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entitled 'Undocumented Aliens: Questions Persist about Their Impact on 
Hospitals' Uncompensated Care Costs' which was released on May 28, 
2004.

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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:

GAO Highlights:

Highlights of GAO-04-472, a report to congressional requesters 

Why GAO Did This Study:

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.

What GAO Found:

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: 

[See PDF for image]

[End of table]

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.

What GAO Recommends:

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.

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.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Effect of Undocumented Aliens on Hospitals' Uncompensated Care Costs Is 
Uncertain:

Some Federal Funding Has Been Available but Not for All Undocumented 
Aliens or Hospitals:

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:

Conclusions:

Recommendation for Executive Action:

Agency Comments:

Appendix I: Survey Methodology and Results:

Survey Sample:

Survey Questions:

Lack of Social Security Number as a Proxy for Undocumented Aliens:

Survey Pretesting and Response:

Data from Responding Hospitals:

Appendix II: Methodology for Determining Federal Funding Sources and 
Homeland Security's Responsibility for Medical Costs:

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

Appendix IV: Comments from the Department of Homeland Security:

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Acknowledgments:

Tables:

Table 1: Federal and State Emergency Medicaid Expenditures for 10 
States, Fiscal Year 2002:

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

Table 3: Characteristics of Universe from Which Hospitals Were Sampled:

Table 4: Financial Information for Responding Hospitals:

Table 5: Uncompensated Care Levels by Tertile of Percentage of 
Inpatient Days Attributable to Patients without a Social Security 
Number:

Abbreviations:

BBA: Balanced Budget Act of 1997: 
CMS: Centers for Medicare & Medicaid Services: 
DSHdisproportionate share hospital 
EMTALA: Emergency Medical Treatment and Active Labor Act: 
INS: Immigration and Naturalization Service:

United States General Accounting Office:

Washington, DC 20548:

May 21, 2004:

Congressional Requesters:

An estimated 7 million undocumented aliens[Footnote 1] resided in the 
United States in 2000, according to the Immigration and Naturalization 
Service (INS).[Footnote 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.[Footnote 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-of-
entry 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 
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 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.

Results in Brief:

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 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.

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.

Background:

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.[Footnote 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 
condition, regardless of income or immigration status.[Footnote 5] Two 
recent studies have reported on hospitals' provision of care to 
undocumented aliens, but they were limited in scope.[Footnote 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.[Footnote 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 
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.[Footnote 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.[Footnote 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.[Footnote 10] The Secretary 
of Homeland Security may parole--that is, allow temporary access into 
the United States--an otherwise inadmissible alien for urgent 
humanitarian reasons, such as treatment for an emergency medical 
condition.[Footnote 11]

Effect of Undocumented Aliens on Hospitals' Uncompensated Care Costs Is 
Uncertain:

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.[Footnote 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 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 but Not for All Undocumented 
Aliens or Hospitals:

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.

Medicaid Covers Emergency Medical Services for Eligible Undocumented 
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 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.[Footnote 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.

Table 1: Federal and State Emergency Medicaid Expenditures for 10 
States, Fiscal Year 2002:

State: Arizona; 
Expenditures: 84.

State: California[A]; 
Expenditures: 776.

State: Florida; 
Expenditures: 223.

State: Georgia; 
Expenditures: 62.

State: Illinois; 
Expenditures: 75.

State: New Jersey; 
Expenditures: 27.

State: New Mexico[B]; 
Expenditures: 4.

State: New York; 
Expenditures: 474.

State: North Carolina; 
Expenditures: 43.

State: Texas; 
Expenditures: 265.

Total; 
Expenditures: 2,034[C].

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.

[End of table]

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.[Footnote 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.

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.[Footnote 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 
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.[Footnote 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 Disproportionate Share Hospital Adjustments Aid Some 
Hospitals:

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.[Footnote 17] The extent to which hospitals benefit from 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.

Balanced Budget Act Funding for Undocumented Aliens Retained by States:

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.[Footnote 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.[Footnote 
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 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.

New Federal Funding Will Be Available Beginning in Fiscal Year 2005:

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.[Footnote 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.[Footnote 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.[Footnote 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.

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:

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.

The Border Patrol Generally Does Not Take Injured Aliens into Custody 
and Is Therefore Not Responsible for Subsequent 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.[Footnote 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 authority to cover the 
medical expenses of aliens not in custody, and therefore Homeland 
Security is not responsible for these medical costs.[Footnote 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.[Footnote 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 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.[Footnote 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.

The Border Patrol's Total Encounters with Sick or Injured Aliens Is 
Unknown:

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.[Footnote 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 Responsible for Medical Costs of Aliens 
Granted Humanitarian Parole for Urgent Medical Reasons, but Few Such 
Paroles Are Granted:

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 
case-by-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-of-entry 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 
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.[Footnote 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 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.

Conclusions:

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.

Recommendation for Executive Action:

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.

Agency Comments:

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 
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.

Signed by: 

Janet Heinrich: 
Director, Health Care--Public Health Issues:

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:

[End of section]

Appendix I: Survey Methodology and Results:

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: All States; 
Estimated number: 7,000,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 100.0%. 

State: California; 
Estimated number: 2,209,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 31.6%. 

State: Texas; 
Estimated number: 1,041,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 14.9%. 

State: New York; 
Estimated number: 489,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 7.0%. 

State: Illinois; 
Estimated number: 432,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 6.2%. 

State: Florida; 
Estimated number: 337,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 4.8%. 

State: Arizona; 
Estimated number: 283,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 4.0%. 

State: Georgia; 
Estimated number: 228,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 3.3%. 

State: New Jersey; 
Estimated number: 221,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 3.2%. 

State: North Carolina; 
Estimated number: 206,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 2.9%. 

State: New Mexico; 
Estimated number: 39,000; 
Percentage of total estimated undocumented aliens residing in the 
United States: 0.6%.

Source: U.S. Immigration and Naturalization Service.

[End of table]

Survey Sample:

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.

Table 3: Characteristics of Universe from Which Hospitals Were Sampled:

Characteristic: All hospitals; 
Number of hospitals: 1,637; 
Percentage of hospitals: 100%. 

Characteristic: Ownership: Not-for-profit; 
Number of hospitals: 967; 
Percentage of hospitals: 59%. 

Characteristic: Ownership: Investor owned; 
Number of hospitals: 317; 
Percentage of hospitals: 19%. 

Characteristic: Ownership: Government owned; 
Number of hospitals: 353; 
Percentage of hospitals: 22%. 

Characteristic: Number of staffed beds: Less than or equal to 73; 
Number of hospitals: 415; 
Percentage of hospitals: 25%. 

Characteristic: Number of staffed beds: More than 73 and less than or 
equal to 279; 
Number of hospitals: 814; 
Percentage of hospitals: 50%. 

Characteristic: Number of staffed beds: More than 279; 
Number of hospitals: 408; 
Percentage of hospitals: 25%. 

Characteristic: County poverty level: Less than or equal to 11%; 
Number of hospitals: 448; 
Percentage of hospitals: 27%. 

Characteristic: County poverty level: More than 11 percent and less 
than or equal to 19 percent; 
Number of hospitals: 943; 
Percentage of hospitals: 58%. 

Characteristic: County poverty level: More than 19%; 
Number of hospitals: 246; 
Percentage of hospitals: 15%. 

Characteristic: State: Arizona; 
Number of hospitals: 53; 
Percentage of hospitals: 3%. 

Characteristic: State: California; 
Number of hospitals: 335; 
Percentage of hospitals: 20%. 

Characteristic: State: Florida; 
Number of hospitals: 175; 
Percentage of hospitals: 11%. 

Characteristic: State: Georgia; 
Number of hospitals: 141; 
Percentage of hospitals: 9%. 

Characteristic: State: Illinois; 
Number of hospitals: 186; 
Percentage of hospitals: 11%. 

Characteristic: State: New Jersey; 
Number of hospitals: 71; 
Percentage of hospitals: 4%. 

Characteristic: State: New Mexico; 
Number of hospitals: 31; 
Percentage of hospitals: 2%. 

Characteristic: State: New York; 
Number of hospitals: 187; 
Percentage of hospitals: 11%. 

Characteristic: State: North Carolina; 
Number of hospitals: 107; 
Percentage of hospitals: 7%. 

Characteristic: State: Texas; 
Number of hospitals: 351; 
Percentage of hospitals: 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.

[End of table]

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 state, hospital ownership, and estimates of 
undocumented aliens by county.[Footnote 29]

Survey Questions:

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.

Lack of Social Security Number as a Proxy for 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.

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.

Survey Pretesting and Response:

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.

Data from Responding Hospitals:

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: Total uncompensated care costs (dollars); 
Median: $2.6 million.

Financial information: Total expenses (dollars); 
Median: $58.0 million.

Financial information: Uncompensated care levels (percentage); 
Median: 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.

[End of table]

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 ): Bottom third (0-0.24); 
Median uncompensated care level (percent): 4.3%;
Minimum uncompensated care level (percent): 0.0%;
Maximum uncompensated care level (percent): 17.5%.

Tertile (percentage range ): Middle third (> 0.24-1.66); 
Median uncompensated care level (percent): 4.3%; 
Minimum uncompensated care level (percent): 1.3%; 
Maximum uncompensated care level (percent): 14.6%.

Tertile (percentage range ): Top third (> 1.66-19.71); 
Median uncompensated care level (percent): 4.9%; 
Minimum uncompensated care level (percent): 1.4%; 
Maximum uncompensated care level (percent): 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.

[End of table]

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.

[End of section]

Appendix II: Methodology for Determining Federal Funding Sources and 
Homeland Security's Responsibility for Medical Costs:

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 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.

[End of section]

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

DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services:
Administrator 
Washington, DC 20201:

DATE:

APR 13 2004:

TO: Janet Heinrich:

Director, Heath Care-Public Health Issues 
General Accounting Office:

FROM: Mark B. McClellan, M.D., Ph.D. 
Administrator:

Centers for Medicare & Medicaid Services:

SUBJECT: General Accounting Office Draft Report, "Undocumented Aliens: 
Questions Persist about Their impact on Hospitals' Uncompensated Care 
Costs" (GAO-04-472):

Thank you for the opportunity to review and comment on the General 
Accounting Office's (GAO) draft report entitled, "Undocumented Aliens: 
Questions Persist about Their Impact on Hospitals' Uncompensated Care 
Costs."

This report examines the relationship between treating undocumented 
aliens and hospitals' cost not paid by patients or insurance. In 
addition, the GAO found 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 cost remains elusive. The GAO attempted to examine the 
relationship between uncompensated care and undocumented aliens by 
survey. However, due to the low response rate from hospitals, GAO could 
not determine the effect of undocumented aliens on hospital 
uncompensated care costs.

Section 1011 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) distributes $250 million per year 
during fiscal years 2005 - 2008 to eligible providers (i.e., hospitals, 
physicians, providers of ambulance services) for emergency services 
provided to undocumented aliens. Two-thirds of these funds will be 
divided among all 50 states and the District of Columbia based on their 
relative percentages of undocumented aliens. One-third will be divided 
among the six states with the largest number of undocumented alien 
apprehensions.

The GAO states that the availability of new Federal funding, under the 
MMA, may offer an incentive for hospitals serving undocumented aliens 
to collect more reliable information on the number of these patients 
and the costs of their care. While this may be true for those hospitals 
incurring significant cost related to undocumented aliens, some 
hospitals and other providers, especially those who do not see 
undocumented aliens in an emergency department setting on a regular 
basis, may chose to continue to provide uncompensated care without ever 
trying to document the number or costs associated with providing care 
to this population. In addition, given the pro rata reduction provision 
contained in section 1011 and the limitation on Federal funding, some 
providers may choose not to document or bill for emergency services 
provided to undocumented aliens.

The GAO recommends that, "the Secretary of HHS, 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 other eligible 
aliens."

We concur with the recommendation. In fact, we are currently developing 
the process to implement section 1011 of the MMA and expect to 
establish appropriate internal controls prior to making payments to 
hospitals and other providers. To this end, it would be useful if the 
GAO provided its insight into the specific internal controls it 
believes would be useful in ensuring that claims are paid only for 
unreimbursed emergency services for undocumented or certain other 
aliens.

[End of section]

Appendix IV: Comments from the Department of Homeland Security:

U.S. CUSTOMS AND BORDER PROTECTION 
Department of Homeland Security:

Memorandum:

DATE: April 14, 2004:

FILE: AUD-1-OP SM:

MEMORANDUM FOR JANET HEINRICH 
DIRECTOR, HEALTH CARE-PUBLIC HEALTH ISSUES:

FROM: Seth M. M. Stodder:

Director, Office of Policy and Planning:

SUBJECT: Draft Audit Report of Undocumented Aliens Hospital Care Costs:

Thank you for providing us with a copy of your draft report entitled, 
"Undocumented Aliens: Questions Persist about Their Impact on 
Hospitals' Uncompensated Care Costs" and the opportunity to discuss the 
issues in this report.

CBP generally agrees with the report and has provided the attached 
general/technical comments to be included in the final report.

We have determined that the information contained in the draft report 
does not warrant protection under the Freedom of Information Act.

If you have any questions regarding the attached comments, please have 
a member of your staff contact Ms. Sandy Manuel at (202) 927-2096.

Attachment:

[End of section]

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Kim Yamane, (206) 287-4772 Linda Y. A. McIver, (206) 287-4821:

Acknowledgments:

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.

FOOTNOTES

[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.

[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). 

[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).

[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.

[10] Previously under the INS, each of the 43 crossing points was 
considered a distinct port of entry for most purposes.

[11] Under 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.

[12] For example, U.S. citizens might not provide their Social Security 
number, or undocumented aliens might provide a false or stolen Social 
Security number. 

[13] In 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. 

[14] In 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. 

[15] At 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. 

[16] Two 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).

[17] Hospitals 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.

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

[19] The 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.

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

[21] The 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. 

[22] In 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.

[23] 42 U.S.C. § 249 (2000). 

[24] Under 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.

[25] 8 U.S.C. § 1357(a)(2) (2000).

[26] Executive Order 12807 directs the Coast Guard to interdict 
migrants at sea beyond U.S. territorial limits and return them to their 
countries of origin. 

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

[28] In 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. 

[29] 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 
foreign-born noncitizens in each county. 

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