On December 28,2010, the Office of Inspector General (“OIG”) published Advisory Opinion 10-26, wherein the OIG concluded that an ambulance provider offering discounted rates to skilled nursing facilities (“SNFs”) could violate the Anti-Kickback Statute (“AKS”). In Advisory Opinion 10-26, Requestor is a nonprofit Medicare and Medicaid certified ambulance supplier providing emergency and non-emergency transportation services, including services for Medicaid-covered residents of skilled nursing facilities (“SNFs”) (the “Medicaid Transport Services”). The Requestor operates in a state in which Medicaid bundling recently became a law where Medicaid pays nursing facilities a per resident per day rate for ancillary and support costs, which includes the Medicaid Transport Services. According to the state law, payment to ambulance suppliers for Medicaid Transport Services must be paid by the SNFs, as those services are included in the new bundled rate for the ancillary and support costs.
In Advisory Opinion 10-26, Requestor proposed to offer the SNFs two types of payment plans for the Medicaid Transport Services:
1. Capitated per Resident Rate – This rate would be based on the Medicaid resident days, regardless of whether the Medicaid Transport Services are needed for the resident. The rate would be below the Requestor’s total costs of providing the Medicaid Transport Services if all the residents were Medicaid-only residents.
2. Fee-for-Service Rate – The Requestor would contract with the SNFs to pay a fee-for-service basis for the Medicaid Transport Services. This rate, like the Capitated per Resident Rate, would be below cost for Medicaid-only residents, as well.
In evaluating whether the proposed arrangement violated the AKS, the OIG analyzed whether there was an improper nexus between the rates offered for services and the referrals of federal business. Specifically, the OIG considered whether the rate was commercially reasonable in the absence of other, non-discounted business. The OIG concluded that the rate may be commercially unreasonable and that the SNFs may be soliciting improper discounts on business in exchange for referrals for which they bear no risk. Thus, the OIG stated that “prices offered to the SNF that are below the supplier’s total costs of providing the services–as in the facts presented here–give rise to an inference that the supplier and the SNF may be ‘swapping’ the below-cost rates on business for which the SNF bears the business risk in exchange for other profitable non-discounted Federal business, from which the supplier can recoup losses incurred on the below cost-business, potentially through overutilization or abusive billing practices.”
For more information, please contact Adrienne Dresevic, Esq. or Carey F, Kalmowitz, Esq. at (248) 996-8510 or (212) 734-0128 or Daniel B. Brown, Esq. at (770) 804-6475 or visit the Stark and Anti-Kickback specialty page on the HLP website.