OIG-HHS issues advisory opinion on hospital’s arrangement for ambulance services

by bvernia | August 25th, 2009

In an advisory opinion posted on August 18, Lew Morris, the Chief Counsel to the OIG-HHS, blessed a non-profit hospital’s plan to provide a subsidy, in the form of cash, equipment, and services, to a taxable ambulance cooperative which would take over ambulance services provided by the hospital.

The hospital, a 501(c)(3) entity, currently provides advanced life support (ALS) ambulance services to its region, and is a member of an ambulance cooperative service whose other members are three volunteer fire departments. The hospital informed the OIG that it was losing approximately 50% of the cost of providing the ambulance services, and it asked to transfer its ambulance function to the cooperative, who was applying for 501(c)(3) status so it could qualify for funding for ALS services. The hospital expected that it would need to provide the subsidies until that funding could be obtained.

The OIG-HHS found four factors persuasive:

  • The ambulance service received no net benefit from the arrangement – it assumed responsibility for providing the services and merely received the means to carry out that responsibility;
  • The amount of the subsidy would not be dependent upon referrals to the hospital;
  • The cooperative and the volunteer fire departments were not in a position to affect referrals to the hospital – among other reasons, the hospital was the only one in the area offering comprehensive emergency care; and
  • There were no for-profit alternatives available, the hospital was losing money, and certified that the services could not be provided without a subsidy.

The OIG concluded that although the arrangement could potentially generate prohibited remuneration under the Antikickback Statute, it would not impose administrative sanctions, under these circumstances.

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