Ensuring Equal Access for Medicaid Children

OBRA89: THE FIRST FOUR YEARS

Since Medicaidbegan,the program has sought to provide equal access to medical care for the low-income beneficiaries it serves. The equal access regulation (42 C.F.R. 447.204) was included in the original set of Medicaid regulations promulgated in 1966. It was modified

OBRA89 was the capstone to a string of federal laws that began in 1984, which dramatically expanded Medicaid eligibility for children and pregnant women and transformed Medicaid from an in-kind, income maintenance program tied to public assistance to a public health insurance safety net now serving more than 50 million Americans, including more than one-fourth of the nation's children. (Kaiser Commission on Medicaid and the Uninsured, 2004).

Through a three-pronged strategy, OBRA89 provided children and pregnant women with a special status among beneficiary groups in the Medicaid program. First, it dramatically broadened the mandated eligible age group from low-income pregnant women and children to age seven, to all poor children to age 18. But unlike predecessor legislation that established eligibility expansions through income and age standards only, the Congress went much further to ensure that these new beneficiaries would receive the mainstream care that it intended. It created requirements in two areas that historically had been the prerogative of the states-benefits and provider payment-changing the latter through a toughened equal access standard.

The benefits revision centered on a requirement that states provide enhanced early and periodic screening, diagnosis, and treatment (EPSDT) services. The EPSDT program is the federal mandatory Medicaid service that requires states to provide children, to age 21, with a set of preventive care services defined in consultation with established medical and dental groups. This benefits revision specified more comprehensive health screening services and more important, required states to provide any treatment service needed to remediate a medical problem identified in an EPSDT screening. States were explicitly mandated to provide services to children even if they exceeded the amount, duration, and scope of care identified in the state plan and were not provided to adults. Previously these "discretionary services" were optional.

With respect to provider reimbursement, OBPvA89 elevated the equal access requirements by shifting them from regulation to codified legislation. It also toughened the states' performance standards by requiring provider payments "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 in the geographic area" (OBRA89, section 6402). The notion of a geographic area baseline, with which Medicaid access to care would be compared and to which states would be held accountable, was entirely new.

It also instituted comprehensive state reporting requirements to the secretary of Health and Human Services (HHS) on the participation rates of obstetric and pediatrie providers and payment rates for a long list of commonly provided pediatrie and obstetric care services.The selection of only pediatric and OB services, as opposed to other possible groupings, such as all primary care or all federally mandated services, and its linkage to children's eligibility and benefits enhancements in the same legislation underscored the Congressional intent to ensure equal access to care specifically for children and pregnant women. These unprecedented legislative actions sent a clear message to the states that children and pregnant women must be furnished medically necessary care and created in the view of many, a special entitlement accorded to no other Medicaid-eligible subpopulations.

Asserting the link between provider reimbursement and access, the Congress requested that the federal Physician Payment Review Commission (PPRC) "examine the adequacy of physician reimbursement, physician participation, and access to care for Medicaid beneficiaries" and report to the Congress by July of the next year. (Physician Payment Review Commission, 1991, p. l).This also was a significant departure from past practice because the PPRC was created to study Medicare physician payment issues.

By the early 1990s, there was a growing body of research evidence linking low reimbursement rates to the shrinking pool of physicians who were willing to participate in Medicaid or limit their participation if they accepted any Medicaid-eligible patients into their practice (Berman, Wasserman, & Grimm, 1991 ;Margolis et al.,1992;Mitchell, 1991; Perloff, Kletke, & Neckerman, 1986, 1987; Yudkowsky, Cartland, & Flint, 1990). Published research subsequent to this period provided comparable findings. (Adams, 1995; American Academy of Pediatrics, 2000; Berman, Dolins, Tang, & Yudkowsky, 2002; Zuckerman, McFeeters, Cunningham, & Nichols, 2004).

Much of the "participation" research had been undertaken by pediatrician groups, in part as a result of their unique payer mix. Far and away the most Medicaid-involved specialty, 27 percent of pediatricians' gross practice revenue is derived from Medicaid compared with an all-physician average of 13 percent (American Medical Association,2001). Although this research was often funded through competitive grants, published in peer-reviewed journals, and was substantively consistent with other independent research, there may have been some skepticism, because it could have been interpreted as slanted to support an economic interest. However, when the independent PPRC reported that on average Medicaid was paying just 69 percent of what Medicare reimburses for the same service, delivered by the same doctor, in the same site, and that this was certainly affecting physician program participation and beneficiary access to care, low Medicaid reimbursement became front page news (Pear, 1991).

Contemporaneous reports corroborated the PPRC's findings with respect to Medicare rates and benchmarked poorer competitiveness with commercial insurance reimbursement. Schwartz and colleagues (1991) reported that Medicaid paid an average of 66 percent of Medicare rates, and Medicare itself was only reimbursing physicians at rates roughly 80 percent of private insurers. McManus and colleagues found that Medicaid reimbursed pediatricians, general practitioners, and family physicians between 57 percent and 65 percent compared with private insurance for children's standard office visit. (McManus, Flint, & Kelly, 1991.)

State provider organizations, often in close collaboration with patient advocates, seized on the new clout OBRA89 afforded to increase the historically paltry reimbursement rates that Medicaid paid to all providers.The first impact of the new law was in a California case, Clark v. Kizer. In 1987, under the pre-OBRA89 equal access regulation, a provider payment suit was initiated by obstetricians and dentists. A partial consent decree resolved the OB portion. Following OBRA89's enactment, on October 3,1990 District Court Judge Lawrence K. Karlton approved a summary judgment for the dentist plaintiffs stating that dental rates had to be increased because they fell so far below market rates that they did not meet the test of equal access as defined by the new statute. He saw no need for a trial (Clark v. Kizer, 1990)

Armed with the new definition of equal access, mandatory reporting of pediatric and obstetric fees to HHS, and the requirement that states must actually deliver screening and treatment services to children, pediatricians and other child advocates perceived an unprecedented level of clout to increase provider reimbursement rates and require states to implement other changes in their Medicaid program to ensure that children enrolled in Medicaid achieved access equal to their privately insured counterparts.

In 1991 the Pennsylvania Chapter of the American Academy of Pediatrics (AAP) with 14 other advocacy groups and Medicaid beneficiaries, filed the first suit (Scott v. Snider), contending that its state Medicaid program was violating federal law by underpaying providers and not ensuring that children were receiving EPSDT services. Similar actions quickly followed in North Carolina, and in Illinois, where the Memisovski v. Garner suit was filed on March 22, 1992.

The Pennsylvania suit was settled out of court on June 1,1995, after the state agreed to raise physician and dental fees significantly, including more than doubling the reimbursement for EPSDT screenings. The state also agreed to track 18 performance standards to monitor the provision of EPSDT services.

North Carolina never formally filed its lawsuit, but its threat jump-started a series of provider negotiations with the state's Medicaid administration. The result was an agreement to drop its legal action for a 30 percent across the board fee increase that brought the state's reimbursement levels to roughly 85 percent of Medicare and a doubling of EPSDT rates. The Illinois suit was stayed to allow plaintiffs time for discovery. Because of several lengthy postponements, it did not come to trial until 2004.

Across the country, state Medicaid programs began increasing provider reimbursement rates after several years of rate freezes and small rate hikes that failed to keep up with inflation or reimbursement levels of other payers. By 1993 the average Medicaid-to-Medicare payment ratio climbed to 75 percent (Norton & Zuckerman, 2000).

Physician participation, at least for pediatricians, increased in tandem with improved reimbursement levels. In 1989 only 56 percent of pediatricians who had practices that were not at capacity were accepting all Medicaid-eligible children (Yudkowsky et al, 1990). By 1993 that proportion increased to 70 percent (Yudkowsky, 1994). OBPvA89's pressure to hike fees as a means to increase access to pdiatrie care was succeeding.

1993-2003

The ebb and flow of Medicaid reimbursement rates continued after the initial round of rate hikes following the enactment of OBPxA89. Fee levels began to erode again relative to Medicare, private payers, and inflation, however, and by 1998 the national Medicaid-to-Medicare ratio declined to 62 percent (Norton & Zuckerman, 2000; Zuckerman et al., 2004). Fee levels perked up significantly from 1998 through 2000 as state coffers benefited from the economic expansion of the late 199Os, and crept back to the pre-OBPvA89 Medicaid-to-Medicare ratio of 69 percent by 2003 (Zuckerman et al.). A clear pattern emerged. Physician reimbursement rates were based on factors other than calibrating financial incentives to ensure equal access to care. Federal pressure, macroeconomic forces, and states' fiscal conditions drove rate setting, not a commitment to ensure a sufficient provider base to assure equal access to care for Medicaid beneficiaries.

During this period there were several provider suits from pharmacists, dentists, nursing homes, and hospitals that were not directly tied to children or pregnant women. Also, two noteworthy changes in the legal landscape occurred. In 1997 a more conservative Congress enacted federal legislation, the Balanced Budget Act of 1997 (RL. 105-33) that repealed the requirement for annual state reports to the secretary of HHS on pdiatrie and obstetric reimbursement rates. It did not roll back the equal access requirement, but it did weaken its enforcement. Consistent with this hands-ofFapproach, the "Boren Amendment," which set federal payment policies for hospital and nursing home care, was repealed as well. It was the only other provider payment rule ever legislated at the federal level.

The other change emanated from the judiciary. In 2002 a Supreme Court decision, Gonzaga University v. Doe, imposed greater restrictions on the right of private parties to sue the states in federal court.

EPSDT PERFORMANCE-BASED SUITS

Despite this pullback in federal influence over reimbursement rate setting and limitations imposed on potential plaintiffs, a new round of pediatricoriented lawsuits ensued, based on the failure of the states to provide the EPSDT services mandated by OBRA89. Although there was a distinct initial upward trend in provider rates following OBRA89's enactment, the increase in receipt of EPSDT services was less dramatic. By 1995 just 57 percent of eligible children were receiving at least one screening per year, double the screening rates of the late 1980s, but still short of the federal minimum requirement that 80 percent of children must receive at least one screening annually (see http://www. cms. hhs. gov/medicaid/epsdt/).

With respect to specific services such as lead screening and dental care, the results were quite disappointing. On the last two days of the Clinton administration, two letters were sent to state Medicaid directors from HHS citing unacceptably poor state performance with respect to providing EPSDT services, with demands for action plans by states to show how they intended to improve their performance (Westmoreland, 2001).

Michigan

On June 12, 1999, a coalition of pediatricians, pediatrie dentists, and child advocates filed the "Westside Mothers" case in federal court in Michigan. (Like the Memisovski case, this suit is referred to by the name of the plaintiffs because the defendants changed frequently.) The suit alleged that the state's Medicaid program was failing to deliver EPSDT services as required by federal law because of inadequate provider reimbursement rates.Judge Robert H. Cleland dismissed the case on March 26,2001, on technical grounds that related to legal provisions in federal spending power (Westside Mothers v. Havemen, 2001).

The case was appealed to the U.S. Court of Appeals for the 6th District, which reversed Judge Cleland s ruling on May 15, 2002. The state applied for review by the Supreme Court, and in December 2002 the Court declined to hear the case, allowing the Court of Appeals ruling to stand.

In October 2004 plaintiffs filed an amended complaint, which Judge Cleland dismissed on May 17, 2005, again contending that the plaintiffs could not use the federal courts for this issue. This time the judge asserted that only the federal governments executive branch, through HHS, could force compliance with federal rules to ensure equal access. He also invoked the Gonzaga decision, which as noted earlier,limited private parties'access to federal courts. The ruling was appealed by plaintiffs the next day, and as of this writing, the case is still pending.

Oklahoma

Although the Michigan case is not settled, significant decisions have been reached in Oklahoma and Illinois. There, for the first time, actual trials with witnesses and evidence provided a day in court for the equal access provision. In Oklahoma on March 22, 2005 the court entered "Findings of Fact and Conclusions of Law" after a comprehensive trial, and on May 19,2005 it issued its judgment. Judge Claire Eagan ruled that the state's Medicaid program was not ensuring that payments were sufficient to enlist enough providers, was not "furnishing medical assistance with reasonable promptness," and was out of compliance with federal law because it had not established a periodicity schedule in consultation with recognized medical and dental groups (Oklahoma Chapter of the American Academy of Pediatrics v. Fogarty, 2005).

As an "immediate interim measure" the court issued a permanent injunction that ordered the state to begin reimbursing all Medicaid care at the Medicare level as soon as the state legislature could act to appropriate the funds. It also required that a study be undertaken by a "nationally recognized economic consulting firm.. .to determine the fee-for-service reimbursement rate necessary to assure reasonably prompt access to health care for minor children in the Oklahoma Medicaid Program while also complying with the utilization and efficiency requirements" of federal law (Oklahoma Chapter, 2005, p. 4). The study is to include an analysis of physician overhead costs and commercial payer rates, and is to be completed within six months.The court also ordered the state to develop an EPSDT periodicity schedule.

The court was adamant in its insistence on rate relief and stated that "a lack of such funding shall not excuse compliance with this Permanent Injunction" (p. 5).The state dutifully complied. On the last day of the 2005 legislative session, it appropriated $9.9 million to increase reimbursement in both the fee-for-service and Medicaid managed care program (SoonerCare) for services provided to children and pregnant women.

There also was an aspect of the court's decision that disappointed child advocates and is currently being appealed. Although the court's Findings of Fact detailed the state's many, serious and knowing failures to deliver medically necessary services to children, the court ultimately concluded that the state was in "substantial compliance" with the equal access requirements. Plaintiffs'appeal contends that "substantial compliance" is the incorrect legal standard to be applied considering the definitive legislative intent of OBRA89.

If the substantial compliance standard is allowed to stand, the court would not have established an explicit state obligation to ensure that services are actually furnished to eligible children. Its duty to perform would stop at setting standards for required services and having those services available. Consequently, if for reasons deemed beyond the control of the state, such as poor care-seeking behaviors on the part of eligible families, Medicaid-enrolled children would not have to actually receive all (or any) of the care made available to them, and the state would have no further obligations.

Illinois

The Memisovski case in Illinois, which was decided in a bench trial the year before the Oklahoma case, left no such wiggle room. In the most sweeping decision to date Judge Joan H. Lefkow ruled on August 23, 2004 in an exhaustive 100-page plus opinion that the state of Illinois most certainly has an EPSDT performance standard that goes beyond an increase in provider reimbursement rates (Memisovski v. Maram, 2004).

The Memisovski case is noteworthy for its comprehensiveness in other aspects as well. In the Oklahoma case the judge relied on anecdotal evidence to a great extent, and that is why she ordered a systematic analysis by a nationally known research firm before a final settlement is reached.The plaintiffs for Memisovski had comprehensive, data-based analyses provided by expert witnesses (Darling,2003; Flint, 2003) which were corroborated by providers and Medicaid beneficiaries at trial.

Among the 174 Findings of Fact stated in the judge's opinion were the following principal points:

* Eligible children were not receiving required EPSDT services (for example, periodic screenings, dental services, blood lead screening, required immunizations, vision and hearing screens).

* The EPSDT provider base was inadequate. Among formally enrolled EPSDT physician providers, during the study period of July 1,1998 to December 31, 2001, 63 percent did not provide a single screening, and 6 percent of enrolled physicians provided just one (Darling, 2003).

* Adverse health outcomes resulted from inadequate service provision.

* The state failed to inform beneficiaries adequately of the EPSDT services and did not facilitate the provision of care when beneficiaries sought treatment.

* Managed care organizations (MCOs) failed to provide EPSDT services without consequences, and the quality of services provided by MCOs, federally qualified health centers (FQHCs), and private providers was never evaluated.

* The state was well aware that its reimbursement rates were discouraging physician participation,but failed to take corrective action.

In the Conclusion of Law section of the opinion, Judge Lefkow stated: "The starting point for the issue of equal access must be the rates Illinois Medicaid pays to medical providers....Rates and equal access simply cannot be divorced" (Memisovski v. Maram, 2004, p. 76).Trial testimony and a virtually undisputed expert witness report demonstrated that Medicaid was reimbursing providers at roughly half the level that Medicare and private commercial payers were paying for identical services, and that these rates did not even meet average overhead costs for private practice physicians to provide the care (Flint, 2005).

Similar to the defense in the Michigan case, the state contended that there was no right for private action in federal court. Here it was rejected. The state also argued that reported screening rates were understated and that Illinois's reimbursement rates were similar to neighboring states.The former was rebutted by an expert witness analysis (Darling, 2003), and the latter was deemed irrelevant because the competition for physician services takes place in local medical markets.

On June 27, 2005 a Proposed Consent Decree was issued. Without admitting fault, the state of Illinois agreed to take several actions. Extensive notification efforts, using literacy specialists in their development, will be undertaken including material written in Spanish and Braille that will inform beneficiaries of their right to EPSDT services. Beneficiaries will be made aware of paid transportation services, and an enhanced physician referral system will be developed. Individual notification will be supplemented with annual public information campaigns.

Reimbursement rates were increased dramatically, roughly doubling current fees for medical and dental care. In addition, bonus payments for physicians and FQHCs will be made for timely provision of EPSDT services.The state appropriated $45 million to meet this requirement for the next fiscal year.

The state agreed to monitor the effectiveness of the new measures to provide necessary services through quarterly reporting. It also committed to funding a study on children's access to specialty care needed to remediate medical problems identified during EPSDT screenings (Memisovski v. Maram, 2004).

A Final Settlement Hearing took place in November 2005, but it is widely anticipated that the terms in the Proposed Consent Decree will be finalized because both parties have publicly agreed to accept the court-ordered actions.

California

By the summer of 2005, the child advocacy community believed a consensus was emerging from the federal bench that confirmed the expanded rights to care for children and pregnant women intended under OBRA89's equal access provision. The Westside Mothers case was the anomalous decision, but success in preceding appeals in this case led most observers to believe that Michigan too would fall in line. State AAP chapters in Florida and Colorado, in concert with local child advocates, began moving into final preparation to take action in federal court to enforce the equal access provision in their states.

The optimism was short lived when on August 2,2005, a three-judge panel from the U.S. Court of Appeals for the 9th Circuit upheld a lower court ruling that threw out two companion equal access cases, Sanchez v.Johnson (2005) and clayivorth v. Bonta (2005).The former is a suit brought by developmental disability advocates in August 2003, and the latter was brought by the California Medical Association in December 2003 in an attempt to stave off physician reimbursement cuts proposed by the California legislature (California Disability Community Action Network, 2005). Sounding similar to Michigan's Judge Cleland, Judge Diarmuid F. O'Scannlain wrote that California's Medicaid beneficiaries have no right of private action to enforce the equal access provision in federal court, an argument raised and rejected in Memisovski and in other cases.

The panel, all Reagan appointees with a history of conservative decisions, ruled that an established right of individuals to sue state officials who violate rights secured by federal law did not apply to Medicaid beneficiaries. section 1983 of the 19th century Civil Rights Act that followed the Civil War has been relied on regularly in multiple contexts as a basis for using the courts to ensure federal entitlements. Other District Courts of Appeal decisions, such as a 1996 case decided by the U.S. Court of Appeals for the 1st District brought by home care providers in Massachusetts against its state Medicaid program, stated unambiguously that section 1983 grants standing for Medicaid entitlement issues. However, section 1983 and a tighter interpretation of the Gonzaga decision are now being reinterpreted by conservative judges. (Pear, 2005).

On August 30,2005, several groups filed a petition for a rehearing of Sanchez and clayworth "en bane," which means the entire 47 members of the 9th Circuit court would hear the case and a simple majority ruling would decide the matter. If the petition for rehearing is denied or the decision stands after rehearing, a Supreme Court case is likely because opposing rulings are emanating from different Courts of Appeal.

Consequently, despite the unique claim to equal access afforded to children and pregnant women by OBRA89 and the supportive subsequent court decisions, the final chapter has not been written on this 16-year battle.

SOCIAL WORK INTERESTS

The fight to confirm OBRA89's right to mainstream care for children and pregnant women has implications for social workers in several respects. First, social workers have been the frontline of child advocacy issues for generations. Establishing state Medicaid programs' obligation to provide care to medically underserved, low-income children is a battle in which the profession is far from a disinterested party.

Enormous challenges to provide quality care for the uninsured and underinsured would remain even if equal access for Medicaid children can be established unequivocally. However, moving children with publicly funded insurance closer to a one-class health care system, particularly during a period of accelerating income inequality and a weakening of the rights of poor people, surely supports the larger fight to establish a national right to health care for everyone, a long-term goal of the profession.

Second, if section 1983 and the Gonzaga decision are reinterpreted to deny access to the courts by Medicaid beneficiaries when the legislative intent is so unambiguous, the potential application of this doctrine toWIC,low-cost housing,food stamps, and other federal programs could be devastating to social work clients throughout the country. The looming precedent of limiting the private right of actions in the federal courts should concern all advocates for poor and low-income populations. On the other hand, if the Illinois case holds as the model, the umbrella of federal court protections could extend beyond Medicaid beneficiaries to recipients of other federal entitlement programs.

Third, the fact that this battle is being waged by coalitions led by professional organizations should be seen as significant by social workers. Acceptance by the federal courts of provider groups as legitimate advocates for poor people, even though their members stand to benefit economically by the decision, opens the door to advocacy strategies that social work organizations may have rejected in the past, for fear of appearing self-serving.

Finally, it should be acknowledged that when adequate payment for professional services is recognized as one of the mandatory prerequisites to the delivery of services to those in need, social workers should be pleased. If the field is to recruit and retain the best and the brightest, fair pay can only buttress that goal.