Covering Services for Children with Special Needs Under Medicaid, The Individuals with Disabilities Education Act (IDEA), and Private Insurance

November, 2003

Overview of Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) and Early Intervention Services through IDEA

EPSDT

Under Medicaid, all beneficiaries under 21 are entitled to EPSDT. One of the EPSDT components is regular comprehensive screening examinations (medical, vision, hearing, and dental screening) and the provision of immunizations and lab tests. Based on pediatric medical and dental standards, states preset age intervals at which the screenings are supposed to occur. This is known as the state “periodicity schedule.” In addition, children are entitled to “interperiodic screening”—that is, children are entitled to go to a health care provider when necessary to determine the presence of an illness or condition. Once a problem is identified through a screening examination, treatment and any necessary healthcare, diagnostic services, or other measures that are described in the Medicaid Act, “to correct or ameliorate physical or mental illnesses and conditions” must be covered.
Generally, under federal rules, a slate of services can be offered under a state’s Medicaid plan including some services that a state must provide and others that they may provide to adults. However, for children and youths under 21, all of the possible covered Medicaid services must be provided in every state if necessary to correct or ameliorate a child or youth’s physical or mental condition. Many Medicaid beneficiaries and Medicaid case workers, as well as Medicaid agencies in some states, do not understand the right to treatment under EPSDT. If needed, Medicaid-eligible children can get a whole spectrum of services, including diagnostic services, rehabilitation services, speech therapy, and occupational therapy. Many of those services are similar, even identical, to those that are covered under the federal Individuals with Disabilities Education Act (IDEA).

IDEA

Under IDEA, children are entitled to government-funded services for diagnostic and evaluation purposes, physical and occupational therapies, and speech-language pathology if these services are necessary to help the child get the benefit of his or her education. States receive fixed grants from the federal government to assist them in paying for IDEA services and if children’s needs exceed the grants, must pay for the rest of the services needed out of state revenues.
States vary dramatically in how they cover the early intervention services mandated under IDEA. State legislation determines what services are covered under private insurance and where children get other early intervention services. Under federal law, every state has an obligation to make sure that there are early intervention services but it isn’t always through private insurance that those are made available.

Coordinating EPSDT and IDEA

EPSDT and IDEA exist for a slightly different and over-lapping purpose but for different sets of children. EPSDT is to serve low-income children and children whose families are impoverished by medical expenses. IDEA is to serve children with disabilities, whether or not they are in low-income families. Under EPSDT, Medicaid covers any health services necessary to enable a low-income child to benefit from other early intervention services. Medicaid has covered a number of unusual services for children with medical needs pursuant to directives by the Center for Medicare and Medicaid Services and pursuant to litigation. For example, equipment can be covered (e.g.: car restraint seat, a computer system and bedside communication device for a child who has cerebral palsy, exercise equipment, touch talkers, air-conditioners to lessen seizures for children with seizures disorder, a beeper to promote communication with a child with brain damage); swimming lessons for a child with cystic fibrosis; and other services that are not necessarily intuitive Medicaid services.
Many parents do not want to go through the ordeal of a due process hearing for children who are eligible for special education under IDEA but are not getting therapies through the school systems. Complaints can be made to the state education department and sometimes that is a way to get some systemic relief. Children who qualify for Medicaid can receive services in school as part of their individual education plans under IDEA that are paid for by Medicaid. In fact, the Medicaid statute says that services provided as part of an early intervention plan that are also Medicaid-covered services should be billed to Medicaid, and IDEA is a payer of last resort in that circumstance. However, schools have to be Medicaid-certified providers to be paid by Medicaid.
For states, Medicaid is a much better source of funding than IDEA to pay for early intervention services. When children qualify for Medicaid coverage, states get at least 50% of their Medicaid costs matched by the federal government whereas IDEA provides a lump of money that may or may not, and usually does not, cover all of the needs of the children who need IDEA services. In a “wealthy state” like Connecticut, the federal-state Medicaid match is 50-50, but in states with lower per capita income, the federal matching percentage can be in the high 70s. In addition, administrative activities under Medicaid are matched at 90 percent, so some of the coordination and set up of Medicaid reimbursement mechanisms for services in schools would be covered by the federal government. States that do not coordinate Medicaid and IDEA services are basically giving away the opportunity to get federal money. Advocates need to educate legislatures and state education personnel about the opportunities.

Coordinating Coverage through Medicaid and Private Insurance Plans

For children with access to private insurance, Medicaid is used as “wrap around coverage” – that is, Medicaid pays for some services not covered by the private insurance and is the payer of last resort. States thus do not take on the full cost of care for these children. Since their primary coverage is through private insurance, these children are often excluded from Medicaid managed care. Many of these families have two working parents and have access to private insurance but still lack care coordination. They are left fending for themselves. A second disadvantage is that Medicaid wrap-around services remain on a fee-for-service basis and their doctors and other providers can refuse to take any more Medicaid kids. If they were part of the managed care network, the plans would have to guarantee them access to a provider.

Key Points and Issues

An issue in coordinating Medicaid with private insurance is that Medicaid law requires it be the last payer, so private insurance either has to pay or deny services before Medicaid pays. This can cause delays in services and can cause great confusion when a private plan has different coverage criteria than Medicaid.
Part C under the federal Individuals with Disabilities Education Act (IDEA) mandates early intervention services. The law also mandates that each state have a Interagency Coordinating Council for early intervention. However, implementation of the law varies dramatically from state-to-state, making it much more complicated. In Rhode Island for instance, the mandate is to provide services for children birth to age three who have a disability or meet a certain deviation below normal. In some states, the early intervention mandate is actually a “birth to five” or “birth to six” system. Besides determining the ages for early intervention services, states can also determine what services will be covered and how they will be provided.
Every state has a Part C coordinator, but depending on the state, the Part C early intervention program may be administered by the Department of Health, the Department of Education, or the Department of Human Services. A technical assistance site for early intervention programs can be found at www.neceac.org. At this website, directories will identify a Part C contact person or chairperson of the Interagency Coordinating Council.
CMS has issued guidance stating that if a service is a Medicaid covered service in any way, Medicaid should cover it, even if it is provided under an Individualized Education Plan (IEP). In Medicaid managed care, you may have a situation where managed care entities claim that a requested service is not medical in nature and is not actually a Medicaid service.
Under Medicaid, habilitation is not covered as a service category. As part of a home and community-based waiver, states can offer special services that are not normally a part of Medicaid. Children with developmental disabilities and related conditions can get physical therapy, occupational therapy, and speech therapy covered by Medicaid and their need for those services does not have to be related to an injury.
Medicare placed a capitation on physical therapy, occupational therapy, and speech therapy, but then placed a moratorium on implementation of the caps. However, the moratorium date has passed and Congress did not extend it. Medicare has placed a capitation on physical, occupational and speech therapies – the three cannot exceed a $1500 cap. Children with conditions such as cerebral palsy are now often left with just one hour of therapy a week when they need six hours. Middle class families who have children with disabilities are no longer being through their private health insurance or through their schools.

Experiences of Individuals States

Mandated benefits for early intervention services: A Connecticut mandate requires coverage of services such as therapy for children up to age three, but does not speak to how much therapy must be offered. Due to funding constraints, those services are diminishing. In services such as speech therapy for instance, the amount of therapy offered is so little that the service is of very little value. Parents are sacrificing to provide supplemental therapies on a self-pay basis.
Mandated benefits for families of children with special needs: In Virginia, the insurance code requires licensed insurers to provide coverage for early intervention services under certain conditions for a child up to age three, provided the child meets some other requirements. Most of the managed care plans are cognizant of that statutory requirement and do a good job providing services up to the minimum requirements. Families face issues after their children turn three and are no longer eligible for that mandated coverage. In response to the meeting with families, the Office of the Managed Care Ombudsman developed a tip sheet that specifically addresses the issues of parents with special needs, fitting within the Ombudsman’s mission to provide consumer education.
Exclusions of educational services: In Minnesota, a lot of insurance plans wrote an exclusion into their plan contracts stating that they would not cover services “for educational purposes”, so the school districts have to pay for these services. The state legislature passed a law that instructs the school districts to get Medicaid certification to recapture some of the cost, but school districts are not all complying. When kids go in for special needs services and assessment, school districts often cite limited special education funds as a reason for not providing service, ignoring the requirements of IDEA and other mandates. Unless an aggressive parent files for a fair hearing, parents just walk away after being told there is no money for these services.
Use of Case Management: In the Ombudsman’s experience, Virginia plans are very good about providing services to children under age 3. Case managers are assigned to help to make sure that each child gets the services and treatment they need but they do not try to resolve administrative issues such as incorrect billings, co-pays and deductibles and things of that nature.¹
Dual Eligibility for Medicaid and Private Insurance. When Rhode Island went forward with an 1115 managed care waiver nine or ten years ago to place most Medicaid-eligible families in managed care, “protected children” were carved out of the managed care transition – that is, Medicaid-eligible children with special health care needs remained in the fee-for-service system for their benefits. Nine years later these protected children are being transitioned into managed care, as is the trend across the country. Rhode Island has spent a lot of time researching effective ways to protect these kids along the way. One of the reasons that it took Rhode Island so long to move in that direction was the lack of research data and experience to prove whether or not managed care was advantageous to already vulnerable families. There are three major populations of special needs children in Rhode Island who are eligible for Medicaid:

those with SSI eligibility
those who would qualify for Medicaid if they were in an institution, known as “Katie Beckett” children (not all states cover such children since this is an option rather than a requirement for states)
those on an adoption subsidy program (i.e.: kids that had been in state custody in the past but have been adopted by families and their insurance has been provided through Medicaid).

Additional Medicaid Resources

NHeLP’s An Advocate’s Guide to the Medicaid Program can be ordered through the Web site (www.healthlaw.org). It details eligibility and service requirements under Medicaid law.

Screening for Medicaid and SCHIP Eligibility on the Health Assistance Partnership Web site, (www.healthassistancepartnership.org) lists questions to ask to find out whether someone is eligible for Medicaid and explains where to find each state’s eligibility criteria.

This fact sheet was prepared based on a November 13, 2003, Health Assistance Partnership conference call. The guest speakers for this conference call were Tom Bridenstine, Managed Care Ombudsman, Virginia²; Sarah Somers, Attorney, National Health Law Program³; and Dawn Wadryga, Program Director, Family Voices of Rhode Island.4

¹ For additional information see the following website: http://www.state.va.us/scc/division/boi/webpages/boiombudman.htm or call an Ombudsman to discuss an individual situation.
² Tom Bridenstine is the Managed Care Ombudsman in the Virginia State Corporation Commission, Bureau of Insurance. His office was created in 1999 by the General Assembly. The Code of Virginia explains its duties. The Office of the Managed Care Ombudsman was designed with the expressed intent of serving as a resource to consumers covered by managed care, answering general inquiries and helping consumers understand their benefits, and it has the ability to assist individuals in managed care plan appeals. In Virginia, all HMOs, most but not all PPOs, and any other forms of managed care are called Managed Care Health Insurance Plans.
³ Sarah Somers is a staff attorney with the National Health Law Program (NHeLP), which works for justice in health care for low-income people. Previously, she represented children in both Medicaid and special education cases. Although NHeLP’s primary focus is on Medicaid, Ms. Somers continues to focus on the intersection of Medicaid and special education issues. She can be reached at somers@healthlaw.org.
4 Dawn Wadryga is a mother of six children, three of whom have had varying levels of disabilities and developmental delay. Seventeen years ago, she gave birth to full-term twin sons, one of whom suffered a brain injury during his delivery and was left medical technology dependent. Early in the process, she became a vocal advocate for her child with disabilities, obtaining the “education of a lifetime” through her efforts. After her son’s death, she became the Program Director for Family Voices at the Rhode Island parent information network.