By Nathaniel Schlicher, MD, JD, MBA, FACEP

Emergency Medicine Physician, St. Joseph’s Medical Center, Tacoma, WA

Dr. Schlicher reports no financial relationships relevant to this field of study.

For all its headaches, the Emergency Medical Treatment and Labor Act (EMTALA) codified the moral compass of emergency medicine 30 years ago. Anyone, anytime, for any reason, regardless of ability to pay, became our standard. We work nights and holidays when others close because disease knows no breaks. When clinics, grocery stores, and other businesses leave inner cities, we stay to care for the poor and underserved, recognizing that we will not be paid by many of them, but it’s our sacred calling.

Big insurance wants in on the game of free care for their “covered” insured patients. Since EMTALA requires us to provide care to their patients, big insurance companies see no reason to provide payment for care they do not feel like covering. While some argue that on the surface this is their right to pay only for necessary services, the decision to retrospectively deny coverage is a fundamental assault on the rights of patients to seek emergency care and providers to bill for legitimate services rendered. Using the “retrospectoscope” to lecture patients and providers about care for serious health threats is a disservice to us all. It is unconscionable, immoral, illegal, and potentially unconstitutional.


Retrospective denials for care are not novel concepts for big insurance companies, but they now apply uniquely to emergency medicine. Starting in 2010 with the state of Washington’s three visit rule and extending to the 2017 efforts in Missouri and Kansas to limit covered conditions, a renewed effort by dozens of states to blame patients for medical emergencies has emerged. In both Washington and Kansas, the efforts were focused on the Medicaid managed care organizations (MCOs) limiting covered conditions for their insured on diagnoses such as chest pain, abdominal pain, influenza, and hundreds of other life-threatening conditions.1 Often, these lists were designed to save money and cover up inadequate primary care networks with substandard reimbursement for providers. Such efforts do little to address the systemic failures of the Medicaid system and, instead, pass the expenses on to hospitals and providers for unmanaged chronic illnesses with serious adverse health effects.

Meanwhile, Blue Cross Blue Shield is leading efforts in Missouri and Georgia to punish private pay patients for seeking care for what the insurer deems to be unnecessary.2 When combined with escalating deductibles that now exceed the liquid assets of many Americans,3 these cost-shifting efforts can produce devastating outcomes for patients. Increasing bad debt also occurs with these efforts, putting the viability of practices into question. Legal protection of patients and practices must be considered for all our survival.

Prudent Layperson Statutes

Efforts to deny payment based on discharge diagnosis are not new. Such attempts in the 1980s led to the creation of the prudent layperson statutes in more than 30 states. Prior to the Affordable Care Act’s inclusion of prudent layperson standards, it had been extended to Medicaid managed care plans as part of the Balanced Budget Act of 1997 and federal employees in 1999.4 Although each state’s language may differ slightly, here is an example of specific language from Washington state’s statute RCW 48.43.005(12) that defines a medical emergency to be one 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 a condition a) 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; b) serious impairment to bodily functions; or c) serious dysfunction of any bodily organ or part.”

When patients present with a condition that meets this definition, then coverage is required. Thus, the patient who is determined after the visit to have indigestion from a spicy meal, but is a diabetic, hypertensive, hyperlipidemic male with chest pain cannot be denied coverage for his visit solely based on the fact that he did not experience a heart attack.

Some theorize that providers could litigate financial injury for failure to make payments for covered conditions under the prudent layperson statute. The issue of standing and whether providers represent an intended beneficiary of the statute remains undetermined. Standing is the legal theory that an individual must assert hir or her own rights and claims before the court that is specific to his or her interest that the statute was intended to cover. Given the financial effect on the medical practices and the fact that the statutes were created to require payment to providers in these cases, it is reasonable to assume that standing would be granted to providers in the case of litigation.

The right legal standard also must be used when targeting Medicaid vs. private insurance. The Medicaid limits have been barred by federal statute for 20 years and are not a source of current political controversy. In contrast, the prudent layperson protections for privately insured patients is only provided by the Affordable Care Act in states such as Missouri that do not have state level prudent layperson protections, a current area of significant political danger. If this provision were to be eliminated from federal law, it would leave the patients and providers in these states subject to even greater risk of denial.

Medicaid Requirements

The Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) requirements for Medicaid plans may be violated by many of these programs and be a further legal remedy. EPSDT requires that Medicaid cover “any medical or remedial service recommended by a physician ... for the maximum reduction of physical or mental disability and restoration of an individual to the best possible functional level.”5 Medicaid rules that have conflicted with EPSDT requirements previously have been declared invalid.6 These requirements apply to any child younger than 21 years of age.

Many of the Medicaid visit limit programs involve children younger than 21 years of age and could affect their ability to maintain the best possible functional level. In fact, in a recent analysis in Washington state’s Medicaid program, the non-dual eligible Medicaid population seasonal variation of potentially avoidable visits was because of children younger than 21 years of age. Most of these visits were for minor traumatic injuries, upper respiratory illness, abdominal pain, and other conditions commonly included on visit limit lists. Programs that try to prevent these visits for non-payment would risk violating the EPSDT requirement of federal law and invalidate the state level Medicaid rules, such as in Kansas.

CMS Waiver Requirements

Under current law, Medicaid programs are joint federal- and state-administered endeavors that require federal approval for most significant policy changes, often referred to under the banner of Medicaid waiver requirements. Previously, courts have ruled that where Medicaid rules conflict with federal requirements, they are unconstitutional under the Supremacy Clause of the U.S. Constitution, Article VI.7 These changes to policy not only must be submitted for federal approval, but “may not be implemented until federal approval is actually obtained.”8 Thus, violation of the federal prudent layperson standard, EPSDT, or statutory requirements that were not properly vetted through CMS for approval could be blocked until proper approval is received. Although temporary in effect, this could lead to the opportunity for better redress and negotiation of alternative policies while any waiver works its way through the federal process.

Theft of Service

Physicians have preferred to focus on the patient and argue on the moral authority instead of consideration of their own right to payment for services rendered, but with increasing pressure, the concept of theft of service arises as a potential legal remedy. Theft of service is a legal doctrine that states a crime has occurred when: “1) the person obtains services, known by that person to be available only for compensation, by deception, force, threat, or other means to avoid payment for the services; 2) having control over the disposition of services of others to which the person is not entitled, the person knowingly diverts those services to the person’s own benefit or to the benefit of another not entitled to them.”9

While each jurisdiction will operate under its own legal statute, the concept of theft of services and potential criminal and civil remedies could be considered. Arguably, insurers have directed their beneficiaries to the ED to seek care for conditions that they know they will not pay for and, thus, have benefited from services that they are not entitled to receive. Alternatively, the insurers have obtained services and used the threat of retaliation with contract to make non-payment for a list of conditions they know requires compensation.

These legal theories have limited testing in addressing patients who have sought uncompensated care with fraudulent means, but not against large insurance companies for systematic denials of compensation. As such, this would be a potentially novel application that warrants further exploration and discussion if it can provide relief to patients and colleagues.

Prior Authorization

Prior authorization reform has become a hot button issue over the past year. Large coalitions of providers, hospitals, and healthcare organizations have banded together to demand reform of the system.10 With a list of 21 principles available from the taskforce,11 one key element is clear: “Prior authorization should never be required for emergency care.” Additional requirements for transparency and medical validity further argue against visit limitation policies. Many states are in the process of reforming their prior authorization and utilization management programs. Including barriers to retrospective denials that are one step removed from prior authorization could help prevent the spread of these inappropriate visit limitation lists.

While subject to the political process, the indignation that providers feel at insurers telling patients with life-threatening conditions that they cannot seek care resonates with the broader public and politicians. By working these bills through the legislative process, much as what happened with prudent layperson laws 20 years ago, it is possible that this issue could return to the shadows once more.

Emergency physicians stand at the intersection of many failed healthcare policy efforts. The ED visit limits are an attempt to punish those who care for all patients regardless of their ability to pay. These types of denials and limits may reduce potentially avoidable care, but also important and necessary care that helps our patients. These efforts threaten our ability to provide care. These attempts cannot be left to stand and must be met with the full force of the law to ensure that the safety net remains able to care for this vulnerable population. It is one more way we advocate for patients, by making sure they can receive the care they need.


  1. Craig CS. New concerns arise over application of prudent layperson standard in the ED. CIPROMS Medical Billing, May 18, 2017. Accessed Sept. 13, 2017.
  2. Hiltzik M. A big health insurer is planning to punish patients for ‘unnecessary’ ER visits. Los Angeles Times, June 2, 2017. Available at: Accessed Sept. 13, 2017.
  3. Claxton G, Rae M, Panchal N. Consumer Assets and Patient Cost Sharing. The Henry J. Kaiser Family Foundation, March 11, 2015. Available at: Accessed Sept. 13, 2017.
  4. Blachly L. ACEP initiative supporting ‘prudent layperson’ standard becomes law in health care reform act. ACEP News, May 2010. Available at: Accessed Sept. 13, 2017.
  5. 42 USC 1396d(a).
  6. Samantha A v. DSHS, 171 Wn.2d 623 (2011).
  7. Orthopaedic Hosp. v. Belshe, 103 F.3d1491, 1496 (9th Cir. 1997).
  8. California Hosp. Ass’n v Maxwell-Jolly, 777 F. Supp. 2d 1129,1148 (E.D. Cal 2011).
  9. AS 11.46.200. Theft of Service (Alaska).
  10. American Medical Association. Health Care Coalition Calls for Prior Authorization Reform. AMA News, Jan. 25, 2017. Available at: Accessed Sept. 13, 2017.
  11. Prior Authorization Reform Taskforce. Prior Authorization and Utilization Management Reform Principles. Available at: Accessed Sept. 13, 2017.