EMS Insider, Legal Consult

New Public-Sector Ambulance Rule Set to Take Effect

On Dec. 7, 2016, the Office of the Inspector General (OIG) published a new “safe harbor” regulation under the federal anti-kickback statute (AKS). The regulation will become effective in 30 days. Under the safe harbor, government-owned/operated ambulance services in certain instances can waive the collection of patient copayments and deductibles if they meet certain requirements.

Background

For decades, the OIG has maintained that healthcare providers who routinely waive Medicare copays could violate the AKS unless the waivers were based on financial hardship. The OIG said routine waivers of Medicare patient copayments may constitute illegal “remuneration” under the AKS.

However, the OIG has recognized a “special rule” for ambulance providers and suppliers that are owned and operated by a state or a political subdivision of a state, such as a county or a municipal fire department. In several advisory opinions, the OIG permitted municipally-owned/operated ambulance providers to treat revenue from local taxes as payment of beneficiary cost-sharing amounts. The OIG also confirmed in Advisory Opinion 13-17 that this “special rule” would apply to waivers of cost-sharing amounts for both residents and non-residents of a municipality who need emergency ambulance services.

The New Safe Harbor 

Now, the OIG has established a safe harbor, applicable to government owned and operated ambulance providers and suppliers nationwide. If a government provider or supplier meets the specific requirements in the new regulation, it may waive or reduce cost-sharing amounts that it would otherwise have to collect without violating the AKS. Here are those conditions:

1. Government Owned & Operated 

The safe harbor protection only applies to ambulance providers or suppliers that are owned and operated by a state, political subdivision of a state, or tribal healthcare program as that term is defined in the Indian Health Care Improvement Act.

The safe harbor does not include nongovernmental ambulance providers or suppliers, such as private or nonprofit companies. The OIG has permitted (through advisory opinions) situations where a state or municipality contracts with a private ambulance company, and the state or municipality uses its residents’ tax dollars to pay the ambulance company an amount that is actuarially equivalent to the residents’ copayments. But, this safe harbor does not apply to those situations.

In addition, the OIG states that subscription arrangements should be subject to a case-by-case determination, rather than protected by this safe harbor.

It is important to note that an arrangement that fails to meet a safe harbor is not necessarily illegal, it merely means that the arrangement is not guaranteed the safe harbor protection under the AKS. This means that a municipal or government-owned ambulance that waives Medicare copayments for its patients, but does not strictly comply with this safe harbor regulation, may nevertheless still not end up violating the AKS.

2. Offered on a Uniform Basis

To meet the safe harbor, the government ambulance provider or supplier must offer the reduction or waiver on a uniform basis to all of its residents or (if applicable) tribal members, or to all individuals transported. So, an ambulance provider or supplier could waive cost-sharing amounts for all residents, but charge cost-sharing amounts to nonresidents. But, an ambulance provider or supplier cannot discriminate on the basis of any factor other than residency or, if applicable, tribal membership. For example, an ambulance provider or supplier cannot:

·         Waive cost-sharing amounts for patients transported for an emergency that required only outpatient treatment, but charge cost-sharing amounts for patients transported for a condition that requires hospitalization (or vice versa);

·         Choose whether to waive cost-sharing on the basis of the patient’s age; or

·         Waive cost-sharing on the basis of insurance or financial status.

The bottom line is that the safe harbor protects only routine waivers where the waivers do not take into account or require any case-by-case, patient-specific determinations (other than residency or tribal membership).

3. Emergency Responses 

The safe harbor only applies to transports where the provider or supplier engaged in an “emergency response” as that term is defined in the Medicare regulations. In other words, governmental ambulance providers and suppliers may not waive applicable copayments and deductibles for non-emergency transports.

An “emergency response” is defined by the standard Medicare definition found at 45 CFR 414.605, which is: “[R]esponding immediately at the BLS or ALS1 level of service to a 9-1-1 call or the equivalent in areas without a 9-1-1 call system. An immediate response is one in which the ambulance entity begins as quickly as possible to take the steps necessary to respond to the call.”

4. No Cost-Shifting

Finally, the ambulance provider or supplier must not later claim the amount reduced or waived as a bad debt for payment purposes under a federal healthcare program or otherwise shift the burden of the reduction or waiver onto a federal healthcare program, other payers or individuals. ​The OIG said that accepting a higher fee schedule amount from a private insurer would not constitute cost-shifting (assuming the fee schedule is either a standard fee schedule for the insurer or was not specifically requested by the ambulance provider or supplier to recoup costs it may lose by waiving copayments). Examples of impermissible cost shifting under the safe harbor include practices like upcoding services, providing medically unnecessary services or other illegal or inappropriate means.

The waiver of Medicare copayments has long been a “hot topic,” especially for government-owned ambulance services that wish to treat their residents’ taxes as copayments and not have to separately bill them for their Medicare cost-sharing amounts. This new safe harbor regulation gives public-sector EMS agencies some protection under federal law for that practice. Public sector ambulance services who wish to implement this safe harbor regulation would be well-advised to obtain qualified legal counsel prior to implementing any copayment waiver policy.