A proposed arrangement under which a hospital would subsidize an affiliated ambulance cooperative to enable the cooperative to provide certain ambulance services currently provided by the hospital would not constitute grounds for the imposition of civil money penalties or administrative sanctions, according to the Office of Inspector General (OIG). The acute care hospital provides various services, including advanced life support (ALS) services, and is the only hospital in its county that has “comprehensive” emergency services capability. The hospital is part of a nonprofit health system, of which the ambulance cooperative is also a member. The cooperative provides ambulance services in the town and surrounding communities. Its members include the hospital and several local volunteer fire companies.
Facts. Under the current arrangement, when the cooperative's basic life support (BLS) ambulance is dispatched together with the hospital's paramedic squad, the cooperative bills the ALS rate, but the hospital does not bill; the cooperative bills the ALS rate when the ALS portion of the ambulance service actually is provided by the hospital paramedic squad, because the cooperative and the hospital are both members of the health system and subject to the health system’s global budget. As a result of this and other billing practices, the hospital recoups only half of the cost of providing ALS services through Medicare and other payers. In contrast, under the proposed arrangement, responsibility for providing the ALS services provided by the hospital and the BLS services provided by the cooperative would be consolidated in the cooperative.
Analysis. The proposed arrangement would continue an essential service to the community — ALS ambulance services — currently provided by the hospital at a financial loss. The risk of kickback abuse from the proposed arrangement is low because: (1) the cooperative and its members would receive no benefit from the proposed arrangement; (2) the hospital's donations to the cooperative would not vary with the volume or value of referrals to the hospital by the cooperative; (3) the cooperative and the volunteer fire companies are not in a position to affect referrals in a significant way; and (4) any risk posed by the proposed arrangement is offset by the fact that there are no for-profit ambulance services in the county, given the expense of operating an ambulance service in a sparsely-populated area, and the fact that ALS ambulance services cannot be provided unless subsidized by the hospital.
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