Jan. 27, 1999 
Dear State Medicaid Director: 
In the past few months we have received reports of providers which have 
inappropriately required Medicaid patients to make cash payments for Medicaid 
covered services. There have been reports from States of incidents where an 
anesthesiologist would not provide an epidural to a Medicaid patient in childbirth 
unless she paid in advance, with her own funds, for the procedure. In one instance, 
the obstetrician had ordered the epidural in advance but when the woman was in 
active labor, she was refused this service for lack of pre-payment. Even though she 
tried to pay by check, credit card and a Western Union Money telegram, the doctor 
refused anything but cash. Treatment of a Medicaid patient in this manner is not just 
a concern, it is alarming. I am writing to request that you alert your hospitals to this 
situation and make every effort to assure that they understand their responsibilities 
in this area under the conditions of participation. 
It is important to emphasize a hospital's responsibilities in this situation under the 
Medicaid program. A hospital which accepts a Medicaid patient for treatment accepts 
the responsibility for making sure that the patient receives all medically necessary 
services. The conditions of participation which govern hospitals providing care to 
Medicaid and Medicare patients require that the governing body of the hospital 
assures accountability of the medical staff for the quality of care provided to 
patients. This means that there must be an effective hospital-wide quality assurance 
program to evaluate the provision of patient care; and that all organized services 
related to patient care, including services furnished by a contractor must be 
evaluated and where deficiencies are identified, remedial action must be taken (42 
CFR 482.12, 21 & 22). 
A Medicaid State agency may place appropriate limits on a service based on medical 
necessity or utilization control criteria (42 CFR 440.230(d)). Accordingly, if providers 
(including but not limited to anesthesiologists) do not accept a particular patient for 
treatment, the hospital has the responsibility of assuring the delivery of these 
medically necessary services. Where epidurals are a covered benefit under a State's 
Medicaid program and the service is determined to be medically necessary, a 
pregnant Medicaid beneficiary is entitled to receive the service from a provider who 
has accepted her for a patient without the imposition of deductibles, cost sharing or 
similar charges. 
Each physician determines whether or not to accept an individual patient for 
treatment. A doctor who is participating in a State's Medicaid program, and agrees to 
treat a Medicaid patient covered by the state plan, may not require a copayment for 
his or her services, but must accept payment by the State Medicaid agency as 
payment in full. Under federal Medicaid law, deductions, cost sharing or similar 
charges are not permitted for Medicaid services furnished to pregnant women. Thus, 
a participating physician's demand for these additional payments would be in 
violation of the law. However, where a physician accepts an individual for treatment 
not as a Medicaid patient but as a private patient, and the Medicaid beneficiary 
accepts the arrangement as a condition of treatment through pregnancy and 
delivery, the arrangement is not governed by Medicaid program requirements. For  example, in such a physician non-Medicaid patient arrangement, where a routine 
delivery is anticipated, as part of her prenatal counseling the patient's options for 
pain relief medication during childbirth may be explained to her. If she requests an 
epidural, it is explained that the anesthesiologist's fee for this procedure must be 
paid in advance, prior to the time of hospitalization and delivery. This is not a 
situation covered by Medicaid program requirements. 
The Department of Health and Human Services' Office of Inspector General has been 
asked to investigate the provider referred to in this letter's first paragraph. To be 
pro-active about the concerns which are being raised, we urge you to alert your 
providers to their respective responsibilities with respect to services provided to 
pregnant Medicaid patients. 
Thank you for your cooperation. If your staff have questions, regarding this letter 
they may be directed to Peggy Rahn via e-mail at prahn@hcfa.gov, or by phone at 
(410) 786-3284. 
Sincerely,  
/s/  
Sally K. Richardson  
Director  
Center for Medicaid and State Operations 
cc: 
Nolan Jones National Governors' Association  
Joy Wilson National Conference of State Legislatures  
Lee Partridge American Public Human Services Association  
All HCFA Regional Administrators  
All HCFA Associate Regional Administrators for Medicaid and State Operations  
Department of Health and Human Services Office of Inspector General