Hospital Reimbursement of
Ambulance Services
On March 14, 2007, the Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion No. 07-02 addressing the proposal by an integrated nonprofit health care system, which includes an acute care subsidiary hospital recognized as a leader in cardiovascular services (Hospital), to subsidize the cost of various air and ground ambulance transportation for patients transported to the Hospital from outside the Hospital's locality. The Hospital would pay the ambulance suppliers a negotiated fee for the ambulance services and submit claims for reimbursement directly to third-party payors, including Medicare and Medicaid.
Under the arrangement, the Hospital would absorb any costs beyond those reimbursed by Medicare and other payors as well as cost-sharing obligations that would otherwise be owed by patients if the services were billed directly by the ambulance providers. (A recent change in Medicare reimbursement policies caused some patients transported by ambulance to Hospital to receive bills from ambulance providers for non-covered charges.) The arrangement would not be limited to cardiac patients, nor would it be based on individual determinations of financial need. No advertisements on the service would be made to patients.
The OIG issued a negative advisory opinion concluding that the arrangement would potentially violate the anti-kickback statue and could constitute grounds for the imposition of civil monetary penalties (CMP). The OIG cited several reasons for its position. First, the payment or subsidy of an expense that would ordinarily be borne by a patient is remuneration to the patient--regardless of whether the expense is the additional cost of non-local transportation or the patient's cost-sharing obligation. Second, the arrangement may improperly influence patients to order or receive items or services reimbursable by Medicare or Medicaid and could
influence initial and subsequent choice of the Hospital or Hospital services. Third, program safeguards, such as a lack of advertising of the ambulance services directly to patients, are not adequate to protect against the potential of improper influence on patients. Lastly, as the Hospital acknowledged, the subsidization of patients' ambulance transportation costs, is likely to generate Federal healthcare program business for the Hospital.
Hospitals offering free or discounted programs for transportation of patients should review such programs under this Advisory Opinion. If you would like assistance with this review or have further questions on the Advisory Opinion or related issues, please contact Kevin C. Woodhouse (kevin.woodhouse@icemiller.com) or Sarah Dansker Cotterill (sarah.cotterill@icemiller.com).
