Over Four Years After D.C. v. DMAHS, New Jersey Still Fails to Follow the “Screen Before Terminate” Rule

by Jose D. Roman | Feb 20, 2025 | Legal Bulletin, Medicaid

Public health advocates applauded the Court’s decision in D.C. v. Division of Medical Assistance & Health Services, 464 N.J. Super. 343 (App. Div. 2020), because it resolved a longstanding logistical issue that caused severe hardship for people transitioning from one Medicaid program to another. Specifically, the New Jersey Appellate Division ruled that state Medicaid agencies must screen beneficiaries for eligibility in alternative programs before terminating their existing benefits, ensuring a seamless transition and continuous benefits. Despite the Court’s clear mandate, over four years later, New Jersey has repeatedly failed to implement an effective “screen before terminate” system, leaving many vulnerable individuals exposed to gaps in coverage and financial hardship. Let’s revisit the case.

Factual Background

A married couple receiving Social Security Disability benefits were enrolled in New Jersey’s Aged, Blind, and Disabled (ABD) Medicaid Program. The program provides Medicaid health coverage for people with limited income who are blind, have been determined disabled by the Social Security Administration, or are 65 and over. However, following a change in circumstances the couple’s income exceeded the limit ABD eligibility. As a result, the Essex County Board of Social Services sent them a letter indicating that their ABD coverage would terminate effective August 31, 2017. Although they no longer qualified for ABD Medicaid, the couple still qualified for the Specified Low-Income Medicare Beneficiaries (SLMB) Program, which covers Medicare Part B premiums for low-income Medicare beneficiaries. The couple applied for the SLMB Program on August 30, 2017. Although they clearly qualified, the Essex County explained that their application could not be processed until their ABD benefits were officially terminated, which caused a gap in benefits. They filed for a Fair Hearing before an Administrative Law Judge who concluded that since benefits could be applied retroactively for 90 days, the state could terminate benefits without first assessing eligibility for other programs. The ALJ’s decision was adopted by the Division of Medical Assistance & Health Services (DMAHS) and the matter was then appealed to the Superior Court, Appellate Division.

Appellate Division Decision

The couple argued that federal regulations, including provisions found at 42 CFR 435.916(f)(1), mandate that state agencies screen beneficiaries for eligibility in other Medicaid programs before terminating existing benefits. They contended that the Division of Medical Assistance and Health Services (DMAHS) failed to perform this pre-termination screening for the SLMB Program, thereby causing a gap in benefits. DMAHS argued that the SLMB Program was “a Medicare savings program that allows states to pay Medicare Part B premiums,” rather than a Medicaid program, and since beneficiaries cannot be eligible for Medicaid and SLMB in the same month, they had to wait until coverage was terminated before applying. They argued that the requirement to screen for other programs prior to termination did not apply because SLMB was not a Medicaid program.

Importantly, the ALJ and DMAHS relied heavily on the 90 day retroactivity of New Jersey Medicaid to justify forcing people to have a disruptive gap in benefits, rather than implement a more efficient system. Under these rules, SLMB benefits could be applied retroactively for up to three months. The agency’s rationale was that even if there was a gap in immediate coverage, the retroactive provisions would compensate for the period during which the petitioners were without benefits. However, the couple argued that this reasoning did not absolve the agency of its responsibility to ensure a seamless transition in coverage. They also noted that the gap created a hardship because they had current obligations such as rent, food, and utilities.

The court found that SLMB was clearly a Medicaid program and that DMAHS erred by not screening the couple for eligibility in the SLMB Program before terminating their ABD benefits. The court held that relying on retroactive benefits subverted the purpose of pre-termination screening and did not justify a policy that permitted gaps in essential healthcare coverage. The court held that this was a circumstance where DMAHS acted in a way that was clearly inconsistent with its statutory mission and legislative policy. The court concluded that DMAHS’s decision was arbitrary, unreasonable, and erroneous, and therefore subject to being overturned. The decision was clear: DMAHS was required to proactively assess eligibility for other programs to prevent the disruption of benefits.

Current Challenges – County-Level Variability

In New Jersey, a significant portion of Medicaid eligibility decisions are handled by county-level agencies. As a result, compliance with the pre-termination screening requirement varies considerably from one county to another. Limited resources, inexperienced staff, and clerical errors lead to inconsistent application of the screening mandate. Instead of proactively transferring eligible beneficiaries between various Medicaid programs—such as SSI Medicaid, NJ Family Care/MAGI Medicaid, ABD Medicaid, MLTSS Medicaid, Workability Medicaid, and SLMB—the county offices often merely provide a referral or a new application and leave beneficiaries to navigate the system on their own.

Despite the clear mandate from the court, DMAHS has yet to develop and implement a robust, statewide system for conducting the required pre-termination eligibility screening and facilitating seamless transitions between programs. In practice, many beneficiaries continue to experience gaps in coverage because DMAHS appears to lack an integrated, automated system that cross-references a beneficiary’s eligibility for other Medicaid programs prior to terminating existing benefits. This means that the court’s requirement is not uniformly applied, leaving beneficiaries vulnerable to disruptions in care.

These challenges underscore the need for DMAHS and county agencies to collaborate on developing a comprehensive, statewide protocol. Or perhaps eliminate the county system altogether. Such a system should not only automate the screening process but also establish clear guidelines and accountability measures to ensure that beneficiaries do not experience unnecessary interruptions in their Medicaid benefits.

Final Thoughts

The ruling in D.C. v. Division of Medical Assistance & Health Services emphasizes the critical need for proactive administrative practices in the management of Medicaid benefits. By failing to pre-screen for eligibility in alternative programs, DMAHS not only violated federal regulatory requirements but also jeopardized the well-being of vulnerable low income people. Moreover, the lack of a cohesive, state-wide system to implement this requirement further compounds the problem, resulting in inconsistent and often inadequate protections for those most in need. This case just one example highlighting the need to reexamine and overhaul Medicaid administrative processes.

ACLU New Jersey Fights for Disabled Child’s Right to Healthcare in Medicaid Case

by Jose D. Roman | Feb 4, 2025 | Legal Bulletin, Medicaid

In an interesting case from last year, J.R. v. Horizon NJ Health, A-2028-21 (February 5, 2024), the American Civil Liberties Union (ACLU) of New Jersey, supported by advocacy groups like Disability Rights New Jersey and the National Health Law Program, took on a widespread issue affecting Medicaid recipients. The case centered on J.R., a child with medically complex needs whose Private Duty Nursing (PDN) hours were significantly reduced by Horizon NJ Health, her Medicaid provider. Despite some clever legal arguments, the Superior Court of New Jersey, Appellate Division, ruled in favor of the Horizon’s decision to scale back J.R.’s care hours.

Background

Born prematurely in February 2019, J.R. faces serious medical conditions, including bronchopulmonary dysplasia, hypertension, and laryngomalacia. Initially, Horizon provided her with round-the-clock PDN care to meet her intensive medical needs. However, in 2020, Horizon reassessed her condition using a form called the PDN Acuity Tool—developed by Milliman Care Guidelines—and decided to cut her nursing hours from 24 per day down to just 8. This drastic reduction, which unfortunately is a common practice, was challenged. Specifically, at issue was the fairness and reliability of the process when using an automated assessment method such as the PDN Acuity Tool.

Legal Arguments: A Fight for Fairness

The ACLU of New Jersey, advocating for J.R., presented novel arguments against Horizon NJ Health’s decision, emphasizing the following concerns:

• Inadequate Notice: J.R.’s legal team argued that Horizon NJ Health failed to provide a clear, detailed explanation for reducing her PDN hours, leaving insufficient regulatory grounding for the decision.
• Questionable Standards and the PDN Acuity Tool: Critics contend that the reliance on the PDN Acuity Tool constitutes an overly opaque method for determining medical necessity. While automated tools can standardize assessments, such systems risk oversimplifying the complexities inherent with severe disabilities. The proprietary nature of the tool—and the lack of transparency regarding its underlying algorithms—can conceal potential biases and errors that adversely affect vulnerable populations.
• Ignoring Medical Expertise: Despite J.R.’s treating physician’s strong recommendation for 24/7 care, the decision-making process largely depended on the tool’s point score, which may not fully incorporate individualized clinical judgments.

The PDN Acuity Tool and Automated Decision-Making

This case is an important attempt at taking a critical look at the implications of using automated decision-making systems in the delivery of healthcare:

• Balancing Standardization and Individual Needs: The PDN Acuity Tool was designed to convert complex clinical data into a quantifiable score. However, this case highlights the fact that while such tools promote consistency, they may fall short when addressing the multifaceted nature of a patient care. In J.R.’s case, the tool’s reduction from 24 to 8 hours was based on a standardized scoring system that her attorneys argued failed to fully capture the child’s nuanced clinical needs, and was contrary to the recommendation of her physician.
• Transparency and Accountability Concerns: Critics argue that using algorithmic forms such as the PDN Acuity Tool lack transparency because there is no clear disclosure of how individual variables are weighted. The forms simply have pre-determined point values without disclosing how the point value was determined. As a result, consumers are left with little means to challenge potentially arbitrary reductions in care. This analysis underscores the necessity for state agencies to ensure that automated assessments are accompanied by detailed, accessible explanations that uphold due process rights. It also highlights a roadmap for future legal challenges.
• Impact on Individuals with Unique Needs: While automated decision-making systems may be efficient, they may inadvertently disadvantage those with complex or atypical care needs. The legal discourse around J.R.’s case illustrates how reliance on proprietary tools can obscure critical nuances and lead to decisions that appear “reasonable” on paper but are ethically problematic when applied to individual patients.

The Court’s Decision: A Disappointing Outcome

The Appellate Division ultimately upheld the decision to reduce J.R.’s care hours, concluding that Horizon NJ Health had acted within Medicaid regulations. The ruling was based on several key points:

• Sufficient Notice: The court found that, despite lacking explicit regulatory citations, the notice provided adequate information about the reasons for the reduction.
• Legitimacy of the PDN Acuity Tool: No evidence was presented showing improper use of the tool. The court accepted its results as a “reasonable and objective” method to determine medical necessity, even as critics warned that such assessments might not fully address individual clinical complexities.
• Consideration of Medical Evidence: The review included extensive clinical records and expert testimony, which the court deemed sufficient to support the decision.

What This Means for Medicaid Recipients

J.R.’s case brings to light the ongoing tension between cost containment measures and the rights of Medicaid beneficiaries to receive personalized, medically appropriate care. While automated tools like the PDN Acuity Tool offer efficiency, they also underscore the need for transparency, individualized assessment, and robust safeguards against the potential biases inherent in algorithm-driven decisions.

Looking Ahead

Although the ruling was not favorable, it highlights an important conversation regarding the use of automated decision-making systems. The Appellate Division seemed to indicate that it was looking for more evidence from J.R.’s side that could be a roadmap for future litigation. Specifically, the court noted that at the hearing stage “J.R. had the right to discovery, to subpoena witnesses, and to call her own witnesses, including experts.” Perhaps depositions of Horizon representatives and experts, as well as testimony from experts who are critical of the PDN tool could change the outcome in a future case. In the meantime, advocacy organizations will continue to call for clearer guidelines, enhanced transparency, and more comprehensive evaluations that integrate both standardized assessments and individualized clinical judgments. This case serves as a powerful reminder of the critical role legal advocacy plays in ensuring that technological advancements in healthcare do not come at the expense of patient rights and quality care.