Conley v. Department of Health, Division of Health Financing

IN THE UTAH COURT OF APPEALS
‐‐‐‐ooOoo‐‐‐‐
Nicholas Conley and Patty Olguin, ) OPINION
)
Petitioners, ) Case No. 20100496‐CA
)
v. ) FILED
) (September 27, 2012)
Department of Health, Division of )
Medicaid and Health Financing, ) 2012 UT App 274)
Respondent. )
‐‐‐‐‐
Original Proceeding in this Court
Attorneys: Robert B. Denton and Laura K. Boswell, Salt Lake City, for Petitioners
Mark L. Shurtleff and Nancy L. Kemp, Salt Lake City, for Respondent
‐‐‐‐‐
Before Judges Thorne, McHugh, and Christiansen.
CHRISTIANSEN, Judge:
¶1 Petitioners Nicholas Conley and Patty Olguin seek judicial review of the Final
Agency Order of respondent Department of Health, Division of Medicaid and Health
Financing (the Division), which denied Petitioners’ Medicaid benefits for speech
augmentative communication devices (SACDs).1 We determine that the Agency abused
1
The Utah Medicaid Program refers to an augmentative or alternative
communication device as a speech augmentative communication device. The Utah
Medicaid Provider Manual defines SACD as an “electronic or non‐electronic aid[],
(continued...)
its discretion in determining that the Division is not required to provide coverage of
SACDs to non‐pregnant individuals age twenty‐one and older under the Utah Medicaid
Program.
BACKGROUND
¶2 The underlying facts in this case are undisputed. Conley, who was twenty‐two
years old in 2010 when the Division denied his request for an SACD, suffers from
spastic quadriplegia related to cerebral palsy. According to the Administrative Law
Judge’s (ALJ) finding, Conley “is not able to produce any intelligible words due to
motor difficulties secondary to his medical diagnosis and he uses an [augmentative
speech device] to communicate.” Conley’s SACD is more than seven years old, is not
functioning properly, and has a recent history of needing repairs. Because the cost of
repairing the device far exceeds the cost of a new device, Conley’s medical providers
recommended that Conley receive a new SACD to “meet [his] communication needs.”
Conley requested prior authorization for the purchase of a new SACD, which the
Division denied.
¶3 Olguin, who was thirty‐eight in 2010 when the Division denied her request for an
SACD, was diagnosed with multiple sclerosis as a child. As the ALJ found, “in 2002,
[Olguin] suffered a stroke during a surgical operation to her leg which caused severe
dysarthia, a motor speech disorder resulting from a neurological injury.” Olguin’s
medical providers determined that an SACD is “necessary to meet her functional
communication needs.” Olguin also requested prior authorization for an SACD, which
the Division likewise denied.
1
(...continued)
device[], or system[] that correct[s] expressive communication disability.” The Utah
Medicaid Provider Manual, § 2–Speech‐Language Services, at 9 (Jan. 2012). The Fifth
Circuit has defined an augmentative communication device as “a computerized
instrument that produces pre‐programmed voice‐synthesized sentences.” Fred C. v.
Texas Health & Human Servs. Comm’n, 117 F.3d 1416, *1 (5th Cir. 1997) (per curiam).
Thus, an SACD is a piece of equipment that produces speech. SACDs can be used by
individuals who have the cognitive ability to know what they want to express but lack
the physical ability to produce intelligible speech.
20100496‐CA 2
¶4 The Division’s explanation for the denial of both Petitioners’ requests was that
the “[s]ervices requested are not a covered benefit.” Petitioners sought further agency
action from the Division and later agreed to have their cases consolidated. In her
recommended decision, the ALJ concluded that the Division’s denial of SACD benefits
to Petitioners met the reasonable standards requirement under the Medicaid Act, which
requires that all Medicaid recipients be treated equally and under reasonable, non‐
discriminatory standards, see 42 U.S.C. § 1396a(a)(17) (2012)2 ( “A State plan for medical
assistance must . . . include reasonable standards.”). The ALJ also concluded that the
Utah Medicaid Program, which covers SACDs only for pregnant individuals and for
individuals under the age of twenty‐one, does not violate the Medicaid Act. The ALJ
reasoned that the Medicaid Act and the federal regulations implementing the Act do
not specifically mention SACDs as a mandatory benefit. Additionally, the ALJ
concluded that the provision of the Utah Medicaid Program allowing SACDs as early
and periodic screening, diagnostic, and treatment services to pregnant women and
individuals under the age of twenty‐one, effectively nullifies the inclusion of SACDs
within any other more general provision. The ALJ explained that both federal
regulations and case law allow the Division discretion to employ a “utilization control
procedure” in order to deny coverage of SACDs to non‐pregnant individuals age
twenty‐one and older. See 42 C.F.R. § 440.230(d) (2012); Hern v. Beye, 57 F.3d 906, 910
(10th Cir. 1995).
¶5 In its Final Agency Order, the Division Director (the Agency) adopted the ALJ’s
recommended decision in its entirety, and this petition for review followed.
ISSUE AND STANDARD OF REVIEW
¶6 For purposes of this appeal, the Division does not dispute that Petitioners are
eligible Medicaid recipients.3 The Division also does not dispute that SACDs are
2
Unless otherwise indicated, we cite the current version of the United States
Code and the Code of Federal Regulations throughout this opinion.
3
There are several categories of eligible Medicaid recipients, including those who
are categorically needy and those who are medically needy. Specifically, the term
“categorically needy” refers to an individual who is receiving financial assistance
pursuant to the State’s approved plans under the Social Security Act, or is in need
(continued...)
20100496‐CA 3
medically necessary for Petitioners. Thus, the only issue before us is whether the
Agency abused its discretion in determining that the Division is not required under the
Utah Medicaid Program to provide coverage of SACDs to non‐pregnant individuals age
twenty‐one and older. This issue requires us to resolve the related question of whether
the Division’s policy denying such coverage to non‐pregnant individuals age twenty‐
one and older violates the Medicaid Act.4 Because the Agency interpreted and applied
both state and federal law, we review the Final Agency Action under multiple
standards.
¶7 We start by reviewing the Agency action pursuant to the Utah Administrative
Procedures Act (UAPA) and “shall grant relief [to Petitioners] only if” we conclude, to
the extent relevant here, that they have been “substantially prejudiced” “by the
[Agency’s] erroneous[] interpret[ation] or appli[cation of] the law,” or “the [A]gency
action is . . . arbitrary or capricious.” Utah Code Ann. § 63G‐4‐403(4)(d), (h)(iv) (2011).
In making that determination, we generally interpret questions of law for correctness.
See id. § 63G‐4‐403(4)(d); see also Murray v. Labor Comm’n, 2012 UT App 33, ¶ 12, 271 P.3d
192, cert. granted, 280 P.3d 421 (Utah 2012). Similarly, the Agency’s interpretation of the
3
(...continued)
under the State’s standards for financial eligibility, and includes aged, blind, disabled,
or needy with dependent children. See 42 C.F.R. § 435.4. The term “medically needy”
includes the aged, blind, and disabled, and refers to those individuals who do not
qualify for some forms of federal assistance, but who nonetheless lack the resources to
obtain adequate medical care. See id. In this case, though the Division recognizes that
“both Petitioners are financially qualified to receive Medicaid,” it is unclear whether
Petitioners are qualified as “categorically needy” or “medically needy” Medicaid
recipients. For purposes of this appeal, and because Utah provides services to both, we
assume, as the parties seem to assume, that Petitioners are classified as categorically
needy. See generally Utah Admin. Code R414‐1‐2(3), (19) (defining both terms); Bleazard
v. Utah Dep’t of Health, 861 P.2d 1048, 1050 (Utah Ct. App. 1993) (explaining the
difference between categorically needy and medically needy for purposes of receiving
Medicaid benefits).
4
The Division moves to strike the addendum to Petitioners’ reply brief. Because
the information contained in the addendum was not presented in the administrative
proceedings, it is not part of the record on appeal. Accordingly, we grant the Division’s
motion to strike and do not consider Petitioners’ reply brief addendum. See State v.
Pliego, 1999 UT 8, ¶ 7, 974 P.2d 279.
20100496‐CA 4
federal and state statutes and regulations that govern Utah’s Medicaid Program are
questions of law that we review “for correctness,” according “no particular deference to
the agency decision.” Bleazard v. Utah Dept. of Health, 861 P.2d 1048, 1049 (Utah Ct. App.
1993) (internal quotation marks omitted). “[G]eneral questions of law include
constitutional questions, rulings concerning an [administrative] agency’s jurisdiction or
authority, interpretations of common law principles, and interpretations of statutes
unrelated to the agency.” Associated Gen. Contractors v. Board of Oil, Gas & Mining, 2001
UT 112, ¶ 18, 38 P.3d 291 (internal quotation marks omitted); see also Morton Int’l Inc. v.
Auditing Div. of Utah State Tax Comm’n, 814 P.2d 581, 585 (Utah 1991). Further, a “state
agency’s determination of procedural and substantive compliance with federal law is
not entitled to the deference afforded a federal agency.” Amisub (PSL), Inc. v. State of
Colo. Dep’t of Soc. Servs., 879 F.2d 789, 796 (10th Cir. 1989); see also Colorado Health Care
Ass’n v. Colorado Dep’t of Soc. Servs., 842 F.2d 1158, 1164 (10th Cir. 1988) (determining
that the court’s review of whether the State of Colorado’s decision to amend its
Medicaid Plan violated federal law is limited and stating, “Our task is only to determine
whether the agency conformed with controlling statutes. We can determine whether
federal law has been violated.” (citation omitted)).
¶8 Nonetheless,“‘[a]n exception to this general rule exists if the legislature has either
explicitly or implicitly granted discretion to the agency’ to interpret or apply the law.”
Murray, 2012 UT App 33, ¶ 12 (alteration in original) (quoting Esquivel v. Labor Comm’n,
2000 UT 66, ¶ 14, 7 P.3d 777)). In this instance, the legislature has clearly granted the
Department of Health discretion to administer the Utah Medicaid Program pursuant to
Title XIX of the Social Security Act. See Utah Code Ann. § 26‐18‐3(1) (Supp. 2012).5
“When the statute delegates discretion to the agency, the court reviews the agency
action under Utah Code section 63G‐4‐403(4)(h)(i), which authorizes relief when agency
5
Within the Department of Health, the Division is charged with “implementing,
organizing, and maintaining the [Utah] Medicaid [P]rogram . . . in accordance with the
provisions of this chapter and applicable federal law.” Utah Code Ann. § 26‐18‐2.1
(2007); see also id. § 26‐18‐2.3(1) (Supp. 2012) (explaining the Division’s responsibility for
“the effective and impartial administration of [the Utah Medicaid Program] in an
efficient, economical manner,” including establishing “safeguard[s] against unnecessary
or inappropriate use of Medicaid services,” and for “deny[ing] . . . claim[s] for services
that fail to meet criteria established by the Division concerning medical necessity or
appropriateness”); see also South Davis Cmty. Hosp. v. Department of Health, 869 P.2d 979,
982 n.2 (Utah Ct. App. 1994) (stating that the Utah Legislature “grant[ed] [the Division]
implicit discretion to administer and interpret the Medical Assistance Act”).
20100496‐CA 5
action constitutes ‘an abuse of the discretion delegated to the agency by statute.’”
Murray, 2012 UT App 33, ¶ 12 (quoting § 63G‐4‐403(4)(h)(i) (2011)). Appellate courts
have referred to this as review for “reasonableness and rationality.” Id. ¶ 13 (internal
quotation marks omitted). See generally Primary Children’s Hosp. v. Utah Dep’t of Health,
1999 UT App 348, ¶ 13, 993 P.2d 882 (reviewing the Division’s denial of Medicaid
coverage for reasonableness and rationality); Peterson ex rel. Frei‐Peterson v. Utah Dep’t of
Health, 969 P.2d 1, 8 (Utah Ct. App. 1998) (Bench, J., concurring) (same); South Davis
Cmty. Hosp. v. Department of Health, 869 P.2d 979, 982 (Utah Ct. App. 1994) (same).
¶9 Accordingly, we review the Agency’s interpretation of the Medicaid Act as well
as the Agency’s determination that denial of coverage complied with the Medicaid Act
for correctness. However, we review the Agency’s interpretation of the Utah Medicaid
Program and its application of the law to this case for reasonableness and rationality.
ANALYSIS
¶10 On appeal, Petitioners raise essentially two arguments. First, they contend that
the Division’s policy denying coverage of SACDs to non‐pregnant individuals age
twenty‐one and older violates the reasonable standards requirement of the Medicaid
Act, see 42 U.S.C. § 1396a(a)(17). This provision requires states to establish “reasonable
standards . . . for determining . . . the extent of medical assistance under [their state
medicaid program,] which . . . are consistent with the objectives of [the Medicaid Act].”
Id. Second, Petitioners contend that the Division’s policy violates the Medicaid Act’s
comparability provision, which requires states to provide the same “amount, duration,
or scope” of benefits to all categorically needy individuals. See id. § 1396a(a)(10)(B)(i);
42 C.F.R. § 440.230(b) (“Each service must be sufficient in amount, duration, and scope
to reasonably achieve its purpose.”).
¶11 The Division responds that both the reasonable standards and comparability
requirements do not apply to Petitioners’ argument that SACDs cannot be restricted by
age within certain “optional” categories. The Division also argues that under the
pertinent statutes and regulations comprising the Medicaid Act, it is not required to
provide coverage of SACDs to anyone other than those who are pregnant or under the
age of twenty‐one.
¶12 As set forth below, we determine that both the reasonable standards and
comparability requirements apply to whether SACDs can be restricted within the
various “optional” categories. We conclude that the Agency abused its discretion in
20100496‐CA 6
determining that the Division is not required to provide coverage of SACDs to non‐
pregnant individuals age twenty‐one and older under the Utah Medicaid Program. In
reaching our conclusion, we also determine that the Division’s policy of denying such
coverage to non‐pregnant individuals age twenty‐one and older violates the Medicaid
Act.
¶13 Because of the complexity of this issue resulting from the interrelationships
between lengthy state and federal statutes, we have divided our analysis into several
distinct sections.6 First, we provide an introduction to the Medicaid Act, including its
history, intent, and scope. Second, we explain the categories of both mandatory and
optional services. Within this section, we also list the optional categories within Utah’s
Medicaid Program. Third, we attempt to describe the different categories within which
SACDs could be categorized under the Medicaid Act and the Utah Medicaid Program.
Last, we explain our ultimate conclusion that the Agency abused its discretion in
determining that the Division is not required to provide coverage of SACDs to non‐
pregnant individuals age twenty‐one and older under the Utah Medicaid Program and
that the Division’s exclusion of such individuals from coverage violates the Medicaid
Act.
I. The History, Intent, and Scope of Medicaid
¶14 “Medicaid was established in 1965 through Title XIX of the Social Security Act as
a cooperative federal and state cost‐sharing venture for the provision of basic medical
services to eligible applicants.” Bleazard v. Utah Dep’t of Health, 861 P.2d 1048, 1049
(Utah Ct. App. 1993) (footnote omitted) (quoting Hogan v. Heckler, 769 F.2d 886, 887 (1st
Cir. 1985)); see also § 42 U.S.C. § 1396, et seq.
6
Indeed, as described by Judge Calabresi of the Second Circuit Court of Appeals,
“Complex regulatory schemes produce complex cases. And the interplay between
complex state and federal statutory and regulatory schemes produces very complicated
cases.” Catanzano v. Wing, 103 F.3d 223, 225 (2d Cir. 1996). In fact, “[t]he Social Security
Act is among the most intricate of all federal laws. Judges have lamented its
labyrinthine complexity, and have characterized it as an aggravated assault upon the
English language, resistant to attempts to understand it.” King v. Sullivan, 776 F. Supp.
645, 649 (Dist. R.I. 1991) (citations and internal quotations marks omitted).
20100496‐CA 7
¶15 The purpose of the Medicaid Act is to
enabl[e] each State, as far as practicable under the conditions
in such State, to furnish (1) medical assistance on behalf of
families with dependent children and of aged, blind, or
disabled individuals, whose income and resources are
insufficient to meet the costs of necessary medical services,
and (2) rehabilitation and other services to help such families
and individuals attain or retain capability for independence
or self‐care.
42 U.S.C. § 1396‐1. Similarly, this court has explained that the Medicaid Act is designed
to “‘provid[e] federal financial assistance to States that choose to reimburse certain costs
of medical treatment for needy persons.’” A.M.L. v. Department of Health, 863 P.2d 44, 47
(Utah Ct. App. 1993) (quoting Harris v. McRae, 448 U.S. 297, 301 (1980)). In particular,
“the federal government reimburses states electing to participate in the Medicaid
program for a percentage of the funds that the state expends in providing health care to
eligible individuals and families” but does so only if “a state . . . develop[s] a plan that is
consistent with the Medicaid statute and federal implementing regulations.” Id.¶16 “[P]articipating states [have] considerable latitude in creating and implementing
their Medicaid programs.” Peterson v. Utah Dep’t of Health, 969 P.2d 1, 5 (Utah Ct. App.
1998) (internal quotation marks omitted); see also Hern v. Beye, 57 F.3d 906, 910 (10th Cir.
1995) (explaining the states’ “considerable flexibility in determining the scope of their
Medicaid coverage”). In fact, the United States Supreme Court has held, “[N]othing in
the [Medicaid Act] suggests that participating States are required to fund every medical
procedure that falls within the delineated categories of medical care.” Beal v. Doe, 432
U.S. 438, 444 (1977). Moreover, participating states are permitted to “place appropriate
limits on a service based on such criteria as medical necessity or on utilization control
procedures.” 42 C.F.R. § 440.230(d).
¶17 Although a state may “elect[] to participate in the Medicaid program for a
percentage of the funds they expend in providing medical care for eligible individuals
and families,” see A.M.L., 863 P.2d at 47 (citation and internal quotation marks omitted),
“[i]n order to qualify for reimbursement . . . a state must develop a plan that is
consistent with the Medicaid statute and federal implementing regulations,” id.; see also
Hern, 57 F.3d at 909 (“‘Once a State voluntarily chooses to participate in Medicaid, the
20100496‐CA 8
State must comply with the requirements of Title XIX and applicable regulations.’”
(quoting Alexander v. Choate, 469 U.S. 287, 289 n.1 (1985))).7 Most importantly,
there are important restrictions on states in their exercise of
this discretion. Two of those restrictions are particularly
relevant here. First, Title XIX requires participating states to
establish “reasonable standards . . . for determining . . . the
extent of medical assistance under [their Medicaid] plan
which . . . are consistent with the objectives of [Title XIX].”
42 U.S.C. § 1396a(a)(17). Second, state Medicaid plans “may
not arbitrarily deny or reduce the amount, duration, or scope
of [any] required service [s] . . . to an otherwise eligible
recipient solely because of the diagnosis, type of illness, or
condition.” 42 C.F.R. § 440.230(c).
Hern, 57 F.3d at 910 (omissions and first, second, and fourth alterations in original); see
also 42 U.S.C. § 1396a(a)(10)(B)(i) (requiring states to provide the same “amount,
duration, or scope” of benefits to all categorically needy individuals); 42 C.F.R.
§ 440.230(b) (“Each service must be sufficient in amount, duration, and scope to
reasonably achieve its purpose.”). Accordingly, states have broad discretion to choose
the proper amount, scope and duration of limits on coverage as long as care and
services are provided in the “best interests of the recipients.” Alexander, 469 U.S. at 303.
II. Mandatory and Optional Categories of Medical Services
¶18 The Medicaid Act identifies twenty‐nine categories of medical services for which
federal reimbursement is allowed. See 42 U.S.C. § 1396d(a). Of these categories, the
Medicaid Act mandates coverage by the states in seven categories. See id.
§ 1396a(a)(10)(A)(i). None of the twenty‐nine categories of services, however, describe
specific medical treatments or procedures that are covered by Medicaid. Rather,
7
Although a state has considerable discretion in fashioning its Medicaid program,
that discretion is not unbridled. A state’s eligibility determinations for medical
assistance must be “‘reasonable’ and ‘consistent with the objectives’ of the Act.” Beal v.
Doe, 432 U.S. 438, 444 (1977) (quoting 42 U.S.C. § 1396a(a)(17)). “This provision has
been interpreted to require that a state Medicaid plan provide treatment that is deemed
‘medically necessary’ in order to comport with the objectives of the Act.” Weaver v.
Reagan, 886 F.2d 194, 198 (8th Cir. 1989).
20100496‐CA 9
particular treatments, health services, and medical equipment are covered by a state
Medicaid program only if the treatment, service, or device fits within one or more of the
broad categories of services identified in that state’s Medicaid program.
¶19 In order to participate in Medicaid, a state’s program must include the seven
categories of services to qualified individuals. See generally id.; Hern, 57 P.3d at 910;
Peterson, 969 P.2d at 5. At a minimum, a state plan for medical assistance must include
inpatient hospital services; outpatient hospital services; laboratory and x‐ray services;
nursing facility services and early and periodic screening, diagnostic and treatment
(EPSDT) services and family planning services; physicians’ services; midwife services;
and nurse practitioner services. See 42 U.S.C. § 1396d(a)(1)–(5), (17), (21).
¶20 The only mandatory category relevant to this appeal is EPSDT services “for
individuals who are eligible under the plan and are under the age of 21.” Id.
§ 1396d(a)(4)(B); see also id. § 1396d(r). EPSDT is a preventative health care program, the
goal of which is to provide Medicaid‐eligible individuals under the age of twenty‐one
with effective, preventative health care through the use of periodic examinations,
standard immunizations, diagnostic services, and treatment services. See generally id.
§ 1396d(r). As required, Utah provides EPSDT services for eligible individuals under
the age of twenty‐one. See Utah Admin. Code R414‐1‐6(e).
¶21 In addition to the seven mandatory categories of services, a state may choose to
provide numerous other categories of optional medical services described in the
Medicaid Act. See 42 U.S.C. § 1396a(a)(10)(A)(ii) (explaining that all of the other
categories of services under subsection 1396d(a) are optional); 42 C.F.R. § 440.225(explaining optional services). Examples of optional categories of services relevant to
our inquiry are those for home health services, see 42 U.S.C. § 1396d(a)(7);8
8
Pursuant to the Medicaid Act, home health services are mandatory as to some
services and optional as to others. See generally 42 U.S.C. § 1396d(a)(7); id.
§ 1396a(a)(10)(A); id. § 1396a(a)(10)(D) (“A State plan for medical assistance must
provide for the inclusion of home health services for any individual who, under the
State plan, is entitled to nursing facility services.”); 42 C.F.R. § 411.15(b) (“A State plan
must provide . . . that the agency provides health services to—(1) Categorically needy
recipients age 21 or over; (2) Categorically needy recipients under age 21, if the plan
provides skilled nursing facility services for them; individuals; and (3) Medically needy
recipients to whom skilled nursing facility services are provided under the plan.”). The
(continued...)
20100496‐CA 10
physical therapy and related services, see id. § 1396d(a)(11);9 and prosthetic devices, see
id. § 1396d(a)(12).10
¶22 Utah participates in Medicaid through the Utah Medicaid Program, which the
Division administers. See Utah Code Ann. § 26‐18‐2(4) (2007) (defining the Utah
Medicaid Program as “the state program for medical assistance for persons who are
eligible under the state plan adopted pursuant to Title XIX of the federal Social Security
Act”); id. § 26‐18‐2.1. Utah’s Medicaid Program provisions are defined in the Utah
Administrative Code. See Utah Admin. Code R414‐1. Utah has elected to provide
coverage of home health services, see Utah Admin. Code R414‐1‐6(2)(l); id. R414‐14;
physical therapy and related services, see id. R414‐1‐6(2)(p); id. R414‐21; speech‐
8
(...continued)
home health services category includes (1) nursing services; (2) home health aide
service provided by a home health agency; (3) medical supplies, equipment and
appliances suitable for use in the home; and (4) physical therapy, occupational therapy,
or speech pathology and audiology services provided by a home health agency. See 42
C.F.R. § 440.70. If the state opts to provide home health services, the services listed in
subsections (1)–(3) are required services for the categorically and medically needy. See
id. § 440.70(1)–(3). Those services listed in subsection (4), however, are optional. See id.
§ 440.70(4).
9
Pursuant to the Medicaid Act, and as defined in the Code of Federal
Regulations, the physical therapy, occupational therapy, and services for individuals
with speech, hearing, and language disorders category includes (a) physical therapy
provided by a physical therapist, (b) occupational therapy provided by an occupational
therapist, and (c) “diagnostic, screening, preventive, or corrective services” provided for
individuals with speech, hearing, and language disorders by or under the direction of a
speech pathologist or audiologist. See generally 42 U.S.C. § 1396d(a)(11); 42 C.F.R. §
440.110. Any necessary supplies and equipment for each service are required. See 42
U.S.C. § 1396d(a)(11); 42 C.F.R. § 440.110(a)(1), (b)(1), (c)(1).
10
Pursuant to the Medicaid Act, and as defined in the Code of Federal
Regulations, “[p]rosthetic devices mean[] replacement, corrective, or supportive devices
prescribed by a physician or other licensed practitioner of the healing arts . . . to (1)
Artificially replace a missing portion of the body; (2) Prevent or correct physical
deformity or malfunction; or (3) Support a weak or deformed portion of the body.” 42
C.F.R. § 440.120; see also 42 U.S.C. § 1396d(a)(12).
20100496‐CA 11
language pathology services, see id. R414‐1‐6(2)(q); id. R414‐54; and prosthetic devices,
see id. R414‐1‐6(2)(r); id. R414‐70.
III. Categories Relevant to SACDs Under the Medicaid Act and the Utah
Medicaid Program
¶23 In determining that the Division is required to provide coverage of SACDs to
non‐pregnant individuals age twenty‐one and older under the Utah Medicaid Program
and that the Division’s exclusion of those individuals from coverage violates the
Medicaid Act, we must first locate and describe the categories under which SACDs
could fit. Thus, in an attempt to streamline the confusing and overlapping statutes and
regulations, we describe the several categories under which SACDs could be
categorized within the Medicaid Act and the Utah Medicaid Program.
A. SACDs Categorized As EPSDT Under the Medicaid Act and the Utah Medicaid
Program
1. EPSDT Under the Medicaid Act
¶24 EPSDT is one of the categories under which SACDs may be categorized. EPSDT
is one of the seven mandatory categories of services under federal Medicaid. The
required services within EPSDT are (1) screening services, (2) vision services, (3) dental
services, (4) hearing services, and (5) “[s]uch other necessary health care, diagnostic
services, treatment, and other measures described in subsection (a) of this section to
correct or ameliorate defects and physical and mental illnesses and conditions
discovered by the screening services, whether or not such services are covered under
the State plan.” 42 U.S.C. § 1396d(r)(1)–(5). As required, Utah provides EPSDT
services.11 See Utah Admin. Code R414‐1‐6(2)(e) (explaining that, pursuant to Utah’s
Medicaid Program, “early and periodic screening and diagnoses of individuals under
21 years of age, and treatment of conditions found, are provided in accordance with
federal requirements”); Utah Medicaid Provider Manual § 1–General Information, at 10
(July 2012).
11
“In Utah, [the EPSDT] program is called the Child Health Evaluation and Care
(CHEC) Program and individuals under the age of twenty‐one with a current Medicaid
Card are automatically enrolled in CHEC.” Utah Medicaid Provider Manual
§ 1–General Information, at 10 (July 2012).
20100496‐CA 12
2. EPSDT Under the Utah Medicaid Program
¶25 As we explain in more detail below, Utah provides SACDs exclusively under its
EPSDT program, which covers individuals under twenty‐one years of age. The Utah
Administrative Code does not specifically refer to SACDs or define the devices, but it
does provide coverage of speech‐related services under certain circumstances, as
mentioned in the Utah Administrative Code under the home health services section, see
Utah Admin. Code R414‐14‐5(6) (“[S]peech pathology services are occasionally
indicated and approved for the patient needing home health service. . . . Occupational
therapy and speech pathology services in the home are available only to clients who are
pregnant women or who are individuals eligible under the [EPSDT] Program.”), and
under the speech‐language pathology services section, see id. R414‐54‐4 (“Speech‐
language pathology services are available only to clients who are pregnant women or
who are individuals eligible under the [EPSDT] Program.”).
¶26 The Speech‐Language Services section of the Utah Medicaid Provider Manual
(the Manual) discusses SACDs, stating, “[SACDs] are available only for individuals
eligible for [EPSDT] . . . . Utah Medicaid will authorize [SACDs] as speech language
therapy services when medical necessity criteria as defined in this document are met.”
Utah Medicaid Provider Manual § 2–Speech‐Language Services, at 9 (Jan. 2012)
(emphasis added). The same section of the Manual provides, “The SACD is a prosthesis
to replace a non‐functioning, damaged or absent speech controlling mechanism.” Id. at
10. The medical supplies section of the Manual defines prosthetic devices as
“replacement, corrective, or supportive devices that are suitable for use in the home . . .
to: (a) artificially replace a missing portion of the body” and states that “[SACDs] are
available only for individuals eligible for EPSDT.” Utah Medicaid Provider Manual
§ 2–Medical Supplies, at 5–6 (July 2012).
B. SACDs Categorized As Home Health Services, DME, and Speech Pathology Services
1. Home Health Services and DME Under the Medicaid Act
¶27 Another category under which SACDs could be categorized is the home health
services category, of which durable medical equipment (DME) is a subcategory. Under
the Medicaid Act, if a state opts into the home health services category, that state is
required to provide certain services to the categorically and medically needy as well as
to others. See supra note 8; see also 42 C.F.R. § 440.70(b)(1) (requiring coverage of nursing
services); id. § 440.70(b)(2) (requiring coverage of home health aide services); id.
20100496‐CA 13
§ 440.70(b)(3) (requiring coverage of “[m]edical supplies, equipment, and appliances
suitable for use in the home”).
¶28 Although the decision to provide home health services also includes the
requirement to cover DME, DME is not defined by federal law. Instead, each state is
permitted to define DME for the purposes of its program. See Fred C. v. Texas Health &
Human Servs. Comm’n, 988 F. Supp. 1032, 1035 (W.D. Tex. 1997), aff’d per curiam, 167 F.3d
537 (5th Cir. 1998). Thus, under federal Medicaid, states that choose to cover home
health services must provide DME according to each state’s own definition of the term.
Notwithstanding that flexibility with respect to DME, the Medicaid Act requires each
state electing to provide home health services to provide “medical supplies, equipment,
and appliances suitable for use in the home.” See 42 C.F.R. § 440.70(b)(3); see also id.§ 441.15 (providing that a state plan must provide medical supplies, equipment, and
appliances to categorically needy recipients age twenty‐one or over and to medically
needy recipients to whom skilled nursing facility services are provided under the plan).
2. Home Health Services and DME Under the Utah Medicaid Program
¶29 Utah has opted to provide home health services for all categorically and
medically needy individuals, irrespective of age. See Utah Admin. Code R414‐1‐6(2)(l);
id. R414‐14‐3 (“Home health services are available to categorically eligible and
medically needy individuals.”); Utah Medicaid Provider Manual § 1–General
Information, at 9–11 (July 2012) (“Covered services include: . . . . Home health services
including . . . medical supplies, equipment, and appliances suitable for use in the
home.”). The administrative rule that governs Utah’s home health services, R414‐14, is
the state’s counterpart to the Code of Federal Regulation section 440.70. Compare Utah
Admin. Code R414‐14‐1(2), with 42 C.F.R. § 440.70. Matching the federal mandate,
Utah’s home health services plan includes coverage of “medical supplies, equipment
and appliances suitable for use in the home,” Utah Admin. Code R414‐1‐6(2)(l)(iii). See
generally id. § R414‐70.
¶30 In Utah, DME is defined generally as equipment that,
(a) can withstand repeated use;
(b) is primarily and customarily used to serve a medical
purpose;
20100496‐CA 14
(c) generally is not useful to a person in the absence of an
illness or injury; and
(d) is suitable for use in the home.
Id. R414‐70‐2(1).
¶31 More specifically, however, DME is restricted to the equipment described in the
Manual and the Medical Supplies Manual and List. See id. R414‐1‐5(2) (stating that the
Medical Supplies Manual and List described in the Utah Medicaid Provider Manual,
section 2, is incorporated by reference into the Utah Medicaid Program); id. R414‐70‐2(6)
(same); id. R414‐70‐3(2) (“Medical supplies, DME, and prosthetic devices are limited to
services described in the Medical Supplies Manual and List.”). The Medical Supplies
Manual and List purports to “specif[y] the reasonable and appropriate amount,
duration, and scope of the service sufficient to reasonably achieve its purpose.” Id.
R414‐70‐3(3). Whether receiving home health services as an optional or a mandatory
service, “[a]n individual . . . may receive medical supplies, DME, and prosthetic devices
as described in the Medical Supplies Manual and List,” id. R414‐70‐4(1) (emphasis
added); see also id. R414‐70‐5(1), provided that the individual “meet[s] the criteria
established in the . . . List and obtain[s] prior approval if required,” id. R414‐70(4)(2); see
also id. R414‐70‐5(2). SACDs are not listed as DME in the Medical Supplies List.
3. Home Health Services and Speech Pathology Under the Medicaid Act
¶32 Speech pathology services as a home health service is still another category
under which SACDs could fit. Though it must provide nursing services, home health
aide services, and DME, a state that includes home health services in its program is not
required to provide speech pathology services as a home health service. See 42 C.F.R.
§ 440.70(b)(4) (stating that “[p]hysical therapy, occupational therapy, or speech
pathology and audiology services, provided by a home health agency or by a facility
licensed by the State to provide medical rehabilitation services” are optional). Federal
regulation 440.70(b)(4) includes a cross‐reference to regulation 441.15, which states,
“Home health services include, as a minimum[,] . . . (1) Nursing services; (2) Home
health aide services; and (3) Medical supplies, equipment, and appliances.” Id.§ 441.15(a).
¶33 There is no definition of “home health speech pathology services” contained in
the Medicaid Act. Speech pathology is generally defined as “the scientific study and
treatment of defects, disorders, and malfunctions of speech and voice, as stuttering,
20100496‐CA 15
lisping, or lalling, and of language disturbances, as aphasia or delayed language
acquisition.” Dictionary.com Unabridged, http://dictionary.reference.com/browse/
speech + pathology (last visited on September 18, 2012). Speech pathologists generally
evaluate individuals with speech and language disorders to establish their causes and
provide treatment and therapy to correct or ameliorate speech problems. Home health
speech pathology services may but are not required to be “provided by a home health
agency or by a facility licensed by the State to provide medical rehabilitation services.”
42 C.F.R. § 440.70(b)(4).
4. Home Health and Speech Pathology Services Under the Utah Medicaid
Program
¶34 With regard to home health and speech pathology services, as a counterpart to
federal regulation section 440.70(b)(4), the Utah Administrative Code provides,
Physical therapy and speech pathology services are
occasionally indicated and approved for the patient needing
home health service. Any therapy services offered by the
home health agency directly or under arrangement must be
ordered by a physician and provided by a qualified licensed
therapist in accordance with the plan of care. Occupational
therapy and speech pathology services in the home are
available only to clients who are pregnant women or who
are individuals eligible under the [EPSDT] Program.
Utah Admin. Code R414‐14‐5(6) (describing service coverage under home health
services). Thus, speech pathology services in Utah are not actually available to persons
like Petitioners who are not pregnant and who are age twenty‐one and older.
Moreover, Utah only allows that a “home health agency [to] provide therapy
services . . . in accordance with medical necessity and after receiving prior
authorization.” Id. at R414‐14‐5(18).
20100496‐CA 16
C. SACDs Categorized As Physical Therapy and Speech‐Related Services and
Equipment
1. Speech‐Related Services and Equipment Under the Medicaid Act
¶35 Speech‐related services and equipment is still another category under which
SACDs could logically be categorized. In addition to the optional speech pathology
services available under the home health services category, see 42 C.F.R. § 440.70(b)(4),
federal Medicaid outlines another optional category entitled “Physical Therapy and
Related Services,” see 42 U.S.C. § 1396d(a)(11). If a state opts to cover “physical therapy,
occupational therapy, and services for individuals with speech, hearing, and language
disorders,” speech disorder services that are “provided by or under the direction of a
speech pathologist or audiologist, for which a patient is referred by a physician or other
licensed practitioner of the healing arts within the scope of his or her practice under
State law,” then supplies and equipment must also be provided. See 42 C.F.R.
§ 440.110(c)(1).
2. Speech‐Related Services and Equipment Under the Utah Medicaid Program
¶36 Utah has opted to provide coverage of certain therapy services akin to those
described in the federal physical therapy and related services category. See U.S.C.
§ 1396d(a)(11); 42 C.F.R. § 440.110(c)(1). Specifically, rule 414‐1‐6 states, “The following
services provided in the State Plan are available to both the categorically and medically
needy: . . . (p) physical therapy and related services; (q) services for individuals with
speech, hearing, and language disorders furnished by or under the supervision of a
speech pathologist or audiologist.” Utah Admin. Code R414‐1‐6(2). In addition, the
Manual states that “[c]overed services include: . . . Physical therapy, occupational
therapy and related services[, and s]ervices for individuals with speech, hearing, and
language disorders furnished by or under the supervision of a speech pathologist or
audiologist.” Utah Medicaid Provider Manual § 1–General Information, at 11 (July
2012).
¶37 However, for categorically and medically needy non‐pregnant individuals age
twenty‐one and older, Utah Medicaid actually limits those therapy services to physical
and occupational therapy. See Utah Admin. Code R414‐54‐4(1) (“Speech‐language
pathology services are available only to clients who are pregnant women or who are
individuals eligible under the [EPSDT] Program.”); id. R414‐21‐2 (“Physical therapy and
occupational therapy services are available to categorically and medically needy
individuals under Medicaid when received from an independent occupational therapist
20100496‐CA 17
or an independent physical therapist including group practices, rehabilitation centers
and hospitals.”). The Manual also provides that SACDs “are available only for
individuals eligible for [EPSDT]. . . . Utah Medicaid will authorize [SACDs] as speech
language therapy services when medical necessity criteria as defined in this document
are met.” Utah Medicaid Provider Manual § 2–Speech‐Language Services, at 9 (Jan.
2012) (emphasis added).
¶38 Thus, in apparent contradiction to rule 414‐1‐6 and the general information
provided in the Manual, Utah makes “speech‐language pathology services” or “speech‐
language services” available only to pregnant individuals or individuals eligible
through the EPSDT program. See Utah Admin. Code R414‐54‐4(1); Utah Medicaid
Provider Manual § 2–Speech‐Language Services, at 9–12. These services are further
limited to those described in the Speech‐Language Services Provider Manual, found in
section 2 of the Manual, to “include evaluative, diagnostic, screening, preventative or
corrective processes planned and provided by a speech‐language pathologist for which
a recipient is referred by a physician [pursuant to] 42 C.F.R. 440.110(c).” Utah Medicaid
Provider Manual § 2–Speech‐Language Services, at 4 (emphasis omitted); see also Utah
Admin. Code R414‐54‐3(2)‐(3).
D. SACDS Categorized As Prosthetic Devices
1. Prosthetic Devices Under the Medicaid Act
¶39 The last relevant category under which SACDs could be categorized is the
prosthetic device category. Prosthetic devices are an optional category under the
Medicaid Act. See 42 U.S.C. § 1396d(a)(12). Under the federal definition,
“Prosthetic devices” mean[] replacement, corrective, or
supportive devices prescribed by a physician or other
licensed practitioner of the healing arts within the scope of
his practice as defined by State law to—
(1) Artificially replace a missing portion of the body;
(2) Prevent or correct physical deformity or
malfunction; or
20100496‐CA 18
(3) Support a weak or deformed portion of the body.
42 C.F.R. § 440.120.
2. Prosthetic Devices Under the Utah Medicaid Program
¶40 Utah has opted to provide prosthetic devices. See Utah Admin. Code R414‐1‐6(2)
(“The following services provided in the State Plan are available to both the
categorically needy and medically needy: . . . (r) prescribed drugs, dentures, and
prosthetic devices.”); see also Utah Medicaid Provider Manual § 1–General Information,
at 11 (July 2012) (“Covered services include: . . . [p]rescribed drugs, dentures and
prosthetic devices.”). The Utah Medicaid Program defines prosthetic devices as
replacement, corrective, or supportive devices that are
suitable for use in the home, such as braces, orthoses, or
prosthetic limbs prescribed by a physician or other licensed
practitioner of the healing arts within the scope of his or her
practice as defined by state law to:
(a) artificially replace a missing portion of the body;
(b) prevent or correct physical deformities or malfunction; or
(c) support a weak or deformed portion of the body.
Utah Admin. Code R414‐70‐2(7).
¶41 The Manual allows prosthetic devices for “persons residing in a long term care
facility as well as for patients in their own home and [these prosthetic devices] are
limited to the services described on the Medical Supplies List.” Utah Medicaid Provider
Manual § 2–Medical Supplies, at 5 (July 2012). Within the definition of prosthetic
devices, the Manual states that SACDs “are available only for individuals eligible for
EPSDT” and refers the reader to the Speech‐Language services section of the Manual for
criteria. See id. at 6.
¶42 As with DME available in connection with home health services, prosthetic
devices are restricted to those devices described in the Medical Supplies Manual and
List. See Utah Admin. Code R414‐1‐5(2); id. R414‐70–2(7), ‐3. SACDs are not listed as
prosthetic devices in the Medical Supplies List.
20100496‐CA 19
E. Summary of SACDs Under the Medicaid Act and the Utah Medicaid Program
1. SACDs Under the Medicaid Act
¶43 In summary, federal Medicaid requires that those states electing to provide home
health services also provide coverage of DME, see 42 C.F.R. § 440.70(b)(3); id.§ 441.15(a)(3), but federal Medicaid does not mandate coverage of speech pathology
services as part of the home health services category, see id. § 440.70(b)(4). Additionally,
federal Medicaid requires states opting to provide coverage of speech disorder services
as a physical therapy and related service, to also provide supplies and equipment. See
id. § 440.110(c)(1). It follows, then, that if a state opts to provide speech pathology
services as a home health service or chooses speech disorder services as one of its
Medicaid categories, then the state must also provide the supplies and equipment
associated with those services.
¶44 Aside from the argument that SACDs are equipment related to speech pathology
and physical therapy and related services, SACDs may legitimately qualify as DME and
prosthetic devices, and nothing in the Medicaid Act precludes them from so qualifying.
See id. § 440.70(b)(3); id. § 440.120. Thus, we must consider whether a state that denies
coverage of speech therapy or speech disorder services under the categories of home
health services or physical therapy and related services is thereby relieved of the
obligation to provide SACDs as DME or prosthetic devices.
¶45 While not controlling in our analysis, we note that a number of courts have
determined that their state’s plans are required to provide coverage of SACDs to non‐
pregnant individuals age twenty‐one and older. See, e.g., Meyers v. Reagan, 776 F.2d 241,
244–45 (5th Cir. 1985) (holding that because Iowa elected to cover physical therapy and
related services, including speech pathology services, it was required to comply with
the federal regulation providing for any equipment, including SACDs, that the speech
pathologist deemed necessary to correct the speech disorder); William T. v. Taylor, 465 F.
Supp. 2d 1267, 1285–87 (N.D. Ga. 2000) (stating that because Georgia elected to cover
home health services, prosthetic devices, and speech language services and because
SACDs met the Georgia statutory definitions of DME, prosthetic devices, and necessary
equipment for speech pathology language services, the state was required to cover
SACDs in its Medicaid plan); Fred C. v. Texas Health & Human Servs. Comm’n, 988 F.
Supp. 1032, 1036 (W.D. Texas 1997) (holding that because Texas provides SACDs as
DME in the EPSDT plan, its denial of benefits to individuals age twenty‐one and older
“cannot meet the fundamental legal concept of reasonableness” and because Texas
provides two other types of prosthetic devices, and SACDs meet the requirements of a
20100496‐CA 20
prosthetic device, “it cannot arbitrarily exclude [SACDs] from coverage”), aff’d per
curiam, 167 F.3d 537 (5th Cir. 1998); Hunter v. Chiles, 944 F. Supp. 914, 920 (S.D. Fla. 1996)
(concluding that because Florida elected to provide home health services, including
DME, and that because SACDs are DME, they are a covered benefit under Florida
Medicaid).
2. SACDs Under the Utah Medicaid Program
¶46 To review, Utah has elected to include in its Medicaid program the optional
categories of home health services, including DME and speech pathology services;
physical therapy and speech disorder services; and prosthetic devices. See generally
Utah Admin. Code R414‐1‐6(2)(l), (p)‐(r); id. R414‐14‐3, ‐5(6); id. R414‐70‐4(1), ‐5(1). Yet,
all of these categories are restricted to conditions set forth elsewhere in the Utah
Administrative Code. Coverage of DME and prosthetic devices is limited by the
Manual and the Medical Supplies Manual and List, see id. R414‐70‐3(2), and coverage of
speech‐related services is limited to non‐pregnant individuals age twenty‐one and
older, see id. R414‐14‐5(6); id. R414‐54‐4(1). These categories are additionally restricted
in the Manual and the Medical Supplies Manual and List, which explicitly deny
coverage of SACDs to non‐pregnant individuals age twenty‐one and older. See Utah
Medicaid Provider Manual § 2–Speech‐Language Services, at 9–12 (Jan. 2012); Utah
Medicaid Provider Manual § 2–Medical Supplies, at 5–6 (July 2012).
¶47 Notably, though the Manual states that “Utah Medicaid will authorize [SACDs]
as speech language therapy services,” the Manual itself defines SACDs or
“augmentative and alternative communication devices” as “electronic or non‐electronic
aids, devices, or systems that correct expressive communication disability . . . . The
device is a prosthesis to replace a non‐functioning, damaged, or absent body part.” Utah
Medicaid Provider Manual, § 2–Speech‐Language Services, at 9–10 (Jan. 2012)
(emphasis added).
IV. The Division is Required to Provide Coverage of SACDS to Petitioners
¶48 We now consider whether the Agency erred in determining that the Division is
not required to provide coverage of SACDs to non‐pregnant individuals age twenty‐one
and older under the Utah Medicaid Program and whether the Division’s policy
excluding such individuals from coverage violates the Medicaid Act. This issue
presents several distinct inquiries, which we explain and resolve below. We ultimately
conclude that the Division is required to provide coverage of SACDs to Petitioners and
20100496‐CA 21
that the Division’s policy of denying coverage of SACDs to non‐pregnant individuals
age twenty‐one and older violates the Medicaid Act.
¶49 The Division does not deny that SACDs meet the description of DME, speech
related equipment, and prosthetic devices.12 However, the Division contends that
under federal Medicaid it may opt to cover SACDs exclusively in one category, that is, as
speech language pathology services under the EPSDT program, see Utah Admin. Code
R414‐54‐4, comparable to the optional federal category of physical therapy and related
services, see 42 C.F.R. § 440.110(c)(1). The Division also argues that it can deny coverage
of home health‐based speech language pathology services and related equipment under
subsection 440.70(b)(4) because, like subsection 440.110(c)(1), it is an optional category.
See id. § 440.70(b)(4); id. § 440.110(c)(1). The Division argues, therefore, that it can deny
coverage of speech language pathology services and equipment to non‐pregnant
individuals age twenty‐one and older, while choosing to cover the devices for
individuals under age twenty‐one and for pregnant women. The Division reasons that
under subsection 440.70(b)(3), federal Medicaid does not require a state to cover speech
pathology equipment as medical equipment suitable for home use for non‐pregnant
individuals over age twenty‐one and older because such an interpretation is contrary to
the state’s right to opt out of that coverage. See id. § 440.70(b)(3). To hold otherwise, the
Division argues, would nullify subsection 440.70(b)(4). As an extension of that position,
the Division contends that although it is required to provide DME when home health
services are provided under subsection 440.70(b)(3), the State’s coverage obligation is
subject to subsection 440.70(b)(4), making that obligation optional. Essentially, the
Division claims that by characterizing SACDs as a speech pathology service, it can rely
on subsection 440.70(b)(4), which makes coverage of home health speech pathology
services optional. Accordingly, the Division argues that coverage of speech pathology
equipment is be optional as well.
¶50 Furthermore, the Division asserts that federal Medicaid specifically addresses
SACDs only in subsection 440.110(c)(1), which provides the definition for physical
therapy and related services, see 42 U.S.C. § 1396d(a)(11); 42 C.F.R. § 440.110(c)(1).
According to the Division, “[b]ecause the language of the federal regulations explicitly
and unambiguously addresses equipment related to speech pathology services, there is
no room to speculate that SACDs can also fit into other categories of coverage such as
[DME] or prosthetic devices. Even if they could, the more specific provisions are
controlling . . . .”
12
The ALJ explicitly found that SACDs meet the definition of a prosthetic device.
20100496‐CA 22
¶51 The ALJ agreed with the Division and concluded that because federal Medicaid
does not specifically require coverage of SACDs as DME or as a prosthetic in any
mandated category of Medicaid, and because Utah provides coverage of SACDs
specifically as speech pathology services as part of the EPSDT program, the specific
provision prevails over the more general one. See Williams v. Public Serv. Comm’n of
Utah, 754 P.2d 41, 48 (Utah 1988) (“In resolving the conflict between the two statutes, we
are guided by the principle that when two statutory provisions conflict, the more
specific provision will prevail over the more general provision.”). We are not
convinced.
¶52 As explained, a state has broad discretion in determining which categories of
medical services it will opt into under its Medicaid plan. See Beal v. Doe, 432 U.S. 438,
444 (1977). Utah has elected to provide coverage of services in the optional categories of
home health services, physical therapy and related services, and prosthetic devices.
And federal Medicaid leaves open the possibility of classifying SACDs as DME, speech‐
related services, and prosthetic devices. By characterizing SACDs only as speech
pathology services, Utah’s Medicaid Program limits coverage of SACDs to only
pregnant women and individuals under age twenty‐one. Thus, we must determine
whether the State of Utah has exceeded its discretion by doing so.
¶53 The Division’s choice to categorize SACDs exclusively as a speech language
pathology service available only to pregnant women and individuals under age twenty‐
one appears to be contrary to its own definition of the devices in both this appeal and in
the Manual. Compare Utah Admin. Code R414‐1‐6(2)(l), (p)–(r); id. R414‐14‐3; id. R414‐
14‐5(6); id. R414‐70‐4(1); and id. R414‐70‐5(1), with id. R414‐14‐5(6); id. R414‐54‐4(1); id.R414‐70‐3(2); Utah Medicaid Provider Manual § 2–Speech‐Language Services, at 9–12
(Jan. 2012); Utah Medicaid Provider Manual § 2–Medical Supplies, at 5–6 (July 2012).
The Division contends that the Utah Medicaid Program complies with the Medicaid Act
because the Secretary of the United States Department of Health and Human Services
(HHS) has approved the state plan. The Medicaid Act requires participating states to
submit a state plan, containing a comprehensive description of the nature and scope of
the state’s Medicaid program for approval by the HHS. See 42 U.S.C. § 1396a(a). HHS’s
approval of a state’s plan entitles the state to collect federal government reimbursement
for a percentage of the funds it has paid to health care providers servicing Medicaid
recipients. See id. § 1396b(a). However, HHS’s general approval of a state plan does not
insulate or immunize that plan from judicial scrutiny of how the plan is specifically
administered. Moreover, there is nothing in the Utah Medicaid Program itself,
20100496‐CA 23
comprised of Utah statutes and administrative rules, other than in the Manual, that
explicitly denies SACDs to non‐pregnant individuals age twenty‐one and older.13
¶54 We conclude that the Division’s policy limiting its obligation to provide coverage
of SACDs to only EPSDT‐eligible individuals by categorizing SACDs as “speech
language pathology services” violates the Medicaid Act. Simply put, it is unreasonable
for the State to opt into the categories in which SACDs could be categorized for all
categorically and medically needy individuals but then to limit coverage of certain
services within those categories by the age of the recipient. Indeed, the State
characterizes SACDs as speech language therapy services for purposes of coverage, yet
in its own Manual defines the devices as “prosthetics” and “electronic or non‐electronic
aids, devices, or systems that correct expressive communication disabilities.” Utah
Medicaid Provider Manual § 2–Speech‐Language Services, at 9 (Jan. 2012). SACDs
cannot reasonably be prosthetics and communication equipment for those individuals
under age twenty‐one and pregnant women, but only be speech pathology services for
non‐pregnant individuals age twenty‐one and older.
¶55 Once a state chooses to provide an optional category of services, it must comply
with the Medicaid Act and provide coverage of those services. See Lankford v. Sherman,
451 F.3d 496, 51 (8th Cir. 2006) (“While a state has discretion to determine the optional
services in its Medicaid plan, a state’s failure to provide Medicaid coverage for non‐
experimental, medically‐necessary services within a covered Medicaid category is both
per se unreasonable and inconsistent with the stated goals of Medicaid.”); Doe v. Chiles,
136 F.3d 709, 714 (11th Cir. 1998) (“[W]hen a state elects to provide an optional service,
that service becomes part of the state Medicaid plan and is subject to the requirements
of federal law.” (alteration in original) (citation and internal quotation marks omitted));
Eder v. Beal, 609 F.2d 695, 702 (3d Cir. 1979) (“[O]nce a state elects to participate in an
‘optional’ program, it becomes bound by the federal regulations which govern it.”).
Specifically, “[o]nce a state chooses to cover one of the optional services which could
possibly provide Medicaid funding for augmentative communication devices, that state
13
HHS approved Utah’s Medicaid Program. However, the documents that the
State refers to as having been presented to HHS for approval explain that Utah’s
program does not provide the optional speech pathology services to non‐pregnant
individuals age twenty‐one and older. These documents do not demonstrate the
Division’s attempt to provide SACDs exclusively as speech pathology services. Nor do
they demonstrate in any other way that the Utah Medicaid Program explicitly denies
coverage of SACDs to non‐pregnant individuals age twenty‐one and older.
20100496‐CA 24
is required to provide [S]ACDs.” Hunter v. Chiles, 944 F. Supp. 914, 919 (S.D. Fla. 1996)
(citing Meyers v. Reagan, 776 F.2d 231, 244 (8th Cir. 1985)); see also Meyers, 776 F.2d at 244
(stating that when Iowa elected to participate in the optional physical therapy and
related services category, “it bound itself to act in compliance with [the Medicaid Act]”
and could not properly exclude coverage of SACDs). The Division’s decision to opt into
a category of services and then to restrict coverage of certain services in that category
based upon the age of the recipient is unreasonable and arbitrary, in violation of the
reasonable standards and comparability requirements of the Medicaid Act. See 42
U.S.C. § 1396a(a)(17); id. § 1396a(a)(10)(B)(i); 42 C.F.R. § 440.230(b).
¶56 While Utah has the discretion to fashion its own Medicaid program, it must also
“include reasonable standards . . . for determining eligibility for and the extent of
medical assistance under the plan which . . . are consistent with the objectives of [the
Medicaid Act].” See 42 U.S.C. § 1396a(a)(17). Congress included the reasonable
standards requirement in the Medicaid Act to ensure that states were not arbitrary or
overly stringent in their provision of Medicaid services. Although Medicaid is a
partnership between the states and the federal government, the reasonable standards
requirement can best be understood as an effort to limit state discretion in order to
facilitate the provision of services to qualified Medicaid recipients. The reasonable
standards requirement should be construed as a safeguard against both intentional and
unintentional state parsimony. Based on the language of that provision, courts have
scrutinized state standards to assure conformity with Congress’s intent that state
Medicaid programs provide necessary medical services to those who cannot afford
them.
¶57 Although the Medicaid Act requires that states provide more comprehensive
treatment and a greater range of services to individuals eligible for EPSDT programs,
see id. § 1396a(a)(10)(A); id. 42 U.S.C. § 1396d(a)(4)(B); id. 42 U.S.C. § 1396d(r)(5), Utah
has opted to provide coverage of home health services, physical therapy and other
services, and prosthetics for all categorically and medically needy individuals.
However, by including SACDs only as speech language pathology services, despite the
Division’s own broader definition of such services, the Division limits the coverage of
SACDs to only those individuals who are pregnant or under the age of twenty‐one. See
Utah Admin. Code R414‐1‐6(2)(l), (p)–(r); Utah Medicaid Provider Manual § 2–Speech‐
Language Services, at 9 (Jan. 2012). As the Arizona Supreme Court stated with regard
to that state’s denial of liver transplants to any individuals other than those in its EPSDT
program, “[i]t is reasonable to expand service categories for age‐appropriate care to
young persons. But it is unreasonable to allocate treatment within a service category
solely on the basis of age.” Salgado v. Kirschner, 878 P.2d 659, 664 (Ariz. 1994).
20100496‐CA 25
¶58 Federal case law lends support on this issue. Similar to Utah, Texas also opted to
provide home health services as part of its medicaid program, see Fred C. v. Texas Health
& Human Servs. Comm’n, 988 F. Supp. 1032, 1034 (W.D. Tex. 1997), aff’d per curiam, 167
F.3d 537 (5th Cir. 1998), and provided coverage of SACDs as a home health service only
under the EPSDT program. See id. at 1035. Ultimately, the court in Fred C. held that
“Texas Medicaid’s selection of age as the sole criterion for denying benefits is wholly
unrelated to the medical decision at hand and cannot meet the fundamental legal
concept of reasonableness.” Id. at 1036. The Fred C. court further explained that,
according to the Medicaid Act, “each covered service ‘must be sufficient in amount,
duration, and scope to reasonably achieve its purpose,’” id. (quoting 42 C.F.R.
§ 440.230(b) (1995)), and that the general purpose [of the Medicaid Act] is to help
individuals attain the capability for independence and self‐care,” id. (citing 42 U.S.C.
§ 1396‐1). The court determined,
The specific purpose is to augment verbal communication
through the program’s home health care/durable medical
equipment service. See id. at § 1396d(a)(7) (Supp. 1996).
Because the ability to speak and communicate is vital,
augmentative communication devices have enabled adult
Medicaid recipients with severe speech impairments to live
on their own, maintain employment, pay taxes, and become
productive members of the community rather than wards of
the state. This limits the cost of other medical services, such
as nursing costs, and reduces or eliminates the costs of
disability and other welfare benefits. Helping the Mute to
Speak, 17 N.Y.U. Rev. L. & Soc. Change at 741. This Court
cannot divine a rational basis to make available the blessings
of speech to one who is twenty years three hundred sixty‐
four days old and deny the same blessing to one who is two
days older.
Id.
¶59 Other courts have also determined that Medicaid funding cannot be denied on
the basis of age. For example, as part of its Medicaid program, the State of Florida
opted into the category of home health services, including durable medical equipment,
but denied coverage of SACDs to non‐pregnant individuals age twenty‐one and older.
See Hunter, 944 F. Supp. at 919. Similar to Fred C., the federal district court in Hunter
held that “Florida Medicaid’s selection of age as the sole criterion for denying benefits is
20100496‐CA 26
wholly unrelated to the medical decision at hand and cannot meet the fundamental
legal concept of reasonableness.” Id. at 920; cf. Hiltibran v. Levy, 793 F. Supp. 2d 1108,
1114–15 (W.D. Mo. 2011) (holding that incontinence diapers, provided under Missouri’s
EPSDT program and labeled there as DME, could not be denied to individuals age
twenty and older because once Missouri chose to cover this optional service, its decision
to deny these individuals services was “in violation of Medicaid’s ‘reasonable
standards’ requirement”).
¶60 We agree that Utah cannot arbitrarily restrict coverage of SACDs by recognizing
their availability only as speech language pathology services. Because Utah has opted
into the categories of home health services, physical therapy and related services, and
prosthetic devices, it is obligated to cover the same services and equipment for
categorically and medically needy non‐pregnant individuals age twenty‐one and older
that it does for individuals eligible under the EPSDT program.
¶61 Furthermore, the denial of coverage of SACDs to non‐pregnant individuals age
twenty‐one and older also violates the Medicaid Act’s comparability of services
requirement. See 42 U.S.C. § 1396a(a)(10)(B)(i) (requiring that states provide the same
“amount, duration, or scope” of benefits to all categorically needy individuals); 42
C.F.R. § 440.230(b)–(c) (“Each service must be sufficient in amount, duration, and scope
to reasonably achieve its purpose” and “may not arbitrarily deny or reduce the amount,
duration, or scope of [such] service[s] . . . to an otherwise eligible recipient solely
because of the diagnosis, type of illness, or condition”). Denying SACDs to individuals
age twenty‐one and older while providing them to those in the EPSDT program is
contrary to the objectives of Medicaid.
¶62 For these reasons, we conclude that Utah’s coverage of SACDs exclusively under
the EPSDT program, where it provides coverage of home health services, physical
therapy and related services, and prosthetic devices to all individuals, violates the
Medicaid Act’s reasonable standards and comparability requirements.14
14
We reach this conclusion without considering Petitioners’ argument that the
Utah Medicaid Program’s exclusive list of DME violates the reasonable standards
requirement of federal Medicaid. See Utah Admin. Code R414‐70‐3(2) (restricting
“medical supplies, DME, and prosthetic devices” “to services described in the Medical
Supplies Manual and List”); id. R414‐70‐4(1) (“An individual . . . may receive medical
supplies, DME, and prosthetic devices as described in the Medical Supplies Manual and
(continued...)
20100496‐CA 27
14
(...continued)
List,” (emphasis added)); id. R414‐70‐5(1)–(2). At the heart of this discussion lies the
function of the Center for Medicare and Medicaid Services (CMS), which administers
federal Medicaid under the United States Department of Health and Human Services.
See Utah Admin. Code R414‐1‐2(6) (defining CMS); Lankford v. Sherman, 451 F.3d 496,
506–07 (8th Cir. 2006) (same). In a September 4, 1998, letter to state Medicaid directors,
CMS clarified that although “[a] State may develop a list of pre‐approved items of
[medical equipment (ME)] as an administrative convenience because such a list
eliminates the need to administer an extensive application process for each ME request
submitted,” such a list must “provide[ a] . . . reasonable and meaningful procedure for
requesting items that do not appear on a State’s pre‐approved list.” A reasonable and
meaningful procedure would entail a “process [that] is timely and employs reasonable
and specific criteria by which an individual item of ME will be judged for coverage
under the State’s home health services benefit. These criteria must be sufficiently
specific to permit a determination based solely on a diagnoses, type of illness, or
condition.” Id. In DeSario v. Thomas, 139 F.3d 80 (2d Cir. 1998), vacated sub nom. by
Slekis v. Thomas, 525 U.S. 1098 (1999), the Second Circuit reversed and vacated the
district court’s decision to enjoin the Connecticut Medicaid Division from limiting DME
to items on an exclusive list of covered equipment. See id. at 90–92. In Slekis, the
Supreme Court remanded to the Second Circuit to consider the September 4, 1998 CMS
letter. See 525 U.S. at 1098.
Petitioners did not preserve the exclusive list issue before either the ALJ or the
Agency. “Utah law requires parties to preserve arguments for appellate review by
raising them first in the forum below—be it a trial court or an administrative tribunal.”
Columbia HCA v. Labor Comm’n, 2011 UT App 210, ¶ 6, 258 P.3d 640 (further stating that
the petitioner could satisfy the preservation requirement by raising the issue before
either the ALJ or the reviewing commission). Because Petitioners failed to raise the
issue during any of the administrative proceedings, the tribunal below never had an
opportunity to consider it. See id. (“In an administrative proceeding, the preservation
doctrine requires the challenged issue to initially be brought to the fact finder’s
attention so that there is at least the possibility that it could be considered.” (internal
quotation marks omitted)). We therefore decline to consider Petitioners’ argument
related to whether Utah’s exclusive list of DME violates the Medicaid Act.
20100496‐CA 28
CONCLUSION
¶63 Although federal Medicaid grants states considerable latitude in designing their
Medicaid programs, it also requires states to administer their programs reasonably and
nonarbitrarily. Utah has opted into categories of medical services that the Division
admits legitimately provide coverage of SACDs to all categorically and medically needy
individuals, irrespective of their age. Nevertheless, the Division denies coverage of
these devices to non‐pregnant individuals based upon its restrictive classification of
SACDs set forth in the Utah Medicaid Provider Manual. By doing so, the Division has
arbitrarily and unreasonably denied coverage of SACDs based solely on the age of the
claimant. Accordingly, the Agency abused its discretion in concluding that the
Division’s denial of the Petitioners’ requests for coverage of SACDs was consistent with
its obligations under the Medicaid Act.
¶64 Accordingly, we reverse the Final Agency Ruling and remand for further
proceedings consistent with the Petitioners’ requests for authorization.
____________________________________
Michele M. Christiansen, Judge
‐‐‐‐‐
¶65 WE CONCUR:
____________________________________
William A. Thorne Jr., Judge
____________________________________
Carolyn B. McHugh, Judge
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