond an effort at informing eligible persons of available EPSDT services."

In the Supreme Court, two specific issues concerning the enforceability of the consent decree entered into by the state will be addressed. These issues are: (1) do State officials waive Eleventh Amendment immunity by urging the district court to adopt a consent decree when the decree is based on federal law and specifically provides for the district court's ongoing supervisionof the officials' compliance with the decree; and (2) does the Eleventh Amendment bar a district court from enforcing a consent decree entered into by State officials unless the plaintiffs show that the "decree violation is also a violation of a federal right" remediable under Section 1983? The Supreme Court will not review the third question presented, which asks whether the failure of state officials to provide services required by the Medicaid Act's EPSDT provisions violate rights that Medicaid beneficiaries may enforce pursuant to 42 USC Section 1983?

Salazar v. D.C., 1997 WL 306876 (D.D.C.) District of Columbia must provide "effective" notice of EPSDT services to Medicaid eligible teens as well as their parents, and notice must be given to individuals who are blind, deaf and illiterate. The district was also ordered to establish a Spanish language help line to explain EPSDT services.

John B. v. Menke, 176 F. Supp.2d 786 (M.D.Tenn.2001). This case was brought in 1998 on behalf of persons under age 21 involved in Tennessee's managed care program (TennCare) and the parties entered into a consent decree to enforce EPSDT provisions. On a motion to show cause alleging that state defendants were in contempt for violating the 1998 consent decree and May 2000 Agreed Orders, the court found, in a detailed decision, that TennCare had failed to comply with EPSDT requirements mandated by federal law and the consent decree. Issues addressed by the court included outreach, screening, diagnosis and treatment. As an immediate remedy, the court appointed a special master to draft "an EPSDT-compliant plan" for all TennCare beneficiaries under 21.

Carr v. Wilson-Coker, 203 F.R.D. 66 (D. Conn. 2001). The court granted plaintiffs' motion for class certification in this action brought by Medicaid beneficiaries (both children and adults) against the state agency overseeing managed care organizations providing Medicaid-covered dental services. Plaintiffs allege, inter alia, violations of federal statues and regulations due to defendants' failure to: (1) adopt and maintain programs and policies making dental care available for Medicaid beneficiaries throughout the state; (2) provide reasonable dental reimbursement rates to attract a sufficient number of providers; (3) give Medicaid beneficiaries needed dental care with reasonable promptness; (4) effectively inform Medicaid beneficiaries under the age of 21 of EPSDT services; and (5) provide or arrange for provision of periodic dental screening, dental services, and dental treatment identified as necessary during screenings.

2. Timely Treatment

States must ensure timely EPSDT treatment, generally within an outer limit of six months after the request for screening services. 42 C.F.R. § 441.56(e).

Kirk T. v. Houstoun, 2000 WL 830731 (E.D.Pa.2002). The court granted plaintiffs' motion for summary judgment in this class action as to the state's failure to provide reasonably prompt Medicaid (therapeutic support staff) services and behavioral health rehabilitative services for children qualified for, and in need of, such services but denied the motion as to the state's alleged discrimination against categorically needy children.

French v. Concannon, No. 97-CV-24-B-C- (D.Me.)(July 1998, Order of dismissal and settlement agreement)(settlement agreement available on line at www.healthlaw.org). Medicaid eligible children with severe mental health diagnoses used the EPSDT provisions to challenge long waits for services. The state settled the case agreeing to: (1) create a position within the state Department of Mental Health to identify children who are waiting for services and to ensure that treatment is being implemented; (2) revise the EPSDT brochure and EPSDT screening forms, (3) hire additional case managers; (4) streamline the prior authorization process, and (5) create a new provide category "behavioral health specialist" to increase availability of home care providers.

Risinger v. Concannon, 117 F. Supp. 2d 61 (D.Me. 2000). This is a follow up case to French, supra. Plaintiffs are children with severe mental health diagnoses. The action alleged that the state violated EPSDT requirements because of insufficient behavioral health services, including a lack of case managers, behavioral health providers, and screening and treatment services. The reported decision denies defendants' motion to dismiss holding that the French settlement does not bar the action based upon res judicata and that the Maine P & A agency has standing to bring this lawsuit.

Risinger v. Concannon, 201 F.D.R. 16 (D.Me., 2001) Court granted certification of class as: "All current or future recipients of Medicaid in the state of Maine who are under the age of twenty-one (21) years (who do not 'opt out' of their entitlement to in-home health services) who are not receiving or will not timely receive in-home mental health services under the Early and Periodic Screening, Diagnosis and Treatment provisions of the Federal Medicaid Act ..., and who are otherwise eligible to receive such services, due to the failure of Defendants to arrange for and provide: (1) a timely, adequate, and reliable screening process to determine eligibility for such services; (2) case management procedures effective to secure timely and adequate provision of such services to them once determined to be eligible; or (3) the delivery of prescribed services."

Chisholm v. Hood, Civil. Action No 97-3274 (E.D.La.) (Feb. 16, 2000, Stipulation and Order of Partial Dismissal). Plaintiffs challenged waiting lists for services for children with mental retardation and developmental disabilities. The state settled the case agreeing to increase the availability of case management services and assure that case managers possess minimum qualifications, handle a caseload of only 35 clients, and are trained on Medicaid and EPSDT services. Portions of the settlement agreement are described at Chisholm v. Hood, 110 F. Supp. 2d 499, 504 (E.D.La. 2000)

Memisovski ex. rel Memisovski v. Patla, 2001 WL 1249615 (N.D.Ill. Oct. 17, 2001) Prior to this unreported decision on a motion to dismiss, the district court certified two classes in this Section 1983 action: (1) women who have been, are, or will be eligible for Medicaid and who have been, are, or will be pregnant; and (2) children who have been, are, or will be eligible for Medicaid in Cook County. Members of both classes were unable to find medical care providers and therefore, did not have access to medical care to the same extent that such services are available to the general population. The court denied defendants' motion to dismiss noting, inter alia, that violations of statutory provisions requiring EPSDT services may be redressed through Section 1983 and rejecting the argument that the Eleventh Amendment bars relief.

3. Limits on EPSDT Services

(A) Medical Necessity

EPSDT covers all medically necessary services. The Medicaid Act's definition of medical necessity for EPSDT is much broader than that used by private insurance. Under EPSDT, state Medicaid programs must cover "necessary health care, diagnostic services, treatment and other measures...to correct or ameliorate defects and physical and mental illnesses and conditions." 42 U.S.C. § 1396d(r)(5) Services must be covered if they correct, compensate for, or improve a condition, or prevent a condition from worsening - even if the condition cannot be prevented or cured.

Dajour B. v. City of New York, 2001 WL 830674 (July 23, 2001, S.D.N.Y.) Numerous individual plaintiffs allege in this §1983 action that defendants have failed to provide adequate screening, diagnosis and treatment services for homeless children with asthma pursuant to their EPSDT obligations under the Medicaid Act. Ruling on defendants' motion to dismiss and cross-motions for summary judgment by the New York State Department of Health (DOH) and plaintiffs, the district court found that plaintiffs have a private right of action under Section 1983 to enforce the EPSDT provisions but the Medicaid state plan requirements (42 USC 1396a(a)(5)) and its implementing regulation (42 CFR 431.10) do not provide plaintiffs with enforceable rights against the DOH under Section 1983 . However, the court stated that DOH, as the agency responsible for the state's Medicaid program, "is accountable for violations of the substantive EPSDT provisions, which do create enforceable rights." Class certification granted on October 3, 2001 (2001 WL 1173504 (S.D.N.Y.).

S.D. V. Hood, 2002 WL 31741240 (E.D.La.). Plaintiff is a16 year old with spina bifida who brought a Section 1983 action to assert his federal statutory right to "medically necessary" services (incontinence underwear) pursuant to EPSDT requirements. The district court found that the state's policy of refusing to provide incontinence underwear for Medicaid beneficiaries for whom such "medical assistance" has been found medically necessary by EPSDT screenings violates the federal Medicaid Act. The court compared this medical assistance to the plaintiff's wheelchair, which allows him to move about his home, to travel, and to engage in age appropriate activities.

Collins v. Hamilton, 231 F.Supp.2d 840 (S.D. Ind. 2002). This class action suit was filed on April 20, 2001, alleging that state officials failed to provide medically necessary residential psychiatric treatment for Medicaid-eligible children, and that plaintiffs' substantive due process rights were violated by requiring their parents to relinquish custody to the state in order to obtain necessary funding for residential treatment. The court found that all plaintiffs are Medicaid beneficiaries eligible for EPSDT services and held that the state's policy of refusing to provide long-term residential psychiatric treatment, found to be medically necessary pursuant to EPSDT screenings, violates the federal Medicaid Act.

(B) Tentative Limits on Services

States may place "tentative" limits on EPSDT services, for example, 14 days of hospital care. However, the state must have an expeditious process in place to allow children to obtain treatment services beyond the tentative limits. States may not use absolute caps or limits as they sometimes do with adult services. The only absolute limit that may be placed on EPSDT services is that based upon medical necessity. See, CMS, State Medicaid Manual, EPSDT Services, § 5110.

(C) The Most Economic Mode

Although CMS allows states to limit EPSDT treatment settings and provider types to the "most economic mode," these limits do not apply if there is an inadequate supply of the less expensive treatment or provider, or if the less costly treatment is less effective.

Chisholm v. Hood, 110 F. Supp. 2d 499 (E.D.La. 2000). Louisiana's policy of limiting Medicaid eligible children with developmental disabilities to occupational, speech, and audiological services provided by their resident school boards violated children's freedom to choose from a "variety" of providers. Freedom of choice provisions requires that class members have a variety, or choice, of providers. Moreover, the state's policy completely precluded homebound class members from obtaining necessary medical treatment.

Chisholm v. Hood, 133 F.Supp.2d 894(E.D.La. 2001). The district court held that Louisiana's Medicaid program did not adequately provide community-based behavioral and psychological services to class members (all current and future Medicaid beneficiarys under the age of 21) who were diagnosed with autism. The court ordered the parties to submit a proposed remedy for the violations of federal law.

Bonnie L. ex rel. Hadsock, et al. v. Bush, 180 F. Supp.2d 1321 (S.D.Fla. 2001). Foster children plaintiffs brought §1983 action against state officials for declaratory and injunctive relief on complaints relating to the foster care system. Plaintiffs allege, inter alia, violations of EPSDT provisions of the Medicaid Act. When defendants moved to dismiss the case, the district court held that the EPSDT claim was enforceable in § 1983 action on basis of alleged inadequate care of foster children.

VI. Federal Requirements For Medicaid Services

Although states have some discretion in fashioning the mix of health care services available to Medicaid beneficiaries, the Medicaid Act contains several important limits on this discretion to ensure that beneficiaries have timely and adequate access to health care. These federal limitations on states' discretion form the basis for most Medicaid service advocacy.

State-wideness

The Medicaid Act requires that a state plan for medical assistance "shall be in effect in all political subdivisions of the State. 42 U.S.C. §1396a(a)(1). The meaning of this requirement is clear: states cannot limit health care services available under the state plan to a specific geographic location or simply fail to provide a covered service in a particular area. To comply with this requirement, state Medicaid programs must provide all medically necessary health care services available under the state plan without regard to the county of residence of the beneficiary who is seeking health care services.

There is an important exception for services provided through a Home and Community-Based Waiver (HCBW) program, pursuant to 42 U.S.C. 1396n(c). The statewideness provision is one of several requirements that states may waive in developing their HCBW programs.

Sobky v Smoley, 855 F. Supp. 1123, 1137 (E.D. Ca. 1994). California Medicaid found in violation of 42 U.S.C. §1396a(a)(1) because its methadone treatment program was only available in certain counties and was not "in effect" on a statewide basis. It is insufficient for a state Medicaid program to simply formulate a statewide plan without further ensuring that the plan is in effect throughout the state.

Christy v Ibarra, 826 P.2d 361 (Court of Appeals, Co, 1991).

Colorado Medicaid in violation of 42 U.S.C. § 1396a(a)(1) because case management services through the Home and Community-Based Services program were not available in certain areas of the state. Although Colorado Medicaid could have waived the state-wideness requirement in developing this waiver program, its failure to do so made the program subject to this provision.

Clark v Kizer, 758 F. Supp. 572, 580 (E.D. Cal. 1990); aff'd in part, vacated in part, Clark v Coye, 967 F. 2d 585 (9^th Cir. 1992). California Medicaid found in violation of 42 U.S.C. § 1396a(a)(1) as its dental services program did not operate uniformly throughout the state. Medicaid services must be in existence, operational, and functioning statewide.

Smith v Vowell, 379 F. Supp. 139 (W.D. Tex 1974) aff'd 504 F. 2d 759 (5^th Cir. 1974). Texas Medicaid's argument that 42 U.S.C § 1396a(a)(1) simply requires that a plan be formulated, but not necessarily put into effect, was characterized by the court as "preposterous."

B.       Reasonable Promptness

The Medicaid Act also requires that a state plan for medical assistance:

"must . . . provide that all individuals wishing to make application for medical assistance under the plan shall have opportunity to do so, and that such assistance shall be furnished with reasonable promptness to all eligible individuals." 42 U.S.C. § 1396a(a)(8).

Federal regulations implementing this provision require that a state Medicaid agency must "furnish Medicaid promptly to recipients without delay caused by the agency's administrative procedures" and "continue to furnish Medicaid regularly to all eligible individuals until they are found to be ineligible." 42 C.F.R. § 435.930

Numerous cases interpreting the reasonable promptness requirement of the Medicaid Act have found states in violation of 42 U.S.C. § 1396a(a)(8) when access to Medicaid services is delayed or denied.

Doe v Chiles, 136 F.3d 709 (11^th Cir. 1998). Individuals with developmental disabilities were being placed on long waiting lists for intermediate care facilities (ICFs). The court found Florida Medicaid to be in violation of the reasonable promptness requirement and ordered the state to establish a reasonable waiting period for ICF services not to exceed 90 days.

Bryson v. Shumway, 308 F.3d 79 (1^st Cir. 2002) Individuals with acquired brain disorders filed suit challenging the operation of New Hampshire's HCBW for this group of people. The district court found that defendants violated the reasonable promptness requirement when it failed to secure enough waiver slots to serve the plaintiff class and provide these services within a period not to exceed twelve months. On appeal, the 1^st Circuit remanded the case to the district court for further findings on the issue whether the state was providing these services in a reasonably prompt manner.

Boulet v. Celucci, 107 F. Supp.2d 61, (D. Mass. 2000) Delays in providing services available through a HCBW program to eligible waiver participants violate the "reasonable promptness" requirement of the Medicaid Act.

Sobky v Smoley, 855 F. Supp. 1123, 1149 (E.D. Cal. 1994). Insufficient Medicaid funding by the State and counties for methadone maintenance treatment slots caused providers to place eligible individuals on a waiting list for treatment. The court held that this was precisely the sort of state procedure the reasonable promptness provision is designed to prevent.

Linton v Carney, 779 F. Supp. 925, 936 (M.D. Tenn. 1990). State policy of limiting the number of nursing home beds that could be used for Medicaid patients violated the reasonable promptness provision by causing these patients "to experience extended delays and waiting lists in attempting to gain access to long term nursing home care.

Clark v Kizer, 758 F. Supp. 572, 580 (E.D.Cal. 1990), aff'd in part and vacated in part on other grounds subnom., Clark v Coye, 967 F.2d 585 (9^th Cir. 1992). The court granted summary judgment on a reasonable promptness claim where declarations of county public health officials indicated that a shortage of Medicaid-participating dentists caused frequent delays in obtaining appointments for regular and emergency dental care.

C.     Freedom of Choice

Medicaid beneficiaries are allowed to choose their health care professionals from a range of participating providers. This freedom of choice provision extends to any "institution, agency, community pharmacy, or person, qualified to perform the service of services required . . . who undertakes to provide him such services . . ." 42 U.S.C. § 1396a(a)(23). However, under prescribed circumstances, state's may use managed care systems that restrict Medicaid beneficiaries to certain providers.

Chisholm v Hood, 110 F. Supp. 2d 499 (E.D.La. 2000). Louisiana's policy of limiting Medicaid-eligible children with disabilities to occupational, speech, and audiological services provided by their resident school boards violated the children's freedom to choose from a "variety" of providers.

D.     Equal Access to Care

The equal access to care provision of the Medicaid Act, 42 U.S.C. § 1396a(a)(30)(A), states that:

A state plan for medical assistance must . . . provide such methods and procedures relating to the utilization of and the payment for, care and services available under the plan  . . . to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population.

This provision requires states to establish payment rates adequate to assure Medicaid clients: (1) reasonable access, and (2) services of adequate quality. State Medicaid payment rates and methods of payment must be sufficient to attract enough providers so that care and services are available to the Medicaid population at least to the extent they are available to the general population in the geographic area. Rates must also be sufficient to assure quality of care.

Evergreen Presbyterian Ministries, Inc. v. Hood, 235 F.3d 908, (5^th Cir. 2000) Medicaid providers brought suit to challenge a 7% across-the board reduction in Medicaid reimbursement for a wide range of health care services. The 5^th Circuit vacated the preliminary injunction issued by the district court, finding among other things, that the equal access provision of the Medicaid Act is not enforceable by providers as Medicaid-eligible individuals are the only intended beneficiaries of this provision.

Clark v Kizer,758 F. Supp. 572, 577 (E.D.Cal. 1990, aff'd in part and vacated in part on other grounds sub nom., Clark v Coye, 967 F.2d 585 (9th Cir. 1992). California Medicaid violated the equal access to care provision by utilizing payment rates for dental care that were 40% less for Medicaid beneficiaries than for other patients. Also indicative of this violation was a drop in dentist participation in the program from 83% of licensed dentists to 55% over a ten-year period.

Sobky v Smoley, 855 F. Supp. 1123, 1138 (E.D. Cal. 1994). Court refused to find California Medicaid in violation of the equal access provision as the inadequate distribution of methadone services throughout the state did not result from the reimbursement rates paid by the state for this service. Holding that the equal access provision is directed at the problem of inadequate reimbursement rates, the court declined "to expand it to encompass plaintiffs' claims regarding the inadequate amount and distribution of services available."

E.       Comparability of Services

The comparability requirement of the Medicaid Act provides that the medical assistance available to any eligible individual "shall not be less in amount, duration, or scope than the medical assistance made available to any other individual." 42 U.S.C. §1396a(10)(B). This requirement ensures equity of health care in two ways. First, it assures that the services provided to individuals who are categorically eligible for Medicaid are comparable to those provided to the medically needy. Second, it also ensures that services are comparable among individuals within the group of beneficiaries who are categorically eligible for Medicaid. 42 C.F.R. §440.240(b).

Rodriguez v City of New York, 1999 WL 795552 (2^nd Cir. N.Y.) New York Medicaid did not violate the comparability requirement of the Medicaid Act by refusing to include safety monitoring as a component of the personal assistance category of service. The comparability requirement does not extend to an examination of the scope of services offered to all eligibility groups

Parry v Crawford, 990 F. Supp. 1250, (D. Nev. 1998) Nevada Medicaid found in violation of the comparability requirement of the Medicaid Act because it limited ICF-MR services to individuals with mental retardation and excluded this service for individuals with related conditions. Given that the federal definition of ICF-MR services covers individuals with mental retardation and related conditions both the comparability requirement and the amount, duration, and scope rule require that this service be available to individuals diagnosed with related conditions.

Sobky v Smoley, 855 F. Supp. 1123, 1138 (E.D. Cal. 1994). California Medicaid found in violation of 42 U.S.C. §1396a(a)(10)(B) as it failed to fund enough methadone maintenance treatment for all categorically needy individuals who require this service.

Clark v Kizer, 758 F. Supp. 572, 577 (E.D.Cal. 1990), aff'd in part and vacated in part on other grounds sub nom., Clark v Coye, 967 F.2d 585 (9th Cir. 1992). California Medicaid found in violation of the comparability requirement of the Medicaid Act based upon the variance in utilization rates of dental services from county to county by Medicaid-eligible children.

F. Reasonable Standards Requirement

According to the Medicaid Act, "[a] State plan for medical assistance must...include reasonable standards...for determining eligibility for and the extent of medical assistance under the plan which...are consistent with the objectives of this [Act]." 42 U.S.C. §1396a(a)(17). Many courts applying this standard have concluded that states cannot exclude medically necessary services from coverage when this exclusion would result in a denial of all treatment for a particular medical condition. Exclusions of treatment from coverage based upon non-medical criteria violate the reasonable standards requirement of the Medicaid Act.

Preterm v Dukakis, 591 F.2d 121(1st Cir. 1979). The Court held that it is unreasonable and violates the purpose of the Medicaid Act to single out one medical procedure, abortion, and limit access to this service solely to situations of life and death; it is also inconsistent with the Medicaid Act in that the Act provides a central role for the treating physician in determining proper treatment.

Hern v Beye, 57 F.3d 906 (10^th Cir. 1995) The Court held that "[T]his Circuit and several other courts have interpreted the statute as imposing a general obligation on states to fund those mandatory coverage services that are medically necessary . . . It may be that, pursuant to a generally applicable funding restriction or utilization control procedure, a participating state could deny coverage for a service deemed medically necessary in a particular case. But a state law that categorically denies coverage for a specific, medically necessary procedure, abortion, except in those rare instances when the patient's life is at stake is not a "reasonable standard... consistent with the objectives of the [Act]."

Hope Medical Group for Women v Edwards, 63 F.3d. 418 (5^th Cir. 1995) The Fifth Circuit held that Louisiana Medicaid could not exclude coverage of abortion in cases of rape or incest without regard to whether the procedure was medically necessary. Thus, the state could not adopt a restriction on Medicaid funding of abortions based upon social policy reasons rather than the medical necessity of the procedure.

Pinneke v Preisser, 623 F.2d 548 (8^th Cir. 1980). Exclusion of sex reassignment surgery is an arbitrary denial of benefits based solely on the diagnosis, type of illness, or condition where physician and hospital care are mandatory services and such surgery is "the only successful treatment known to medical science." Twenty years later, the 8^th Circuit took a different position on a similar issue in Smith v. Rasmussen, 249 F.3d 755 (8^th Cir. 2001) and held that the Iowa Medicaid program did not violate Medicaid's reasonable standards requirement by promulgating a rule that categorically excluded reconstructive surgery related to gender identity disorder. In support of this conclusion, the Court noted that there was disagreement in the medical community about the efficacy and necessity of this treatment in light of other treatment options. Additionally, the Court repeatedly stated that the Medicaid program is "designed to provide necessary medical services to the greatest number of needy people in a reasonable manner."

Weaver v Reagen, 886 F.2d 194 (8^th Cir. 1989). Missouri's prohibition of off-label uses of AZT is "unreasonable and inconsistent with the objectives of the Medicaid Act" in light of the fact that the medical community agrees that it is the only available treatment for AIDS.

Fred C. v Texas, 988 F. Supp. 1032 (W.D. Tex. 1997), aff'd 167 F.3d 537 (5^th Cir. 1998). Denial of coverage for ACDs for beneficiaries over the age of 21 is irrational in light of purpose of the Medicaid Act, which is to help individuals attain the capability for independence and self sufficiency. State may not deny treatment solely based upon age as there is no rational basis for distinguishing between those over and under 21.

Salgado v Pima County Arizona, 878 P.2d 659 (1994). State provided organ transplant coverage for children but not for adults. The court found it unreasonable to allocate treatment within a service category solely based upon age.

McDaniel v Betit, WL 426816 (D.Utah 1996). State may not deny treatment solely because of age. Beneficiary was 22 and state provided ABM transplant for those under 21.

Hunter v Chiles, 944 F. Supp. 914 (S.D.Fla.1996). Adults sought ACDs which state conceded it would cover for child if unavailable from other sources. Citing Salgado, court held that "Medicaid funding cannot be denied on the basis of age." Age as sole criterion is wholly unrelated to medical necessity and is unreasonable.

Peck v Califano, 454 F. Supp. 484, 488 (D.Utah 1977). Medicaid payment for sterilizations only for beneficiaries over 21 fails the constitutional rational relationship test.

While the reasonable standards requirement of the Act has protected many Medicaid beneficiaries seeking treatment that fits within the scope of covered services, there have also been several unsuccessful applications of this provision.

Rodriguez v City of New York, 1999 WL 795552, cert. denied (2^nd Cir. N.Y.) 121 S. Ct. 156 (2000). New York Medicaid's failure to provide safety monitoring as part of the personal assistance benefit does not violate the amount, duration, and scope rule or the provision prohibiting diagnosis-based decision-making. The court refused to consider reasonableness in light of the Medicaid statute as a whole, and accepted the state's allegation of financial constraints as a reasonable basis for its restriction.

Cherry v Tompkins, WL 502403 (S.D.Ohio 1995). State amended its level of care criteria for determining whether an individual qualified for home and community based services. The old criteria considered all aspects of an individual's condition, the new criteria looked at few criteria and thus made it more difficult to qualify for waiver services. The court held that the standards were "reasonable" and "consistent" with federal law as nothing in the Medicaid Act required the state to consider all aspects of an individual's condition.

G. Amount, Duration, and Scope Rule

The reasonable standards requirement of the Medicaid Act is further explained by the amount, duration, and scope rule. 42 C.F.R. § 440.230. This rule provides that:

      (a)      The plan must specify the amount, duration, and scope of each service that it provides for

                 (1) The categorically needy; and

                 (2) Each covered group of medically needy.

     (b)      Each service must be sufficient in amount, duration, and scope to reasonably achieve its purpose.

     (c)      The Medicaid agency may not arbitrarily deny or reduce the amount, duration, or scope of a required service...to an otherwise eligible beneficiary solely because of the diagnosis, type of illness, or condition.

     (d)      The agency may place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures.

1.  Each Service Must Be Sufficient in Amount, Duration and Scope to Reasonably Achieve Its Purpose. 42 C.F.R. § 440.230(b)

(A) Numerical Limits on Services

Curtis v Taylor, 625 F.2d 645 (5^th Cir. 1980). The state Medicaid agency limited doctor visits to three per month except for emergencies. The Court found that this numerical limit was "sufficient to reasonably achieve purpose of the Act" if the number of visits was adequate to serve the medical needs of most of the individuals eligible for Medicaid. On average Medicaid beneficiaries saw physicians 5.6 times per year. Only 3.9% of Medicaid beneficiaries needed more than three visits in any one month and only .5% required more than three visit in more than one month.

Mitchell v Johnson, 701 F.2d 337, 346-47 (5^th Cir. 1983). Texas Medicaid replaced its annual EPSDT dental checkups with one checkup every three years, except under limited circumstances, and deleted eight basic dental services. The court defined the purpose of the EPSDT dental services as "aimed at reducing future Medicaid expense by detecting and remedying incipient dental problems with children who could reasonably be anticipated to become adult Medicaid recipients. The court found the dental plan insufficient in amount, scope and duration to meet the reasonable dental needs of the children.

(B) Limits on Medications

The Medicaid Act permits states to exclude certain drugs such as fertility drugs, barbiturates, benzodiazepines, and nonprescription drugs. For a complete list see, 42 U.S.C. § 1396r(8)(d)(2).

Specific drugs

Visser v Taylor, 756 F. Supp. 501, 507 (D.Kan. 1990). The state's refusal to cover Clozaril violated Medicaid regulation because it was an arbitrary reduction in the scope of services and a denial of medically necessary treatment.

Weaver v Regan, 886 F.2d 194, 197-200 (8^th Cir. 1989), reh'g denied (Nov. 6, 1989). Missouri Medicaid could not deny coverage of AZT for people with AIDS who are Medicaid eligible and whose physicians have certified that AZT is medically necessary.

Drug Formularies

Dodson v Parham, 427 F. Supp. 97 (N.D. Ga. 1977). The court invalidated Georgia Medicaid's formulary restrictions on prescription drugs as insufficient in amount, scope and duration to achieve their purpose, which was deemed to be the care, mitigation or prevention of disease or the maintenance of beneficiaries. The prior authorization system was flawed because this system for approval of non-formulary drugs did not operate on weekends, at night, or on holidays and did not allow prescribing physicians any discretion in emergencies.

Jeneski v Myers, 163 Cal. App. 3d 18 (1984), cert denied sub nom. 

Kizer v Jeneski, 471 U.S. 1136 (1985). The court concluded that making certain drugs totally unavailable and ignoring necessity that some patients have for drugs that might be merely palliative for others, violated the Medicaid Act as discrimination based upon the medical disorder of the individual.

(C) DME Formularies

HCFA State Medicaid Director Letter (September 14, 1998) sets out the requirements for DME coverage.

• States may use DME formularies as an administrative convenience, but the state must provide a reasonable and meaningful procedure for requesting items that do not appear on a State's approved list.
• The process must be timely and employ reasonable and specific criteria by which an individual item of DME can be judged for coverage. These criteria must be sufficiently specific to permit a determination of whether an item of DME that does not appear on the state's approved list has been arbitrarily excluded from coverage based solely on a diagnosis, type of illness or condition.
• States may not arbitrarily exclude items from coverage based solely on a diagnosis, type of illness or condition.
• In evaluating a request for an item of DME, a state may not use a "Medicaid population as a whole" test which requires a beneficiary to demonstrate that, absent coverage of the item requested, the need of "most" Medicaid recipients will not be met. This test, in the DME context, establishes a standard that virtually no individual item of DME can meet.
• The approved list and the process for seeking modifications and exceptions to the DME list must be made available to all enrollees.

Estaban v Cook, 77 F. Supp. 2d 1256 (S.D.Fl. 1999). Florida Medicaid's cost cap of $582 for wheelchairs effectively denied both motorized and customized mobility devices to Medicaid recipients over age 21 and thus failed to comply with HCFA's policy on DME coverage as the cap was absolute and there were no procedures for requesting an exception. The exclusion was unreasonable because it was based solely on age (over 21) rather then medical necessity, and did not comport with the purpose of the Medicaid Act which is to help individuals "attain or retain capacity for independence and self-care."

Brisson v Dept. of Social Welfare, 702 A.2d 405 (S. Ct. Vt., 1997) Vermont Medicaid's refusal to provide a closed circuit television (CCTV) under the optional category of eyeglasses violated the amount, duration, and scope rule of the Medicaid Act. This exclusion is inconsistent with the state's obligation to cover treatment in a manner that provides services to those with the greatest need.

(D) Other Kinds of Limits

Montoya v Johnston, 654 F. Supp. 511 (5^th Cir.1987). Texas Medicaid's cap of $50,000 on inpatient hospitals services is an unreasonable and arbitrary denial of services to children who needed guarantee of $100,000 in order to be placed on active list for liver transplants.

King v Sullivan, 776 F. Supp. 645 (D.R.I.1991). Plaintiffs claimed that state did not spend enough money on ICF-MR services and sought to compel the state to make more group home services available. The court denied summary judgment for plaintiffs on the issue of whether the services were sufficient to reasonably achieve the purpose of the ICF-MR service. Defendants submitted evidence that every plaintiff had been offered a placement. Plaintiffs offered no evidence that the state had promised group home placement to all persons and that they had been denied these placements.

2. The Medicaid Agency May Not Arbitrarily Deny or Reduce the Amount, Duration, or Scope of a Required Service To an Otherwise Eligible Beneficiary Solely Because of the Diagnosis, Type of Illness, or Condition. 42 C.F.R. § 440.230 (c)

(A) Prohibited distinctions based on diagnosis or condition

White v Beal, 555 F.2d 1146 (3^rd Cir. 1977). Eyeglasses available to those with eye pathology but denied to persons suffering from other types of visual impairment is discrimination based on diagnosis.

Weaver v Regan, 886 F.2d. 194 (8^th Cir. 1989). Missouri Medicaid's rule limiting Medicaid coverage of AZT to only those beneficiaries who met diagnostic criteria listed on the FDA label was an arbitrary denial of benefits based solely on diagnoses, type of illness, or condition in light of widespread agreement in the medical community that AZT was the only approved treatment for HIV and was an effective treatment for those who do not meet the FDA indications.

Preterm v Dukakis, 591 F.2d 121 (1979 1^st Cir.). When the state Medicaid agency singles out one condition, a medically complicated pregnancy, and restricts access to abortion treatment to life and death situations it has crossed the line between permissible discrimination based on degree of need and entered into forbidden discrimination based on medical condition. It is unreasonable to single out one medical procedure, abortion, and limit access to situations of life and death.

Hern v Beye, 57 F.3d 906 (10^th Cir. 1995). Colorado's Medicaid program paid for abortions only when the mother's life "would be endangered if the fetus were carried to term." "Although states may use medical need as a criterion for placing appropriate limits on coverage, a state may not single out a particular medically necessary service and restrict coverage to instances where the patient's life is at risk. Such a policy denies services solely on the basis of diagnosis or condition, and does so arbitrarily because the denial is not in accordance with a uniform standard of medical need."

(B) Distinctions that are not prohibited

Cherry v Tompkins, WL 502403 (S.D.Ohio 1995). Ohio Medicaid's criteria for determining eligibility for home and community-based waiver services gave more emphasis to physical rather than cognitive impairments when determining level of care requirements for these services. The court found no violation because this distinction focused on who should qualify for services, rather than the services provided.

3. The Agency May Place Appropriate Limits on a Service Based on Such Criteria as Medical Necessity or on Utilization Control Procedures.
         42 C.F.R. § 440.230(d)

(A) Medical Necessity

All Medicaid-funded services must be medically necessary. Medical necessity is not defined in the Medicaid Act, however, state law and regulation often define the term. While the wording of these definitions may differ from state to state, numerous courts have concluded that the determination of what treatment is medically necessary must be consistent with accepted standards of medical practice and must be made by the beneficiary's treating physician.

The importance of the treating physician or other health care professionals in determining what treatment is medically necessary is clear from the legislative history of the Medicaid Act.

The committee's bill provides that the physician is to be the key figure in determining utilization of health services - and provides that it is a physician who is to decide upon admission to a hospital, order tests, drugs and treatments, and determine the length of stay.

For this reason the bill would require that payment could be made only if a physician certifies to the medical necessity of the services furnished." S.Rep. No. 404, 89^th Cong., 1^St Sess., reprinted in 1965 U.S.C.C.A.N. 1943.

Relying upon this legislative history, numerous courts have emphasized that State procedures that interfere with a treating physician's professional judgment concerning medically necessary treatment violate the Medicaid Act.

Pinneke v Preisser, 623 F.2d 546, 550 (8^th Cir. 1980). "[T]he decision of whether or not certain treatment or a particular type of surgery is ā€˜medically necessary' rests with the individual recipient's physician and not with clerical personnel or governmental officials."

Beal v Doe, 432 U.S. 438 (1977). "[T]he decision whether to fund the costs of abortion thus depends solely on the physician's determination of medical necessity."

(B) Experimental Procedures

In some instances, states may be required to fund certain experimental procedures. In other cases, the state may not be required to fund procedures that are experimental as such treatment may be considered unnecessary.

Weaver v Reagan, 886 F.2d 194 (8^th Cir. 1989). Missouri's Medicaid program refused to pay for the drug AZT except for patients whose diagnoses and conditions matched the conditions specified on the FDA label for the drug. The state claimed the limit was an "appropriate limit based upon medical necessity" because the drug was "experimental when used for off-label purposes. The court found that FDA labeling was not intended to limit a physician's use of an approved drug and that AZT was generally accepted in the medical community as an effective treatment for AIDS patients who did not meet the FDA indications. The court held that the drug was not experimental, but "generally accepted by the professional medical community as an effective and proven treatment for [AIDS].

Rush v Parham, 625 F.2d 1150 (5^th Cir. 1980). State may refuse to cover experimental treatment, i.e. treatments not generally recognized as effective by the medical profession. The case was remanded for trial on the issue of whether sex-reassignment surgery is experimental in general.

(C) Utilization Review

DeLuca v Hammons, 927 F. Supp. 132 (1996). State regulation limiting the number of home-care attendant hours allocated to Medicaid recipients who are initial applicants for home care, but placing no limit on the number of hours of services for those already receiving home care services is arbitrary and an unreasonable utilization review function.

J.K. v Dillenberg, 836 F. Supp. 694 (1993). State Medicaid agency must oversee and remain accountable for uniform state-wide utilization review procedures conforming to bona fide standards of medical necessity. Regional behavioral health authorities found to be state actors and their actions in administering services amount to state action and are governed by federal Medicaid law.

VII.    Home and Community-Based Waiver Services

Section 1915 (c) of the Social Security Act enables states to request a waiver of certain federal Medicaid requirements to provide enhanced community support services to those Medicaid beneficiaries who would otherwise require institutional care. 42 U.S.C. § 1396n(c); 42 C.F.R. § 441.300 et seq. These Home and Community Based Waiver (HCBW)programs can be used to fund services not otherwise authorized by the federal Medicaid statute such as respite care, home modifications, and non-medical transportation. Waiver programs can also be used to provide optional Medicaid services for waiver participants not offered to other adult Medicaid beneficiaries, such as case-management or personal assistance services. The federal regulations contain a list of the types of services states may choose to provide through HCBW programs. 42 C.F.R. § 440.180.

HCBW programs allow states to waive three specific Medicaid requirements: state-wideness, comparability of services, and community income and resource rules. Through these waiver programs, states can elect to cover a limited number of individuals, offer different groups of people a different set of services, offer services in only certain geographic locations, or waive deeming requirements to allow more individuals to be Medicaid eligible. Importantly, states' HCBW programs must comply with all federal Medicaid requirements that are not specifically waived.

HCBW programs provide states the flexibility to design a waiver program offering a mix of community-based services that meet the needs of the group the state wishes to serve. Federal regulations permit HCBW programs to serve the elderly, persons with physical disabilities, developmental disabilities, mental retardation, or mental illness. States may also develop programs to target beneficiaries with specific illnesses or conditions, such as technology-assisted children or individuals with AIDS. States can also make home and community-based services available to individuals who would otherwise qualify for Medicaid only if they were in an institutional setting. 42 U.S.C. § 1396n. When a state offers waiver services, it must inform individuals likely to require nursing home or ICF/MR care about "any feasible alternatives available under the waiver" and give them the "choice of either institutional or home and community-based services. 42 U.S.C. § 1396n(c)(2); 42 C.F.R § 441.302 (d).

HCBW programs are initially approved for three years and may be renewed at five-year intervals. To receive approval to implement a HCBW program, a state must assure CMS that the average per capita cost of providing HCBW services will not exceed the cost of care for the same population in an institution. 42 U.S.C. § 1396n(c)(2)(D); 42 C.F.R. § 441.302(e). States may satisfy this "cost-neutrality" test on an aggregate basis, in which case the average cost of care for all waiver recipients must be equal to or less than the cost of institutional services, or the state may refuse to offer waiver services to individuals "whose cost of the services would exceed the cost of an equivalent level of care" provided in a nursing home, hospital, or ICF/MR. 42 U.S.C. § 1396n(c)(4)(A); 42 C.F.R. § 441.301(a)(3). The state must also document that there are safeguards in place to protect the health and welfare of beneficiaries. 42 U.S.C. § 1396n(e).

States may limit the number of Medicaid beneficiaries who participate in a HCBW program. 42 U.S.C. § 1396n(c)(9) and (10). Specifically, 42 C.F.R. § 441.303(6) provides:

The State must indicate the number of unduplicated beneficiaries to which it intends to provide waiver services in each year of its program. This number will constitute a limit on the size of the waiver program unless the State requests and the Secretary approves a greater number of waiver participants in a waiver amendment. .

Numerous lawsuits have been filed to challenge states' operation of HCBW programs or the failure to provide sufficient HCBW services. The following cases provide an overview of this litigation. For a complete list of recent HCBW cases, however, see, Status Report: Litigation Concerning Medicaid Services for Persons with Developmental Disabilities, which is available at www.healthlaw.org.

A.     Level of Care Requirement

Martinez v. Ibarra, 759 F. Supp. 664 (D.Colo 1991). Colorado Medicaid may not use criteria for HCBW program that are stricter than those that actually would be used to determine whether individuals meet the relevant institutional level of care.

B.   Limitations on Eligibility

Parry v. Crawford, 990 F. Supp. 1250 (D. Nev, 1998). State may deny waiver services to person with autism when waiver is limited to persons with mental retardation. Plaintiff dropped his challenge to this waiver restriction when Nevada amended its waiver to include this group of people. The court held that ICF-MR institutional services may not be so limited because the federal definition of ICF-MR services specifically includes individuals with related conditions as well as individuals with mental retardation.

Skandalis v. Rowe, 14 F.3d 173 (2d Cir. 1994), rev'd 811 F.Supp. 782 (D.Conn. 1993). State may limit eligibility to certain subsets of categorical and financial eligibles. The court upheld Connecticut's HCBW program that limited eligibility to those with incomes below 300% of the SSI level holding that the state could maintain more stringent financial eligibility requirements for the waiver program than it did for its general Medicaid program.

Beckwith v. Kizer, 912 F.2d 1139 (9^th Cir. 1989). California Medicaid limited HCBW eligibility to individuals who required 90 days or more of acute-level hospital care and who were hospitalized immediately prior to receiving waiver services. The court concluded that 42 U.S.C. 1396n(c) did not prohibit California from defining a waiver group in terms of hospitalization. The court also held that the hospitalization requirement did not violate equal protection because it met a rational basis test.

C.   Cost-effectiveness

Beckwith v. Kizer, 912 F.2d 1139 (9^th Cir. 1989). California's HCBW prorgram was designed to benefit a class of individuals with physical disabilities who required 90 or more days of hospitalization. In deciding cost effectiveness, California could compare the costs of the waiver to the costs of patients who required stays of 90 days or more. It was not required to use the average annual inpatient costs for all hospital inpatients. Congress amended 42 U.S.C. § 1396n(c)(7)(A) to allow this kind of cost estimate and made the provision retroactive.

Leach v. Comm'r, 1995 WL 495907 (Va. App., Aug. 22, 1995). An applicant denied HCBW services because her costs exceeded the individual cost cap challenged its use. A conflict existed in Virginia's waiver request making it unclear whether the state intended to apply an individual cost cap or merely an aggregate cost cap. Virginia Medicaid checked the box on the waiver application indicating it intended to use only an aggregate cap. However, attached to the waiver form and incorporated into the waiver request was the state manual which provided for an individual cap. The court found that the state's intent in the waiver was to apply an individual cost cap for this waiver.

Ash v. Ohio Dep't of Human Serv., 126 Ohio App.3d 211, 709 N.E.2d 1257 (Ohio App. 4 Dist. 1998). Ohio's HCBW program had a cost cap of $9,000. Individuals, like plaintiff, whose monthly costs of care were higher were eligible to participate in the waiver, but had to pay any additional costs of care themselves or through other sources. Plaintiff challenged the cap. The court found that without a showing that the cost cap fails to meet the medical needs of most persons eligible for the waiver, the cap was not arbitrary or capricious.

D.       Waiting Lists and the Reasonable Promptness Requirement

Makin v. Hawaii, No. 98-0097 DAE (D. Haw., Nov. 26, 1999). Hawaii Medicaid did not violate the reasonable promptness requirement of the Medicaid Act by maintaining extensive waiting lists for HCBW programs when all waiver slots were filled. There is no entitlement to waiver services once the population cap is reached. NOTE: The court held that the Medicaid statute is ambiguous about states' authority to set limits on HCB Waiver slots. However, the court found that the regulations are clear and are a reasonable interpretation of the statute.

Boulet v. Celucci, 107 F. Supp. 2d 61 (D.Mass.2000). Massachusetts Medicaid violated beneficiaries' right to receive HCBW services in a reasonably prompt manner by placing them on extensive waiting lists for residential services when waiver slots were available. The court found that although the population cap for the waiver program was a permissible constraint on eligibility pursuant to 42 USC § 1396n(c)(10), eligible individuals who fall under the population cap are entitled to the full range of waiver services in compliance with the Medicaid Act, including the requirement that services be provided with reasonable promptness. 42 USC § 1396a(a)(8).

Benjamin H. v. Ohl, Civ. Action No. 3:99-0388 (S.D.W.Va., Order entered March 15, 2000). The court ordered the state to assure that the HCBW waiting list move "at a reasonable pace," defined as services to begin within 90 days of the date that eligibility is determined. However, the fact situation in West Virginia is unusual. Several years ago the state legislature declared a moratorium on new ICF-MR/DD beds in favor of the expansion of community services. At first, the state expanded community based offerings, in part through a HCB waiver. However, in April, 1999, the state Medicaid agency abruptly changed this policy limiting its waiver program to emergency placements only and requesting only 25 additional HCBW slots over the next five years. The result was an expansion of already-existing waiting lists for HCBW placements. Plaintiffs alleged that these waiting lists meant that ICF-level services were simply not operating in the state.

E.       Free Choice

Makin v. Hawaii, 114 F. Supp. 2d 1917 (D. Haw 1999). Hawaii Medicaid did not violate the free choice requirement because once the population cap was reached and the waiver was full the program there was no longer an available alternative.

Cramer v. Chiles, 33 F. Supp. 2d 1342, 1352 (S.D.Fla. 1999). State plan requiring choice between a HCBW program which gave no assurance that the supports and services would meet individuals' needs and a possible decades-long waiting list for ICF/MR institutional care gave beneficiaries no real choice of services in violation of the Medicaid Act.

F.  Due Process Issues in HCBW Programs

Martinez v. Ibarra, 759 F. Supp. 664 (D. Colo. 1991). The failure of the state's HCBW program to establish clear, written procedures regarding determinations of need violated beneficiaries' due process rights.

McMillan v. McCrimon, 807 F. Supp. 475, (C.D.Ill. 1992). Plaintiffs challenged the state's refusal to accept applications for the state's HCBW program. The court held that Illinois Medicaid had to afford each individual an opportunity to apply for Medicaid HCBW services without delay.

Parry v. Crawford, 990 F. Supp. 1250 (D. Nev, 1998). Applicant for Medicaid waiver services is entitled to notice and an opportunity to request a fair hearing when an application is denied. Notice is required even when the applicant repeatedly requests the same benefits.

King v. Fallon, 801 F. Supp. 925 (D.R.I. 1992). State agency must provide adequate notice and hearing rights following level of need assessments for home and community-based services. Notices must be in writing and must be specific enough to provide a basis for challenge.

Weaver v. Colo. Dept. of Social Services, 791 P.2d 1230 (Colo. Ct. App. 1990). Notice of termination of HCBW services must include the specific regulations that support the state's action. The state sent the recipient a written notice of termination. Although the notice did cite some regulations, it did not include a cite to the HCB Waiver regulations.

Cramer v. Chiles, 33 F. Supp. 2d 1342, 1352 (S.D.Fla. 1999). State statutory change converting ICF/MR facilities to HCBW program amounted to a reduction in services requiring notice and an opportunity to be heard.

VIII.   Due Process Protections for Medicaid Beneficiaries

The United States Constitution and the federal Medicaid Act protect Medicaid applicants, as well as beneficiaries, seeking Medicaid services. See, Goldberg v. Kelly, 397 U.S. 245 (1970); 42 U.S.C. § 1396a(a)(3); 42 C.F.R. § 431.200-.250; and 42 C.F.R. § 435.911-.920. Applicants may not be denied the opportunity to apply for Medicaid and beneficiaries must have their request for services acted upon in a reasonably prompt manner. 42 U.S.C. §1396a(a)(8); 42 CFR § 435.930

Notice of denials of eligibility or services must include the reasons for the action, the specific regulation supporting the action, and an explanation of the person's right to request a hearing. 42 C.F.R. § 435.912

State Medicaid agencies must inform applicants and benficiaries of the right to request a hearing, the method to obtain a hearing, and the ability to be represented by an attorney or other representative. A fair hearing must be available to any individual whose application is denied or is not acted upon in a reasonably prompt manner. A hearing is also available when a state Medicaid agency seeks to deny, terminate, or suspend services.

A Medicaid applicant or beneficiary who requests a fair hearing has the right to review his/her case file, review all documents to be used by the state at the hearing, call witnesses, establish the facts of the case without interference from the state, and confront and cross-examine adverse witnesses.

Finally, hearing decisions must be based solely on the evidence presented at the hearing and must summarize the facts of the case, identify relevant regulations and supporting evidence, and be issued within 90 days of the request for a hearing. In most states, unsuccessful hearing petitioners can seek judicial review of the hearing decision in state court.

The following cases illustrate the myriad challenges to denials of due process, including inadequate or untimely notice, failure to provide fair hearings or conduct proper hearings, and the insufficiency of hearing decisions.

A.  Right to Apply Without Delay

McMillan v. McCrimon, 807 F. Supp. 475, (C.D.Ill. 1992). Once a state Medicaid agency elects to provide an optional service, the state must comply with all requirements of the Medicaid Act. Plaintiffs challenged the state's failure to accept applications for the state's HCBW program. The court held that the state had to afford each individual an opportunity to apply for Medicaid HCBW services without delay.

B.  Written eligibility standards

Martinez v. Ibarra, 759 F. Supp. 664 (D. Colo. 1991). HCBW program's failure to establish clear, written procedures regarding determinations of need violated beneficiaries' due process rights.

C.  Written notice and the right to request a fair hearing.

Goldberg v. Kelly, 397 U.S. 254 (1970). Welfare beneficiary has constitutional due process rights to an effective opportunity to challenge the termination of benefits and to retain an attorney to do so. Welfare beneficiary also has right to a pre-termination hearing.

Mathews v. Eldridge, 424 U.S. 319 (1976). SSD beneficiary has no constitutional right to a pre-termination hearing. Court creates a balancing test for determining what process is due: (1) the private interest affected, (2) the risk of an erroneous deprivation of such interest and the probable value of additional safeguards, and (3) the government's interests.

D.  Notice Must Be Adequate

Vargas v. Trainor, 508 F.2d 485, 490 (7^th Cir. 1974), cert. denied, 420 U.S. 1008 (1975). Notice to public assistance beneficiaries must include reasons or grounds for the action.

Moffitt v. Austin, 600 F. Supp. 295 (W.D. Ky 1984). Plaintiffs were residents of ICF facilities. The state agency contracted with a PSRO to periodically review the level and appropriateness of care provided. When the PSRO decides that the patient no longer requires the level of care that he or she is receiving, the patient must receive a notice that contains a detailed statement of the intended action, the reason for the change in status, citation to the specific statutory section requiring reduction or termination, and specific notice of the beneficiary's right to appeal.

Cherry v. Tompkins, WL 502403 (S.D. Ohio 1995). Statement you do not have an appropriate level of care" is insufficient notice of reason for denial of home and community based waiver services.

E.   Denial, Suspensions, Terminations & Reductions, i.e. Changes in Care

Weaver v. Colorado Dept. of Soc. Servs., 791 P.2d 1230 (Colo.Ct. App. 1990. Constitutional due process protection against arbitrary administration of the program prevent terminations from home care unless there is a change in medical condition or in the underlying regulations or statute.

Featherstone v. Stanton, 626 F.2d 591 (7^th Cir. 1980). The case contains a detailed discussion of the federal regulatory requirements for hearings.

Mikel v. Gourley, No. 76-881C(1) (E.D. Mo., May 15, 1990), appeal dismissed, 951 F.2d 166 (8^th Cir. 1991). Upholding right to timely in-person as opposed to telephone fair hearing.

Parry v. Crawford, 990 F. Supp. 1250 (D. Nev, 1998). Applicant for ICF/MR services is entitled to notice and an opportunity to request a fair hearing when application is denied. This is true despite an applicant's repeated requests for the same benefits. Notice is required after every determination of eligibility for services.

King v. Fallon, 801 F. Supp. 925 (D.R.I. 1992). Notice required to challenge level-of-care assessments governing eligibility for home and community based waiver services.

Haymons v. Williams, 795 F. Supp. 511 (M.D.Fla. 1992). Medicaid beneficiaries entitled to individual notice when their home health providers were terminated from the program.

Jeneski v. Myers, 163 Cal. App. 3d 18 (1984), cert. denied Kizer v. Jeneski, 471 U.S. 1136 (1985). Notice and hearing rights required for denials for prior authorization requests for drugs.

Stenson v. Blum, 476 F. Supp. 1331 (S.D.N.Y. 1979), aff'd mem., 628 F.2d 1345 (2d Cir.), cert. denied, 449 U.S. 885 (1980). State may not terminate Medicaid benefits without notice and an opportunity for a hearing and without an ex parte determination of eligibility for Medicaid benefits independent of eligibility for SSI.

F.   Notice and Hearing Rights with Managed Care and Other Independent Contractors

J.K. v. Dillenberg, 835 F. Supp. 694 (1993). State provided mental health services to children through regional behavioral health authorities (REHBA). One REHBA introduced a new policy limiting inpatient services to 90 days. Court found state action because REHBA assigned the entire responsibility for a state-created service, served only state supported patients, and engaged in utilization review. As a result, due process attaches to REHBA actions just as it would the actions of the state. Case remanded to determine what process was due. Defendants argued they were engaged in utilization review and level of care decisions that did not prompt due process protections.

Banks v. Sec. of the Indian Family and Social Services Administration, 997 F.2d 231 (7^th Cir. 1993). Beneficiary was not entitled to notice and an opportunity for a hearing when provider's claim for reimbursement is rejected. Provider prohibited from attempting to collect from beneficiary, therefore no negative change in beneficiary's benefits to trigger due process.

Perry v. Chin, 1996 WL 159808 (D. Ariz. 1996). State provided Medicaid services through private health maintenance organizations. These private health plans may not terminate previously provided services without written notice and an opportunity for a hearing from the state or the health plans. The court found state action on the part of the health plan and further held that a state cannot use contracts to avoid federal legal obligations. The state remains liable for violations of law by the contractor.

Daniels v. Wadley, 926 F. Supp. 1305 (M.D. Tenn. 1996). Private Medicaid managed care organizations meet state action requirements and may not deny, delay, reduce, suspend or terminate Medicaid eligibility or services without adequate notice and timely fair hearing.

Yaretsky v. Blum, 457 U.S. 991 (1982). Discharge or transfer by private nursing home does not require notice and opportunity to be heard because decision was made by a private entity.

Fukerson v. Comm'r, 802 F. Supp. 529 (D. Me. 1992). Provider's determination that service is "non-emergency" and thus, co-payment is required, is not an agency action that gives rise to a hearing.

Taylor v. St. Clair, 685 F.2d 982 (5^th Cir. 1982). Discharge or transfer by private nursing home does not require notice and opportunity to be heard.

G.  Across-the-Board Changes In Law

Cramer v. Chiles, 33 F. Supp. 2d 1342, 1352 (S.D. Fla. 1999). Individualized due process notices required when a state statutory change denied beneficiaries a choice between an ICF/MR facility or a home and community-based waiver program.

Eder v. Beal, 609 F.2d 695 (3d Cir. 1979), cert. denied, 444 U.S. 950 (1979). Notice required to implement various across-the-board reductions in Medicaid benefits.

Benton v. Rhodes, 586 F.2d 1 (6^th Cir. 1978), cert. denied, 440 U.S. 973 (1979). No right to notice of termination of optional benefits, although state had provided an abbreviated form of written notice. No hearing required when state terminates optional services.

Budnicki v. Beal, 450 F. Supp. 546 (E.D. Pa. 1978). State reduced coverage for orthopedic shoes. Due process requires state to provide opportunity for hearing to those who challenge proposed terminations as resting on incorrect or misleading factual premises or a misapplication of rules or policies to the facts or particular cases. State is not constitutionally required to provide hearing to those who have no "factual issues in dispute or where the application of the rule of law is not intertwined with factual issues."

IX.   Conclusion

The Medicaid Act and regulations can be daunting to the most experienced lawyer or paralegal and are often overwhelming to the new health care advocate. So why do this work? Perhaps the best answer to this question was provided by the court in Salazar v. District of Columbia, 954 F. Supp. 278, 281 (D.C. 1996).

This case is about people - children and adults who are sick, poor, and vulnerable - for whom life, in the memorable words of poet Langston Hughes, "ain't been no crystal stair." It is written in the dry and bloodless language of "the law" - statistics, acronyms of agencies, and bureaucratic entities, Supreme Court case names and quotes, official governmental reports, periodicity tables, etc. But let there be no forgetting the real people to whom this dry and bloodless language gives voice: anxious, working parents who are too poor to obtain medications or heart catheter procedures or lead poisoning screens for their children, AIDs patients unable to get treatment, elderly persons suffering from chronic conditions like diabetes and heart disease who require constant monitoring and medical attention. Behind every "fact" found herein is a human face and the reality of being poor in the richest nation on earth.

1. Of this number, approximately 51% of all Medicaid beneficiaries are children\ and youth under the age of twenty-one. Individuals with disabilities represent\ approximately 17% of all Medicaid beneficiaries while older individuals constitute nearly\ 10% of the Medicaid population. Parents and other adults comprise the remaining 21%\ of Medicaid beneficiaries.

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