Medicaid Managed Care and COBRA: Do Some Screening Procedures Violate the Law?

As more Medicaid programs put their members into managed heath plans, EDs across the country are confronting managed care on an unprecedented scale. And many hospitals are running afoul of federal anti-patient-dumping legislation in the process, say some experts.

"Managed care issues comprise the fastest growing area of complaints to HCFA regarding emergency care," says Robert Bitterman, MD, JD, Director of Risk Management and Managed Care in the Department of Emergency Medicine at Carolinas Medical Center in Charlotte, NC. "Some states and participating hospitals have set up triage and screening procedures to treat Medicaid patients differently than other ED patients."

Managed care organizations generally seek to discourage treatment in the ED, often by refusing to authorize payment for services rendered. As these EDs attempt to comply with new authorization requirements while minimizing their exposure to unreimbursed costs, some are developing programs that may meet state standards but will not hold up against the federal requirements, Bitterman says. "What people don’t realize is that federal law preempts state law."

COBRA/EMTALA: The letter of the law

The Emergency Medical Treatment and Active Labor Act (EMTALA), also called COBRA because it was originally passed as part of the Consolidated Omnibus Budget Reconciliation Act, has been on the books for over a decade, yet confusion still remains over just what the law requires, says Glenn C. Freas, MD, JD, Associate Program Director, Emergency Medicine Residency of Allegheny University Hospitals.

COBRA/EMTALA simply mandated that everyone presenting to the ED receive treatment regardless of their ability to pay, Freas explains. The law specifies that everyone is entitled to a medical screening examination (MSE) to determine whether an emergency condition exists, but the law did not outline what exactly the examination should involve or who should perform it.

In 1995, the Health Care Financing Administration (HCFA) released rules clarifying specific requirements under the law, but failed to strictly define an MSE, Freas says. It simply ruled that the exam should be performed by qualified medical personnel.

"They basically reserved the right to retrospectively review all situations and then determine whether the standard was met or not," he says.

Though the law itself is not specific, courts have generally held that an MSE is physician-directed, and should involve a history, lab work, and x-rays to rule out an emergency situation, Freas says.

However, some hospitals, for example, the University of California-Davis, have established procedures where specially trained nurses and other medical personnel perform screening exams. These nurses may "triage out" patients not deemed in need of emergency care.

"That’s been deemed to be OK by HCFA," Freas says, "as long as everyone is treated the same way and you have written procedures defining what your screening exam is."

To complicate matters, telling patients their plan will not pay for the treatment and that they will be receiving a bill may also constitute "financial coercion" and be deemed illegal, Bitterman says. HCFA also ruled that the MSE cannot be delayed to collect insurance information.

Many hospitals thought that meant they were not allowed to ask about insurance at all, Freas says, but HCFA has ruled that information can be obtained as long as it doesn’t constitute a significant delay in their care.

An example in Georgia

The state of Georgia’s move to put its Medicaid population into managed care, through the Georgia Better Health plan, has had a significant impact on the ED of Scottish Rite Children’s Medical Center in Atlanta. Prior to the change, only a small portion of the ED’s patients were in managed health care plans and arrived without authorizations, says the ED’s former medical director, Joseph Simon, MD, currently the hospital’s medical director for the integration of care delivery.

"When we were suddenly faced with 33% of our population that needed authorizations, we thought maybe we’d better set up a system to deal with it," he explains.

Two years before, Scottish Rite had begun a nurse advice telephone service, Rite Call, marketing it to the community and to area primary care physicians, he notes. Rite Call nurses used protocols covering about 30 standard chief complaints to determine whether a child should be taken to the emergency room or could wait to see his or her primary care physician (PCP).

Scottish Rite updated and expanded these protocols to serve as an additional screening process for patients whose managed care plan requires preauthorization.

"We converted those telephone questions into questions our nurse could ask in the triage room," Simon says. "We also added some observations that our nurse could make face-to-face, that the nurse on the phone wouldn’t be able to do."

The process works like this:

• A child is brought to the ED by his or her caregiver. The child is seen by a triage nurse. If the child is so sick that he or she needs immediate attention, they are then seen immediately by an ED doctor, no questions asked.

• If not, the child undergoes a second triage by the nurse, who then takes more specific information, looking at vital signs, listening to the heart, etc.

• If the child is still not deemed to be in need of immediate care, he or she is registered in the ED. Insurance information is obtained, and, if a call for authorization from a primary care provider is needed, it is made.

• Patients in managed care plans, like Kaiser or Georgia Better Health, are given an additional triage, using the established protocol for their chief complaint. The protocol consists of a series of approximately 20 questions and observations, in a yes-or-no format, designed to determine whether the patient is stable enough to be discharged to their PCP’s office. A "yes" answer to even one of these questions immediately classifies the child as emergent and halts the process. This procedure takes approximately two minutes.

• When the primary care provider calls the department, he or she either authorizes the visit in the ED or denies. If payment for ED services is denied, the PCP speaks with the patient’s parent on the phone and is asked to explain the reasons for denial.

After the call, the caregiver is informed that the child may still receive treatment in the ED, but the parents will be responsible for the bill themselves.

• If the patient elects to leave, the hospital asks the parents to sign a form acknowledging that they have been informed of their right to care, that they would not be subject to immediate payment, and that they still choose to leave.

"By this time, they have undergone four separate screenings for an emergent situation," Simon says. "We feel very confident that the children have been through a vigorous assessment, that is chief-complaint specific. It is not a general screen."

The process has worked very well for the four months it has been in place, Simon says. The hospital is not receiving retroactive denials of payment for care without failure to obtain preauthorization, the patients are being adequately screened to determine whether a true emergency exists, and they are able to be treated in the proper setting, he notes.

Is this system a viable alternative? According to Bitterman, the point is neither how well the process is working, nor how many people are doing it, but rather, whether the screening is discriminatory. "Scottish Rite appears to discriminate based on the patient’s insurance status," he says.

First, the hospital must designate who is qualified to perform its MSEs. If the hospital designates physicians, then its process is a violation because some managed care patients are never seen by physicians during their visit, Bitterman says.

The MSE also must be the same for everyone, he says. Even if the hospital designates nurses to perform the screening, if managed care patients receive different evaluations than other patients who present to the ED with similar complaints, the process is discriminatory and violates COBRA.

However, if the hospital designates nurses to perform all of its screening exams and they determine the patient does not have an emergency medical condition, then the hospital is free to examine the patient further or "triage out" based on insurance status after that determination, Bitterman clarifies.

The procedure in place at Scottish Rite has been extensively reviewed by medical and legal personnel both inside and outside the facility and deemed to meet COBRA requirements, Simon says.

He denies the process is treating patients in a discriminatory manner. "First of all, the [protocol] can only be used to increase urgency," he says. "It’s not a question of my getting paid or not. That’s not why we do it."

Because the hospital uses such liberal criteria in defining an emergent condition, almost 90% of those presenting are deemed to be emergent and treated, he says. Of the 10-15% who are not deemed emergent, half of those are approved for care in the department by their PCP, he estimates.

In many of these cases, the health plan still denies payment after the fact when it feels the situation was not an emergency, but the hospital then absorbs the cost of that visit, Simon notes.

Simon acknowledges that not all patients at Scottish Rite undergo the same screening process, but says that is because other patients either have insurance that doesn’t require authorization for treatment in the ED or they simply have no one to call.

"Some patients may not have a primary physician," he says.

The ED staff is simply complying with the mechanism instituted by that patient’s health plan to managed their medical care and then informing the patient when their insurance will not pay for services in the department, Simon says.

"To me, the heart of it is, we are not denying the patient care," he claims. "We are simply allowing them to make a fully informed choice."

Physicians have a "moral obligation" to inform patients that they will receive a bill, Simon contends. And, since all patients presenting to the ED must sign a form acknowledging they will be responsible for charges, this does not "coerce" managed care patients any more than those with standard insurance, he says.

Washington’s plan

A plan developed by Washington state’s Medicaid is being adopted by other MCOs in the state because it discourages over-utilization of the ED, but doesn’t attempt to force emergency physicians to bear the cost of its members’ mistakes, says Robert Apter, MD, Medical Director of Island Hospital in Anacordes.

Under the Medicaid procedure, patients are supposed to call their PCP before coming to the ED, obviating the need for the ED staff to call for authorization. Apter acknowledges that this is not always the case.

If a Medicaid patient presents to the ED without calling their PCP and their condition is not deemed an immediate emergency during triage, a call is placed by department staff, Apter says.

The Medicaid and managed care patients will still be seen by the ED physician for a screening exam like everyone else, but if the PCP denies authorization for treatment there and wants to see the patient in the office, the ED physician does not have to do as extensive a workup, Apter says.

"We know that they are going to be seen," he says. "We just have to make sure they are well enough to be seen later that day."

The physician will get a $35 screening fee from Medicaid for the care he gives to the patient in the ED, Apter says.

Apter says he feels this system works better than the "prudent layperson" approach to defining an emergency.

"[The system] works to keep people out of the ED, and the emergency physicians don’t feel abused because they know they are going to get a screening fee for seeing them," Apter states.

However, that procedure is also vulnerable to COBRA challenges if the physician is merely doing an "eyeball" workup of the patient, Bitterman explains.

"If a child presents with a cough, fever, and wheezing and normally you would do a pulse-ox and a chest x-ray to determine if an emergency exits, but, for that Medicaid patient in that situation you don’t, then the exam is a violation of COBRA," he says. "You’ve provided a different sort of screening based on the patient’s insurance: That’s discrimination under the law."

Differing philosophies

At the heart of the matter is a dispute between physicians who would say EDs have to work with managed care organizations to reduce utilization of the ED and those who say that that battle should be fought elsewhere.

"Some people would rather the hospital spend millions of dollars taking care of non-urgent cases than risk paying a fine," says Simon. "We’re not afraid to argue in court that we are doing the best we can to comply with COBRA and the state regulations at the same time."

If ED physicians continue to routinely treat non-urgent cases, it will hurt emergency medicine in the long run, he continues. "Society has said it is not acceptable to have 15% of our gross national product spent on health care," he says. "If we don’t find a way to reduce utilization now, we are going to pay for it later."

Many ED physicians are biased in favor of keeping up the volume in the departments, he claims, and don’t want to let go of the lower-acuity patients who could be adequately seen in other settings.

"They may have some short-term successes, but, in the long run, they are going to see their fees cut to pay for overutilization of the ED," he predicts.

Bitterman argues that it is the MCO’s job to divert non-urgent cases from the ED, but that once a patient enters the ED, they become the responsibility of the physician they see there.

"You can’t tell me that someone on the phone who hasn’t even seen the patient can determine whether there is an emergency or not," Bitterman states. "It’s hard enough (to make a diagnosis) when they are standing right in front of you."

What can happen

When considering the regulations imposed by MCOs, it’s important to remember that the MCO cannot be sued or fined under COBRA, Bitterman notes.

And because "authorization" by the MCO is legally only authorization for payment, not for treatment, only the hospital and the ED physician are liable for any violations. "HCFA has a rule that specifically states that MCOs cannot deny care," Bitterman says. "They can only deny payment."

If a department is cited for a violation of COBRA, the hospital could be fined and lose its participation in Medicare—essentially a death sentence, Freas explains. The facility would also be liable in civil court for any damages awarded to a plaintiff who filed suit under the statute.

In addition, individual physicians can be fined up to $50,000 for each violation and lose their participation in Medicare.

Individual physicians cannot be sued in civil court under COBRA, Freas says, but if the hospital were to claim that responsibility for the violation rested solely with one doctor, then it wouldn’t take much for an attorney to enjoin the physician as a party in the suit, he says.

It’s also important to keep in mind that a bad outcome does not have to occur for a facility to be cited.

"There doesn’t have to be harm," Freas emphasizes. "If someone comes in with a stubbed toe, something that should obviously be treated elsewhere, and the registration person says, ‘You should go see your primary care provider,’ that’s a violation of COBRA, he states.

When telling the person that their PCP has refused to authorize treatment in the ED, the staff must make it clear that the person will be seen in the department if they wish, regardless of their ability to pay, Freas says.

"You cannot refuse treatment to someone who presents in your department," he says. "That’s the law."