Do We Have to Bill Everyone? Important EMS Billing Ruling
Today’s Burning Question: My fire department has provided EMS transport for over fifty years, and we have been billing for the past 2 decades. We have been told we have to bill everyone equally or we could violate some federal requirement. We have decided not to pursue non-payers who are city residents, but we do pursue non-payers who are not city residents. I heard that some fire departments have stopped billing their residents all together and now only send bills to non-residents. Is that legal?
Answer: There are actually two parts to your “is it legal” question. Part one is: is it legal from the perspective of the federal government, and specifically Medicare and Medicaid billing. Part 2 is whether private insurance companies will pay your ambulance transport bills if you do not bill everyone. This posting will focus only on Part 1, and the answer is, it would appear that fire departments can choose to bill only non-residents for EMS transports without violating any federal requirements.
The US Department of Health and Human Services, Office of Inspector General issued an important Advisory Opinion this week that could impact many fire departments that bill for EMS services.
The ruling issued July 9, 2013 addresses fire departments who only bill non-residents for EMS transport services. The concern among many has been section 1128(b)(6) of the Social Security Act (the “Act”), which allows the Secretary of Health and Human Services to exclude certain providers from participating in any federal health care program if they have “submitted … bills … for services … substantially in excess of such individual’s or entity’s usual charges”.
The concern is that by not billing everyone, a provider could run afoul of section 1128(b)(6). The question is if a fire department transports residents for free, would the US DHHS consider a bill submitted on behalf of a non-resident to be "substantially in excess of… usual charges"? An unnamed fire district submitted a request for a formal interpretation of the practice of billing only non-residents and the IOG responded as follows:
“We conclude that the District’s bills to Medicare and Medicaid for non-residents are not substantially in excess of its usual charges. Rather than charging its residents or their insurers for emergency medical services, the District has elected to cover these costs through tax revenues; the voters of the District passed a tax referendum expressly to cover the rising costs of providing emergency medical services. This choice does not require the District also to provide emergency medical services to non-residents without charge. Although the District categorizes its patients as residents or non-residents, its billing practices for the patients (and their insurers) within each category are consistent: no member of the former category is billed for emergency medical services, whereas all members of the latter category are billed on equal terms. The District’s distinction between residents and non-residents, and its decision to bill the latter but not the former, is reasonable and falls within the District’s discretion.”
Here is a copy of the full opinion. AdvOpn13-08
Curt,
This only addresses exclusion under 1128(b)(6), not potential violations of the anti-kickback statute or false claims act. Prior decisions have addressed this to some extent (see Adv.Op. 12-18, which allows copayment waivers for back-up 911 services under reciprocal agreements between municipalities; Adv. Op 11-13, which allows a county fire department to waive copayments for residents under the assumption that taxes paid by the resident stand in for the copayments; but cf Adv.Op 12-11, which doesn't allow a municipality to force a private 911 provider to routinely waive copayments for service as a condition of receiving a contract.). While exclusion is a big deal, anti-kickback and false claims act issues are generally a bigger problem for the EMS community in my opinion, because it is a violation of one of those statutes that will get you excluded under 1128(a) (and those exclusions are mandatory, unlike the exclusions under 1128(b)).
What this question really highlights is that more EMS services (and fire services that provide EMS) need to consult with their attorney's, or find attorney's that have knowledge of these issues, rather than relying on opinions that may not be up to date or familiar with the current laws and rules associated with healthcare billing.
Full disclosure: I know Greg Demske personally though serving on committees with him in the ABA Health Law Section, but that gives me absolutely no inside knowledge of the thinking of HHS OIG regarding the above questions.
Marc Meyer
Marc
Excellent points – and thank you very much. For those not familair, Marc is an attorney-firefighter in Texas and has a great deal of knowledge in this area.
Again Marc – I truly appreciate your input on this issue.
Curt or Marc,
I admit I have to do some more reading on this but I had already begun looking into it when it was passed those weeks ago. Or when the clarification was issued, I should say. So the only thing I question is this: I'm well aware of hundreds of agencies across the country who bill people who live out of town and not the residents and have always understood when you consider resident contribution to taxes. What I thought about the recent issue though is that the rule was you to charge the people who reside in your jurisdiction and outside the same amount. I thought this was similar to $200 for a resident (the rest subsidized by taxes) and $600 for nonresident. If it's true that an agency that bills BOT has to keep the numbers as you put "are not substantially in excess of usual charges" -how does the government not claim disparity or violation between free for resident and $600 for nonresident? This isn't all that well but I'm not sure how to ask the question better. I'm very happy for the departments that are able to flex requirements to meet the bottom line, I think all would like to see it that way I'm just simply wondering how free for greater than 60% of your calls and $600 for out of towners isn't too far apart. Thanks for your time.
Kelly Cormier
Kelly
This is not an area of the law that I profess to have a great deal of knowledge… that could change but right now I do not have any answers for you. Marc does alot more of it than I do so I will defer to him.
That being said… let me make 2 points. First – you equated residency with paying taxes… and the two do not necessarily go together. They should… but in our upside down world they don't. I suppose one could make the argument that granting a non-taxpaying resident a free pass on EMS transport undercuts the rational that residents/taxpayers underwrite the service so they shouldn't have to pay again… Just sayin…
The second point – my original understanding was that everyone had to be billed, resident and non resident alike. However, there was no obligation to pursue (ie. send collection notices and ultimately file suit against) non-payers… and in particular a community could make a decision the pursue non-residents but not pursue residents without violating any medicaid/medicare laws. Again – that was just my understanding – I never had occasion to research it – but it was that understanding that led me to believe that Advisory Opinion 13-08 was so significant… hence the original post posting…
As is often the case I stand corrected.
Curt I completely understand, and let me apologize at how poorly written my first question was. I was burning the midnight oil. I am very interested to see if Marc will be able to provide some input here.
I used the example and again,hopeful I'm saying it clearer this time for Marc-of not billing folks who are residents and then billing nonresident a substantial fee to transport. That is the one that confuses me–to me, a usual zero amount recieved subtracted from $500 out of town looks to me like a big leap that I thought was 'disparity". I'm certainly respectful that we can all use some more sharpness and learning in this area..hopefully Marc will take mercy and hop in. I always thought prior to joining my company that if you billed one you had to bill them all but quickly learned that was incorrect.
Yes, the scenario that comes to alot of light with the order that came down seemed to confim the legality of the the soft bill indistrict (take what you can get but don't pursuit for nonpayment in district) and hardbilling of nonresidents (sending to collections and pursuiting beyond what nonparticipatory insurances would cover). When I brought the issue to our compliance officer for out company I was very happy to hear that the vast majority of my clients are right on the ball and doing the right thing and only one of many needed to be counseled to make needed corrections.
Marc i always leave my sources of info annonymous but can you possibly help explain how not billing in town residents and then billing substantially the out of towners doesn't lead to disparity findings? Thank you both for assistance with these often murky waters.
Kelly
Well, the answer, as you will regularly hear from a lawyer, is it depends on the circumstances. Let me first address this by saying that the advisory opinions issued by HHS OIG are 1) strictly advisory in nature, 2) dependant upon the facts that are presented to the HHS OIG, and 3) specific to the provider who asks for the advisory opinion.
That said, Curt is right that the best practice is to bill everyone (or at least bill insurance). What you do after that point depends on the payor, the providers contract with provider (in the case of private insurance) and federal law (via the Anti-Kickback Statute, False Claims Act and the related regulations and advisory opinions to provide guidance).
If the person is a private payor, then really the above discussion is a moot point. Right now, there is no legal obligation to bill at all, bill the same amount, pursue or not pursue an individual who has availed themselves of EMS services – unless the provider is a non-profit or otherwise has some sort of charity care requirement.
If the person that used the services has private insurance, then that is a matter of contract and contract law principles will control. Basically, if you have a contract with an insurance company that states you will bill everyone for copay and write off a certain amount, then that is what you need to do. But if there is no contract with the insurance company, it is a matter of the contract that the insurance company has with the person – your services would be a third-party beneficiary of that contract and somewhat constrained by that contract, but likely able to bill or not bill for co-pays as your providers wish.
Where the advisory opinions come in are for those persons, who are likely a majority of your providers clients between Medicare and Medicaid, who are covered under one of the federal heathcare programs. This is where the above advisory opinions come in – specifically Ad. Ops. 11-13, 12-11 and 12-18. And for the federal programs, it is pretty clear that you have to bill the federal programs the same as the best rate you bill anyone else, but you may choose to waive the copay for residents of the jurisdiction (though it appears that a municipality that chooses to contract with a provider may not force the provider to waive the copayments as a condition of receiving the contract).
There is one caveat to this discussion. The providers, as noted, should bill everyone as a best practice. Because Medicare should be getting the best rate, if you don't bill everyone, you could potentially run into an issue because you are not providing Medicare with the best rate. If you don't bill someone, then you are charging those persons a zero rate and Medicare should be charged the same rate – this could potentially implicate AKS and FCA so you should at least send out a bill, even if you are not going to pursue residents of the jurisdicion. I don't remember reading any advisory opinions that address that set of facts, so I could not recommend that a provider fail to at least send an initial bill, even to residents.
Note that I have not addressed the term "disparity." I don't believe that disparity is the issue here.
Remember that the reason for FCA and AKS are to decrease the possibility that the federal government as a payor is not giving a provider the incentive to increase the amount of reimbursement from Medicare/Medicaid/other federal programs by fraudulent means or inducements to overutilize the services. An argument can be made that by not billing residents, there is a possibility that it would increase the amount billed to Medicare/Medicaid improperly, though there is the counterveiling argument that could be made that taxes pay for the residents services. I just don't believe that the argument has been made to HHS OIG when a provider only bills nonresidents rather than billing all and waiving payments/copays routinely.
Marc
Disclaimer – The foregoing is not legal advice as I do not have knowledge of the specific situations described above and we do not have a attorney client relationship. This response is for informational purposes only and I suggest that both your company and the providers should consult with an attorney who has knowledge and experience in dealing with Healthcare billing issues.