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New Ambulance Service-Related Advisory Opinion

In a new advisory opinion, Number 04-10, issued on August 4, 2004, the Department of Health and Human Services’ (DHHS) Office of Inspector General (OIG) has concluded that it would not impose penalties against a county or its related entities for an arrangement between first responders and secondary transporters. The OIG is the office of DHHS that, among other duties, monitors healthcare providers for violations of the Anti-Kickback Act related to Medicare and other federal healthcare benefit funds. The advisory opinion was requested by an unnamed county, hereafter referred to as the County.

The Anti-Kickback Act (AKA) makes it a criminal offense to intentionally give or receive anything of value in exchange for the referral of Medicare patient business. Violation of the statute is a criminal felony punishable by a fine of up to $25,000 and/or imprisonment of up to five years. A conviction of an AKA crime will also lead to exclusion from Medicare, Medicaid and other federally funded health benefit programs, prohibiting the provider from billing them. There can further be civil liabilities under the AKA through the False Claims Act or other similar laws that would require all funds received as part of the illegal activity to be returned to the government, along with additional heavy penalties. Because violations of the AKA can be very subjective, the OIG issues these advisory opinions to give medical providers the opportunity to have a course of action approved prior to engaging in something that could later lead to severe liabilities.

The County’s proposed arrangement was for its fire rescue units to respond to all 9-1-1 calls and provide any necessary first-responder services, then call for a second responder in cases that required transportation. The County wanted to open bidding up to ambulance services to provide for the second responder portion of the arrangement. The winning bidder would be the ambulance service that agreed to pay the County the highest rate for its first responder services (including dispatch).

As first responders, the County fire and rescue would not be able to bill insurance programs such as Medicare for services rendered to patients transported by another entity. Therefore the transporting entity (the “second responder”) would be the billing entity for these services and receive the payments. They would then, in turn, pay the first responder for its services. The theory is that it was a team effort, but since there is only one payment, it should be divided among the team.

This arrangement, however, begs for kickback violations! In the worst light, the County is soliciting a kickback (i.e., a direct payment of cash, possibly more cash than the value of the County’s first responder services) in exchange for granting an ambulance service an exclusive opportunity to bill for all of the emergent transports in the County. The OIG acknowledged that this arrangement could raise kickback violations, but stated they would not impose sanctions against the County for proceeding with the arrangement. The OIG listed five factors that it found were in favor of allowing the County’s proposal.

First, the arrangement was proposed by a local government entity that was trying to provide adequate medical services to its community through a comprehensive EMS program. Second, the County anticipates that the payment for first responder services will in fact be less than the cost of providing those services, so it will be getting underpaid for its services, which would not be a kickback. It was also noted that Medicare allows for payments from ambulance services to first responders. Third, the number of individuals with federal healthcare benefits who need transports will not be affected by the arrangement, so the cost to the government will not be increased because of the way the County chooses to run EMS. Fourth, while there will be an exclusive contract, the open bidding process will allow for competition. And fifth, the money going to the County that could be considered a kickback is actually going into the County’s treasury to be used for the good of the public. Kickbacks are usually designed to benefit a private individual, therefore there is little concern for a true kickback where the money is going to another government entity.

As with any advisory opinion, the OIG stated that the opinion was based on the information given to it by the requesting County, and therefore was dependent on its full and truthful disclosure of facts. As with all advisory opinions, the opinion cannot and should not be relied upon by parties other than the one specifically requesting the opinion. The OIG and the federal government are not bound by this opinion and reserve the right to change their position in the future. Specific facts often lead to very different results (for example, the OIG refrained from giving an opinion as to the propriety of the bidding process itself, and clearly, if the amount received by the County was more than the value of its services, the opinion might have been to not allow the arrangement), therefore, you should consult an attorney before beginning any course of action that you have questions about.

For the same reasons, nothing in this article is intended by the author to be construed as legal advice.

The author has given a summary of the contents and provided some editorial comments on this advisory opinion. To view the entire opinion, go to: Other advisory opinions can also be found at the OIG website.

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