Court orders Medicaid coverage for low-income HIV patients

A recent California trial court ruling could help extend Medicaid coverage to hundreds of HIV-positive patients in the state.

A Los Angeles Superior Court judge chastised the state for failing to implement a 2002 law intended to close a gap in the state's Medicaid regulations preventing HIV-positive patients who met federal income requirements from qualifying for the benefits until they developed AIDS.

The Legislature had directed the Dept. of Health Care Services to encourage Medicaid patients with AIDs to switch voluntarily from the state's fee-for-service plan to a less costly Medicaid managed care network. The savings generated by the re-enrollments were to be used to fund coverage for new HIV patients in a budget-neutral manner.

In a decision Nov. 25, 2008, however, Judge James C. Chalfant found that health officials had abandoned their statutory obligations to carry out a number of steps required to institute the program and ordered the state to comply with the law, which took effect on Jan. 1, 2003. Final approval of the order came on Dec. 17, 2008. The Dept. of Health Care Services must report its progress to the court within 120 days of the final order. The California Medical Assn. supported the law but was not involved in the case.

Because the state sat on the statute for nearly six years, hundreds or possibly thousands of HIV-positive patients were deprived of necessary care through Medi-Cal, said Tom Myers, general counsel to the AIDS Healthcare Foundation. The global advocacy and health care service organization filed the lawsuit against the state.

Because HIV-positive patients were unable to receive coverage until their health had deteriorated into full-blown AIDS, the costs and complexity of care were much higher, Myers said.

The state "simply decided this was not going to work without doing any work," he said. "We know people can benefit from this [program], and it's incumbent on the state to obey the law ... and start providing care."

The Dept. of Health Care Services said it plans to follow the court's order. But the agency maintains that it did its job and simply could not make the math work.

"The law was very clear that it should not be implemented if the costs could not be offset by the savings," said DHCS spokesman Anthony Cava. "Unfortunately, due to the higher costs of some managed care plans, we could not demonstrate that to the federal government's satisfaction." But the court determined that the state made little effort to affirm that conclusion and fell short on several requirements outlined in the law.

Aside from two meetings with HIV/AIDS advocates and a flier mailed to Medicaid recipients in only three counties, health officials "undertook no direct outreach or awareness activities to encourage Medi-Cal recipients with AIDS to explore the managed care option" as mandated, Chalfant wrote. He also rejected the state's contentions that a lack of funding and confidentiality concerns posed barriers, saying there was no evidence to back such claims.

Before the bill passed, the Dept. of Health Care Services had estimated that roughly 20 AIDS patients would need to transfer to Medicaid managed care to defray the cost of one HIV-positive enrollee, according to court documents.

But in its analyses, the agency failed to establish a capitation rate for HIV-positive patients or accurately track AIDS patients transferring into managed care to determine the true level of potential savings, the court said. Nor did the health department follow up on the federal government's request for additional financial data after receiving the state's initial waiver application for the Medicaid expansion.

The AIDS Healthcare Foundation's Myers estimated that his organization's own managed care program could have saved the state $2 million between 2003 and 2007. "We know the money is there," he said, adding that at least 20 other managed care plans in the state cover AIDS patients on Medicaid.

In addition, nothing in the law prevented health officials from looking to other revenue sources to meet the cost-neutrality requirements, but the state "actively rejected" such options, the court said.