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K.W., By His Next Friend D.W, et al v. Richard Armstrong

August 2, 2012


The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge



The Court has before it a motion by the Idaho Department of Health and Welfare (IDHW) asking the Court to approve a form of Notice to be given to plaintiffs informing them that their budgets for home-care have been reduced. The motion is fully briefed and at issue. For the reasons explained below, the Court will deny the motion.


Plaintiffs are developmentally disabled adults who qualify for benefits under Medicaid. They are eligible for long-term institutional care but choose to live instead in their own homes or in community settings. When their Medicaid payments were reduced, they brought this action against IDHW, alleging, among other things, that the notices sent by IDHW informing them of the reductions were insufficient. The Court enjoined the reductions, and the parties eventually agreed to the terms of a preliminary injunction that maintained the status quo and provided plaintiffs with information regarding their budget reductions. IDHW then filed the present motion to approve the form of Notice that they sent to each plaintiff. The Court will determine whether the Notice is sufficient after reviewing the Medicaid provisions at issue here.

Moving the disabled out of institutions, and into homes, can save money and improve care. See Ball v. Rodgers, 492 F.3d 1094, 1098 (9th Cir. 2006). Medicaid recognized this by allowing states to set up "Home and Community-Based Services" ("HCBS") to allow the disabled to "waive" their entitlement to institutional care in return for receiving community-based care. The State of Idaho participates in Medicaid and the HCBS program. In Idaho, the program is known as the Developmental Disabilities Waiver ("DD Waiver") program, and is administered by IDHW.

The plaintiffs all participate in the Idaho DD Waiver program. The purpose of the program is "to prevent unnecessary institutional placement, provide for the greatest degree of independence possible, enhance the quality of life, encourage individual choice, and achieve and maintain community integration." IDAPA

For each participant in the DD Waiver program, the IDHW annually prepares a "budget" that sets a limit on the expenses authorized for that person. The budget is calculated by IDHW's budget tool software based on inputs from Independent Assessment Providers (IAPs) hired by an IDHW contractor, the Idaho Center for Disabilities Evaluation ("ICDE").

The IAPs visit with participants and a "respondent," typically the legal guardian or family member, to assess that person's needs. See Whilhite-Grow Declaration (Dkt. No. 42-6) at ¶¶ 2-3. The IAP will also examine any medical provider's records. Id. Following these evaluations, the IAP fills out a form called an "Inventory of Individual Needs." See Exhibit C (Dkt. No. 53-5) at p. 20. The form has numerous boxes to check that in aggregate describe how the participant is affected by her disability. For example, the boxes to be checked describe such things as (1) type of disability, (2) need for psychotropic medications or nursing services, (3) level of hearing, vision and mobility, (4) assistance needed for feeding, dressing, and toileting, and (5) living situation, among other things. Id. The Inventory is about 6 pages long. Id.

The IAP fills out the Inventory by hand, and then enters the information into a computer form known as an Individualized Budget Calculation (IBC). The IBC contains fields corresponding to categories of needs. For example, there are fields for "Feeding," "Toileting," and "Need for Nursing Services," among others, corresponding to the boxes described above in the Inventory of Individual Needs.*fn1 The IAP carries over the data from the Inventory into the IBC.

When a field is completed on the IBC, the IDHW's budget tool software automatically calculates what Medicaid would pay toward meeting that need. For example, the IAP has four options to describe the level of assistance that a participant might need with tolieting: (1) independent, (2) supervision, (3) assistance, or (4) total support. On the IBC, there is a "Toileting" field; if the IAP enters "assistance" in that field, the budget software automatically calculates the dollar amount Medicaid would pay toward meeting the need of assistance with tolieting. If the IAP enters "total support" instead, the software would automatically enter a higher dollar figure. The important point here is that the IAP describes the need, and the budget software calculates the dollar figure Medicaid pays for that need.

The budget tool software program runs a spreadsheet that lists all the need categories and their corresponding dollar amounts. The software starts with a dollar figure for the budget calculation that is called the "constant." That is the budget the participant starts with, and it is either reduced or increased depending on the IAP's evaluation of the various needs of the participant. In the case of plaintiff K.C. for the period 2011 to 2012, her constant was $24,476.75. See Exhibit C (Dkt. No. 43-4). When the IAP entered K.C.'s age in the appropriate field in the IBC, the budget tool software subtracted $3,190.68 from the constant. Id. When the IAP inputted her specific type of living situation, the software added $8,881.87 to the constant. Id. There were other reductions and additions to the constant until the final budget -- the Assigned Budget Amount -- was calculated by the software.

When the IAP has finished filling out all the fields on the IBC, and the budget tool software has calculated a Assigned Budget Amount, the software automatically exports this data into a Notice that is then sent to the participant. This is the Notice that the IDHW asks the Court to approve in its motion now before the Court.

The Notice starts out by informing the participant that they are eligible for the program, and then, after explaining in general terms how budgets are calculated, sets forth the specific Assigned Budget Amount for that participant. Because the language of the Notice is critical to the IDHW's motion, the Court will set it out in pertinent part below:

The Department has determined you eligible for developmental disability services according to Section 66-402(5), Idaho Code, and that you meet Intermediate Care Facility for People with Intellectual Disabilities ("ICF/ID") Level of Care criteria for adults with developmental disabilities, as defined in Medicaid Enhanced Plan rules at IDAPA

Pursuant to 42 CFR 441.302(c) and IDAPA, the Department notifies each participant of his or her annual individual set budget amount as part of the annual eligibility determination and redetermination process. The Department calculates your individualized budget using information entered on the Inventory of Individual Needs about your medical needs, abilities and limitations, service and support desires, history of expenditures (when available) and other relevant characteristics. This information was obtained through an interview with you and a person authorized to speak on your behalf during the Department's assessment, and from your complete case file, which was reviewed by a Regional Independent Assessor. Information from the Inventory of Individual Needs is ...

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