Ambulance Swapping: The Cheap Ride Buys the Next Referral

Ambulance swapping is a kickback arrangement in which an ambulance company offers cheap or free facility-paid rides in exchange for separately billable Medicare or Medicaid referrals. The hospital or nursing home saves on transports it must pay for. The ambulance company gets the business it can bill to the government. If you negotiate the facility contract, approve the invoices or compete for the account, the bargain is visible in the price and the referrals that come with it. The inducement is the low bill.

How the Discount Becomes a Referral Bargain

The facility controls something the ambulance company wants: who gets called for patient transports. Some rides cost the facility money. Others generate claims the ambulance supplier can submit directly to a federal health care program. Swapping connects the price of the first group to referrals from the second.

That split explains why an ambulance company might pursue an account with prices that look unattractive on their own. The discounted facility work buys access to other business. The nursing home reduces its transport expense, while the supplier expects the separately reimbursed rides to make the account worthwhile.

The Department of Health and Human Services’ Office of Inspector General described the incentive in its 1999 ambulance advisory opinion. Skilled nursing facilities had a reason to limit expenses under their bundled payment, and the ambulance company wanted business in a competitive market. The facilities could direct substantial business outside that bundle to the supplier offering the discount.

The government programs can end up subsidizing that bargain. The Inspector General’s office also identified an incentive for suppliers to increase utilization inappropriately or use abusive billing to recoup losses on discounted work. That connects the contract negotiation to what happens later in billing. We see the absurdity in asking taxpayers to support a discount they never received.

SNF Part A Ambulance Discounts for Part B Business

SNF Part A ambulance discounts for Part B business exploit the split between transports included in a skilled nursing facility’s bundled payment and transports separately payable to the ambulance supplier. For rides inside the bundle, the facility bears the transport expense. The supplier’s opportunity is the separate federal-program business the facility can send its way.

The payment distinction depends on the transport. Medicare Part B ambulance coverage requires that Part A has not already paid directly or indirectly for the service. Certain ambulance trips during a covered nursing-facility stay belong in the facility’s consolidated payment. Qualifying trips from a skilled nursing facility to dialysis and back are an exception, even during a covered Part A stay.

For a swapping inquiry, the important connection is between the facility’s discounted expense and the separately billable referrals it controls. The payer-status records identify which rides fall on each side of the bargain. The contract and referral practices show how those sides were linked.

Would the Nursing Home Price Make Sense Without Medicare Referrals?

If the price only makes commercial sense with Medicare referrals attached, the referrals explain the discount. The Inspector General’s advisory opinion asks that question about a below-cost nursing home ambulance contract tied to Medicare referrals. The opinion arose when an ambulance company asked OIG to approve discounted services for skilled nursing facility residents. The office declined to approve the proposed arrangement.

The Inspector General’s office identified below-cost prices as particularly suspect. It also described another comparison: what the supplier charges a buyer that generates the same or greater volume of business as the nursing facility’s Part A work but has no Part B or other federal-program business available to refer.

The comparison asks what the same supplier charges a customer buying just as many rides with no federal-program patients to send. If the better rate depends on access to Medicare patients, the referrals are part of what the supplier expects to receive.

For an insider, the telling detail is a rate offered only to facilities that can direct federal-program transports. The price charged to a comparable customer, the cost of supplying the discounted rides and the business promised in return each answer a different part of that question. We examine those connections with you, including how the price was chosen and what the facility was expected to deliver.

The concern also reaches arrangements carried out through practice. In its 2003 guidance for ambulance suppliers, the Inspector General’s office said an explicit or implicit link between out-of-pocket prices and federal-program referrals implicates the Anti-Kickback Statute. It specifically described hospitals and nursing facilities buying services for private-pay and Part A patients while referring Part B and Medicaid patients to the supplier. The customer purchasing the discounted service also controlled the other business. That is why the account’s actual referral history belongs beside the written agreement.

When the Hospital Receives Cheap Rides for Referrals

When a hospital receives cheap ambulance rides for exclusive referrals, the price cut is the alleged benefit to the hospital. The ambulance supplier gets access to the patients. The Houston settlements show why the receiving facility matters even when the supplier submits the government claim.

In October 2017, four Houston-area hospitals affiliated with Hospital Corporation of America agreed to pay $8.6 million to resolve ambulance-swapping allegations. The hospitals were Bayshore Medical Center, Clear Lake Regional Medical Center, West Houston Medical Center and East Houston Regional Medical Center.

The Anti-Kickback Statute addresses the exchange of discounts for federal-program referrals. The government alleged that free or heavily discounted rides bought Medicare and Medicaid referrals. According to the Justice Department, the hospitals would otherwise have been financially responsible for those transports at significantly higher rates. Their alleged benefit was a reduced expense. The ambulance companies’ benefit was the referred business.

Three whistleblowers brought two lawsuits. The Justice Department emphasized responsibility on both sides of a referral arrangement, including entities that do not submit the ambulance claims themselves. Its Southern District of Texas office described this as its second medical-institution swapping settlement, following one announced in late 2015.

For someone inside a hospital, that changes where the story begins. The transport expense the facility avoided and the business it directed are central to the alleged exchange. Accounts payable and contracting can hold the facility side of a case whose government claims sit with an outside ambulance supplier.

The California Case Put the Contract in View

Five Southern California ambulance companies collectively agreed to pay more than $11.5 million to resolve swapping allegations. The Justice Department alleged that deeply discounted, often below-cost facility rides purchased exclusive rights to more lucrative Medicare referrals. It alleged that the resulting Medicare Part B claims subsidized the discounted trips. The settling companies were Pacific Ambulance, Bowers Companies, Care Ambulance Service, Balboa Ambulance Service and E.R. Ambulance.

The whistleblower was a competitor in the San Diego, Orange and Los Angeles County ambulance markets. That perspective matters: the person trying to win the facility account can understand both the price being offered and the referral business attached to it. The Justice Department announced a whistleblower reward exceeding $1.7 million.

A Flat Rate and Free Wheelchair Vans

The competitor’s complaint described the alleged exchange in terms a contracting employee would recognize:

The allegation connects a price, a free service and a referral commitment in the same contract. It gives the facility something it would otherwise have to pay for and ties that benefit to the ambulance supplier’s access to other transports. The promise of all Part B work is what completes the alleged exchange.

The complaint also alleged that Pacific waived mileage charges and sometimes did not collect even the discounted facility rate under unwritten agreements. That makes collections part of the pricing story. It also alleged that full-cost bills concealed much lower payments under contractual allowances. The printed price could hide the bargain.

Exclusivity Could Live Outside the Contract

The same complaint alleged that actual referral practices could differ from the agreement’s wording:

That allegation puts the calls and the assignments beside the contract. A person who knows how the facility allocated transports may see the promised exchange in daily practice. We want to understand who received the referrals and how that pattern related to the discounted work.

Liberty’s Pricing Policy and the National Care Owners

Liberty Ambulance

Liberty Ambulance’s case put the alleged swapping arrangement into a company pricing policy. The government joined a whistleblower’s case. In its announcement of its complaint, the Justice Department alleged that Liberty offered commercially unreasonable rates to hospitals, nursing homes and other private payers without offering the same discounts to the government. The alleged purpose was exclusive access to those customers’ federally subsidized patient populations.

The complaint also addressed billing conduct and attached training documents and manuals that the government alleged Liberty used to teach employees to falsify records. Across the alleged conduct, the government said more than $28 million in claims had been submitted to federal healthcare programs. Liberty later agreed to a $1.2 million settlement, announced in July 2018.

The alleged claim submissions dwarfed the settlement. Liberty’s case also connected the account sold to the claim submitted: the government alleged a policy of buying exclusive patient access alongside training to falsify records. A contracting employee and a billing employee could recognize different parts of that same alleged conduct.

The National Care EMS Owners

The National Care EMS case targeted the ambulance company’s owners. In the January 2016 announcement, the former owner of National Care EMS agreed to pay $125,000. The owner and operator of a successor company using the same name agreed to pay $120,000.

The owners resolved kickback allegations on the ambulance side of the arrangement. The Houston hospitals resolved allegations on the receiving side in their own settlement. Together, the matters show why we follow the benefit and the referrals through both businesses while keeping each party’s conduct and payment separate.

What the Contract, Payments and Referrals Show Together

A facility insider can know what the discount bought; a competing bidder can know why the price made no sense without the referrals. We connect that commercial knowledge to the contracts, payments and separately billed rides. The California case shows that a competitor can bring a qui tam case over this arrangement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know What the Discount Bought

If you saw facility prices tied to Medicare referrals, talk with our whistleblower experts about the bargain behind the ambulance contract. We work beside you to build your strongest ambulance swapping whistleblower case around the pricing decisions, the benefit to the facility and the business sent back. We bring in ambulance fraud whistleblower lawyers who understand facility referral arrangements and stay with you throughout the case.