The Child and Youth Behavioral Health Crisis: EPSDT Settlement Drives NY State Reforms

In January 2026, a federal court granted final approval of a in C.K. v. McDonald, which requires New York State to reform how it delivers intensive home- and community-based mental health services to Medicaid-eligible children and youth. Children’s Rights, the National Health Law Program, Disability Rights New York and Proskauer Rose LLP filed the class action on behalf of Medicaid-eligible youth with significant mental health needs alleging New York did not meet its obligations under Medicaid’s Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit, the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation Act, resulting in Medicaid-eligible children and youth being hospitalized or institutionalized, separated from their families or unable to access care that could have supported their well-being at home or in their communities.

New York is the latest state to be at the center of a settlement agreement requiring statewide improvements to the Medicaid behavioral health system for children, youth and families. Since 2006, when a federal district court ruled Massachusetts violated its obligations to provide intensive in-home services in the landmark Rosie D. v. Romney federal class action lawsuit, at least ten other states—including Michigan, Colorado and Iowa in the last year—have been subject to similar consent decrees or settlement agreements.  

Under EPSDT, children and youth under age 21 are entitled to a comprehensive array of preventive and behavioral health services. States must furnish all Medicaid coverable, appropriate and medically necessary services needed to correct and ameliorate health and behavioral health conditions, regardless of whether these services are covered for adults. Notably, services need only “ameliorate,” or make better, a child or young person’s condition, not necessarily restore them to a prior level of functioning or fully remediate their condition, as often is required by commercial plans. In addition to EPSDT, the ADA and Section 504 prohibit discrimination that would prevent children with significant behavioral health needs from getting necessary services. These laws help to ensure that children receive appropriate care in the least restrictive environment, which often means services delivered at home or in school settings. Together, EPSDT, the ADA and Section 504 safeguard children’s access to medically necessary behavioral health services within their communities rather than institutional settings.

New York’s Settlement Agreement 

New York’s settlement agreement established a multi-year plan for New York to overhaul delivery of intensive home and community-based behavioral health services for children and youth. It requires New York to:

1. Redesign Intensive Care Coordination, Intensive In-Home Services and Mobile Crisis Services for Medicaid-eligible children, youth and families. New York will overhaul how they deliver these three community-based behavioral health services that effectively treat children and youth in their homes and communities. There is evidence that these models—specifically the High-Fidelity Wraparound (HFW) model of Intensive Care Coordination and Mobile Response and Stabilization Services (MRSS) for children and youth—are more than inpatient and residential care while young people in their homes and communities.  
2. Develop an Implementation Plan that identifies specific steps the State will take to strengthen the required services. In the Implementation Plan, New York will specify eligibility criteria for each of the services, standardize assessment processes to assess eligibility and set reimbursement rates that drive adequate provider networks. The Implementation Plan will also describe the strategies New York will use to ensure Medicaid-eligible children and youth receive all medically necessary behavioral health services in the least restrictive setting and describe outreach and engagement strategies the state will use to spread awareness about the availability of the enhanced community-based service offerings.  
3. Assess performance on coverage, access and quality of the required services. New York must assess statewide performance annually against key performance indicators related to the provision, timeliness, sufficiency and effectiveness of intensive home- and community-based behavioral health services. The state will also develop a publicly available data dashboard related to the provision of the required services.

Implications for Other States

The settlement highlights that EPSDT, the ADA and Section 504 require states to review and address gaps in medically necessary services for children and youth living with complex behavioral health needs who can be served in their homes and communities. To drive improved outcomes while mitigating the risk of litigation, states can proactively:

• Evaluate the continuum of covered behavioral health services. States can ensure a robust continuum of services that spans from prevention and early intervention to crisis services and other intensive treatment is covered and accessible for children, youth and families. Service offerings should include an array of intensive home- and community-based services like mobile crisis services, intensive care coordination and intensive in-home services. States can leverage past and learnings from New York and to identify services that may be missing in their continuum of care for children, youth and families.
• Engage with youth, families and other stakeholders to understand access and quality gaps. Youth and families with lived experience with the behavioral health system, along with other stakeholders such as provider organizations and advocacy groups, can help states identify where services may be covered on paper, but are not accessible or high quality on the ground. Young people and other stakeholders can also help states understand what additional outreach or education may be needed to ensure children and families know how to access intensive community-based care.  
• Establish a clear plan for addressing gaps in the behavioral health system and assess progress against that plan over time. Once gaps are identified, states can develop a plan for implementing changes to their child and youth behavioral health system. Like in New York, a comprehensive plan will make it clear how the state will address coverage gaps; ensure robust provider networks and payment structures are in place so that services are sustainable; use data to track performance; and continually engage with youth, families and stakeholders to assess progress and identify where improvements are needed.  

By proactively addressing coverage issues, access challenges and the need for accountability, states can improve the health and wellbeing of children, youth and families with complex needs, and reduce the risk of future litigation.