[Issued September 23, 1998]
[Posted on the OIG Web Site September 30, 1998]
To: The Attached Distribution List [redacted]
Re: [Name redacted]
Advisory Opinion No. 98-13
Ladies and Gentlemen:
We are writing in response to your request for an advisory opinion, in which you ask
whether an ambulance restocking program, coordinated through a local emergency medical
services council (the "Program"), constitutes prohibited remuneration under the
anti-kickback statute, section 1128B(b) of the Social Security Act (the "Act"),
and, if so, whether the Program constitutes grounds for the imposition of sanctions under
the anti-kickback statute, section 1128B(b) of the Act, the exclusion authority related to
kickbacks, section 1128(b)(7) of the Act, or the civil monetary penalty provision for
kickbacks, section 1128A(a)(7) of the Act.
You have certified that all of the information you provided in your request, including
all supplementary information, is true and correct, and constitutes a complete description
of the material facts regarding the Program. In issuing this opinion, we have relied
solely on the facts and information you presented to us. We have not undertaken any
independent investigation of such information. This opinion is limited to the facts
presented. If material facts have not been disclosed, this opinion is without force and
Based on the facts certified in your request for an advisory opinion, we conclude that
the Program could constitute prohibited remuneration under the anti-kickback statute if
the requisite intent to induce referrals were present, but that the OIG will not subject
the Program, as described in the request and supplemental submissions, to sanctions
arising under the anti-kickback statute pursuant to sections 1128B(b), 1128(b)(7), or
1128A(a)(7) of the Act.
This opinion may not be relied on by any persons other than the addressees and is
further qualified as set out in Part IV below and in 42 C.F.R. Part 1008.
The requesters of this advisory opinion are eight fire departments (listed on the
attached distribution list) and The County X Ambulance District located in County X, State
Y. All of the fire departments and the ambulance district are owned and operated by
municipal governments and provide emergency medical services ("EMS").
The requesters are members of the County X Emergency Medical Services Council (the
"Council"), a non-profit association founded in 1980. The Council is an advisory
and coordinating organization whose mission is to promote and advance EMS throughout
County X. Membership on the Council includes those who are providing EMS and those who are
interested in furthering the goals of the Council. The Council's current membership
includes public and private ambulance providers, hospitals, medical directors, and local
educational facilities. The Council's goals include: standardization of EMS practices and
equipment; provision of education and training for EMS providers; and improvement of EMS
capabilities in the Council's service area. Through its Executive Committee, the Council
may appoint working committees to accomplish its goals. One such committee is a practice
The practice committee has oversight of the restocking Program and is responsible for
standardizing the Program within the local EMS community, educating Council members
regarding the Program, and disseminating information about the Program. The Program has
been in operation in County X for eighteen years. The Program provides for the free
exchange of drugs and medical supplies used by EMS providers when they bring an individual
to a hospital for emergency treatment. Currently, all hospitals and EMS providers in the
County X service area participate in the Program. Under the Program protocol, the hospital
that receives the patient restocks the ambulance with the medications and supplies used in
connection with the patient's emergency medical treatment. Both an EMS provider and a
representative of the receiving hospital fill out and sign an emergency medical response
for each patient (the "Report"). One copy of the Report is placed in the
patient's record and one copy of the Report is used for inventory documentation of the
expended drugs and medical supplies. The ambulance providers are not charged, and do not
pay, for restocked items. The cost of the drugs and medical supplies is charged to the
patient by the receiving hospital in the manner of other billing for the services to the
II. LEGAL ANALYSIS
The anti-kickback statute makes it a criminal offense knowingly and willfully to offer,
pay, solicit, or receive any remuneration to induce referrals of items or services
reimbursable by any Federal health care program. See section 1128B(b) of the Act.
Where remuneration is paid purposefully to induce referrals of items or services for which
payment may be made by a Federal health care program, the anti-kickback statute is
violated. By its terms, the statute ascribes criminal liability to parties on both sides
of an impermissible "kickback" transaction. For purposes of the anti-kickback
statute, "remuneration" includes the transfer of anything of value, in cash or
in-kind, directly or indirectly, covertly or overtly.
The statute has been interpreted to cover any arrangement where one purpose of
the remuneration was to obtain money for the referral of services or to induce further
referrals. United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v.
Greber, 760 F.2d 68 (3d Cir.), cert. denied, 474 U.S. 988 (1985). Violation of
the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up
to five years, or both. Conviction will also lead to automatic exclusion from Federal
health care programs, including Medicare and Medicaid. This Office may also initiate
administrative proceedings to exclude persons from Federal and state health care programs
or to impose civil monetary penalties for fraud, kickbacks, and other prohibited
activities under sections 1128(b)(7) and 1128A(a)(7) of the Act.(1)
This Office's concern with the provision of goods and services for free or at
below-market rates to potential referral sources is longstanding and clear: such
arrangements are suspect under the anti-kickback statute. The provision of free or
below-market rate goods or services to a referral source may violate the anti-kickback
statute if one purpose of the gift is to induce referrals of Federal health care program
The 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. An inference may be drawn that one purpose of such remuneration is to induce the
ambulance provider to bring patients to the hospital. However, the strength of that
inference may vary with the circumstances of the specific arrangement.
In assessing the potential risk of fraud or abuse under the anti-kickback statute, our
concerns are principally fourfold: increased risk of overutilization, increased program
costs, patient freedom of choice, and unfair competition. Because it is limited to
emergency medical services, the Program does not increase the risk of overutilization and
is unlikely to lead to increased costs to Federal health care programs. Neither the number
of Federal program beneficiaries requiring emergency transport in County X, nor the
treatment these patients will require or receive at a hospital, is related to the
existence or operation of the Program.(2)
With respect to freedom of choice and unfair competition, emergency ambulance crews
have relatively limited opportunities to steer patients to particular hospitals. In life
threatening cases, the selection of a receiving hospital will be dictated by the patient's
condition. In other circumstances, the choice of receiving hospital will frequently be
dictated by the patient, the patient's physician, or the patient's insurer.
Notwithstanding, there will inevitably be situations in which ambulance provider personnel
would be able to steer patients who do not have a preference to a particular facility. In
the circumstances presented here, however, there would appear to be no financial reason
arising from the Program for ambulance personnel to steer patients to a particular
hospital, since all area hospitals participate in the Program.
However, the mere fact that all hospitals may be restocking ambulances without charge
does not immunize conduct that might otherwise violate the anti-kickback statute. Some
institutions may well participate in the restocking because of fear of adverse competitive
consequences if they do not. In short, remuneration that is given to retain or maintain
existing referrals may violate the anti-kickback statute.
We previously addressed an ambulance restocking arrangement that raised concerns under
the anti-kickback statute in OIG Advisory Opinion 97-6 (October 8, 1997). Based on the
specific facts presented by the hospital requester, we found that, notwithstanding a state
administrative regulation that required ambulances to transport patients to the facility
of the patient's choice except in exigent circumstances, the hospital's proposed
arrangement for free restocking of supplies and medications posed a risk of improper
steering and unfair competition. Accordingly, we concluded that the arrangement could
potentially violate the anti-kickback statute if the requisite intent to induce referrals
The facts presented here differ in material respects from those presented in OIG
Advisory Opinion 97-6 for the following reasons:(3)
First, the Program is not a unilateral arrangement; rather, it is part of an
ongoing effort by the Council and its members to maintain and improve EMS throughout the
County X service area. The Council, a non-profit association founded in 1980, is open to
all hospitals and emergency ambulance providers in the area, as well as local educational
institutions, physicians, and other community members. Regional EMS councils, like the one
at issue here, were formed in the early 1970s in response to a growing recognition of the
inadequacy of then existing emergency medical care and the high cost in human lives and
physical disabilities due to accidents and sudden illness and injury.(4)
EMS councils were established to coordinate emergency care among all levels of a region's
EMS system, including public safety organizations, private and hospital-based ambulance
providers, hospitals and other critical care facilities, and local physicians and
Second, the restocking aspects of the Program are not free-standing; the Program
is part and parcel of a coordinated regional effort to integrate and improve the emergency
medical care system. In addition to the drug and supply exchange programs, the Council
promotes the standardization of practices and equipment within the emergency medical
system and provides education and training for EMS providers. It also evaluates and
supports requests for improvements to the local EMS delivery system, sponsors educational
programs related to EMS, and otherwise seeks to promote high quality EMS care for the
Third, regional and local programs to improve and coordinate the delivery of
quality EMS have been actively encouraged and promoted by the Federal government over the
past twenty-five years. In 1973 the Federal government enacted the Emergency Medical
Services Systems Act of 1973 ("EMSSA"), Pub L. 93-154, 87 Stat. 594 (1973),
which provided federal funding for the development of regional EMS systems at the state,
regional, and local levels.(5) These regional systems were
to develop comprehensive programs to improve such areas as communications (including
"911" systems); transportation; provision and training of emergency personnel;
facilities; critical care units; use of public safety agencies; accessibility to care;
consumer participation, education, and information; transfer of patients; standard medical
record keeping; independent review and evaluation of EMS; disaster linkage; and mutual aid
agreements among communities. EMSSA was one of several Federal legislative efforts to
promote EMS delivery systems, including the Highway Safety Act of 1966, Pub. L. 89-594, 80
Stat. 731 (1966), which established an EMS program in the Department of Transportation;
the Emergency Medical Services for Children Program, under the Public Health Act, Pub. L.
98-555, 99 Stat. 2854 (1984), which provided funds for enhancing pediatric EMS; and the
Trauma Care Systems Planning and Development Act of 1990, Pub. L. 101-590, 104 Stat. 2915
Finally -- and importantly -- the Program is likely to have a positive impact on
the quality of patient care. By providing a mechanism to ensure that ambulances are fully
stocked with current medications and appropriate supplies, the Program is likely to foster
fast, efficient, and effective pre-hospital emergency care for the County X service area.
These significant community benefits, coupled with the conditions, requirements, and
limitations outlined above, persuade us that the Program poses minimal risk of fraud and
abuse under the anti-kickback statute, and therefore the OIG would not subject it to
The advisory opinion process is a "means of relating the anti-kickback statute to
the particular facts of a specific arrangement." 62 Fed. Reg. 7350, 7351 (February
19, 1997). The advisory opinion process permits this Office to protect specific
arrangements that "contain limitations, requirements, or controls that give
adequate assurance that Federal health care programs cannot be abused." Id. In
evaluating an arrangement's potential to lead to fraud or abuse of Federal health care
programs, no one fact or element is necessarily dispositive. Here, we are persuaded that
the Program is likely to result in substantial community benefit consistent with
longstanding national policy objectives. We are further persuaded that, taken as a whole,
the aspects of the Program described above -- including, but not limited to, the Program's
relationship to a coordinated regional EMS system, the role of the regional Council, the
Program's limitation to emergency medical services, and the uniformity of the Program
across providers -- create sufficient limitations, requirements, or controls so as to give
adequate assurance that the Program will not lead to program abuse under the anti-kickback
Accordingly, we conclude that while the Program might technically violate the
anti-kickback statute if the requisite intent to induce referrals were present, the OIG
will not impose sanctions on the requesters under sections 1128(b)(7) (as it relates to
kickbacks) or 1128A(a)(7) of the Act, based on the facts certified in the requesters'
request for an advisory opinion.
The limitations applicable to this opinion include the following:
This advisory opinion is issued only to the requesters listed on the Attached Distribution List, which are the requesters of this opinion. This advisory opinion has no application, and cannot be relied upon, by any other individual or entity.
This advisory opinion may not be introduced into evidence in any matter involving an
entity or individual that is not a requester to this opinion.
This advisory opinion is applicable only to the statutory provisions specifically noted
in the first paragraph of this advisory opinion. No opinion is herein expressed or implied
with respect to the application of any other Federal, state, or local statute, rule,
regulation, ordinance, or other law that may be applicable to the Program.
This advisory opinion will not bind or obligate any agency other than the U.S.
Department of Health and Human Services.
This advisory opinion is limited in scope to the specific arrangement described in this
letter and has no applicability to other arrangements, even those which appear similar in
nature or scope.
This opinion is also subject to any additional limitations set forth at 42 C.F.R. Part
The OIG will not proceed against the requesters with respect to any action that is part
of the Program taken in good faith reliance upon this advisory opinion as long as all of
the material facts have been fully, completely, and accurately presented, and the Program
in practice comports with the information provided. The OIG reserves the right to
reconsider the questions and issues raised in this advisory opinion and, where the public
interest requires, rescind, modify or terminate this opinion. In the event that this
advisory opinion is modified or terminated, the OIG will not proceed against any requester
with respect to any action taken in good faith reliance upon this advisory opinion, where
all of the relevant facts were fully, completely, and accurately presented and where such
action was promptly discontinued upon notification of the modification or termination of
this advisory opinion. An advisory opinion may be rescinded only if the relevant and
material facts have not been fully, completely, and accurately disclosed to the OIG.
D. McCarty Thornton
Chief Counsel to the Inspector General
[Attached Distribution List Redacted]
1. Because both the criminal and administrative sanctions related to the anti-kickback implications of the Program are based on violations of the anti-kickback statute, the analysis for purposes of this advisory opinion is the same under both.
2. This advisory opinion only relates to drugs and supplies directly related to the provision of emergency pre-hospital services in the Program's service area. Restocking of drugs or supplies used in connection with non-emergency services is outside the scope of this opinion.
3. We note that may aspects of the Program are similar to aspects of the proposed arrangement in OIG Advisory Opinion 98-7, which addressed an ambulance restocking arrangement that we concluded would not be subject to OIG sanction.
4. See, e.g. Accidental Death and Disability: The Neglected Disease of Modern Society, National Academy of Sciences and National Research Council (September 1966).
5. EMSSA defined "emergency medical services system" as "a system which provides for the arrangement of personnel, facilities, and equipment for the effective and coordinated delivery in an appropriate geographical area of health care services under emergency conditions . . . and which is administered by a public or nonprofit private entity which has the authority and the resources to provide effective administration of the system." 87 Stat. at 595.
6. We express no opinion regarding liability of the requesters under the False Claims Act or other legal authorities in connection with any improper billing or claims submission directly or indirectly related to, or arising from, the Program.