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by John Allen, Professor of Law
University of Iowa, College of Law, Iowa
July 29, 1998

The Medicaid program has been an important source of assistive technology for thousands of persons. There is no doubt that it will continue to play a significant role in funding assistive technology, but a couple of recent court cases frame the debate about whether that role will expand. This short article will offer a brief review of the Medicaid program, and then consider the implications of these recent cases.

The Medicaid program was created by Congress in 1965, as Title XIX of the Social Security Act, to provide medical assistance to persons in financial need. Each state operates its own program in conformance with federal requirements, with the federal government providing matching funds to the states. The states submit a "state plan" to the Department of Health and Human Services (HHS), the agency responsible for administration at the federal level, which must meet the relevant federal requirements.
The federal statute mandates that certain categories of services be provided, while other categories of services are optional. Each service that the state provides must be "sufficient in amount, duration, and scope to reasonably achieve its purpose." Even with "optional" services, states are "bound to act in compliance with the Act and the applicable regulations in the implementation of those services...", including the amount, duration and scope regulation.

Assistive technology can be covered under a number of categories of services. Often assistive technology can be covered as a prosthetic device, as in Fred C. v. Texas Health and Human Services Commission, where the court held that an augmentative communication device could properly be characterized as a prosthetic device. In Meyers v. Reagan, the court held that the state could be required to provide an augmentative communication device as a speech service, covered under the Medicaid statute as "physical therapy and related services". Often assistive technology can be covered as "durable medical equipment", which is included within "home health care services". For example, in both the Fred C. case and in Hunter v. Chiles, the courts held that augmentative communication devices could be covered as durable medical equipment.

Fred C. and Hunter v. Chiles:
In Hunter, the plaintiffs challenged a Florida law that precluded coverage of augmentative communication devices. The court concluded that these devices are "durable medical equipment" which the State was required to provide since it had opted to provide "home health care". The court also concluded that they met the "medical necessity" standard given that they were the "only effective speech therapy" for the plaintiffs.

In Fred C., the court struck down a Texas rule that limited augmentative communication devices to persons under the age of 21. The court held that they could be covered for adults either as durable medical equipment or as prosthetic devices, and that the Texas exclusion of such devices from its program was arbitrary. The court relied in part on a regulation that requires benefits provided to include services recommended "for maximum reduction of physical or mental disability and restoration of a recipient to his best possible function level."

DeSario v. Thomas
In this case, the plaintiffs challenged Connecticut's treatment of claims for durable medical equipment. The plaintiffs challenged two policies. Under the first, Connecticut explicitly excluded certain items from coverage as durable medical equipment. Specifically, the state refused to cover humidifiers and air purifiers, air conditioners, and stair glides. The state argued that while these items might have an incidental effect on the individual's medical condition, they are not "medical" items.
Under the second policy, the state agency used an exclusive list of durable medical equipment items, denying claims not specifically listed. Under this policy, claims for items that met the definition of durable medical equipment were nonetheless denied because they did not appear on the list.

The court held that both policies are consistent with federal law. With respect to the first policy setting out specific exclusions, the court held that the agency had established "a rational distinction between equipment that is primarily medical in nature, and devices principally employed for non-medical purposes that might incidentally benefit someone with a particular condition." The court rejected the view that equipment that is required for medical reasons is always "medical"equipment.

While the court's narrow view of medical treatment is disturbing, the court's defense of the second policy is even more problematic. The court held that "a state may impose coverage limitations that result in denial of medically necessary services to an individual Medicaid recipient, so long as the health care provided is adequate with respect to the needs of the Medicaid population as a whole." Under this view, an individual seeking coverage for an unlisted item would have to show that the failure to cover the item would make DME coverage inadequate as to the Medicaid population as a whole. The court explicitly rejects a long line of cases that have held that the exclusion of medically necessary services is a violation of federal law.

The effectiveness of the Medicaid program as a source of funding for assistive technology will be tested over the next couple of years. Some agencies and courts are willing to embrace the potential of assistive technology to transform individuals' lives in looking at Medicaid policy. This mind set will help to maintain Medicaid's central role in the provision of assistive technology. We can only hope that these agencies and courts will continue to reject the kind of resistance to new technology represented by the DeSario decision.

The terms Medicare and Medicaid are often uttered in the same sentence. Although they are distinct programs, many people have a difficult time keeping them distinct in their minds -- after all, they both were created in 1965 by Acts of Congress, they both provide funding for medical care, and they even sound alike. These, of course, are superficial similarities. The nature and administration of these programs is fundamentally different.

Medicare is a social insurance program providing funds for medical care for persons who are 65 years and older and eligible for Social Security, and individuals who have received Social Security disability benefits for 24 months. Unlike Medicaid, the individual's financial resources are not considered under Medicare, so that benefits are paid without regard to income. Unlike the Medicaid program, there is no direct state involvement in the administration of Medicare, or in the development of policy. Policy is established at the federal level, through the Health Care

Financing Administration (HCFA).
The Medicare program consists of two parts. Part A provides coverage for institutional health care. Part B provides supplemental coverage, and individuals must pay a premium to participate. Part B covers various services not covered by Part A, including physicians' fees, durable medical equipment and prosthetics. Under Part B, the program generally pays 80% of "reasonable" costs or charges. Through authority granted by Congress, HCFA has entered into contracts with private insurance companies to administer Part B claims. Claims for durable medical equipment and prosthetic devices are handled by four "Durable Medical Equipment Regional Carriers" (DMERCs). In processing claims, the DMERCs will use various guidelines issued by HCFA as well as the Medicare Part B Carrier's Manual.

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