New Budget Makes ‘Major Change’ to Lanterman Act, Autism Policy

Jennifer McNulty is a Ventura County mom whose son has autism. He has come a long way from his early days of aggression and communication problems.

McNulty credits, in part, a treatment called applied behavioral analysis — or ABA therapy — for her son’s progress. “My son Kyle is 16 now, and ABA therapy has worked for him. Now we are hopeful my son can gain enough skills to the point where he can get a job.”

Getting ABA therapy just got a little harder for the McNultys and many other families affected by autism.

Changes for ABA Coverage

A small, obscure provision in the California budget bill passed last week is the culmination of a number of changes and limitations in autism treatment recently made by the state.

The provision deals with regional centers, the private not-for-profit companies that operate 21 regional centers under contract with the state, to provide or coordinate services for Medicaid beneficiaries with developmental disabilities, including autism.

The Lanterman Developmental Disabilities Services Act, passed in 1969, requires regional centers to pay for medically necessary treatments, including ABA therapy. Last year, in order to shift the funding burden on regional centers, the Legislature passed SB 946 by Sen. Darrell Steinberg (D-Sacramento), which required private insurers to pay for the service, saving money for the state.

From Jennifer McNulty’s perspective, before SB 946 passed last year there were no deductibles or copays to even consider. Now that private insurers need to contribute, that has changed.

The budget plan passed by the Legislature last week prohibits regional centers from paying the copayments or deductibles for ABA therapy, except in cases of demonstrable need. Ultimately, the provision means that people with private insurance will have to pay the deductible and copay.

This latest change may be the tipping point for Jennifer McNulty’s family, she said, because it’s already a financial stretch for the self-employed parents to pony up big money for insurance.

“My husband and I have our business, and we pay almost $1,500 a month for a PPO, and we can barely afford that,” McNulty said. “We sold our family home two years ago. Now we’re looking at paying another $7,500 a year, on top of that [in copays and deductibles]. We can’t do that.” So, she said, “It does affect me and my family pretty heavily.”

Her looming choice is to drop her son’s private PPO coverage and enroll him in Medi-Cal — which, of course, will shift expense from private insurance to the state.

“It’s strange. It’s as if [the state is] discriminating against families with private coverage,” McNulty said. “I’ve heard people right and left saying, ‘Well, no more ABA [therapy] for us, because we can’t afford the copays.’

“I don’t see what else to do,” she said. “I’m definitely considering dropping coverage.”

‘Never Been an Assault Like This on Lanterman Act’

State health officials said this is simply an instance of cost-cutting by the Legislature and governor.

All inquiries to state officials for this story were referred to the Department of Developmental Services, which responded with a short written statement. According to the DDS statement, if clients have trouble paying their copays, regional centers are allowed to help, depending on the clients’ demonstrated financial need.

The DDS statement said, in part:

“The current budget trailer bill establishes uniform guidelines and authorizes regional centers to pay health insurance co-payments for services on behalf of lower income families or others who demonstrate hardship. Subsequent to enactment of the budget trailer bill, DDS will provide guidance to the regional centers regarding implementation of the authority to pay co-payments for low-income families or others who demonstrate hardship.”

In the vernacular, this is called “means-testing.”

That kind of means-testing has never been part of the Lanterman Act, according to Rick Rollens, a legislative adviser to ARCA, the Association of Regional Center Agencies.

“This is an historic shift in the Lanterman Act,” Rollens said. “It’s a major shift. It’s the first time when a major service provision is now being means-tested. Historically, this has not been an issue.”

This is how the rest of the statement from DDS describes the shift: “The Lanterman Act requires regional centers to identify and pursue all possible sources of funding for consumer services, including private insurance. Recent legislation confirmed the responsibility of insurers and health plans to pay the cost of behavioral health treatment, including ABA, for individuals with autism.”

The budget trailer bill language simply includes copays and deductibles as part of that funding source, DDS officials said.

“They’re changing the Lanterman Act,” Rollens said. “The Legislature and governor, they have the authority to amend it anytime they want. But what has happened here is tragic and didn’t have to happen. What this language does is it limits access to services to a certain class of people.”

The state has estimated it will save $80 million a year from requiring insurers and health plans to pay for ABA treatments, though the consumer percentage of that is much smaller, an estimated 10% of the total savings.

“There has never been an assault like this on the Lanterman Act,” Rollens said. “The means-testing opens the door for other attempts, for means-testing other services. And it gives the bean-counters in the state the ability to ratchet down on means testing.” They can lower the aid threshold at any time, he said.

“It is shameful for the Legislature and the governor to do this,” Rollens said. “I’m sure Frank Lanterman is turning over in his grave, as we speak.”

Lanterman Act Intended ‘
To Keep Kids Out of Institutions’

According to Kristin Jacobson, president of Autism Deserves Equal Coverage, a not-for-profit autistic children’s advocacy group, the Lanterman Act has remained relatively unchanged since its inception.

In part, that’s because it’s cost-effective to have autistic children grow up to be “less dependent on the state and more productive members of society,” she said.

“One of the main purposes of the Lanterman Act is to keep kids out of institutions and [move them] into homes and into the community,” Jacobson said. “It allows us to keep those individuals in society. It’s very, very expensive to institutionalize these kids.”

Autistic children who don’t receive ABA therapy can end up as a lifetime drag on the Medi-Cal system, according to Jacobson. “You’re looking at $2 to $3 million in costs over someone’s lifetime because they don’t get treatment,” she said.

Judy Mark, government relations chair for the Autism Society of Los Angeles,  said the lowest-income and high-income families won’t be as affected by the new prohibition on deductibles and copays.

“Working individuals, the people who did the right thing and bought health care insurance, those are the people who will be most affected,” Mark said. “Low-income families will still get their ABA therapy. But the middle-class folks, or the lower middle class, this is a multi-thousand-dollar hit they can’t afford.”

Mark said notices about the change could start going out as soon as July 1. “Lots of parents will be getting letters in the mail and wondering, ‘What the heck?'” Mark said.

Other Recent Shifts in State’s Autism Coverage

The question of payment for ABA therapy in the regional centers is just one of several recent changes in autism coverage in California.

• The proposal to include ABA therapy as a benefit under the federally funded optional Medi-Cal expansion starting in 2014 was dropped.

• In their May budget proposal, state lawmakers allocated $50 million (or $100 million, if the federal matching money was considered) for one fiscal year of ABA therapy for Medi-Cal patients, which would have begun in July 2013. That provision was struck from the budget trailer bill in June.

• In 2009, the state eliminated funding for the Early Start program that affected about 17,000 developmentally delayed and at-risk children, including many kids who had early signs of autism, according to Jacobson.

• In September 2012, the state passed SB 946, requiring private insurers to pay for ABA treatment. The bill also provided for ABA therapy for children in the Healthy Families program. An estimated 10,000 of the 860,000 children in Healthy Families may have qualified for ABA therapy. But shortly after SB 946 passed, the state announced it was eliminating the Healthy Families program and moving those children to Medi-Cal managed care plans.

State health officials at the time assured lawmakers that there would be no gaps in continuity of care and that benefits would follow the children, but that has turned out not to be the case for an estimated 500 Healthy Families children who started to receive ABA therapy. Those children have been referred to the regional centers, and an estimated three-fourths of them are expected to fail to qualify for ABA therapy at the centers.

‘Worse Off Now Than We Were a Year Ago’

McNulty can’t believe what has happened to autism therapy policy in the past year.

Less than a year ago, she said, it seemed that passage of SB 946 was a great victory for the autism community.

“I was thrilled at the time,” McNulty said, “because I thought it would make it a lot easier for families to get their insurance to pay, and it took [financial] pressure off the state.”

It seemed like a kind of watershed moment, that policymakers finally understood that children needed these autism treatments, she said.

“None of us ever imagined the Brown administration would put this language in place to undermine families. I couldn’t believe it,” McNulty said. “There has to be a legal remedy for this. Because this just isn’t fair.”

Mark summed it up this way: “All of this basically says kids with autism are not entitled to services,” she said. “It’s incredibly short-sighted.”

Mark said autism treatment, coverage and policy now are going to be big topics of conversation in Sacramento. The passage of SB 946 last year ended up not meaning much, after all, she said.

“The reason there’s so much doom and gloom in our community right now is because we’re worse off now than we were a year ago,” Mark said. “It’s a worst-case scenario.”

Related Topics

Insight