Iowa will take steps to ensure Medicaid-eligible children with mental illness diagnoses will receive the necessary mental and behavioral health care services as part of a recently announced settlement agreement.

The lawsuit, filed in early 2023 by Disability Rights Iowa and other national health and law advocacy organizations, accused Iowa of “longstanding failure” to provide Medicaid-eligible children with legally required and medically necessary mental and behavioral health services.

The suit was filed against Iowa Department of Health and Human Services Director Kelly Garcia.

The plaintiffs alleged that Iowa administers an inadequate mental health system, despite receiving federal funds for children’s mental health care. As a result, Medicaid-eligible children younger than 21 who require intensive home and community-based services face a high risk of being placed in institutions away from their families and communities, they argued.

More than 300,000 youth — or about three out of every eight Iowa youth under the age of 21 — are covered by Medicaid. Of that population, nearly 90,000 had a serious emotional disturbance in state fiscal year 2020, according to court records.

Advocates behind the lawsuit say the steps proposed by the state in the agreement present a “radical change” that will ultimately be a positive move for youth in Iowa who need mental and behavioral health services.

“That’s a lot of children that this is going to directly impact in terms of the services they’re able to receive, and change the trajectory of not only their immediate circumstances and immediate mental health needs, but also their long-term prospects,” Catherine Johnson, executive director of Disability Rights Iowa, told the Register.

A preliminary settlement was reached in December after more than a year of negotiation between the plaintiffs and the state health and human services agency. The judge issued preliminary approval of the agreement last week, and set a final approval hearing for early May.

More: Lawsuit accuses Iowa of ‘longstanding failure’ to provide kids with mental health services

What does this settlement mean?

To address the plaintiffs’ alleged shortfalls in behavioral health services for children, the state agreed to ensure key services are available statewide to Medicaid-eligible children with serious emotional disturbances. The state is required to complete this process by the end of 2032.

The settlement agreement includes a detailed implementation plan Iowa HHS, which has been dubbed by state officials as the Iowa REACH initiative.

The plan includes specific steps the state will take to develop and deliver intensive home and community-based mental health services to children statewide when deemed medically necessary, and will be lead by a team from across the agency who will be responsible for overseeing the plan.

The agreement, along with the state’s REACH strategy, signals “a major step in the right direction for Iowa youth and their families,” Garcia said in a statement Wednesday.

“Iowa HHS is fully committed to implementing new strategies and evaluating current outcomes to ensure we are meeting the needs that our children and youth deserve and families expect,” she said.

Johnson praised the significant work to develop the settlement agreement, noting that the plan laid out by the state would create major structural change to Iowa’s current mental and behavioral health system for youth. Because of this plan, she said youth will be able to stay with their families in their community, receiving the services and supports they need to succeed.

“They get to go to school with their friends and they don’t have to go to an institution or a hospital that’s scary and they don’t know anyone,” Johnson said. “They get to stay with the people that love them, and grow up with mental health services in place. Your future is different, perhaps, than it might have been without this brand new structure.

“I think it’s just very, very significant, and I’m really excited for the implementation to begin so that Iowa can have these services in place as soon as possible for our kids.”

What are the terms of the settlement?

Among the terms of the settlement, the state must ensure Medicaid-eligible children receive mental health services “in the most integrated setting appropriate to their needs and are free from serious risks of segregation and institutionalization, including the unnecessary use of out-of-home placements.”

These changes must ensure Iowa youth receive the supports necessary to maximize their success growing into healthy and independent adults, the settlement agreement states.

To reach that goal, the state must develop and implement certain relevant services, which include intensive care coordination. This is a “single point of accountability” for ensuring medically necessary Medicaid services are coordinated and delivered appropriately to Iowa youth, according to the settlement agreement.

State officials also agreed to provide intensive in-home and community therapeutic services, with the goal to “maximize the child’s ability to live and participate in the community and to function independently.” That includes individual and family therapy.

The state must also boost its 24/7 mobile crisis intervention and stabilization services for young Iowans as part of this settlement agreement.

To support their effort, state officials say they will utilize additional Medicaid services to support children with serious emotional disturbances and “to help maintain them in their homes and communities and avoid higher levels of care and out-of-home placements.”

These additional services include respite care or other supports meant to help children build skills and help the family’s ability to successfully care for the child at home.

However, state officials warn that while it can request funding from state lawmakers for these initiatives, the settlement ultimately does not have authority over the Iowa Legislature.

Both parties also agreed to an independent monitor tasked with evaluating the state’s progress in implementing the proposed plan. The monitor — which will be a third-party selected at a later date — will issue reports on the state’s effort each year, per the settlement agreement.

Michaela Ramm covers health care for the Des Moines Register. She can be reached at mramm@registermedia.com or at (319) 339-7354.