DGS Health Law Blog
OIG Allows for Cost Sharing Arrangement between Ambulance Providers and Municipal Dispatch
Recently the OIG issued an advisory opinion in favor of a municipal fire department’s plan to share costs for dispatch-related EMS services with local hospitals’ ambulance providers. OIG explained that this arrangement did not warrant administrative sanctions, although it nonetheless has the potential to generate prohibited remuneration under the Anti-Kickback Statute if the requisite intent to induce referrals was present.
The city’s fire department administers the emergency medical services (“EMS”) component of the 911 dispatch system, including assisting with decisions on critical care for patients and ambulance transport destinations (the “Services”). Historically, the fire department was responsible for all of the costs associated with the Services. However, under the proposed arrangement, the local hospitals would bear a portion of the costs for personnel to administer the dispatch system. Specifically, the fire department would use data from the previous year on the costs for the Services and the number of scheduled tours to each hospital to determine each hospital’s pro rata share of the costs for the coming year.
The proposed arrangement implicates the Anti-Kickback Statute because it requires the hospitals—each potential referral recipients from the dispatch service—to pay a portion of the costs for the dispatch as a condition for providing EMS services in the city, some of which are reimbursable by Medicare and Medicaid. OIG concluded, however, that a number of factors helped to mitigate the risk of fraud and abuse.
First, OIG explained that the sharing of costs was part of a comprehensive scheme by the city to manage EMS services and that the arrangement would ensure that municipalities were flexible enough to organize local EMS systems efficiently and economically. Second, OIG determined that the arrangement would ensure that hospitals paid a proportionate share of the costs and therefore the hospitals would not be overpaying their referral sources. Third, the amount due from a particular hospital would not be tied, directly or indirectly, to the volume or value of referrals it received because the costs would be pro-rata based on the number of scheduled tours. Fourth, OIG found that the arrangement did not increase the risk of overutilization of services because it was limited to EMS and would not change the existing dispatch procedures. Finally, the arrangement would not have an adverse impact on competition because it would permit all hospitals in the area to participate in the dispatch system.
Notably, OIG emphasized that it might have found the arrangement improper if the hospitals were paying the city or fire department anything not directly related to the provision of EMS, such as free or reduced cost equipment.