Corrective action plans play integral role in Medicaid suit

August 1, 2007

Ahearing before a federal district court this summer will most likely conclude the 14-year Texas class action case of Frew v. Hawkins. This class action suit was filed in 1993 by a group of mothers who were dissatisfied with the medical treatment that their children received-children who qualified for, but allegedly did not receive, full preventive care and treatment under Medicaid laws. As states enact changes to ensure full compliance with these laws, MCOs will see the effects on Medicaid provider networks, reimbursement rates and reporting requirements.

Ahearing before a federal district court this summer will most likely conclude the 14-year Texas class action case of Frew v. Hawkins. This class action suit was filed in 1993 by a group of mothers who were dissatisfied with the medical treatment that their children received-children who qualified for, but allegedly did not receive, full preventive care and treatment under Medicaid laws. As states enact changes to ensure full compliance with these laws, MCOs will see the effects on Medicaid provider networks, reimbursement rates and reporting requirements.

States are also required to educate parents of enrolled children about the need for checkups and help them find physicians and access transportation to the doctor if necessary. Federal Medicaid rules seek to ensure that at least 80% of children get at least one examination per year.

REACHING A COMPROMISE

This year, the Texas legislature successfully compelled the parties in Frew v. Hawkins to negotiate a compromise to settle the case, which included a CAP with such components as case management, check-up reports, outreach, additional medications, enhanced supply of healthcare providers, and enhanced transportation programs, among others. The agreement allocated $1.8 billion in state and federal funds to increase reimbursement rates, improve outreach and education to Medicaid families, and improve the availability of services in rural regions. Before final entry and enforcement of the amended CAPs, the district court held a hearing on July 9 to determine the fairness, reasonableness and adequacy of the agreement and CAPs.

For Texas HMOs, the settlement and CAPs will only affect the content of the reports already required by the Texas Health and Human Service Commission. Starting in 2008, the state will require each HMO to report annually about numbers of new Medicaid enrollees under 21 who are still enrolled 90 days later, who get medical checkups within 90 days, who have been enrolled continuously for 90 days or more, and who get timely, age-appropriate medical checkups. Based on the reports, the state will develop and implement plans to reward and/or sanction MCOs with high or low rates of checkups.

In Frew v. Hawkins, federal and state courts have ruled, the plaintiffs' and state's lawyers have negotiated, and now the legislature has compelled all parties to an agreement and has appropriated the necessary funds. The agreed-upon settlement and the CAPs will bring Texas into compliance with the federal Medicaid laws pertaining to the medical treatment of Texas children.

Barry Senterfitt is a partner in the insurance industry practice of Akin Gump Strauss Hauer & Feld LLP in the firm's Austin, Texas, office.

This column is written for informational purposes only and should not be construed as legal advice.