What is the test for a state to determine whether or not it can refuse to pay the medical costs of a patient who is otherwise eligible for treatment?

"A state may pay 'part or all of the cost ... of care and services,' 42 U.S.C. 1396d(a), but it 'may not deny or reduce the amount, duration, or scope of a required service ... to an otherwise eligible recipient solely because of the diagnosis, type of illness, or condition.' 42 C.F.R. 440.230(c)(1) (1978). Although a state 'may place appropriate limits on a service based on medical necessity or on utilization control procedures,' id. 440.230(c)(2), '[e]ach service must be sufficient in amount, duration, and scope to reasonably achieve its purpose.' Id. 440.230(a)." (Simpson v. Wilson (D.Vt.1979) 480 F.Supp. 97, 100.)