## Facts

- Arkansas operated Child Health Management Services (CHMS) clinics that delivered early-intervention diagnostic and therapy services to Medicaid-eligible young children as part of the federal EPSDT mandate.
- Due to budget concerns, the Arkansas Department of Human Services (ADHS) sought to repeal or substantially revise State Medicaid Plan provisions that explicitly referenced CHMS and to restructure delivery and reimbursement.
- CHMS providers and parents of Medicaid-eligible children sued, alleging the proposed changes would reduce access to medically necessary services required by federal Medicaid/EPSDT law.
- The federal district court permanently enjoined ADHS from repealing certain CHMS-related State Plan provisions, effectively requiring continuation of CHMS as structured in the plan.
- ADHS appealed, arguing Medicaid permits program redesign so long as EPSDT obligations are satisfied.

## Issues

1. Whether EPSDT-related Medicaid provisions create enforceable rights that may be vindicated in federal court under 42 U.S.C. § 1983.
2. Whether Arkansas may repeal CHMS-specific State Plan language and reorganize its early-intervention service system while remaining compliant with EPSDT.
3. Whether a permanent injunction may require preservation of a particular Medicaid delivery model and specific State Plan provisions rather than focusing on substantive EPSDT compliance.

## Decision

- The Eighth Circuit affirmed in part, reversed in part, and remanded.
- The court held that EPSDT imposes substantive obligations to provide medically necessary services to eligible children, including services needed to “correct or ameliorate” conditions.
- The court rejected the view that beneficiaries are entitled to receive EPSDT services only through the existing CHMS clinic model or through unchanged State Plan language.
- The court held Arkansas may alter or repeal CHMS-specific plan provisions and redesign the program, but only if it continues to meet EPSDT requirements (including arranging for care and informing eligible families).
- The permanent injunction was overbroad to the extent it froze the CHMS model in place; it had to be narrowed and the case remanded for further proceedings consistent with that limitation.

## Legal Principles

- EPSDT requires states to furnish, arrange for, and provide notice of screening, diagnostic, and treatment services that are medically necessary to correct or ameliorate a child’s physical or mental conditions.
- A state cannot avoid EPSDT obligations through changes in labeling, plan drafting, or administrative restructuring if the practical effect is denial or material impairment of access to medically necessary EPSDT services.
- Medicaid grants states flexibility in organizing service delivery systems; federal law generally protects access to required services, not a specific state-selected program model or particular State Plan wording.
- Injunctive relief in EPSDT disputes should target substantive compliance with federal requirements, not mandatory preservation of a particular state program structure.

## Conclusion

The Eighth Circuit held that Arkansas must continue to ensure EPSDT-required, medically necessary services for eligible children, but it may revise State Plan provisions and redesign its delivery system so long as it still arranges for, pays for, and adequately informs families about required EPSDT services; the district court’s injunction was too broad insofar as it locked in the CHMS model.


Pediatric Specialty Care, Inc. v. Ark. Dep't of Hum. Servs., 293 F.3d 472 (8th Cir. 2002)