Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

Routine Prenatal and Postpartum Care 

for Undocumented Aliens 

JUNE GIBBS BROWN 

Inspector General 

MAY 1998 

OEI-07-96-00310 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI’s Kansas City Regional Office prepared this report under the direction of James H. Wolf, 

Regional Inspector General. Principal OEI staff included: 

REGION HEADOUARTERS 

Hugh Owens, Project Leader Wynethea Walker, Program Specialist 

Michael Barrett, Program Analyst 

To obtain copies of this report, please call the Kansas City Regional Office at (8 16) 426-3697. 

Reports are also available on the World Wide Web at our home page address: 

http:llwww.dhhs.gov/progorg/oei 
EXECUTIVE SUMMARY 

PURPOSE 

To determine if States are claiming Federal reimbursement for routine prenatal and postpartum 

care for undocumented alien women. 

BACKGROUND 

The Omnibus Budget Reconciliation Act of 1986 amended the Social Security Act to limit Federal 

payment for emergency medical services under the Medicaid program to undocumented aliens 

except in certain circumstances. The amendment explains that an emergency medical condition 

occurs when the patient’s health would be in serious jeopardy caused by serious impairment to 

bodily functions, or serious dysfunction of any bodily organ or part without immediate medical 

attention. This includes labor and delivery but does not include routine prenatal and postpartum 

care, generally referred to as those periods “preceding birth” and “after childbirth.” 

This review is a follow-up to a prior inspection which found that two States covered and claimed 

Federal funds for routine postpartum care for undocumented alien women. 

We surveyed the Health Care Financing Administration’s (HCFA) Central Office and regional 

offices to determine the extent of directives they had released to States covering specific policies 

on claiming Federal funds for non-emergency medical treatment. We also surveyed all Medicaid 

State and territorial agencies to determine if they cover and claim Federal funds for routine 

prenatal and postpartum care. Further, we requested copies of their policies and procedures 

regarding coverage for undocumented aliens. 

FINDINGS 

Six States Have Claimed Federal Funds for Routine Prenatal and Postpartum Care for 

Undocumented Alien Women. Three Still Do. 

We found that Nebraska, New York, and West Virginia cover both routine prenatal and 

postpartum care and claim Federal funds for these services. Nebraska has a global obstetric 

package that covers prenatal, delivery, and postpartum care. New York is claiming Federal funds 

for prenatal services pursuant to an order from the United States District Court for the Eastern 

District of New York (reference our third Finding) and continues to claim postpartum care as part 

of a Medicaid benefit package. West Virginia covers visits during both the prenatal and 

postpartum periods. These States are presently claiming Federal funds. 

i 
We also found that three other States have covered some of these services. Minnesota claimed 

Federal funds only on routine prenatal care from July 1994 to July 1997. Oklahoma and 

Vermont, although not routinely claiming Federal funds for prenatal and postpartum care, 

indicated that they have in the past been claimed for undocumented alien women in limited 

instances (i.e., citizenship status of the undocumented alien was not known to the provider at the 

time the services were rendered). 

Survey Respondents in 31 States and Territories Indicated They Were Not Aware of 

HCFA’s Guidance on this Subject. Two HCFA Regional Offices Did Not Send Guidance to 

States. 

Respondents in Nebraska, Vermont, and West Virginia, along with 28 other States and territories 

noted that they were not aware of HCFA’s guidance which addressed routine prenatal and 

postpartum care for alien women. This was despite HCFA’s various efforts to make States aware 

of policy provisions. 

Two HCFA Regional Offices (Denver and Kansas City) did not send guidance to the States in 

their region subsequent to HCFA Central Office’s issuance of the October 12, 1994 memorandum. 

A Federal Court Has Ordered Continuation of Benefits in New York 

As noted earlier, New York continues to claim, and HCFA continues to pay, Federal funds 

pursuant to an order of the United States District Court for the Eastern District of New York in 

Lewis v. Grinker. 

It is our understanding that the Department of Health and Human Services, acting through the 

Department of Justice, has recently petitioned the New York Federal court to vacate this order 

based on the Personal Responsibility and Work Opportunity Reconciliation Act, Public Law 

104- 193 (1996). In the meantime, and until the order is vacated, HCFA is authorized by its own 

regulations to pay for Medicaid services provided pursuant to court order. 

RECOMMENDATIONS 

In an earlier inspection we found two States were improperly claiming Federal funds for routine 

postpartum medical care for undocumented alien women. Since misinterpretation or 

misunderstanding of the law on this matter continues to exist in some States, we recommend that 

HCFA: 

0 identify and recover Federal funds that Minnesota, Nebraska, Oklahoma, Vermont, and 

West Virginia inappropriately claimed for routine prenatal and postpartum care for 

undocumented alien women; 

ii 
0 assure States and territories are aware of and implementing policy provisions applicable to 

claiming Federal funds for routine prenatal and/or postpartum services; and 

0 continue to monitor and support the Justice Department’s efforts to resolve the legal issues 

involving New York. 

AGENCY COMMENTS 

The HCFA agrees with our recommendations in the report and will take appropriate action to 

implement them. The HCFA also noted the positive aspects of our inspection - that there were 

only six States in which we detected inappropriate claims, and that these States have 

comparatively few undocumented aliens compared to other States. The full text of the HCFA 

comments are shown in Appendix D. 

111 
TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY 

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

FINDINGS . . . . . . . 

Claiming Federal Funds ....... 

Survey Respondents .......... 

Federal Court Order ......... 

RECOMMENDATIONS ...... 

AGENCY COMMENTS ....... 

APPENDICES 

............. . 

............. 

............. 

. . ....... .6 

. ....... ....... .7 

A: HCFA’s October 12, 1994 Memorandum . ....... . . ...... . . . . . A-l 

B: States Not Aware of HCFA Policy Guidance . ....... . . ...... . . . . B-l 

C: HCFA Regional Office Guidance Issuances ....... ...... . . . . . . C-l 

D: Agency Comments . . . . . . . . . . . ....... . . ...... . . . . . D-l 
INTRODUCTION 

PURPOSE 

To determine if States are claiming Federal reimbursement for routine prenatal and postpartum 

care for undocumented alien women. 

BACKGROUND 

Definitions 

Prenatal is defined as the period “preceding birth” and postpartum is defined as the period 

“after childbirth. ” Undocumented aliens are immigrants who entered as temporary residents 

and overstayed their visas or are engaged in activities forbidden by their visas, or who entered 

illegally into this country. 

Guideline Perspectives 

The Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509, $9406) amended the Social 

Security Act, effective January 1, 1987 by adding 9 1903(v) which limits Federal payment for 

undocumented aliens’ emergency medical care under the Medicaid program. The Act and Federal 

Regulations define an emergency medical condition as “after sudden onset, manifesting itself by 

acute symptoms of 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 of any bodily organ or part.” 

Under the Personal Responsibility and Work Opportunity Reconciliation Act (Public Law 104-

193) enacted August 22, 1996, Medicaid eligibility for aliens is based on whether they are 

qualified or non-qualified. Qualified aliens include lawful permanent residents, refugees, asylees, 

aliens whose deportation has been withheld, parolees, aliens granted conditional entry, and 

battered immigrants. Qualified aliens who are members of certain designated groups as specified 

in the law are eligible for Medicaid. Non-qualified aliens, which include illegal and also ineligible 

(e.g., temporary workers or foreign exchange visitors) aliens are eligible only for treatment of 

emergency medical conditions. Illegal aliens either were never legally admitted to the United 

States for any period of time or were admitted for a limited period of time and did not leave the 

United States when that time expired. 

The Health Care Financing Administration’s (HCFA) State Medicaid Manual specifically indicates 

that Federal payment for medical services for qualified aliens whom the State has not elected to 

cover or non-qualified aliens will be available only for treatment of emergency medical 

1 
conditions (including emergency labor and delivery), “provided such care and services are not 

related to routine prenatal or postpartum care.” 

HCFA Central Office Guidance Issuances 

HCFA issued guidance to both the regional offices and the States which addressed emergency 

services for undocumented aliens. 

0 HCFA Memorandum to “OIG Investigation of Services Provided to and 

Regional Offices FFP Claims for Non-Emergency Post Partum Care Provided 

to Aliens Eligible under 1903(v)-ACTION” 

issued October 12, 1994 

0 State Medicaid Manual: Revision 29, issued November 1988 

Transmittal 66, issued April 1995 

Transmittal 67, issued February 1997 

0 Federal Regulation: 42 CFR 440.255, issued September 7, 1990 

Problem Identijication 

We reviewed four States as part of our 1994 inspection of the Systematic Alien Verification for 

Entitlements program,’ a process for the States to validate an alien’s immigration status. In the 

course of gathering data for that study we discovered that in two of those States their Medicaid 

policy covered routine postpartum care for undocumented alien women for which Federal funds 

were claimed. In our report on this, we requested HCFA to identity Medicaid overpayments and 

to provide guidance to all States to assure their correct interpretation of the law. 

Action Taken by HCFA to Correct the Problem 

The HCFA indicated that it issued a policy memorandum to all regional offices October 12, 1994. 

This memorandum requested regional offices to advise States that routine postpartum services, or 

any other non-emergency services, provided to illegal aliens are not eligible for Federal funds 

under Medicaid. In addition, HCFA regions were notified to monitor this issue and assure 

compliance with Federal provisions (Appendix A). 

Needless to say, States and local governments are not precluded from providing, at their own 

expense, medical care or financial assistance for prenatal and postpartum care for undocumented 

aliens. 

‘Medicaid Overpayments for Postpartum Care to Undocumented Aliens, 

(OEI-07-95-000 lo), November 4, 1994. 

2 
METHODOLOGY 

We requested copies of coverage and operational guidelines established by HCFA (regulations, 

manuals, memoranda, and letters) that it has provided to its regional offices and to the various 

Medicaid State and territorial agencies. We also requested copies of related policy guidance the 

HCFA regional offices have provided to the States and territories. 

We surveyed all 56 Medicaid State and territorial agencies inquiring about policy guidance from 

HCFA on non-emergency routine prenatal and postpartum medical services for undocumented 

alien women. We requested copies of policies and procedures covering emergency labor and 

delivery, and asked about any action taken upon receipt of HCFA guidelines. 

We received responses from all Medicaid State and territorial agencies. We analyzed the 

information received, specifically evaluating their receipt of HCFA guidelines, coverage policies 

and compliance with guidelines for claiming Federal funds. 

We conducted our review in accordance with the Quality Standardsfor Inspections issued by 

the President’s Council on Integrity and Efficiency. 

3 
FINDINGS 

Six States Have Claimed Federal Funds for Routine Prenatal and Postpartum Care for 

Undocumented Alien Women. Three Still Do. 

Six of the 56 State and territorial agencies surveyed covered routine prenatal and/or postpartum 

care for undocumented alien women, and have claimed Federal funds. Three of these States 

continue to pay for routine prenatal and postpartum care. 

0 Nebraska, New York, and West Virginia cover both routine prenatal and postpartum care 

and continue to claim Federal funds for these services. 

Nebraska has established a global obstetric package that always covers prenatal 

and postpartum care when delivery is billed. 

New York Medicaid policy covers prenatal care as a result of an order from the 

United States District Court for the Eastern District of New York in the Lewis v. 

Grinker case and continues to claim postpartum care as part of a Medicaid benefit 

package. New York case workers do not ask applicants for their status, with full 

coverage provided for prenatal and postpartum care as well as delivery (see 

Finding on page 5). 

West Virginia limits prenatal visits to 20 for the nine month pregnancy period 

unless prior authorization is obtained for more. Postpartum care has a limitation of 

one visit in six months. 

0 Minnesota does not cover postpartum care. However, it has provided prenatal coverage 

for undocumented alien women and claimed Federal funds for the period July 1994 to July 

1997. 

0 Oklahoma and Vermont, although not routinely claiming Federal funds for such prenatal 

and postpartum care, indicated that Federal funds have in the past been claimed for 

undocumented alien women in limited instances. (i.e., citizenship status of the 

undocumented alien was not known to the provider at the time the services were 

rendered). 

Survey Respondents in 31 States and Territories Indicated They Were Not Aware of 

HCFA’s Guidance. Two HCFA Regional Offkes Did Not Send Guidance to States. 

Respondents in Nebraska, Vermont, and West Virginia along with 28 other States and territories 

noted that they were not aware of HCFA’s guidance which addressed routine prenatal and 

postpartum care for alien women (see Appendix B). States expressed this lack of awareness 

despite HCFA’s various efforts to communicate policy provisions, which included release of 

Central Offrce guidance issuances supplemented by regional offices’ instructions to the States 

4 
addressing non-emergency medical services for undocumented aliens. Regional office issuances 

are shown in Appendix C. 

We found that two HCFA regional offices (Denver and Kansas City) did not send out instructions 

to the States in their regions subsequent to the October 12, 1994 HCFA Central Office 

memorandum. 

A Federal Court Has Ordered Continuation of Benefits in New York 

New York continues to claim, and HCFA continues to pay, Federal funds pursuant to an order of 

the United States District Court for the Eastern District of New York. In Lewis v. Grinker, 794 

F. Supp. 1193, 1200 (E.D.N.Y. 1991) a class action challenging Department and parallel New 

York regulations denying Medicaid-sponsored prenatal care to undocumented aliens, the district 

court held that the Medicaid statute required that the unborn fetuses of these aliens were entitled 

to prenatal care. The district court thus enjoined the Department and the State of New York from 

denying prenatal services benetitting these future American citizens. This order was affirmed on 

appeal by the United States Court of Appeals for the Second Circuit. See Lewis v. Grinker, 965 

F.2d 1206 (2d Cir. 1992). The Second Circuit held that Congress, in enacting the Omnibus 

Budget Reconciliation Act of 1986, did not intend to exclude these future citizens from Medicaidsponsored prenatal care. 

It is our understanding that the Department of Health and Human Services, acting through the 

Department of Justice, has recently petitioned the New York Federal court to vacate its order 

based on the Personal Responsibility and Work Opportunity Reconciliation Act, Public Law 

104-193 (1996). In the meantime, and until the order is vacated, HCFA is authorized by its own 

regulations to pay for Medicaid services provided pursuant to court order. See 42 CFR 

3 43 1.250. 

5 
RECOMMENDATIONS 

In an earlier inspection we found two States were improperly claiming Federal mnds for routine 

postpartum medical care for undocumented alien women. Since misinterpretation of the law 

and/or its application continues to exist in States as to the claiming of Federal funds for routine 

prenatal and postpartum care for undocumented alien women, we recommend that HCFA: 

0 identify and recover Federal funds that Minnesota, Nebraska, Oklahoma, Vermont, and 

West Virginia inappropriately claimed for routine prenatal and postpartum care for 

undocumented alien women; 

0 assure States and territories are aware of and implementing policy provisions applicable to 

claiming Federal funds for routine prenatal and/or postpartum services. It should also 

assure that States’ determine Medicaid applicants’ citizenship status to avoid payment for 

other than emergency medical services for undocumented aliens; and 

0 continue to monitor and support the Justice Department’s efforts to resolve the legal issues 

involving New York. 

6 
AGENCY COMMENTS 

The HCFA agrees with our recommendations in the report and will take appropriate action to 

implement them. The HCFA also noted the positive aspects of our inspection - that there were 

only six States in which we detected inappropriate claims, and that these States have 

comparatively few undocumented aliens compared to other States. The full text of the HCFA 

comments are shown in Appendix D. 

7 

APPENDIX B 

STATES WHOSE RESPONDENTS 

SAID THEY WERE NOT AWARE 

OF HCFA POLICY GUIDANCE 

Alaska 

California 

Colorado 

Connecticut 

Dist. of Col. 

Georgia 

Guam 

Hawaii 

Indiana 

Iowa 

Kansas 

Louisiana 

Massachusetts 

Mississippi 

Missouri 

Montana 

No. Mariana Islands 

Nebraska 

Nevada 

New Jersey 

North Dakota 

Ohio 

Pennsylvania 

Puerto Rico 

South Carolina 

South Dakota 

Texas 

Vermont 

Virginia 

Washington 

West Virginia 

B-l 
APPENDIX C 

HCFA REGIONAL OFFICE GUIDANCE ISSUANCES 

Boston: 

New York: 

Philadelphia: 

Atlanta: 

Chicago: 

Dallas: 

Kansas City: 

Denver: 

San Francisco: 

Seattle: 

State Medicaid Agency Regional Bulletin No. 95-04, January 13, 1995 

State Operations Letter No. 93-68, September 27, 1993 

Medicaid Letter No. 94- 112, November 14, 1994 

HCFA Program Issuance Transmittal Notice MCD-68-94, 

January 19, 1995 

Regional State Letter No. 38-95, July 1995 

Regional Medical Services Letter No. 94-80, November 7, 1994 

No instructions issued to States 

No instructions issued to States 

HCFA Regional Memorandum No. 94-76, November 2, 1994 

Title XIX State Agency Letter No. 94-48, October 27, 1994 

C-l 
APPENDIX D 

AGENCY COMMENTS 

D-l 
DEP.iRTMExT OF HEALTH & HUMAN SERVICES Health Care Financing Administration 

The Administrator 

Washington. D.C. 20201 

DATE: APR 6 I98 

TO: JuneGibbsBrown 

InspectorGeneral 

FROM: Nancy-Ann Mm DeParle 

Administrator 

SUBJECT: Office of Inspector General (OIG) Draft Report: “Routine Prenataland 

PostpartumCare for Undocumented Aliens” (OEI-07-96-00310) 

We reviewed the above-referencedreport that examines if statesare claimingFederal 

reimbursementfor routine prenatal and postpartum care for undocumentedalien women. 

The OIG inspectionfound that -Minnesota claimed Federal funds from July 1994to July 

1997. Oklahomaand Vermont claimed Federal funds in limited instances,andNebraska, 

New York, andWest Vi.r~@.n.ia continue to claim Federal fimds. 

We would like to point out the positive aspect of this inspection - that therewere only six 

states in which OIG detectedinappropriate claims - and thesestateshaveinsi-&cant 

numbers of undocumentedaliens. OIG did not report problems in other states,including 

those with the vastmajority of undocumented aliens in which claiming problemscould 

have major financial ramifications. We view this as evidenceof the Health Care 

Financing Administration’s (HCFA’s) and the states’ successin implementingthe law 

limiting Medicaid servicesto undocumented aliens to emergencyservices. 

We concur with the report recommendations. Our detailed commentsfollow. 

OIG Recommendation 

HCFA shouldidentify andrecover Federal funds that Minnesota, Nebraska,Oklahoma, 

Vermont, andWest Vi@.ia inappropriately claim for routine prenatal andpostpartum 

care for undocumentedalien women. 

HCFA Resuonse 

HCFA concurs. We will askthe regional offi ces to follow up with the above-citedstates 

to recover the potential overpaymentsof Federal funds asso$itF,t with the paymentof 

routine prenataland postpartumcare for undocumented alien women!?: 
OIG Recommendation 

HCFA should ensurestatesand territories are aware of and are implementingpolicy 

provisions applicableto claiming Federal funds for routine prenatal and/orpostpartum 

services. It should also ensurethat states determine Medicaid applicants’ citizenship 

status to avoid paymentfor other than emergency medical servicesfor undocumented 

aliens. 

HCFA Resnonse 

HCFA concurs. We will ask the regional offices to remind statesand territories of the 

policy provisions applicableto claiming Federal funds for routine prenataland/or 

postpartum careservicesto undocumented aliens. 

OIG Recommendation 

HCFA should continueto monitor and support the Justice Department’s efforts to resolve 

the legal issuesinvolving New York. 

HCFA Resnonse 

HCFA concurs. We will continue to actively support the Justice Departmentin resolving 

the issuesraisedby this lawsuit. 

b Nancy-Ann Min DeParle 

a