New Haven — When she was younger, Natalia Caraballo used some words and sign language to communicate. But around her 2nd birthday, Natalia, who has Down syndrome and autism, stopped speaking and started making less eye contact with those around her.

Her parents hoped to continue the intensive therapy Natalia, now 4, had received through an early intervention program.

Miriam Martinez

Miriam Martinez and her daughter, Natalia Caraballo

But their insurance, HUSKY, the state’s Medicaid program, denied coverage for the services, known as applied behavioral analysis, saying that the services were for “habilitation” purposes, not rehabilitation.

“This means they are meant to help you get new skills, not to restore skills or abilities that you once had but lost due to an illness or health condition,” Mark Schaefer, the state Department of Social Services’ director of medical care administration, wrote in a letter explaining the denial.

“It’s saying a child that’s born with the condition cannot receive services,” said Natalia’s mom, Miriam Martinez.

Child and patient advocates say it’s a misinterpretation of federal law that could have damaging implications for poor children born with disabilities and prove costly to taxpayers.

“It appears that DSS is taking a step backwards from the way Medicaid has been interpreted,” state Child Advocate Jeanne Milstein said. “These kids are supposed to get whatever medical services are available that will allow them to reach their highest levels of functioning.”

She added that it’s critical for children to receive needed services without delays because getting them later on can be too late.

State Healthcare Advocate Victoria Veltri said her office has had a handful of cases similar to Natalia’s, and has been in touch with providers that see HUSKY patients who were also told the therapy is not covered.

“I think the issue is more an issue of what the interpretation could mean to all HUSKY children with disabilities,” she said.

In a letter to Social Services Commissioner Roderick L. Bremby, Veltri and legal aid attorneys Sheldon Toubman and Randi Faith Mezzy wrote that if the rationale for denying habilitation services had merit, it would also be used to routinely deny coverage of services to address functional limitations of children born with conditions like spina bifida, learning disabilities or mental retardation, since any improvements the services produced would get them new skills they didn’t have at birth.

Legal basis

Martinez, represented by Toubman, appealed the decision in her daughter’s case through an administrative hearing, but DSS hearing officer Hernold C. Linton denied the appeal December.

Linton wrote that “Medicaid does not cover habilitation services unless provided under certain circumstances or settings,” such as part of treatment by facilities for mentally delayed residents. He did not cite a basis for the distinction between “habilitation” and “rehabilitation.”

In regulations issued last year for rehabilitation services for children in Medicaid, DSS defined “rehabilitation services” as being “designed to assist individuals in reaching an achievable level of independent functioning.”

When asked to explain the root of the distinction between habilitation and rehabilitation services for children, and when the department began enforcing it, DSS spokesman David Dearborn said the questions, and input from Veltri and others, “are being considered and discussed by the department.”

Medicaid is a jointly administered federal-state program, and federal law gives states a menu of services they can cover for adults. Some must be covered, but others, like dental care or rehabilitation, are optional.

But for children and youth under 21, states don’t have the choice; regardless of what services a state covers for adults, its Medicaid program must cover medically necessary screening, diagnostic and treatment services, as well as measures to “correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services.”

In their letter, Veltri, Toubman and Mezzy wrote that DSS’ position that only services required to restore skills are covered represented a misinterpretation of federal law.

They suggested that DSS’ reasoning was based on proposed regulations that never took effect. Those proposed regulations, issued in 2007 by the Bush administration, did outline a distinction between rehabilitation and habilitation. The proposal drew concerns from advocates for children with disabilities, who argued that it would create administrative barriers for children to get health services.

Congress prohibited the administration from making changes to Medicaid rehabilitation coverage, and in 2009, the Obama administration withdrew the proposed regulations, citing “clear congressional concern.”

Costs to the state

Despite DSS’ distinction between rehabilitation and habilitation services, the state’s Medicaid program could be required to cover applied behavioral analysis and other services deemed to be habilitation — if they’re provided by a licensed professional.

That’s because federal law requires Medicaid to cover services recommended by physicians or other licensed practitioners “for the maximum reduction of physical or mental disability and restoration of an individual to the best possible functional level.”

In their letter, Veltri, Toubman and Mezzy noted that unlicensed paraprofessionals increasingly provide services like the therapy Natalia’s parents were seeking, at lower costs than licensed professionals. By trying to restrict access to the services, they wrote, “DSS effectively sets the state up for paying far more than is necessary for these services.”

They added that there are few licensed psychologists who provided applied behavioral analysis and accept Medicaid, making it likely that the services wouldn’t be provided to Medicaid clients at all, potentially leaving the state to absorb higher costs in the future for people who couldn’t get remedial services as children.

In addition, they argued, the department’s position on the therapy is out of step with the policy choices of the legislature, which passed a law in 2009 requiring insurance plans to cover applied behavioral analysis when it’s medically necessary.

Natalia has been able to get some applied behavioral analysis — about 20 hours a week — through her school district, although it’s only half as much as she should get, according to Melissa Olive, the psychologist who oversees her care.

“It’s sad because the whole idea of providing services to children who are in poverty is to give them the opportunity to do as good as the children who have resources,” Martinez said.

Martinez never expected to be on Medicaid. She was an auditor and an accountant before she and her husband moved to New Haven so he could attend divinity school at Yale University. She had planned to work when they relocated, but it coincided with Natalia’s autism diagnosis, and Martinez said her daughter’s needs were too intense.

“It’s really hard for families to just sit down and think you could be doing something and you just can’t because you have no money,” she said.

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Arielle Levin Becker covered health care for The Connecticut Mirror. She previously worked for The Hartford Courant, most recently as its health reporter, and has also covered small towns, courts and education in Connecticut and New Jersey. She was a finalist in 2009 for the prestigious Livingston Award for Young Journalists, a recipient of a Knight Science Journalism Fellowship and the third-place winner in 2013 for an in-depth piece on caregivers from the National Association of Health Journalists. She is a 2004 graduate of Yale University.

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