EMTALA and Prudent Layperson Standard FAQ

According to CMS, Congress enacted the Emergency Medical Treatment & Active Labor Act (EMTALA) in 1986 “to ensure public access to emergency services regardless of ability to pay”. Section 1867 of the Social Security Act imposes specific obligations on Medicare-participating hospitals that offer emergency services to provide a medical screening examination (MSE) when a request is made for examination or treatment for an emergency medical condition (EMC), including active labor, regardless of an individual's ability to pay. Hospitals and specifically emergency departments are then required to provide stabilizing treatment for patients with EMCs. If a hospital is unable to stabilize a patient within its capability, or if the patient requests, an appropriate transfer should be implemented.

As outlined in FAQ 1, EMTALA obligates Medicare participating hospitals to provide a medical screening examination when a patient presents to the emergency department for examination or treatment for an emergency medical condition (EMC). Until the medical screening examination is provided, hospitals may not query the patient about insurance or payment. EMTALA is an unfunded federal mandate with the greatest responsibility placed on the hospitals and emergency physicians who provide this care shouldering the financial burden of providing EMTALA related medical care whether payment is made.

Some health insurance plans retrospectively deny claims for emergency departments visits, based on a patient's final diagnosis, rather than the presenting symptoms (e.g., when chest pain turns out not to be a heart attack). ACEP continues to advocate for a national prudent layperson emergency care standard that provides coverage based on a patient's presenting symptoms, rather than the final diagnosis. In addition, health insurers should cover EMTALA-related services up to the point an emergency medical condition can be ruled out or resolved.

CMS defines a “dedicated emergency department” under EMTALA regulations using three (3) criteria, and only one of the criteria need be met: 

1. State licensure—the department is licensed as an ED;
2. The department holds itself out to the public as an emergency department via signage, advertising or reputation for addressing emergencies;
3. Treatment patterns: at least one-third of the patient encounters for the preceding calendar year were treatments for emergency medical conditions on an unscheduled, emergency basis. 

EMTALA applies when an individual "comes to the emergency department." A dedicated emergency department is defined as "licensed by the State...as an...emergency department" or "is held out to the public...as a place that provides care for emergency medical conditions (as above)." This means that hospital-based outpatient clinics are not obligated under EMTALA unless they provide more than one-third of care as unscheduled AND those one-third visits are emergency medical conditions as defined by the statute. EMTALA applies to all aspects of emergency care, including specialists, all available tests and procedures, and anything else necessary to determine or stabilize an emergency medical condition. Additionally, a hospital must report any time it has reason to believe it may have received an individual who has been transferred in an unstable condition in violation of requirements of EMTALA.

Health plans for years have denied claims based on the final diagnoses instead of the presenting symptoms that initially brought the patient to the emergency department seeking treatment. For example, if a patient presented to the emergency department with chest pain, but it turned out to be gastric reflux or non-cardiac related, the insurance company would deny payment or down code the claim as non-emergent. Among several different approaches, one of the most common was to measure the final diagnosis against the health plan’s list of “non-emergent diagnoses” and then down code the claim from a higher E&M level to a lower level if the final diagnosis appeared on the list. Often, the reimbursement for the lower level was deemed to be a “triage fee” in the $15-25 per visit range. 

The Prudent Layperson language, adopted individually by most States, defines an 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: a) placing the patient’s health in serious jeopardy; b) serious impairment to bodily functions; or c) serious dysfunction of any bodily organ or part.

According to ACEP's White Paper on Prudent Layperson, “ACEP fought hard for many years at both the national and state levels to secure passage of legislation aimed at protecting emergency patients from retroactive denials of insurance coverage for emergency department visits for conditions that turned out not to be emergencies.”

In the Balanced Budget Act of 1997, Congress enacted the Prudent Layperson Standard for Medicare and Medicaid managed care plans. The prudent layperson standard was extended to all federal employees in 1999 in the Federal Health Benefit Plans by the US Treasury Dept. The Affordable Care Act in 2010 also extended the Prudent Layperson Standard even further to individual- and small-group health plans. Later, the US Dept. of Labor by regulations applied the PLP to ERISA plans and these plans are estimated to cover approximately 130-150 million employees and their beneficiaries in medium and large self-funded employer plans.

PLP was intended to protect both the patients and the clinicians from “ex post facto” determinations that the patient’s condition was not in fact a “true emergency.” Prior to 1997, prior authorization was a common requirement for patients to go to the ED. PCPs were provided “ED authorization numbers” to provide to patients who called first before presenting to the ED. ED physician claims would frequently be either denied or suspended for the lack of the PCP authorization number. Using the mandate of care under EMTALA, ACEP and its stakeholders were able to successfully argue that ED physicians should be protected from denials based on a lack of prior authorization. These and other artificial health plan requirements for “approved” emergency care had placed patients at serious risk, just as patients were put at risk prior to the passage of EMTALA in 1986.

According to EMTALA, Medical Screening Examination and/or stabilizing treatment is not to be delayed in order to inquire about payment status. This does not, however, assure that payers will pay for emergency treatment when treatment is for a condition that does not qualify for emergency payment according to their own unique guidelines. For example, some payers inappropriately use a diagnosis list to determine payment and if the ED visit is performed for a problem not listed, payment may be denied or paid at an allowable rate for a lower level of service, arbitrarily assigned by the payer.  Providers always have an opportunity to appeal a payer’s decision, and it is advised that emergency providers appeal unfair payment decisions when they made are made. Although EMTALA and Prudent Layperson were not designed as a billing and payment policy per se, they give each patient with an “average knowledge of health and medicine” the right to seek emergency care for problems they deem as “serious.”

Medicare and Medicaid health plans are required by law to include compliance with PLP in their agreements with CMS and/or the state Medicaid department. Medicaid managed care entities (MCEs) and commercial plans may state the PLP standards but then they apply a coding and reimbursement policy that undercuts PLP concepts, see previous discussion regarding deployment of “non-emergent” diagnosis lists. 

Unfortunately, some payers look at the diagnosis codes assigned to the final diagnosis statement in the record to determine the medical necessity of the visit rather than consider the symptoms that required the work-up to determine a final diagnosis or rule out a life-threatening condition. For example, a patient may come to the ED because of chest pain, receive a full chest pain work up (i.e., an EKG, a chest x-ray with interpretations, labs including cardiac enzymes, and PO or IV medication) and receive a discharge diagnosis of costochondritis. Although the discharge diagnosis is not life-threatening or considered very serious, the physician utilized high cognitive resources during the ED visit to rule-out an Emergency Medical Condition and determine the final diagnosis. According to Medicare.gov, “medically necessary” is defined as “health-care services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.”  Thus, the service should be considered appropriate and medically necessary.

By contrast, Cigna, a large private payer, defines "Medically Necessary" or "Medical Necessity" as, "Health care services that a physician, exercising prudent clinical judgment, would provide to a patient. The service must be:

1. For the purpose of evaluating, diagnosing, or treating an illness, injury, disease, or its symptoms;
2. In accordance with the generally accepted standards of medical practice;
3. Clinically appropriate, in terms of type, frequency, extent, site, and duration, and considered effective for the patient's illness, injury, or disease;
4. Not primarily for the convenience of the patient, health care provider, or other physicians or health care providers;
5. Not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease."

In April 2000, then HCFA (now CMS) Medicaid Director Tim Westmoreland wrote to state Medicaid directors to clarify the obligations of State Medicaid programs and Medicaid MCOs under the PLP provisions contained in the federal Balance Budget Act of 1997 (BBA 97). Director Westmoreland restated that in an earlier letter from HCFA in February 1998 that the BBA required that contracts between MCOs and states specify that MCOs must cover emergency medical (EM) services without prior authorization.  He then noted that HCFA mandated that CPT codes be accepted by the states, according to the State Medicaid Manual. After a brief description of the EM CPT codes, Mr. Westmoreland made the following statement: 

“We strongly believe that, unless an MCO or a State has reason to believe that a provider is ‘upcoding’ or engaging in activity violating program integrity, all claims coded as CPT 99283 through CPT 99285 are very likely to be appropriately regarded as emergency services for purposes of the BBA and should be approved for coverage regardless of prior authorization. This should not be taken to imply that claims coded as CPT 99281 and CPT 99282 will not also meet the BBA definition; they may, but, as opposed to those claims involving the CPT codes, there may be instances in which payers have a reasonable basis to disagree.”

Significantly, in Virginia Hospital & Healthcare Association, The Medical Society of Virginia and Virginia College of Emergency Physicians (VACEP), Plaintiffs vs. Cheryl Roberts, et al., Defendants (US District Court, ED District VA, April 27, 2023), the federal court ruled that the VA Medicaid “Downcoding Provision” in a state plan amendment approved by CMS violated the federal prudent lay person laws and regulations. The district court’s decision was not appealed by either the state of Virginia or CMS.  

The federal court, in ruling that the state and CMS’ approval of the downcoding provision was arbitrary and capricious, stated that “The failure to explain its decision is of particular concern because CMS’ own preexisting regulations and guidance case direct doubt on the lawfulness of the Downcoding Provision. As noted previously, the Director of CMS explained:

         “[w]henever a payer (whether an MCO or a State) denies coverage or modifies a claim for payment, the determination of whether the prudent layperson standard has been met must be based on all pertinent documentation, must be focused on the presenting symptoms (and not the final diagnosis), and must take into account that the decision to seek emergency services was made by a prudent layperson (rather than a medical professional.)”  (emphasis in the original) (Citing to the Westmoreland letter) (Roberts, at 50-51). 

Finally, the federal court cited the provisions above from the Westmoreland letter that States and MCO should approve CPT 99283 through 99285 for coverage. (Roberts, at 50-51).

Federal Law requires that insurance sold on the individual and group markets and group health plans abide by the Prudent Layperson Standard. According to CFR › Title 29 › Subtitle B › Chapter XXV › Subchapter L › Part 2590 › Subpart C › Section 2590.715-2719A coverage of emergency services in a group health plan, or a health insurance issuer offering group health insurance coverage, must provide benefits with respect to services in an emergency department of a hospital, and the plan or issuer must cover emergency services;

(1) Without the need for any prior authorization determination, even if the emergency services are provided on an out-of-network basis;

(2) Without regard to whether the health care provider furnishing the emergency services is a participating network provider with respect to the services;

(3) If the emergency services are provided out of network, without imposing any administrative requirement or limitation on coverage that is more restrictive than the requirements or limitations that apply to emergency services received from in-network providers;

(4) If the emergency services are provided out of network, by complying with the cost-sharing requirements; and

(5) Without regard to any other term or condition of the coverage, other than the exclusion of or coordination of benefits; an affiliation or waiting period permitted under part 7 of ERISA, part A of title XXVII of the PHS Act, or chapter 100 of the Internal Revenue Code; or applicable cost sharing.

Definition of Emergency Medical Condition. Under the statute, “emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) so 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 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; serious impairment to bodily functions; and to serious dysfunction of any bodily organ or part.

Applicability date. The provisions of federal law are applicable to group health plans and health insurance issuers for plan years beginning on or after January 1, 2017. Until the applicability date for this regulation, plans and issuers were required to continue to comply with the corresponding sections of 29 CFR part 2590, contained in the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

Here is where the problem often lies. Payers look for an “emergency” condition to determine medical necessity for payment, and their definition of “emergency condition” may determine whether the visit is paid in full or even at a lower payment level. Often, the presenting problem looks like an emergency condition but, after a medically necessary work up, the final diagnosis does not appear to support an emergency condition according to the payer policy. Identifying the presenting problem and/or chief complaint on billing forms may better describe the problem that caused the patient to seek emergency treatment. However, according to ICD-10, “Codes that describe symptoms and signs, as opposed to diagnoses, are acceptable for reporting purposes when a diagnosis has not been established (confirmed by) the provider. When a diagnosis is confirmed, it is technically inaccurate to add on the chief complaint, signs and symptoms. There is difficulty in providing “accurate” coding per the ICD-10 rules and identifying the problem when a final diagnosis is made.”

In the example above, the patient who arrived with “atypical chest pain” (R07.89) and diagnosed with costochondritis (M94.0) would be coded with ONLY the costochondritis and not the chest pain which provides the medical necessity for the extensive diagnostic treatment to rule out a cardiac event. It is important to document and code medical necessity for each step in the medical decision-making process, including diagnostic studies and ancillary services. Co-morbidities and risk factors provide additional details to support medical necessity for evaluation and management of the patient.

Adding a thorough and complete differential diagnosis to the encounter when they played a role in determining the diagnostic work up can also help in these situations. In addition, it is very helpful for PLP reasons and successful appeals of down-coding or denials for the ED clinician to notate if the patient was told by their PCP to present to the ED and the reasons behind that recommendation.

Not all of a patient's past medical history will be pertinent in every visit, but those that needed to be managed (hyperglycemia/diabetes in a patient who presents for cellulitis) or played a role in determining the evaluation (ordering a CT soft tissue neck in a patient with a sore throat who has HIV) should be added to the final diagnoses of the encounter.

For those payers who look to the final diagnosis on the claim form to determine the appropriateness of emergency department care, it may be in the emergency provider's best interest to also include the codes for signs and symptoms to provide enough information to allow the payer to make appropriate decisions about payment.

References:

1. State-by-State listing of EMC language
2. Prudent Layperson article
3. Emergency Medical Treatment and Labor Act (EMTALA), Centers for Medicare and Medicaid Services 
4. Cigna Definition of Medically Necessary
5. ACEP EMTALA Fact Sheet 
6. Private Payer Coverage of Prudent Layperson
7. Federal Prudent Layperson Standard