National Trends and
Regulatory Update
Caroline Brown
Philip Peisch
Covington & Burling LLP
NASMHPD/NASDDDS Legal Divisions Meeting
November 11, 2014
Medicaid Services for Children with ASD
2
Medicaid Services for Children with ASD
• How should States cover Applied Behavior Analysis
(ABA) therapy for children with autism spectrum
disorder (ASD)?
• Section 1905(a)(13) rehabilitative service?
– Distinction between rehabilitative and habilitative services
•
•
•
•
Section 1905(a)(13) preventive service?
Section 1905(a)(6) other licensed practitioner service?
Section 1915(c) habilitative service?
Section 1915(i) habilitative service?
3
Medicaid Services for Children with ASD
• Litigation over whether EPSDT requires
coverage of ABA therapy for children. For
example:
– Chisholm v. Kliebert, 2013 WL 3807990 (E.D. La.
2013)
– K.G. v. Dudek, 864 F. Supp. 2d 1314, 1319 (S.D.
Fla. 2012), rev’d in part by Garrido v. Dudek, 731
F.3d 1152 (11th Cir. 2013)
– Parents League for Effective Autism Services v.
Jones-Kelley, 339 Fed. App’x 542 (6th Cir. 2009)
4
Medicaid Services for Children with ASD
• Recent CMS guidance: Informational Bulletin
(July 7, 2014) and FAQs (September 24, 2014)
– Suggests EPSDT requires coverage of ASD-related
services, but it is not clear which services are required
and how States should cover them
– Still unclear how States should cover ABA therapy
• CMS did not take the position that ABA therapy is a Section
1905(a)(13)(C) rehab service
– Increased litigation risk for States that do not cover
ABA therapy
5
Medicaid Services for Children with ASD
• Recent CMS guidance (cont’d)
– A service cannot be covered for children under
Section 1915(c) or Section 1915(i) if it is coverable
as a Section 1905(a) state plan service
– States that currently provide services coverable
under Section 1905(a) to children with ASD through
a Section 1915(c) waiver will need to transition
those services to the state plan
6
Medicaid Expansion Update
7
Medicaid Expansion Update
• 27 States, plus the District of Columbia, have
agreed to expand Medicaid under the ACA
– Several States have expanded through Section
1115 demonstrations
• A few additional States are in discussions
with CMS about expanding Medicaid
8
Alternative Benefit Plans
9
Alternative Benefit Plans
• New low-income adult group will be covered
by “Alternative Benefit Plans” (ABP), not state
plan
• ABPs are what used to be called “benchmark”
coverage under Section 1937
10
Alternative Benefit Plans
• ABPs must cover “Essential Health Benefits”
– Complex ABP design process: compare/combine
Section 1937 plan with commercial base
benchmark plan
– “rehabilitative and habilitative services and
devices”
• CMS: ABPs must include habilitative services
– “mental health and substance use disorder
services, including behavioral health treatment”
11
Alternative Benefit Plans
• Mental Health Parity and Addiction Equity Act
(MHPAEA) applies to ABPs
• Institution for Mental Disease (IMD) Exclusion
– CMS applies IMD exclusion to ABPs, even though ABP
coverage is “[n]otwithstanding . . . any other provision of
this title which would be directly contrary to the authority
under this section”. See § 1937(a).
– Problems with application of the IMD exclusion
• Increasing demand for inpatient MH/SUD treatment (particularly
in the new group of low-income adults?)
• Application of IMD exclusion is in tension with MHPAEA
12
Alternative Benefit Plans
• “[M]edically frail or otherwise an individual
with special medical needs” are exempt from
mandatory enrollment in an ABP and must be
offered state plan benefits, including ICF/ID
– Includes individuals with disabling mental
disorders and individuals with chronic substance
use disorders
• HCBS waivers may be opened to new group,
but are not required
– Olmstead implications
13
Medicaid and the Mental Health
Parity and Addiction Equity Act
(MHPAEA)
14
Medicaid and the MHPAEA
• MHPAEA applies to:
• Medicaid managed care
• Alternative Benefit Plans
• CHIP
• MHPAEA does not apply to:
• Medicaid fee-for-service
15
Medicaid and the MHPAEA
• November 2013: final MHPAEA rule
• December 2014 (expected): Notice of
Proposed Rulemaking, “Application of the
Mental Health Parity and Addiction Equity Act
to Medicaid Programs”
16
DSH Allotments
17
DSH Allotments
• ACA’s DSH reductions
–
–
–
–
$500 million in 2014
Increase to $5.6 billion in reductions by 2019
Congress extended to 2022
In September 2013, CMS finalized a DSH
Reduction Methodology for 2014 and 2015. 78
Fed. Reg. 57,293.
18
DSH Allotments
• Changes and Delays to the ACA’s DSH Reductions
– December 2013 budget bill
• Eliminates the FY 2014 and FY 2015 DSH reductions
• Doubles the FY 2016 reduction from $600 million to $1.2 billion
• Extends reduced DSH allotments by one year to FY 2023
– April 2014: Protecting Access to Medicare Act
• Eliminates the FY 2016 DSH reductions
• Decreases DSH reductions for future years
• Extends reduced DSH allotments by one year to FY 2024
19
DSH Allotments
• President Obama’s Fiscal Year 2015 budget
– Current law: DSH reductions end after 2024
– President Obama’s budget would effectively
extend the cuts indefinitely by determining all
future DSH allotments beyond FY 2023 based on
the State’s actual DSH allotment as reduced by
the ACA
20
DSH Allotments
• Section 1923(h) of the SSA imposes limits on
the DSH payments for IMDs, which cannot
exceed the lowest of:
– The percentage of the State’s DSH payments paid
to IMDs in 1995
– The dollar amount of DSH payments made in 1995
– 33% of the State’s DSH allotment
21
DSH Allotments
• The ACA’s DSH Reductions’ Impact on IMDs
– CMS: “for FY 2014 and FY 2015, we will calculate
the IMD DSH limit under section 1923(h) . . .
based on the DSH allotment after reductions
implemented by the final rule to ensure that the
IMD limit experiences a corresponding reduction
consistent with the overall reductions in annual
state DSH allotments.” 78 Fed. Reg. 57,293
(Sept. 19, 2013).
22
New FLSA Rules for Home Care Workers
23
New FLSA Rules for Home Care Workers
• Background: Fair Labor Standards Act (FLSA)
statutory exceptions
– “Companionship services”. 29 U.S.C. § 213(a)(15).
– With respect to overtime only, domestic service
workers who reside in the private residence in
which they work. 29 U.S.C. § 213(b)(21).
24
New FLSA Rules for Home Care Workers
• New rules will remove many home care workers
from the exceptions to the FLSA
• Narrows “companionship services” to mean
primarily “fellowship and protection.”
– Assistance with ADLs/IADLs must be “attendant to”
fellowship and protection and “not exceed 20 percent
of the total hours worked.” 29 C.F.R. § 552.6.
• Prohibits third party employers from taking
advantage of exceptions for companionship
services or live-in domestic workers. 29 C.F.R. §
552.109.
25
New FLSA Rules for Home Care Workers
• New rules effective January 1, 2015
• DOL’s 2015 non-enforcement policy.
• 79 Fed. Reg. 60974 (Oct. 9, 2014)
• First half of 2015: no DOL enforcement actions
• Second half of 2015: DOL “will exercise prosecutorial
discretion in determining whether to bring enforcement
actions, with particular consideration given to the extent
to which States and other entities have made good faith
efforts to bring their home care programs into compliance
with the FLSA since promulgation of the Final Rule”
• Does not delay effective date of the new rules
26
New Home- and Community-Based
(HCB) Setting Standards
27
New HCB Setting Standards
• HCBS under Section 1915(i), Section
1915(c), or Section 1915(k) must be delivered
to individuals living in an HCB setting
• January 2014: new final rule defining HCB
setting
– 79 Fed. Reg. 2948 (Jan. 16, 2014)
– Effective March 17, 2014
28
New HCB Setting Standards
• General standards for HCB settings
• Special rules for provider-owned and
provider-controlled settings
29
New HCB Setting Standards
• State transition plans
– Deadlines
• If the State renews or amends a Section 1915 benefit or waiver
before March 17, 2015, the transition plan for that specific
benefit or waiver is due at the time of renewal/amendment and
a transition plan for all the State’s other benefits/waivers is due
within 120 days thereafter
• If the State does not renew or amend a Section 1915 benefit or
waiver by March 17, 2015, the transition plan is due for all
waivers/benefits by March 17, 2015
– 30-day public comment period
– Transition period of up to five years if the State can
show a need for that time
30
Questions?
31