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Publication

May 8, 2009Client Alert

OIG Approves Waiver of Cost-Sharing for Municipal EMS Transportation Program

On April 30, 2009, the Department of Health and Human Services Office of Inspector General (“OIG”) posted Advisory Opinion 09-03. This advisory opinion reviewed an arrangement whereby three municipalities reciprocally waived otherwise applicable cost-sharing obligations of insured individuals residing within each other’s borders when providing backup emergency medical services (“EMS”) transportation. The review was to determine whether this arrangement violated the Anti-Kickback Statute.

Background

Three adjacent municipalities entered into an agreement pursuant to which each provides backup EMS transportation within each other’s boundaries when the vehicles and crews of the home municipality are unavailable or unable to adequately respond to the emergency. Normally, if a Medicare beneficiary uses an ambulance service, Medicare pays a portion of the fee and the beneficiary pays the co-payment(s). Here, each municipality previously decided to treat local tax revenues as payment-in-full for any co-payments or deductibles otherwise owed by insured residents, including Medicare beneficiaries.

Legal Analysis

This arrangement raises the issue of “insurance only” billing, which may implicate the Anti-Kickback Statute to the extent that it constitutes a waiver of Medicare cost-sharing obligations. OIG has long been concerned with standing waivers of cost-sharing obligations for Medicare beneficiaries, which could encourage Medicare beneficiaries to use a particular medical service provider. Here OIG determined that the arrangement included many features that minimized the potential risk of prohibited remuneration. First, the waiver was not a standing, routine waiver because the backup EMS transportation was only provided on an unscheduled and sporadic basis. Second, the non-routine nature of the waiver limits the risks of overutilization and is unlikely to lead to increased federal health care program costs. Third, each municipality waives cost-sharing obligations for its own residents so there is no expectation on the part of residents that they would receive an additional financial benefit from the backup EMS transportation. Finally, this is not a situation where a municipality requires a private company to bill “insurance only” as a condition of getting the municipality’s EMS transportation business.

Conclusion

While the proposed arrangement could potentially violate the Anti-Kickback Statute by providing an economic benefit to the individuals who benefited from the waiver of cost-sharing, the OIG decided, based on the facts and circumstances related to OIG by the municipalities, that it would not subject the proposed arrangement to sanctions. Please note that the OIG has limited this Advisory Opinion to the particular facts and circumstances of the proposed arrangement and, therefore, this Advisory Opinion does not have the force of law.

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