Don’t let COBRA cut your economic lifeline
Medicaid presents a Catch 22’
The increase in managed care and the subsequent requirement that patients seek treatment at specific health care facilities have spawned a rash of violations under a sprawling federal law the Consolidated Omnibus Budget Reconciliation Act (COBRA).
The law was designed to ensure that all people needing emergency medical treatment get it often leaving the treating health system to foot the bill.
What’s worse, if you fail to provide emergency screening and necessary treatment to the out-of-plan patient, the financial consequences can far exceed what might have been shelled out for the cost of care.
"It’s a nuclear blast type of sanction," says Stephen Frew, JD, president of the Frew Consulting Group in Rockford, IL. "Prosecutors go right for the big guns. There are no intermediary-type sanctions." Penalties can reach $50,000 per violation and expulsion from the Medicare program. To date, a dozen hospitals have been tagged with COBRA violations and suspended from Medicare reimbursement. In 10 of those instances, the hospitals were reinstated within six months. Two are out for good, Frew says.
Whistle-blowing
One of the more unsettling components of the law is the "rat-on-your-neighbor" requirement. In short, this portion of the law says that if your health system receives an inappropriate transfer from another hospital, you must report the incident to federal authorities or risk sanctions yourself, says Claudia Hinrichsen, JD, an attorney with Nixon, Hargrave, Devans & Doyle in Garden City, NY.
When this law went into effect in September 1995, Frew says reporting did go up, but many hospitals also failed to report inappropriate transfers, thinking that it was a law that was not actively enforced. That perception changed last October when the federal government successfully prosecuted its first case for failure to report. "With that case, the government has gone on record saying that if you didn’t report and the other hospital was the first one in violation, we’re going to terminate you, too, [from Medicare] for failure to report," Frew says. The law states that the hospital must report within 72 hours after receiving an inappropriate transfer, Frew adds.
Florida has taken that one step further, requiring hospitals that make an inappropriate transfer to report themselves. The federal law does not mandate self-reporting. "I seldom, if ever, suggest self-reporting unless the state requires it," Frew adds. "Getting [investigators] to your hospital is the thing most to be avoided. The scope of their investigation protocol is most thorough. If any [other] violations are undetected, unremedied, you’re at-risk."
The Medicaid problem
Many states have injected managed care and capitation into their Medicaid plans increasing the risk of violating the COBRA law for health systems that are not part of a Medicaid managed care plan but get capitated Medicaid patients presenting at their emergency departments, Frew says.
"The important thing here for hospitals to be aware of is that the federal government has issued guidelines, even in waiver states, that say the [out-of-plan] hospital is still required to conduct and thereby pay for the medical screening exam," Frew says. "That puts hospitals between a rock and a hard place. If they do what the federal law says, they won’t get paid. If they don’t do what the federal law says, they could end up closing [because they’ve been expelled from Medicare]."
Frew says he’s aware of one hospital that allegedly violated the federal law 72 times when it failed to properly screen or treat out-of-plan Medicaid patients. "[The hospital is] potentially liable for 72 violations at $50,000 a violation," he says. The case, in which Frew declined to identify the hospital, is currently working its way through the legal process.
Frew also warns hospitals about a group of patients who can make them susceptible to COBRA violations "frequent fliers" who, for whatever reason, make regular visits to an emergency department.
"Frequent fliers must get a complete screening each time they come in, even if they were there just there three hours ago," Frew says. "Most people think the law refers only to emergency medical conditions and that people who do not have emergency medical conditions aren’t covered. That type of thinking is incorrect. The statute is very clear that every single person must receive a medical screening exam on every emergency department visit."
This requirement may drain an emergency department’s resources, but the intent of the law is to protect the patient and even the hospital since chronic emergency department visitors represent one of the highest medical malpractice risks, Frew says. "The headache yesterday was a migraine. [The patient] is back in today with a headache and now also has an enlarged bruise at the base of the skull. But nobody checked for it because this patient always has headaches," Frew says. "That type of mind-set can get you in a lot of trouble."
Many people erroneously refer to COBRA as a patient "anti-dumping" law and thereby ignore its details. People often say, "We don’t dump" and think that the law then does not apply to them, Frew adds. "The law has very little to do with patient dumping," he explains. "The crux of that matter is that COBRA is a guaranteed access law that is in direct contradiction to the gatekeeper model of health care that plays such a big role in managed care."
While the medical community tends to refer to the law as COBRA, legal types tend to refer to it as ETMALA, which stands for the Emergency Medical Treatment and Active Labor Act. Both acronyms refer to the same law.
Treating desperadoes
One unusual problem you may encounter involves situations in which police drop off a suspected criminal at an emergency department but don’t arrest the person -– thus potentially evading the cost of care and leaving the treating facility to pick up the bill. "It’s a common practice among law enforcement agencies to refrain from arrest to avoid providing medical care," says Jack Duffy, corporate director of patient financial services for ScrippsHealth in San Diego.
If this happens at your facility, Duffy recommends sending a letter to the law enforcement agency involved, saying that it assumes the agency is going to accept financial responsibility and that it should expect a bill.
"Be prepared to go to court," he advises. "You’ll find that if you’re willing to defend your rights as a provider and confront the district attorney or whoever, they are not going to go to court to explain what happened. You’ll often get a phone call right about then, negotiating a settlement."
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