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"The new HHS policy appears to allow health maintenance organizations and other managed care organizations to deny low-income mothers, children, seniors and individuals with disabilities access to needed services in the event of an emergency, and/or restrict the emergency rooms in which they could acquire the care," Sen. Bob Graham (D-FL) wrote in a letter to President Bush Thursday.

Graham, as part of the massive 1997 Balanced Budget Act, included language requiring coverage of emergency room care under the prudent layperson standard for patients enrolled in both Medicare and Medicaid managed care plans.

But on December 20th, Federal Medicaid Director Dennis Smith wrote a letter to Medicaid directors in every state to inform them that the Centers for Medicare and Medicaid Services is removing the requirement that patients be allowed to use the nearest emergency room. And the agency is also removing the requirement that plans pay for hospital stays arising from emergencies, even if a beneficiary has used up the number of days allowed under the program.

"We believe that the limitations on amount, duration and scope regarding emergency services in the state plan will apply to managed care enrollees as well as all other beneficiaries," the letter said.

Graham said this directly conflicts with the law passed by Congress and signed by President Bill Clinton.

"The point of Congress enacting the prudent layperson standard was so that individuals would not be denied needed emergency care by arbitrary HMO network and prior-authorization restrictions," the senator wrote. "This letter raises questions about these statutory protections for patients, and may actually eviscerate them."