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Department of Health and Human Services
Medicare Appeals Council

Managed Care Organization Benefits  



Kaiser Foundation Health Plan


The Administrative Law Judge (ALJ) issued a decision on January 9, 2003. The appellant has asked the Medicare Appeals Council to review this action. The Council grants the request for review because there is an error of law and the findings and conclusions of the ALJ are not supported by substantial evidence. See 20 C.F.R. �� 404.967 and 404.970, incorporated by reference in 42 C.F.R. � 422.608.

The beneficiary is an enrollee of Kaiser Foundation Health Plan, a Medicare + Choice organization (M+CO). This appeal involves the enrollee's request for reimbursement of ambulance services she obtained on February 27, 2002. (The enrollee was taken by ambulance to a hospital emergency room; the emergency room visit is not at issue in this appeal.)

The ALJ found that the beneficiary did not require emergency or non-emergency ambulance services, and there was no indication that another means of transportation would have endangered the beneficiary's medical condition. In reaching this conclusion, the ALJ evaluated the case solely under the regulations governing Medicare fee-for-service ambulance claims. Because the appellant obtained the services while enrolled in an M+CO, she was entitled to have her request for reimbursement evaluated under the rules governing the Medicare + Choice program. For the reasons explained herein, the Council finds that the M+CO is required to reimburse the enrollee for the services at issue under the Medicare + Choice program's prudent layperson standard, which governs coverage of emergency services.


An M+CO's obligations to its enrollees is governed by section 1852 of the Social Security Act and the implementing regulations at 42 C.F.R. part 422. In enacting the Medicare + Choice program, Congress directed that the Secretary employ a definition of "emergency services" that differed from the standard governing managed care benefits provided under section 1876 of the Act. Under section 1852(d)(3)(A) of the Act, Congress defined "emergency services" as covered inpatient and outpatient services that are furnished by a provider that is qualified to furnish such services under [title XVIII], and are needed to evaluate or stabilize an emergency medical condition (as defined in [� 1852(d)(3)(B)]).

Section 1852(d)(3)(B) of the Act defines the term "emergency medical condition" as a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in (i) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, (ii) serious impairment to bodily functions, or (iii) serious dysfunction of any bodily organ or part.

In addition, section 1852(c)(1)(E) of the Act provides that M+COs shall include information concerning emergency services in material provided to beneficiaries, including: the appropriate use of emergency services, including use of the 911 telephone system or its local equivalent in emergency situations and an explanation of what constitutes an emergency situation.

The statutory definition of emergency services was included in the June 26, 1998, final regulations that implemented the Medicare + Choice program at 42 C.F.R. �422.2 (1998). In response to these regulations, the Centers for Medicare and Medicaid Services (CMS) received public comments requesting clarification of the steps CMS was taking to ensure that the MCOs were providing the access to emergency services intended by law. 65 Fed. Reg. 40170, 40199 (June 29, 2000). In a final regulation issued June 29, 2000, CMS specified at 42 C.F.R. � 422.100(b)(1)(i) that M+CO organizations are required to cover ambulance services that are not provided through the M+CO when that are dispatched through 911 or its local equivalent in conformance with 42 C.F.R. � 422.113, a regulation added by the June 29, 2000 rulemaking. In addition, CMS moved the statutory definitions of emergency services and emergency medical condition to the new regulation and added new rules governing ambulance services obtained by M+CO enrollees.

The regulations published on June 29, 2000, were effective on July 31, 2000. 65 Fed. Reg. 40170 (June 29, 2000). They provide, in pertinent part, that an M+C organization must make timely and reasonable payment to or on behalf of the plan enrollee for (1) ambulance services dispatched through 911 or its local equivalent as provided in � 422.113 and (2) emergency services as provided in � 422.113. 42 C.F.R. � 422.100(b)(1) and (2)(2000). With respect to ambulance services, 42 C.F.R. � 422.113(a)(2000) provides that the M+C organization is financially responsible for ambulance services, including ambulance services dispatched through 911 or its local equivalent, where other means of transportation would endanger the beneficiary's health.

In the preamble to the June 29, 2000, final rule, CMS explained why it had added �422.113(a) as follows:

Section 422.113 specifies that the M+C organization bears financial responsibility for ambulance services where other means of transportation would endanger the beneficiary's health. This policy is consistent with original Medicare's coverage of ambulance services where other means of transportation would endanger the health of the beneficiary as provided by section 1861(s)(7) of the Act, as well as with the emergency coverage provisions of section 1852(c)(1)(E) of part C of the Act. In particular, we believe that the law's reference to use of the 911 telephone system indicates statutory intent for coverage of ambulance services whether provided through the organization or other than through the organization. .... We note that nonemergency ambulance services generally would be covered only when provided through the organization, to the extent the services are covered under the general principles set forth in section 1861(s)(7) of the Act (that is, when use of other forms of transportation would endanger the health of the beneficiary.) Regulations on original Medicare coverage of ambulance services may be found at �410.40. 65 Fed. Reg. 40170, 40200 (June 29, 2000).

In response to another commenter's concern that retrospective denials should not be based solely on a final diagnosis, CMS included in the definition of emergency medical condition an explicit requirement that the M+CO assume financial responsibility for services meeting the prudent layperson standard regardless of final diagnosis. 42 C.F.R. � 422.113(b)(2)(iii) (2000). CMS also noted that "the perspective of the enrollee is a significant factor in determining whether an enrollee acted appropriately in seeking emergency care." 65 Fed. Reg. 401701, 40200 (June 29, 2000).

In light of the above, we find that the ALJ erred in evaluating this case solely on the basis of the objective standards contained in 42 C.F.R. � 410.40. The Council has granted review to apply the rules governing emergency ambulance services contained in part 422 to the facts of this case.

The Evidence Presented

During the hearing, the enrollee, a registered nurse, provided a detailed account of her injury and its aftermath. She testified that after slicing her right thumb, she attempted various techniques to stop the bleeding for three hours. The wound, however, continued to bleed profusely. Feeling weak and dizzy, the beneficiary attempted to contact five different neighbors to take her to the hospital, but no one was home or available by phone. The beneficiary then contacted the M+C organization, Kaiser Foundation Health Plan, for assistance and was told to dial 911. Neither the fire department or ambulance personnel who were dispatched by 911 could stop the bleeding, therefore they insisted the beneficiary be transported to the hospital by ambulance. Upon reaching the hospital, it took several attempts before the bleeding was finally stopped. As the medical records confirm, the area had to be thoroughly cauterized with silver nitrate to stop the bleeding. (Exh. 1, at 3).

The M+CO did not challenge any aspect of the enrollee's testimony except her statement that she had called the M+CO and had been told to call 911. The ALJ indicated, however, that he would accept her statement concerning the 911 call. Kaiser also argued that the beneficiary's bleeding was controlled when the emergency personnel arrived on the scene and that the beneficiary was not exhibiting other symptoms such as shortness of breath or dizziness. Therefore, it argued, the beneficiary's clinical condition did not reasonably require transport by a licensed ambulance and she could have safely reached the hospital by other means of transportation.

The Council notes that even though the bleeding was reportedly controlled when the ambulance arrived, the enrollee's testimony and the medical record as a whole indicates that the bleeding resumed and was only finally contained when the wound was cauterized at the hospital. Moreover, the beneficiary had already been bleeding, profusely at times, for a considerable period of time before the emergency personnel arrived, and, as a consequence, was feeling dizzy and weak. In these circumstances, the Council concludes that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably have expected that the absence of immediate medical attention would place her health in serious jeopardy. Moreover, the paramedics who arrived at the scene reportedly affirmed her belief. Accordingly, we conclude that the beneficiary is entitled to reimbursement for the ambulance services obtained on February 27, 2002.


The Medicare Appeals Council has carefully considered the entire record and makes the following findings:

  • The beneficiary is a member of the Medicare + Choice organization, Kaiser Foundation Health Plan, Inc.

  • On February 27, 2002, the beneficiary suffered a laceration to her thumb and was unable to stop the bleeding by herself.

  • At the direction of Kaiser Foundation Health Plan, Inc., the beneficiary called 911.

  • The emergency personnel that responded to the 911 call were unable to stop the beneficiary's bleeding and, therefore, the beneficiary was transported by ambulance to the hospital.

  • The beneficiary had an emergency medical condition as defined in 42 C.F.R. �422.113(b)(1)(i) and required ambulance services to transport her to the hospital.

  • Other means of transportation to the hospital would have endangered the beneficiary's health.

  • The Medicare + Choice organization is, therefore, financially responsible for the ambulance services the beneficiary obtained through her call to 911.


It is the decision of the Medicare Appeals Council that Kaiser Foundation Health Plan, Inc. is financially responsible for the ambulance services obtained on February 27, 2002.


November 13, 2003


Susan Wiley
Administrative Appeals Judge

Thomas Herrmann
Administrative Appeals Judge