Report to Congressional Requesters

United States General Accounting Office 

GAO 

May 2004 UNDOCUMENTED 

ALIENS 

Questions Persist 

about Their Impact on 

Hospitals’ 

Uncompensated Care 

Costs 

GAO-04-472 
www.gao.gov/cgi-bin/getrpt?GAO-04-472.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Janet Heinrich 

at (202) 512-7119. 

Highlights of GAO-04-472, a report to 

congressional requesters 

May 2004

UNDOCUMENTED ALIENS 

Questions Persist about Their Impact on 

Hospitals’ Uncompensated Care Costs 

Hospitals generally do not collect information on their patients’ immigration 

status, and as a result, an accurate assessment of undocumented aliens’ 

impact on hospitals’ uncompensated care costs—those not paid by patients 

or by insurance—remains elusive. GAO attempted to examine the 

relationship between uncompensated care and undocumented aliens by 

surveying hospitals, but because of a low response rate to key survey 

questions and challenges in estimating the proportion of hospital care 

provided to undocumented aliens, GAO could not determine the effect of 

undocumented aliens on hospitals’ uncompensated care costs. 

Federal funding has been available from several sources to help hospitals 

cover the costs of care for undocumented aliens. The sources include 

Medicaid coverage for emergency medical services for eligible 

undocumented aliens, supplemental Medicaid payments to hospitals treating 

a disproportionate share of low-income patients, and funds provided to 12 

states by the Balanced Budget Act of 1997 (see table). In addition, the 

recently enacted Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 appropriated $1 billion over fiscal years 2005 

through 2008 for payments to hospitals and other providers for emergency 

services provided to undocumented and certain other aliens. By September 

1, 2004, the Secretary of Health and Human Services must establish a 

process for hospitals and other providers to request payments under the 

statute. 

Federal Funding Sources That Have Been Available to Help Cover Costs of Treating 

Undocumented Aliens 

Program Description 

Medicaid Covers emergency medical services for 

undocumented aliens who meet Medicaid 

eligibility requirements 

Medicaid disproportionate share hospital 

payments 

Provides supplemental payments to certain 

hospitals serving a larger number of low-income 

patients 

Balanced Budget Act of 1997 Made $100 million available to 12 states in fiscal 

years 1998 through 2001 for emergency services 

furnished to undocumented aliens 

Source: GAO. 

Border Patrol and U.S. port-of-entry officials encounter aliens needing 

medical attention under different circumstances, but in most situations, 

Homeland Security is not responsible for aliens’ hospital costs. The agency 

may cover medical expenses only for those people in its custody, but border 

officials reported that sick or injured people they encounter generally 

receive medical attention without being taken into custody. 

 

About 7 million undocumented 

aliens lived in the United States in 

2000, according to Immigration and 

Naturalization Service estimates. 

Hospitals in states where many of 

them live report that treating them 

can be a financial burden. GAO was 

asked to examine the relationship 

between treating undocumented 

aliens and hospitals’ costs not paid 

by patients or insurance. GAO was 

also asked to examine federal 

funding available to help hospitals 

offset costs of treating 

undocumented aliens and the 

responsibility of the Department of 

Homeland Security (Homeland 

Security) for covering medical 

expenses of sick or injured aliens 

encountered by Border Patrol and 

U.S. port-of-entry officials. 

To conduct this work, GAO 

surveyed 503 hospitals and 

interviewed Medicaid and hospital 

officials in 10 states. GAO also 

interviewed and obtained data from 

Homeland Security officials. 

GAO recommends that the 

Secretary of Health and Human 

Services, in establishing a payment 

process under recently enacted 

legislation, develop appropriate 

internal controls to ensure 

payments are made only for 

unreimbursed emergency services 

for undocumented or certain other 

aliens. The Centers for Medicare & 

Medicaid Services concurred with 

GAO’s recommendation. Homeland 

Security also agreed with the 

report’s findings. 
Page i GAO-04-472 Undocumented Aliens and Uncompensated Care 

Letter 1

Results in Brief 3

Background 5

Effect of Undocumented Aliens on Hospitals’ Uncompensated Care 

Costs Is Uncertain 8

Some Federal Funding Has Been Available but Not for All 

Undocumented Aliens or Hospitals 9

Homeland Security Is Usually Not Responsible for Hospital Costs 

of Aliens Needing Emergency Medical Care Who Are 

Encountered by Border Patrol and Port-of-Entry Officials 16

Conclusions 21

Recommendation for Executive Action 21

Agency Comments 21

Appendix I Survey Methodology and Results 24 

Survey Sample 24

Survey Questions 26

Lack of Social Security Number as a Proxy for Undocumented 

Aliens 26

Survey Pretesting and Response 27

Data from Responding Hospitals 27

Appendix II Methodology for Determining Federal Funding 

Sources and Homeland Security’s Responsibility 

for Medical Costs 29 

Appendix III Comments from the Centers for Medicare & 

Medicaid Services 31 

Appendix IV Comments from the Department of Homeland 

Security 33 

Appendix V GAO Contacts and Staff Acknowledgments 34 

GAO Contacts 34

Acknowledgments 34 

Contents 
Page ii GAO-04-472 Undocumented Aliens and Uncompensated Care 

Tables 

Table 1: Federal and State Emergency Medicaid Expenditures for 

10 States, Fiscal Year 2002 11

Table 2: Estimated Undocumented Aliens Residing in 10 States, 

2000 24

Table 3: Characteristics of Universe from Which Hospitals Were 

Sampled 25

Table 4: Financial Information for Responding Hospitals 27

Table 5: Uncompensated Care Levels by Tertile of Percentage of 

Inpatient Days Attributable to Patients without a Social 

Security Number 28

Abbreviations 

BBA Balanced Budget Act of 1997 

CMS Centers for Medicare & Medicaid Services 

DSH disproportionate share hospital 

EMTALA Emergency Medical Treatment and Active Labor Act 

INS Immigration and Naturalization Service 

This is a work of the U.S. government and is not subject to copyright protection in the 

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permission from GAO. However, because this work may contain copyrighted images or 

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reproduce this material separately. 
Page 1 GAO-04-472 Undocumented Aliens and Uncompensated Care 

May 21, 2004 

Congressional Requesters 

An estimated 7 million undocumented aliens1

 resided in the United States 

in 2000, according to the Immigration and Naturalization Service (INS).2

Concern has been raised that uncompensated care costs due to treating 

undocumented aliens place financial strain on hospitals in many areas of 

the United States, including along the U.S.-Mexican border.3

 Some hospital 

associations and hospital officials report that increasing numbers of 

persons they believe to be undocumented aliens, including some whom 

the U.S. Border Patrol has encountered and found in need of immediate 

medical attention, are arriving at their hospitals. In addition, U.S. port-ofentry officials may grant aliens humanitarian parole, a means of allowing 

temporary access into the United States, and these aliens may also arrive 

at hospitals in need of medical care. Because federal law requires hospitals 

participating in the federal Medicare health insurance program to 

medically screen and, if necessary, treat to stabilize any person seeking 

care for an emergency medical condition, regardless of immigration status, 

some hospital officials have said they believe the federal government 

should help pay for emergency and other medical care provided to 

undocumented aliens. 

Although hospital officials contend that they are left to absorb 

uncompensated care costs for emergency treatment and other medical 

services provided to undocumented aliens, questions remain about the 

 1

Federal law does not define the term “undocumented alien.” For purposes of this report, 

the term “undocumented alien” refers to a person who enters the United States without 

legal permission or who fails to leave when his or her permission to remain in the United 

States expires. 

2

INS was abolished and its functions, including those of the Border Patrol and immigration 

inspection at ports of entry, were transferred to the Department of Homeland Security, 

effective March 1, 2003. Pub. L. No. 107-296, § 441, 116 Stat. 2135, 2192 (2002). 

3

Hospital uncompensated care is care for which the hospital receives no payment from 

either the patient or an insurer. Uncompensated care costs include (1) costs of providing 

charity care, that is, care for which the hospital never expected to receive payment because 

of the patient’s inability to pay, and (2) bad debt incurred for services for which the 

hospital expected but did not receive payment because patients were unable or unwilling 

to pay. 

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-04-472 Undocumented Aliens and Uncompensated Care 

magnitude of the problem. No national data are available on the number of 

undocumented aliens who receive medical care, the specific services they 

receive, or the uncompensated care costs associated with their treatment. 

At your request, we conducted a study to address this issue. We focused 

our work on the following questions: 

• To what extent are hospitals’ uncompensated care costs related to treating 

undocumented aliens? 

• What has been the availability of federal funding sources to help offset 

hospitals’ costs of treating undocumented aliens? 

• What is the responsibility of the Department of Homeland Security 

(Homeland Security) to cover the medical expenses of aliens needing 

emergency medical care who are either encountered by Border Patrol 

agents or granted humanitarian parole by U.S. port-of-entry officials? 

To conduct this work, we focused our review on 10 states: Arizona, 

California, Florida, Georgia, Illinois, New Jersey, New Mexico, New York, 

North Carolina, and Texas. We selected the 4 Southwest states—Arizona, 

California, New Mexico, and Texas—because uncompensated care costs 

due to treating undocumented aliens has been a long-standing issue for 

hospitals located in communities near the U.S.-Mexican border. We 

selected the other 6 states because high estimated numbers of 

undocumented aliens resided there in 2000, according to INS. In all, the 10 

states comprised an estimated 78 percent of the population of 

undocumented aliens in the United States in 2000. We mailed a 

questionnaire to 503 hospitals located in the 10 states. We received survey 

responses from 351 hospitals (70 percent), of which 198 (39 percent of 

surveyed hospitals) provided the information necessary for us to calculate 

their total uncompensated care costs and the proportion of care they 

provided to patients without a Social Security number, a proxy we used 

for undocumented aliens. To determine the availability of federal funding 

sources to hospitals treating undocumented aliens, we obtained 

documents and interviewed officials from state Medicaid offices and state 

hospital associations in the 10 states, as well as from the Department of 

Health and Human Services’ Centers for Medicare & Medicaid Services 

(CMS). In addition, we reviewed provisions of the recently enacted 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

pertaining to payments to providers for treating undocumented and other 

aliens. Finally, to determine the policies and practices used by the U.S. 

Border Patrol and U.S. port-of-entry officials when they encounter aliens 

needing emergency medical care, we interviewed Homeland Security 
Page 3 GAO-04-472 Undocumented Aliens and Uncompensated Care 

officials, including officials from relevant Border Patrol jurisdictions and 

U.S. ports of entry along the U.S.-Mexican border. We also interviewed 

Coast Guard officials about their encounters with sick or injured aliens at 

sea. For additional information on our scope and methodology and survey 

results, see appendixes I and II. We conducted our work from September 

2002 through April 2004 in accordance with generally accepted 

government auditing standards. 

The impact of undocumented aliens on hospitals’ uncompensated care 

costs remains uncertain. Hospitals generally do not collect information on 

patients’ immigration status, thereby making it difficult to identify patients 

who are undocumented aliens and the costs associated with treating them. 

We determined that a potentially feasible method for hospitals to collect 

information for our survey that would allow us to estimate the amount of 

care given to undocumented aliens would be to identify patients without a 

Social Security number. We used this proxy, with the understanding that it 

could possibly over- or underestimate the number of undocumented 

aliens, in our survey of hospitals to assess the effect of undocumented 

aliens on hospitals’ total uncompensated care costs. Thirty-nine percent of 

surveyed hospitals provided information to evaluate this relationship. 

Because of the low response rate to key questions and because we were 

unable to assess the accuracy of the proxy, we could not determine the 

effect of undocumented aliens on hospitals’ levels of uncompensated care. 

Federal funding to help offset hospitals’ costs for treating undocumented 

aliens has been available from several sources, but this funding has not 

covered care of all undocumented aliens or all medical services and has 

not been available to all hospitals. Two of these sources are available 

through the Medicaid program, the joint federal-state program that 

finances health care for low-income people. First, Medicaid provides 

health care coverage for some undocumented aliens. Like citizens, 

however, some undocumented aliens are not eligible for or may choose 

not to enroll in Medicaid. In addition, coverage for undocumented aliens 

under Medicaid is limited to services for treatment of emergency medical 

conditions. Second, Medicaid disproportionate share hospital (DSH) 

adjustments provide supplemental payments to hospitals serving relatively 

large numbers of low-income patients, which can include undocumented 

aliens. Not all hospitals receive these payments, however. A third source 

of federal funding was provided in the Balanced Budget Act of 1997 (BBA), 

which made $25 million available annually, from fiscal years 1998 through 

2001, to selected states for emergency services provided to undocumented 

aliens. States could use these funds to recover the state share of Medicaid 

Results in Brief 
Page 4 GAO-04-472 Undocumented Aliens and Uncompensated Care 

expenditures for undocumented aliens and other state expenditures for 

undocumented aliens not eligible for Medicaid. The states we reviewed all 

opted to use these funds to help recover their state Medicaid expenditures, 

and no new funding was available to hospitals to help cover costs of 

undocumented aliens not eligible for Medicaid. The recently enacted 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

appropriated additional federal funding—$1 billion over fiscal years 2005 

through 2008—for payments to hospitals and other eligible providers of 

emergency medical services delivered to undocumented and certain other 

aliens. According to the statute, the Secretary of Health and Human 

Services must establish by September 1, 2004, a process for hospitals and 

other providers to request these payments. 

Border Patrol agents and U.S. port-of-entry officials encounter aliens 

needing emergency medical care under different circumstances, but in 

most cases Homeland Security is not responsible for these aliens’ hospital 

costs. Homeland Security may cover medical expenses only of people in 

its custody, and persons needing emergency medical assistance 

encountered by the Border Patrol and U.S. port-of-entry officials generally 

receive hospital care without being taken into custody. Border Patrol 

officials reported that their first priority when they encounter sick or 

injured people is to seek medical assistance, generally without first 

determining immigration status or taking them into custody. In some 

circumstances, such as when a sick or injured person is of particular law 

enforcement interest—for example, a suspected drug smuggler—Border 

Patrol agents may take a person into custody at the hospital; in this case, 

Homeland Security is responsible for the costs of care once the alien is in 

custody. Although the Border Patrol tracks aliens in its custody, it does 

not track the number of aliens not in custody whom it refers to hospitals. 

At U.S. ports of entry, officials may encounter aliens seeking entry to 

obtain emergency medical care from a U.S. hospital. Under certain 

circumstances, U.S. port-of-entry officials may grant these aliens 

humanitarian parole, a means of allowing temporary access into the 

United States, for urgent medical reasons. According to officials, these 

types of paroles do not occur often, and when they do, the aliens are not 

placed in custody and Homeland Security is not responsible for medical 

expenses. Data collected by Homeland Security’s Bureau of Customs and 

Border Protection’s Office of Field Operations show that from June 

through October 2003, 54 such paroles were authorized at ports along the 

U.S.-Mexican border. 
Page 5 GAO-04-472 Undocumented Aliens and Uncompensated Care 

We are making a recommendation that as part of establishing a process for 

paying hospitals’ and other providers’ claims under the Medicare 

Prescription Drug, Improvement, and Modernization Act of 2003, the 

Secretary of Health and Human Services develop appropriate internal 

controls to ensure that claims are paid only for unreimbursed emergency 

services for undocumented or certain other aliens as designated in the 

statute. In commenting on a draft of this report, CMS concurred with our 

recommendation and stated that the agency expects to include proper 

internal controls in its payment process before distributing any funds to 

providers. CMS also indicated that it would be helpful for GAO to provide 

insight into the specific internal controls that would be useful in ensuring 

that claims are paid only for unreimbursed emergency services for 

undocumented and certain other aliens. In response to CMS’s request, we 

amended our recommendation to be more specific. We also provided 

officials in Homeland Security an opportunity to comment on a draft of 

this report. In its comments, Homeland Security generally agreed with the 

report’s findings. Both agencies also provided technical comments, which 

we incorporated as appropriate. The agencies’ comment letters are 

reprinted in appendixes III and IV. 

According to INS, the estimated population of undocumented aliens in the 

United States increased from 3.5 million in 1990 to about 7 million in 2000. 

Many states that had relatively few undocumented aliens in 1990 

experienced rapid growth of this population during the decade. The 

estimated number of undocumented aliens residing in Georgia, for 

example, rose from 34,000 in 1990 to 228,000 in 2000. INS estimates 

indicate that the vast majority of undocumented aliens were concentrated 

in a few states, with nearly 70 percent from Mexico.4

Undocumented aliens’ use of medical services has been a long-standing 

issue for hospitals, particularly among those located along the U.S.-

Mexican border. As required by the Emergency Medical Treatment and 

Active Labor Act (EMTALA), hospitals participating in Medicare must 

medically screen all persons seeking emergency care and provide the 

treatment necessary to stabilize those determined to have an emergency 

 4

U.S. Immigration and Naturalization Service, Estimates of the Unauthorized Immigrant 

Population Residing in the United States: 1990 to 2000 (Washington, D.C.: 2003). 

Background 
Page 6 GAO-04-472 Undocumented Aliens and Uncompensated Care 

condition, regardless of income or immigration status.5 Two recent studies 

have reported on hospitals’ provision of care to undocumented aliens, but 

they were limited in scope.6

 National data sources on health insurance 

coverage do not report the extent to which undocumented aliens have 

health insurance or are otherwise able to pay for their medical care. 

Available data on the broader category of foreign-born noncitizens 

suggests that a large proportion may be unable to pay for their medical 

care. A U.S. Census Bureau report indicates that in 2002, more than 40 

percent of foreign-born noncitizens residing in the United States, including 

undocumented and some lawful permanent resident aliens, lacked health 

insurance.7

Homeland Security’s Bureau of Customs and Border Protection is 

responsible for securing the nation’s borders. The bureau’s Border Patrol 

is responsible for detecting and apprehending persons who attempt to 

enter illegally between official ports of entry. The bureau’s Office of Field 

Operations oversees U.S. port-of-entry officials who inspect and determine 

the admissibility of all individuals seeking to enter the United States at 

official ports of entry. Both Border Patrol agents and U.S. port-of-entry 

officials may come into contact with persons needing emergency medical 

care. For example, Border Patrol agents may encounter persons suffering 

from severe dehydration or who have been injured in vehicle accidents, 

and U.S. port-of-entry officials may encounter persons with urgent medical 

 5

EMTALA applies to hospitals participating in Medicare, the federal health insurance 

program for seniors age 65 and over, and some disabled persons. See 42 U.S.C. § 1395dd 

(2000). According to federal regulations implementing EMTALA, a hospital that provides 

emergency services must medically screen all persons who come to the hospital seeking 

emergency care to determine whether an emergency medical condition exists. If the 

hospital determines that a person has an emergency medical condition, the hospital must 

provide treatment necessary to stabilize that person or arrange for an appropriate transfer 

to another facility. See 42 C.F.R. pt. 489 (2003). 

6

One study, conducted for the United States–Mexico Border Counties Coalition, focused on 

the 24 counties located along the U.S.-Mexican border [MGT of America, Medical 

Emergency: Costs of Uncompensated Care in Southwest Border Counties (Austin, Tex.: 

2002)]. The study estimated that uncompensated care due to emergency medical treatment 

provided to undocumented aliens was approximately $190 million, but the 95 percent 

confidence interval around this estimate ranged from about $7 million to about 

$373 million. Another study, conducted by the Florida Hospital Association in 2002, 

examined hospital charges for uninsured noncitizens in 56 Florida hospitals, or 26 percent 

of the acute care hospitals in that state. 

7

U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census 

Bureau, Health Insurance Coverage in the United States: 2002 (Washington, D.C.: 2003). 
Page 7 GAO-04-472 Undocumented Aliens and Uncompensated Care 

needs, such as burn victims, seeking entry because the closest capable 

medical facility is in the United States. 

Border Patrol operations are divided into 21 sectors, but more than 95 

percent of Border Patrol apprehensions in 2002 occurred in 9 sectors 

bordering Mexico. Since the mid-1990s, the Border Patrol has been 

implementing a strategy to strengthen security and disrupt traditional 

pathways of illegal immigration along the border with Mexico. As we 

reported in August 2001, however, one of the strategy’s major effects has 

been a shift in illegal alien traffic from traditional urban crossing points 

such as San Diego, California, to harsher, more remote areas of the 

border.8

 Rather than being deterred from illegal entry, many aliens have 

instead risked injury and death trying to cross mountains, deserts, and 

rivers. To reduce the number of undocumented aliens who die or are 

injured trying to cross the border illegally, INS in 1998 created the Border 

Safety Initiative, whose focus includes searching for and rescuing those 

who may have become lost. One element of the initiative is tracking the 

number of aliens whom Border Patrol agents rescue, a subset of all Border 

Patrol encounters with sick or injured aliens.9

U.S. port-of-entry officials inspect and determine the admissibility of 

persons seeking entry at air, land, and sea ports of entry around the 

country. Along the U.S.-Mexican border, officials at the 24 land ports of 

entry, which cover 43 separate crossing points, conducted more than 250 

million inspections in fiscal year 2003.10 The Secretary of Homeland 

Security may parole—that is, allow temporary access into the United 

 8

U.S. General Accounting Office, INS’ Southwest Border Strategy: Resource and Impact 

Issues Remain after Seven Years, GAO-01-842 (Washington, D.C.: Aug. 2, 2001). 

9

The Border Patrol defines a “rescue” as a situation in which the lack of intervention by the 

Border Patrol could result in death or serious bodily injury to those suspected of 

attempting to enter illegally. 

10Previously under the INS, each of the 43 crossing points was considered a distinct port of 

entry for most purposes. 
Page 8 GAO-04-472 Undocumented Aliens and Uncompensated Care 

States—an otherwise inadmissible alien for urgent humanitarian reasons, 

such as treatment for an emergency medical condition.11

The impact of undocumented aliens on hospitals’ uncompensated care 

costs remains uncertain. Determining the number of undocumented aliens 

treated at a hospital is challenging because hospitals generally do not 

collect information on patients’ immigration status and because 

undocumented aliens are reluctant to identify themselves. After speaking 

with experts and hospital administrators, we determined that one 

potentially feasible method for hospitals to estimate this population is to 

identify patients without a Social Security number, recognizing that this 

proxy can over- or underestimate undocumented aliens.12 We surveyed 503 

hospitals in 10 states to collect information on patients without a Social 

Security number and their effect on hospitals’ uncompensated care 

levels—that is, uncompensated care costs as a percentage of total hospital 

expenses. We also included a question in the survey to determine what 

other methods, if any, hospitals were using to track undocumented aliens 

to help assess how well patients without a Social Security number served 

as a proxy for this population. 

Despite a concerted follow-up effort, we did not receive a sufficient survey 

response to assess the impact of undocumented aliens on hospitals’ 

uncompensated care levels or to evaluate the lack of a Social Security 

number as a proxy for undocumented aliens. (Details on our survey 

methods and analysis appear in app. I.) Although about 70 percent of 

hospitals responded to the survey, only 39 percent provided sufficient 

information to evaluate the relationship between uncompensated care 

levels and the proportion of care provided to patients without a Social 

Security number. Of all responding hospitals, fewer than 5 percent 

reported having a method other than the lack of a Social Security number 

alone to identify their undocumented alien patients, and the methods used 

by these hospitals varied. For example, one hospital identified 

 11Under the Immigration and Nationality Act, the Attorney General was authorized to 

parole aliens into the United States for humanitarian reasons. See 8 U.S.C. § 1182(d)(5)(A) 

(2000). This authority was transferred to the Secretary of Homeland Security and 

responsibility for this authority was delegated to the level of port director. Humanitarian 

paroles may also be granted for other reasons, such as to allow an individual to attend the 

funeral of a close relative or to accompany seriously ill family members. 

12For example, U.S. citizens might not provide their Social Security number, or 

undocumented aliens might provide a false or stolen Social Security number. 

Effect of 

Undocumented Aliens 

on Hospitals’ 

Uncompensated Care 

Costs Is Uncertain 
Page 9 GAO-04-472 Undocumented Aliens and Uncompensated Care 

undocumented aliens as those who were both Hispanic and lacked a 

Social Security number; other hospitals identified undocumented alien 

patients through foreign addresses or information from patient interviews. 

Furthermore, the estimates produced by these other methods were 

inconsistent with those produced by using lack of Social Security number 

alone. Because we did not receive a sufficient survey response rate and 

because we were unable to assess the accuracy of the proxy, we could not 

determine the effect of undocumented aliens on hospital uncompensated 

care levels. Until better information is available, assessing the relationship 

between this population and hospitals’ uncompensated care levels will 

continue to pose methodological challenges. 

Some federal funding has been available to assist with hospitals’ costs of 

treating undocumented aliens, but this funding has not covered care of all 

undocumented aliens or all hospital services, and not all hospitals receive 

it. Two funding sources are available through the Medicaid program. First, 

Medicaid provides some coverage for eligible undocumented aliens, such 

as low-income children and pregnant women. Not all undocumented aliens 

are eligible for or enrolled in Medicaid, however, and this coverage is 

limited to emergency medical services, including emergency labor and 

delivery. Second, Medicaid DSH adjustments are available to some 

hospitals treating relatively large numbers of low-income patients, 

including undocumented aliens. Finally, under the provisions of BBA, 

$25 million was available annually, from fiscal years 1998 through 2001, to 

assist certain states with their costs of providing emergency services to 

undocumented aliens regardless of Medicaid eligibility. According to state 

Medicaid officials in the states we reviewed, states used these funds to 

help recover the state share of Medicaid expenditures for undocumented 

aliens, and not to recover hospitals’ costs of care for undocumented aliens 

not eligible for Medicaid. Recent legislation appropriated additional 

federal funding—$250 million annually for fiscal years 2005 through 

2008—for payments to hospitals and other eligible providers for 

emergency medical services delivered to undocumented and certain other 

aliens. 

Undocumented aliens may qualify for Medicaid coverage for treatment of 

an emergency condition if, except for their immigration status, they meet 

Medicaid eligibility requirements. Medicaid coverage is also limited to care 

and services necessary for treatment of emergency conditions for certain 

legal aliens—including lawful permanent resident aliens who have resided 

in the United States for less than 5 years and aliens admitted into the 

Some Federal 

Funding Has Been 

Available but Not for 

All Undocumented 

Aliens or Hospitals 

Medicaid Covers 

Emergency Medical 

Services for Eligible 

Undocumented Aliens 
Page 10 GAO-04-472 Undocumented Aliens and Uncompensated Care 

United States for a limited time, such as some temporary workers. We 

refer to Medicaid coverage for these groups of individuals—that is, those 

whose coverage is limited to treatment of emergency conditions—as 

emergency Medicaid. Because immigration status is a factor when states 

determine an individual’s Medicaid coverage, people applying for Medicaid 

are asked about their citizenship and immigration status as a part of the 

Medicaid eligibility determination process.13

State Medicaid officials in the 10 states that we reviewed reported 

spending more than $2 billion in fiscal year 2002 for emergency Medicaid 

expenditures (see table 1). Although states are not required to identify or 

report to CMS their Medicaid expenditures specific to undocumented 

aliens, several states provided data or otherwise suggested that most of 

their emergency Medicaid expenditures were for services provided to 

undocumented aliens. According to data provided by state Medicaid 

officials in 5 of the 10 states, at least half of emergency Medicaid 

expenditures in these states were for labor and delivery services for 

pregnant women. 

 13In general, most aliens applying for Medicaid, including lawful permanent resident aliens, 

must provide documentation of immigration status and sign a declaration stating that they 

are in satisfactory immigration status for Medicaid. Undocumented aliens and some other 

aliens who are eligible only for emergency Medicaid are not required to provide 

documentation of immigration status or sign a declaration of immigration status. 
Page 11 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Table 1: Federal and State Emergency Medicaid Expenditures for 10 States, Fiscal 

Year 2002 

Dollars in millions 

State Expenditures

Arizona 84

Californiaa776

Florida 223

Georgia 62

Illinois 75

New Jersey 27

New Mexicob4

New York 474

North Carolina 43

Texas 265

Total 2,034c

Source: State Medicaid officials. 

a

California emergency Medicaid expenditures do not include expenditures for lawful permanent 

resident aliens. 

b

Data for New Mexico are for state fiscal year 2002. 

c

Numbers do not add to total shown because of rounding. 

Emergency Medicaid expenditures in the 10 states have increased over the 

past several years but remain a small portion of each state’s total Medicaid 

expenditures. In 9 of the 10 states we reviewed, emergency Medicaid 

expenditures grew faster than the states’ total Medicaid expenditures from 

fiscal years 2000 to 2002.14 For example, while Georgia’s total Medicaid 

expenditures increased by 44 percent during this period, the state’s 

emergency Medicaid expenditures increased 349 percent—nearly eight 

times as fast. Nevertheless, emergency Medicaid expenditures in these 

states accounted for less than 3 percent of each state’s total Medicaid 

expenditures. 

 14In Arizona, emergency Medicaid expenditures increased from fiscal year 2000 to fiscal 

year 2002, but the percentage increase was not more than that for total Medicaid 

expenditures. California’s data on emergency Medicaid expenditures excluded those for 

lawful permanent resident aliens. 
Page 12 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Emergency Medicaid funding is limited in that not all undocumented 

aliens treated at hospitals are eligible for Medicaid, not all eligible 

undocumented aliens enroll in Medicaid, and not all hospital services 

provided to enrolled undocumented aliens are covered by Medicaid. 

• Not all undocumented aliens are eligible for Medicaid. 

Undocumented aliens are eligible for emergency Medicaid coverage only 

if, except for immigration status, they meet Medicaid eligibility criteria 

applicable to citizens. Many state hospital association officials we 

interviewed commented that hospitals were concerned about 

undocumented aliens who do not qualify for Medicaid. To qualify, 

undocumented aliens must belong to a Medicaid-eligible category—such 

as children under 19 years of age, parents with children under 19, or 

pregnant women—and meet income and state residency requirements. 

Arizona hospital and Medicaid officials said that many undocumented 

aliens treated at their hospitals are only passing through the state and 

cannot meet Medicaid state residency requirements. However, 

comprehensive data are not available to determine the extent to which 

undocumented aliens receiving care in hospitals are not eligible for 

Medicaid coverage. 

• Not all eligible undocumented aliens enroll in Medicaid. Factors 

besides eligibility may also influence the number of eligible undocumented 

aliens who actually enroll in Medicaid and receive coverage. According to 

officials in most state Medicaid offices and hospital associations we 

interviewed, fear of being discovered by immigration authorities is one 

factor that can deter undocumented aliens from enrolling.15 Enrollment in 

Medicaid involves filling out an application; providing personal 

information such as income and place of residency; and, in some states, an 

interview. Also, because undocumented aliens are generally covered by 

Medicaid only for the duration of an emergency event, they may have to 

reenroll each time they receive emergency services. 

• Not all hospital services provided to undocumented aliens enrolled 

in Medicaid are covered. Medicaid coverage for undocumented aliens is 

limited to treatment of an emergency medical condition. Hospital 

 15At the same time, pre-enrollment policies in some states may facilitate enrollment. In 2 of 

the 10 states we reviewed, Medicaid officials said that undocumented aliens in their states 

may enroll in Medicaid before an emergency condition arises; a third state allows 

undocumented women to enroll during their third trimester of pregnancy. Medicaid 

officials in 2 of these states reported believing that such policies can increase enrollment of 

undocumented aliens. 
Page 13 GAO-04-472 Undocumented Aliens and Uncompensated Care 

association officials in 7 of the 10 states we reviewed reported that a 

concern of hospitals is the cost of treatment for undocumented aliens that 

continues beyond emergency services and is not covered by Medicaid. 

Aside from anecdotal information, however, data are not available to 

determine the extent to which hospitals are treating undocumented aliens 

for nonemergency conditions. Further, within federal guidelines, the 

services covered under emergency Medicaid may vary from state to state.16

According to an eligibility expert in CMS’s Center for Medicaid and State 

Operations, the agency’s position is that each case needs to be evaluated 

on its own merits, and the determination of what constitutes an emergency 

medical service is left to the state Medicaid agency and its medical 

advisors. 

Medicaid DSH payments are another source of funding available to some 

hospitals that could help offset the costs of treating undocumented aliens. 

Under the Medicaid program, states make additional payments, called 

DSH adjustments, to qualified hospitals serving a disproportionate number 

of Medicaid beneficiaries and other low-income people, which can include 

undocumented aliens. As with other Medicaid expenditures, states receive 

federal matching funds for DSH payments to hospitals. Medicaid DSH 

allotments—the maximum federal contribution to DSH payments—totaled 

$5 billion in fiscal year 2002 in the 10 states we reviewed. All hospitals, 

however, do not receive these funds. In general, a hospital qualifies for 

DSH payments on the basis of the relative amount of Medicaid service or 

charity care it provides. Care provided to undocumented aliens could fall 

into one of these categories.17 The extent to which hospitals benefit from 

 16Two court cases have provided slightly different interpretations of the scope of coverage 

under emergency Medicaid. See Greenery Rehabilitation Group, Inc. v. Hammon, 150 

F.3d 226 (2nd Cir. 1998) (stabilization after initial injury ends Medicaid coverage unless 

another emergency develops) and Scottsdale Healthcare, Inc. v. Arizona Health Care Cost 

Containment System Admin., 75 P.3d 91 (Az. Sup. Ct. 2003) (stabilization after initial 

injury does not determine whether Medicaid coverage ends). See also Luna v. Division of 

Social Services, 589 S.E.2d 917 (N.C. Ct. App. 2004) (adopting the reasoning of the Arizona 

Supreme Court). 

17Hospitals that meet federally set criteria must be designated as DSH hospitals. Under 42 

U.S.C. § 1396r-4(b) (2000), a hospital is deemed to be a DSH hospital if its Medicaid 

inpatient utilization rate is at least one standard deviation above the mean rate for hospitals 

receiving Medicaid payments in the state or if the hospital’s low-income utilization rate 

exceeds 25 percent. The Medicaid inpatient utilization rate is the number of Medicaid 

inpatient days as a percentage of total inpatient days. The low-income utilization rate is 

calculated using total hospital revenue for patient services that are paid by Medicaid, the 

amount of state and local government cash subsides for patient services, and total hospital 

charges for inpatient hospital services attributable to charity care. 

Medicaid Disproportionate 

Share Hospital 

Adjustments Aid Some 

Hospitals 
Page 14 GAO-04-472 Undocumented Aliens and Uncompensated Care 

DSH payments depends on how states administer the DSH program. 

Medicaid officials in some states we reviewed said that some hospitals 

transfer money to the state to support the state’s share of the DSH 

program; such transfers reduce the net financial benefit of DSH payments 

to these hospitals. 

Federal funding provided under BBA was made available to help states 

recover their costs of emergency services furnished to undocumented 

aliens regardless of Medicaid eligibility; the states we reviewed opted to 

use this money to help recover the state share of emergency Medicaid 

expenditures. BBA made $25 million available for each of fiscal years 1998 

through 2001 for distribution among the 12 states with the highest 

numbers of undocumented aliens.18 INS estimates of the undocumented 

alien population in 1996 were used to identify the 12 states. Seven of the 10 

states we reviewed were eligible for a portion of these allotments; 6 of the 

7 states claimed these funds.19 BBA allotments for these 6 states accounted 

for 91 percent of the $25 million available each year. States could use the 

funds to help recover (1) the state share of emergency Medicaid 

expenditures for undocumented aliens and/or (2) other state expenditures 

or those of political subdivisions of the state, for emergency services 

provided to those undocumented aliens not eligible for Medicaid. In each 

of the 6 states, Medicaid officials reported using the state’s entire BBA 

payment to recover a portion of what the state had already paid for 

undocumented aliens under emergency Medicaid. These funds were not 

used to cover hospitals’ costs for the care of undocumented aliens not 

eligible for Medicaid. 

In commenting on BBA funding, state hospital association officials in 5 of 

the 7 states we interviewed that were eligible for this funding said that the 

amount was too low. For example, in fiscal year 2001, BBA allotments for 

undocumented aliens for the two states with the largest ($11,335,298) and 

smallest ($651,780) allotments accounted for less than 2 percent of 

reported emergency Medicaid expenditures in those states. Officials from 

several state hospital associations, as well as from the American Hospital 

Association, reported that their members would like any additional federal 

 18Pub. L. No. 105-33, § 4723, 111 Stat. 251, 515. 

19The seven states in our review that qualified for BBA allotments are Arizona, California, 

Florida, Illinois, New Jersey, New York, and Texas. Of these, New Jersey did not claim any 

BBA funds. 

Balanced Budget Act 

Funding for 

Undocumented Aliens 

Retained by States 
Page 15 GAO-04-472 Undocumented Aliens and Uncompensated Care 

funding for undocumented aliens to be distributed to hospitals more 

directly. Some state hospital association and state Medicaid officials 

nevertheless acknowledged matters that would need to be addressed in 

order to distribute funds to hospitals for undocumented aliens not covered 

by emergency Medicaid, including how hospitals would identify, define, 

and document expenditures for emergency services provided to these 

undocumented aliens. As mentioned above, fewer than 5 percent of 

hospitals responding to our survey reported having a method for 

identifying undocumented alien patients other than tracking patients 

without a Social Security number. 

The recently enacted Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 appropriated additional funds, beginning in 

fiscal year 2005, for payments to hospitals and other providers for 

emergency medical services furnished to undocumented and certain other 

aliens. Section 1011 of the act appropriated $250 million for each of fiscal 

years 2005 through 2008 for this purpose.20 Two-thirds of the funds are to 

be distributed according to the estimated proportion of undocumented 

aliens residing in each state; the remaining one-third is designated for the 

six states with the highest number of apprehensions of undocumented 

aliens as reported by Homeland Security.21 These new funds are to be paid 

directly to eligible providers, such as hospitals, physicians, and ambulance 

services, for emergency medical services provided to undocumented and 

certain other aliens that are not otherwise reimbursed.22 Payment amounts 

will be the lesser of (1) the amount the provider demonstrates was 

incurred for provision of emergency services or (2) amounts determined 

under a methodology established by the Secretary of Health and Human 

Services. By September 1, 2004, the Secretary is required to establish a 

process for providers to request payments under the statute. 

 20Pub. L. No. 108-173, § 1011, 117 Stat. 2066, 2432. 

21The law specifies that the proportion of undocumented aliens in each state is as 

determined by INS as of January 2003 on the basis of the 2000 census. 

22In addition to undocumented aliens, the statute pertains to certain Mexican citizens 

permitted to enter the country for 72 hours or less and aliens paroled into the United States 

for eligible services. Eligible services include health care services required by EMTALA and 

related hospital and ambulance services as defined by the Secretary of Health and Human 

Services. 

New Federal Funding Will 

Be Available Beginning in 

Fiscal Year 2005 
Page 16 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Both Border Patrol agents and U.S. port-of-entry officials come into 

contact with people needing emergency medical assistance whom they 

refer or allow to enter for care, but in most situations, Homeland Security 

is not responsible for the resulting costs of emergency medical assistance. 

Homeland Security may cover medical expenses only of people taken into 

custody, but Border Patrol officials said that when they encounter people 

with serious injuries or medical conditions, they generally refer the 

individuals to local hospitals without first taking them into custody. The 

agency does not track the number of aliens it refers to hospitals in this 

fashion. Similarly, undocumented aliens arriving at U.S. ports of entry with 

emergency medical conditions may be granted humanitarian parole for 

urgent medical reasons, but they are not in custody, and Homeland 

Security is not responsible for their medical costs. 

Although the Border Patrol does not have an agencywide formal written 

policy regarding encounters with sick or injured persons, Border Patrol 

officials and documents we obtained indicate that the Border Patrol’s first 

priority in such encounters is to obtain medical assistance and, if 

necessary, arrange transportation to a medical facility. According to 

Border Patrol officials, agents generally do not take sick or injured 

persons into custody on the scene, and because the individuals are not in 

custody, Homeland Security is not responsible for their medical costs. 

Under federal law, the U.S. Public Health Service, within the Department 

of Health and Human Services, is authorized to pay the medical expenses 

of persons in the custody of immigration authorities.23 Under an 

interagency agreement, Homeland Security is responsible for reimbursing 

the Department of Health and Human Services for hospital care provided 

to such persons. The statute does not grant the Public Health Service the 

 2342 U.S.C. § 249 (2000). 

Homeland Security Is 

Usually Not 

Responsible for 

Hospital Costs of 

Aliens Needing 

Emergency Medical 

Care Who Are 

Encountered by 

Border Patrol and 

Port-of-Entry Officials 

The Border Patrol 

Generally Does Not Take 

Injured Aliens into 

Custody and Is Therefore 

Not Responsible for 

Subsequent Medical Costs 
Page 17 GAO-04-472 Undocumented Aliens and Uncompensated Care 

authority to cover the medical expenses of aliens not in custody, and 

therefore Homeland Security is not responsible for these medical costs.24

Border Patrol officials provided a number of different reasons for not first 

taking injured or sick persons they have encountered into custody. Several 

officials said, for example, that Border Patrol agents assume a 

humanitarian role when encountering persons needing emergency medical 

care, and their first concern is obtaining medical assistance. In addition, 

many officials said that an injured or sick person’s condition may affect his 

or her ability to reliably answer questions about immigration status. Some 

Border Patrol officials and documents indicated that taking all sick or 

injured persons into custody would not be consistent with the agency’s 

primary enforcement mission. They explained that the Border Patrol does 

not have the resources to pursue a prosecution of every possible violation 

of law, so agents exercise their prosecutorial discretion and concentrate 

resources on those violations that will produce maximum results in 

accomplishing their mission. Further, according to statute, an immigration 

officer may not arrest an alien without a warrant unless the officer has 

reason to believe that the person is in the United States in violation of 

immigration law and is likely to escape before a warrant can be obtained.25

Some officials maintained that when aliens encountered need medical 

attention and are considered unlikely to escape, they are generally not 

taken into custody. 

Border Patrol officials reported that in certain instances, agents may take 

particular persons into custody while they are in the hospital. For 

example, if agents encounter an individual who is of particular law 

enforcement interest—such as a suspected smuggler of drugs or aliens—

they may take that individual into custody. Doing so may involve posting a 

guard at the hospital. In these circumstances, Homeland Security would 

 24Under 42 U.S.C. § 249, the Public Health Service is authorized to provide medical care for 

persons who are “detained by” INS. (INS’s functions were transferred to Homeland 

Security effective Mar. 1, 2003.) The term “detained” is not defined in the statute or in the 

agency’s regulations, but its meaning was addressed in City of El Centro v. United States, 

922 F.2d 816 (Fed. Cir. 1990). In this case, the court determined the meaning of 

“detained” by applying principles derived from analogous situations, such as those 

involving seizures of persons under the Fourth Amendment. According to the court, a 

seizure occurs when the government acts intentionally to deprive a person of freedom of 

movement. 

258 U.S.C. § 1357(a)(2) (2000). 
Page 18 GAO-04-472 Undocumented Aliens and Uncompensated Care 

assume responsibility for any costs of care once the individual is placed 

into custody. 

Border Patrol agents in the Miami sector encounter sick or injured aliens 

under conditions slightly different from those in the Southwest, but their 

practices in such encounters are generally consistent with those reported 

by the nine Southwest sectors and with Border Patrol’s general unwritten 

policy and practice. According to Miami sector officials, because the 

sector has fewer than 100 agents to cover more than 1,600 coastal miles in 

Florida, Georgia, South Carolina, and North Carolina, Miami sector agents 

typically come into contact with aliens in response to calls from other law 

enforcement agencies. If the other law enforcement agency called for local 

emergency medical services before Miami Border Patrol sector agents 

determined the person’s immigration status, Border Patrol agents would 

not take that person into custody and Homeland Security would not be 

responsible for his or her medical costs. According to Miami sector 

officials, Homeland Security is responsible for medical costs only for those 

people taken into custody after their immigration status has been 

determined, and agents follow up at the hospital only with these patients. 

If another law enforcement agency refers the person to the hospital, 

Border Patrol agents said they do not follow up unless called by the 

hospital upon the patient’s release, and then only if agents are available to 

respond. 

Undocumented aliens are also intercepted at sea by the U.S. Coast Guard. 

Coast Guard cutters have trained medical personnel on board, and 

according to officials in the agency’s Migrant Interdiction Division, when 

Coast Guard personnel encounter sick or injured undocumented aliens, 

their practice is to treat them at sea to the extent possible and return them 

to their home countries once they are stabilized.26 On occasion, persons 

encountered at sea with severe medical conditions may need to be 

transported to shore or directly to a hospital, but this situation rarely 

occurs. In fiscal year 2002, the Coast Guard brought 9 aliens to shore for 

medical care and in fiscal year 2003, brought in 14. According to Coast 

Guard officials, the agency has no responsibility to pay for care of those 

aliens brought to shore for medical treatment. 

 26Executive Order 12807 directs the Coast Guard to interdict migrants at sea beyond U.S. 

territorial limits and return them to their countries of origin. 
Page 19 GAO-04-472 Undocumented Aliens and Uncompensated Care 

It is unknown how often the Border Patrol refers sick or injured aliens not 

taken into custody to hospitals. Border Patrol officials said the agency 

does not track the total number of encounters with sick or injured 

persons. What is known is how much the Department of Health and 

Human Services pays for care, subject to reimbursement from Homeland 

Security, for those already in Border Patrol custody. In fiscal year 2003, 

the Department of Health and Human Services paid about $1.7 million in 

medical claims for people in Border Patrol custody, of which about 

$1.2 million was for hospital inpatient and outpatient expenses. Data are 

also available on Border Patrol encounters with aliens that the agency 

categorized as rescues—that is, incidents in which death or serious injury 

would have occurred had Border Patrol agents not responded—but these 

data do not include all encounters with aliens who were referred to 

hospitals without first having been taken into custody. Our analysis of 

Border Patrol rescue data for the nine sectors on the U.S.-Mexican border 

shows that in fiscal year 2002 about 360 suspected undocumented aliens 

were rescued and referred to hospitals for care.27 Rescued aliens were 

referred to hospitals for a variety of medical reasons, including heat 

exposure, possible heart attack, injuries, and complications from 

pregnancy. Nearly half the referrals occurred in the Tucson Border Patrol 

sector, which covers most of Arizona. 

Homeland Security is not authorized to pay the medical costs of aliens 

granted humanitarian parole at U.S. ports of entry for urgent medical 

reasons because these individuals are not in custody. Humanitarian 

paroles for urgent medical reasons are granted by port directors on a caseby-case basis and, according to most officials responsible for ports of 

entry whom we interviewed, only when the alien is in medical distress or a 

“life-or-death situation,” such as after a severe head trauma. Some port-ofentry officials cited instances when they turned aliens away because they 

believed that the medical conditions were not urgent and medical facilities 

in Mexico could provide treatment. When humanitarian paroles for urgent 

medical reasons are granted, a formal record of arrival is completed to 

document the aliens’ entry into the United States. Sometimes, port-of-entry 

officials know in advance that an injured alien will be arriving, and the 

form is completed beforehand. If medical urgency prevents completion of 

this form at the port of entry, an official will go to the hospital to obtain 

the necessary information. The length of time a paroled alien is allowed to 

 27Not all persons rescued by the Border Patrol require a referral for hospital care. 

The Border Patrol’s Total 

Encounters with Sick or 

Injured Aliens Is Unknown 

Homeland Security Is Not 

Responsible for Medical 

Costs of Aliens Granted 

Humanitarian Parole for 

Urgent Medical Reasons, 

but Few Such Paroles Are 

Granted 
Page 20 GAO-04-472 Undocumented Aliens and Uncompensated Care 

remain in the United States is determined case by case but cannot exceed 

1 year. Like all other aliens who enter for a temporary period, a paroled 

alien is expected to leave when his or her authorized stay ends. 

Office of Field Operations data show that from June 1 through October 31, 

2003, officials at 7 of the 24 ports of entry along the U.S.-Mexican border 

granted a total of 54 humanitarian paroles for urgent medical reasons.28

Almost two-thirds (35) of these paroles were granted at the Columbus port 

of entry in New Mexico and brought to one local hospital. A Columbus 

port-of-entry official stated that the limited capability of the nearby 

medical facility in Mexico contributes to the high number of humanitarian 

paroles granted for urgent medical reasons at the port. The hospital that 

treated most of the paroled patients reported receiving no payment for any 

of the 27 patients paroled from June through August 2003 and noted that 4 

of these patients were later transferred to other hospitals for further care. 

The other 19 paroles occurred at three ports of entry in Arizona and three 

ports of entry in Texas, near small towns straddling the border. 

Most (17 of 24) of the Southwest border ports of entry reported granting 

no paroles for urgent medical reasons from June through October 2003. 

Officials at three ports of entry we reviewed granted no humanitarian 

paroles for urgent medical reasons during that time and are located near 

large cities in Mexico. Officials at one of these ports of entry told us that 

hospital care is available in the Mexican cities across the border, so that 

Mexican residents need not be treated at U.S. hospitals. Hospital officials 

in Arizona noted that several Arizona hospitals and the U.S. government 

have provided funds and equipment to help improve the capabilities of 

nearby Mexican medical facilities and that these measures helped reduce 

their burden of cases from Mexico. 

Finally, although aliens may be granted humanitarian parole for urgent 

medical reasons, several port-of-entry officials told us that the majority of 

persons seeking entry into the United States for emergency medical care 

have proper entry documents. For example, some aliens arriving at U.S. 

hospitals may be Mexican nationals with border crossing cards, which 

allow entry into the United States within 25 miles of the border for 

business or pleasure for up to 72 hours. Another port official reported that 

 28In response to our request, Homeland Security’s Bureau of Customs and Border 

Protection’s Office of Field Operations collected data starting in June 2003 on the number 

of humanitarian paroles granted for urgent medical reasons at ports of entry located along 

the U.S.-Mexican border. 
Page 21 GAO-04-472 Undocumented Aliens and Uncompensated Care 

many U.S. citizens live in Mexico and sometimes arrive in ambulances to 

go to U.S. hospitals. According to some officials responsible for ports of 

entry, hospitals may not be fully aware of the immigration status of 

patients who have crossed the border to obtain emergency medical care; 

this uncertainty may create the impression that ports are granting more 

humanitarian paroles for urgent medical reasons than they are. 

Despite hospitals’ long-standing concern about the costs of treating 

undocumented aliens, the extent to which these patients affect hospitals’ 

uncompensated care costs remains unknown. The lack of reliable data on 

this patient population and lack of proven methods to estimate their 

numbers make it difficult to determine the extent to which hospitals treat 

undocumented aliens and the costs of their care. Likewise, with respect to 

undocumented aliens referred to hospitals but not first taken into custody 

by the Border Patrol, neither the Border Patrol nor hospitals track their 

numbers, making it difficult to estimate these patients’ financial impact on 

hospitals. Until reliable information is available on undocumented aliens 

and the costs of their care, accurate assessment of their financial effect on 

hospitals will remain elusive, as will the ability to assess the extent to 

which federal funding offsets their costs. The availability of new federal 

funding under the Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 may offer an incentive for hospitals serving 

undocumented aliens to collect more reliable information on the numbers 

of these patients and the costs of their care. 

To help ensure that funds appropriated by the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003 are not improperly spent, we 

recommend that the Secretary of Health and Human Services, in 

establishing a payment process, develop appropriate internal controls to 

ensure that payments are made to hospitals and other providers only for 

unreimbursed emergency services for undocumented or certain other 

aliens as designated in the statute. In doing so, the Secretary should 

develop reporting criteria for providers to use in claiming these funds and 

periodically test the validity of the data supporting the claims. 

We provided officials in CMS and Homeland Security an opportunity to 

comment on a draft of this report. In its comments, CMS concurred with 

our recommendation that the Secretary develop appropriate internal 

controls and stated that the agency expects to develop appropriate 

internal controls regarding funds appropriated by section 1011 of the 

Conclusions 

Recommendation for 

Executive Action 

Agency Comments 
Page 22 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Medicare Prescription Drug, Improvement, and Modernization Act. The 

agency said it is currently developing a process for providers to claim 

these funds and indicated that it would be helpful for GAO to provide 

insight into the specific internal controls that would be useful in ensuring 

that claims are paid only for unreimbursed emergency services for 

undocumented and certain other aliens. In response to CMS’s request, we 

amended our recommendation to be more specific. CMS also agreed that 

the new federal funding may offer an incentive for those hospitals 

incurring significant costs for undocumented aliens to collect more 

reliable information on the number of undocumented alien patients they 

treat and the costs of their care, but it also noted that other providers, 

especially those who do not regularly see undocumented aliens in 

emergency department settings, may choose to continue to provide 

uncompensated care to this population without ever trying to document 

the costs. CMS also provided technical comments, which we incorporated 

as appropriate. Homeland Security generally agreed with the report’s 

findings and provided some technical comments regarding parole and the 

numbers of ports of entry, which we incorporated as appropriate. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from its 

date. We will then make copies available to other interested parties upon 

request. In addition, this report will be available at no charge on the GAO 

Web site at http://www.gao.gov. 

If you have any questions, please contact me at (202) 512-7119. Additional 

GAO contacts and the names of other staff members who made major 

contributions to this report are listed in appendix V. 

Janet Heinrich 

Director, Health Care—Public Health Issues 
Page 23 GAO-04-472 Undocumented Aliens and Uncompensated Care 

List of Requesters 

The Honorable W. Todd Akin 

The Honorable Joe Baca 

The Honorable Cass Ballenger 

The Honorable Nathan Deal 

The Honorable Mark Foley 

The Honorable Charles A. Gonzalez 

The Honorable Luis V. Gutierrez 

The Honorable Rubén Hinojosa 

The Honorable John L. Mica 

The Honorable Grace F. Napolitano 

The Honorable Solomon P. Ortiz 

The Honorable Ed Pastor 

The Honorable Silvestre Reyes 

The Honorable Lucille Roybal-Allard 

The Honorable José E. Serrano 

House of Representatives 
Appendix I: Survey Methodology and Results 

Page 24 GAO-04-472 Undocumented Aliens and Uncompensated Care 

To collect information on the extent to which hospitals’ uncompensated 

care costs are related to treating undocumented aliens, we mailed a 

questionnaire to a sample of more than 500 hospitals in 10 states—

Arizona, California, Florida, Georgia, Illinois, New Jersey, New Mexico, 

New York, North Carolina, and Texas. We selected the 4 Southwest 

states—Arizona, California, New Mexico, and Texas—because 

uncompensated care costs due to treating undocumented aliens has been 

a long-standing issue for hospitals located in communities near the U.S.-

Mexican border. We selected the other 6 states because high estimated 

numbers of undocumented aliens resided there in 2000, according to the 

Immigration and Naturalization Service (INS). In all, the 10 states 

comprised an estimated 78 percent of the population of undocumented 

aliens in the United States in 2000. (See table 2.) 

Table 2: Estimated Undocumented Aliens Residing in 10 States, 2000 

State Estimated number 

Percentage of total estimated 

undocumented aliens residing 

in the United States 

All States 7,000,000 100.0

California 2,209,000 31.6

Texas 1,041,000 14.9

New York 489,000 7.0

Illinois 432,000 6.2

Florida 337,000 4.8

Arizona 283,000 4.0

Georgia 228,000 3.3

New Jersey 221,000 3.2

North Carolina 206,000 2.9

New Mexico 39,000 0.6

Source: U.S. Immigration and Naturalization Service. 

We sent our survey to a randomly selected stratified sample of 503 of 1,637 

short-term, nonfederal, general medical and surgical care hospitals that—

according to either the American Hospital Association’s annual survey 

database, fiscal year 2000, or the Centers for Medicare & Medicaid 

Services Provider of Service File as of the end of 2000—had an emergency 

department. Table 3 shows the characteristics of the universe from which 

the hospitals were sampled. 

Appendix I: Survey Methodology and Results 

Survey Sample 
Appendix I: Survey Methodology and Results 

Page 25 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Table 3: Characteristics of Universe from Which Hospitals Were Sampled 

Characteristic 

Number of 

hospitals 

Percentage 

of hospitals

All hospitals 1,637 100

Ownership 

Not-for-profit 967 59

Investor owned 317 19

Government owned 353 22

Number of staffed beds 

Less than or equal to 73 415 25

More than 73 and less than or equal to 279 814 50

More than 279 408 25

County poverty level 

Less than or equal to 11% 448 27

More than 11 percent and less than or equal to 19 

percent 943 58

More than 19% 246 15

State 

Arizona 53 3

California 335 20

Florida 175 11

Georgia 141 9

Illinois 186 11

New Jersey 71 4

New Mexico 31 2

New York 187 11

North Carolina 107 7

Texas 351 21

Source: GAO analysis of American Hospital Association and U.S. Census Bureau data. 

Notes: Because of rounding, percentages may not add to 100. Data from the American Hospital 

Association’s Annual Survey Database, Fiscal Year 2000, and the U.S. Census Bureau’s Census 

2000 Demographic Profiles. 

From this universe of hospitals, we sampled 100 percent of the hospitals in 

Arizona and New Mexico. In the other 8 states, we stratified the sample by 
Appendix I: Survey Methodology and Results 

Page 26 GAO-04-472 Undocumented Aliens and Uncompensated Care 

state, hospital ownership, and estimates of undocumented aliens by 

county.1

Our survey included questions about the hospital, such as (1) whether it 

had an emergency department in fiscal year 2002; (2) the number of 

staffed beds on the last day of fiscal year 2002; (3) financial information on 

bad debt and charity care charges, total expenses, gross patient revenue, 

and other operating revenue; (4) whether the hospital routinely collected 

Social Security numbers and, for fiscal year 2002, total inpatient days and 

the number of inpatient days for people without a Social Security number, 

our proxy for undocumented aliens; and (5) as a means of evaluating the 

accuracy of the proxy, whether the hospital used a method other than lack 

of a Social Security number alone to identify undocumented aliens. 

After speaking with hospital officials, we concluded that although lack of a 

Social Security number could potentially over- or underestimate the actual 

population of undocumented aliens treated by a hospital, it might be the 

least burdensome way for hospitals to provide us with information for our 

survey that would allow us to attempt to identify care given to 

undocumented aliens. We included a question on the survey asking 

hospitals to report the number of inpatient days for patients without a 

Social Security number. We used this information, along with total 

inpatient days reported, to calculate the proportion of inpatient days for 

patients without a Social Security number in order to approximate the 

proportion of inpatient care provided to undocumented aliens. Although 

undocumented aliens may first seek care through hospital emergency 

departments, we focused on inpatient care because hospital officials 

reported that patient data, including Social Security numbers, are 

generally more complete for persons admitted as inpatients; persons 

treated in the emergency department are often released before such 

information can be collected. Further, although a large number of patients 

may be seen in emergency departments, hospital officials reported that the 

majority of uncompensated care cost is incurred in inpatient settings. 

 1

For sampling purposes, we developed estimates of undocumented aliens as a percentage 

of the population by county by (1) dividing INS estimates of the number of undocumented 

aliens in each state by Census Bureau estimates of the number of foreign-born noncitizens 

in the state and (2) applying this ratio to Census Bureau estimates of the number of foreignborn noncitizens in each county. 

Survey Questions 

Lack of Social 

Security Number as a 

Proxy for 

Undocumented Aliens 
Appendix I: Survey Methodology and Results 

Page 27 GAO-04-472 Undocumented Aliens and Uncompensated Care 

We could not establish the accuracy of our proxy before carrying out the 

survey, so to assess our proxy, we included a survey question on hospitals’ 

methods for estimating undocumented aliens. We were, however, unable 

to determine our proxy’s accuracy. Fewer than 5 percent of hospitals 

responding to the survey reported that they had methods of estimating 

undocumented aliens other than lack of Social Security number alone. 

These methods varied among the hospitals and led to estimates 

inconsistent with those based on lack of a Social Security number. 

We also pretested our questionnaire in person with officials at six 

hospitals to determine if it was understandable and if the information was 

feasible to collect, and we refined the questionnaire as appropriate. We 

conducted follow-up mailings and telephone calls to nonrespondents. We 

obtained responses from 351 hospitals, for an overall response rate of 

about 70 percent. Of the hospitals that returned surveys, 300 provided 

financial information to calculate uncompensated care levels—defined as 

uncompensated care as a percentage of total expenses—but only 198 (39 

percent of all hospitals surveyed) provided sufficient information to allow 

us to examine the relationship between hospitals’ uncompensated care 

levels and the percentage of inpatient days for patients without a Social 

Security number. We performed checks for obvious errors and 

inconsistent data but did not independently verify the information 

hospitals provided in the survey. 

Three hundred hospitals provided sufficient information to calculate 

uncompensated care levels. Table 4 shows financial information for these 

hospitals; this information is not generalizable to the overall population. 

Table 4: Financial Information for Responding Hospitals 

Financial information Median

Total uncompensated care costs (dollars) $2.6 million

Total expenses (dollars) $58.0 million

Uncompensated care levels (percentage) 5.0

Source: GAO. 

Notes: Based on GAO’s 2003 survey of hospitals. Results are limited to the 300 respondents that 

provided sufficient information and are not generalizable to the overall population. 

Survey Pretesting and 

Response 

Data from 

Responding Hospitals 
Appendix I: Survey Methodology and Results 

Page 28 GAO-04-472 Undocumented Aliens and Uncompensated Care 

For the 198 hospitals that provided sufficient information, we examined 

the variation in uncompensated care levels by percentage of inpatient days 

attributable to patients without a Social Security number after dividing the 

distribution of the latter into thirds. Table 5 shows this information for 

these 198 hospitals; this information is not generalizable to the overall 

population. 

Table 5: Uncompensated Care Levels by Tertile of Percentage of Inpatient Days 

Attributable to Patients without a Social Security Number 

Tertile (percentage range ) 

Median 

uncompensated 

care level 

(percent)

Minimum 

uncompensated 

care level

(percent)

Maximum 

uncompensated 

care level

(percent) 

Bottom third (0–0.24) 4.3 0.0 17.5

Middle third (> 0.24–1.66) 4.3 1.3 14.6

Top third (> 1.66–19.71) 4.9 1.4 17.0

Source: GAO. 

Notes: Based on GAO’s 2003 survey of hospitals. Results are limited to the 198 respondents that 

provided sufficient information and are not generalizable to the overall population. 

Factors other than the percentage of inpatient days attributable to patients 

without a Social Security number, such as the extent to which hospitals 

treat uninsured patients (including uninsured patients with a Social 

Security number), could affect the variation in uncompensated care levels 

among hospitals. 

Since a high proportion of hospitals we surveyed did not provide us with 

information to calculate the percentage of inpatient days attributable to 

patients without a Social Security number, and we could not validate the 

accuracy of this proxy, we cannot evaluate either the relationship between 

the percentage of inpatient days attributable to patients without a Social 

Security number and hospitals’ uncompensated care levels, or to what 

extent hospitals’ uncompensated care costs are related to treating 

undocumented aliens. 
Appendix II: Methodology for Determining 

Federal Funding Sources and Homeland 

Security’s Responsibility for Medical Costs 

Page 29 GAO-04-472 Undocumented Aliens and Uncompensated Care 

To determine the availability of federal funding sources to assist hospitals 

with the costs of treating undocumented aliens, we reviewed relevant 

literature and legal documents, spoke with officials at the Centers for 

Medicare & Medicaid Services (CMS), and interviewed state Medicaid and 

hospital association officials in the same 10 states in which we surveyed 

hospitals—Arizona, California, Florida, Georgia, Illinois, New Jersey, New 

Mexico, New York, North Carolina, and Texas. Specifically, to assess the 

availability of Medicaid to cover hospitals’ costs of treating undocumented 

aliens, we reviewed Medicaid eligibility and Medicaid disproportionate 

share hospital (DSH) laws and regulations and interviewed state Medicaid 

officials about Medicaid coverage, eligibility requirements, and DSH 

programs in their states. We collected data on total state Medicaid 

expenditures and DSH allotments from CMS and on emergency Medicaid 

expenditures from state Medicaid officials. We assessed the reliability of 

the above data by interviewing agency individuals knowledgeable about 

the data. After reviewing state expenditure and DSH allotment figures for 

logic and following up where necessary, we determined that these data 

sources were sufficiently reliable for the purposes of this report. We also 

reviewed published reports and spoke with state hospital association 

officials about impediments to obtaining Medicaid coverage for 

undocumented aliens treated at hospitals. To determine the availability of 

federal funds allotted to states through the Balanced Budget Act of 1997 

(BBA) for emergency services furnished to undocumented aliens, we 

obtained information on BBA allotments to states and interviewed state 

Medicaid officials in the seven states in our review that were eligible to 

receive these funds about how they used the funds. We also reviewed CMS 

guidance relevant to BBA’s section on emergency medical services for 

undocumented aliens and interviewed hospital association officials. In 

addition, we reviewed the provisions in the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003 pertaining to payments to 

providers for treating undocumented and other aliens, and we interviewed 

CMS officials about their plans to implement these provisions. 

To determine the responsibility of the Department of Homeland Security 

(Homeland Security) for covering the medical costs of sick or injured 

aliens encountered by Border Patrol agents, we reviewed relevant laws, 

regulations, and legal opinions and interviewed Border Patrol officials in 

headquarters, in the nine sectors along the U.S.-Mexican border, and in the 

Miami sector. We also interviewed Coast Guard officials about their 

encounters with sick or injured aliens at sea. We obtained data from the 

Department of Health and Human Services’ Division of Immigration Health 

Services on payments for medical claims for aliens in Border Patrol 

custody. We also obtained and analyzed data from the Border Patrol’s 

Appendix II: Methodology for Determining 

Federal Funding Sources and Homeland 

Security’s Responsibility for Medical Costs 
Appendix II: Methodology for Determining 

Federal Funding Sources and Homeland 

Security’s Responsibility for Medical Costs 

Page 30 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Border Safety Initiative database to determine how many of the suspected 

undocumented aliens counted as rescues by the Border Patrol were 

transported to local hospitals. We assessed the reliability of these data by 

interviewing agency officials knowledgeable about the data, reviewing the 

data for logic and internal consistency, and following up with officials 

where necessary. We determined that the data on payments for medical 

claims for aliens in Border Patrol custody and on suspected 

undocumented aliens rescued by the Border Patrol were sufficiently 

reliable for the purposes of this report. 

To determine the responsibility of Homeland Security for covering the 

medical costs of aliens seeking humanitarian parole for urgent medical 

reasons at ports of entry, we interviewed officials in the four Field 

Operations offices responsible for ports of entry along the U.S.-Mexican 

border and at five of the ports of entry: Brownsville, Texas; Columbus, 

New Mexico; Douglas, Arizona; El Paso, Texas; and San Ysidro, California. 

At the El Paso port of entry, we interviewed officials at the port’s busiest 

crossing point, Paso Del Norte. We selected these five ports of entry for 

geographic diversity or because they had granted a large number of 

paroles. We reviewed relevant laws, regulations, and procedures regarding 

parole authority. Because Homeland Security did not normally collect data 

on the number of paroles granted specifically for urgent medical 

treatment, we requested that the Office of Field Operations record the 

number of such paroles granted at ports of entry along the U.S.-Mexican 

border. 
Appendix III: Comments from the Centers for 

Medicare & Medicaid Services 

Page 31 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Appendix III: Comments from the Centers for 

Medicare & Medicaid Services 
Appendix III: Comments from the Centers for 

Medicare & Medicaid Services 

Page 32 GAO-04-472 Undocumented Aliens and Uncompensated Care 
Appendix IV: Comments from the Department of Homeland Security 

Page 33 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Appendix IV: Comments from the 

Department of Homeland Security 
Appendix V: GAO Contacts and Staff 

Acknowledgments 

Page 34 GAO-04-472 Undocumented Aliens and Uncompensated Care 

Kim Yamane, (206) 287-4772 

Linda Y. A. McIver, (206) 287-4821 

In addition to those named above, Carla D. Brown, Ellen W. Chu, Jennifer 

Cohen, Michael P. Dino, Jennifer Major, Kevin Milne, Dae Park, Karlin 

Richardson, Sandra Sokol, Adrienne Spahr, Leslie Spangler, and Marie C. 

Stetser made key contributions to this report. 

Appendix V: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Acknowledgments 

(290226) 
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