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OIG Issues Advisory Opinion on Reimbursement for Dispatch Costs

June 24, 2012
TO: AAA Membership
FROM: Brian S. Werfel, Esq., AAA Medicare Consultant
RE: OIG Issues Advisory Opinion on Reimbursement for Dispatch Costs

On June 21, 2013, the Office of the Inspector General (IG) posted Advisory Opinion 13-05, which permitted an exclusive contract between a municipality and a private ambulance service pursuant to which the ambulance service was required to reimburse the municipality for a portion of the costs of providing emergency dispatch services. 

The advisory opinion involved an RFP to be the exclusive 911 provider within a municipality. The requestor was the winning bidder, a private ambulance service. As part of the proposed arrangement, the requestor would be obligated to pay the municipality an annual remittance (estimated to be $6,000 in the first year of the contract), which was intended to reimburse the municipality for one-half of the costs associated with providing emergency dispatch services.

In analyzing the proposed arrangement, the IG indicated that it would implicate the federal anti-kickback statute, because it would require the ambulance service to reimburse the municipality for potential referrals. However, the IG determined that adequate safeguards existed to mitigate the risk of fraud and abuse. The IG first noted that the arrangement was part of a comprehensive regulatory scheme to manage the delivery of non-emergency ambulance services in the municipality. The IG then noted that the payments to the municipality would only partially offset the municipality’s costs of operating the dispatch center. Therefore, the ambulance service would not be “overpaying” the source of referrals, which the IG indicated is the typical anti-kickback concern. The IG also noted that the payments were not tied to the volume of referrals to the ambulance service. 

This is the latest in a long line of IG opinions. The IG has consistently held that an ambulance service could reimburse a municipality for actual costs incurred by the municipality in operating its EMS system. Other recent opinions on this subject include Advisory Opinion 12-04 (April 2012), Advisory Opinion 10-24 (October 2010), Advisory Opinion 09-15 (September 2009) and Advisory Opinion 09-14 (September 2009). 

The Advisory Opinion can be read in full at: http://oig.hhs.gov/fraud/docs/advisoryopinions/2013/AdvOpn13-05.pdf.  

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