News: HHS proposes anti-kickback safe harbor for ambulance restocking

June 1, 2000

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Published May 19 by the HHS Office of Inspector General

HHS proposes anti-kickback safe harbor for ambulance restocking

Health and Human Services Office of Inspector General Press Release

A full copy of the proposed rule can be obtained from the Office of Inspector General's Internet site: http://www.hhs.gov/oig/new.html

WASHINGTON, D.C. — The Department of Health and Human Services' Office of Inspector General today proposed an anti-kickback statute "safe harbor" that would protect certain arrangements involving hospitals that restock drugs and medical supplies without charge for ambulance suppliers transporting emergency patients to the hospitals.

The anti-kickback statute prohibits the knowing payment or receipt of anything of value to influence referrals of federal health care program business, including Medicare and Medicaid. Safe harbors immunize from prosecution certain payment and business practices that are potentially prohibited by the anti-kickback law.

"The proposed safe harbor is designed broadly to allow properly structured ambulance restocking arrangements to continue without fear of liability under the anti-kickback statute," said D. McCarty Thornton, chief counsel to the Inspector General. "Appropriate restocking arrangements can serve a significant public interest by making sure ambulances are fully stocked with current medications and supplies compatible with equipment used in local emergency rooms."

To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor. Compliance with safe harbors is voluntary, and failure to comply with a safe harbor provision does not mean that an arrangement is illegal. Arrangements that do not comply with a safe harbor, however, must be analyzed on a case-by-case basis for compliance with the anti-kickback statute.

The proposed ambulance restocking safe harbor went on public display today [May 18] at the Federal Register and is scheduled for publication as a proposed rule in the May 22, 2000, Federal Register. There will be a 60-day public comment period from the date of Federal Register publication.

Under the proposed rule, safe harbor protection would be provided for ambulance restocking arrangements that satisfy all of the conditions in one of two categories established by the safe harbor. Both categories pertain only to emergency ambulance services, and the safe harbor would not protect restocking of ambulance supplies, linens or medications following routine ambulance transports.

The first category would protect restocking arrangements where an ambulance supplier pays the hospital fair-market value for drugs and supplies used during the transport of an emergency patient. Payment would not have to be made at the time of restocking as long as commercially reasonable and appropriate payment arrangements have been made in advance.

The second category would protect arrangements when a hospital contemporaneously restocks drugs and supplies used during the transport of an emergency patient, even if the restocking is for free or reduced prices. The Office of Inspector General is proposing that the following seven conditions be met to qualify for this safe harbor protection:

Hospitals must restock on an equal basis for all ambulance suppliers, whether for-profit or not-for-profit, that bring emergency patients to the hospital.

Restocking arrangements must be part of a comprehensive and coordinated effort to improve the emergency medical services delivery system in the relevant service area, must be open to all emergency ambulance suppliers and hospitals operating in the service area, and must be monitored by a non-profit entity such as a regional emergency medical services council or functionally similar organization that will be known as the oversight entity. The safe harbor incorporates significant flexibility regarding the size, composition and structure of the oversight entity so as not to impose an undue burden on local emergency medical systems. The Office of Inspector General recognizes that oversight entities will vary depending on the size and resources of a particular service area.

Restocking arrangements must be in writing.

To prevent duplicate payments under Medicare Part A and Part B, the hospital must not bill any federal health care program or beneficiary for the restocked drugs or supplies or write off the cost of such drugs and supplies as bad debt.

To prevent double billing and program overpayments, ambulance suppliers may not bill any federal health care program or beneficiary separately for restocked rugs and supplies. Existing payment policies for ambulance suppliers typically include the cost of drugs and supplies used in transporting a patient. Additionally, since ambulance suppliers could receive drugs and supplies for free or reduced cost under the safe harbor, it would not be appropriate for the supplier to bill the government or beneficiaries separately for the drugs and supplies.

The hospital and ambulance supplier must maintain records of the restocked drugs and supplies and make the records available to the Health and Human Services' Secretary on request.

The hospital and ambulance supplier must otherwise comply with all federal, state and local laws regulating emergency medical care and the provision of drugs and medical supplies, including laws relating to the handling of controlled substances such as morphine.

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