FR Doc 05-9470

[Federal Register: May 13, 2005 (Volume 70, Number 92)]
[Notices]
[Page 25578-25595]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13my05-72]

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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 Paperwork@cms.hhs.gov, 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

[[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.

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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.
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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

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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

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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

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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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