Ambulance Kickbacks: Who Pays for the Referral?

Ambulance kickbacks buy patient referrals with cash, discounted rides or other benefits tied to federal health care business. The ambulance company may give a hospital a cheap rate on trips the hospital must pay for, then get the hospital’s Medicare referrals in return. A facility employee may receive the money personally. A municipal authority may control the contract that delivers the patients. If you work with those rates, payments or referrals, you may see the bargain from either side.

The Anti-Kickback Statute reaches offering and paying for referrals as well as soliciting and receiving the benefit. The question running through these cases is concrete: who received something of value, what business could that recipient direct, and how were the two connected?

How Ambulance Swapping Turns a Discount Into a Referral Payment

Ambulance swapping exchanges cheap facility-paid transport for access to separately billable Medicare or Medicaid business. A hospital or skilled nursing facility saves money on the rides it must fund. The ambulance operator gets the referrals it expects to bill directly to a federal program. The facility’s saving and the operator’s expected revenue sit on different invoices.

That split explains why a price below cost can make commercial sense to the operator. The cheap trips buy access to the other trips. Medicare and Medicaid do not receive the facility’s discount, and the government can end up subsidizing it.

The Department of Health and Human Services’ Office of Inspector General examined that arrangement in its 1999 advisory opinion on discounted ambulance services. Its economic question was whether the discount made sense without the other, non-discounted business. It singled out prices below the supplier’s cost and prices lower than those offered to an equally large customer with no federal-program referrals to give. A sales or finance employee may know which customers got that rate and what business they could send back.

In May 2015, Pacific Ambulance and four other ambulance operators agreed to pay more than $11.5 million to resolve allegations of swapping in Southern California. The Justice Department alleged that deeply discounted, often below-cost rides bought exclusive access to facilities’ more lucrative Medicare referrals. It alleged that false Part B claims subsidized the discounted trips. The Office of Inspector General and the Federal Bureau of Investigation investigated the case.

The competing ambulance operator who brought the whistleblower case described the proposed exchange in the complaint:

The allegation puts the rate and the referral promise in the same transaction. We see the absurdity in the bargain: the facility gets to save money because someone else gets the bill. The competitor’s case also shows why a losing bidder can recognize the connection. The Justice Department announced a whistleblower share exceeding $1.7 million from the settlements.

What Are Some Examples of Kickbacks in Healthcare?

Ambulance examples include free or discounted facility rides exchanged for Medicare referrals, gift certificates for staff who direct trips, and payments used to obtain or retain a municipal ambulance contract. The benefit can reduce an institution’s expenses or go straight to an employee.

The Southern California whistleblower complaint alleged that E.R. Ambulance gave Country Hills employees $50 gift certificates whenever the facility called for a ride. It also alleged that Pacific Ambulance paid for an onsite hospital transportation coordinator. Those allegations show why the examination reaches staff benefits and services supplied inside the facility as well as the transport rate.

In the municipal case involving Paramedics Plus, the government’s announcement of its complaint described alleged cash payments, political contributions, marketing expenses and direct payments to the ambulance authority’s contractors. The alleged payments covered the referral source’s bills.

The accounting description may be a rebate, a marketing expense or a payment for services. We follow what the recipient received and the business it could send back. The contract, the invoice and the referral pattern each explain a different part of that exchange.

Hospitals Can Receive the Kickback Without Billing for the Ambulance

A hospital can benefit from an ambulance kickback through the transport costs it avoids. The ambulance operator submits the resulting transport claims, while the facility controls the referrals that make the discount valuable.

In October 2017, four Houston-area hospitals affiliated with Hospital Corporation of America agreed to pay $8.6 million to settle allegations that they received kickbacks. The government alleged that ambulance companies supplied free or heavily discounted rides in exchange for the hospitals’ other Medicare and Medicaid transport business.

The hospitals would otherwise have been responsible for those rides at significantly higher rates, according to the Justice Department. That avoided expense was the alleged benefit. The government pursued the institutions receiving it, even though they did not bill the ambulance services themselves.

For a facility employee, the relevant decisions can be close at hand: who negotiated the transport price, who approved the arrangement, and who decided which ambulance company received the next call. The settlement resulted from work by the U.S. Attorney’s Office for the Southern District of Texas, the Office of Inspector General and the Texas Attorney General’s Office.

Dialysis Clinic Employee Received Cash for Referrals to Mauran Ambulance

A dialysis clinic employee received cash for directing patient referrals to Mauran Ambulance. In her criminal admission in the Mauran Ambulance case, a Los Angeles dialysis-center employee said she conspired with a Mauran employee to receive cash kickbacks for referring dialysis patients to Mauran.

Dialysis referrals can bring repeat business. The Justice Department’s announcement of a Kentucky ambulance settlement explained that non-emergency dialysis transports can occur several times a week, at significant cost to Medicare. That recurring business gives the person arranging transportation influence over more than a single ride.

Patient inducements follow another path. The Southern California whistleblower complaint alleged that some patients received financial incentives to ride with particular ambulance companies. In one arrangement, the benefit reaches someone arranging another person’s transport. In the other, it reaches the person being transported.

The Federal Claim Is the Other End of the Bargain

The federal-program business connects the referral payment to an ambulance False Claims Act case. In the Southern California settlements, the government alleged that Medicare Part B claims subsidized the cheap facility rides. In the Houston settlements, it identified both Medicare and Medicaid referrals as the business the ambulance companies sought.

The payment rules help explain the attraction. Some transport costs belong within a facility’s payment, while other covered trips are separately payable to the ambulance operator. The Medicare ambulance coverage manual distinguishes facility-paid transport from separately payable Part B services. A facility that directs both kinds of trips can offer an ambulance company access to revenue beyond the invoice the facility pays.

The Centers for Medicare & Medicaid Services describes an inpatient taken temporarily to another site for specialized care while remaining an inpatient of the original provider. That transport can be part of the facility’s payment. A discharge from one provider followed by admission to another can instead be separately payable under Part B when coverage requirements are met. We connect each class of trip to the payer responsible for it, then examine what the discount bought.

The patient-care report carries another part of the story: the patient’s condition, why other transportation was unsuitable and the service actually furnished. Those records connect the referral to the ride and the claimed service.

In its Paramedics Plus complaint, the government explained that claims resulting from an Anti-Kickback Statute violation can be false claims, including when someone other than the party arranging the kickback submits them. We examine the payment, the referral and the resulting claims together.

Municipal Ambulance Contracts Can Buy Control of Patient Referrals

A municipal ambulance contract can give an operator access to an entire stream of patients. In August 2018, the Justice Department announced settlements exceeding $21 million involving East Texas Medical Center, Paramedics Plus and municipal clients. The case resolved allegations that benefits to public entities helped secure their ambulance business.

The government’s complaint alleged that East Texas Medical Center and Paramedics Plus earned approximately $45 million in profit under the Oklahoma contract from 2006 through 2013 and returned over $20 million to Oklahoma’s Emergency Medical Services Authority through a concealed arrangement intended to keep the contract. The government’s complaint described a proposal to improve the authority’s cash flow in exchange for negotiating a contract extension without competing bids.

The whistleblower had been Paramedics Plus’s chief operating officer overseeing the Oklahoma contract. The United States joined part of his case, and the department announced that he would receive over $4.9 million as his share of the settlements. The U.S. Attorney’s Office for the Eastern District of Texas, the Justice Department’s Civil Division, the Office of Inspector General and the states of California, Florida, Indiana and Oklahoma investigated the allegations.

Does the Anti-Kickback Statute Have Safe Harbors?

Yes. Whether your arrangement fits a safe harbor is something we work through with you, alongside the payments and referrals you know about.

The Office of Inspector General’s 2003 ambulance compliance guidance also identified routine copayment waivers and some membership arrangements as inducement concerns. It identified dispatch systems, first responders, hospitals, nursing facilities, their staff and patients as potential referral sources. For first responders, it specifically addressed inflated payments used to generate calls for a transporting ambulance company. The same practical question runs through each setting: what influence did the recipient have over where the patient went?

What an Ambulance or Facility Insider Can See

If you work in ambulance sales or facility billing, you may know why the rate on the invoice differs from what the facility pays. A scheduler may know which operator gets the calls. Together, those perspectives can explain what the discount bought.

The Southern California complaint alleged that exclusive referrals continued even where a written contract omitted or disclaimed exclusivity. It also alleged that full-price invoices concealed the lower amounts facilities actually paid. Those allegations make the daily practice and the payment history as important as the contract’s wording.

For a municipal insider, the comparison can run between the public contract and the rebates, vendor invoices, travel payments or marketing expenses outside it. Bid materials and contract modifications show how the business was awarded and extended. In the Paramedics Plus allegations, internal correspondence and the contents of the contract file supplied a different account from the public paperwork.

Dispatch and patient-care records connect those business decisions to particular trips. The ambulance guidance identifies who ordered the trip, dispatch instructions, times, pickup and destination, mileage and services provided as information to record. A biller, dispatcher, facility scheduler or competing operator may know a different part of the connection. We work with that knowledge to establish who benefited, who directed the business and what the government paid for. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know What Bought the Referrals

If you know how a transport discount, a staff payment or a municipal rebate bought ambulance business, talk to our whistleblower experts about the arrangement. We connect the commercial decisions to the referrals and claims, build your case with you, and bring in ambulance kickback whistleblower lawyers who understand both sides of the transaction. We stay beside you through the whole process, putting that inside knowledge to work on your strongest ambulance kickback case.