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From Health Law Daily, June 21, 2013

OIG unconcerned with arrangement between town, ambulance company

By Paul Clark

The HHS Office of Inspector General (OIG) will not impose administrative sanctions related to an exclusive contract for emergency medical services and transports between a town and an ambulance company, even though the arrangement could potentially generate prohibited remuneration under the anti-kickback statute (OIG Advisory Opinion, No. 13-05, June 14, 2013).

Background. The town operates an emergency 911 communication center to monitor and direct calls for police and fire assistance and for emergency medical services (EMS). The town issued a Request for Proposals (RFP) for an exclusive contract to provide primary response for EMS calls. The ambulance company was awarded a three-year contract to provide the services. Many recipients of the EMS provided for under the contract are Medicare or Medicaid beneficiaries. Under the arrangement, the ambulance company pays the town an annual remittance equal to one half of the portion of the dispatch center’s operating costs that are associated with EMS dispatches. At the end of each year, a reconciliation process occurs to ensure that the actual remittance paid for the year reflects half of the actual costs. The parties estimated the remittance for the first year of the contract at $6,000, though payment has so far been withheld pending the outcome of this advisory opinion.

OIG analysis. The OIG noted that while the arrangement implicates the anti-kickback statute, as it requires the ambulance company to bear a portion of the cost of providing EMS call dispatch services, and at least some EMS will be reimbursable under Medicare, other factors mitigate the risk of health care fraud and abuse. Specifically –

  • The arrangement is part of a contract that itself is part of a comprehensive regulatory plan by the town to manage the delivery of EMS.
  • The remittance to the town will only partially offset the actual costs of the town’s dispatch operations attributable to the ambulance company’s services, so the company will not be over-paying the source of the referrals, which is the typical anti-kickback concern.
  • Although the remittance varies from year to year based on the costs of operating the dispatch center, it is not tied, directly or indirectly, to the volume or value of referrals between the parties.
  • Finally, the exclusivity of the contract between the town and the ambulance company is unlikely to adversely impact competition.

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