January 17, 2003

The Honorable Tommy G. Thompson
Secretary
Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, D.C. 20201

Dear Secretary Thompson:

We are writing to express our serious concern over the December 20, 2002, letter to State Medicaid Directors. The letter appears to rescind previous policy and would undermine access to essential emergency services for low-income Americans. Your new policy appears to allow health maintenance organizations (HMOs) and other managed care organizations to deny low-income mothers, children, seniors, and individuals with disabilities access to needed services in the event of an emergency, and/or restrict the emergency rooms in which they could acquire such care. If that is in fact the intent, we urge you to reverse this action immediately. If that is not your intent, we ask you issue a revised letter clarifying the continued applicability of the statutory protections.

In 1997, Congress passed the Balanced Budget Act on a bipartisan basis. This legislation included a provision guaranteeing Medicaid beneficiaries access to emergency care according to the "prudent layperson" standard (Section 1932(b)(2) of the Social Security Act). Emergency services are those needed to evaluate and stabilize an emergency medical condition.

The CMS letter of April 18, 2000, implementing this policy stated that "When the prudent layperson standard is met, no restriction may be placed on access to emergency care. Limits on the number of visits are not allowed." A recent letter of December 20, 2002, states that it removes this protection, allowing states, and arguably MCOs acting on their own through the process of defining their benefit package, to place limits on emergency room visits and on which emergency room patients can access. In addition, the letter would appear to allow an HMO to deny payment for an inpatient admission even in an emergency if such admission would exceed the limit on covered inpatient days. From the letter it appears both of these restrictions apply regardless of whether the patient meets the prudent layperson standard.

Congress enacted the prudent layperson standard so that individuals would not be denied needed emergency care by arbitrary HMO network and prior-authorization restrictions. This letter raises questions about these statutory protections for patients, and may actually eviscerate them.

Not only patients, but hospitals and emergency providers would also suffer as a result of this policy change. By definition, families who receive their health insurance through Medicaid are poor. The cost of a single hospital admission in some instances is more than these families’ annual incomes. If the HMO is allowed to deny coverage even in an emergency, this exorbitant burden will fall on the families, driving more Americans to bankruptcy. Or alternatively, the burden will fall on hospitals -- particularly safety net hospitals -- who are already struggling to stay afloat.

When President Bush took office two years ago, we were assured that he was no less committed to patient protections than his predecessor, President Clinton. Over the course of the past two years, however, the Bush Administration has, through the waiver process and otherwise, consistently diluted fundamental patient protections found in the Medicaid Act, regulations and prior CMS policy. The case of denying access to emergency services for low-income children, pregnant women, elderly, and disabled Americans who depend on Medicaid, the Nation’s largest health insurance program, for emergency care is only the most recent example.

In this instance it is not simply a matter of inaction to correct a wrong, but rather an affirmative action to weaken existing protections. How can we expect private insurance companies to voluntarily uphold such standards in the absence of a Patients’ Bill of Rights if the Bush Administration is not willing to hold itself to that same standard for the Nation’s most vulnerable citizens?

We hope that it is not your intent to allow the ills that we have identified above. We urge you to reconsider this unwise directive and return to your previous policy, outlined in the April 18, 2000, letter to State Medicaid Directors, which comported with the requirements of the Balanced Budget Act.

Sincerely,