OIG Issues Unfavorable Advisory Opinion Regarding an Ambulance Supplier’s Proposal to Waive Cost-Sharing Amounts for Part-Time Emergency Medical Services

On September 4, 2011, the Office of Inspector General (“OIG”) issued an unfavorable advisory opinion (Advisory Opinion No. 12-11), which addressed an ambulance supplier’s proposed agreement with a municipality to waive cost-sharing amounts for emergency medical services (“EMS”). The requestor of the opinion, a for-profit provider of basic life support ambulance services (“BLS Supplier”), proposed to provide part-time EMS services for a municipality that currently enlists volunteer first aid squads as its majority provider of ambulance services. These volunteer providers generally do not charge residents cost-sharing amounts for the services rendered. In instances where volunteer squads are incapable of responding to emergency calls, other ambulance suppliers, such as BLS Supplier, may provide the services. Some of these instances are attributable to a volunteer squad’s inability to respond to a particular call, while other situations are due to volunteer squads dispatching in that they are unavailable to cover a service area during certain blocks of time.

The proposed arrangement in question involves BLS Supplier entering into agreements with municipalities to provide EMS on a part-time basis for the aforementioned situations. BLS Supplier would use insurance-only billing, in which it would bill Medicare and other third-party payors, but would agree to allow the municipality to waive all cost-sharing amounts.

In issuing its opinion, the OIG determined that the proposed agreement could potentially violate the anti-kickback statute because such waivers of Medicare cost-sharing amounts may constitute prohibited remuneration to induce referrals. The OIG went on to state that municipalities must pay the owed amounts to an independent ambulance supplier if municipalities seek to assume the cost-sharing obligations. The anti-kickback statute is implicated in the proposed arrangement if the municipalities either fail to make the payments to BLS Supplier or fail to permit BLS Supplier to directly bill the residents for the services provided. The OIG emphasized that this is especially true when a municipality enters into an agreement with an independent ambulance provider, such as BLS Supplier, to be its primary supplier of emergency ambulance services during designated time slots, even when only provided part-time. This opinion was distinguished with a prior OIG opinion (Advisory Opinion 99-1) where an independent ambulance supplier merely provided services during isolated and unanticipated circumstances in which the volunteer squad was currently preoccupied with another emergency response.

For more information on compliance with the anti-kickback statute and other regulations impacting ambulance suppliers and other health care providers, please contact an experienced health law attorney at Wachler & Associates attorney at 248-544-0888.