CMS Releases Guidance for Alien Payment Under MMA Section 1101.

Summary

Action: On May 9, 2005, CMS issued its final guidance for implementation of MMA Section 1011, which provides for funding in the amount of $250 million per year to cover the otherwise uncompensated costs of emergency care provided to undocumented aliens and certain other aliens by hospitals, physicians and ambulance providers.

Impact: The guidance describes covered services, eligible patients and the procedures to be used by providers to enroll in the program and submit claims. It also describes how payment amounts will be calculated and distributed.

Effective Date: Once CMS designates a contractor, eligible providers can begin submitting enrollment applications. Claims for services provided on and after May 10, 2005 can be submitted thirty days after enrollment.

On May 9, 2005, the Centers for Medicare and Medicaid Services ("CMS") released its final implementation guidance (the "Guidance") for Section 1011 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("MMA"). Section 1011 provides $250 million per year for federal fiscal years 2005 through 2008 for payment to hospitals, physicians and ambulance providers for emergency health services provided to undocumented aliens and certain other specified aliens. The Guidance includes some significant changes from the proposed guidance ("Proposed Guidance") issued by CMS in July 2004. The following summarizes the most significant parts of the Guidance:

Amount Distributed

As required by MMA, the Guidance provides that two-thirds of the $250 million annual allotment, ($167 million per year) is to be divided among all 50 states and the District of Columbia based on each jurisdiction's relative percentage of undocumented aliens as reflected in the 2000 decennial census. The balance of the funds ($83 million per year), is to be divided among the six states with the highest number of undocumented alien apprehensions for the four fiscal quarters prior to the fiscal year in which the funds are distributed, as determined by the Department of Homeland Security ("DHS"). Based on DHS data, the six states which will receive the first of these funds are Arizona, California, Florida, New Mexico, New York and Texas.

Eligible Providers and Services

The providers eligible to receive the payment include hospitals, physicians and providers of ambulance services (including Indian Health Service facilities). The word "physicians" is defined to include not only medical and osteopathic doctors, but also podiatrists, optometrists, chiropractors and doctors of dental surgery with respect to some of the services they render.

Upon completion of an enrollment form and submission of qualifying claims, these providers will be eligible for reimbursement for certain emergency services and related care rendered to undocumented aliens; aliens who have been paroled into the United States for the purpose of receiving eligible services; and Mexican citizens permitted to enter the United States under the authority of a biometric machine readable border crossing identification card, i.e., a "laser visa," for a specified period of time.

The statute defines "eligible services" as those required by the Emergency Medical Treatment and Active Labor Act ("EMTALA") and related hospital, physician and ambulance services. For hospitals, those services will include treatment that begins with the hospital's EMTALA obligation (i.e., when the patient presents at the Emergency Department and care is requested), until the patient's emergency medical condition is stabilized, including that part of any inpatient admission required for stabilization. In implementing this methodology, CMS will assume that most patients can be stabilized within two calendar days following an emergency admission, and will generally accept hospitals' representations regarding the duration of covered services in claims encompassing two days or less. However, claims for inpatient admissions beyond two calendar days may be reviewed to determine whether the patient continued to have an unstabilized emergency condition.

Covered physician services include all medically necessary services which physicians furnish to a hospital inpatient or outpatient who received emergency services through the point of stabilization, as described above. This Guidance is less generous to hospitals and physicians than the Proposed Guidance, which would have covered all hospital and physician care for the entire duration of an emergency patient's hospitalization, regardless of when stabilization occurred.

Covered ambulance services include all medically necessary air and/or ground ambulance transportation of the patient to the first hospital in which he or she is seen for an emergency medical condition, as well as any ambulance transportation required to effect an appropriate transfer under EMTALA. This will not include transportation required by a patient after stabilizing emergency care has been provided or a patient has been admitted as an inpatient.

Verifying Patient Eligibility

CMS triggered a storm of controversy by proposing that providers ask patients about their immigration status in the Proposed Guidance. In the Guidance, CMS instructs providers not to ask patients whether they are undocumented aliens, but instead relies on an "indirect" data collection process. Using either a form created by CMS or their own internal documentation, providers will determine and document patient eligibility based on whether:

The patient is eligible for Medicaid or emergency-only Medicaid, in which case the CMS form states that Section 1011 funding is generally unavailable;

The patient has a specific type of border card or has been paroled into the United States for medical care, in which case eligibility may exist; and

The patient reports a foreign place of birth, and either provides specific documentation or an invalid social security number, or is brought to the provider by a law enforcement official.

Enrollment and Claims Submission Procedures

In order to receive payment, eligible providers will be required to submit an enrollment application at least 30 days prior to submitting their first payment request. CMS has not yet opened the enrollment process but plans to do so shortly. As required by the statute, hospitals may make an election to receive payment for both hospital and physician services. Contracted and employed physicians who provide services in hospitals making such elections will not be permitted to submit their own separate claims. Hospitals that do not elect to receive payment for physicians may nevertheless elect to receive a portion of any on call payment made by the hospital to physicians, using an election form developed by CMS that specifies a methodology for calculating the amount for which each hospital is eligible.

To receive payment, providers will be required to file claims electronically with a contractor to be designated by CMS, using Medicare claims procedures, within 180 days of the close of the federal fiscal quarter in which the services are rendered. Claims will only be accepted for services rendered on or after May 10, 2005, but cannot be submitted until CMS has opened the enrollment process and designated a contractor.

Although Section 1011 allocates $250 million to pay for services rendered during federal fiscal year 2005 (which began October 1, 2004), CMS will not make payment retroactive to the beginning of the fiscal year. CMS will, however, make payment intended to cover services rendered during the entire third quarter of federal fiscal year 2005, which began April 1, by using an extrapolation methodology.

Specifically, CMS, or its contractor, will calculate the amount of payment a provider likely would have received had it begun submitting claims for services on and after April 1. This will be accomplished by calculating, for each eligible provider, an average covered amount per day for the remainder of the third quarter (i.e., from May 10 through June 30, 2005) based on the claims submitted, and then multiplying that average amount by the total number of days in the quarter. For example, if a provider submits approved claims totaling $50,000 for services provided from May 10 through June 30, a period of 52 days, CMS will determine that the average daily claimed amount for that period was $961.54 per day ($50,000 divided by 52 days). As there are 91 days in the quarter, the claimed amount for the entire quarter would then be calculated as $87,500.14 ($961.54 per day times 91 days).

Rates to be Paid

Providers will be paid based on the applicable Medicare rates payable for the services in question, subject to pro rata reduction if there are insufficient funds in any jurisdiction to fully compensate providers.

Physicians will be paid based the Physician Fee Schedule, while ambulance providers will be paid according to the Ambulance Fee Schedule, including enhancements for rural services specified in that fee schedule.

Hospitals will be paid for inpatient services rendered up to the point of stabilization, which in some cases will be less than the entire hospitalization; therefore, CMS will pay for inpatient hospital services based on a per diem methodology that takes into account the applicable DRG. The per diem rate will be calculated by dividing the full DRG payment assigned to a patient's stay by the geometric mean length of stay for that DRG. Payment on any specific hospital claim will be capped at the full DRG payment amount, regardless of how long it took to stabilize the patient.

The statute provides for payment only to the extent that payment is not made from another source. To implement this requirement, the Guidance requires providers to seek payment from all other available sources, including other private or public funding sources, as well as direct patient payment, prior to submitting a claim. For eligible patients covered by worker's compensation or other insurance, providers may submit claims for the unpaid portion of any cost-sharing or deductible amounts. However, the total amount received by a provider from Section 1011 funds, plus all other sources, may not exceed the lower of the amount payable under Medicare (or, for inpatient services, the per diem equivalent described above) or the provider's charges.

Claims will not be paid until the 180-day claim submission period has expired, so that the contractor can determine, for each state, whether the amount of eligible claims exceeds that state.s funding allocation. In that event, as will likely be the case in some states, the Guidance provides for an across the board pro rata reduction in the amount of payment made on each claim. As an example, in the event of a 15% shortfall in the funds available in a particular state for any quarter, all eligible submitted claims will be reduced by 15%.

The foregoing provides only an overview of the information found in the Guidance. The Guidance, along with the required forms, can be found on the CMS website at:

http://www.cms.hhs.gov/providers/section1011/

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr R. Scarano, Jr.

Foley & Lardner

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