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Federal pursuit of anti-kickback statute takes millions from local EMS

Expert witness commentary on the recent Paramedics Plus litigation, in which the government alleged violations of the federal Anti-Kickback Statute

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Under its Oklahoma contract, EMSA – the public agency – owned and operated all of the ambulances, and Paramedics Plus was awarded a contract to staff those ambulances.

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This article originally appeared in the September 13, 2018 issue of the Paramedic Chief Leadership Briefing, Employee engagement | Anti-kickback statutes | FirstNet podcast. Read the full briefing and add the Paramedic Chief eNewsletter to your subscriptions.

By Doug Wolfberg

I served as an expert witness in the recent Paramedics Plus litigation, in which the government alleged violations of the federal Anti-Kickback Statute (AKS) in procuring contracts, principally in Oklahoma. As this case represents one of the largest federal settlements in EMS history, I’d like to provide some commentary on the lawsuit and what it means for the industry.

In my background as an EMS attorney with the Page, Wolfberg & Wirth law firm; as a professor of healthcare law; an EMS1 columnist; and as a former county, state and federal EMS official, I have worked extensively in applying, analyzing and advising clients under the federal AKS. My partner Steve Wirth and I each have about 25 years experience working specifically with the AKS. Never before have we seen such a misapplication of this law by the federal government – and this unfortunate prosecution can have significant effects on local EMS systems across the United States.

The AKS cannot properly be applied to a situation where a public agency awards a contract to an ambulance company, but where it’s the public agency itself which bills Medicare and other federal healthcare programs for the ambulance services rendered. Under its Oklahoma contract, EMSA – the public agency – owned and operated all of the ambulances, and Paramedics Plus was awarded a contract to staff those ambulances. This is a type of public utility model (PUM) contract.

The “usual” type of arrangement for which the AKS could apply is where a public agency awards a 911 contract to an ambulance company, and then the ambulance company bills Medicare and other insurers directly as its compensation.

The government failed to appreciate the critical difference between the type of PUM contract implemented by EMSA in Oklahoma and the usual type of contract where the ambulance company receives referrals that it bills to Medicare and other insurers.

Anti-Kickback Statute does not apply

Paramedics Plus did not receive any referrals under the AKS – nor did Paramedics Plus bill a single dollar or a single claim in Oklahoma to Medicare, Medicaid or any other insurer. EMSA was the provider and all claims went out under its name and its provider number, and EMSA received all reimbursement for the services billed.

In short, the AKS cannot apply where a public agency awards a contract to a vendor that can’t bill for any services, but instead all billing is done by the public agency that awarded the contract.

Beyond the significant legal flaw in the case is the Federal government’s effort to penalize a local agency’s thoughtful development of an EMS system that meets the needs of the local community in a way that was intended to simply minimize costs for the public agency – while delivering a high-quality system to the public.

The government’s lawsuit alleged that a “profit cap” arrangement was the centerpiece of this alleged “kickback scheme.” In reality, Paramedics Plus refunded excess revenue back into the local EMS agency after paying its contract expenses – for the public good. These refunds benefitted a public agency, and therefore, the public. And, because the billing was done by EMSA, which was also the recipient of the reimbursement, it means the local government agency kept more of its own money and paid less of it to a vendor.

That’s like paying a kickback to yourself. That’s just not how the law works.

No benefit to Paramedics Plus

Another key point: no one at Paramedics Plus personally benefited from the contracts that it has with the communities it serves. Paramedics Plus was investing back into the local EMS system for the good of the public it served, which is a far cry from the actions of some companies which seek only to bleed their local governments dry for every penny of profit they can squeeze.

It’s surprising to see the Justice Department pursue this case when there are undoubtedly real violations of the law and real fraud that needs to be rooted out in the industry. Federal prosecutors and enforcement agents are noble professionals with a tough job, and we applaud their efforts to combat real fraud and abuse in healthcare.

But sometimes they get it wrong, and it’s my professional judgment – and that of quite a few other lawyers – that this was one such case. It’s something that the EMS industry should watch, as this case could have significant impact on local governments and how they go about organizing their local EMS systems. It’s never a good outcome – or sound public policy – when $21 million that is better used at the local level is instead sent off to the federal government in the form of a massive penalty for an arrangement that benefitted local citizens. This should send chills down the spine of every EMS system administrator.

Please feel free to email me if you have any further questions about what this may mean for the EMS industry.

For over 20 years, PWW has been the nation’s leading EMS industry law firm. PWW attorneys and consultants have decades of hands-on experience providing EMS, managing ambulance services and advising public, private and non-profit clients across the U.S.

PWW helps EMS agencies with reimbursement, compliance, HR, privacy and business issues, and provides training on documentation, liability, leadership, reimbursement and more. Visit the firm’s website at www.pwwemslaw.com.

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