On July 9, 2013 the OIG posted Advisory Opinion 13-08, concerning a Fire Protection District ("District") policy of only billing individuals that reside outside the fire protection district for emergency medical services. Here, the District does not bill any residents or their insurers (including federal health care programs) for emergency medical services. But it does bill all non-residents (including federal health care programs) for emergency medical service under a fee schedule established by referendum.
The District sought the OIG's guidance on whether its bills to non-residents were "substantially in excess" of the District's usual charges, which could be grounds for exclusion from participating in federal health care programs under Section 1128(b)(6) of the Social Security Act. The OIG determined this arrangement did not violate the rule that a health care provider may not charge Medicare or Medicaid substantially in excess of what it charges other payers for the same services - and thus the arrangement did not constitute grounds for exclusion under the law.
The OIG has a longstanding practice of allowing "insurance only" or "soft-billing" practices of municipal ambulance operations that forego co-payment collection practices for bona-fide residents (see e.g. OIG Advisory Opinions 01-11, 02-8, 04-12, 05-9, 07-07, 08-18). But this is the first time (that we are aware) where the OIG permitted an arrangement where residents (and federal health care programs and insurance) were not billed at all, while non-residents were billed.
The OIG concluded in this case that the bills to Medicare and Medicaid for non-residents services were not "substantially in excess" of their usual charges. Rather than charging their residents or their insurers for EMS, the OIG notes, the District has elected to instead cover those costs through tax revenues via a referendum. The OIG said that choice did not require the District to also provide EMS to non-residents without charge. Even though the District categorized patients into "resident" and "non-resident" categories, the OIG said that its billing practices within each category were consistent - that no resident was billed and that all non-residents were billed - and thus its decision to bill non-residents, but not residents was reasonable and within its discretion.
It is important to note that OIG Advisory Opinions provide an analysis of proposed arrangements only with respect to specific federal laws, particularly the AKS. There may be other laws that could potentially be implicated even where the OIG does not take issue with an arrangement in an Advisory Opinion. For example, in a recent Florida case, a state court judge found an ordinance where a municipality had a separate lower fee schedule for municipal residents and a higher fee schedule for non-residents to be an unauthorized tax that violated the Florida Constitution. A resident of St. Petersburg, FL challenged the $100 non-resident surcharge that the City of Miami billed to non-city residents when they receive EMS, after she was injured, transported by the City's Fire Rescue Department, and then charged the "non-resident" surcharge. In granting summary judgment in favor of the plaintiff non-resident, the court found the surcharge to be an unconstitutional user fee under the Florida Constitution. The judge found that the added fee was also unconstitutional because it discriminated on the basis of residency and impaired Florida's constitutional right to intrastate travel. (Haigley v. City of Miami, Case No. 11-01364 CA 05, 11th Judicial Circuit (May 1, 2013).
The bottom line is that EMS agencies must carefully evaluate every billing arrangement not just for potential AKS issues, but also for issues under other federal and state laws - even where the arrangement would pass the OIG's review. You need to consult with health care counsel familiar with the AKS and other health care related laws whenever you are unsure of the arrangement passing legal muster.