On December 7, 2016, the Office of the Inspector General (OIG) published a new “safe harbor” regulation under the anti-kickback statute (AKS).  The regulations will become effective in 30 days.  Under the safe harbor, government-owned/operated ambulance providers and suppliers can receive protection under the AKS if they choose to waive the collection of beneficiary cost-sharing amounts, if they meet certain requirements.   

Background -The AKS and the OIG's Stance on Waivers

For decades, the OIG has maintained that health care providers who routinely waive Medicare cost-sharing amounts for reasons unrelated to individualized, good faith assessments of financial hardship could violate the Federal Anti-Kickback Statute (AKS) by engaging in that practice.  The OIG said routine waivers may constitute prohibited remuneration to induce referrals under the AKS.

However, the OIG has recognized a "special rule" for ambulance providers and suppliers that are owned and operated by a state or a political subdivision of a state, such as a county or a municipal fire department.  In several Advisory Opinions, the OIG permitted municipally-owned/operated ambulance providers to treat revenue from local taxes as payment of beneficiary cost-sharing amounts.  The OIG also confirmed in Advisory Opinion 13-17 that this "special rule" would apply to waivers of cost-sharing amounts for both residents and non-residents of a municipality who need emergency ambulance services.   

The New Safe Harbor 

Now, the OIG has established a safe harbor, applicable to government owned and operated ambulance providers and suppliers nationwide.  If a government provider or supplier meets the specific requirements in the new regulation, it may waive or reduce cost-sharing amounts that it would otherwise have to collect without violating the AKS.  Here are those conditions:

Government Owned and Operated 

The safe harbor protection only applies to ambulance providers or suppliers that are owned and operated by a State, a political subdivision of a State, or a tribal health care program, as that term is defined in the Indian Health Care Improvement Act.  The safe harbor does not include nongovernmental ambulance providers or suppliers, such as private or nonprofit companies.  The OIG has permitted (through Advisory Opinions) situations where a State or municipality contracts with a private ambulance company, and the State or municipality uses its residents’ tax dollars to pay the ambulance company an amount that is actuarially equivalent to the residents’ copayments.  But, this safe harbor does not apply to those situations.  In addition the OIG states that subscription arrangements should be subject to a case-by-case determination, rather than protected by this safe harbor. It is important to note that an arrangement that fails to meet a safe harbor is not necessarily illegal, it merely means that the arrangement is not guaranteed the safe harbor protection under the AKS.  

Offered on a Uniform Basis

To meet the safe harbor, the government ambulance provider or supplier must offer the reduction or waiver on a uniform basis to all of its residents or (if applicable) tribal members, or to all individuals transported.  So, an ambulance provider or supplier could waive cost-sharing amounts for all residents, but charge cost-sharing amounts to nonresidents. But, an ambulance provider or supplier cannot discriminate on the basis of any factor other than residency or, if applicable, tribal membership. For example, an ambulance provider or supplier cannot:

• Waive cost-sharing amounts for patients transported for an emergency that required only outpatient treatment, but charge cost-sharing amounts for patients transported for a condition that requires hospitalization (or vice versa);
• Choose whether to waive cost-sharing on the basis of the patient’s age; or
• Waive cost-sharing on the basis of insurance or financial status.

The bottom line is that the safe harbor protects only routine waivers where the waivers do not take into account or require any case-by-case, patient-specific determinations (other than residency or tribal membership).

Emergency Responses 

The safe harbor only applies to transports where the provider or supplier engaged in an "emergency response" as that term is defined in the Medicare regulations.  In other words, governmental ambulance providers and suppliers may not waive applicable copayments and deductibles for non-emergency transports.  

An "emergency response" is defined by the standard Medicare definition found at 45 CFR 414.605, which is: “[R]esponding immediately at the BLS or ALS1 level of service to a 911 call or the equivalent in areas without a 911 call system. An immediate response is one in which the ambulance entity begins as quickly as possible to take the steps necessary to respond to the call.”

No Cost-Shifting

Finally, the ambulance provider or supplier must not later claim the amount reduced or waived as a bad debt for payment purposes under a Federal health care program or otherwise shift the burden of the reduction or waiver onto a Federal health care program, other payers, or individuals. ​The OIG said that accepting a higher fee schedule amount from a private insurer would not constitute cost-shifting (assuming the fee schedule is either a standard fee schedule for the insurer or was not specifically requested by the ambulance provider or supplier to recoup costs it may lose by waiving copayments). Examples of impermissible cost shifting under the safe harbor include practices like upcoding services, providing medically unnecessary services, or other illegal or inappropriate means.