Under federal Medicaid law, states must provide â€œearly and periodic screening, diagnostics, and treatment,â€ also known as EPSDT services, to eligible Medicaid recipients under age 21 (U.S.C. Â§ 1396d(a)(4)(B)). The definition of EPSDT includes necessary health care, diagnostic services, treatment, and other measures described in the Medical Assistance subchapter for the United States Code (42 U.S.C. Â§ 1396d (a)) (2012) that correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, regardless of whether such services are covered under the state plan (42 U.S.C. Â§ 1396d (r)(5)) (2013). The medical necessity standard, which is based on clinical standards of care, refers to interventions that may be justified as reasonable, necessary, or appropriate. States must comply with the FMA standard to cover all treatments for a Medicaid- eligible childâ€™s physical or mental condition, even if service coverage is optional for adults covered by Medicaid. FMA also bars states from arbitrarily denying or reducing the amount, duration, or scope of a required service to an otherwise eligible recipient solely because of the diagnosis, illness, or condition (Nebraska Legislature 2012).
Despite the provisions of FMA, the U.S. Department of Health and Human Services, which oversees the Medicaid program, excludes certain behavioral health treatments for children with developmental disabilities and autism (National Health Law Program 2012; Autism Society of Nebraska 2012). In addition, some statesâ€™ Medicaid contracts allow insurers more freedom than other states to deny payment for services. States also vary in whoâ€”the claimant or the insurerâ€”must prove whether coverage provisions are adequate or fall short of federal Medicaid legal standards (Rosenbaum and Teitelbaum 1998). Differences among states in approval of payment for specific treatments, including mental and behavioral health treat- ment, illustrate the need for more consistency in Medicaid coverage provisions and the lack of parity between mental and physical health coverage. Mental health ben- efits must be offered at parity with medical services to newly eligible recipients as part of the 2010 Patient Protection and Affordable Care Act (ACA), and Medicaid expansion controversy is clear evidence that parity is a work in progress (Mental Health America 2013; U.S. Department of Labor 2008).
Because of inadequate coverage for mental and behavioral health services for Medicaid-eligible children, some parents have no option other than to surrender their child to the child welfare system so that the child will receive full coverage for neces- sary mental and behavioral health care services. This results in significant cost-shift- ing from Medicaid to the stateâ€™s child welfare system. That is, when a state provides federally mandated services to Medicaid-eligible children, it receives a financial match from the federal government to pay the costs. When a state denies federally mandated Medicaid services and a family surrenders a child to state custody so the child can receive care, the state pays the expense of the previously denied Medicaid costs plus the expense of entitlements the child acquires as a ward of the state.
The ACA Medicaid expansion offers a window of opportunity to increase cover- age for behavioral health treatment for children with mental illnesses. Although the federal government will bear the primary financial burden of Medicaid expansion, some states have elected, for political reasons, not to participate in this expansion.
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