Last week, the Department of Health sent notices to all health care providers participating in the EarlySteps (Part C) system that reimbursement rates would be reduced by 25 percent beginning Feb. 1. The rate reduction is a first step to control costs in this entitlement program, which provides early intervention services to children up to age three with developmental delays and disabilities.

EarlySteps/Part C is an entitlement program in which eligibility is determined by need (i.e. disability) rather than income.

Even with the new rates (see chart next page), most rates paid by LDH beginning Feb. 1 will exceed the flat $50 per hour rate that was in place 18 months ago.

In addition to the rate reductions, LDH also will begin development of a fee schedule for recipients who are not Medicaid-eligible. There will be strict standards set for what services an eligible child can receive (currently, there are no limits) through the development of a standard assessment/screening tool. LDH is reviewing all EarlySteps contracts to seek further savings.

“This program has experienced phenomenal growth since LDH took control of it 18 months ago. But, the growth, absent fundamental program changes, threatens the very existence of services that are needed by children with disabilities. Our foremost goal is to save the program, but to do so it requires this immediate rate adjustment, as well as other efficiency measures,” said Dr. Fred Cerise, LDH secretary.

Cerise attributes the spending problem to more participants who are not eligible for Medicaid. For Medicaid-eligible children, the federal government pays for 70 percent of the service costs.

“When we took over EarlySteps, 80 percent of the enrolled children were on Medicaid. Today, outreach efforts have attracted more children from families who earn too much to qualify for Medicaid. With almost 40 percent of the participants’ families having an income of some level, it is prudent to institute a fee structure,” he added.

“Since Part C services are not able to be limited (per Federal requirements), this rate reduction is the only option left to the Office of Public Health to assure continuation of the EarlySteps system of services for infants and toddlers and their families,” Linda Pippins and Nichole Dupree wrote. “We are working on a significant restructuring of the EarlySteps system in an attempt to avoid this type of midyear cost cutting in the future. We appreciate your dedication and support as EarlySteps goes through these ‘growing pains’.”

LDH became the lead agency for EarlySteps/Part C in July 2003 when it was moved from the Department of Education to the health agency. Federal officials said at the time that the state was at risk for losing the program altogether because of a historical failure to provide services to all eligible children.

Since then, LDH has implemented outreach efforts that have resulted in increased participation. Official reports to the federal government show EarlySteps serving 2,483 children as of 12/1/02. On Dec. 1, 2003, that had climbed to 3,498 children served. LDH estimates that its end-of-the-year report for 2004 will show 4,543 children served.

“To a large degree, we are a victim of our own success,” said Sharon Howard, assistant secretary for DHH’s Office of Public Health. “The federal Department of Education is very pleased with our effort to follow the law and serve all eligible children, yet that has resulted in increased costs due to higher utilization of services.”

The new hourly rates are shown in the attached chart.




Special Purpose Facility

Hourly Rate

Special Purpose Facility

With Inclusive Child Care

Hourly Rate

Natural  Environment

Home and Community

Hourly Rate














Special Instr




















Service Coordination