Regent Management Services: Ambulance Swapping and the Facility’s Bundled Costs

In the Regent Management Services fraud case, the company agreed to pay approximately $3.199 million to resolve ambulance-swapping allegations: free or heavily discounted transports in exchange for Medicare and Medicaid referrals. The alleged benefit went straight to Regent’s own expenses. It would otherwise have had to pay significantly higher rates for those trips. In that alleged bargain, taxpayers funded the referral business used to buy that discount.

At the time of the Justice Department’s November 30, 2015 announcement, Regent Management Services L.P. was headquartered in Galveston and managed twelve separately owned and operated nursing facilities, including eleven in seven Texas cities. The case put the facility’s role in choosing an ambulance company under scrutiny, alongside the supplier’s opportunity to bill the government.

How the Alleged Ambulance Swapping Worked

Regent allegedly obtained a break on transports it was financially responsible for by sending the same ambulance companies other residents’ Medicare and Medicaid transport business. The ambulance companies gave up revenue on the facility’s bill to obtain referrals the government described as more lucrative.

That is the exchange behind ambulance swapping. A facility has an expense it wants to reduce. A supplier wants access to residents whose services it can bill to a government program. In the government’s account of Regent, the discounted service and the referrals were the bargain.

The Anti-Kickback Statute prohibits giving or receiving a benefit in return for referrals covered by federal health care programs.

The Justice Department described the resolution as what it believed was the first in the nation to hold medical institutions accountable for this kind of ambulance swapping. Its point was the recipient’s responsibility: a facility could be held accountable for the arrangement even when the ambulance company submitted the Medicare or Medicaid claim.

Why the Facility’s Bundled Costs Matter

Medicare Part A pays a skilled nursing facility a bundled rate covering many of the services its residents receive. That creates a financial reason for a facility to care about an outside supplier’s price: the supplier’s payment can come out of money Medicare has already paid the facility.

The bundle includes room, board, nursing, therapy, drugs, laboratory services and supplies under Medicare’s skilled nursing facility billing rules. Medicare pays the nursing facility, and the facility’s contract determines what it pays an outside supplier. Under Medicare’s consolidated-billing rules, the outside provider cannot bill Medicare separately for a service included in that bundle.

A round trip can leave the nursing home responsible for the ambulance bill even though the resident received care elsewhere. Admission and discharge ambulance trips are among the exceptions to the bundle.

That payment boundary gives the alleged bargain its value. A discount on a facility-paid trip reduces the facility’s expense. A referral of separately billable transport business gives the ambulance supplier another source of revenue. The Regent allegation connected those benefits: lower transport costs for the manager in exchange for access to government-paid business.

The Same Bargain in Other Nursing-Home Services

Kan-Di-Ki LLC, doing business as Diagnostic Laboratories and Radiology, agreed to a $17.5 million settlement announced in September 2013 over an alleged exchange involving different services but the same payment divide. The supplier allegedly charged nursing facilities below-cost rates for Part A business in exchange for their Medicare Part B and Medi-Cal referrals.

The facility-paid work supplied the discount. The separately reimbursed work supplied the incentive to offer it. Two former employees brought the Kan-Di-Ki case.

A whistleblower’s complaint concerning LABQ Clinical Diagnostics alleged a comparable exchange involving nursing-home testing and the federal uninsured testing program. The nursing homes’ owner wanted to avoid the cost of weekly testing. The complaint described what each side allegedly received:

In that allegation, free testing relieved an expense the nursing homes faced while the laboratory gained government-paid work. Regent’s alleged exchange used ambulance services. Both accounts make the facility’s avoided cost central to understanding why the supplier would offer the deal.

The Regent Settlement Reached the Facility Manager

Regent’s announced settlement allocated approximately $533,000 to Texas, which had funded some of the Medicaid claims at issue.

Regent also entered a corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General. It required substantial internal compliance reforms for five years.

What Evidence Is Needed to Prove Fraud?

For an ambulance-swapping allegation, the useful evidence connects the facility’s transport costs, the supplier’s discount, the referrals and the resulting Medicare or Medicaid claims. We examine those connections together, including who negotiated the price and who controlled where residents’ transport business went.

The ambulance agreement and facility invoices can show which trips the facility was expected to pay for and what the supplier charged. Transport and referral records can connect those trips with the other business directed to the same supplier. Payer and claim records then show which services generated a facility bill and which generated a government claim.

The approval and accounting trail can show who accepted the discount and how it affected the facility’s transport expense. Communications about where to send other residents can connect that saving to the supplier’s expected return.

Someone involved in supplier contracts may know why a price was offered. Someone arranging residents’ transports may know where the referrals went. Someone handling invoices or claims may see which payer was charged. We work with the insider to connect that knowledge to the arrangement and the people who controlled it.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Transport Deal Bought

If you saw the discount terms, the referral decisions or the bills they produced, speak with our whistleblower experts about the transport arrangement. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand nursing-facility payment and ambulance referral arrangements. We stay beside you as your knowledge of the business becomes the evidence behind the case.