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OIG Issues Advisory Opinion on Waiver of Out-of-Pocket Expenses by Volunteer Ambulance Squad

October 14, 2014
AAA Member Advisory
TO:          AAA Membership
FROM:      Brian S. Werfel, Esq.
RE:           OIG Issues Advisory Opinion on Waiver of Out-of-Pocket Expenses by Volunteer Ambulance Squad

On October 14, 2014, the HHS Office of the Inspector General (IG) posted Advisory Opinion 14-09, which permits a Township to pay the out-of-pocket expenses due from its residents when they are transported by a local volunteer ambulance squad. 

The advisory opinion was requested a private non-profit corporation that operates as a volunteer ambulance squad. The ambulance squad has a long-standing relationship with the Township, pursuant to which it is the approved provider of BLS emergency ambulance services. Historically, the ambulance squad only billed bona fide residents of the Township to the extent of their insurance, i.e., it would not bill residents for applicable copayments and deductibles due under their health insurance policies, nor would it bill the uninsured or underinsured. In lieu of billing residents for these out-of-pocket expenses, the ambulance squad would accept an annual stipend from the Township. The parties certified that the annual stipend reasonably approximated the out-of-pocket expenses that would otherwise be due from residents in any given year. 

In analyzing the proposed arrangement, the IG first restated its long-standing concern regarding potentially abusive waivers of Medicare cost-sharing amounts. However, the OIG noted that the arrangement called for the Township to effectively assume responsibility for all out-of-pocket expenses due from its residents. The OIG noted that such an arrangement was consistent with its previous guidance to the ambulance industry, including its Compliance Program Guidance for Ambulance Suppliers (issued in March 2003), where it noted that:

“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 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.” 

Since the annual stipend was intended to cover the out-of-pocket expenses due from residents, the OIG indicated that the ambulance squad’s practice of not billing the residents for these amounts would not constitute a routine waiver, and therefore would not implicate the anti-kickback statute. As a result, the OIG permitted the arrangement. 

The OIG’s determination in this advisory opinion is consistent with its long-standing practice of permitting municipalities to use tax revenues to pay cost-sharing amounts otherwise due from their residents. 

The Advisory Opinion can be read in full at: http://oig.hhs.gov/fraud/docs/advisoryopinions/2014/AdvOpn14-09.pdf.

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