A recent ruling by the Bush administration could ease the burden on health plans that have to cover emergency room services for Medicaid recipients.

The ruling was laid out in a letter sent to state Medicaid directors from Dennis Smith, the director of the Center for Medicaid and State Operations at the Department of Health and Human Services.

Smith told state officials that MCOs can limit and restrict the amount of coverage of emergency services for Medicare beneficiaries.

The New York Times reports that while the letter does not spell out specific limits, state officials have discussed several ideas, including limiting the number of covered ER visits.

The decision lifts restrictions contained in the Balanced Budget Act of 1997. Those restrictions were reinforced in rules issued by the Clinton administration in January 2001, and also by the Bush administration last June.

The 1997 act gives states the power to require Medicare beneficiaries to enroll in HMOs or other managed care plans. It also requires that health plans pay for ER services that a prudent layperson would consider necessary.

A prudent layperson is defined as someone with "an average knowledge of health and medicine."

Ben A. Bearden, the Medicaid director in Louisiana, cheered the change, saying that his state is looking into limiting ER visits to three a year.

"Three ER visits a year for an adult may sound like a small number, but it's really not," Bearden tells the Times. "I'm 60, and I've been to an ER once in my life. The ER is very expensive, and people in this state use it inappropriately. They go in for a stubbed toe."

Some are questioning the legality of the move. Florida Democratic Sen. Bob Graham, a principal author of the Balanced Budget Act, says that he cannot understand how the administration could, by letter, make such profound changes in a policy established by statute.

In a letter to President Bush, Graham writes that the new policy "appears to allow HMOs and other MCOs to deny low-income mothers, children, seniors and individuals with disabilities access to needed services in the event of an emergency.... I urge you to reconsider this unwise directive."

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