V. Kickbacks and Inducements

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A. What Is the Anti-Kickback Statute?

The anti-kickback statute prohibits the purposeful payment of anything of value (i.e., remuneration) in order to induce or reward referrals of federal health care program business, including Medicare and Medicaid business.12 (See section 1128B(b) of the Act (42 U.S.C. 1320a–7b).) It is a criminal prohibition that subjects violators to possible imprisonment and criminal fines. In addition, violations of the anti-kickback statute may give rise to CMPs and exclusion from the federal health care programs. Both parties to an impermissible kickback transaction may be liable: the party offering or paying the kickback, as well as the party soliciting or receiving it. The key inquiry under the statute is whether the parties intend to pay, or be paid, for referrals. Paying for referrals need not be the only or primary purpose of a payment; as courts have found, if any one purpose of the payment is to induce or reward referrals, the statute is violated. (See, e.g., United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. Greber, 760 F.2d 68 (3d Cir.), cert. denied, 474 U.S. 988 (1985).) In short, an ambulance supplier should neither make nor accept payments intended, in whole or in part, to generate federal health care program business.

B. What Are ‘‘Safe Harbors’?

The department has promulgated ‘‘safe harbor’’ regulations that describe payment practices that do not violate the anti-kickback statute, provided the payment practice fits squarely within a safe harbor. The safe harbor regulations can be found at 42 CFR 1001.952 and on the OIG Web page at http://oig.hhs.gov/ fraud/safeharborregulations.html#1. Compliance with the safe harbor regulations is voluntary. Thus, failure to comply with a safe harbor does not mean that an arrangement is illegal. Rather, arrangements that do not fit in a safe harbor must be analyzed under the anti-kickback statute on a case-by-case basis to determine if there is a violation. To minimize the risk under the anti-kickback statute, ambulance suppliers should structure arrangements to take advantage of the protection offered by the safe harbors whenever possible. Safe harbors that may be useful for ambulance suppliers include those for space rentals, equipment rentals, personal services and management contracts, discounts, employees, price reductions offered to health plans, shared risk arrangements, and ambulance restocking arrangements. (42 CFR 1001.952(b), (c), (d), (h), (i), (t), (u), and (v), respectively.)

C. What Is ‘‘Remuneration’’ for Purposes of the Statute?

Under the anti-kickback statute, ‘‘remuneration’’ means virtually anything of value. A prohibited kickback payment may be paid in cash or in kind, directly or indirectly, covertly or overtly. Almost anything of value can be a kickback, including, but not limited to, money, goods, services, free or reduced rent, meals, travel, gifts, and investment interests.

D. Who Are Referral Sources for Ambulance Suppliers?

Any person or entity in a position to generate federal health care program business for an ambulance supplier, directly or indirectly, is a potential referral source. Potential referral sources include, but are not limited to, governmental ‘‘9–1–1’’ or comparable emergency medical dispatch systems, private dispatch systems, first responders, hospitals, nursing facilities, assisted living facilities, home health agencies, physician offices, staff of any of the foregoing entities, and patients.

E. For Whom Are Ambulance Suppliers Sources of Referrals?

In some circumstances, ambulance suppliers furnishing ambulance services may be sources of referrals (i.e., patients) for hospitals, other receiving facilities, and second responders. Ambulance suppliers that furnish other types of transportation, such as ambulette or van transportation, also may be sources of referrals for other providers of federal heath care program services, such as physician offices, diagnostic facilities, and certain senior centers. In general, ambulance suppliers—particularly those furnishing emergency services—have relatively limited abilities to generate business for other providers or to inappropriately steer patients to particular emergency providers.

F. How Can Ambulance Suppliers Avoid Risk Under the Anti-Kickback Statute?

Because of the gravity of the penalties under the anti-kickback statute, ambulance suppliers are strongly encouraged to consult with experienced legal counsel about any financial relationships involving potential referral sources. In addition, ambulance suppliers should review OIG guidance related to the anti-kickback statute, including advisory opinions, fraud alerts, and special advisory bulletins. Ambulance suppliers concerned about their existing or proposed arrangements may obtain binding advisory opinions from the OIG.

Ambulance suppliers should exercise common sense when evaluating existing or prospective arrangements under the anti-kickback statute. One good rule of thumb is that all arrangements for items or services should be at fair market value in an arms-length transaction not taking into account the volume or value of existing or potential referrals. For each arrangement, an ambulance supplier should carefully and accurately document how it has determined fair market value. As discussed further in appendix A.4, an ambulance supplier may not charge Medicare or Medicaid substantially more than its usual charge to other payors.

Ambulance suppliers should consult the safe harbor for discounts (42 CFR 1001.952(h)) when entering into arrangements involving discounted pricing. In most circumstances, ambulance suppliers who offer discounts to purchasers who bill federal programs must fully and accurately disclose the discounts on the invoice, coupon, or statement sent to purchasers and inform purchasers of the purchasers’ obligations to report the discounts to the federal programs. Accurate and complete records should be kept of all discount arrangements.

Ambulance suppliers should exercise caution when selling services to purchasers who are also in a position to generate federal health care program business for ambulance suppliers (e.g., SNFs or hospitals that purchase ambulance services for private pay and Part A patients, but refer Part B and Medicaid patients to ambulance suppliers). Any link or connection, whether explicit or implicit, between the price offered for business paid out of the purchaser’s pocket and referrals of federal program business billable by the ambulance supplier will implicate the anti-kickback statute.

An ambulance supplier should not offer or provide gifts, free items or services, or other incentives of greater than nominal value to referral sources, including patients, and should not accept such gifts and benefits from parties soliciting referrals from the ambulance supplier. In general, token gifts used on an occasional basis to demonstrate good will or appreciation (e.g., logo key chains, mugs, or pens) will be considered to be nominal in value.

G. Are There Particular Arrangements to Which Ambulance Suppliers Should Be Alert?

Ambulance suppliers should review the following arrangements with particular care. (This section is intended to be illustrative, not exhaustive, of potential areas of risk under the anti-kickback and beneficiary inducement statutes.)

1. Arrangements for Emergency Medical Services (EMS)

a. Municipal Contracts

Contracts with cities or other EMS sponsors for the provision of emergency medical services may raise anti-kickback concerns. Ambulance suppliers should not offer anything of value to cities or other EMS sponsors in order to secure an EMS contract. (In general, ambulance suppliers may provide cities or other municipal entities with free or reduced cost EMS for uninsured, indigent patients.) In addition, arrangements that cover both EMS and non-EMS ambulance business should be carefully scrutinized; conditioning EMS services on obtaining non-EMS business potentially implicates the anti-kickback statute. Absent a state or local law requiring a tie between EMS and non-EMS business, ambulance suppliers contemplating such arrangements should consider obtaining an OIG advisory opinion. While cities and other EMS sponsors may charge ambulance suppliers amounts to cover the costs of services provided to the suppliers, they should not solicit inflated payments in exchange for access to EMS patients, including access to dispatch services under ‘‘9–1–1’’ or comparable systems.

A city or other political subdivision of a state (e.g., fire district, county, or parish) may not require a contracting ambulance supplier to waive copayments for its residents, but it may pay uncollected, out-of-pocket copayments on behalf of its residents. Such payments may be made through lump sum or periodic payments, if the aggregate payments reasonably approximate the otherwise uncollected cost-sharing amounts. However, a city or other political subdivision that owns and operates its own ambulance service is permitted to waive cost-sharing amounts for its residents under a special CMS rule. (See CMS Carrier Manual, section 2309.4; CMS Intermediary Manual, section 3153.3A; see also, e.g., OIG Advisory Opinion No. 01–10 and 01–11.)

b. Ambulance Restocking

Another common EMS arrangement involves the restocking of supplies and drugs used in connection with patients transported to hospitals or other emergency receiving facilities. These arrangements typically do not raise anti-kickback concerns. However, ambulance suppliers participating in such arrangements can eliminate risk altogether by complying with the ambulance restocking safe harbor at 42 CFR 1001.952(v). In general, the safe harbor requires that EMS restocking arrangements involving free or reduced price supplies or drugs be conducted in an open, public, and uniform manner, although hospitals may elect to restock only certain categories of ambulance suppliers (e.g., nonprofits or volunteers). Restocking must be accurately documented using trip sheets, patient care reports, patient encounter reports, or other documentation that records the specific type and amount of supplies or drugs used on the transported EMS patient and subsequently restocked. The documentation must be maintained for 5 years. The safe harbor also covers fair market value restocking arrangements and government-mandated restocking arrangements. The safe harbor conditions are set forth with specificity in the regulations.

Wholly apart from anti-kickback concerns, ambulance stocking arrangements raise issues with respect to proper billing for restocked supplies and drugs. Payment and coverage rules are set by the health care program that covers the patient (e.g., Medicare or Medicaid). To determine proper billing for restocked supplies or drugs, ambulance suppliers should consult the relevant program payment rules or contact the relevant payment entity. Under the Medicare program, in almost all circumstances the ambulance supplier—not the hospital—will be the party entitled to bill for the restocked supplies or drugs used in connection with an ambulance transport, even if they are obtained through a restocking program. However, under the ambulance fee schedule, supplies and drugs are included in the bill for the base rate and are not separately billable. Ambulance suppliers should consult with their payor to confirm appropriate billing during the new ambulance fee schedule transition period.

2. Arrangements With Other Responders

In many situations, it is common practice for a paramedic intercept or other first responder to treat a patient in the field, with a second responder transporting the patient to the hospital. In some cases, the first responder is in a position to influence the selection of the transporting entity. While fair market value payments for services actually provided by the first responder are appropriate, inflated payments by ambulance suppliers to generate business are prohibited, and the government will scrutinize such payments to ensure that they are not disguised payments to generate calls to the transporting entity.

3. Arrangements With Hospitals and Nursing Facilities

Because hospitals and nursing facilities are key sources of non-emergency ambulance business, ambulance suppliers need to take particular care when entering into arrangements with such institutions. (See section F above.)

4. Arrangements With Patients

Arrangements that offer patients incentives to select particular ambulance suppliers may violate the anti-kickback statute, as well as the CMP law that prohibits giving inducements to Medicare and Medicaid beneficiaries that the giver knows, or should know, are likely to influence the beneficiary to choose a particular practitioner, provider, or supplier of items or services payable by Medicare or Medicaid. (See section 1128A(a)(5) of the Act (42 U.S.C. 1320a-7a(a)(5).)

Prohibited incentives include, without limitation, free goods and services and copayment waivers. The statute contains several narrow exceptions, including financial hardship copayment waivers and incentives to promote the delivery of preventive care services as defined in regulations. In addition, items or services of nominal value (less than $10 per item or service or $50 in the aggregate annually) and any payment that fits into an anti-kickback safe harbor are permitted.

An ambulance supplier should not routinely waive federal health care program copayments (e.g., no ‘‘insurance only’’ billing), although the supplier may waive a patient’s copayment if it makes a good faith, individualized assessment of the patient’s financial need.(16) Financial hardship waivers may not be routine or advertised. As discussed in section G above, cities and other political subdivisions are permitted to waive copayments for services provided directly to their residents.

Subscription or membership programs that offer patients purported coverage only for the ambulance supplier’s services are also problematic because such programs can be used to disguise the routine waiver of cost-sharing amounts. To reduce their risk under the anti-kickback statute, ambulance suppliers offering subscription programs should carefully review them to ensure that the subscription or membership fees collected from subscribers or members, in the aggregate, reasonably approximate—from an actuarial or historical perspective—the amounts that the subscribers or members would expect to spend for cost-sharing amounts over the period covered by the subscription or membership agreement.

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