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DEPARTMENT OF HEALTH & HUMAN SERVICES Office of Inspector General 

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Memorandum 

Date Nov 41994 

From	 June Gibbs Brown 

Inspector Genera 8 

‘Ubjec[
OIG Final Rep t: Medicaid Overpayments for Post-Partum Care 

to Undocumented P’ iens,” OEI-O7-95-OOO1O

To	 Bruce C. Vladeck 

Administrator 

Health Care Financing Administration 

The purpose of this memorandum is to alert you to information


we uncovered during a review of the Systematic Alien


Verification for Entitlements (SAVE) program. We have found


evidence that some State agencies are making improper payments


for pregnancy services delivered to undocumented aliens. This


information has been shared with HCFA staff, who have already


taken some action on the information we have provided.


Backcmound


While a number of sections of Title XIX define eligible


populations for medical assistance generally, and pregnancy


related services specifically, Section 1902(a) qualifies such


language by stating:


ItNotwithstanding paragraph (10)(B) or anY other Provision 

of this subsection, a State Plan shall provide medical


assistance with respect to an alien who is not lawfully


admitted for permanent residence or otherwise permanently


residing in the United States under color of law only in


accordance with section 1903(v)”.


Section 1903(v) states that unrestricted Medicaid payments can


be made for those aliens lawfully admitted for permanent


residence or are permanently residing in the United States


under color of law. For those aliens who are not lawfully


admitted to the United States, known as undocumented aliens,


Medicaid payments can be made for an emergency condition only.


The statute defines “emergency medical condition~’ as a medical


condition (including emergency labor and delivery) which


manifests itself by acute symptomsof sufficient severity


(including severe pain) that the absence of immediate medical


attention could reasonably be expected to result in:


(A) placing the patient’s health in serious jeopardy


(B) serious impairment to bodily functions, or


(C) serious dysfunction to any bodily organ or part.

Page 2 - Bruce C. Vladeck 

Under such a definition, Federal financial participation (FFP)


is not available for routine prenatal or post-partum care for


undocumented aliens.


Current Studv


We are currently conducting a review of the cost-effectiveness


of the SAVE program, which is administered by the Immigration


and Naturalization Service. States are required to use SAVE to


verify the immigration status of alien applicants for Aid to


Families with Dependent Children and Medicaid. Our inspection


included a review of SAVE in four States: California, Florida,


Illinois, and Texas.


As part of our review, we analyzed a sample of client case


files in each State to determine if SAVE had identified clients


who had applied for benefits but were not eligible because of


their immigration status. The results of this review will be


detailed in a full report on the cost-effectiveness of SAVE


which will be issued later in the year.


Findinas


During the course of our study, we were informed by county case


workers in California that the Medi-Cal (Medicaid) program


covers prenatal and post-partum care for undocumented aliens.


TO follow up on this information, we contacted the California


Department of Health Services, which administers Medi-Cal. We


requested a written response to questions we submitted to them


concerning coverage of pregnancy related services for


undocumented aliens.


The Department responded that California does not cover


prenatal care for undocumented aliens under the Federal/State


portion of the Medi-Cal program. Prenatal care for eligible


undocumented aliens is provided under a State only financed


program. However, the Department stated that California does


cover post-partum care for undocumented aliens under the


Federal/State financed program.


Upon receipt of this information from California, we contacted


staff in the HCFA Medicaid Bureau to confirm our conclusion


that the State erred in covering routine post-partum care for


undocumented aliens under the Medi-Cal program. We sent HCFA


the response from the California Department of Health Services,


as well as a summary of their Medi-Cal Manual which addresses


coverage of pregnancy related services. We also forwarded a


copy of the Illinois De~artment . of Public Aid Medicaid


instructions to their counties concerning coverage of pregnancy


related services, which seemed to represent a similar


interpretation of the law.

Page 3 - Bruce C. Vladeck


The HCFA staff responded that it appeared that both California


and Illinois were making incorrect payments based on their


State Medicaid policies. In subsequent conversations between


HCFA central office staff, regional staff, and State of


California staff, State officials admitted that erroneous


Federal Medicaid costs have been claimed based upon their


incorrect interpretation and issuance of State policy


describing coverage of post-partum care for undocumented


aliens. The HCFA also contacted its regional staff for the


State of Illinois, where we found evidence of a similar


problem.


We have contacted Florida and Texas, the other two States in


our sample. It appears they are following the intent of the


law and are not paying for routine pregnancy services for


undocumented aliens.


Recommendation


The HCFA staff has verbally informed us they intend to issue a


notice to all of their regional offices to assure that Federal


Medicaid funding is claimed only for emergency labor and


delivery services provided to pregnant undocumented aliens. We


support this clarification in procedure and would appreciate


receiving a copy of the notice.


We further suggest, in addition to clarifying policy, that HCFA


systematically contact all States to determine where


overpayments may have been made for pregnancy related care for


undocumented aliens because of confusion in State policy.


Based on the information collected through this review, HCFA


should initiate recoveries. We also request that HCFA notify


us of the total overpayments identified, and the total


recovered.


Should you have any questions or comments concerning this


memorandum or the results of our review, please do not hesitate


to contact me or George Grob, Deputy Inspector General for


Evaluation and Inspections, or have your staff contact Penny


Thompson at (410) 966-3138.