A $1 billion program to reimburse hospitals that provide emergency care to illegal immigrants has created an ethical dilemma for many health care providers who must decide whether to accept the cash but also comply with demands to turn over personal data.

"We do not want to be an arm of the INS (search) or Homeland Security (search). Our job is to provide patient care and the best patient care," said Kevin Bloye, director of public relations for the Georgia Hospital Association (search).

The program, which takes effect in October, will require emergency care staff to ask patients questions about their citizenship status, which Bloye said he believes will generate excessive paperwork as well as paranoia.

"As illegal immigrants (search) realize that hospitals will be asking these questions, they will decide not to seek care when they absolutely need care," Bloye said.

Federal authorities insist the questions are strictly for accounting purposes, not immigration enforcement. But Shannon Goessling, head of the Southeastern Legal Foundation (search), a conservative legal advocacy group, said the feds are putting their money in the wrong basket.

"I would believe that we need to address the issue of deficit spending. But if we are going to throw money at a problem, I say, throw it at the national security issue and border patrols," Goessling said.

Click on the video box near the top of this story to watch a report by FOX News' Jonathan Serrie.