Local county and city governments that require independent ambulance contractors to routinely waive patient co-pays should commission an annual audit to ensure the contractors are fully reimbursed for these uncollected balances.
The OIG has generally favored arrangements involving the waiver of patient out-of-pocket costs for government-owned ambulance and emergency services because of a special rule identified in the Medicare Benefit Policy Manual, Chapter 16, section 50.3.1, which provides that:
A [state or local government] facility which reduces or waives its charges for patients unable to pay, or charges patients only to the extent of their Medicare and other health insurance coverage is not viewed as furnishing free services and may therefore receive program payment.
In this respect, it may be viewed that if the municipality only bills and collects from insurers (including Medicare and Medicaid) for ambulance services, the residents are still paying for their out-of-pocket costs of the ambulance services indirectly through their local taxes.
However, the OIG further elaborates that a local government cannot require independent ambulance contractors to waive patient out-of-pocket portions, unless the local government periodically compensates the independent ambulance contractor on behalf of its residents on the basis of reasonable calculations to cover the uncollected amounts. Municipalities that systematically waive patient co-payments in this manner should commission an annual audit to ensure independent ambulance services are reimbursed for all waived government and commercial insurance co-payment amounts.
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————————————Sources: OIG Advisory Opinions 13-4, 13-5, 13-8, 13-11, 13-14, 13-17, 13-18