[Federal Register Volume 70, Number 92 (Friday, May 13, 2005)]
[Notices]
[Pages 25578-25595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-9470]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[Document Identifier: CMS-10130]


Emergency Clearance: Public Information Collection Requirements 
Submitted to the Office of Management and Budget (OMB)

AGENCY: Center for Medicare & Medicaid Services, HHS.
    In compliance with the requirement of section 3506(c)(2)(A) of the 
Paperwork Reduction Act of 1995, the Centers for Medicare & Medicaid 
Services (CMS), Department of Health and Human Services, submitted the 
following collection for emergency review and approval.
    We requested an emergency review because the collection of this 
information is needed before the expiration of the normal time limits 
under OMB's regulations at 5 CFR part 1320. This is necessary to ensure 
compliance with provisions of Section 1011 of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (MMA). We cannot 
reasonably comply with the normal clearance procedures because of the 
effective implementation date associated with this provision of MMA.
    OMB evaluated the collection for necessity and utility of the 
proposed information collection for the proper performance of the 
agency's functions; the accuracy of the estimated burden; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and the use of automated collection techniques or other 
forms of information technology to minimize the information collection 
burden.
    OMB approved the emergency review of the information collection 
referenced below on May 9, 2005. OMB approved CMS'' request for the 
information collection titled, ``Federal Funding of Emergency Health 
Services (Section 1011): Provider Payment Determination and Request for 
Section 1011 Hospital On-Call Payments to Physicians'' 
(OMB:0938-NEW) for a 180-day approval period.

Background

    Section 1011 provides $250 million per year for fiscal years (FY) 
2005-2008 for payments to eligible providers for emergency health 
services provided to undocumented aliens and other specified aliens. 
Two-thirds of the funds will be divided among all 50 states and the 
District of Columbia based on their relative percentages of 
undocumented aliens. One-third will be divided among the six states 
with the largest number of undocumented alien apprehensions.
    From the respective state allotments, payments will be made 
directly to hospitals, certain physicians, and ambulance providers for 
some or all of the costs of providing emergency health care required 
under section 1867 and related hospital inpatient, outpatient and 
ambulance services to eligible individuals. Eligible providers may 
include an Indian Health Service facility whether operated by the 
Indian Health Service or by an Indian tribe or tribal organization. A 
Medicare critical access hospital (CAH) is also a hospital under

[[Page 25579]]

the statutory definition. Payments under section 1011 may only be made 
to the extent that care was not otherwise reimbursed (through insurance 
or otherwise) for such services during that fiscal year.
    Payments may be made for services furnished to certain individuals 
described in the statute as: (1) Undocumented aliens; (2) aliens who 
have been paroled into the United States at a United States port of 
entry for the purpose of receiving eligible services; and (3) Mexican 
citizens permitted to enter the United States for not more than 72 
hours under the authority of a biometric machine readable border 
crossing identification card (also referred to as a ``laser visa'') 
issued in accordance with the requirements of regulations prescribed 
under a specific section of the Immigration and Nationality Act. Note: 
On August 13, 2004, the Department of Homeland Security, Bureau of 
Customs and Border Protection, published an interim final rule 
extending the time limit for border crossing card visitors from 72 
hours to a period of 30 days.
    Type of Information Collection Request: New collection.
    Title of Information Collection: Federal Funding of Emergency 
Health Services (Section 1011): Provider Payment Determination and 
Hospital On-Call Payment Form and Related Instructions.
    Use: The provider payment determination form will be used to 
determine whether a patient's health care provider is eligible to 
receive Federal payment under section 1011 of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003; allow hospitals and 
other providers to make an affirmative determination regarding a 
patient's section 1011 eligibility; allow CMS to verify that the 
hospital, physician or provider of ambulance services has obtained the 
necessary documentation to ensure claim payment. Hospitals electing to 
receive payments under section 1011(c)(3)(C)(ii) will use the hospital 
on-call payment form to determine a their on-call costs.
    Form Number: CMS-10130 (OMB: 0938-0952).
    Frequency: Other: as needed.
    Affected Public: Business or other for-profit, Not-for-profit 
institutions, and State, Local or Tribal Govt.
    Number of Respondents: 7,503,000.
    Total Annual Responses: 7,512,000.
    Total Annual Hours: 634,000.
    Final Implementation Notice: Readers can find CMS final 
implementation notice for this program attached to this notice and at 
http://www.cms.hhs.gov/providers/section1011.

FOR FURTHER INFORMATION CONTACT: Jim Bossenmeyer, (410) 786-9317.
    To obtain copies of the supporting statement for this information 
collection, CMS' final implementation approach, and any related forms 
for the proposed paperwork collections referenced above, access CMS' 
Web site address at http://www.cms.hhs.gov/regulations/pra/, or e-mail 
your request, including your address, phone number, OMB number, and CMS 
document identifier, to [email protected], or call the Reports 
Clearance Office on (410) 786-1326.

Subject

    Center for Medicare & Medicaid Services Final Implementation 
Notice: Federal Funding of Emergency Health Services Furnished to 
Undocumented Aliens: Federal Fiscal Years 2005 Through 2008.
    This notice provides the Centers for Medicare & Medicaid Services 
(CMS) final implementation guidance with respect to section 1011, 
Federal Reimbursement of Emergency Health Services Furnished to 
Undocumented Aliens, of the Medicare Prescription Drug, Improvement and 
Modernization Act of 2003, Public Law 108-173, (December 8, 2003). This 
legislation is commonly referred to as the Medicare Modernization Act 
of 2003 (MMA).
    The guidance provided below sets forth CMS' implementation 
approach, establishes the general framework and procedural rules for 
submitting an enrollment application and payment requests, establishes 
general statements of policy, and provides CMS' interpretation of 
section 1011.

Future Program Changes

    Since section 1011 payments are authorized for 4 years, CMS will 
monitor its implementation approach in future years and, if necessary, 
make the necessary adjustments to improve the accuracy and timeliness 
of payments to providers, ensure patient access to emergency services, 
and reduce administrative costs for providers.

I. Background

    Sections 1866(a)(1)(I), 1866(a)(1)(N), and 1867 of the Social 
Security Act (the Act) impose specific obligations on Medicare-
participating hospitals that offer emergency services. These 
obligations concern individuals who come to a hospital emergency 
department and request examination or treatment for medical conditions, 
and apply to all of these individuals, regardless of whether or not 
they are beneficiaries of any program under the Act. Section 1867 of 
the Act sets forth requirements for medical screening examinations of 
medical conditions, as well as necessary stabilizing treatment or 
appropriate transfer. In addition, section 1867(h) of the Act 
specifically prohibits a delay in providing required screening or 
stabilization services in order to inquire about the individual's 
payment method or insurance status. Section 1867(d) of the Act provides 
for the imposition of civil monetary penalties on hospitals responsible 
for negligently violating a requirement of that section, through 
actions such as the following: (a) Negligently failing to appropriately 
screen an individual seeking medical care; (b) negligently failing to 
provide stabilizing treatment to an individual with an emergency 
medical condition; or (c) negligently transferring an individual in an 
inappropriate manner. (Section 1867(e)(4) of the Act defines 
``transfer'' to include both transfers to other health care facilities 
and cases in which the individual is released from the care of the 
hospital without being moved to another health care facility.)
    These provisions, taken together, are frequently referred to as the 
Emergency Medical Treatment and Labor Act (EMTALA), also known as the 
patient antidumping statute. EMTALA was passed in 1986 as part of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). 
Congress enacted these antidumping provisions in the Social Security 
Act because of its concern with an increasing number of reports that 
hospital emergency rooms were refusing to accept or treat individuals 
with emergency conditions if the individuals did not have insurance.

Section 1011 Legislative Summary

    Section 1011 provides $250 million per year for fiscal years (FY) 
2005-2008 for payments to eligible providers for emergency health 
services provided to undocumented aliens and other specified aliens. 
Two-thirds of the funds will be divided among all 50 states and the 
District of Columbia based on their relative percentages of 
undocumented aliens. One-third will be divided among the six states 
with the largest number of undocumented alien apprehensions.
    From the respective state allotments, payments will be made 
directly to hospitals, certain physicians, and ambulance providers for 
some or all of the costs of providing emergency health care required 
under section 1867 and related hospital inpatient, outpatient and 
ambulance services to eligible individuals. Eligible providers may

[[Page 25580]]

include an Indian Health Service facility whether operated by the 
Indian Health Service or by an Indian tribe or tribal organization. A 
Medicare critical access hospital (CAH) is also a hospital under the 
statutory definition. Payments under section 1011 may only be made to 
the extent that care was not otherwise reimbursed (through insurance or 
otherwise) for such services during that fiscal year.
    Payments may be made only for services furnished to certain 
individuals described in the statute as: (1) Undocumented aliens; (2) 
aliens who have been paroled into the United States at a United States 
port of entry for the purpose of receiving eligible services; and (3) 
Mexican citizens permitted to enter the United States for not more than 
72 hours under the authority of a biometric machine readable border 
crossing identification card (also referred to as a ``laser visa'') 
issued in accordance with the requirements of regulations prescribed 
under a specific section of the Immigration and Nationality Act. Note: 
On August 13, 2004, the Department of Homeland Security, Bureau of 
Customs and Border Protection, published an interim final rule 
extending the time limit for border crossing card visitors from 72 
hours to a period of 30 days.

II. Provisions of CMS Final Implementation Guidance

    This paper is divided into the following sections.

----------------------------------------------------------------------------------------------------------------
           Section                                               Section title
----------------------------------------------------------------------------------------------------------------
III.........................  Determination of Annual State Allotments for FY 2005--FY 2008.
IV..........................  Eligible Providers.
V...........................  Eligible Aliens.
VI..........................  Covered Services.
VII.........................  Enrollment Application Process.
VIII........................  Reimbursement from Third-Party Payers and Patients.
IX..........................  Patient Eligibility Determination.
X...........................  Payment Methodology.
XI..........................  Distribution of State Funding to Providers.
XII.........................  Submission of Payment Requests.
XIII........................  Determination of Payment Amounts.
XIV.........................  Pro-Rata Reduction.
XV..........................  Quarterly Payments.
XVI.........................  Appeals and Claim Adjustments.
XVII........................  Compliance Reviews.
XVIII.......................  Overpayments.
XIX.........................  Annual Reconciliation Process.
XX..........................  Unused State Funding.
----------------------------------------------------------------------------------------------------------------

III. Determination of Annual State Allotments for FFY 2005--FY 2008

    As mentioned above, section 1011 provides $250 million per year for 
FY 2005-2008 for payments to eligible providers for certain emergency 
health services furnished to undocumented and certain other aliens.
    This paper provides Federal fiscal year (FFY) 2005 state allotments 
that are available for distribution to eligible providers within each 
state and the District of Columbia that furnish emergency eligible 
services to eligible individuals. In addition, this paper provides the 
FFY 2005 state allotments that are available to the six States with the 
highest number of undocumented alien apprehensions for such fiscal 
year. This paper also describes the methodology used to determine each 
State's allotment.

Determination of State Allocation Based on Undocumented Aliens 
Percentage

    The statute dictates that two-thirds of the total yearly 
appropriation, or $167 million, is to be proportionally divided among 
all 50 states and the District of Columbia. The amount of the state's 
allotment is to be based on the ``the percentage of undocumented aliens 
residing in the State as compared to the total number of such aliens 
residing in all States, as determined by the Statistics Division of the 
Immigration and Naturalization Service, as of January 2003, based on 
the 2000 decennial census,'' (emphasis added) (MMA Section 
1011(b)(1)(B)(ii)).
    Because the statutory language requires the allocation calculation 
to be made by comparing a percentage to a national number, we would not 
be able to calculate the state allotments if the statutory provision is 
interpreted literally. In order to produce a mathematically meaningful 
result that would enable us to implement this subparagraph, and be 
consistent with the language of the committee report on section 1011, 
we have determined the ``percentage'' in section 1011(b)(1)(B)(ii) by 
comparing the number of undocumented aliens in the state to the total 
of undocumented aliens in all states and the District of Columbia. 
Using information from the Department of Homeland Security (DHS) Office 
of Immigration Statistics, we have calculated the allotments for each 
state and the District of Columbia by multiplying the total 
appropriation ($167 million) by the proportion generated by dividing 
the number of undocumented aliens who reside in each state by the total 
number of undocumented aliens in all states (see attached chart). 
Because the statute bases the allocation of the $167 million on the 
proportion of undocumented aliens at one given time, these allocations 
will be the same for each state for each fiscal year (FY 2005-FY 2008).
    As of January 2003, DHS estimated that each of the following four 
states had fewer than 1,000 undocumented aliens residing in the state: 
Maine, Montana, North Dakota, and Vermont. From discussions with DHS, 
we did not believe it was appropriate to assume that there were zero 
undocumented aliens residing within these states simply because DHS 
estimates are rounded to the thousand. Thus, for purposes of 
implementing Section 1011, we have adopted a position that 500 
undocumented aliens reside in each of these four states.

Allocation Based on Undocumented Alien Apprehensions (Distributing $83 
million)

    The remaining one-third of the total appropriation, or $83 million, 
is divided among the six states with the highest number of undocumented 
alien apprehensions for each fiscal year. The statute requires that the 
data to be used for determining the ``highest number of undocumented 
aliens apprehensions for

[[Page 25581]]

a fiscal year shall be based on the apprehensions for the 4-
consecutive-quarters ending before the beginning of the fiscal year for 
which information is available for undocumented aliens in such states, 
as reported by the Department of Homeland Security.'' Since section 
1011(b)(2)(C) requires that we use data from the four consecutive 
quarters ending before the beginning of the fiscal year, we are 
adopting a position to identify the six states based on data available 
prior to the fiscal year when the funding is available. The last 
available four fiscal quarters ending before the beginning of FFY 2005 
(which begins October 1, 2004) would be from July 1, 2003 through June 
30, 2004. However, due to changes in the way the Department of Homeland 
Security collects alien apprehension data, there is not complete data 
available for that period of 4-consecutive quarters. As a result, for 
FY 2005 allocations we will identify the six states to receive portions 
of the $83 million based on the highest number of undocumented alien 
apprehensions for the time period from April 1, 2003 to March 31, 2004. 
For future fiscal year allocations, we plan to use the 4-consecutive 
quarters for which information is available, which should be July 1-
June 30.
    Our analysis, using apprehension data from DHS from April 1, 2003 
to March 31, 2004, indicates that the six states with the highest 
number of undocumented alien apprehensions were Arizona, California, 
Florida, New Mexico, New York, and Texas.
    Once the six states have been identified, the statute directs us to 
allocate money to those states in the following manner:

Determination of Allotments

    The amount of the allotment for each State for a fiscal year shall 
be equal to the product of--
    (i) The total amount available for allotments under this paragraph 
for the fiscal year; and
    (ii) The percentage of undocumented alien apprehensions in the 
State in that fiscal year as compared to the total of such 
apprehensions for all such States for the preceding fiscal year.
    Again, the mathematical formula in statutory language is 
problematic. Therefore, we have determined a calculation for the 
statutory usage of ``percentage'' by comparing the number of alien 
apprehensions in the state to the total number of alien apprehensions 
in all states and the District of Columbia. Moreover, the statute 
directs us to determine the percentage based on the number of alien 
apprehensions in the current year as compared to the total number of 
apprehensions in the previous fiscal year. Taking a literal 
interpretation of the statute would be problematic in that if the total 
number of apprehensions in the current year were to increase, then the 
six states' proportion of the previous year's total would exceed 100 
percent of the money available.
    For example, assume that in 2004 (previous FY) State A had 10 
apprehensions, and State B had 30 apprehensions--for a total of 40 
apprehensions in the previous fiscal year. In FY 2005, State A might 
have 20 apprehensions and State B might have 30 apprehensions, for a 
total of 50 apprehensions in the current fiscal year. If we followed 
the exact statutory language, State A would receive 50 percent of the 
allocation (20 apprehensions in current FY/40 total apprehensions in 
previous fiscal year), and State B would receive 75 percent (30/40). 
Using these proportions would result in allocating 125 percent of the 
$83 million specified in law, a result that would be legally 
prohibited. Alternatively, if the total number of apprehensions in the 
current year were to decrease, then the six states' proportion of the 
previous year's total could be less than 100 percent of the available 
funds, again making it impossible to allocate the funds as provided for 
by the statute.
    Additionally, a literal interpretation of the statute would delay 
implementation inappropriately in that it would require us to wait for 
data on the number of undocumented alien apprehensions to be made 
available for the current year. With the inherent time lag necessary 
for DHS to collect and compile the data, FY 2005 data would not be 
available until November 2005. Not knowing final allotments until after 
the end of the fiscal year could impose a burden on providers if 
payments had to be reconciled after the end of the year.
    Given the ambiguity in the statutory language, we believe that the 
current year used to identify the six states with the highest number of 
undocumented alien apprehensions is actually a time prior to the start 
of the current fiscal year. We believe it was the legislative intent to 
calculate the state proportions based on apprehension data from the 
same time period that is prior to the start of the current fiscal year. 
Thus, in consideration of the need for symmetry between the numerator 
and the denominator, we plan to use the same time period that is used 
for identifying the six states as for determining the proportions 
(April 1, 2003 to March 31, 2004. Thus, we plan to determine the FY 
2005 allotments to the six states based on the proportion of 
undocumented alien apprehensions in a given state for the period of 
April 1, 2003-March 31, 2004, compared to the total of such 
apprehensions for all six states for the period of April 1, 2003-March 
31, 2004.
    For purposes of determining the allocation for the six states in 
subsequent fiscal years, we will use the period of July 1-June 30 of 
the previous year (i.e., FY 2006 will be based on the number of 
apprehensions for July 1, 2004-June 30, 2005.)

Final FY 2005 State Allocations

    Attachment 1 contains the final state funding allocations for FY 
2005. The state specific allocation of the $167 million is based on 
already available data required to calculate the funding amounts and 
remain unchanged for each fiscal year (FY 2005-FY 2008). The six state 
allocations of the $83 million may change on yearly basis, so the 
allocations may change in FY 2006-FY 2008. Updated allotments for the 
$83 million for FY 2006-2008 will be determined before the start of 
each fiscal year.

Public Comments

    In response to several comments that suggested that state funding 
allocations be redistributed from one jurisdiction (i.e., State or the 
District of Columbia) to another jurisdiction, CMS is adopting a 
position that section 1011(b) of the MMA establishes a funding 
allocation for each jurisdiction identified in (e)(6) and that the 
funding allocation is not subject to revision by CMS. Moreover, we 
believe that the statutory language contained in section 1011(e)(6) of 
the MMA precludes payment for services furnished in Guam, Puerto Rico, 
and other U.S. Territories. Therefore, we are unable to adopt the 
recommendation to redistribute state allocations established by section 
1011.

IV. Eligible Providers

    For the purposes of this provision, a hospital, physician, or 
provider of ambulance services (including an Indian Health Service 
(IHS) facility whether operated by the IHS or by an Indian tribal or 
tribal organization) are considered eligible providers.
    ``Hospital'' is defined at section 1861(e) of the Social Security 
Act (42 U.S.C. 1395x(e)). The term ``Hospital'' generally includes all 
Medicare participating hospitals, except that such term shall include a 
critical access hospital (as defined in section 1861(mm)(1) of such Act 
(42 U.S.C.

[[Page 25582]]

1395x(r)). While the definition of hospital under Sec.  1011(e)(3) 
cross-refers to Sec.  1861(e) of the Social Security Act, and does not 
expressly limit coverage to hospitals with a Medicare participation 
agreement under Sec.  1866, ``eligible services'' are defined in Sec.  
1011(e)(2) as meaning, in pertinent part, ``health care services 
required by the application of section 1867 of the Social Security Act 
* * *'' Because section 1867 establishes legal obligations only for 
hospitals participating in the Medicare program, therefore, only 
Medicare participating hospitals can furnish ``services required'' by 
section 1867. Thus, we are adopting a position that only Medicare 
participating hospitals can apply to receive funds under section 1011.
    ``Physician'' is defined at section 1861(r) of the Act (42 U.S.C. 
1395x(r). The term ``Physician'' includes doctor of medicine (MD), 
doctor of osteopathy, and within certain statutory restrictions on the 
scope of services they may provide, doctors of podiatric medicine, 
doctors of optometry, chiropractors, or doctors of dental surgery.
    While section 1011 does not define a ``provider of ambulance 
services,'' we are adopting a position that a state-licensed ``provider 
of ambulance services'' for covered emergency transportation services 
is eligible for payment for covered transports to a hospital emergency 
department or from one hospital to another.
    ``Indian Tribe'' or ``Tribal organization'' are described in 
section 4 of the Indian Health Care Improvement Act (25 U.S.C. 1603).

Public Comments

    Several commenters recommended that Federally Qualified Health 
Centers (FQHCs) and mid-level practitioners, including nurse 
practitioners, physician assistants, and clinical nurse specialists, be 
allowed to seek section 1011 payment. Since section 1011 clearly 
specifies that only physicians, as defined in 1861(r) of the Act (42 
U.S.C. 1395x(r), are eligible to bill for emergency services furnished 
to individuals identified in (c)(5), mid-level practitioners, including 
nurse practitioners, clinical nurse specialists, and physician 
assistants, are not eligible to receive payments under section 1011 for 
the emergency services provided. Moreover, we believe that the 
statutory language contained in section 1011(e)(4) of the MMA excludes 
FQHCs from receiving payment for section 1011 emergency services, 
unless the FQHC meets the definition of a hospital in 1861(e) of the 
Social Security Act (42 U.S.C. 1395x(e)).

V. Eligible Aliens

    As specified in (c)(5) of section 1011of the MMA, aliens are 
defined as:
     Undocumented Aliens (Section 1011 does not define the term 
``undocumented alien.'' For the purposes of implementing this section 
of MMA, the term ``undocumented alien'' refers to a person who enters 
the United States without legal permission or who fails to leave when 
his or her permission to remain in the United States expires); or
     Aliens who have been paroled into the United States at a 
United States port of entry for the purpose of receiving eligible 
services (In general, parole authority allows the Department of 
Homeland Security to respond to individual cases that present problems 
for which no remedies are available elsewhere in the Immigration and 
Nationality Act. Parole is an extraordinary measure sparingly used to 
bring otherwise inadmissible aliens into the United States for a 
temporary period of time due to a very compelling emergency. The 
prototype case arises in an emergency situation. For example, the 
sudden evacuation of U.S. citizens from dangerous circumstances abroad 
often includes household members who are not citizens or permanent 
resident aliens, and these persons may be paroled. When aliens are 
brought to the United States to be prosecuted or to assist in the 
prosecution of others, they are paroled.); or
     Mexican citizens permitted to enter the United States for 
not more than 72 hours under the authority of a biometric machine 
readable border crossing identification card (also referred to as a 
``laser visa'') issued in accordance with the requirements of 
regulations prescribed under section 101(a)(6) of the Immigration and 
Nationality Act (8 U.S.C. 1011(a)(6)).
    On August 13, 2004, the Department of Homeland Security, Bureau of 
Customs and Border Protection, published an interim rule with request 
for comments (69 Fed Reg. 50051) expanding the time restriction on 
border crossing cards used by Mexicans to enter the United States for 
temporary visits. The new rule extends the time limit for border 
crossing card visitors from 72 hours to a period of 30 days. 
Previously, border-crossing cardholders could visit the United States 
for 72 hours within a border zone of 25 miles along the border in 
Texas, New Mexico, and California and 75 miles of the border in 
Arizona. The geographic limitations remain unchanged.

Public Comments

    One commenter recommended that an eligible provider be allowed to 
claim section 1011 payments for foreign nationals possessing a non-
immigrant visa. Since the statutory language does not permit payment 
for foreign nationals and other immigrants not identified in section 
1011(c)(5) of MMA, we are not adopting this recommendation.

VI. Covered Services

    Paragraph (c)(1) of section 1011 requires the Secretary to make 
payments, from the allotments described earlier in that provision, for 
eligible services to undocumented aliens. ``Eligible services'' are 
defined in paragraph (e)(2) as ``health care services required by the 
application of section 1867 [EMTALA] * * * and related hospital 
inpatient and outpatient services and ambulance services (as defined by 
the Secretary).'' For hospital and ambulance services, the authority to 
pay for ``related'' services, as well as for those the hospital is 
required to provide under EMTALA, is clear. For physician services, we 
believe that the statutory language also should be read to provide for 
payment for ``related'' physician services.
    Under the Medicare Act, inpatient hospital services are paid under 
Part A while the associated physician services are paid under part B. 
Thus, normally EMTALA services give rise to separate claims under part 
A and part B. Section 1011, however, is not codified in the Medicare 
Act and, therefore, we are not required to follow those billing 
conventions. Moreover, Congress seems to have intended to permit 
simultaneous payment for both hospital and physician services furnished 
at the same time by giving the hospital the option to elect to receive 
payment for the associated physician services, see section 
1011(c)(3)(C)(i). Because section 1011 includes payment for both 
related inpatient and outpatient services, we believe that in the 
context of this new program the statute can be reasonably interpreted 
to include the associated physician services at the hospital that are 
related to EMTALA.
    Section 1867(e) of the Social Security Act defines the term 
``emergency medical condition'' as a medical condition manifesting 
itself by acute symptoms of sufficient severity (including severe pain) 
such that the absence of immediate medical attention could reasonably 
be expected to result in placing the health of the individual (or, with 
respect to pregnant women, the health of the woman or her unborn child) 
in serious jeopardy, serious

[[Page 25583]]

impairment to bodily functions, or serious dysfunction of any bodily 
organ or part; or with respect to a pregnant woman who is having 
contractions that there is inadequate time to effect a safe transfer to 
another hospital before delivery, or that transfer may pose a threat to 
the health or safety of the woman or unborn child.

Initial Proposal

    Initially, we proposed that section 1011 coverage would end when a 
patient was discharged from the hospital. While this approach would 
impose the least amount of burden on hospitals since no splitting of 
costs/charges or other information would be needed to determine 
payments during a stay, we now believe that this approach is overly 
expansive and may not fully comport with the intent of Congress to 
limit the coverage criteria. Thus, by adopting our final implementation 
approach that permits payment for services furnished until the patient 
is stabilized, we believe that we are focusing payment on EMTALA and 
the most closely related EMTALA services. The primary point of the 
EMTALA services is to stabilize the patient in an emergency rather than 
to cure the underlying illness or injury.

Other Options Considered

    We considered several other options in our initial proposal. We 
also considered limiting ``related services'' by the hospital to 
services furnished within a specific time frame after stabilization or 
inpatient admission. For example, coverage of outpatient hospital 
services at the hospital to which the patient initially presents could 
be limited to services that are furnished on the date on which the 
patient is stabilized, and inpatient services coverage could be limited 
to services furnished on the calendar day immediately following the 
date of a good faith admission to stabilize the patient's emergency 
medical condition, or on the next calendar day. Coverage of inpatient 
and outpatient hospital services of specialty hospitals could be 
limited to services furnished on the calendar day immediately following 
the date of admission as a result of an appropriate transfer required 
by EMTALA, or on the following calendar day. In adopting a position 
that covers services provided through stabilization, we believe, in 
general, the most intensive procedures or services required for an 
emergency patient would be those furnished during the earliest part of 
a stay. In some cases, however, stabilization may take longer, so we 
are adopting a final approach that will permit payments beyond a fixed 
time period in some circumstances. We believe this more flexible 
approach will more accurately reflect the services that hospitals and 
physicians furnish to patients prior to stabilization.
    Finally, we considered an approach under which coverage for the 
hospital, which first treats the individual, would end when that 
hospital admits an unstable individual for inpatient treatment. We 
recognize that such an approach would allow us to identify and pay for 
the services required by EMTALA, and would help hospitals and other 
providers clearly identify the point at which coverage terminates. 
However, this option would not fully implement the statute since it 
would not provide payment for EMTALA-related services, as required 
under section (e)(2) of section 1011. Therefore, we do not believe this 
approach can be adopted.

Public Comments

    Several commenters recommended that we limit inpatient coverage to 
a defined period of time after an inpatient admission. Specifically, 
these commenters recommended that CMS more closely tie section 1011 
coverage to patient stabilization. In addition, these commenters 
asserted that extending inpatient coverage through discharge would 
accelerate the depletion of the program's limited financial resources, 
could encourage fraud and abuse, and may result in the hospitals 
providing services unrelated to the emergency condition for which the 
patient was admitted. We appreciate these comments and agree that 
providing coverage through stabilization is consistent with 
Congressional intent.

Final Implementation Approach

    For hospital services, we are adopting a position that payment will 
be made for covered services that would begin when the hospital's 
EMTALA obligation begins. Typically this is when the individual arrives 
at the hospital emergency department and requests examination or 
treatment for a medical condition or if the individual comes to an area 
of the hospital other than the dedicated emergency department for an 
emergency medical condition. For specialty hospitals receiving 
appropriate transfers under EMTALA (section 1867(g) of the Act), 
coverage will begin when the individual arrives at the specialty 
hospital.
    For hospital services, we are also adopting a position that section 
1011 coverage continues until the individual is stabilized, 
notwithstanding any inpatient admission. (In connection with this 
option, we note that under current EMTALA regulations, the obligation 
of the hospital which first treats the individual ends when the 
individual is either stabilized, appropriately transferred to another 
facility, or admitted in good faith as an inpatient for stabilizing 
treatment). For a specialty hospital receiving an appropriate transfer, 
coverage also will continue until the individual is stabilized. For an 
inpatient of either hospital, this could necessitate a stabilization 
determination in the middle of the patient's stay, and charges/costs or 
other information (such as diagnostic or procedural information) needed 
to determine payments would have to be divided between both portions of 
the entire stay, to assure that the bill submitted for section 1011 
includes only covered services.
    To be considered stable, a patient's emergency medical condition 
must be resolved, even though the underlying medical condition may 
persist. For example, an individual presents to a hospital complaining 
of chest tightness, wheezing, and shortness of breath and has a medical 
history of asthma. A physician completes a medical screening 
examination and diagnoses the individual as having an asthma attack 
which is an emergency medical condition (EMC). Stabilizing treatment is 
provided (medication and oxygen) to alleviate the acute respiratory 
symptoms. In this scenario the EMC was resolved, but the underlying 
medical condition of asthma still exists. After stabilizing the 
patient, the hospital no longer has an EMTALA obligation. The physician 
may discharge the patient home, admit him/her to the hospital, or 
transfer (the ``appropriate transfer'' requirement under EMTALA does 
not apply to this situation since the patient has been stabilized) the 
patient to another hospital depending on his/her needs or request.
    In general, we believe that most patients are stabilized within 2 
calendar days. We believe that EMTALA-related services are all those 
medically necessary inpatient services that occur prior to 
stabilization. (For example, a patient that is admitted after midnight 
on May 10th would most likely be stabilized before midnight on May 
11th.) In conjunction with our adopted payment methodology, we are 
adopting a position to review inpatient admissions that go beyond 2 
calendar days. As a matter of enforcement discretion when conducting 
reviews of claims, we will not review the stabilization determination 
for those claims for which stabilization occurs on the first or second 
day. Hospitals need not document when stabilization

[[Page 25584]]

occurred in these cases. We may review cases where stabilization is 
determined to have occurred on the third or later day of the admission. 
In the event we review the claim, we would expect the medical record to 
completely document the reasons for the stabilization determination. If 
a determination were not properly documented, we would deem 
stabilization to have occurred on the second day of the stay. 
Accordingly, hospitals would need to determine how many days an 
individual was in the hospital before stabilization occurred. The 
hospital would then receive a per-diem rate for that individual for 
each day of the stay, not to exceed the full DRG payment. The per diem 
rate is calculated by dividing the full DRG payment by the geometric 
mean length of stay for the DRG. However, it is worth noting that the 
per diem rate is still subject to the pro-rata reduction discussed in 
section XV.
    While this approach may impose additional administrative burdens on 
hospitals, we believe that this coverage approach is more consistent 
with Congressional intent of limiting the duration of covered services 
to stabilization. In adopting this approach, we believe that we will 
reduce the potential of the pro-rata reduction discussed in section XV. 
Further, we believe that limiting coverage through stabilization, 
rather than through discharge, will prevent hospitals from seeking 1011 
funds for services unrelated to the emergency medical condition.
    For physician services, we are adopting a position to cover all 
medically necessary and appropriate services which physicians furnish 
to a hospital inpatient or outpatient who receives emergency services 
required by section 1867 (EMTALA) or ``related'' inpatient or 
outpatient services, as defined above; that is, through stabilization. 
Our reasons for planning to adopt that coverage option for hospital 
services are explained further above. As noted above, ``physician'' is 
defined at section 1861(r).
    We are adopting a position that follow-up care provided by a 
physician to an individual who is no longer receiving hospital services 
covered under this section would not be covered. Non-coverage of 
physician services would extend to services which might be furnished 
when the patient is neither a hospital inpatient nor outpatient, even 
if the services are needed to treat the same illness or injury that 
caused the EMTALA provision to apply. For example, if an individual 
were treated as an outpatient in a hospital emergency department for a 
severe cut and required minor surgery to close the wound, thus 
stabilizing his or her medical condition, both the hospital and 
physician services in that setting would be covered. However, 
subsequent physician office visits provided after stabilization would 
not be covered, even if the visits were for the purpose of removing 
stitches or providing other post-surgical care for the injury that 
caused the original emergency department visit.
    For ambulance services, we are adopting a position that covers all 
medically necessary air and/or ground ambulance transportation of a 
patient to the first hospital at which he or she is seen for an 
emergency medical condition. In addition, we will cover any medically 
necessary air/and or ground ambulance transportation of a patient that 
is necessary to effect an appropriate transfer under EMTALA. We are 
adopting a position that we will not cover the transportation costs 
associated with transporting patients once emergency care is provided. 
Although air and/or ground ambulance providers are not themselves 
subject to EMTALA under section 1867, such transport services, when 
medically necessary, are ``related'' to services that a hospital is 
mandated under EMTALA to provide.

VII. Enrollment Application Process

    Section 1011(c)(3)(C) of the MMA states that the Secretary shall 
provide for the election by a hospital to either receive payments to 
the hospital for--
    (i) Hospital and physician services; or
    (ii) Hospital services and a portion of the on-call payments made 
by the hospital to physicians.
    To implement this provision of the statute, CMS is adopting a 
position that each provider electing to receive section 1011 payments 
must submit a paper enrollment application and an electronic enrollment 
application prior to submitting a payment request.
    While completing the enrollment application increases the paperwork 
burden for some providers, we believe that this process is essential to 
issuing electronic payments to providers and ensuring payments are made 
only to qualified providers. Moreover, this application will be a 
measure to ensure that inappropriate or fraudulent payments are not 
made as required by section 1011(d)(1)(B). Specifically, this 
application will:
     Identify a provider's potential interest in seeking 
payment under section 1011, but will not require the provider to seek 
payment;
     Allow hospitals to make a payment election, as required by 
section 1011(c)(3)(C);
     Allow CMS' designated contractor to obtain necessary 
financial information to effectuate payments and issue the appropriate 
tax information;
     Establish the state of service for each provider. This 
will assist CMS in making provider payments from the appropriate state 
allocation;
     Allow CMS to verify whether the hospital, physician or 
provider of ambulance services is currently enrolled as a Medicare 
provider;
     Advise hospitals to notify physicians of its election 
under (c)(3)(C) of section 1011;
     Advise hospitals electing hospital and physician payments 
to provide reimbursement to physicians in a prompt manner;
     Inform hospitals of the statutory provisions that prohibit 
a hospital electing to receive both hospital and physician payments 
from charging an administrative or other fee to physicians for the 
purpose of transferring reimbursement to physicians (see section 
1011(c)(3)(D));
     Acknowledge the provider's obligation to repay any 
assessed overpayment within 30 days of notification by CMS; and,
     Inform a provider about applicable Federal laws relating 
to submission of false claims.
    Accordingly, we are adopting a position that an abbreviated 
enrollment application must be submitted electronically via a secure 
Web site established by our designated contractor and that an original 
copy of the enrollment application must be submitted to CMS' designated 
contractor for verification purposes.
    On May 9, 2005, the OMB approved the provider enrollment 
information collection instrument and related instructions. The 
provider enrollment application can be found at http://www.cms.hhs.gov/providers/section1011.

Enrollment Process and Application for Medicare Participating Providers

    Any hospital, including those operated by the Indian Health Service 
and Indian tribes and tribal organizations, enrolled in the Medicare 
program and seeking payment must submit an enrollment application to 
participate in the section 1011 program.
    Further, as stated above in section IV of this paper, because 
section 1867 of the Social Security Act establishes legal obligations 
only for hospitals participating in the Medicare program, only Medicare 
participating hospitals

[[Page 25585]]

can furnish ``services required'' by section 1867, we are adopting the 
position that only Medicare participating hospitals can apply to 
receive funds under section 1011.

Hospitals' Election

    We are adopting a position that hospitals electing to receive 
payment for both hospital and physician services under (c)(3)(C)(i) 
will not be allowed to submit claims from certain physicians while 
allowing other physicians to bill separately. Accordingly, hospitals 
electing to receive payments under (c)(3)(C)(i) must receive payment 
for all physicians employed by or contracted with the hospital.

Submission of Enrollment Application for Medicare Participating 
Providers

    Medicare providers are required to submit an abbreviated enrollment 
application and an electronic section 1011 enrollment application. Once 
the section 1011 web-based enrollment process is established, Medicare 
providers will be notified. Once established, Medicare providers may 
submit their electronic enrollment application at any time, but at 
least 30 days prior to submitting a claim. Since Medicare participating 
providers already have electronic data interchange agreements (EDI) 
with their existing carrier or fiscal intermediary, we are adopting a 
policy that no additional agreement be signed. If the provider does not 
have an EDI agreement, the provider will need to complete an EDI 
agreement. Finally, we are adopting a position that a provider would be 
eligible for payment if the designated contractor approves an 
abbreviated enrollment application in advance of quarterly claims 
processing activities.

Enrollment Process and Application for Non-Medicare Participating 
Providers

    We are adopting a position that a physician or provider of 
ambulance services not currently enrolled in the Medicare program 
submit a completed Medicare enrollment application (i.e., a CMS-855I 
for physicians or a CMS-855B of a provider of ambulance services) and 
sign an EDI agreement prior to submitting a section 1011 abbreviated 
enrollment application and electronic section 1011 enrollment 
application. If the provider does not have an EDI agreement, the 
provider will need to complete an EDI agreement.
    The designated contractor will review and approve/deny the Medicare 
enrollment application prior to reviewing the section 1011 abbreviated 
enrollment application request. Note: A physician or provider of 
ambulance services need not enroll in the Medicare program in order to 
receive section 1011 payment. However, we will use the Medicare 
enrollment application and the abbreviated enrollment application to 
ensure that inappropriate, excessive or fraudulent payments are not 
made from state allotments.
    The purpose of collecting this information is to determine or 
verify the eligibility of individuals and organizations to participate 
in the section 1011 program. This information will also be used to 
ensure that no payments are made to a physician or provider of 
ambulance services who is excluded from participating in Federal or 
State health care program.

Change in Banking and Financial Information

    To ensure that payments are issued in a timely manner and in an 
effort to reduce the administrative burden both for provider submitting 
reimbursement requests and for CMS, we are adopting a position that 
participating section 1011 providers notify CMS' designated contractor 
in writing regarding any change in its bank routing or financial 
information. We believe that this approach will ensure the efficient 
and effective administration of the statute.

VIII. Reimbursement From Third-Party Payers and Patients

    Paragraph (c)(1) of section 1011 requires the Secretary to directly 
pay providers for the provision of eligible services to aliens to the 
extent that the eligible provider was not otherwise reimbursed (through 
insurance or otherwise) for such services during that fiscal year.
    Accordingly, we are adopting a position that each provider seek 
reimbursement from all available funding sources, including, if 
applicable, Federal (e.g., Department of Homeland Security), State 
(e.g., Medicaid or State Children's Health Insurance Program), third-
party payers (e.g., private insurers or health maintenance 
organizations), or direct payments from a patient, prior to requesting 
a section 1011 payment. We believe that this is consistent with the 
statutory intent of this provision and will limit reimbursement to only 
those instances where no other reimbursement is likely to be received.

Use of Existing Practices and Procedures To Identify Reimbursement 
Sources

    We are adopting a position that hospitals and other providers use 
their existing practices and procedures to identify and request 
reimbursement from all available funding sources prior to requesting a 
section 1011 payment.

Impact of Medicaid Payments

    Consistent with 42 CFR 447.15, Medicaid payments will be considered 
payment in full and providers are only allowed to submit a request for 
section 1011 reimbursement for the deductible, coinsurance or co-
payment not paid by the individual. 42 CFR 447.15 states, ``A state 
plan must provide that the Medicaid agency must limit participating in 
the Medicaid program to providers who accept, as payment in full, the 
amounts paid by the agency plus any deductible, coinsurance or co-
payment required by the plan to be paid by the individual. However, the 
provider may not deny services to any eligible individual on account of 
the individual's inability to pay the cost-sharing amount imposed by 
the plan in accordance with 431.55(g) or 447.53. The previous sentence 
does not apply to an individual who is able to pay. An individual's 
inability to pay does not eliminate his or her liability for the cost 
sharing charge.''

Impact of Department of Homeland Security Payments

    Consistent with U.S. Code Title 18, Part III, Chapter 301, Section 
4006, we are adopting a position that payments made by the Department 
of Homeland Security are deemed to be full and final payment.

Impact of Workers Compensation Payments

    Subject to limitations imposed by state law, we are adopting a 
position that providers may balance bill a patient after receiving a 
worker's compensation payment or determining that a workers' 
compensation payment may be made on behalf of the patient. In addition, 
subject to limitations imposed by state law, we are adopting a position 
that allows a provider to bill section 1011 for unpaid workers' 
compensation co-payments and deductibles.

Impact of Payments From a Patient

    To the extent that there is no third-party payer and an eligible 
patient self-pays for his or her care, CMS is adopting a position that 
a provider be allowed to ``balance bill'' section 1011 in the 
aforementioned situation for claims that are not fully paid by the 
patient. In addition, a provider may balance bill the patient for the 
appropriate costs after a section 1011 payment has been made.

[[Page 25586]]

Impact of Grants and Gifts

    We are adopting a position that state and local indigent or charity 
care programs or state funded subsidies are not to be considered in 
determining whether a third-party payment is applicable.

Impact of Section 1011 Payments on the Medicare Cost Report

    We are adopting a position that hospitals should not report section 
1011 payments on their Medicare cost report.

Receipt of Third-Party or Patient Payments After Section 1011 
Reimbursement Is Received

    We are adopting a position that if a hospital or other provider 
receives a payment from a third-party payer subsequent to a section 
1011 payment that the provider notify the CMS' designated contractor. 
An overpayment may occur if a provider receives payments in excess of 
the approved payment amount. In some cases, a provider may receive a 
combination of third-party payment and section 1011 payment that exceed 
the approved payment amount.

IX. Patient Eligibility Determination

    Section 1867 of the Social Security Act (EMTALA) requires a 
hospital that provides emergency services to medically screen all 
persons who come to the hospital seeking emergency care to determine 
whether an emergency medical condition exists. If the hospital 
determines that a person has an emergency medical condition, the 
hospital must provide treatment necessary to stabilize that person or 
arrange for an appropriate transfer to another facility.
    Section 1867 precludes a participating hospital from inquiring 
about an individual's method of payment or insurance status before a 
medical screening examination. For purposes of payment under section 
1011, hospitals and other providers are required to collect and 
maintain additional information regarding a patient's eligibility.
    After a hospital initiates the medical screening for an emergency 
medical condition and stabilization efforts have been initiated, 
hospital staff routinely begins a financial screening process to 
determine how an individual will pay for his or her health care. In 
many cases, the financial liability associated with an individual's 
care is borne by a third-party payer, including federal, state, or 
private insurance. In some cases, a patient is neither insured nor 
financially able to pay for his or her care. If a patient has no other 
insurance and is unable to pay for treatment, many hospitals will 
attempt to enroll the patient in Medicaid.
    In general, section 1903(v)(1) of the Social Security Act limits 
Medicaid eligibility to aliens who meet certain immigration status 
requirements. However, all aliens (including undocumented aliens) are 
eligible for treatment of an emergency medical condition, provided that 
they meet all other Medicaid eligibility requirements. In other words, 
all aliens are eligible for emergency Medicaid coverage only if, except 
for immigration status, they meet Medicaid eligibility criteria 
applicable to citizens. For citizens and non-citizens to qualify, they 
must belong to a Medicaid-eligible ``category'' such as children under 
19 years of age, parents with children under 19, or pregnant women--and 
meet income and state residency requirements.
    We believe that hospital eligibility specialists are sufficiently 
knowledgeable to avoid asking patients to complete a Medicaid 
application when the individual has provided information that would 
deem the patient ``categorically ineligible'' for Medicaid benefits. 
Patients generally considered ``categorically ineligible'' include non-
disabled adults and adults without minor children. Moreover, while 
undocumented aliens have little or no incentive to provide information 
regarding their citizenship status, it should be noted that 
categorically eligible immigrants have a strong incentive to 
demonstrate that they qualify to receive Medicaid.

Government Accountability Office Findings

    In May 2004, the Government Accountability Office (GAO) issued a 
report titled, ``Undocumented Aliens: Questions Persist about Their 
Impact on Hospitals' Uncompensated Care Costs.'' In this report (GAO-
04-472), the GAO attempted to examine the relationship between 
uncompensated care and undocumented aliens by surveying hospitals, but 
because of a low response rate to key survey questions and challenges 
in estimating the proportion of hospital care provided to undocumented 
aliens, GAO could not determine the effect of undocumented aliens on 
hospitals' uncompensated care costs.
    The GAO also found that, ``Determining the number of undocumented 
aliens treated at a hospital is challenging because hospitals generally 
do not collect information on patients' immigration status and because 
undocumented aliens are reluctant to identify themselves.'' Further, 
the GAO concludes that, ``The lack of reliable data on this patient 
population and the lack of proven methods to estimate their numbers 
make it difficult to determine the extent to which hospitals treat 
undocumented aliens and the costs of their care.'' Finally, the GAO 
recommended that, ``the Secretary develop reporting criteria for 
providers to use in claiming these funds and periodically test the 
validity of the data supporting the claims.''

Initial Proposal

    Initially, we proposed that a patient specific approach that 
required hospitals and other providers to request direct eligibility 
information from patients. In response to the public concerns regarding 
the negative public health consequences of asking for this information, 
we have decided not to ask hospitals and other providers to ask a 
patient if he or she is a citizen of the United States.

Other Options Considered

    We considered two other provider eligibility documentation options. 
We considered establishing a hospital's alien patient workload by 
taking the ratio of number of emergency Medicaid eligible patients to 
the number of full-scope of Medicaid eligible patients served by a 
provider and apply that ratio to the provider's overall uncompensated 
care costs. While we considered this option, we do not favor this 
approach because these options do not adequately document the 
eligibility status of aliens described in paragraph (c)(5) of section 
1011. In the case of establishing a statistically based determination, 
we do not believe the data would yield a valid proxy or survey for the 
services provided to aliens defined in (c)(5). Moreover, we do not 
believe that any proxy methodology mentioned to date demonstrates a 
high correlation to providing emergency services for undocumented and 
other specified aliens.

Final Implementation Approach

    In considering how providers will identify and document patient 
eligibility for the purposes of receiving payment under this section, 
CMS believes that documentation standards should: (1) Not impose 
requirements on providers that are inconsistent with EMTALA, (2) 
minimize the cost and reporting and record-keeping requirements, and 
(3) not compromise public health by discouraging undocumented aliens 
from seeking necessary treatment.

[[Page 25587]]

    Since section 1011 payments are authorized only for the three 
categories of non-citizens specified in (c)(5) of section 1011, it is 
important to establish a process that helps to ensure that hospitals 
and other providers will receive payments only for those three 
categories of individuals. Accordingly, we are adopting an indirect 
patient-based documentation approach. Using this approach, providers 
would request information about a patient's eligibility prior to 
discharge, but after the patient is identified as self-pay and not 
Medicaid eligible. Note: Under EMTALA, a participating hospital may not 
delay a medical screening examination or treatment in order to inquire 
about the individual's method of payment or insurance status. We also 
would not allow a delay in the medical screening examination because of 
inquiries about patient eligibility.
    In documenting eligibility, a provider may use a Medicaid 
enrollment application or another existing information collection 
instrument. In documenting the eligibility of a minor child, the 
provider must determine if Medicaid or the State Children's Health 
Insurance Program would be available for the child's treatment. As an 
alternative to using the Medicaid enrollment application process or 
another established information collection instrument, a provider could 
use the information collection instrument that we have designed to 
obtain the necessary information regarding a patient's eligibility. In 
the event that a state's Medicaid enrollment application or another 
existing information collection instrument does not contain the 
information included in the newly designed information collection 
instrument, we would ask providers to supplement their existing 
collection instrument to include any additional information requested 
in the approved collection instrument.
    On May 9, 2005, the OMB approved the provider payment determination 
information collection instrument and related instructions. The 
provider payment determination form can be found at http://www.cms.hhs.gov/providers/section1011.
    In adopting this approach, we have designed the information 
collection instrument to minimize its intrusiveness and therefore to 
minimize the extent to which it discourages persons from seeking needed 
emergency services. Similarly, we believe the final design minimizes 
the administrative burden on providers as much as is feasible while 
still providing CMS with information needed for accurate section 1011 
reimbursement of services. While we are not requiring that providers 
use the information collection instrument designed by CMS, we are 
adopting a position that would require that providers collect and 
maintain the same information contained in the provider payment 
determination information collection instrument. This can be 
accomplished in a number of ways--a provider may collect and maintain 
any additional information needed to support a patient eligibility 
determination by supplementing their existing collection instruments or 
a provider may use the provider payment determination information 
collection instrument as the basis of its eligibility determination. In 
either case, a provider must collect and maintain all of the 
information contained in the approved information collection.
    Provider associations and patient advocacy organizations raised a 
number of concerns regarding CMS' proposed implementation approach of 
asking patients to directly respond to the questions regarding their 
eligibility status. To mitigate these concerns and the potential 
negative health consequences of patients not seeking emergency care 
when it is needed, we are adopting an indirect measure to determine 
patient eligibility status. By establishing an indirect measure of 
patient eligibility, we believe that providers will be able to make an 
affirmative determination regarding a patient's eligibility without 
directly asking the patient about his or her eligibility status.
    We believe that asking a patient to state that he or she is an 
undocumented alien in an emergency room setting may deter some patients 
from seeking needed care. Moreover, if providers were required to 
request a Social Security number or other independently verifiable 
information from a patient, providers would need a mechanism to verify 
the authenticity of the information submitted.
    Given the numerous concerns raised about CMS' proposed patient-
specific documentation approach, we believe that providers are more 
likely to receive accurate answers to the indirect questions, thus 
increasing the accuracy of patient eligibility determinations. We 
believe that revising our patient-specific eligibility documentation 
approach will limit the number of incorrect payment determinations made 
by hospital staff and other providers. Finally, we believe that 
adopting an approach based on indirect questions offers several 
significant advantages over the proposed implementation approach, 
including improving section 1011 payment accuracy, simplifying the 
patient eligibility information collection requirements for providers, 
and reducing provider associations' and patient advocacy organizations' 
concerns about potential adverse public health effects.
    Finally, it is important to emphasize that emergency treatment 
should not be delayed to gather information contained on CMS' 
information collection instrument or any other existing collection 
instrument used by a provider to document a patient's eligibility. 
Moreover, if a provider decides to collect and maintain information 
regarding the name and badge number of a Federal or State Officer/Agent 
who brings a patient to the emergency department, that information 
should be gathered in a way that does not delay emergency medical 
treatment.

Completing the Provider Payment Determination

    In determining a patient's eligibility status, a provider is 
responsible for completing and signing the provider payment 
determination and obtaining the documents to affirmatively determine 
patient eligibility. If a patient refuses to or is unable to provide 
the proof of eligibility, then the provider should not submit an 
individual claim or bill for the services rendered (see section XIII, 
Determination of Payment Amounts, Determination of Payment for 
Undocumented Uncompensated Care, for additional information regarding 
payments to providers for undocumented uncompensated care).

Protected Information

    The sole purpose for requesting information contained on the 
Provider Payment Determination form is to obtain the information 
necessary to determine provider payment. Since section 1011 payments 
are only available to certain providers who furnish emergency and 
related services to patients identified in section (c)(5), we are 
adopting a position that providers initially determine whether payment 
is applicable for the services rendered to an individual patient.
    The Health Insurance Portability and Accountability Act of 1996 
(HIPAA) Privacy Rule directs ``covered entities,'' which includes 
providers that electronically transmit health information in connection 
with covered transactions, to protect certain personal health 
information of individuals, including undocumented aliens. The Privacy 
Rule identifies and explains permitted and required uses and 
disclosures of the information. Among its provisions, it allows covered 
entities

[[Page 25588]]

to use and disclose to other covered entities protected health 
information for payment purposes, under specified conditions. Payment 
is defined to include coverage or eligibility determination activities 
related to the individual to whom health care is provided.

Protecting Patient Information--Use of Existing Provider Practices and 
Procedures

    We are adopting a position that when responding to these 
information requests, covered providers, including covered hospitals, 
follow the HIPAA Privacy Rule requirements relating to uses and 
disclosures for payment purposes and, as applicable, their own privacy 
practices. If complying with these requests constitutes a material 
change to a covered provider's privacy practices, that provider must 
also revise and distribute its privacy practices notice according to 45 
CFR 164.520.

Protecting a Patient's Civil Rights

    Hospitals and other providers should not assume that an individual 
is an undocumented alien based on a patients' ethnicity and their 
inability to pay for emergency services. Title VI of the Civil Rights 
Act of 1964, 42 U.S.C. 2000d et seq., prohibits discrimination on the 
basis of race, color, or national origin in any program or activity, 
whether operated by a public or private entity, that receives federal 
funds or other federal financial assistance. Thus, in operating or 
participating in a federally assisted program, a provider should not, 
on the basis of race, color or national origin, differentiate among 
persons in the types of program services, aids or benefits it provides 
or the manner in which it provides them. For example, providers should 
treat all similarly situated individuals in the same manner, and should 
not single out individuals who look or sound foreign for closer 
scrutiny or require them to provide additional documentation of patient 
eligibility. Accordingly, hospital and other provider personnel may not 
selectively screen individuals regarding their eligibility status, on 
the basis of race, color, or national origin.
    As a reminder, we encourage hospitals and other providers to review 
their existing Title VI policies and practices to ensure that all 
patient rights are protected.

Attestation and Maintenance of Eligibility Information

    We are adopting a position that providers make a good faith effort 
to obtain correct eligibility information and attest to the fact that 
the information was correct to the best of their knowledge and belief. 
Since section 1011 funds are limited and section 1011 funding is 
available for only the individuals identified in paragraph (c)(5), we 
are adopting a position that providers attest that information 
contained in the information collection instrument is correct to the 
best of their knowledge and belief.
    Consistent with EMTALA regulations, under this statute, the 
provider will be required to document the patient's file regarding the 
patient's eligibility when the patient is a member of a group for which 
payment under section 1011 is possible. While we expect that hospital 
staff and other providers will routinely collect and maintain patient 
eligibility information when it is determined that a section 1011 
payment may be applicable, we are adopting a position that hospitals 
and other providers are not required to maintain patient eligibility 
information for individuals where a section 1011 payment is not 
possible.
    We are adopting a position that providers maintain patient 
eligibility information and that patient eligibility information will 
not routinely be submitted to CMS. While some individuals have 
suggested that patient eligibility information be sent to one central 
location, we do not believe that collecting this information is 
necessary given the payment methodology we are adopting. In addition, 
we are concerned about the paperwork burden and administrative expense 
associated with sending patient eligibility data to CMS on a regular 
basis.
    As noted above, while hospitals and other providers will be 
required to collect information regarding individuals' eligibility 
status in order to assure that section 1011 funds are being spent 
appropriately, we are adopting a position that providers are not 
required to submit this information to CMS as part of routine claims 
processing. However, providers are required to maintain this patient 
eligibility information for purposes of audit or compliance review. 
Moreover, since hospitals are in the best position to request 
information regarding a patient's eligibility status after meeting 
EMTALA requirements, we would require that hospitals maintain 
eligibility information for patients for whom section 1011 payment 
would be sought and that hospitals would make this information 
available to physicians and ambulance providers. Thus, the hospital 
eligibility determination would also apply to ``related'' ambulance and 
physician services as well.
    If a hospital chooses not to participate in the section 1011 
program or does not collect the patient eligibility information, a 
physician or ambulance provider is required to collect and maintain 
patient-specific eligibility information before billing the section 
1011 program.
    In conclusion, we believe that documentation requirements described 
in this approach will further our efforts to ensure that we reimburse 
providers only for the care associated with aliens described in 
paragraph (c)(5).

X. Payment Methodology

    Paragraph (c)(4) requires that we make payments to eligible 
providers for the costs incurred in providing eligible services to 
aliens as described in paragraph (c)(5). In this section, we describe 
how we intend to reimburse eligible providers for providing emergency 
services to undocumented aliens and certain other aliens.
    Section 1011 establishes a broad framework governing payment for 
the eligible services furnished to eligible individuals. All payments 
must be taken from a particular state's allotment, thus, there is a 
finite amount of money that can be paid in any particular state or the 
District of Columbia for a fiscal year. In addition, the amount paid to 
a provider cannot exceed the costs incurred (section 1011(c)(2)(A)(i)), 
but the payment could be less than the provider's costs based on a 
methodology established by the Secretary, see section 
1011(c)(2)(A)(ii). The statute also requires the Secretary to make a 
pro-rata reduction (see section XIV, Pro-Rata Reduction) of previous 
payments if the amount of funds allocated to a State is ``insufficient 
to ensure that each eligible provider receives the amount that is 
calculated under [Sec.  1011(c)(2)(A)].'' Thus, each ``eligible 
provider'' would receive some payment for furnishing ``eligible 
services'' but the precise amount of the final payment is uncertain. 
Moreover, the amount of the interim payment may vary by service, the 
number of eligible providers, the type of eligible provider, the 
location of the provider, or where the service is furnished. The 
Secretary is required to make quarterly payments under section 
1011(c)(3)(D).
    Within this broad framework, the statute gives the Secretary 
discretion to determine a payment methodology (section 
1011(c)(2)(A)(ii)) and contained specific provisions that would permit 
the Secretary to make payments on the basis of advance estimates of 
expenditures with subsequent adjustments for any overpayments or 
underpayments. Section 1011(d)(2). The

[[Page 25589]]

statute also requires the Secretary to adopt measures that will prevent 
inappropriate, excessive, or fraudulent payments.
    While the statute would allow CMS to design a prospective payment 
approach for section 1011, we are not implementing this approach. We 
have no provider specific data that we can use to estimate the cost of 
services currently provided to eligible aliens. Accordingly, we are 
adopting a retrospective payment approach. We believe that this is the 
only practical methodology that we can adopt that would ensure that 
interim payments would not exceed the available state allotment and 
that we would not need to make significant adjustments to those 
payments. In the future, if we determine that prospective payments can 
be made effectively and with a minimum number of overpayments, we will 
consider revising our payment methodology.
    Given that CMS is establishing a retrospective payment methodology, 
another issue that must be resolved to implement section 1011 is the 
question of what type of retrospective payment methodology should CMS 
use in paying providers for care provided to undocumented aliens and 
certain other aliens.

Other Options Considered

    We previously considered establishing a service-based payment 
methodology with aggregate quarterly summaries. Under this option, CMS 
would have required each provider to submit one aggregate quarterly 
report of all of its charges for all covered section 1011 services. 
Payment would be determined based on the information included in these 
quarterly summaries. This approach would not require providers to 
submit individual bills or claims for payment on a service-by-service 
basis, as they currently do under Medicare. Providers would have been 
required to maintain documentation sufficient to allow information from 
the quarterly report to be traced back to the individual patient 
services, thus permitting an audit of their claims.
    In general, we do not believe that this approach would provide the 
level of detail about services that is available through a claim-by-
claim service-based payment approach. In addition, this approach limits 
CMS' ability to ensure that inappropriate, excessive or fraudulent 
payments are not made. Finally, this approach would still require that 
providers maintain claim-specific payment information (i.e., service-
by-service or stay-by-stay) for each service provided, although it 
would not be submitted to CMS.
    We also considered establishing a payment methodology that utilized 
broad payment categories. Several interested parties have suggested 
that CMS establish five or six broad payment categories, such as:

--Ambulance Service
--Physician Only Emergency Department Service
--Emergency Department--Visit Only (hospital and a portion of on-call 
payments)
--Emergency Department--Visit Only (hospital and physician services)
--Emergency Department with Inpatient Admission
--Emergency Department with Inpatient Admission and subsequent Surgery

    While this approach would simplify payment methodology for CMS, we 
believe that establishing a payment methodology consisting of broad 
payment categories would require burdensome and costly billing system 
modifications for most providers. In addition, this approach does not 
allow a provider to be paid based on the costs incurred for each 
specific service. Since this approach would utilize an average payment 
amount for a particular service category (e.g., physician only 
emergency department service), it would result in overpaying some 
providers for particular services.
    Finally, we considered establishing a payment methodology based on 
a statistical proxy. To simplify the payment process and minimize 
documentation requirements, several interested parties have suggested 
that CMS establish a proxy methodology (such as determining hospital 
payments for undocumented alien services based on total ER visits, or 
on a percentage of Medicaid payments the hospital receives.) While this 
approach would allow CMS to distribute payments prospectively, it: (1) 
Does not allow a provider to demonstrate the actual cost incurred for 
rendering EMTALA-related services, (2) does not link payment to a 
specific patient, and (3) may overstate the amount of payments to 
hospitals.
    While we believe that a proxy payment methodology represents an 
alternative to individual or aggregate claim submissions, we do not 
believe that a proxy methodology can be validated on a claim specific 
basis. In addition, CMS could only validate the proxy measures, not the 
actual services provided. In general, we believe that any proxy measure 
will benefit some providers while disadvantaging other providers. 
Specifically, we believe that a proxy measure could benefit large 
hospital systems with complex computer systems and disadvantage smaller 
hospitals, rural hospitals, and Indian Health Service facilities that 
may be unable to provide the necessary information to receive an 
appropriate payment from a single proxy methodology.
    Finally, we are unable to establish a proxy measure that would 
provide fair payments to physicians and ambulance providers. We believe 
that physicians and ambulance providers would be disadvantaged if we 
adopted this type of payment methodology. We detail the payment 
methodologies we will use in section XIII of this paper.

Final Implementation Approach--Payment Methodology

    We are adopting a bill-specific payment methodology. CMS will 
require providers to submit bills or claims for payment on a service-
by-service or per discharge basis, much as they currently do under 
Medicare and other insurance programs. Payment will be determined based 
on the information included in these claims. We believe that this 
system establishes an efficient payment process for providers. In 
establishing our payment methodology, we are generally using Medicare 
payment rules to calculate the payment amount for hospital services up 
to the point of stabilization, physician, and ambulance services under 
section (c)(2)(ii). Indian Health Service facilities and Tribal 
organizations would also be required to submit valid claim submissions 
and the payment amount under section (c)(2)(ii) would be determined 
based on the same methodology use by Medicare to pay those facilities.
    This approach would establish a fair and consistent approach to 
provider reimbursement for the costs each provider incurs for treating 
and stabilizing undocumented and certain other aliens. All payment 
requests would be aggregated (by CMS during claims processing) at the 
state level. Each provider within a state would receive a payment equal 
to the lesser of its costs, the Medicare reimbursement rate or, if 
provider payments exceed the state allotment, a proportional payment of 
the Medicare reimbursement rate. Thus, if a pro-rata reduction were 
applicable, then CMS would apply a common discounting factor to each 
Medicare based payment rate in order to adjust provider payments to the 
state allocation amount. We believe this method is the most accurate 
method for determining payments based on the actual services provided 
to undocumented aliens.
    Using this payment determination approach would allow CMS to gather

[[Page 25590]]

specific information about the types of services provided to 
undocumented aliens. Furthermore, the level of detail about services 
that is available through a claim-by-claim service-based payment 
approach will help CMS ensure that inappropriate, excessive or 
fraudulent payments are not made.

XI. Distribution of State Funding to Providers

    In our initial proposal, we considered establishing a single 
provider funding pool in each state.

Public Comments

    Several commenters recommended that we distribute funding according 
to specific funding allocations for each provider type. One commenter 
recommended that we use the national or state Medicaid payment data to 
establish distinct funding pools for each provider. Another commenter 
recommended that state allocation be distributed according to a defined 
methodology. Using the commenter's methodology, hospitals and 
physicians would each receive 49 percent of the state allocation with 
ambulance providers receiving the remaining 2 percent of the state 
allocation.
    While we appreciate and understand the rationale for establishing 
distinct funding pools, we do not favor this approach because it 
unnecessarily limits provider payment in advance of receiving provider 
payment request. In addition, we believe that this approach would 
increase the administrative complexity and costs associated with 
administering these funds.

Final Implementation Approach--Creation of State Funding Pool

    As we have stated above, state allotments are based on the 
statutory formula. Using the final state allotments, we are adopting a 
policy that establishes a single provider funding pool in each state 
and the District of Columbia. This approach would establish a single 
payment allocation per state and each provider would receive a payment 
from the state allocation. We believe that this approach would maximize 
provider payment, establish payments to providers within a state that 
reflect each provider's prorated share of the state allocation based on 
the costs each provider incurred in each quarter, and simplify the 
administration of this section of MMA.

XII. Submission of Payment Request

    CMS requires that providers requesting reimbursement for aliens 
described in paragraph (c)(5) of section 1011 submit claims within 180 
days of the close of the Federal fiscal quarter. Thus, it is important 
to note that claims will not be paid on a first come, first paid basis. 
Because of the statutory mandate that the Secretary issue payments on a 
quarterly basis and the necessity for finality in the claims process, 
claims not submitted within a timely manner will be denied.
    Providers should submit individual claim submissions for services 
rendered on or after May 10, 2005. This approach provides for 
appropriate payment to providers of health care services required by 
the application of section 1867 and related hospital and outpatient 
services and ambulance services for individuals identified in (c)(5) of 
section 1011.

Basic Requirements for All Section 1011 Claims

    We are adopting a position that section 1011 claims meet the 
following requirements:
    1. We are adopting a position that a claim must be filed 
electronically with CMS' designated contractor in a form prescribed by 
CMS in accordance with CMS' Medicare processing instructions. For the 
purposes of section 1011, CMS will require that a hospital submit an 
electronic claim that complies with the X12N 837 version 410A1 
institutional claim implementation guide (the electronic equivalent of 
the UB-92) and that physicians and non-hospital ambulance providers 
submit an electronic claim that complies with the X12N 837 version 
410A1 professional claim implementation guide (the electronic 
equivalent of the CMS-1500).
    We are adopting a position that hospitals electing to receive 
payments for hospital and physician services under (c)(3)(C)(i) of 
section 1011 must submit separate bills for hospital and physician 
services.
    2. We are adopting a position that a claim must have a date of 
service on or after May 10, 2005. For the purpose of section 1011 
payment, services rendered prior to May 10, 2005 or initiated on or 
before May 9, 2005 are not eligible for payment.
    3. We are adopting a position that providers must file an 
electronic claim within 180 days of the end of the federal fiscal 
quarter in which the service was provided. Accordingly, if services are 
rendered on May 12, 2005, a provider must submit a payment request no 
later than 180 days from the end of that fiscal quarter (i.e., June 30, 
2005) in order to receive payment. Failure to submit a payment request 
within the prescribed time frames will result in a payment denial. This 
requirement is necessary given that section (c)(3)(D) of section 1011 
requires that the Secretary make quarterly payments to eligible 
providers.
    4. We are adopting a position that a hospital's request for on-call 
payment must have a date of service on or after May 10, 2005. For the 
purpose of section 1011 payment, hospital on-call payments made by the 
hospital for physician services on or before May 9, 2005 are not 
eligible for payment.

Submission of Medical and Other Documentation

    Unless specifically requested, CMS is adopting a position that 
hospitals and other providers maintain, but not submit, medical and/or 
patient eligibility information for payment purposes. CMS' designated 
contractor may review claims documentation prior to making a section 
1011 payment. Moreover, the compliance review contractor may review 
claims documentation during the compliance review process to determine 
the accuracy of payments.

Designated Claims Processing Contractor

    CMS will designate a single contractor for the purposes of 
enrolling providers, receiving claims, calculating provider payment 
amounts, and effectuating payments. We believe that a single claims 
processing contractor will facilitate the effective administration of 
this section of MMA. We expect to award the contract for the designated 
contractor shortly.
    If a provider submits a section 1011 claim to an existing Medicare 
carrier or fiscal intermediary other than the designated section 1011 
contractor, the Medicare carrier or fiscal intermediary receiving the 
section 1011 claim submission will return the claim to the provider. 
Since section 1011 claims are not Medicare claims and will not contain 
a valid Health Insurance Claim Number, only the designated contractor 
will be able to process these claims to payment.

Designated Compliance Contractor(s)

    CMS is a adopting a position that a compliance contractor will 
review medical and non-medical documentation. The compliance contractor 
may conduct pre-payment or post-payment claim reviews, identify and 
assess overpayments, if necessary, and ensure compliance with the 
provisions outlined in this notice.

XIII. Determination of Payment Amounts

    As stated above in section X, Payment Methodology, we generally use

[[Page 25591]]

Medicare payment rules to calculate the payment amount for hospital, 
physician, and ambulance services under section (c)(2)(ii). Indian 
Health Service facilities and Tribal organizations would also be 
required to submit valid claim submissions and the payment amount under 
section (c)(2)(ii) would be paid based on current Medicare payment 
rules.
    Specifically, section (c)(2)(A) requires that CMS paid at the 
lesser of:
    (i) The amount that the provider demonstrates was incurred for the 
provision of such services; or
    (ii) Amounts determined under a methodology established by the 
Secretary.
    The Secretary's method for estimating payments will consist of 
determining what the appropriate Medicare payment amount would be if 
the patient whose services are covered under section 1011 were a 
Medicare beneficiary, that is to say:
     Payment rules using the transfer payment policy under the 
Inpatient Prospective Payment System (IPPS) for acute care hospitals, 
specifically payments will be calculated as if the patient were 
transferred on the day of stabilization or the appropriate excluded 
payment system for inpatient hospital services (including pre-admission 
bundling and all other payment rules.) In this way, payments will more 
appropriately track resource use regardless of the time it takes to 
stabilize a patient;
     Payment rules using the transfer payment policy under the 
IPPS for long term care hospitals (LTCHs), which are acute care 
hospitals, because we are considering only the time until 
stabilization, which will generally be significantly shorter than the 
long stays usually associated with LTCHs;
     Payment rules using the inpatient psychiatric hospital PPS 
for inpatient psychiatric hospitals transitioning to the inpatient 
psychiatric hospital PPS to calculate what Medicare would have paid on 
a per diem basis for the days up to and including the date of 
stabilization;
     Payment rules using the transfer payment policy under the 
inpatient rehabilitation facility prospective payment system;
     The interim payment on the bill for inpatient services 
provided by critical access hospitals (a per diem amount for routine 
services and a percentage of billed charges for ancillaries); and,
     The TEFRA per discharge limit for children's and cancer 
hospitals excluded from the IPPS.
     Payment rules under the Outpatient Prospective Payment 
System (OPPS) for hospital outpatient department EMTALA and EMTALA-
related services not associated with an inpatient admission.
     Payment rules under the physician fee schedule for 
Medicare participating physicians (that is, service level billing using 
appropriate CPT/HCPCS codes that we would then convert to claimed 
payment amounts using the Physician Fee Schedule (PFS) payment rules 
appropriate for the services billed). Similarly, we are adopting a 
position to pay physicians not enrolled in Medicare the PFS payment 
amount.
     Payment rules under the ambulance fee schedule for 
ambulance trips that would be separately payable under the Medicare 
program if the patient were a Medicare beneficiary. Consistent with 
Medicare policy, the point of pickup determines the basis for payment 
under the fee schedule and the point of pickup is reported by its five-
digit zip code. Thus, the point of pickup zip code determines both the 
level of payment under fee schedule and applicable geographic practice 
costs index (GPCI). If a second ambulance transport is required for a 
subsequent transport, then the zip code of the point of pickup of the 
second or subsequent transport determines both the applicable GPCI for 
such leg and whether a rural adjustment applies to such leg.
    We believe that this approach is consistent with (c)(2)(A) of 
section 1011.

Determination of Hospital On-Call Payments

    CMS has determined that hospitals electing to receive payments 
under section (c)(3)(C)(ii) will receive a percentage of the on-call 
payments made by the hospital to physicians. Hospitals electing to 
receive payments under section (c)(3)(C)(ii) will be required to submit 
a payment request to claim on-call costs.
    CMS requires that hospitals must file the hospital on-call 
information collection instrument within 180 days of the end of the 
federal fiscal quarter to claim payment. Failure to submit the hospital 
on-call information collection instrument within the prescribed time 
frames will result in the payment denial for on-call costs. This 
requirement is necessary given that section (c)(3)(D) of section 1011 
requires that the Secretary make quarterly payments to eligible 
providers.
    On May 9, 2005, the OMB approved the Request for Section 1011 
Hospital On-Call Payments to Physicians information collection 
instrument and related instructions. The hospital on-call payment form 
can be found at http://www.cms.hhs.gov/providers/section1011.

Determination of Payments for Undocumented Uncompensated Care

    Hospitals that are unable to make an affirmative decision regarding 
a patient's eligibility may not receive the full amount of their 
uncompensated care for individuals identified in (c)(5) of section 
1011. Since we recognize that some patients may refuse to provide 
hospital staff or other providers with the necessary information to 
make an affirmative section 1011 eligibility determination, we have 
adopted an approach which would allow hospitals and physicians to 
receive a fraction of the outpatient emergency department care costs 
for individuals who refuse to provide information regarding their 
eligibility or provide the necessary billing information (e.g., valid 
address) that prevents the hospital from collecting payment from the 
patient.
    Because we presume that one in every 10 people that a hospital 
would treat, who would otherwise be an alien described under section 
1011(c)(5), will refuse or be unable to furnish the required 
eligibility information, we are going to create an additional payment 
to providers who furnish services (based on appropriate funding 
methodology discussed above) in the amount of 10 percent of the total 
approved outpatient services furnished in a quarter, subject to the 
pro-rata reduction. This increase in payment is intended to provide 
compensation to hospitals and physicians for services rendered in an 
outpatient setting for those patients who refuse to or unable to 
provide an affirmative demonstration of their eligibility status. We 
are also adopting a position that ambulance provider approved claims 
will be increased by 10 percent for those patients who refuse to or 
unable to provide an affirmative demonstration of their eligibility 
status.

XIV. Pro-Rata Reduction

    Paragraph (c)(2)(B) of section 1011 states that if the amount of 
funds allocated to a state for a fiscal year is insufficient to ensure 
that each eligible provider in that state receives the amount of 
payment calculated, the Secretary shall reduce that amount of payment 
with respect to each eligible provider to ensure that no more than the 
amount allocated to the State for that fiscal year is paid to such 
eligible providers.
    Based on the statutory language, we believe that when the total 
value of all payment requests exceeds the total amount available for a 
specified state allotment that we must recalculate the

[[Page 25592]]

approved provider reimbursement amount so that each eligible provider 
will receive some payment for furnishing eligible service and that the 
sum of all provider payments within a state does not exceed the 
available state allotment. For example, if CMS' designated contractor 
calculates that provider payments for a given quarter within a state 
are $40 million, but the state quarterly allotment is set at $5 
million, then each provider would receive 12.5 percent of their 
approved payment amount.
    Since we are unable to predict the number of claim submissions or 
the value of approved claims for a given state for a particular quarter 
or fiscal year, we are unable to determine whether the pro-rata 
reduction would be applicable for a given quarter or state until we 
receive actual claim submissions. It is also important to note that the 
pro-rata reduction will vary from quarter to quarter and from state to 
state.

XV. Quarterly Payments

    CMS is adopting a quarterly proportional payment approach. Under 
this approach, CMS would make proportional provider payments on a 
quarterly basis but would not attempt to adjust provider payments 
within a state on an annual basis. In determining the quarterly state 
funding allotment, the annual state allotment will be divided by four 
and distributed on a quarterly basis. In selecting this approach, we 
believe that providers would like to receive the maximum payment 
available within the shortest time period.
    Paragraph (c)(3)(D) of section 1011 requires the Secretary to make 
quarterly payments to eligible providers. For the purposes of 
implementing this section, we are adopting a position to begin to make 
quarterly payments beginning two to three months after the claims 
filing deadline. Providers will receive quarterly payments 
approximately every three months thereafter.

Implementation Approach for FY 2005

    For services rendered in FY 2005, CMS is adopting a policy to issue 
two proportional, rather than four, payments for the third and fourth 
quarters of FY 2005. Because we believe emergency services will in 
general be provided throughout the year, and because we believe the 
pro-rata reduction will likely be applied, we believe that basing FY 
2005 payments on the last 2 quarters will still accurately reflect 
providers' costs of treating eligible patients.
    Because these instructions regarding information collection were 
not available to eligible providers in advance of April 1, we will 
adjust claims for the third quarter of fiscal year 2005 (April 1, 2005-
June 30, 2005) by developing for each hospital, physician and ambulance 
provider or supplier an average claimed amount per day for the period 
for which the instructions were available, and then multiplying that by 
the number of days in the quarter. In this way, we will adjust the 
claimed amount to cover the services of the entire quarter, rather than 
only the period for which the instructions are available.
    For example, if CMS published this notice on May 9, and a provider 
submitted approved claims totaling $50,000 for services provided from 
May 10-June 30, a period of 52 days, the average daily claimed amount 
for the period would be ($50,000 / 52 days) = $961.54 per day. Because 
there are 91 days in the quarter, the claimed amount for the entire 
quarter would then be calculated as ($961.54 per day x 91 days), or 
$87,500.14.

Implementation Approach for FY 2006 and Beyond

    In FY 2006 and beyond, CMS will issue four proportional payments.

XVI. Appeals and Claim Adjustments

    While we are not adopting a formal appeals process, we believe that 
providers should have an avenue to address payment disputes. 
Accordingly, we are adopting an informal appeals process to resolve 
payment disputes. In order to ensure timely and accurate payments to 
all providers, an informal appeals process will allow providers an 
opportunity to seek clarification of payment decisions while 
significantly reducing the time that it takes to resolve payment 
disputes.
    Since it is essential that we ensure administrative finality, we 
believe that this approach is consistent with section (c)(2)(B) of 
section 1011. Moreover, given the expected level of reimbursement for 
these payments, it does not seem cost effective for providers or CMS to 
establish a formal appeals process.
    The designated contractor will provide additional information 
regarding the informal appeals process during the claiming process.

Claims Adjustments

    To simplify the administration of this provision, we are adopting 
the position that providers are not allowed to submit a claim 
adjustment.

XVII. Compliance Reviews

    Paragraph (d)(1) of section 1011 provides that the Secretary 
establish measures to ensure that inappropriate, excessive, or 
fraudulent payments are not made from the state allotments, including a 
certification by eligible providers of the veracity of the payment 
request.
    To ensure that claim submissions are supported by clinical and non-
clinical documentation, we are adopting a position of compliance 
reviews. These reviews may be based on, among other things, identified 
aberrancies and claims volume.

XVIII. Overpayments

    We are adopting a position that each provider participating in the 
section 1011 project agree to repay any assessed overpayment. To 
simplify the administration of this program, CMS is adopting a position 
to withhold any identified provider overpayments from the next 
quarterly section 1011 payment. CMS will notify the provider and 
withhold payment from the quarterly payment until the overpayment is 
repaid.
    In the event that a provider does not have a sufficient balance in 
the next quarterly payment to repay the overpayment in full, then CMS 
will then notify the provider that the provider has 30 days to repay 
the overpayment without accrual of interest. Upon notification that an 
overpayment exists, the provider that fails to repay the overpayment 
within 30 days will accrue and be responsible for any interest 
determined to be applicable. Moreover, we are adopting a position to 
refer unpaid overpayments to an appropriate debt collection agency or 
the Department of Treasury consistent with the requirements of the Debt 
Collection Improvement Act.

XIX. Annual Reconciliation Process

    We are adopting a position to conduct a reconciliation process for 
each state annually. It is during this process that we will calculate 
and disburse, subject to the state maximum, any remaining provider 
payments for the prior fiscal year. It is during this reconciliation 
process that any overpayments, whether withheld or refunded by a 
provider, will be redistributed. Thus, we are adopting a position that 
all overpayment will be redistributed during the annual reconciliation 
process. In the event that overpayments are assessed during a 
compliance review process, but repaid subsequent to the annual 
reconciliation process, we will redistribute these funds during a 
future annual reconciliation process.

[[Page 25593]]

XX. Unused State Funding

    In our initial proposal, we stated that any unobligated state funds 
would not be available for redistribution to another state and that any 
unobligated state funds still remaining after the annual reconciliation 
process is complete for a given fiscal year will be returned to the 
U.S. Treasury.

Public Comments

    A number of commenters stated that unused state allocations should 
be reallocated to other states or rolled over to the state allocation 
for the next year. While we do not have the authority to reallocate 
unused state allocations from one state to another, we agree with the 
commenters recommendation that we roll over unused state funding from 
one fiscal year to the next. Thus, if State A has an allocation of $1 
million in FY 2005, but providers in State A are paid $750,000 in FY 
2005, the remaining $250,000 will be added to the available state 
funding allotment in FY 2006.

Final Implementation Approach

    Congress expressly states that the appropriation shall remain 
available until expended. In doing so, Congress has removed all 
statutory time limits as to when the funds may be obligated and 
expended. In essence, the funds remain available for obligation for 
authorized purposes until fully obligated within the purposes and 
limitations attributable to that appropriation.
    We believe that the statute clearly indicates that the purpose of 
the appropriation is to make payments to providers within a state 
subject to the amounts available under the allotment made to the state. 
Once appropriated, the funds become available until expended, with no 
fiscal year limitations on their availability for expenditure. In the 
event that all of the funds allotted to a state in a fiscal year are 
not used to make payments to providers in that state, we are adopting a 
position that these unexpended funds continue to remain available for 
provider payments within that state in subsequent fiscal years.
    There is no indication in the language of the law that state 
allotments could be redistributed to another states or that the funds 
could be returned to CMS for other uses. Thus, CMS is adopting a 
position that a state allocation cannot be redistributed from one 
jurisdiction (state or the District of Columbia) to another 
jurisdiction.

    Dated: May 9, 2005.
Michelle Shortt,
Acting Director, Regulations Development Group, Office of Strategic 
Operations and Regulatory Affairs.
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