Two years ago, a single mother in the Twin Cities asked the state Medicaid program to pay for an intensive type of autism therapy for her 2-year-old son.

She was turned down. State officials said the treatment -- known as Applied Behavior Analysis, or ABA -- is "not now, and never has been,'' a covered service.

It turns out, though, that's not the whole story.

For years, Minnesota taxpayers have been subsidizing that same treatment, which can cost up to $100,000 a year, for middle-class and even wealthy families, including the children of lawyers and business executives.

Last year, the state Medicaid program spent $13.5 million on ABA treatments for 379 children -- most of them above the poverty line, according to state records. Those families have been able to tap into Medicaid through a special disability category that has no limit on family income.

Yet the state tells some of its poorest children, who are in Medicaid managed-care plans, that ABA is simply not an option.

"It's morally reprehensible," said Amy Dawson, founder of the Autism Advocacy and Law Center in Minneapolis, who filed suit on behalf of the 2-year-old boy.

To Idil Abdull, an autism advocate in Minnesota's Somali community, it feels like a double standard. "If you're going to approve it for one set of children, what about the rest?" she asks.

State officials insist that all children on Medicaid are entitled to the same benefits. But when they reviewed the agency's payments at the request of the Star Tribune, they admitted they had serious concerns about the pattern that has emerged over the past six years.

"We've been asking a whole series of questions internally," said Ann Barry, deputy commissioner of the Department of Human Services, which runs the Medicaid program. "I don't think we have all the answers."

Added Maureen O'Connell, an assistant commissioner: "We do find it troubling that there's a perception that we are not treating certain groups fairly."

Like most states, Minnesota has struggled with the growing demand for treatment as autism diagnoses have soared in the past decade. Intensive treatments like ABA are often well beyond the means of most families, and many insurers refuse to cover them. So many parents have turned to Medicaid for help.

But no state has handled the issue quite like Minnesota, said David Mandell, a Medicaid expert at the Center for Autism Research in Philadelphia.

"It sounds like whatever the rules are, de facto [Minnesota has] created this two-tiered system," he said.

Dawson, the lawyer, feels a sense of inequity more than most. Her own son has been getting ABA therapy at taxpayer expense since last summer. And she believes poor children deserve no less. "I hope to end the disparity that exists for low-income kids," she said.


At the heart of Dawson's lawsuit is a little boy identified only as T.O.

He was 2 years old when he got the diagnosis of autism in 2009. Like many low-income families, he and his mother were enrolled in a Medicaid managed-care plan, in this case run by HealthPartners.

At first, his mother tried to get T.O. into an autism treatment center approved by the health plan. But when she heard the program had a 12-month waiting list, she searched for an alternative and found her son a spot at the Lazarus Project, an ABA program in Plymouth. He started getting 22 hours a week of individualized therapy.

Before long, HealthPartners refused to pay the bills, saying Lazarus was not in its network -- and that in any case, ABA was not covered by Medicaid.

The family appealed, but the state of Minnesota sided with HealthPartners.

In court papers, state officials noted that the Legislature had tried -- and failed -- to add ABA to the state's Medicaid benefits in 2001. But the federal government, which pays half the bill, nixed the change. As a result, they said, ABA treatments "are not now, nor ever have been, covered services."

Dawson sued both HealthPartners and the state, challenging the decision.

"There's a shred of truth to what they say," she said. "It's also a lie by omission."

Money and persistence

Since the 1990s, a number of Minnesota families have found a way to get ABA therapy at taxpayer expense, says Dr. Eric Larsson, one of the pioneers of ABA therapy in Minnesota and founder of the Lovaas Institute Midwest, an autism treatment center in Minneapolis.

From the start, he said, they were mostly families with the money and persistence to fight for what they wanted.

They would apply for Medicaid coverage for their children through a special disability program, specifically for families above the poverty level. To get in, the child must be certified as disabled, and parents are required to pay a sliding fee (up to 13.5 percent of income).

Initially, Larsson said, the state rejected most of their requests to pay for ABA therapy -- which can involve up to 40 hours a week of treatment. But on appeal, he said, "every family that could afford an attorney won."

Eventually, it became common knowledge within certain circles that Medicaid would pay for ABA under the billing code for "skills training."

In fact, said Dawson, state officials certified those programs and told them what billing codes to use. "They know they use the ABA method, and they routinely pay those bills."

The Lovaas Institute, for example, gets about two-thirds of its income from Medicaid, according to Larsson. In 2010, it got almost $2.9 million for 42 children, according to state records.

The Minnesota Autism Center, one of the largest ABA programs in Minnesota, gets about 40 percent of its revenue from Medicaid, said executive director Kathryn Marshall -- more than $4.8 million for 144 children last year. That same year, the center paid $600,000 to settle a federal investigation into allegations that it had overbilled Medicaid for its services.

There is no precise breakdown of how much Medicaid spends on autism treatments for children in the other category -- those in managed care -- state officials say.

But one comparison is stark. Last year, the children in ABA programs received an average of 770 hours of skills training at taxpayer expense, according to DHS records.

Autistic kids in its managed-care programs, meanwhile, averaged just 39 hours a year.

The problem, Dawson said, is that families below the poverty line are routinely steered to managed-care programs that, with just one exception, reject ABA out of hand.

As a result, in 2010, only 2 percent of the autistic children getting intensive treatments at state expense were in managed-care plans. The majority, Dawson says, were "by and large middle class or upper-middle-class children."

A sports analogy

Last May, at a legislative hearing on autism, DHS supervisor Gary Cox tried to explain the apparent contradictions. As a rule, he said, Medicaid doesn't pay for "bundles of services" like ABA, but it does pay for some components, such as skills training. He used a sports analogy to elaborate.

"Medicaid pays for running, it pays for catching a ball, it pays for throwing a ball, it pays for hitting a ball with a big stick," he told legislators, "but it does not pay for baseball."

Cox conceded that might seem like a distinction without a difference. The ABA centers were, after all, submitting bills for thousands of hours. "[We] must be paying for at least a substantial portion of the work they do," he said.

At the same time, he noted that all children on Medicaid are entitled to the same services, "more or less." But in practice, he said, those in managed-care plans may have fewer choices.

HealthPartners wouldn't comment on the suit, but issued a statement saying: "We empathize with families who have kids diagnosed with autism and the uncertainties they face in finding proven, effective treatments among the many available." The health plan says it does cover treatments for autism "where there is evidence of benefit."

New scrutiny

Now, the new administration plans to take a closer look at the state's payments to ABA providers, says Barry, the deputy commissioner. "As far as we know, we're paying for skills training," she said. "We don't pay for ABA services."

Barry said it's not entirely clear why the agency would pay ABA programs so much more for skills training than any other autism program -- about $36,000 per child last year, more than three times the state average for autistic children.

Officials say they may have to do an audit to find out if those children have a higher level of need. "Are [we] paying too much for skills training to some providers?" said O'Connell, the assistant commissioner. "That certainly is the question that's on my mind, now that we've had a chance to look at the data."

Dawson, however, is hoping for a different outcome.

Eventually her young client, T.O., did manage to get ABA treatment at government expense. With Dawson's help, his mother switched him into a Medicaid disability program, and he's doing "remarkably well," she said. But she sees the court battle as a test case.

She says low-income families should be told that ABA is an option if they need it, not face a bureaucratic maze to get what is readily available to other children.

Abdull, of the Somali American Autism Foundation, agrees. "How do you ask for something you don't know exists?" she asked. "What I would like is for DHS to mean what it says, and say what it means."

Maura Lerner • 612-673-7384