In Advisory Opinion 09-13, the Office of the Inspector General (OIG) stated that it would allow parties to engage in an arrangement where a Hospital would pay a local Ambulance Cooperative a subsidy (cash, equipment, and services) to take over the provision of advanced life support (ALS) services that the Hospital was currently providing. The OIG examined the possibility that the Hospital’s donation of cash, equipment, and services could be remuneration to the Cooperative to refer or influence referrals of patients to the Hospital, in violation of the Anti-Kickback Statute (AKS). In finding that it would not impose sanctions under AKS for the arrangement, the OIG stressed the unique nature of the circumstances and the fact that the funds would be utilized exclusively to help finance the provision of ALS services that the Hospital had previously been providing at a financial loss.   

The Hospital in the arrangement is the only hospital in the County or within a radius of 35 miles that has been certified by the State as having “comprehensive” emergency services capability. Since 1984, pursuant to an agreement with the Town, the Hospital provided ALS services for the Town and surrounding areas.  The Hospital stated that it only recoups about half the cost of providing ALS services through billing Medicare and other payers. The Ambulance Cooperative in the arrangement, whose membership is comprised of the Hospital and three volunteer fire companies, currently provides basic life support (BLS) ambulance services in the Town and surrounding communities in the County.

Under the proposed arrangement, the responsibility for providing the ALS services provided by the Hospital and the BLS services provided by the Ambulance Cooperative would be consolidated, and the Ambulance Cooperative would provide both levels of services. The Hospital stated that this would result in improved service delivery, create various efficiencies, and reduce operational costs. In addition, the Cooperative could apply to the IRS for 501(c)(3) status, which would make it eligible for certain funding for ALS services earmarked for tax-exempt entities. The parties would also enter an agreement where: (1) the Cooperative would assume responsibility for providing the ALS services currently provided by the Hospital; and (2) the Hospital would provide a subsidy to the Cooperative, in the form of cash, equipment, and services, to be used exclusively for the provision of ALS services.

The OIG concluded that the risk of abuse under the AKS was sufficiently low under the proposed arrangement because:

 

·        The Ambulance Cooperative and its members would receive no net benefit from the proposed arrangement because it would not receive any more remuneration from the Hospital than the means to carry out the new responsibility to provide ALS;

 

·        The Hospital’s donations to the Ambulance Cooperative would not vary with the volume or value of referrals to the Hospital by the Cooperative;

 

·        The Ambulance Cooperative (and the Volunteer Fire Companies in the Cooperative) are not in a position to affect referrals to the Hospital in a significant way since the Hospital is the only one in the County or within 35 miles that has been certified by the State as having “comprehensive” emergency services capability;

 

·        The ambulances are required by State law to transport patients to the hospital of the patient’s choice, if the patient is able to express a choice, and otherwise to the nearest hospital with appropriate facilities, as defined in State protocols; and

 

·        The risk posed by the arrangement is further offset by factors such as: (a) due to the expense of operating an ambulance service in a sparsely-populated area, there are no for-profit ambulance services in the County; (b) the Hospital itself has been unable to provide ALS ambulance services on a break-even basis; and (c) the Hospital certified that such services could be provided unless subsidized by the Hospital.

 

Given all of the above factors taken as a whole, the OIG stated that it would not impose administrative sanctions upon the parties even though the arrangement could potentially generate prohibited remuneration under the AKS. 

 

Note, however that this opinion was very fact specific and the OIG may have come to a different conclusion if the facts were slightly altered. Therefore, ambulance services should seek qualified legal advice before entering into such an arrangement. 

 

 

To read the full Advisory Opinion, CLICK HERE. (PDF Format, 9 pages)