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January 22, 2013

Re:    Municipalities which contract with private ambulance suppliers

Dear Mayor:

The following information was brought to our attention by Beth Christian, a Shareholder at the law firm of Giordano, Halleran & Ciesla.

On September 11, 2012, the HHS Office of Inspector General (“OIG”) published Advisory Opinion No. 12-11.  Because of the findings set forth in the Advisory Opinion, municipalities which contract with private ambulance suppliers would be well advised to review their current arrangements (or proposed arrangements that are being negotiated).  The municipality should not be requiring  the private  ambulance supplier to provide scheduled Basic Life Support (“BLS”) ambulance services under circumstances in which the supplier is required to waive (or offer to waive) collection of co-payments and deductibles for residents of the municipality.  Entities which ignore the analysis contained in the Advisory Opinion place themselves at risk of being found in violation of the Federal anti-kickback law, having fines and penalties imposed and exposure to the possibility of whistleblower lawsuits or other Federal inquiries.

Under the facts reviewed in Advisory Opinion No. 12-11, the private ambulance supplier provided BLS ambulance services when members of the local volunteer ambulance squad were unavailable.  Volunteer first aid squads do not typically charge residents for cost sharing amounts (such as co-payments) associated with emergency ambulance transports.  Local municipalities had asked the private BLS ambulance supplier to provide BLS ambulance services to residents during specified blocks of time (e.g., 9:00 a.m. to 5:00 p.m. on a weekday) when a volunteer ambulance squad was unable.  The private BLS ambulance supplier would bill Medicare and other third party insurers for these transports, but was asked by the municipalities to waive all cost-sharing amounts, a practice known as “insurance-only” billing.  In addition, the municipalities would not pay the private BLS ambulance supplier the waived cost-sharing amounts on their residents’ behalf.

The OIG found that the proposed arrangement potentially violated the anti-kickback law.  The OIG made the following findings with regard to the proposed arrangement:

Under the Proposed Arrangement, the municipalities would effectuate the routine waiver of cost-sharing amounts by: (1) requiring BLS Supplier to bill residents ‘insurance only,’ and (2) not paying owed cost-sharing amounts on their residents’ behalf.  In short, if the municipalities wish to assume cost-sharing obligations owed to an independent ambulance supplier, such as BLS Supplier, for ambulance services provided to their residents on a part-time basis, they must pay the owed amounts.  Failure on the part of the municipalities to make the payments—or to permit BLS Supplier to bill residents for them—implicates the anti-kickback statute.

The Federal anti-kickback law provides for the imposition of criminal sanctions for parties who violate the law by offering or receiving payment or other remuneration in exchange for the referral of business that is paid for by Medicare, Medicaid, or other state health care programs.  Therefore, even though municipalities may not be direct providers of health care services, their activities are subject to scrutiny under the law if they contract with health care providers.

Municipalities that ignore the analysis contained in the Advisory Opinion place themselves at risk of being found in violation of the Federal anti-kickback law, having fines and penalties imposed and exposure to the possibility of whistleblower lawsuits or other Federal inquiries.

For more information contact Matthew Weng League staff attorney at 609-695-3481 ext. 137 or mweng@njslom.com

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

 

 

 

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