OIG Advisory Opinion on private ambulance service

From David Harlow’s healthcare blog:

The OIG posted an October 12 advisory opinion regarding private ambulance service support for county expenses incurred in connection with prehospital care and transportation provided under exclusive contracts with the ambulance services providing the support.

Most municipalities no longer ask for — and most ambulance services no longer offer — vehicle donations and other goodies in return for exclusive contracts.  This advisory opinion serves to remind us that while freebies not closely related to the contract in question are a no-no, some closely-related financial supports are, in fact, permitted.

In this case, partial reimbursement for administrative and dispatch expenses, and free care for uninsured — all related to the county inmates whose transport was the subject of the contract (and which was billed to third parties) — were found by the OIG to be permissible.

The grounds for this decision were as follows:

• The arrangement was part of a comprehensive municipal program to secure transport services
• Payments for administrative and dispatch expenses will not cover their full cost
• Even though payments will vary with volume, the payment will not induce referrals, as most volume is 911 volume
• The arrangement in this case is with providers that have been contracting with the county  government for over 25 years
• The remuneration in this case would inure to the public benefit
• The arrangement was developed by the county government
• “Importantly, there is no ancillary or unrelated remuneration offered or paid by the Ambulance Services to the County . . . .  We might have reached a different result if the Ambulance Services had offered the County . . .  some remuneration not directly related to the provision of the emergency medical transports covered by the contracts including, by way of example, free or reduced cost equipment for . . . County agencies.”

Expect a proliferation of carefully-constructed support programs in the wake of this advisory.

— David Harlow

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Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.