Ambulance Services and Kickbacks
No business wants to pay more for goods or services than it has to pay. This is why hospitals and nursing homes join buying groups for purchases of commodities from bed liners to toilet paper. The buying power of the group drives the cost down. The manufacturers derive less profit per unit, but sell more units. It's a win-win scenario. But not all situations where a facility is offered a discount are such a good deal. Your facility, indeed, the decision-makers involved, could buy themselves some time in a federal penitentiary if they failed to take into account the
Antikickback Statutes.
The United States, for claims filed under Medicare, and most states for claims filed under Medicaid, have a statute that prohibits kickbacks. Kickbacks are pernicious things and in theory they increase the cost of care to the government. So that's why the federal statute is so broad. It prohibits both the payment or offering of a kickback, and the acceptance of a kickback, if it impacts any item of health care services that will be paid for under Medicare. But it doesn't stop there. Congress knew that people are clever and often do things under the table. That's why the statute prohibits the payment of any "item of value" and says that the item of value can be in cash or in kind. While there are safe harbors under the statute, they do not extend to agreements to swap services for money.
Suppose Rocket Roy's Ambulance Service shows up at the nursing home and goes to your front desk. The nurse on duty confronts Rocket's salesman who tells her that any time she calls Rocket Roy to transport a patient, she'll get a $25 cash card for Starbucks, Applebees, or Ruby Tuesday. What a deal! A nurse would be a fool not to take that deal. The patient gets a ride, and the nurse gets a reward!
Hold that thought a moment. Both Rocket and the nurse are now guilty of offering to give and offering to accept a thing of value (a gift card) in exchange for the provision of a service to be paid for under Medicare. It's a felony, and carries with it a $25,000 fine and five years in prison. Maybe this isn't such a good deal?
Wait a minute now, you're saying. I had no idea this was criminal! Too bad. Under the tough love standards in federal court, you can still be liable. This is the holding of United States v. Starks, 157 F.3d 833 (11th Cir. 1998). Starks involved government employees who were convicted for violating the Anti-Kickback Statute. The employees had participated in a scheme where patients were referred to an in-patient chemical dependency unit in exchange for payment. The defendants appealed their conviction claiming that the judge had erred when he refused to instruct the jury that the law's "willful" requirement necessitated proof that the employees knew the referral arrangement violated the Anti-Kickback Statute.
The Appeals Court upheld the conviction, finding that the defendants did not have to know that their conduct was illegal under the Anti-Kickback Statute because they knew generally that their conduct was impermissible. The Court said that the Anti-Kickback Statute "is not a highly technical tax or financial regulation that poses a danger of ensnaring persons engaged in apparently innocent conduct. Indeed, the giving or taking of kickbacks for medical referrals is hardly the sort of activity a person might expect to be legal." Ouch!
Suppose Rocket Roy offers a different deal. Rocket Roy says "We'll transport any patient that the facility would normally have to pay for (Medicare Part A transfers) for $75. In exchange you give us all the transports that Medicare will pay for (Medicare Part B transfers)." What could be wrong with this? You're getting a reduced rate on the facility transports. No person is benefitting personally. How could this be wrong?
Ask American Medical Response. In 2006 they paid the United States Government $9,000,000 to settle claims that the company violated the Antikickback statute in swapping these low cost ambulance services for the pricer Medicare transports. Both AMR and Rural Metro, another Texas-based ambulance company, settled with the government in a case brought under the False Claims Act in Houston, Texas. Because the ambulance companies provided a complete recovery for the federal government, the federal agents did not go after the nursing homes and seek reimbursement from them. But they certainly could have.
Rocket Roy is very persistent. He suggests that you enter into a contract where you get a lower rate. The contract won't require you to send him all your patients, but you understand that this is part of the arrangement. The agreement to use him as the exclusive provider of Medicare Part B transfers isn't written in the agreement, it's just a private understanding between friends. How can there be a violation of the statute?
Just because a person is clever enough not to put the whole agreement in writing doesn't get them off the hook. The federal agents will look at substance, not at what's on paper. If Rocket Roy gets all the transfers - and the facility never calls anyone else - there's a good chance that both Rocket and the facility will both be in trouble.
When it comes to the Antikickback Statute, it pays to be careful.