Sara Rosenbaum DRA EPSDT

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Crossing TheMedicaidPrivate

Insurance Divide: The Case OfEPSDTTodays 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 Medicaids signature child health coverage standard, embodied since 1967 in the

Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit. Whether the corechild health and developmental principles that have been EPSDTs touchstone for four de-

cades 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): 382393;

10.1377/hlthaff.26.2.382]

Me d i c a i d i s t h e p r i m a r y m e a n s o f i n s u r i n g low-income chil-dren and a principal source of pediatric health care financing. In 2005Medicaid 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 whilesustaining and stabilizing critical components of the pediatric health care infra-

structure (such as childrens hospitals) for all children.Virtually since its 1965 enactment, Medicaid has been the subject of contro-versy over program design and cost.2 One aspect of this controversy has been a de-bate over the extent to which risk-design features that characterize the privatehealth insurance market either can or should be applied to a program whose corefunctions reach far beyond market limits. Evidence of this debate over the yearscan be seen in Medicaids growing embrace of managed care arrangements, as wellas in large-scale Medicaid demonstrations conducted under Section 1115 of the So-cial Security Act, a principal aim of which is to liberate Medicaid from its tradi-tional 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

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I n s u r a n c e D e s i g n

DOI 10.1377/hlthaff.26.2.382 2007 Project HOPEThe People-to-People Health Foundation, Inc.

Sara Rosenbaum ([email protected]) is theHirshProfessor and Chair, Departmentof HealthPolicy, at theGeorgeWashington UniversitySchool of Public Health and Health Services in Washington, D.C. Paul Wise is the RichardE. BehrmanProfessorof Child Health and Society, Centers forHealth Policy and Primary Care OutcomesResearch, at Stanford Universityin California.


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Medicaid coverage for beneficiaries, including low-income children. Becausethese coverage reforms affect children, the existing pediatric standard of cover-ageEarly and Periodic Screening, Diagnosis, and Treatment (EPSDT)effec-tively became a policy flashpoint. Although the EPSDT benefit survived, it did sowith an altered structurean irony in view of the fact that, recognizing EPSDTssingular contribution to child health coverage, lawmakers also used the DRA tocreate a new state option to extend Medicaid to underinsured, moderate-incomechildren with serious disabilities.

The potential de facto loss of EPSDT as Medicaids pediatric coverage standardhas major implications for the quality of pediatric care, particularly for childrenwith special health care needs. But preserving EPSDTs scope and reach requiresan understanding of the basic differences between EPSDT coverage principles andthose that guide private health insurance. This paper provides a conceptual frame-work 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 intoa purchaser of private health insurance products. Accordingly, we attempt to helpreaders understand the importance and implications of the state coverage flexibil-ity created by the DRAs 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 betweenchildren and adults, but this ended with the Social Security Act Amendments of1967, which added the EPSDT benefit to sec. 302(a), P.L. 90-248, as part of compre-hensive reforms responding to documented, widespread, and preventable mental

and physical conditions among poor children, from preschool children to youngdraftees.3 The legislation directed states Title V Crippled Childrens programs toperiodically assess the growth and development of (that is, screen) those underage twenty-one to ascertain their physical or mental defects and to furnish suchhealth care, treatment, and other measures to correct or ameliorate defects andchronic conditions discovered thereby.4 Medicaid was simultaneously amendedin the same legislative reform package to finance EPSDT services, as they be-came known, furnished to Medicaid-enrolled children.n Importance of the EPSDT amendments. The EPSDT amendments redefined

the Medicaidentitlement for people under age twenty-one. They were structured toreflect the professional pediatric standard of care, at whose core lies early and pre-

ventive health care emphasizing child development. The earliest EPSDT rules, pro-mulgated in 1972, required periodic, comprehensive health exams; appropriate labo-ratory tests; a comprehensive developmental assessment; recommendedimmunizations; and vision, dental, and hearing care. The rules also permitted statesto cover additional classes of medical assistance not available to adults.5 This legisla-tive and regulatory emphasis on early, developmental, and ameliorative services re-

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flects the fundamental purpose of the benefit. Four decades of legal and policythought, as well as judicial interpretation of the EPSDT benefit entitlement, havefaithfully continued to emphasize this purpose. Although no definitive study ofMedicaid litigation has ever been undertaken, EPSDT has been one of the most fre-quently litigated statutory provisions, because of its importance, power, andbreadth. Indeed, EPSDT lies at the heart of cases challenging the enforceability ofMedicaid rights themselves, as well as the enforceability of voluntarily negotiatedconsent decrees.6

In 1989 Congress enacted and President George H.W. Bush signed into law leg-islation further strengthening EPSDT (Sec. 6408, P.L. 101-239). The legislationcodified and augmented EPSDTs regulatory terms, adding coverage of interpe-riodic (as-needed) screens, codifying each screening element (a comprehensivehealth and developmental assessment; a comprehensive unclothed physicalexam; lab tests including a blood lead level assessment and anticipatory guid-

ance); and vision, dental, and hearing coverage.7

Finally, the amendments addedrequired coverage of all items and services falling within the federal definition ofmedical assistance that are medically necessary to correct and ameliorate physicaland mental conditions and illnesses, even when not covered for adults.8

n From research to legislation. In sum, Medicaid coverage design for low-income children reflects Congresss conscious desire to ensure financing for earlyand broadly conceived health care interventions to promote child development. The1967 reforms were enacted in the wake of research into the health status of poor chil-dren and adolescents; the 1989 reforms were a response to seminal advances in pedi-atric health and social policy, which in turn emanated from research into child de-velopment theory and clinical practice for infants, preschoolers, and children with

disabilities.9

This effort to articulate principles of financing that support a child develop-ment 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 majorepidemiologic trends and clinical innovations are reshaping developmentally ori-ented child health practice.10 The capacity to prevent many traditional threats tochild healthparticularly from acute infectious diseasescoupled with progressin screening for developmental and other disorders, have greatly intensified boththe cadence and the content of early preventive services for children.

Furthermore, the major reduction in acute illness among children has dramati-cally elevated the relative importance of treating chronic diseases and develop-

mental conditions such as cystic fibrosis, asthma, sickle cell disease, and autism.These trends not only underscore the importance of screening, but also greatly in-crease the impact of organized, regionalized pediatric specialty care systems.11 Aregionalization strategy is particularly important for children, since it ensures thepatient volume and committed resources essential to supporting state-of-the-artexpertise and high-quality specialized care.

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Additionally, new insights into the early determinants of cardiovascular diseaseand cancer mean that pediatrics will increasingly focus on the pediatric manage-ment of precursors to adult-onset disease. Finally, pediatrics will continue to be adynamic arena of modern medicine, involving not only the management of identi-fied diseases but also the reduction of identified risks for adverse developmentaland behavioral outcomes, as well as diseases that are likely to emerge symptomati-cally only in late adulthood. Together, these arenas of change provide the empiricalcontext for assessing the potential effects of structural changes in insurance cov-erage such as those in the DRA on coverage, access, and quality.n Restricting EPSDT. The EPSDT entitlement has not been without contro-

versy, beginning with the Nixon administrations refusal to implement the law, con-tinuing through elimination of EPSDT requirements for medically needy children in1981, and culminating with the DRA.12 Medicaids post-1989 history has witnessed asuccession of administrative and legislative efforts to trim or derail the benefit.

Oregon demonstration. The first major post-1989 crack occurred with the Clintonadministrations approval of Oregons Section 1115 Medicaid rationing demonstra-tion, following its disapproval by the first Bush administration. Adopting condi-tion-specific exclusionary rules as a means of restructuring Medicaid coverage,the Oregon demonstration reached both children and adults. To proceed with thedemonstration, the experiment therefore required waivers by the secretary ofhealth and human services (HHS) of a host of Medicaid coverage requirements,including EPSDTs nondiscriminatory early intervention policies.

Subsequent demonstrations. Subsequent Medicaid Section 1115 demonstrationspermitted states to depart from EPSDT principles in the case of low-income chil-dren covered on a demonstration basis rather than as a matter of routine state

plan design. The current Bush administration has pressed market-oriented cover-age demonstrations with particular energy. The administration expressed its stra-tegic effort to remake Medicaid as a system of premium support in its Section 1115Health Insurance Flexibility and Accountability (HIFA) initiative. This initiativestresses the importance of proposing a fundamental departure from Medicaid cov-erage principles, substituting insurance coverage tied to actuarial benchmarksfor traditional Medicaid coverage. The demonstration is intended to give statesthe programmatic f lexibility required to support approaches that increase privatehealth insurance coverage options.13

n SCHIP. From one perspective, the State Childrens Health Insurance Program(SCHIP), enacted in 1997, is simply modest legislation to incentivize coverage of un-

insured low-income children whose families economic circumstances nonethelessplace them above their states Medicaid eligibility limits (states can set financial eli-gibility standards for children at any income level).14 From a structural perspective,however, SCHIP represents a dramatic departure from Medicaid pediatric coverageprinciples, permitting state SCHIP agencies to substitute private health insuranceconcepts for EPSDT coverage design. Under SCHIP, states have the authority to link

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coverage to benchmarks, which in turn are drawn from the employer-sponsoredhealth insurance market. Furthermore, likeself-insuring employers, states can buildtheir own benchmark-equivalent coverage design for SCHIP, subject only to ahandful 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 tochild development principles; as health insurance products seemingly drift everdownward in scope and depth, so can SCHIP.

Studies of separately administered state SCHIP plans suggest widespread useof coverage flexibility, in part perhaps because of inadequate federal SCHIP con-tributions (federal funding is inadequate to permit states to meet projectedneeds).16 Compared with EPSDT, SCHIP benefits typically constrain coveragethrough limits on covered benefit classes (for example, no dental coverage or hear-ing services). They also contain limitations on amount,duration, andscope as wellas condition-specific treatment exclusions not permitted under Medicaid and

greatly narrowed definitions ofmedical necessity.17

n The DRA. The DRA essentially grafted SCHIP principles onto Medicaid as astate plan option and without the need for federal waivers. It also reduced the maxi-mum required agefor EPSDT benefits to eighteenin states pursuing this alternativebenefit approach, as it is known.18 At the same time, it clarified that this approachapplies only up to a point, and that EPSDT continues to supplement basic coveragefor eligible children. But as a result of either drafting clumsiness (seen in other DRAprovisions) or deliberate drafting ambiguity, the legislation raises serious uncertain-ties 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 rea-sonably practiced policy observer, it was the product of the years-long run-up

summarized here. By the summer of 2005, state governmental organizations wereactively calling for EPSDTs curtailment or repeal.20 The Senate bill made nochanges in coverage. But the House measure eliminated all coverage requirements(including EPSDT and all other standards) for optional children, substitutingbenchmarks as the new coverage standard.21 The conference agreement, whichextended state benchmark flexibility to all low-income children while retainingEPSDT as an undefined wraparound to the benchmark, might best be under-stood as an effort to find a middle ground. Effectively, the conference agreementdisplaced EPSDT as the sole standard of coverage for low-income children, rele-gating it to tiered status.

This DRA wraparound approach can be thought of as mirroring to some ex-

tent the approach used in states with Medicaid managed care systems, in whichmost EPSDT services are furnished contractually, while certain extended benefits(for example, inpatient pediatric psychiatric care) continue to be covered asextra-contractual residual medical assistance. But since this approach alreadywas both widespread and permissible at the time of enactment, the nagging ques-tion becomes why Congress legislated further if not to allow additional modifica-

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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 suggestingthat the former was what was intended, early guidance from the Centers for Medi-care and Medicaid Services (CMS) veers toward the latter, implying the elimina-tion of certain EPSDT coverage principles.22 The guidance describes the DRA al-ternative benefit option as one for children and adults who generally are healthy,an essentially meaningless observation in view of the health risks faced by low-income children.23 The guidance then states that

EPSDTwrap-around benefits must be sufficient so that in combination with the benchmark[eligible] in-dividualsreceive thefull EPSDT benefit.Inaccordance with [federallaw] EPSDTservicesmustbe medically necessaryservices (emphasis added).

This interpretation raises problems on two fronts. First, no one has ever dis-puted that EPSDT benefits, like all Medicaid benefits, must be medically neces-sary to qualify for federal payments. The question is, In accordance with whatstandards and principles? At the heart of EPSDT lies its purpose: to prevent andameliorate physical and mental conditions as early as possible. By failing to clarifythe preservation of all aspects of EPSDT coverage principles (something the legis-lative correspondence in fact insisted on), the federal guidance implies at leastthat 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 assess-ment that provides the health basis for coverage, turns on a periodic schedulelinked to pediatric developmental milestones, not on a separate medical neces-sity finding. Coverage is automatic and not subject to separate judgment regard-ing whether it is necessary.

It is unclear whether the CMS intends to allow such basic departures from coreEPSDT principles, although the agencys rapid approval of state alternative bene-fit amendments that on their face violate EPSDT principles suggests a high levelof tolerance, indeed.24 Will a well-child exam that omits a comprehensive devel-opmental assessment be sufficient to make a developmental assessment unneces-sary? Will states be permitted to use a benchmark or benchmark-equivalentmedical necessity definition to determine coverage for EPSDT diagnostic and treat-ment services? Can benchmark-equivalent dental products cap annual expensesat $1,000 and limit wraparound coverage to congenital conditions rather thanany conditions that if left untreated could affect a childs development and health?

One clue regarding tolerance for a narrowing of EPSDT is the CMSs failure toprohibit TennCare (Tennessee Medicaid) from applying to children a new statelegislative medical-necessity standard that bars coverage unless an enrollee is ableto prove that a treatment is (1) for a medical condition (undefined), (2) safe andeffective, (3) the least-costly alternative, and (4) nonexperimental. The legislative

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language fails to reference either early or ameliorative. Furthermore, the lawlimits the relevance of objective clinical scientific evidence based on an extrapo-lation from use in another setting or from use in diagnosing or treating anothercondition.25 As with most pediatric care, treatments to ameliorate the effects ofconditions 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 ap-pealing denials, TennCare would have the legal authority under this definition toexclude such evidence as irrelevant.

What To Expect From Private Insurance Coverage Design

Because the DRA alternative-benefit option links to insurance benchmarks, itis important to understand the inner workings of private health benefit products.Unlike EPSDT, these products have been structured for presumptively healthyworkers with presumptively healthy children. Not only is the commercially in-sured population enrolled fundamentally different from that served by Medicaidand SCHIP, but the coverage products themselves are fundamentally differentfrom Medicaid and SCHIP.26

n No statutory standards. Unlike Medicaid, private benefit products are notcontrolled 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 wherepediatric financing is concerned. For example, even in such seemingly noncontro-versial areas as childhood immunization, no state insurance mandaterequirescover-age of all Centers for Disease Control and Prevention (CDC)recommended pediat-ric 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 ownbenchmark-equivalent coverage standards, linked to actuarial approximationsrather than coverage rules. In other words, states using benchmark-equivalentcoverage could offer less than their own state laws require.n Risk concepts trump social contract principles. Gauging the design of pri-

vately sponsored group health benefit products is difficult, because the contractsthemselves are inaccessible for purposes of comparison and inquiry. Some aspects ofcoverage design, such as overt limits on certain treatments or cost-sharing require-ments, arereadily visible, sincethey are actually described in summary plan descrip-tions distributed to employees. Because the master agreements themselves are pro-prietary, however, their core contractual elements remain hidden until a denial

occurs and a coverage dispute arises. The fact that coverage terms are not discloseddoes not make them inapplicable, of course; however, without access to detailedterms (which can be readily had in the case of Medicaid and SCHIP contracts), it isnot possible to say definitively how private products would compare with EPSDT.28

What insight does exist regardingthe precise termsof coverage agreements tends tocome from published conference proceedings, or surveys of industry officials who

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typically offer secondhand descriptions of their products.29

However, one very important primaryand publicsource of the actual termsof commercially sold coverage agreements can be found in judicial decisions in-volving coverage disputes. In reaching these decisions, courts set forth the actualterms of coverage. These terms tend to confirm that commercially sold health ben-efit products reflect the risk concepts on which they are built, rather than the so-cial-contract principles that underlie a public health financing scheme such asMedicaid.30

The EPSDT benefit design fundamentally reflects this social-contract approachto financing. The benefit consists of a wide array of benefit classes that in turn de-rive their legal meaning from uncommonly broad coverage rules that are embed-ded in the concept of child development. Commercial benefit products, on theother hand, offer far more narrow coverage terms that seek to avoid rather thanembrace the broad developmental conditions in children that can create financing

uncertainty and risk.n Principles governing coverage disputes. Bearing these foundational Medic-aid principles for children in mind, it is thus possible to reflect on the contrast be-tween these terms and the coverage provisions that make their appearance in judi-cial disputes over commercial health benefit coverage limits. Each coverage dispute,of course, is unique. But coverage disputes are resolved by applying general contractterms to individual facts. The contract terms are themselves generalizable to the en-tire group to which the coverage is sold.31

Tightlydraftedcoveragetermsthatexcludecoverageofchronicanddevelopmentalconditions.Judicial case law involving coverage disputes suggests that insurance agreementsare 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 coveragefor 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 insurers physicaltherapy decision, finding that the term physical therapy was drafted sufficientlybroadly to cover the treatment, despite the reviewers highly restrictive interpre-tation. In contrast, the court upheld the speech therapy denial, even though the re-viewers opinion was equally without merit, because (unlike EPSDT) the termspeech therapy was defined to limit coverage to cases in which speech was to berestored rather than attained in a child who lacked speech from birth. In otherwords, while EPSDTs purpose is to provide early preventive treatments that ame-liorate 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-spon-

sored group health benefit contracts contain express Firestone clauses (as theyare known), whose specific purpose is to accord broad decision-making discre-tion to the administrator.33 Tight and exclusionary drafting coupled with broaddiscretion enable health benefit managers to select covered treatments (or no

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treatment at all), to the exclusion of other treatment approaches. This broadgranting of discretion also affects the decision-making process by permitting theinsurer to exclude or limit otherwise relevant evidence. This process can be seenin the TennCare medical necessity definition discussed above, which was expresslydeveloped for that states Medicaid managed care market.

Other exclusionary practices. Insurers also exclude by service setting; by diagnosis;or through nonchallengeable, embedded, hard limits (for example, twenty men-tal health therapy sessions). Yet another innovation involves incorporating prac-tice guidelines into coverage terms, rather than having reviewers use them as in-formal decision-making aids. This technique allows an insurer to effectively selectthe covered treatment modality on a nonappealable basis because individual factsare legally irrelevant to the meaning of coverage.

Although embedded guidelines, tight definitions, and hard limits can dramati-cally reduce the frequency of appealable events, individual coverage decisions in-

evitably occur. Thus, a contracts medical necessity definition continues to matter,both as a framework for individualized decision making and as an across-the-board coverage limitation in its own right.34 The broader the definition, the morelikely a court may use such ambiguity as the basis for reversing a denial.

Collectively, these drafting techniques can be thought of as sticks, with carrotsbeing providing incentives to consumers and providers through tools such as highdeductibles, personal spending accounts, tiered cost sharing, pay-for-perfor-mance, and other inducements to choose in accordance with plan design. Insurersand 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 fitneatly into pre-established norms. This loss of coverage flexibility can be ex-pected to affect patients who have complex conditions that are difficult to diag-nose and treat, whose health risks or conditions are developmentally linked ratherthan the result of an acute and sudden onset, and whose appropriate treatmentand management might necessitate a series of approaches that change over time asthe health care system struggles to find the most beneficial intervention.

These core characteristics of children at elevated physical, mental, and develop-mental risk coupled with the treatment modalities of modern pediatrics suggestthe divide that can separate current insurance trends from the evolving pediatricstandard of care. What is more troubling, practice guidelines might not account

for differences in social circumstances, particularly the impact of poverty onhealth risks and parents capacity to comply with recommended follow-up visita-tion (for example, inflexible daytime employment), which is almost always an im-portant component of pediatric guideline logic.

The attempt to bar clinical evidence as relevant to coverage decision makingcarries particularly important consequences for children. Because specific, serious

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pediatric conditions are relatively rare, it is particularly common in pediatrics toextrapolate 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 asthey are for adult conditions. This implies a built-in bias in coverage languageagainst children with serious, albeit rare, disorders.

Crossing The MedicaidPrivate Insurance Divide To Save A

Child-Development Coverage Standard

If EPSDT is to survive as more than remote second-tier financing, accessibleonly to children assisted by skilled legal advocates and battalions of experts, care-ful thought must be given to the relationship between alternative benefit designand EPSDT wraparound benefits. Critical to Medicaids future is maintainingits historical, foundational respect for the developmental character of childhood.

Any immediate savings associated with the loss of meaningful pediatric coveragewould be negligible: In 2004 total per capita Medicaid spending for children un-der the EPSDT standard of coverage was $1,315an amount that reflects allscreening, diagnostic, and treatment services and a health care financing roundingerror.35 Indeed, estimates show that risk-adjusted per child spending during 199699, adjusted to 2001 dollars, was $924 for all children and $1,344 for privately in-sured children.36

Bringing a child health focus to bear on the structure and operation of alterna-tive coverage might help bridge this divide. From states managed care experi-ences, four principles can be drawn.n Maintain periodic assessments. First, the all-important periodic develop-

mental assessment, pegged to pediatric milestones, must remain a basic and routineaspect of first-tier (that is, benchmark) coverage, without regard to medical ne-cessity decisions, as the CMS apparently would have it. Periodic assessments ofgrowth and development, coupled with anticipatory guidance, go a long way to-ward preserving EPSDTs fundamental developmental thrust. In addition, specificfinancial incentives could be created to encourage high-quality developmental as-sessment performance by pediatric professionals.n Adhere to EPSDTs medical-necessity standard. Second, benchmark agree-

ments must emphasize continued adherence to EPSDTs early and ameliorativemedical-necessity standard. This standard could, of course, be coupled with softlimits on covered diagnostic and treatment services and waiver of limits when reli-

able evidence indicates the likelihood of physical or mental conditions. In otherwords, 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-termtreatments. In other words, EPSDT coverage principles should remain the touch-stone of benchmark coverage, with high-cost treatments, governed by developmen-

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tal concepts of medical necessity, accessed through an upper tier as a means of limit-ing insurer risk.n Encourage flexibility in coverage. Finally, and most fundamentally, health

coverage for children must remain sufficiently flexible to be able to respond quicklyto new insights into child health and development and new, effective strategies ofensuring optimal outcomes. This implies that coverage protocols must be continu-ally updated and made responsive to advances in the field of pediatrics and child de-velopment. It also suggests that attention to medical advances can form a basis forcreative reform in shaping the use of practice incentives and performance measure-ment, which in turn could help sustain EPSDTs broad goals.

EPSDT stands as the signature effort in U.S. social policy to translate pediatricprinciples into health care financing. The goals of EPSDT are as robust today asthey were forty years ago; indeed, if anything, they are validated by the evolution ofpediatric 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 thesake of insurance markets is to lose not only coverage but the ethical basis of childhealth financing for years to come.

Theauthors acknowledge fundingfromthe CommonwealthFund and theCenter forHealth Care Strategies.

NOTES1. 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).

2. R. Stevens and R. Stevens, Welfare Medicinein America:A CaseStudy of Medicaid (New York: Free Press, 1975).

3. A.Foltz,AnOunce of Prevention: Child Health Politicsunder Medicaid (Chicago, AAASPress, 1982); Childrens De-fense Fund, EPSDT: DoesIt Spell HealthCare 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 andEPSDT, Policy Brief, June 2006, http://www.gwumc.edu/sphhs/healthpolicy/chsrp/downloads/mil_prep042605.pdf (accessed 29 January 2007).

4. Sec. 1905(a)(4)(B), added by sec. 302(a), P.L. 90-248.

5. CDF, EPSDT: Does It Spell Health Care for Poor Children?

6. See WestsideMothers v. Haveman, 289 F. 3d 682 (6th Cir., 2002); andFrew v. Hawkins, 540 U.S. 541 (2004).

7. 42 U.S. Code, sec. 1396r.

8. Ibid.

9. P. Wise, The Transformation of ChildHealth in the United States, Health Affairs 23, no. 5 (2004): 925; N.Halfon and M. Hochstein, Life Course Health Development: An Integrated Framework for DevelopingHealth, Policy, and Research, Milbank Quarterly 80, no. 3 (2002): 433479; and B. Starfield, Social, Eco-nomic, and Medical Care Determinants of Childrens Health, in Health Care for Children: Whats Right, WhatsWrong, Whats Next, ed. R. Stein (New York: United HospitalFund of New York, 1997), 3952.

10. 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.

11. IOM, From Neurons to Neighborhoods.

12. See NationalWelfareRights Organization v. Richardson, 334 F. Supp. 488 (D.D.C., 1971); and Title III, P.L. 97-35.

13. 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 Decem-ber 2006); and T.A. Coughlinet al., An Early Look at Ten State HIFA MedicaidWaivers, Health Affairs 25(2006): w204w216 (published online 25 April2006; 10.1377/hlthaff.25.w204).

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14. S. Rosenbaum et al., Public Health Insurance Design for Children: The Evolution from Medicaid toSCHIP,Journal of Health and Biomedical Law 1, no. 1 (2004): 146.

15. Ibid.

16. M. Broaddus andE. Park, SCHIP Financing Update: In 2007, Seventeen States WillFace FederalFundingShortfalls of $800 Million in Their SCHIP Programs, 28 November 2006, http://www.cbpp.org/6-5-06health2.htm(accessed 8 December 2006).

17. Agency for Healthcare Research and Quality, SCHIP Enrollees with Special Health Care Needs and Ac-cess to Care, August 2006, http://www.ahrq.gov/chiri/chiribrf5/chiribrf5.pdf (accessed 8 December2006).

18. SocialSecurity 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 theMedicaid 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. MikeLeavitt fromSen. CharlesGrassley (R-IA) andRep. JoeBarton(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 Virginias 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, Tennessees 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 Medic-aid 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 StateHealth 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., Negotiatingthe 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 MedicalManagement, Health Af-fairs 23 (2004): w300w304 (published online 19 May 2004; 10.1377/hlthaff.w4.300).

30. T. Bakerand J. Simon, eds.,Embracing Risk: TheChanging Cultureof Insurance andResponsibility (Chicago: Univer-sity 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 December2006);and R. Rosenblatt et al., Law and theAmerican HealthCare 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): 180190; and S.J. Singerand L.A. Bergthold, Prospects for Improved Decision Making about Medical Necessity, Health Affairs 20,no. 1 (2001): 200206.

35. Commonwealth Fund, EPSDT and Childrens 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 December2006).

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