Appeals Court Ruling Sustains Services for Arkansas Children With Development Disabilities

A federal appeals court ruling on June 10 means that Arkansas will have to continue funding two services for children with developmental disabilities but will have the option of not providing those services through its Medicaid program, the Arkansas Democrat-Gazette reports. To trim an expected state budget deficit, the state announced last November a series of Medicaid spending reductions for fiscal year 2002. The cuts included coverage for day treatment and therapy for children with developmental disabilities, such as autism and cerebral palsy, but did not affect coverage of diagnostic and evaluation services. Five companies that provide the services filed a lawsuit contesting the cuts, which would save the state a projected $4.9 million to $5.7 million per year. The service providers, who said the cuts could cause them to go bankrupt, argued that "once the state made the services available under Medicaid, it couldn't take them away." State officials countered that they had the "legal right to decide whether to include the services" under Medicaid. In December, U.S. District Judge Bill Wilson Jr. sided with the providers, a decision that officials said "essentially directed" the state to expand the services to all 75 counties, which would cost an estimated $100 million or more per year.

Appeals Court Ruling
In its June 10 ruling, the 8th U.S. Circuit Court of Appeals in St. Louis agreed with Wilson that Medicaid-eligible children have a right to early childhood services. But it disagreed that those services must be provided through the state's Medicaid program. The appeals court did, however, rule that Medicaid "must pay part or all of the cost of treatment for conditions discovered by doctors who first diagnose and evaluate the children." The ruling means that "if doctors prescribe the services for children who qualify for Medicaid, the state must pay with Medicaid funds." However, "if the state doesn't list the services as part of [Medicaid], some doctors may not know to prescribe the services or may hesitate more to prescribe them," the Democrat-Gazette reports. Both sides of the lawsuit "claimed" the appeals court ruling as a victory. Tom Dalton, an operator of one of the companies that sued the state, said the appeals court ruling that the services do not have to be included in Medicaid "means nothing" because the court still determined that the "services are mandatory." Joe Quinn, spokesperson for the state Department of Human Services, which administers Medicaid, said, "We are very pleased. We think [the ruling] gives us back a great deal of flexibility to manage our budget." Both sides agree that the ruling means the state will ultimately spend less money on the child services under Medicaid (Satter, Arkansas Democrat-Gazette, 6/11).