You are on page 1of 12

Ins u r anc e

D e s i g n

Crossing The Medicaid–Private Insurance Divide: The Case Of EPSDT
Today’s insurance trends threaten to undermine the evolving standard of pediatric preventive care.
by Sara Rosenbaum and Paul H. Wise
ABSTRACT: Contained in the Deficit Reduction Act of 2005 is a provision that could greatly affect Medicaid’s signature child health coverage standard, embodied since 1967 in the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit. Whether the core child health and developmental principles that have been EPSDT’s touchstone for four decades will continue to guide Medicaid depends on whether and how these principles will be incorporated into states’ coverage reforms. [Health Affairs 26, no. 2 (2007): 382–393; 10.1377/hlthaff.26.2.382]

e d i c a i d i s t h e p r i m a ry m e a n s o f i n s u r i n g low-income children and a principal source of pediatric health care financing. In 2005 Medicaid paid for more than one-third of all U.S. births and covered one in four children.1 Medicaid has long shaped states’ child health initiatives while sustaining and stabilizing critical components of the pediatric health care infrastructure (such as children’s hospitals) for all children. Virtually since its 1965 enactment, Medicaid has been the subject of controversy over program design and cost.2 One aspect of this controversy has been a debate over the extent to which risk-design features that characterize the private health insurance market either can or should be applied to a program whose core functions reach far beyond market limits. Evidence of this debate over the years can be seen in Medicaid’s growing embrace of managed care arrangements, as well as in large-scale Medicaid demonstrations conducted under Section 1115 of the Social Security Act, a principal aim of which is to liberate Medicaid from its traditional coverage requirements. The Deficit Reduction Act (DRA) of 2005 (P.L. 109-171) pushed the limits of this debate still further, permitting states to fundamentally redefine the meaning of
Sara Rosenbaum (sarar@gwu.edu) is the Hirsh Professor and Chair, Department of Health Policy, at the George Washington University School of Public Health and Health Services in Washington, D.C. Paul Wise is the Richard E. Behrman Professor of Child Health and Society, Centers for Health Policy and Primary Care Outcomes Research, at Stanford University in California.

M

382
DOI 10.1377/hlthaff.26.2.382 ©2007 Project HOPE–The People-to-People Health Foundation, Inc.

M a r c h /A p r i l 2 0 0 7

E P S DT

Medicaid coverage for beneficiaries, including low-income children. Because these coverage reforms affect children, the existing pediatric standard of coverage—Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)—effectively became a policy flashpoint. Although the EPSDT benefit survived, it did so with an altered structure—an irony in view of the fact that, recognizing EPSDT’s singular contribution to child health coverage, lawmakers also used the DRA to create a new state option to extend Medicaid to underinsured, moderate-income children with serious disabilities. The potential de facto loss of EPSDT as Medicaid’s pediatric coverage standard has major implications for the quality of pediatric care, particularly for children with special health care needs. But preserving EPSDT’s scope and reach requires an understanding of the basic differences between EPSDT coverage principles and those that guide private health insurance. This paper provides a conceptual framework for thinking about EPSDT and child health policy in a post-DRA world, in which states can be expected to use their new flexibility to reshape Medicaid into a purchaser of private health insurance products. Accordingly, we attempt to help readers understand the importance and implications of the state coverage flexibility created by the DRA’s obscure but critical legal provisions.

Evolution Of Medicaid Child Health Policy: From Great Society To DRA
The coverage rules of the original Medicaid statute did not distinguish between children and adults, but this ended with the Social Security Act Amendments of 1967, which added the EPSDT benefit to sec. 302(a), P.L. 90-248, as part of comprehensive reforms responding to documented, widespread, and preventable mental and physical conditions among poor children, from preschool children to young draftees.3 The legislation directed states’ Title V “Crippled Children’s” programs to periodically assess the growth and development of (that is, screen) those under age twenty-one “to ascertain their physical or mental defects” and to furnish “such health care, treatment, and other measures to correct or ameliorate defects and chronic conditions discovered thereby.”4 Medicaid was simultaneously amended in the same legislative reform package to finance “EPSDT” services, as they became known, furnished to Medicaid-enrolled children. n Importance of the EPSDT amendments. The EPSDT amendments redefined the Medicaid entitlement for people under age twenty-one. They were structured to reflect the professional pediatric standard of care, at whose core lies early and preventive health care emphasizing child development. The earliest EPSDT rules, promulgated in 1972, required periodic, comprehensive health exams; appropriate laboratory tests; a comprehensive developmental assessment; recommended immunizations; and vision, dental, and hearing care. The rules also permitted states to cover additional classes of medical assistance not available to adults.5 This legislative and regulatory emphasis on early, developmental, and ameliorative services re-

H E A L T H A F F A I R S ~ Vo l u m e 2 6 , N u m b e r 2

383

Ins u r anc e

D e s i g n

flects the fundamental purpose of the benefit. Four decades of legal and policy thought, as well as judicial interpretation of the EPSDT benefit entitlement, have faithfully continued to emphasize this purpose. Although no definitive study of Medicaid litigation has ever been undertaken, EPSDT has been one of the most frequently litigated statutory provisions, because of its importance, power, and breadth. Indeed, EPSDT lies at the heart of cases challenging the enforceability of Medicaid rights themselves, as well as the enforceability of voluntarily negotiated consent decrees.6 In 1989 Congress enacted and President George H.W. Bush signed into law legislation further strengthening EPSDT (Sec. 6408, P.L. 101-239). The legislation codified and augmented EPSDT’s regulatory terms, adding coverage of “interperiodic” (as-needed) screens, codifying each screening element (a “comprehensive” health and developmental assessment; a “comprehensive” unclothed physical exam; lab tests including a “blood lead level” assessment and anticipatory guidance); and vision, dental, and hearing coverage.7 Finally, the amendments added required coverage of all items and services falling within the federal definition of medical assistance that are medically necessary to “correct and ameliorate physical and mental conditions and illnesses,” even when not covered for adults.8 n From research to legislation. In sum, Medicaid coverage design for lowincome children reflects Congress’s conscious desire to ensure financing for early and broadly conceived health care interventions to promote child development. The 1967 reforms were enacted in the wake of research into the health status of poor children and adolescents; the 1989 reforms were a response to seminal advances in pediatric health and social policy, which in turn emanated from research into child development theory and clinical practice for infants, preschoolers, and children with disabilities.9 This effort to articulate principles of financing that support a child development standard of care has never been equaled in other forms of health insurance, and its results have never been more important than they are today. Several major epidemiologic trends and clinical innovations are reshaping developmentally oriented child health practice.10 The capacity to prevent many traditional threats to child health—particularly from acute infectious diseases—coupled with progress in screening for developmental and other disorders, have greatly intensified both the cadence and the content of early preventive services for children. Furthermore, the major reduction in acute illness among children has dramatically elevated the relative importance of treating chronic diseases and developmental conditions such as cystic fibrosis, asthma, sickle cell disease, and autism. These trends not only underscore the importance of screening, but also greatly increase the impact of organized, regionalized pediatric specialty care systems.11 A regionalization strategy is particularly important for children, since it ensures the patient volume and committed resources essential to supporting state-of-the-art expertise and high-quality specialized care.

384

M a r c h /A p r i l 2 0 0 7

E P S DT

Additionally, new insights into the early determinants of cardiovascular disease and cancer mean that pediatrics will increasingly focus on the pediatric management of precursors to adult-onset disease. Finally, pediatrics will continue to be a dynamic arena of modern medicine, involving not only the management of identified diseases but also the reduction of identified risks for adverse developmental and behavioral outcomes, as well as diseases that are likely to emerge symptomatically only in late adulthood. Together, these arenas of change provide the empirical context for assessing the potential effects of structural changes in insurance coverage such as those in the DRA on coverage, access, and quality. n Restricting EPSDT. The EPSDT entitlement has not been without controversy, beginning with the Nixon administration’s refusal to implement the law, continuing through elimination of EPSDT requirements for medically needy children in 1981, and culminating with the DRA.12 Medicaid’s post-1989 history has witnessed a succession of administrative and legislative efforts to trim or derail the benefit. Oregon demonstration. The first major post-1989 crack occurred with the Clinton administration’s approval of Oregon’s Section 1115 Medicaid rationing demonstration, following its disapproval by the first Bush administration. Adopting condition-specific exclusionary rules as a means of restructuring Medicaid coverage, the Oregon demonstration reached both children and adults. To proceed with the demonstration, the experiment therefore required waivers by the secretary of health and human services (HHS) of a host of Medicaid coverage requirements, including EPSDT’s nondiscriminatory early intervention policies. Subsequent demonstrations. Subsequent Medicaid Section 1115 demonstrations permitted states to depart from EPSDT principles in the case of low-income children covered on a “demonstration” basis rather than as a matter of routine state plan design. The current Bush administration has pressed market-oriented coverage demonstrations with particular energy. The administration expressed its strategic effort to remake Medicaid as a system of premium support in its Section 1115 Health Insurance Flexibility and Accountability (HIFA) initiative. This initiative stresses the importance of proposing a fundamental departure from Medicaid coverage principles, substituting insurance coverage tied to actuarial “benchmarks” for traditional Medicaid coverage. The demonstration is intended to “give states the programmatic flexibility required to support approaches that increase private health insurance coverage options.”13 n SCHIP. From one perspective, the State Children’s Health Insurance Program (SCHIP), enacted in 1997, is simply modest legislation to incentivize coverage of uninsured low-income children whose families’ economic circumstances nonetheless place them above their state’s Medicaid eligibility limits (states can set financial eligibility standards for children at any income level).14 From a structural perspective, however, SCHIP represents a dramatic departure from Medicaid pediatric coverage principles, permitting state SCHIP agencies to substitute private health insurance concepts for EPSDT coverage design. Under SCHIP, states have the authority to link

H E A L T H A F F A I R S ~ Vo l u m e 2 6 , N u m b e r 2

385

Ins u r anc e

D e s i g n

coverage to “benchmarks,” which in turn are drawn from the employer-sponsored health insurance market. Furthermore, like self-insuring employers, states can build their own “benchmark-equivalent” coverage design for SCHIP, subject only to a handful of cost-sharing, actuarial, and well-child coverage rules.15 Thus, at its core, SCHIP is pegged to the prevailing market for third-party coverage rather than to child development principles; as health insurance products seemingly drift ever downward in scope and depth, so can SCHIP. Studies of separately administered state SCHIP plans suggest widespread use of coverage flexibility, in part perhaps because of inadequate federal SCHIP contributions (federal funding is inadequate to permit states to meet projected needs).16 Compared with EPSDT, SCHIP benefits typically constrain coverage through limits on covered benefit classes (for example, no dental coverage or hearing services). They also contain limitations on amount, duration, and scope as well as condition-specific treatment exclusions not permitted under Medicaid and greatly narrowed definitions of medical necessity.17 n The DRA. The DRA essentially grafted SCHIP principles onto Medicaid as a state plan option and without the need for federal waivers. It also reduced the maximum required age for EPSDT benefits to eighteen in states pursuing this “alternative benefit approach,” as it is known.18 At the same time, it clarified that this approach applies only up to a point, and that EPSDT continues to supplement basic coverage for eligible children. But as a result of either drafting clumsiness (seen in other DRA provisions) or deliberate drafting ambiguity, the legislation raises serious uncertainties regarding how well the EPSDT safeguard will function in practice.19 This dramatic shift in Medicaid policy did not come out of thin air; to any reasonably practiced policy observer, it was the product of the years-long run-up summarized here. By the summer of 2005, state governmental organizations were actively calling for EPSDT’s curtailment or repeal.20 The Senate bill made no changes in coverage. But the House measure eliminated all coverage requirements (including EPSDT and all other standards) for “optional” children, substituting “benchmarks” as the new coverage standard.21 The conference agreement, which extended state benchmark flexibility to all low-income children while retaining EPSDT as an undefined “wraparound” to the benchmark, might best be understood as an effort to find a middle ground. Effectively, the conference agreement displaced EPSDT as the sole standard of coverage for low-income children, relegating it to tiered status. This DRA “wraparound” approach can be thought of as mirroring to some extent the approach used in states with Medicaid managed care systems, in which most EPSDT services are furnished contractually, while certain extended benefits (for example, inpatient pediatric psychiatric care) continue to be covered as “extra-contractual” residual medical assistance. But since this approach already was both widespread and permissible at the time of enactment, the nagging question becomes why Congress legislated further if not to allow additional modifica-

386

M a r c h /A p r i l 2 0 0 7

E P S DT

tions. Did lawmakers simply mean to codify this current practice or, alternatively, to allow fundamental changes in the EPSDT coverage architecture? Despite postenactment correspondence from congressional leaders suggesting that the former was what was intended, early guidance from the Centers for Medicare and Medicaid Services (CMS) veers toward the latter, implying the elimination of certain EPSDT coverage principles.22 The guidance describes the DRA alternative benefit option as one for children and adults who “generally” are healthy, an essentially meaningless observation in view of the health risks faced by lowincome children.23 The guidance then states that
EPSDT…wrap-around benefits must be sufficient so that in combination with the benchmark…[eligible] individuals receive the full EPSDT benefit. …In accordance with [ federal law] EPSDT services must be medically necessary services (emphasis added).

This interpretation raises problems on two fronts. First, no one has ever disputed that EPSDT benefits, like all Medicaid benefits, must be medically necessary to qualify for federal payments. The question is, In accordance with what standards and principles? At the heart of EPSDT lies its purpose: to prevent and ameliorate physical and mental conditions as early as possible. By failing to clarify the preservation of all aspects of EPSDT coverage principles (something the legislative correspondence in fact insisted on), the federal guidance implies at least that something less could do. Second, the guidance is obviously incorrect in a crucial respect: Under the law, coverage of the EPSDT assessment, including the crucial developmental assessment that provides the health basis for coverage, turns on a periodic schedule linked to pediatric developmental milestones, not on a separate “medical necessity” finding. Coverage is automatic and not subject to separate judgment regarding whether it is “necessary.” It is unclear whether the CMS intends to allow such basic departures from core EPSDT principles, although the agency’s rapid approval of state “alternative benefit” amendments that on their face violate EPSDT principles suggests a high level of tolerance, indeed.24 Will a well-child exam that omits a comprehensive developmental assessment be sufficient to make a developmental assessment “unnecessary”? Will states be permitted to use a “benchmark” or “benchmark-equivalent” medical necessity definition to determine coverage for EPSDT diagnostic and treatment services? Can “benchmark-equivalent” dental products cap annual expenses at $1,000 and limit “wraparound” coverage to congenital conditions rather than any conditions that if left untreated could affect a child’s development and health? One clue regarding tolerance for a narrowing of EPSDT is the CMS’s failure to prohibit TennCare (Tennessee Medicaid) from applying to children a new state legislative medical-necessity standard that bars coverage unless an enrollee is able to prove that a treatment is (1) for a “medical” condition (undefined), (2) safe and effective, (3) the least-costly alternative, and (4) nonexperimental. The legislative

H E A L T H A F F A I R S ~ Vo l u m e 2 6 , N u m b e r 2

387

Ins u r anc e

D e s i g n

language fails to reference either “early” or “ameliorative.” Furthermore, the law limits the relevance of objective clinical scientific evidence “based on an extrapolation from use in another setting or from use in diagnosing or treating another condition.”25 As with most pediatric care, treatments to ameliorate the effects of conditions in children rest on extrapolations drawn from clinical experience. Even if poor children were able to secure a battery of experts to assist them in appealing denials, TennCare would have the legal authority under this definition to exclude such evidence as irrelevant.

What To Expect From Private Insurance Coverage Design
Because the DRA alternative-benefit option links to insurance benchmarks, it is important to understand the inner workings of private health benefit products. Unlike EPSDT, these products have been structured for presumptively healthy workers with presumptively healthy children. Not only is the commercially insured population enrolled fundamentally different from that served by Medicaid and SCHIP, but the coverage products themselves are fundamentally different from Medicaid and SCHIP.26 n No statutory standards. Unlike Medicaid, private benefit products are not controlled by detailed statutory standards. To be sure, state insurance laws exist, but these laws, even when relevant, often tend to involve more heat than light where pediatric financing is concerned. For example, even in such seemingly noncontroversial areas as childhood immunization, no state insurance mandate requires coverage of all Centers for Disease Control and Prevention (CDC)–recommended pediatric vaccines, as is the case with Medicaid.27 Furthermore, state insurance law might be legally irrelevant under the DRA, since the law permits states, like self-insuring employers, to substitute their own “benchmark-equivalent” coverage standards, linked to actuarial approximations rather than coverage rules. In other words, states using “benchmark-equivalent” coverage could offer less than their own state laws require. n Risk concepts trump social contract principles. Gauging the design of privately sponsored group health benefit products is difficult, because the contracts themselves are inaccessible for purposes of comparison and inquiry. Some aspects of coverage design, such as overt limits on certain treatments or cost-sharing requirements, are readily visible, since they are actually described in summary plan descriptions distributed to employees. Because the master agreements themselves are proprietary, however, their core contractual elements remain hidden until a denial occurs and a coverage dispute arises. The fact that coverage terms are not disclosed does not make them inapplicable, of course; however, without access to detailed terms (which can be readily had in the case of Medicaid and SCHIP contracts), it is not possible to say definitively how private products would compare with EPSDT.28 What insight does exist regarding the precise terms of coverage agreements tends to come from published conference proceedings, or surveys of industry officials who

388

M a r c h /A p r i l 2 0 0 7

E P S DT

typically offer secondhand descriptions of their products.29 However, one very important primary—and public—source of the actual terms of commercially sold coverage agreements can be found in judicial decisions involving coverage disputes. In reaching these decisions, courts set forth the actual terms of coverage. These terms tend to confirm that commercially sold health benefit products reflect the risk concepts on which they are built, rather than the social-contract principles that underlie a public health financing scheme such as Medicaid.30 The EPSDT benefit design fundamentally reflects this social-contract approach to financing. The benefit consists of a wide array of benefit classes that in turn derive their legal meaning from uncommonly broad coverage rules that are embedded in the concept of child development. Commercial benefit products, on the other hand, offer far more narrow coverage terms that seek to avoid rather than embrace the broad developmental conditions in children that can create financing uncertainty and risk. n Principles governing coverage disputes. Bearing these foundational Medicaid principles for children in mind, it is thus possible to reflect on the contrast between these terms and the coverage provisions that make their appearance in judicial disputes over commercial health benefit coverage limits. Each coverage dispute, of course, is unique. But coverage disputes are resolved by applying general contract terms to individual facts. The contract terms are themselves generalizable to the entire group to which the coverage is sold.31 Tightly drafted coverage terms that exclude coverage of chronic and developmental conditions. Judicial case law involving coverage disputes suggests that insurance agreements are tightly drafted and structured to narrow and exclude risk. An example of this is Bedrick v. Travelers Insurance Co. (1996), involving the denial of health plan coverage for physical and speech therapy for a child born with cerebral palsy.32 On appeal, the U.S. Court of Appeals for the Fourth Circuit reversed the insurer’s physical therapy decision, finding that the term “physical therapy” was drafted sufficiently broadly to cover the treatment, despite the reviewer’s highly restrictive interpretation. In contrast, the court upheld the speech therapy denial, even though the reviewer’s opinion was equally without merit, because (unlike EPSDT) the term “speech therapy” was defined to limit coverage to cases in which speech was to be “restored” rather than attained in a child who lacked speech from birth. In other words, while EPSDT’s purpose is to provide early preventive treatments that ameliorate the effects of cerebral palsy, the purpose of insurance is to “restore” speech in people with no prior health conditions that would have limited speech. Exclusionary drafting, coupled with broad discretion. Simultaneously, employer-sponsored group health benefit contracts contain express “Firestone” clauses (as they are known), whose specific purpose is to accord broad decision-making discretion to the administrator.33 Tight and exclusionary drafting coupled with broad discretion enable health benefit managers to select covered treatments (or no

H E A L T H A F F A I R S ~ Vo l u m e 2 6 , N u m b e r 2

389

Ins u r anc e

D e s i g n

treatment at all), to the exclusion of other treatment approaches. This broad granting of discretion also affects the decision-making process by permitting the insurer to exclude or limit otherwise relevant evidence. This process can be seen in the TennCare medical necessity definition discussed above, which was expressly developed for that state’s Medicaid managed care market. Other exclusionary practices. Insurers also exclude by service setting; by diagnosis; or through nonchallengeable, embedded, “hard” limits (for example, twenty mental health therapy sessions). Yet another innovation involves incorporating practice guidelines into coverage terms, rather than having reviewers use them as informal decision-making aids. This technique allows an insurer to effectively select the covered treatment modality on a nonappealable basis because individual facts are legally irrelevant to the meaning of coverage. Although embedded guidelines, tight definitions, and hard limits can dramatically reduce the frequency of appealable events, individual coverage decisions inevitably occur. Thus, a contract’s medical necessity definition continues to matter, both as a framework for individualized decision making and as an across-theboard coverage limitation in its own right.34 The broader the definition, the more likely a court may use such ambiguity as the basis for reversing a denial. Collectively, these drafting techniques can be thought of as sticks, with carrots being providing incentives to consumers and providers through tools such as high deductibles, personal spending accounts, tiered cost sharing, pay-for-performance, and other inducements to choose in accordance with plan design. Insurers and plan sponsors benefit financially by efforts to narrow coverage, exclude risks, and create greater cost certainty. But what is lost in all of this legalistic maneuvering is not only many classes of benefits, but also the clinical nuance that might be crucial in cases that do not fit neatly into pre-established norms. This loss of coverage flexibility can be expected to affect patients who have complex conditions that are difficult to diagnose and treat, whose health risks or conditions are developmentally linked rather than the result of an acute and sudden onset, and whose appropriate treatment and management might necessitate a series of approaches that change over time as the health care system struggles to find the most beneficial intervention. These core characteristics of children at elevated physical, mental, and developmental risk coupled with the treatment modalities of modern pediatrics suggest the divide that can separate current insurance trends from the evolving pediatric standard of care. What is more troubling, practice guidelines might not account for differences in social circumstances, particularly the impact of poverty on health risks and parents’ capacity to comply with recommended follow-up visitation (for example, inflexible daytime employment), which is almost always an important component of pediatric guideline logic. The attempt to bar clinical evidence as relevant to coverage decision making carries particularly important consequences for children. Because specific, serious

390

M a r c h /A p r i l 2 0 0 7

E P S DT

pediatric conditions are relatively rare, it is particularly common in pediatrics to extrapolate the usefulness of specific interventions across diagnostic categories. Moreover, although an emphasis on evidence-based decision making is laudatory, extensive clinical trial data are just not as available for childhood conditions as they are for adult conditions. This implies a built-in bias in coverage language against children with serious, albeit rare, disorders.

Crossing The Medicaid–Private Insurance Divide To Save A Child-Development Coverage Standard
If EPSDT is to survive as more than remote second-tier financing, accessible only to children assisted by skilled legal advocates and battalions of experts, careful thought must be given to the relationship between alternative benefit design and EPSDT “wraparound” benefits. Critical to Medicaid’s future is maintaining its historical, foundational respect for the developmental character of childhood. Any immediate savings associated with the loss of meaningful pediatric coverage would be negligible: In 2004 total per capita Medicaid spending for children under the EPSDT standard of coverage was $1,315—an amount that reflects all screening, diagnostic, and treatment services and a health care financing rounding error.35 Indeed, estimates show that risk-adjusted per child spending during 1996– 99, adjusted to 2001 dollars, was $924 for all children and $1,344 for privately insured children.36 Bringing a child health focus to bear on the structure and operation of alternative coverage might help bridge this divide. From states’ managed care experiences, four principles can be drawn. n Maintain periodic assessments. First, the all-important periodic developmental assessment, pegged to pediatric milestones, must remain a basic and routine aspect of “first-tier” (that is, benchmark) coverage, without regard to “medical necessity” decisions, as the CMS apparently would have it. Periodic assessments of growth and development, coupled with anticipatory guidance, go a long way toward preserving EPSDT’s fundamental developmental thrust. In addition, specific financial incentives could be created to encourage high-quality developmental assessment performance by pediatric professionals. n Adhere to EPSDT’s medical-necessity standard. Second, benchmark agreements must emphasize continued adherence to EPSDT’s “early” and “ameliorative” medical-necessity standard. This standard could, of course, be coupled with “soft limits” on covered diagnostic and treatment services and waiver of limits when reliable evidence indicates the likelihood of physical or mental conditions. In other words, coverage should not be delayed until a child is acutely symptomatic. n Apply tiering specifically. Third, tiering can be useful, but rather than using it broadly, the second tier should be preserved for specific, identifiable, long-term treatments. In other words, EPSDT coverage principles should remain the touchstone of benchmark coverage, with high-cost treatments, governed by developmen-

H E A L T H A F F A I R S ~ Vo l u m e 2 6 , N u m b e r 2

391

Ins u r anc e

D e s i g n

tal concepts of medical necessity, accessed through an upper tier as a means of limiting insurer risk. n Encourage flexibility in coverage. Finally, and most fundamentally, health coverage for children must remain sufficiently flexible to be able to respond quickly to new insights into child health and development and new, effective strategies of ensuring optimal outcomes. This implies that coverage protocols must be continually updated and made responsive to advances in the field of pediatrics and child development. It also suggests that attention to medical advances can form a basis for creative reform in shaping the use of practice incentives and performance measurement, which in turn could help sustain EPSDT’s broad goals. EPSDT stands as the signature effort in U.S. social policy to translate pediatric principles into health care financing. The goals of EPSDT are as robust today as they were forty years ago; indeed, if anything, they are validated by the evolution of pediatric knowledge and practice. EPSDT has survived as a singular commitment to a vision of child health financing that has no peer. To sacrifice this vision for the sake of insurance markets is to lose not only coverage but the ethical basis of child health financing for years to come.
The authors acknowledge funding from the Commonwealth Fund and the Center for Health Care Strategies. NOTES
1. Henry J. Kaiser Family Foundation, “State Health Facts: Medicaid and SCHIP,” November 2006, http:// www.statehealthfacts.org/cgi-bin/healthfacts.cgi?action=compare&category=Medicaid+%26+SCHIP& welcome=1 (accessed 8 December 2006). R. Stevens and R. Stevens, Welfare Medicine in America: A Case Study of Medicaid (New York: Free Press, 1975). A. Foltz, An Ounce of Prevention: Child Health Politics under Medicaid (Chicago, AAAS Press, 1982); Children’s Defense Fund, EPSDT: Does It Spell Health Care for Poor Children? (Washington: CDF, 1977); and S. Rosenbaum et al., “National Security and U.S. Child Health Policy: The Origins and Continuing Role of Medicaid and EPSDT,” Policy Brief, June 2006, http://www.gwumc.edu/sphhs/healthpolicy/chsrp/downloads/mil_ prep042605.pdf (accessed 29 January 2007). Sec. 1905(a)(4)(B), added by sec. 302(a), P.L. 90-248. CDF, EPSDT: Does It Spell Health Care for Poor Children? See Westside Mothers v. Haveman, 289 F. 3d 682 (6th Cir., 2002); and Frew v. Hawkins, 540 U.S. 541 (2004). 42 U.S. Code, sec. 1396r. Ibid. P. Wise, “The Transformation of Child Health in the United States,” Health Affairs 23, no. 5 (2004): 9–25; N. Halfon and M. Hochstein, “Life Course Health Development: An Integrated Framework for Developing Health, Policy, and Research,” Milbank Quarterly 80, no. 3 (2002): 433–479; and B. Starfield, “Social, Economic, and Medical Care Determinants of Children’s Health,” in Health Care for Children: What’s Right, What’s Wrong, What’s Next, ed. R. Stein (New York: United Hospital Fund of New York, 1997), 39–52. Institute of Medicine, From Neurons to Neighborhoods (Washington: National Academies Press, 2000); Wise, “The Transformation of Child Health”; and Halfon and Hochstein, “Life Course Health Development.” IOM, From Neurons to Neighborhoods. See National Welfare Rights Organization v. Richardson, 334 F. Supp. 488 (D.D.C., 1971); and Title III, P.L. 97-35. Centers for Medicare and Medicaid Services, “Overview: Health Insurance Flexibility and Accountability (HIFA) Demonstration Initiative,” 14 December 2005, http://www.cms.hhs.gov/HIFA (accessed 8 December 2006); and T.A. Coughlin et al., “An Early Look at Ten State HIFA Medicaid Waivers,” Health Affairs 25 (2006): w204–w216 (published online 25 April 2006; 10.1377/hlthaff.25.w204).

2. 3.

4. 5. 6. 7. 8. 9.

10. 11. 12. 13.

392

M a r c h /A p r i l 2 0 0 7

E P S DT

14. S. Rosenbaum et al., “Public Health Insurance Design for Children: The Evolution from Medicaid to SCHIP,” Journal of Health and Biomedical Law 1, no. 1 (2004): 1–46. 15. Ibid. 16. M. Broaddus and E. Park, “SCHIP Financing Update: In 2007, Seventeen States Will Face Federal Funding Shortfalls of $800 Million in Their SCHIP Programs,” 28 November 2006, http://www.cbpp.org/6-506health2.htm (accessed 8 December 2006). 17. Agency for Healthcare Research and Quality, “SCHIP Enrollees with Special Health Care Needs and Access to Care,” August 2006, http://www.ahrq.gov/chiri/chiribrf5/chiribrf5.pdf (accessed 8 December 2006). 18. Social Security Amendments, sec. 1937, added by Title V, P.L. 109-171. 19. R. Pear, “White House to Ease Medicaid Rule on Proof of Citizenship,” New York Times, 7 July 2006. 20. National Governors Association, “Testimony by NGA Executive Director Ray Scheppach before the Medicaid Advisory Commission on Short-Term Medicaid Reform” (Washington: NGA, 17 August 2005); and National Conference of State Legislatures, “NCSL Principles for Medicaid Reform,” 19 August 2005, http://www.ncsl.org/statefed/health//MArefPrinc.htm (accessed 25 January 2007). 21. H. Rep. 109-276 sec. 1932(a). 22. Letter to Sec. Mike Leavitt from Sen. Charles Grassley (R-IA) and Rep. Joe Barton (R-TX), 29 March 2006. 23. CMS, State Medicaid Directors Letter 06-008, 31 March 2006, http://www.cms.hhs.gov/smdl/downloads/ SMD06008.pdf (accessed 19 August 2006). 24. J. Solomon, “West Virginia’s Medicaid Changes Unlikely to Reduce State Costs or Improve Beneficiaries’ Health,” 31 May 2006, http://www.cbpp.org/5-31-06health.htm (accessed 5 November 2006). 25. A. Schneider, “Tennessee’s New ‘Medically Necessary’ Standard: Uncovering the Insured?” July 2004, http://www.kff.org/medicaid/7139.cfm (accessed 8 December 2006). 26. S. Rosenbaum, “Defined-Contribution Plans and Limited Benefit Arrangements: Implications for Medicaid Beneficiaries,” 13 September 2004, http://www.gwumc.edu/sphhs/healthpolicy/chsrp/downloads/ Rosenbaum_AHIP_FNL_091306.pdf (accessed 8 December 2006). 27. S. Rosenbaum et al., The Epidemiology of U.S. Immunization Law: Mandated Coverage of Immunizations under State Health Insurance Laws, July 2003, http://www.gwumc.edu/sphhs/healthpolicy/immunization/reports.html (accessed 8 December 2006). 28. See Jones v. Kodak Medical Assistance Plan, 169 F. 3d 1287 (10th Cir., 1999); and S. Rosenbaum et al., Negotiating the New Health System: A Nationwide Study of Medicaid Managed Care Contracts, 4th ed. (online), 2003, http:// www.gwumc.edu/sphhs/healthpolicy/nnhs4/ (accessed 8 December 2006). 29. J. Yegian, “Setting Priorities in Medical Care through Benefit Design and Medical Management,” Health Affairs 23 (2004): w300–w304 (published online 19 May 2004; 10.1377/hlthaff.w4.300). 30. T. Baker and J. Simon, eds., Embracing Risk: The Changing Culture of Insurance and Responsibility (Chicago: University of Chicago Press, 2001). 31. Yegian, “Setting Priorities in Medical Care.” 32. Bedrick v. Travelers Insurance Co., 93 F. 3d 149 (4th Cir., 1996). 33. C.E. Medill et al., “How Readable Are Summary Plan Descriptions for Health Care Plans?” EBRI Notes 27, no. 10, October 2006, http://www.ebri.org/pdf/notespdf/EBRI_Notes_10-20061.pdf (accessed 11 December 2006); and R. Rosenblatt et al., Law and the American Health Care System (New York: Foundation Press, 1997), chap. 2(D) and (E). 34. L.A. Bergthold, “Medical Necessity: Do We Need It?” Health Affairs 14, no. 4 (1995): 180–190; and S.J. Singer and L.A. Bergthold, “Prospects for Improved Decision Making about Medical Necessity,” Health Affairs 20, no. 1 (2001): 200–206. 35. Commonwealth Fund, EPSDT and Children’s Coverage Costs, September 2005, http://www.cmwf.org/ publications/publications_show.htm?doc_id=358425 (accessed 8 December 2006). 36. Kaiser Commission on Medicaid and the Uninsured, “Medicaid: A Lower-Cost Approach to Serving a High-Cost Population,” March 2004, http://www.kff.org/medicaid/7057a.cfm (accessed 29 December 2006).

H E A L T H A F F A I R S ~ Vo l u m e 2 6 , N u m b e r 2

393