OIG Proposes Safe Harbor for Cost-Sharing Waivers for Emergency Ambulance Services

On October 3, 2014 the Office of the Inspector General is set to publish a Proposed Rule that would establish a new safe harbor under the Anti-Kickback Statute (AKS) that would permit waivers of cost-sharing amounts for emergency ambulance services furnished by State or municipally-owned ambulance providers and suppliers.  But, there are conditions that must be met in order to fall under this safe harbor and we outline them below. 

The OIG is soliciting comments on this proposed safe harbor and you may submit comments to this Proposed Rule through the Federal eRulemaking Portal at http://www.regulations.gov and attaching a Word document.  You should search for and reference file code OIG-403-P3 when looking for and commenting on the Proposed Rule.

The OIG is also proposing a new safe harbor for free or discounted local transportation services provided to patients who need medically necessary services at other locations.  This safe harbor would apply to bus, van and shuttle-type services, and it specifically excludes transportation by ambulance.   You can read about this safe harbor by clicking HERE and searching for the provisions on "Local Transportation." 

Why Is the OIG Proposing This?

Over the last decade, the OIG has received many requests for advisory opinions about the practice of reducing or waiving of coinsurance or deductible amounts owed by patients for emergency ambulance services to an ambulance supplier that is owned and operated by a State or a political subdivision of a State.  The AKS generally prohibits the routine waiver of applicable cost-sharing amounts due from Medicare beneficiaries by providers and suppliers.  But, the OIG has generally permitted State or municipally-owned ambulance services to use tax revenues to cover otherwise applicable cost-sharing amounts and allowed the practice of reducing or waiving cost-sharing amounts for Medicare beneficiaries served by these ambulance services.  The OIG continues to get requests regarding this practice, and the agency is now proposing to establish a new safe harbor for municipal ambulance services to use, provided they meet all of the OIG’s conditions.

What Are the Conditions?

  1. State or Municipally-Owned Part B Provider or Supplier.  First, the ambulance service must be owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe.
  2. Must Be For Services Not Considered to Be “Free Services.” The general rule is that Medicare does not pay for services that are paid for directly or indirectly by a government entity (i.e., “free services”), and the OIG is proposing to limit the safe harbor to situations in which a provider’s reduction or waiver of coinsurance or deductible “is not considered to be the furnishing of free services paid for directly or indirectly by a government entity.”  The OIG recognizes in the Proposed Rule that cost-sharing waivers by State or municipally-owned ambulance services have generally not been considered to constitute the provision of “free services.” So, presumably this condition would not be difficult to meet.  However, this may require further clarification because the OIG does not make it clear when a reduction or waiver of cost-sharing amounts would be considered “free services.”    
  3. Uniform Waiver or Reduction.  The OIG would also require that the ambulance provider or supplier offer the reduction or waiver on a uniform basis, without regard to patient-specific factors.
  4. Cannot Claim as Bad Debt.  The OIG is including an express prohibition against claiming the amount reduced or waived as bad debt for payment purposes under Medicare or a State health care program or otherwise shifting the burden of the reduction or waiver onto Medicare, a State health care program, other payers, or individuals.
  5. “Emergency Ambulance Services.”  The OIG says it plans to interpret “emergency ambulance services” in a manner consistent with the definition given to that term in the ambulance restocking (or replenishing) safe harbor.  The restocking safe harbor states: “An emergency ambulance service is a transport by ambulance initiated as a result of a call through 9-1-1 or other emergency access number or a call from another acute care facility unable to provide the higher level care required by the patient and available at the receiving facility.”  The OIG is also soliciting comments on this  interpretation and on whether certain terms need to be expressly defined in the text of this new safe harbor. 

The OIG Is Considering Waivers for Other Federal Programs

The OIG is also considering whether to include reductions or waivers of cost-sharing amounts owed under other Federal health care programs, such as Medicaid, and it is soliciting comments on this consideration. 

The Safe Harbor Would Not Apply to Municipally-Contracted Ambulance Services

Finally, the OIG says this proposed safe harbor would apply only to situations in which a governmental unit owns and operates the ambulance provider or supplier.  In other words, it would not apply to situations where a municipality contracts with an outside ambulance provider to furnish ambulance services to residents.  In this situation, the municipality could not require the ambulance provider to waive the collection from Medicare beneficiaries of out-of-pocket cost-sharing amounts unless the municipality paid the cost-sharing amounts owed or otherwise made provisions for paying them.  This has been a consistent stance the OIG has held over the years.