98-14: More Ambulance Restocking - Some Protected, Some Not

On October 21, 1998, the OIG issued Advisory Opinion 98-14, addressing two slightly different ambulance restocking programs. This was the fourth advisory opinion involving ambulances in just over a year. Ambulance restocking, in particular, was the topic of Advisory Opinions 97-6, 98-7, and 98-13. In Advisory Opinion 98-14, the OIG reiterated that ambulance restocking programs may constitute prohibited remuneration under the antikickback statute and, then, used a fairly subtle distinction between the two programs in question to conclude that sanctions would not be imposed against one of the programs but might be imposed against the other.

The advisory opinion was requested by four hospitals with facilities located in four counties. The hospitals represent all of the hospital providers in the four-county metropolitan emergency medical services area. The hospitals participate in an existing pharmaceutical restocking program (Drug Program) under which the receiving hospital restocks the ambulance with medications used in connection with emergency pre-hospital services to the transported patient. The Drug Program is coordinated through the EMS councils in the area. The hospitals have also proposed a limited medical supply restocking program (Supply Program) under which the receiving hospital would restock certain supplies used by ambulance providers during emergency pre-hospital transportation. The Supply Program will be coordinated through a joint committee consisting of representatives of the hospitals.

The OIG began its analysis with a verbatim recitation of the legal standards contained in the prior ambulance restocking opinions. First, the OIG reiterated its longstanding concern that the provision of goods and services for free or at below-market rates to potential referral sources may violate the antikickback statute if even one purpose of the gift is to induce referrals of federal health care program business. Next, the OIG concluded that "[t]he provision by a hospital of free supplies and medications to an ambulance provider fits squarely within the meaning of remuneration for purposes of the anti-kickback statute."

In deciding whether sanctions should be imposed against the two ambulance restocking programs, the OIG seemed to focus on the involvement of the EMS council in preserving the benefit of the program for the entire community. Specifically, the OIG concluded that the Drug Program provided "adequate assurance that the plan is designed to improve and enhance the delivery of EMS in the Four County EMS Area for the benefit of the entire community." As to the Supply Program, the OIG recognized that the program may provide a community benefit, but expressed concern given that it will be implemented under the auspices of a committee representing only the hospitals. The OIG added that "[t]he involvement of a broad range of representatives of the EMS community provides substantial assurance that an ambulance restocking program will operate for the benefit of the local community and will not be undertaken solely for the benefit of a single provider or group of providers."

The OIG emphasized that its decision did not necessarily mean that the Supply Program violated the antikickback statute. Instead, the decision whether the Supply Program violates the antikickback statute depends on a case-by-case analysis of the actual intent of the parties and a determination of intent is beyond the scope of the advisory opinion process. See 62 Fed. Reg. 7351 (Feb. 19, 1997). The decision not to protect the Supply Program reflected the lack of safeguards that were otherwise contained in the Drug Program. The decision did not appear to be related to the items restocked by the various programs, i.e., pharmaceuticals versus medical supplies.

In addition to the standard limitations on advisory opinions, which are discussed below, the OIG included a specific restriction that the advisory opinion is inapplicable to the extent that either the drug or supply restocking programs applied to "non-emergency services" as opposed to "emergency service."