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