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American Academy of Emergency Medicine

Letters from HCFA to State Medicaid Directors Re-Emphasizing the EMTALA Requirements Regarding Payment of Emergency Services by Managed Care Organizations


April 18, 2000

 

Dear State Medicaid Director:

In the letter that was issued on April 5, 2000, we inadvertently omitted a paragraph relating to notification requirements. Therefore, this letter replaces the April 5 letter. It is #21 in a series of letters on the managed care provisions of the Balanced Budget Act of 1997 (BBA). It is intended to clarify guidance issued in a similar letter issued on February 20, 1998(#12 in the series). The February 20, 1998 letter explained the changes made by the BBA regarding coverage of emergency services by managed care organizations (MCOs). We apologize for any misunderstanding caused by the previous letters.

In the February 20, 1998 letter we stated that the BBA requires that contracts between MCOs and States specify that MCOs must cover (i.e., pay for) emergency services without prior authorization. The BBA requires that emergency services be covered in an MCO or a primary care case management (PCCM) setting without prior authorization, regardless of whether the enrollee obtains the services inside or outside the MCO or PCCM.

The BBA addresses emergency services using a prudent layperson standard. It defines an "emergency medical condition" as:

a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possess an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of any bodily organ or part.

Application to PCCMs

This prudent layperson standard applies to a PCCM when it is determining if a Medicaid beneficiary must obtain prior authorization before seeking treatment. As payers for PCCM services under Section 1906(t) contracts, States are also bound by the statutory requirement when they are paying claims. Thus, in a fee-for-service PCCM arrangement in which States pay claims, States are required to cover (i.e., pay for) emergency services that meet the prudent layperson standard in exactly the same manner as are MCOs. States should make this obligation clear in all fee-for-service PCCM contracts.

Program Limits on Emergency Visits

The BBA requires that a Medicaid beneficiary be permitted to obtain emergency services immediately at the nearest provider when the need arises. When the prudent layperson standard is met, no restriction may be placed on access to emergency care. Limits on the number of visits are not allowed.

Payment Requirements/Responsibilities under the Prudent Layperson Standard

The determination of whether the prudent layperson standard is met must be made on a case-by-case basis. The only exceptions to this general rule are that payers may approve coverage on the basis of an ICD-9 code, and payers may set reasonable claim payment deadlines (taking into account delays resulting from missing documents from the initial claim).

Note that payers may not deny coverage solely on the basis of ICD-9 codes. Payers are also barred from denying coverage on the basic of ICD-9 codes and then requiring resubmission of the claim as part of an appeals process. This bar applies even if the process is not labeled as an appeal. Whenever a payer (whether an MCO or a State) denies coverage or modifies a claim for payment, the determination of whether the prudent layperson standard has been met must be based on all pertinent documentation, must be focused on the presenting symptoms (and not on the final diagnosis), and must take into account that the decision to seek emergency services was made by a prudent layperson (rather than a medical professional).

Notification Requirements

Section 1932(b)(2)(A)(I) prohibits prior authorization for coverage of emergency services. This means that services that meet the definition of emergency services must be covered, and beneficiaries must not be charged for these services, except for any permissible nominal cost-sharing amounts. Therefore, neither a State, in the context of a PCCM arrangement, nor an MCO, may make payment for emergency services contingent on the beneficiary providing he State or MCO with notification, either before or after receiving emergency services.

MCOs and States may, however, enter into contracts with providers or facilities that require, as a condition of payment, the hospital to provide notification after beneficiaries present at the emergency room, assuming adequate consideration is given for such a provision. In the case of States as payers (e.g., PCCMs), such notification requirements are permissible as long as they do not violate the State Plan (or that part is waivable). Such requirements might reasonably be thought to be an element of appropriately coordinating and managing care. Regardless of any contractual relationship between managed care entities and providers or facilities, beneficiaries may not be required to pay for covered services (other than allowable nominal cost-sharing).

CPT Code Indicating Moderate and Complex Emergencies

Though its State Medicaid Manual, HCFA requires the acceptance and use of the HCFA Common Procedures Coding System (HCPCS). HCFA uses the American Medical Association's (AMA) Current Procedural Terminology (CPT) as part of the HCPCS system to determine service levels. CPT is the most widely accepted coding reference and has been used since 1966. Claims submitted to MCOs and States include the emergency levels of screening and treatment. They range from CPT 99281 ("straightforward medical decision making") to CPT 99285 ("medical decision making of high complexity"). These codes reflect not only the complexity of the treatment but also the time and difficulty of making a diagnosis. The AMA publishes guides that specifically describe the categorization of levels of emergency and give examples.

We strongly believe that, unless an MCO or a State has reason to believe that a provider is "up-coding" or engaging in activity violating program integrity, all claims coded as CPT 99283 through CPT 99285 are very likely to be appropriately regarded as emergency services for purposes of the BBA and should be approved for coverage regardless of prior authorization. This should not be taken to imply that claims coded as CPT 99281 and CPT 99282 will not also meet the BBA definition, they may, but, as opposed to those claims involving the higher CPT codes, there may be instances in which payers have a reasonable basis to disagree.

If you have any questions, please do not hesitate to contact Tim Roe at (410) 786-2006.

Sincerely,

Timothy M. Westmoreland
Director

Enclosure

cc:
All HCFA Regional Administrators
All HCFA Associate Regional Administrators for Medicaid and State Operations
Lee Partridge - Director, Health Policy Unit American Public Human Services Association
Joy Wilson - Director, Health Committee National Conference of State Legislatures
Matt Salo - Director, Health Legislation National Governors' Association


April 5, 2000

Dear State Medicaid Director:

This letter is #21 in a series of letters on the managed care provisions of the Balanced Budget Act of 1997 (BBA). It is intended to clarify guidance issued in a similar letter issued on February 20, 1998 (#12 in the series). That letter explained the changes made by the BBA regarding coverage of emergency services by managed care organizations (MCOs). We apologize for any misunderstanding caused by the previous letter.

In the February 20, 1998 letter we stated that the BBA requires that contracts between MCOs and States specify that MCOs must cover (i.e., pay for) emergency services without prior authorization. The BBA requires that emergency services be covered in an MCO or a primary care case management (PCCM) setting without prior authorization, regardless of whether the enrollee obtains the services inside or outside the MCO or PCCM.

The BBA addresses emergency services using a prudent layperson standard. It defines an "emergency medical condition" as:

A medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possess an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of any bodily organ or part.

Application to PCCMs

This prudent layperson standard applies to a PCCM when it is determining if a Medicaid beneficiary must obtain prior authorization before seeking treatment. As payers for PCCM services under Section 1905(t) contracts, States are also bound by the statutory requirement when they are paying claims. Thus, in a fee-for-service PCCM arrangement in which States pay claims, States are required to cover (i.e., pay for) emergency services that meet the prudent layperson standard in exactly the same manner as are MCOs. States should make this obligation clear in all fee-for-service PCCM contracts.

Program Limits on Emergency Visits

The BBA requires that a Medicaid beneficiary be permitted to obtain emergency services immediately at the nearest provider when the need arises. When the prudent layperson standard is met, no restriction may be placed on access to emergency care. Limits on the number of visits are not allowed.

Payment Requirements/Responsibilities under the Prudent Layperson Standard

The determination of whether the prudent layperson standard is met must be made on a case-by-case basis. The only exceptions to this general rule are that payers may approve coverage on the basis of an ICD-9 code, and payers may set reasonable claim payment deadlines (taking into account delays resulting from missing documents from the initial claim).

Note that payers may not deny coverage solely on the basis of ICD-9 codes. Payers are also barred from denying coverage on the basis of ICD-9 codes and then requiring resubmission of the claim as part of an appeals process. This bar applies even if the process is not labeled as an appeal. Whenever a payer (whether an MCO or a State) denies coverage or modifies a claim for payment, the determination of whether the prudent layperson standard has been met must be based on all pertinent documentation, must be focused on the presenting symptoms (and not on the final diagnosis), and must take into account that the decision to seek emergency services was made by a prudent layperson (rather than a medical professional).

Notification Requirements

Section 1932(b)(2)(A)(i) prohibits prior authorization for coverage of emergency services. This means that services that meet the definition of emergency services must be covered, and beneficiaries must not be charged for these services, except for any permissible nominal cost-sharing amounts. Therefore, neither a State, in the context of a PCCM arrangement, nor an MCO, may make payment for emergency services contingent on the beneficiary providing the State or MCO with notification, either before or after receiving emergency services.

CPT Codes Indicating Moderate and Complex Emergencies

Through its State Medicaid Manual, HCFA requires the acceptance and use of the HCFA Common Procedures Coding System (HCPCS). HCFA uses the American Medical Association's (AMA) Current Procedural Terminology (CPT) as part of the HCPCS system to determine service levels.

CPT is the most widely accepted coding reference and has been used since 1966. Claims submitted to MCOs and States include the emergency levels of screening and treatment. They range from CPT 99281 ("straightforward medical decision making") to CPT 99285 ("medical decision making of high complexity"). These codes reflect not only the complexity of the treatment but also the time and difficulty of making a diagnosis. The AMA publishes guides that specifically describe the categorization of levels of emergency and give examples.

We strongly believe that, unless an MCO or a State has reason to believe that a provider is "up-coding" or engaging in activity violating program integrity, all claims coded as CPT 99283 through CPT 99285 are very likely to be appropriately regarded as emergency services for purposes of the BBA and should be approved for coverage regardless of prior authorization. This should not be taken to imply that claims coded as CPT 99281 and CPT 99282 will not also meet the BBA definition; they may, but, as opposed to those claims involving the higher CPT codes, there may be instances in which payers have a reasonable basis to disagree.

If you have any questions, please do not hesitate to contact Tim Roe at (410) 786-2006.

Sincerely,

Timothy M. Westmoreland
Director

Enclosure

cc:
All HCFA Regional Administrators
All HCFA Associate Regional Administrators for Medicaid and State Operations
Lee Partridge - Director, Health Policy Unit American Public Human Services Association
Joy Wilson - Director, Health Committee National Conference of State Legislatures
Matt Salo - Director, Health Legislation National Governors' Association

 


February 20, 1998

Dear State Medicaid Director:

This letter is one in a series that provides guidance on the implementation of the Balanced Budget Act of 1997 (BBA). The BBA contains numerous provisions relating specifically to managed care. In order to provide guidance on these as quickly as possible, we are issuing a number of managed care letters. (List of those already issued is attached). This letter is the twelfth in this managed care series.

The purpose of this letter is to advise you of the changes made by the BBA regarding coverage of emergency services by managed care organizations (MCOs). Section 4704 of the BBA added section 1932(b)(2) to the Social Security Act (the Act) to assure Medicaid managed care beneficiaries have the right to immediately obtain emergency care and services.

Under the new statutory provision, each contract with an MCO must require the organization to provide for coverage of emergency services. (For PCCMs, see Application to PCCMS, below.) We interpret coverage to mean that an MCO must pay for the cost of emergency services obtained by Medicaid enrollees. In addition to establishing an obligation to cover emergency services, the law further stipulates that emergency services must be covered without regard to prior authorization or the emergency care provider's contractual relationship with the organization. These provisions collectively enable a Medicaid enrollee to immediately obtain emergency services at the nearest provider when and where the need arises. The responsibility of MCOs regarding the coverage of emergency services is explained in more detail in the attachment.

Emergency services are defined broadly by the BBA to mean covered inpatient and outpatient services that are needed to evaluate or stabilize an emergency medical condition that is found to exist using a prudent layperson standard described below. The services must be furnished by a provider that is qualified to furnish such services under Medicaid. Once the individual's condition is considered stabilized, the MCO may require authorization for hospital admission or follow-up care.

The BBA defines emergency medical condition as a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual (or with respect to a pregnant woman, the health of the woman or her unborn child) is serious jeopardy, serious impairment to body functions or serious dysfunction of any bodily organ or part. While this standard encompasses clinical emergencies, it also clearly requires MCOs to base coverage decisions for emergency services on the severity of the symptoms at the time of presentation and to cover examinations where the presenting symptoms are of sufficient severity to constitute an emergency medical condition in the judgment of a prudent layperson.

In addition to covering medical services that are needed to evaluate or stabilize an emergency medical condition found using a prudent layperson standard, the contract must require the MCO to comply with the guidelines for coordinating post-stabilization care established under Medicare Part C. This particular requirement is effective 30 days after the date Medicare regulations are promulgated.

Application to PCCMs

The prudent layperson standard should be applied to determine when Medicaid beneficiaries in a PCCM may immediately seek treatment without having to obtain prior authorization from the PCCM. However, we realize that the financial structure of PCCMs is significantly different from that of MCOs and we do not believe Congress intended to make PCCMs financially responsible for emergency services furnished on a fee-for-service basis. Therefore, HCFA will not require changes to PCCM contracts to provide for payment of emergency services.

Sanctions

Medicaid MCOs that fail to cover emergency screening or stabilization services may be subject to intermediate sanctions or termination. Section 1932(e) of the Act authorizes States to use intermediate sanctions if an MCO fails substantially to provide medically necessary items and services that are required (under law or under the organization's contract with the State) to be provided to an enrollee covered under the contract. HCFA may also impose sanctions under 1903(m)(5)(A) of the Act if the failure to cover emergency services as required under 1932(b)(2) of the Act adversely affects (or has a substantial likelihood of adversely affecting) a Medicaid beneficiary. Contract termination may also be imposed for any violation of the requirements in sections 1903(m) and/or 1932 of the Act.

If you have any questions, please contact Rob Weaver at 410-786-5914.

Sincerely,

Sally K. Richardson
Director
Center for Medicaid and State Operations

Attachments

cc:
HCFA Regional Administrators HCFA Associate Regional Administrators
HCFA Press Office
Jennifer Baxendell, National Governors Association
Lee Partridge, American Public Welfare Association
Joy Wilson, National Conference of State Legislatures

 


CLARIFICATION OF BENEFICIARY ACCESS AND MCO FINANCIAL
RESPONSIBILITIES FOR EMERGENCY SERVICES

MCO Responsibility --Beneficiary Information -- MCOs are required to inform beneficiaries of their rights and responsibilities and information on covered items and services. Plans should inform beneficiaries of the following regarding their rights of access to, and coverage of, emergency services, both inside and outside of the plan's network.

 Both In-Network and Out-of-Network Emergency Services Are Medicaid-Covered Benefits

Definition of Emergency Services -- Emergency services are defined as covered inpatient and outpatient services furnished by a qualified Medicaid provider that are necessary to evaluate or stabilize an emergency medical condition.

Definition of Emergency Medical Condition -- Coverage of emergency services by an MCO will be determined under the prudent layperson standard. That standard considers the symptoms (including severe pain) of the presenting beneficiary. MCOs must cover cases where the presenting symptoms are of sufficient severity that a person with average knowledge of health and medicine would reasonably expect the absence of immediate medical attention to result in (I) placing their health or the health of an unborn child in immediate jeopardy, (ii)serious impairment of bodily functions, or (iii) serious dysfunction of any bodily organ or part.

Prohibition on Retrospective Denial for Services Which Appeared to Be Emergencies -- MCOs may not retroactively deny a claim for an emergency screening examination because the condition, which appeared to be an emergency medical condition under the prudent layperson standard (as defined above), turned out to be non-emergency in nature.

Prohibition on Prior Authorization for Emergency Services--MCOs may not require prior authorization for emergency services. This applies to out-of-network as well as to in-network services which a beneficiary seeks in an emergency.

MCO Responsibility--Payment Liability and Coverage of Emergency services -- Under the Emergency Medical Treatment and Active Labor Act, also commonly referred to as the anti-dumping statute, Medicare participating hospitals that offer emergency services are required to perform a medical screening examination on all people who come to the hospital seeking emergency care, regardless of their insurance status or other personal characteristics. If an emergency medical condition is found to exist, the hospital must provide whatever treatment is necessary to stabilize that condition. A hospital may not transfer a patient in unstabilized emergency condition to another facility unless the medical benefits of the transfer outweigh the risks, and the transfer conforms with all applicable requirements. When emergency services are provided to an enrollee of a MCO, the organization's liability of payment is determined as follows:

Presence of a Clinical Emergency -- If the screening examination leads to a clinical determination by the examining physician that an actual emergency medical condition exists, MCOs must pay for both the services involved in the screening examination and the services required to stabilize the patient.

Emergency Services Continue Until the Patient Can be Safely Discharged or Transferred -- MCOs are required to pay for all emergency services which are medically necessary until the clinical emergency is stabilized. This includes all treatment that may be necessary to assure , within reasonable medical probability, that no material deterioration of the patient's condition is likely to result from, or occur during, discharge of the patient or transfer of the patient to another facility.

If there is a disagreement between a hospital and an MCO concerning whether the patient is stable enough for discharge or transfer, or whether the medical benefits of an unstabilized transfer outweigh the risks, the judgment of the attending physician(s) actually caring for the beneficiary at the treating facility prevails and is binding on the MCO. The MCO may establish arrangements with hospitals whereby the MCO may send one of its own physicians with appropriate ER privileges to assume the attending physician's responsibilities to stabilize, treat, and transfer the patient.

Absence of a Clinical Emergency -- If the screening examination leads to a clinical determination by the examining physician that an actual emergency medical condition does not exist, then the determining factor for payment liability should be whether the beneficiary had acute symptoms of sufficient severity at the time of presentation. In these cases, the MCO must review the presenting symptoms of a beneficiary and must pay for all services involved in the screening examination where the presenting symptoms (including severe pain) were of sufficient severity to have warranted emergency attention under the prudent layperson standard. If a Medicaid beneficiary believes that a claim for emergency services has been inappropriately denied by an MCO, the beneficiary may seek recourse through the MCO or State appeal process.

Referrals -- When a beneficiary's primary care physician or other plan representative instructs the beneficiary to seek emergency care in-network or out-of-network, the plan is responsible for payment for the medical screening examination and for other medically necessary emergency services, without regard to whether the patient meets the prudent layperson standard described above.