On September 11, 2012, the HHS Office of Inspector General (“OIG”) published Advisory Opinion No. 12-11.  The Advisory Opinion imposes significant restrictions on the ability of a private ambulance supplier to waive the collection of co-payments and other cost-sharing amounts for services rendered to residents of a municipality.  In addition, the Advisory Opinion significantly narrows the OIG’s earlier findings in OIG Advisory Opinion No. 99-1, which also dealt with co-payment collection obligations under an arrangement between a municipality and a private ambulance supplier providing services to the municipality’s residents.

Under the facts reviewed in Advisory Opinion No. 12-11, the private ambulance supplier provided Basic Life Support (“BLS”) ambulance services in a particular state.  In the state where the private BLS ambulance supplier is located, volunteer first aid squads do not typically charge residents for cost sharing amounts (such as co-payments) associated with emergency BLS ambulance transports.

Under the proposed arrangement discussed in the Advisory Opinion, the private BLS ambulance supplier would enter into agreements with various municipalities to provide part-time emergency ambulance services.  Under the agreements, the private BLS ambulance supplier would provide BLS ambulance services to residents of a municipality during certain 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 to provide coverage for that block of time.  The private BLS ambulance supplier would bill Medicare and other third party insurers for these transports, but would waive all cost-sharing amounts, a practice known as “insurance-only” billing.  The private BLS ambulance supplier certified that municipalities with which it would contract to provide part-time emergency ambulance services were requiring the private BLS ambulance supplier to waive all cost-sharing amounts owed by the municipality’s residents as a condition of the municipality awarding the private BLS ambulance supplier the contract to provide the part-time emergency ambulance services.  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 statute.  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.

[footnote omitted]

The OIG  distinguished the circumstances analyzed in Advisory Opinion No. 99-1, which also involved the waiver of co-payments and other cost-sharing amounts by a private BLS ambulance supplier providing back-up emergency ambulance services in situations where no volunteer first aid squad was immediately available to respond.  In the circumstances discussed in that Advisory Opinion, the volunteer first aid squad was at all times the primary supplier of BLS ambulance services, and back-up services were provided by the private BLS ambulance supplier only in isolated and unanticipated circumstances where the volunteer first aid squad was unavailable (e.g., where the volunteer first aid squad was already preoccupied responding to existing calls in its service area).  In contrast, the OIG found that the private BLS ambulance supplier discussed under the facts of Advisory Opinion No. 12-11 would itself be the primary supplier of BLS ambulance services during designated time slots, rather than the volunteer ambulance squad.  The OIG concluded that the proposed agreement to provide BLS emergency services on a scheduled basis as the primary supplier of emergency ambulance services, even if part-time, distinguished the facts of the proposed arrangements from those discussed in OIG Advisory Opinion No. 99-1.

Private BLS ambulance providers and municipalities would be well advised to review their current arrangements (or proposed arrangements that are being negotiated) to ensure that the private  BLS ambulance supplier is not providing scheduled BLS ambulance services under circumstances in which the private BLS ambulance supplier is required to waive (or offers to waive) collection of co-payments and deductibles.  While the Advisory Opinion is technically only applicable to the requester, private BLS ambulance suppliers that ignore the analysis contained in the Advisory Opinion place themselves at risk of being found in violation of the anti-kickback statute, having fines and penalties imposed and exposure to the possibility of whistleblower lawsuits and actions by potential qui tam relators.