Several factors persuaded the IG not to impose sanctions in this case, the office said, noting among other things, that the ambulance fee is not tied to the volume or value of referrals, but instead is related to the costs of the operation of the city's 911 system.

Under the federal anti-kickback statute, it is a criminal offense to offer, pay, solicit, or receive any remuneration-or kickbacks--to induce referrals of items or services that are reimbursed by federal health care programs.

The opinion letter, dated April 1, redacted the names and locations of the parties involved. The letter indicates that the guidance was requested by a city that intends to collect ambulance fees to partially offset the costs of the city's 911 dispatch system.

In 1998, the city's 911 dispatch service received 4,886 calls. Of those calls, 3,232 (66 percent) required the dispatching of an ambulance, according to the letter. The 911 service is operated by the city's fire department.

The city council determined $50,000 to be a reasonable amount for the fee after reviewing the cost and scope of the fire department's involvement in providing emergency medical services in the city. This process included the formation of a committee to review the proposed ambulance arrangement that later became the ordinance.

The IG said that "pay to play" arrangements, such as the ambulance fee, clearly implicate the anti-kickback statute and that depending on the intent of the parties, the proposed arrangement could violate the statute. However, the IG's office said it would not impose sanctions on the arrangement for four reasons.

Four Exonerating Factors.

First, the ambulance fee is only one part of a comprehensive regulatory scheme the city developed to provide oversight and fiscal management of the delivery of EMS. The fee was established by a valid government entity legally empowered to regulate the provisions of EMS in the city, the IG said.

Second, the fee is "reasonably related" to the costs of the operation of the city's 911 system attributable to dispatching ambulances. So long as the total collected fees do not exceed the city's cost of dispatching ambulances, then the fee is reasonable, the IG said. To date, two ambulance companies have paid the $50,000 annual fee and $1,000 application fee to participate in the ambulance arrangement created by the ordinance. This total "falls far short" of the $150,000 that it costs the city each year for dispatching ambulances, the IG said.

Third, the fee is not tied directly or indirectly to the volume or value of referrals. The city's 911 system uses a fixed rotation system for distributing calls and there is no guarantee as to the volume of business that any single ambulance company will get.

Fourth, the fee should not increase the risk of overutilization or costs to federal health care programs. The costs of providing the fire department's 911 dispatch and the first responder service are not reimbursed by any federal health care program. Neither the number of federal program beneficiaries requiring emergency transport in the city, nor the treatment these patients will require at a hospital, is related to the existence of the ambulance fee, the IG said.

"In light of the specific circumstances presented, we would not impose sanctions arising under the anti-kickback statute in connection with the ambulance fee," the IG concluded in the opinion signed by HHS IG Chief Counsel D. McCarty Thornton.

HHS IG Advisory Opinion No. 99-5 is available from the IG's World Wide Web site, http://www.dhhs.gov/progorg/oig

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