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Recent Federal Advisory Opinion Favors Community Paramedic Programs

On March 1, 2019, the Office of Inspector General issued a favorable advisory opinion (AO 19-03) concerning post-discharge patient care services provided to patients by a medical center, including through a community paramedic (CP) program that was operated to help reduce patient readmissions. In this opinion, the OIG recognizes the downstream cost savings and patient care benefits of CP programs that on their face could potentially implicate the federal Anti-Kickback Statute (AKS) and the Civil Monetary Penalties Law (CMP).

The Facts

The medical center and its affiliate provided free, in-home follow-up care to eligible individuals with congestive heart failure (CHF) with the desire to expand the program to include patients with chronic obstructive pulmonary disease (COPD).[1] CHF and COPD are two of the conditions where hospitals could be monetarily penalized by Medicare for the readmission of patients with these conditions. The goals of the CP program were to increase patient compliance with discharge plans, improve patient health, and reduce hospital inpatient admissions and readmissions.

Under the proposed arrangement, patients who meet all eligibility criteria and who choose to participate receive two visits from a community paramedic each week for approximately 30 days following enrollment—at no cost or charge to the patient or to federal healthcare programs. These CP services were provided by the hospital itself, and not an outside EMS agency under contract with the hospital. The hospital sought an opinion from the OIG as to whether providing these post-discharge services would implicate the AKS prohibition on inducements to patients.

The Law

The AKS and the CMP law (collectively “AKS”) makes it illegal—and provides substantial penalties—where one party provides any remuneration (i.e., money, discounts, or anything of value) to another party in return for the referral of any federal healthcare business.

For example, an AKS violation may occur when an ambulance service offers below-cost discounts to a hospital to handle Part A transports for which the hospital is financially responsible in return for the ambulance service receiving from that hospital the more lucrative Part B ambulance transports it can bill directly to Medicare. Another example is offering free wheelchair patient transports to the hospital in return for the Part B ambulance business.

A lesser-known aspect of the AKS is the prohibition on providing remuneration to a Medicare or Medicaid patient, if the provider knows or should know the remuneration is likely to influence the patient’s selection of a specific provider of services. The concern with providing “free” or below-cost services directly to a patient is that this benefit could potentially induce or “incentivize” a patient to self-refer to the hospital that provided those free services, or to overutilize healthcare services generally. This is the prohibition on inducing patient “self-referrals.”

The OIG ultimately determined under these facts that it would not subject the proposed program to sanctions because the “benefits outweigh any risk of inappropriate patient steering.” In making this determination, the OIG was persuaded by several factors:

  • The risk that the proposed program would influence patients to select the hospital to provide other services would be negligible, as only patients who had already selected the hospital for follow-up care related to their COPD or CHF would be eligible for the program. Patients could choose any provider for other services while enrolled in the program.
  • The program would not likely increase costs to the federal healthcare programs, as the CP services would not be directly reimbursed by those programs. Any increase in utilization of other healthcare services would likely reflect only appropriate utilization from patients receiving medically necessary care, and the success of the program would result in overall savings due to improved health and reduced unnecessary inpatient admissions.
  • No employees or contractors would be compensated based on the number of patients who enroll in the program, and therefore the program would be unlikely to skew clinical decision making.
  • The hospital would not advertise or market the program to the public and would not publicize the program on its website.
  • The “scope and duration” of the services provided were “reasonably tailored to accomplish” the goals of increasing patient compliance with discharge plans, improving patient health, and reducing unnecessary hospital inpatient admissions and readmissions.

EMS Agency Takeaways

1. Opinion is limited to providing free or reduced-cost benefits directly to patients.
AO 19-03 does not address arrangements between hospitals and contracted EMS agencies who may provide CP services to hospitals or others who may also refer Part B ambulance business to the EMS agency. It is limited to addressing the prohibition on providing free or reduced-cost services to patients that could potentially induce the patient to self-refer to the healthcare provider that provides those services.

2. Opinion is limited to the readmission reduction program.
AO 19-03 is limited to patients with CHF and COPD, where readmissions are penalized under the Hospital Readmissions Reduction Program (HRRP). It is not clear if the OIG would have the same favorable reaction to CP programs that apply to diagnoses outside of the HRRP. But in recent guidance, the OIG indicated that it is aware that the AKS is “a potential impediment to beneficial arrangements that would advance coordinated care,” and that it is “mindful” that healthcare providers may wish to offer CP services to deliver higher quality of care that improves the health of patients and may decrease overall costs to federal healthcare programs.[2]

3. The OIG previously approved of the more typical CP arrangement with contracted CP providers.
The OIG already addressed the situation where a contracted healthcare provider provided CP services to hospitals and gave a green light to the unique payment options for CP services. In OIG Advisory Opinion 13-10, a healthcare company (which was a wholly owned subsidiary of a drug manufacturer) contracted with hospitals to provide technology platforms and services to coordinate care, help patients adhere to their discharge plans and avoid preventable hospital readmissions.

Each hospital paid a flat fee to cover implementation of the software platform, electronic health record integration, etc., and a per-patient annual fee that covered ongoing technology and personnel costs of the company providing the post-discharge services. There was also an hourly fee that covered specific, additional services that the hospital could purchase from the company. Because both parties could refer Medicare and other federally-insured patients to each other, the OIG analyzed the arrangement under the AKS and determined that the arrangement posed a low risk of fraud and abuse—and that it would not subject the arrangement to sanctions.

The OIG found that the arrangement in AO 13-10 was unlikely to lead to increased costs or overutilization of healthcare services, that the arrangement was not likely to interfere with clinical decision making, and that there were safeguards in place to prevent the arrangement from being used as a tool to increase drug sales by the parent company. Significantly, the OIG noted that the post-discharge services were provided at fair market value (as certified by the parties). Finally, the OIG ruled that the arrangement was unlikely to result in inappropriate “steering” of patients to specific healthcare providers.

4. CP services must be priced properly—preferably at fair market value.
The AKS could be implicated if an EMS agency provides CP services to a hospital for free, or if it provides those services below cost and at the same time receives referrals of Part B ambulance transports from the hospital. Contracted CP services and the implication of payments or discounts between a hospital and an EMS agency contracted to provide CP services are not addressed in this opinion. However, many CP programs are coordinated and conducted directly with insurers and other payers where the AKS would likely not apply. Regardless, payment to an ambulance service for the CP services it provides should at least cover the ambulance service’s fully loaded costs of providing the service—and preferably at the fair market value for those services.

5. CP services should have safeguards to prevent skewing clinical decision making.
Any CP program should be clinically based and focused on what is needed to provide assessment and care for the patient. In-house CP programs that “self-refer” should not compensate any employees based on the number of patients who enroll in the program and must carefully protect patient choice as outlined in the opinion.

Compensation to third-party community paramedics and the agencies that employ them should be primarily based on fair market value of the services provided, but this opinion and the prior opinion indicate that the OIG will likely look favorably on additional compensation for bona fide clinical and efficiency performance indicators that result in net cost savings to federal healthcare programs.

Although contractors should be able to decline certain patients not meeting program criteria, if they are being compensated on a per member referred basis, the contractor should be wary of arrangements where the contractor can influence the number of referrals.

What This Opinion Means for EMS Agencies

Despite its limitations, this opinion is very encouraging news for EMS collaborations with hospitals, payers and other stakeholders. The OIG seems to look beyond the immediate arrangement where some free services were provided, and considers the long-term benefit the program has on patient health and the reduction of healthcare costs. And that is good news!   

When the concept of EMS-based mobile integrated healthcare began to really grow, some partners quietly expressed reservations with some of the funding models. Hospital compliance and legal teams were concerned that paying EMS agencies to prevent readmissions to reduce the hospital’s potential for CMS penalties, or even funding EMS agencies to navigate high utilizer patients to resources other than the hospital emergency department could pose a significant compliance risk. This opinion will help alleviate some of those fears.

Similarly, some EMS agencies have been hesitant to implement funded programs that pay the agency to manage some patients differently than others. For example, let’s say that a commercial insurer pays EMS for providing services like post-discharge follow-ups, high utilizer interventions, or on-scene patient navigation for their members, but those services are not available to other patients who are not members of that health plan.

This same concern has been expressed by some commercial insurers who may have some members in Medicare Advantage programs and members in other health plans.  Some insurers were hesitant to implement innovative payment models for a member plan that may not be available to other offered plans.

The reality is that patients have always received different types of services based on their payer type and plan choice. In some states, Medicaid patients may have coverage available for wheelchair van service or non-traditional medical transportation, while many commercial insurers may not offer that benefit, limiting reimbursement to payment for traditional ambulance service. Another reality is that often, the services provided through an EMS-based CP program are an enhanced service, and are not a reduction of services to that population. The argument against enhanced services based on payer type thus fails.

One of the most encouraging things about OIG Advisory Opinion 19-03 is the tone of the opinion. The OIG recognizes the long-term benefits of CP programs and the related cost savings to federal healthcare programs. Here the OIG found that these benefits—even where some of the services were provided to the patient for free—outweigh any risk of inappropriate patient steering that the AKS was designed to prevent. This opinion, combined with OIG AO 13-10, seems to dovetail nicely with the new CMS ET3 model, which recognizes the need to provide reimbursement for non-transport EMS services that improve health and help keep the patient out of the hospital.

[1] Department of Health and Human Services, Office of Inspector General, OIG Advisory Opinion No. 19-03 (March 1, 2019) found at:

[2] Medicare and State Health Care Programs: Fraud and Abuse, Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducements CMP, 83 Fed Reg. 43,607, 43,608 (Aug. 27, 2018)