Federal Register / Vol. 66, No.

233 / Tuesday, December 4, 2001 / Rules and Regulations 62979

Maximum allow- Maximum allow-

(B) Organics able leachate conc. able total conc.
(mg/l) (mg/kg)

Trichloropropane, 1,2,3- ................................................. 7.69e-04 1.54e-02

Trinitrobenzene, sym- .................................................... 6.49e+00 1.30e+02
Vinyl chloride .................................................................. 2.34e-03 4.68e-02
Xylenes (total) ................................................................ 3.20e+02 6.40e+03

(4) Changes in Operating Conditions: If GROWS significantly changes the treatment process or the
chemicals used in the treatment process, GROWS may not manage the treatment sludge filter
cake generated from the new process under this exclusion until it has met the following conditions:
(a) GROWS must demonstrate that the waste meets the delisting levels set forth in Paragraph 3;
(b) it must demonstrate that no new hazardous constituents listed in Appendix VIII of Part 261
have been introduced into the manufacturing or treatment process: and (c) it must obtain prior writ-
ten approval from EPA and the Pennsylvania Department of Environmental Protection to manage
the waste under this exclusion.
(5) Reopener:
(a) If GROWS discovers that a condition at the facility or an assumption related to the disposal of the
excluded waste that was modeled or predicted in the petition does not occur as modeled or pre­
dicted, then GROWS must report any information relevant to that condition, in writing, to the Re­
gional Administrator or his delegate and to the Pennsylvania Department of Environmental Protec­
tion within 10 days of discovering that condition.
(b) Upon receiving information described in paragraph (a) of this section, regardless of its source, the
Regional Administrator or his delegate and the Pennsylvania Department of Environmental Protec­
tion will determine whether the reported condition requires further action. Further action may in­
clude repealing the exclusion, modifying the exclusion, or other appropriate response necessary to
protect human health and the environment.

* * * * * * *

[FR Doc. 01–29966 Filed 12–3–01; 8:45 am] Overview—Establishing a New Safe for the next emergency call, fully
BILLING CODE 6560–50–P Harbor for Ambulance Restocking stocked with current medications,
Arrangements sanitary linens, and a full complement
This final regulation establishes safe of appropriate medications and
DEPARTMENT OF HEALTH AND harbor protection for ambulance supplies, and helps ensure that
HUMAN SERVICES restocking arrangements.1 Ambulance supplies, such as intravenous tubing
restocking is the practice, commonplace and catheters, are compatible with
Office of Inspector General in many parts of the country, of equipment used in local emergency
hospitals or other receiving facilities rooms so as to expedite the transfer of
42 CFR Part 1001 restocking ambulance providers 2 with critically ill or injured patients to
RIN 0991–AB05 drugs or supplies used during the emergency room systems. Bona fide
transport of a patient to the hospital or restocking arrangements serve a
Medicare and State Health Care receiving facility. (For simplicity, we significant public interest and are
Programs: Fraud and Abuse; sometimes use the shorthand ‘‘hospital’’ consistent with Federal policy
Ambulance Replenishing Safe Harbor or ‘‘receiving hospital’’ in this preamble; established over the past 25 years.3
Under the Anti-Kickback Statute such terminology is intended to include Set forth below is a brief background
other types of receiving facilities, such discussion addressing the anti-kickback
AGENCY: Office of Inspector General
as urgent care or community health care statute and the proposed safe harbor for
(OIG), HHS.
clinics that provide emergency care ambulance restocking; a summary of the
ACTION: Final rule. services). Restocking enables the provisions being adopted into the final
SUMMARY: This final rule sets forth a safe ambulance to depart the hospital ready regulations; and a review of the public
harbor, as authorized under section 14 1 Because these arrangements are commonly 3 See, e.g., Emergency Medical Services Systems
of the Medicare and Medicaid Patient known as ‘‘restocking,’’ we use that term in this Act of 1973, Public Law 93–154 (providing Federal
and Program Protection Act of 1987, to preamble. As further discussed below, the funding for the development of regional Emergency
protect certain arrangements involving regulations use the word ‘‘replenish’’ to make clear Medical Services (EMS) systems at the State,
hospitals or other receiving facilities that the safe harbor only applies to the gifting or regional, and local levels, and defining ‘‘emergency
transfer of drugs and supplies that replace medical services system’’ as ‘‘a system which
that replenish drugs and medical comparable drugs and supplies administered by the provides for the arrangement of personnel, facilities
supplies used by ambulance providers ambulance provider (or first responder) to a patient and equipment for the effective and coordinated
(or first responders) when transporting before the patient is delivered to the receiving delivery in an appropriate geographical area of
patients to the hospitals or receiving facility. The rule is not applicable to any health care services under emergency conditions
arrangements for the general stocking of the * * * and which is administered by a public or
facilities. inventories of ambulance providers. Depending on nonprofit private entity which has the authority and
EFFECTIVE DATE: These regulations are the circumstances, such arrangements may fit into the resources to provide effective administration of
other safe harbors, such as the group purchasing the system.’’); Highway Safety Act of 1966, Public
effective on January 3, 2002. organization safe harbor at § 1001.952(j) or the Law 89–594 (establishing an EMS program in the
FOR FURTHER INFORMATION CONTACT: discount safe harbor at § 1001.952(h) of this part. Department of Transportation); Emergency Medical
Vicki L. Robinson, Senior Counsel, 2 In this preamble and regulations text, unless Services for Children Program, under the Public
Office of Counsel to the Inspector otherwise specified, the term ‘‘ambulance provider’’ Health Act, Public Law 98–555 (providing funds for
compasses both independent ambulance suppliers enhancing pediatric EMS); and Trauma Care
General, (202) 619–0335. and hospital-based providers, including ‘‘under Systems Planning and Development Act of 1990,
SUPPLEMENTARY INFORMATION: arrangements’’ providers. Public Law 101–590.
62980 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations

comments received and our responses to steering of patients to a particular Under the proposed rule, the restocking
those concerns. hospital in exchange for remuneration. arrangements would have to be
The OIG opined that the facts of the implemented on a community-wide
I. Background
particular arrangement—as presented by basis with some involvement of an
A. Ambulance Restocking and the Anti- the hospitals—would be likely to oversight entity. The proposed safe
Kickback Statute involve prohibited remuneration.4 By harbor would not protect unilateral
Section 1128B(b) of the Social law, the opinion applied only to the referral arrangements that were not open
Security Act (the Act) (42 U.S.C. 1320a– hospitals that requested it. to all hospitals and ambulance
Subsequently, the OIG issued several companies in the service area.
7b(b)) provides criminal penalties for
favorable advisory opinions approving Most commenters supported a new
individuals or entities that knowingly
restocking arrangements that it believed safe harbor, but many objected to certain
and willfully offer, pay, solicit or
to be much more representative of aspects of the proposed rule. Some
receive remuneration (i.e., anything of
typical restocking arrangements.5 Most found the rule too narrow or
value, in cash or in kind) in order to recently, in December 2000, the OIG
induce the referral of business burdensome, while others found the
issued a favorable advisory opinion provisions of the proposed regulations
reimbursable by a Federal health care approving a hospital’s proposal to
program. Violations of the statute may ambiguous or impracticable. Of
restock only volunteer ambulance particular concern to many commenters
also result in civil money penalties companies that do not charge anyone for
under section 1128A(a)(7) of the Act or were the proposed safe harbor
their services. conditions relating to monitoring by an
program exclusion under section
1128(a)(7) of the Act. The statute has C. The Proposed Safe Harbor oversight entity, written
been in existence since 1977 and memorialization of the arrangement,
On May 22, 2000, we published a and billing for restocked drugs and
applies broadly to all kinds of health notice of proposed rulemaking to
care providers and suppliers. Payments supplies. We have eliminated or
promulgate safe harbor regulations for substantially revised these conditions,
tied to referrals corrupt the health care ambulance restocking arrangements (65
system, increasing the risks of as described in greater detail in section
FR 32060). In the notice of proposed II. below.
overutilization of items and services, rulemaking, we proposed protecting two
increased costs to the Federal health categories of ambulance restocking II. Summary of the Final Rule
care programs, inappropriate steering of arrangements: (1) Arrangements under As with the proposed rule, the goal of
patients, and unfair competition. which the ambulance provider pays a this final rule is safe harbor protection
Ambulance restocking arrangements receiving facility fair market value for for the vast majority of ambulance
technically implicate the anti-kickback restocked drugs or supplies; and (2) restocking arrangements that further the
statute because the receiving hospital arrangements under which the important mission of insuring that pre-
gives something of value (e.g., drugs or ambulance service provider receives hospital emergency medical services
medical supplies) to a potential source contemporaneous restocking of drugs or (EMS) are timely, effective and efficient.
of Federal health care program business, medical supplies used during
i.e., ambulance providers who deliver emergency transport of a patient to the A. Major Changes
patients. receiving facility, even if the restocking We have modified the proposed rule
Notwithstanding the potential for a is without charge or at reduced prices. in a number of areas in response to
violation, the OIG believes that the vast The proposed rule was designed to public comments. Among the
majority of ambulance restocking protect restocking for emergency substantial changes and clarifications
arrangements are lawful under the anti- transports only. being made in the final regulations are:
kickback statute. We fully recognize the Proposed § 1001.952(v)(2), the fair • Eliminating the oversight entity
importance of ambulances being market value category, was designed to condition in favor of a public operation
restocked and ready for emergency use protect restocking arrangements where and disclosure condition;
at all times. Properly structured an ambulance provider pays the • Clarifying that no complicated
restocking arrangements contribute to receiving facility fair market value, written contracts or agreements are
this laudable goal without significant based on an arms-length transaction, for required and providing a short sample
risk of fraud or abuse. restocked drugs or supplies (including disclosure notice;
B. OIG Advisory Opinions
linens) used in connection with the • Conforming the billing conditions
transport of an emergency patient. to existing Federal health care program
The OIG was first asked to address an Under the proposal, payment need not payment and coverage rules and
ambulance restocking arrangement in be made at the same time as the regulations;
1997 when two hospitals submitted a restocking, provided commercially • Expanding the safe harbor to
request for an advisory opinion under reasonable and appropriate payment include restocking for non-emergency
section 1128D of the Act. As required by arrangements are made in advance. runs so long as the ambulance is also
the statute, the OIG responded to the Proposed § 1001.952(v)(3) was used for emergency runs;
request, even though the subject matter designed to protect remuneration in the • Allowing hospitals to limit the
was not of significant concern to the form of restocking of drugs or medical scope of protected restocking to all non-
OIG. As with all determinations under supplies (including linens) used during profit ambulance providers or all
the anti-kickback statute, our review an emergency transport of a patient to ambulance providers that do not charge
turned on the specific facts and the receiving facility, even if the for their services;
circumstances of the arrangement as restocking is for free or reduced prices. • Simplifying the documentation
presented by the requesting hospitals. conditions so that only one party to the
The request presented an unusual set of 4 OIGAdvisory Opinion 97–6 (October 8, 1997). restocking arrangement is required to
5 OIGAdvisory Opinion 98–7 (June 11, 1998);
facts under which an unscrupulous document the restocking;
OIG Advisory Opinion 98–13 (September 30, 1998);
party could potentially use an OIG Advisory Opinion 98–14 (October 28, 1998);
• Adding specific safe harbor
ambulance restocking arrangement for and OIG Advisory Opinion 00–09 (December 8, protection for Government-mandated
an unlawful purpose, namely the 2000). ambulance restocking; and
 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations 62981

• Including restocking of drugs or and regulations. The ambulance must comply with all Federal, State and
supplies initially administered to the provider and the hospital may not both local laws regulating ambulance
patient by a first responder at the scene bill for the same restocked drug or services, including, but not limited to,
of the illness or injury. supply. For purposes of this safe harbor, emergency services, and the provision
billing includes submitting claims for of drugs and medical supplies,
B. Final Safe Harbor Conditions
bad debt. Compliance with the including, but not limited to, laws
The final safe harbor regulations requirement that billing be appropriate relating to the handling of controlled
establish broad protection for most will be determined separately for substances.
existing ambulance restocking receiving facilities and ambulance
arrangements, while precluding 2. Safe Harbor Conditions Applicable to
providers. For example, if a hospital
protection for any abusive arrangements the Specific Categories of Safe Harbor
improperly bills for restocked supplies,
that use targeted or selective restocking Protection
the ambulance provider who received
for the purpose of inducing or the supplies may still be protected, so The safe harbor conditions applicable
rewarding referrals. The final long as the provider has not done to the three specific categories of safe
regulations address three categories of anything to impede the hospital’s harbor protection are summarized as
restocking: (1) General restocking compliance with the billing rules. follows:
(whether for free or for a charge), (2) fair (b) Documentation requirements. We (a) General restocking. This safe
market value restocking, and (3) have simplified the documentation harbor for general restocking is available
Government-mandated restocking. requirements. Under the final rule, for free restocking arrangements, as well
Parties need only satisfy the conditions either the hospital or the ambulance as arrangements under which the
applicable to any one of these provider may generate the necessary ambulance provider pays some amount
categories. Parties who are unsure documentation, so long as the other for the restocked drugs and supplies
whether their restocking is at fair market party receives and maintains a copy of (whether or not the amount is fair
value or is mandated by a Government it for 5 years. This 5-year period is market value). (Any payment for drugs
authority may look to the general consistent with the recordkeeping must comply with applicable Federal,
restocking category. requirements of the Centers for State and local laws.) Two specific
The final regulations provide that Medicare and Medicaid Services’ conditions apply to the general
‘‘remuneration’’ under the anti-kickback (CMS) 6 hospital conditions of restocking category. First, the receiving
statute does not include any gift or participation. The pre-hospital care facility must restock medical supplies or
transfer of drugs or medical supplies report typically prepared by the drugs on an equal basis for ambulance
(including linens) by a hospital or other ambulance service provider (sometimes providers in one or more of three
receiving facility to an ambulance called the trip sheet, patient care report categories: (i) All ambulance providers;
provider for the purpose of replenishing or patient encounter report) will be (ii) all non-profit and governmental
comparable drugs or medical supplies sufficient to satisfy this requirement if providers; or (iii) all non-charging
(including linens) used by the (i) the report identifies the drugs and providers (typically volunteers and
ambulance provider (or a first supplies used on the patient and municipal providers). A receiving
responder) in connection with the subsequently restocked and (ii) a copy facility can offer restocking to more than
transport of a patient by ambulance to of the report is filed with the receiving one category, and can offer a different
the hospital or receiving facility if all facility within a reasonable amount of restocking program to each category that
applicable safe harbor conditions are time. For arrangements that include it restocks, so long as the restocking is
satisfied. restocking of linens, an exchange of uniform within each category. The final
The regulations are divided into two linens will be presumed to occur with regulations make clear that safe harbor
parts. First, there are four conditions, each run, absent documentation to the protection does not require each
codified at § 1001.952(v)(2), that apply contrary. The pre-hospital care report or hospital and receiving facility in the
to all three of the restocking categories other documentation may be prepared service area to offer restocking, nor all
being protected by the safe harbor. and filed with the other party in hard ambulance providers to accept it.
Second, there are specific conditions copy or electronically. Second, the restocking must be
codified at § 1001.952(v)(3) for each of (c) No ties to referrals. In the light of conducted publicly. As detailed in the
the three categories being set forth the easing of the billing conditions, we regulations text, a restocking
(general restocking, fair market value are adding a safeguard similar to one arrangement will be considered to be
restocking, and Government mandated found in other safe harbors that conducted publicly if: (i) The
restocking). To qualify for safe harbor prohibits any restocking arrangement arrangement is memorialized in a
protection, a restocking arrangement that is conditioned on, or otherwise conspicuously posted writing that
must meet all of the conditions in the takes into account, the volume or value outlines the terms of the restocking
first part and all of the conditions of any referrals or other business program and copies are available
relevant to one category in the second generated between the parties for which publicly (a sample disclosure form is
part. payment may be made in whole or in included in the regulations); or (ii) The
part by a Federal health care program restocking program operates in
1. Conditions Applicable to All Safe accordance with a plan or protocol of
Harbor Restocking Arrangements (other than the delivery to the receiving
facility of the particular patient for general application promulgated by an
The four conditions applicable to all whom the drugs and medical supplies EMS council or comparable
safe harbor restocking arrangements are: are restocked). organization. For purposes of safe
(a) Appropriate billing of Federal (d) Compliance with all other harbor compliance, the writing need not
health care programs. The final rule applicable laws. We have retained the disclose confidential proprietary or
conditions safe harbor protection on proposed condition that the receiving financial information.
Federal health care program billing for facility and the ambulance provider (b) Fair market value restocking. This
restocked drugs and medical supplies category protects restocking
that is consistent with all applicable 6 Until June 2001, CMS was known as the Health arrangements where an ambulance
program payment and coverage rules Care Financing Administration. provider pays the receiving facility fair
62982 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations

market value, based on an arms-length opinion under section 1128D of the Act. As stated in the proposed rule, we
transaction, for restocked medical The procedures for applying for an express no view in these regulations as
supplies (including linens). For advisory opinion are set forth at 42 CFR to the appropriate Federal health care
consistency with the Prescription Drug part 1008 and on the OIG Web site at program payment or coverage policy for
Marketing Act,7 and some State laws, http://www.dhhs.gov/progorg/oig/ drugs and supplies used during
the final regulations do not include the advopn/index.htm. ambulance transports. Those
resale of drugs in this category. determinations are properly made by
III. Public Comments and Responses
(Restocking of drugs may be covered the relevant Federal program. In crafting
under other safe harbor categories.) This In response to our proposed safeguards to include in safe harbor
safe harbor category has two conditions: rulemaking, the OIG received a total of regulations, we considered the ways in
(i) The restocking must be at fair market 46 timely-filed comments from a cross- which a particular payment policy or
value, and (ii) payment arrangements section of ambulance providers, practice may affect the risk of patient or
must be commercially reasonable and hospitals, local and regional emergency program abuse.
made in advance. For reasons discussed medical boards, professional Comment: An ambulance provider
in greater detail in the responses to associations and other interested with a limited budget, and in an area
comments in section III. of this parties. Set forth below is a summary of with a low call volume, explained that
preamble, we are not including any the issues raised by the commenters and it could not maintain an Advanced Life
special accommodation related to the our responses to those specific Support level of service, because it was
Non-Profit Institutions Act, 15 U.S.C. concerns. unable to restock drugs from a local
13(c), exception to the Robinson-Patman hospital. According to the commenter,
A. General Comments
Act.8 their costs of purchasing expensive
(c) Government-mandated restocking. The vast majority of the public drugs in small quantities makes such
This final safe harbor protects comments supported promulgation of a drugs prohibitively expensive. In
restocking of drugs and supplies safe harbor for ambulance restocking, addition, the commenter observed that
undertaken in accordance with a State although many commenters took issue many small providers do not have the
or local statute, ordinance, regulations with one or more specific aspects of the facilities to maintain proper
or binding protocol that requires proposal. environmental conditions for larger
hospitals or receiving facilities in the Comment: Several commenters supplies of these types of drugs.
area subject to such requirement to believed that the OIG advisory opinions Response: Nothing in these
restock ambulances that deliver patients on ambulance restocking under the anti- regulations prohibits hospitals from
to the hospital with drugs or medical kickback statute, especially the first one restocking ambulances with drugs or
supplies that are used during the issued in 1997, have had a chilling prohibits ambulance providers from
transport of that patient. effect on ambulance restocking taking advantage of (i) volume discounts
arrangements. obtained by hospitals (to the extent
C. Safe Harbor Compliance Is Voluntary Response: While this comment otherwise permitted under Federal,
As with all safe harbors, compliance reflects a common perception in the State and local law) or (ii) any hospital
with these new safe harbors is industry, we have learned that a major facility for storing such drugs.
voluntary. While the vast majority of source of the reluctance of many Comment: Several commenters
ambulance restocking arrangements hospitals to enter into, or continue, indicated that in some parts of the
should fit in this new safe harbor, restocking programs is financial. In country, local and State governments
failure to fit does not mean that an other words, their willingness to have imposed mandatory requirements
arrangement is illegal under the anti- participate in restocking arrangements is relating to the restocking of ambulances
kickback statute. Rather, it simply directly related to their ability to be that deliver patients to hospitals. These
means that the legality of the reimbursed by Medicare or other commenters requested an additional
arrangement must be evaluated on a insurers for costly supplies and drugs category of safe harbor protection to
case-by-case basis. If no purpose of the provided without charge to local address arrangements controlled by
arrangement is to induce or reward the ambulance services. Many of these State or local government requirements.
generation of Federal health care drugs and supplies are increasingly Response: Nothing in the safe harbor
program business, there would be no becoming the standard of care for pre- regulations precludes State and local
violation of the statute. The obligation hospital services. In many cases, governments from regulating ambulance
of parties to comply with the anti- financially strapped hospitals are restocking. If the State or local law or
kickback statute pre-dates this safe unwilling to continue to subsidize the regulation is duly promulgated, and the
harbor rulemaking, and arrangements emergency medical system in the restocking arrangement is conducted in
that were lawful before the rulemaking absence of definitive assurance that they accordance with its mandate, the OIG
will continue to be lawful, whether or will be adequately reimbursed for drugs sees little risk under the anti-kickback
not they meet the safe harbor and supplies used during ambulance statute, which requires a showing of
requirements. The safe harbor does not transports. Some hospitals have used unlawful intent. Accordingly, we are
require the restructuring of any the unfavorable 1997 advisory opinion including an additional safe harbor
arrangements, although parties may as a pretext for justifying decisions to category for Government-mandated
choose to restructure to take advantage terminate, or decline to participate in, restocking, and have adapted language
of the safe harbor protection. Parties restocking arrangements in order to suggested by a major trade association.
who are unsure whether their existing blunt negative publicity and adverse We note that nothing in State or local
or proposed arrangements fit in a safe local community reaction. government laws or regulations
harbor or would be subject to OIG Comment: A number of commenters mandating ambulance restocking affects
sanctions may apply for an advisory misread the proposed regulations as an the reimbursement rules under
effort by the OIG to dictate Medicare Medicare or other Federal health care
7 Public Law 100–293, April 22, 1998, 102 Stat. payment policy. programs.
95. Response: The OIG does not set Comment: Some commenters
8 15 U.S.C. 13(a)–(f). Medicare payment and coverage policy. questioned whether ambulance
 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations 62983

restocking arrangements raise kickback patients transported to the receiving used on both emergency and non-
concerns at all. Specifically, with facility. It does, however, protect emergency transports, provided that the
respect to patient steering risks, one restocking in the form of a gift, i.e., ambulance that is restocked is used with
commenter explained that conscious restocking bestowed voluntarily and some degree of regularity to respond to
patients select their own destination, without compensation. emergency calls (i.e., calls from 9–1–1
and unconscious or unstable patients Comment: A large self-insured or another emergency access number).
are taken to the nearest facility. Other manufacturing company that maintains We do not intend to protect restocking
commenters expressed the view that its own private ambulance service to of ambulances that are not used with
instances of fraud in ambulance transport ill or injured employees to its some degree of regularity for
restocking arrangements would be preferred provider hospitals expressed emergencies. The fact that such
isolated. concern about the impact of the restocking is outside the scope of this
Response: We agree that fraud and proposed rule on its restocking rulemaking does not mean that such
abuse are likely to be uncommon in arrangement. According to the restocking is illegal. Whether
bona fide ambulance restocking commenter, the company negotiates arrangements for restocking of non-
arrangements. Nonetheless, in crafting preferred provider plans with hospitals emergency ambulances violate the anti-
safe harbors, we must be mindful not in accordance with which the hospitals kickback statute must be determined on
only of the benefits of the practices we restock the ambulances at the hospitals’ a case-by-case basis. Parties to such
seek to protect, but also the potential expense. No employees transported by arrangements may request an OIG
abuses. With ambulance restocking, the the company’s ambulance service are advisory opinion.
risks are low but not absent. covered by Medicare or Medicaid, but In order to create a bright line rule
Comment: Several commenters the company is concerned that the safe that is simple to apply, this expansion
requested clarification of the term harbor would affect restocking practices requires a measure for determining
‘‘emergency patient’’ as used in the at the hospital. when an ambulance is used for
proposed safe harbor. These Response: Because the company’s emergency calls with sufficient
commenters inquired whether this term ambulance service transports only regularity to qualify for replenishing
referred to the patient’s actual condition private pay patients, nothing in this rule under the safe harbor. The new
or to the manner by which the will directly affect the commenter’s regulations provide that an ambulance
ambulance is summoned. One restocking arrangements. Short of will satisfy this standard if the
commenter suggested that an emergency making clear in this preamble ambulance is used to respond to
patient be defined as a patient delivered discussion that the arrangement emergencies an average of three times
to a bona fide emergency department for described in the comment need not be per week measured over any reasonable
medical or traumatic care. modified to comply with these rules, we time period. This test does not mean
Response: Because we are expanding know of no way of preventing the that the ambulance must actually make
the safe harbor to cover non-emergency collateral impact anticipated by the three emergency runs every week.
transports, we do not believe any company in particular cases. Rather, over a reasonable period of time,
regulatory definition of the term the ambulance must be used an average
‘‘emergency patient ‘‘ is required. B. General Restocking of three times per week. Thus, for
However, we are adding a definition of example, if an ambulance is used 12
1. Non-Emergency Transports
‘‘emergency ambulance service’’ for times during a month, the test will be
purposes of identifying those Comment: A number of commenters met. Similarly, the test will be met if the
ambulances and ambulance providers urged the OIG to expand the proposed ambulance is used for emergency runs
that provide emergency transports and safe harbor to cover the restocking of 156 times in a year, even if there are
are thus eligible for safe harbor- drugs and medical supplies for non- some weeks in which the ambulance
protected restocking. For purposes of emergency transports. Given that receives no emergency calls. In essence,
these final regulations, we are defining ambulances that provide non-emergency the three runs test is designed to
an ‘‘emergency ambulance service’’ as transports are frequently on call for differentiate between ambulances that
one that results from a call through 9– emergencies, commenters noted that it are reasonably likely to be called out for
1–1 or other emergency access number would be contrary to the public health an emergency transport, and thus have
or a call from another acute care facility and safety goals of restocking to bar a compelling need to be restocked by a
unable to provide the higher level care restocking of an ambulance that arrives receiving facility after a non-emergency
required by the patient and available at at a hospital with a non-emergency run, and those that are not.
the receiving facility. patient. One commenter recommended Restocking arrangements for
Comment: Paragraph (v)(1) of the that we expand the safe harbor to apply ambulances or ambulance providers that
proposed regulations indicated that to all patients brought to the hospital or, only provide routine, non-emergency
remuneration ‘‘* * * does not include in the alternative, to all patients brought services, or that do not meet the three
any gift or transfer of drugs or medical to the emergency room. runs test described above, must be
supplies (including linens) * * *’’ A Response: In general, the scope of evaluated under the anti-kickback
commenter found the use of the word replenishing needed after a non- statute on a case-by-case basis. Finally,
‘‘gift’’ in this phrase confusing, since the emergency transport is likely to be nothing in these regulations will require
safe harbor protects what is essentially minimal, since relatively few drugs or restocking of non-emergency transports
an equal or equivalent exchange (i.e., supplies are typically administered to or the expansion of existing restocking
what was used is restocked) and not the non-emergency patients during a programs to cover non-emergency
gifting of additional goods. transport. Nevertheless, to further the transports.
Response: The commenter is correct goal of protecting restocking
that the safe harbor is not designed to arrangements that ensure that 2. Uniform Restocking
protect remuneration in the form of ambulances are stocked and ready to Comment: The proposed rule
additional goods or services beyond the respond to emergencies at all times, we conditioned safe harbor protection on a
restocking of drugs or medical supplies are expanding the safe harbor to cover receiving hospital’s provision of
(including linens) used on particular the restocking of drugs and supplies restocked drugs and supplies on an
62984 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations

equal basis to all ambulance providers hospital’s tax exempt status would be a posed no risk of double payments or
that deliver patients to the hospital. matter for the Internal Revenue Service.) ‘‘double dipping,’’ the conditions were
This condition was intended to insure Comment: A commenter expressed misconstrued by many commenters as
that the safe harbor did not protect concern that the ‘‘all ambulances’’ prohibiting legitimate billing practices
selective or targeted arrangements that condition in the proposed rule would under Medicare payment rules, or as
are not bona fide restocking for the not permit facilities to restock only barring all billing by both the hospitals
purpose of enhancing the delivery of small, low volume volunteer companies and the ambulance providers for the
EMS. Commenters argued that the safe without charge or at below cost. The restocked drugs and supplies. Some
harbor should protect receiving facilities commenter explained that, in their commenters wondered why a safe
that opt to restock only certain region, hospitals could not afford to harbor under the anti-kickback statute
categories of ambulance providers. For restock large, high volume commercial would need to take into account the
example, some wanted to restock only ambulance companies for free. question of billing at all. Commenters
volunteer ambulance providers or only Response: We have revised the safe recommended that the conditions on
ambulance providers that do not charge harbor to permit hospitals to restock billing in the proposed safe harbor be
patients or insurers. Tax-exempt volunteer companies only. To qualify removed or altered to provide only that
hospitals commented that requiring for safe harbor protection, the hospital any billing for restocked items must be
them to restock for-profit ambulance must restock all volunteer companies consistent with applicable Federal
providers could jeopardize their tax- uniformly. The safe harbor does not reimbursement provisions.
exempt status. Other commenters protect differential restocking based on A commenter explained that
wanted to offer different restocking the volume of transports, although ambulance providers in its State are not
programs to different types of offering free or discounted restocking allowed to purchase or bill for drugs.
ambulance providers, such as offering only to low volume companies would The drugs used in the field are
full restocking to non-charging not necessarily violate the anti-kickback purchased and owned by the hospitals
volunteer companies and more limited statute. and restocked locally through a system
Comment: Several commenters of State-approved protocols. The
restocking to companies that charge for
requested clarification as to whether all commenter believed the following
services.
ambulance providers and receiving language would better accomplish the
Response: Having reviewed the facilities in a service area would be safe harbor objectives, while still
comments, we have concluded that an required to participate in a restocking allowing one party to bill for drugs:
appropriate safe harbor can be arrangement in order for the ‘‘Under no circumstances may the
structured that would afford hospitals arrangement to qualify for safe harbor ambulance provider and the receiving
greater flexibility in crafting restocking protection. facility both bill for the actual drug or
programs, while preserving the Response: All ambulance providers in supply. Restocked drugs or supplies
principle that protected restocking a service area are not required to may only be billed to any Federal health
programs should not be unilateral participate in order for an arrangement care program by either the ambulance
arrangements for the benefit of selected to fit in the safe harbor. Under the provider or the receiving facility.’’
providers. (Of course, unilateral proposed rule, we did not intend to Several other commenters suggested
arrangements in remote service areas require all ambulance providers and similar language.
where there is only one receiving receiving facilities in a service area Response: We agree with the
facility or one ambulance service actually to participate in a restocking commenters that a safe harbor
provider are protected if they meet all arrangement in order for the regulation is not a tool for setting
the safe harbor conditions.) The final arrangement to qualify for safe harbor program payment and coverage policy
regulations protect restocking of: (i) All protection. We did intend to require that and doing so was not our intent. The
ambulance providers; (ii) all non-profit a protected restocking arrangement be billing conditions we proposed were
and governmental ambulance providers; open to the voluntary participation of designed to ensure that the safe harbor
or (iii) all ambulance providers that do all ambulance providers and receiving would not protect arrangements that
not charge patients or insurers (typically facilities in a service area. The final could result in Medicare paying twice
volunteers and municipal providers). A regulations—including the new public for the same drugs and supplies (i.e.,
hospital can offer restocking to more operation and disclosure condition— situations in which both the ambulance
than one category and can offer a generally reflect this intent. We have company and the hospital bill for the
different restocking program to each made exceptions for arrangements that same drug or supply), or in the
category that it restocks, so long as the limit the scope of restocking to the ambulance services provider receiving a
restocking is uniform within each particular subcategories of ambulance double benefit by billing Medicare for
category (i.e., non-charging providers providers described in the preceding drugs and supplies for which it obtained
may be offered a larger scope of response or that limit the scope to free replacements (double-dipping). In
restocked items than charging emergency transports. These limitations both circumstances, ambulance
providers). Limiting the scope of free are a reasonable means of constraining restocking arrangements have the
restocking to providers within these the costs of restocking and are not potential to increase costs to Medicare
categories represents a reasonable related to the actual or potential volume and other Federal health care programs.
distinction that will ensure that or value of referrals or other business In the interest of simplification, we are
arrangements qualifying for safe harbor generated between the parties that is adopting the commenters’ suggestion
protection will not be related to the payable by a Federal health care and modifying the billing conditions to
volume or value of referrals or other program. require that any billing of the Federal
business generated for the hospitals. health care programs comport with
This modification accommodates 3. Billing applicable payment and coverage rules
hospitals’ legitimate interests in Comment: Some commenters objected and regulations. Under applicable
containing the cost of their restocking to the proposed billing conditions. Medicare rules, a particular drug or
programs. (The issue of the effect, if any, While designed to limit safe harbor supply administered to a patient in a
of a restocking arrangement on a protection to those arrangements that pre-hospital setting will be covered
 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations 62985

under either the ambulance or the replaced it in the final regulations with multiple logs for multiple ambulance
outpatient hospital benefit, depending one that requires appropriate billing of providers for both supplies and
on the circumstances (e.g., whether the the Federal health care programs, as medications. Several commenters noted
ambulance transport is provided ‘‘under determined by CMS or other relevant that maintaining a record of every
arrangements’’ with the hospital); thus, payment agency. Restocking of restocked item in a large urban EMS
the ambulance provider and the hospital lifesaving drugs will be protected so system with a large volume of patients
may not both bill for the same drug or long as the safe harbor conditions are would create large amounts of
supply.9 met. None of the safe harbor conditions paperwork, consume limited resources,
Comment: Commenters raised a strikes us as imposing any particular and slow down the response time of
number of issues related to burden on restocking of lifesaving ambulances. Alternatively, some
reimbursement for restocked drugs or drugs. Given this, we see no need for the commenters suggested that parties could
supplies in particular circumstances. additional safe harbor suggested by the agree that either the hospital or the
For example, a commenter explained commenters. ambulance provider, but not both,
that several volunteer rescue squads in Comment: Several commenters should bear the responsibility for record
its region do not bill any Federal health observed that hospitals are unwilling to keeping.
care programs. The commenter believes absorb the cost of emergency Response: We have modified the
the proposed rule, as written, did not medications and supplies provided for documentation requirement to permit
consider how a hospital would be free or below fair market values. either party to maintain records of the
reimbursed for drugs and supplies used Response: Nothing in these restocked drugs and medical supplies,
by a volunteer service when an regulations requires hospitals to provide so long as the other party receives and
emergency patient is not admitted to the ambulances with free or below cost maintains a copy of the records. (In the
hospital. Some commenters questioned medications or supplies for emergency alternative, both the hospital and the
how ambulance providers would be services. Our interest in developing the
ambulance provider can maintain
reimbursed for new lifesaving drugs that safe harbor provisions is in insuring that
separate records of the restocking, in
could not have been included in the the anti-kickback statute does not chill
which case they need not file copies of
base rate payable to ambulance bona fide hospital restocking
their respective documentation with the
providers because the drugs did not arrangements by hospitals that wish to
other party.) Patient care reports, trip
exist, or were not used in a pre-hospital provide them. To the extent that
sheets, patient encounter reports, and
setting, when the base rates were set. reimbursement policies may adversely
the like (collectively being referred to as
Several commenters asked that we impact the delivery of EMS, those
pre-hospital care reports in the final
create a separate safe harbor to cover concerns should be addressed to CMS.
Comment: A commenter asked about regulations) are sufficient to meet this
restocking arrangements that deal with
the intended impact of these safe harbor requirement if they document the
specific drugs or devices that are
regulations on current and future restocked drugs and medical supplies
administered at the order of a physician
arrangements involving hospitals that and are filed with the receiving facility
at the receiving hospital or centralized
have negotiated prospective payment within a reasonable time, in hard copy
medical control. A commenter observed
arrangements that may incorporate or electronically. It is our understanding
that unless private ambulance
medication charges or EMS providers that the preparation of a pre-hospital
companies recover costs for expensive
that have negotiated fee structures that care report is the standard of care for
new medications, they will likely cease
providing emergency services, thus bundle such charges in one overall set transferring a patient to a receiving
shifting the entire responsibility onto of base-rate and mileage charges. The facility and is required by law in many
the local governments to provide commenter pointed out that CMS’s States. However, parties may decide
emergency medical care. negotiated rulemaking process for EMS individually or between themselves to
Response: The question of rate setting may alter these document the restocking using other
reimbursement in the circumstances arrangements as new rates, including kinds of paper or electronic records. In
described by the commenters is outside bundled charges, are phased in. the case of first responder restocking,
the scope of the OIG’s regulatory Response: These rules should have no we are requiring that the restocked
authority and should be directed to impact on the arrangements described drugs and medical supplies be
CMS or the relevant fiscal intermediary by the commenter. Nothing in these documented in the pre-hospital care
or carrier. We included a condition in rules alters or changes any billing report prepared by the transporting
the proposed safe harbor that would practice or arrangement. ambulance provider or in records
have denied safe harbor protection for maintained by the hospital and shared
4. Documentation with the transporting provider.
arrangements under which ambulance
providers billed separately (i.e., in Comment: Several commenters raised Comment: One commenter favored
addition to the base rate payment) for concerns about the documentation the proposed documentation
restocked drugs and supplies. The requirement in the proposed safe requirement in most situations, but
condition would not have barred the harbor. Commenters believed that suggested that this requirement might be
restocking of any particular drugs or requiring both the hospital and the rethought for linen exchanges and other
supplies. However, we have removed ambulance provider to document the routinely used items. In the
the former billing condition and restocking was unnecessary and commenter’s view, the requirement that
duplicative. The commenters generally hospitals and ambulance providers keep
9 Nothing in this preamble or these safe harbor suggested that existing patient care records pertaining to routine items, like
regulations should be construed as approving or reports (sometimes known as trip sheets linens, is unduly burdensome. The
establishing any particular billing or payment
practice. Questions regarding Medicare billing or patient encounter reports) already commenter argued that there is little
should be addressed to CMS or the appropriate maintained for other purposes, such as risk to the programs from a one-for-one
fiscal intermediary or carrier. Questions regarding ensuring continuity of care and billing, exchange of soiled linen for clean linen,
Medicaid billing should be addressed to the State should be sufficient. Commenters and that these exchanges are so
Medicaid agency. Questions regarding billing in
other Federal health care programs should be explained that in a busy emergency prevalent throughout the industry that
addressed to the relevant agency. room, it would be difficult to maintain record keeping would be required on
62986 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations

virtually every transport for many confidential proprietary or financial restocking arrangements be
ambulance providers. information is required. implemented with the participation of,
Response: We agree that providers We believe that virtually all existing and monitored by, a regional EMS
need not document the exchange of restocking arrangements are already council or comparable entity.
linens. If they are part of a restocking being conducted in accordance with While we had intended the oversight
arrangement, linens will be presumed to some form of written description of the entity condition to be broad and flexible
have been exchanged on a one-for-one arrangement. So long as the written in accordance with local conditions,
basis. The commenter did not identify, description is conspicuously posted and encompassing a broad array of entities
and it would not be feasible to publicly available and describes (i) The of various composition that were
enumerate in these regulations, other category, or categories, of ambulance representative of their service areas, the
supplies that may be so routinely used provider that qualifies for restocking; (ii) comments made clear that many in the
as to warrant a comparable the drugs or medical supplies included industry found the requirement
presumption. We think parties will be in the restocking program for each burdensome. Accordingly, we have
able to devise simple means of category; and (iii) the procedures for eliminated the oversight entity
documenting such routine restocking. documenting the restocking, no new condition, and in its place we have
Comment: One commenter requested paperwork is required to qualify for safe substituted three flexible safe harbor
guidance on the length of time providers harbor protection. conditions that we believe will provide
need to maintain records of restocked sufficiently comparable protection from
drugs and supplies. 6. Publicly-Conducted restocking
a safe harbor perspective. These include
Response: As indicated above, we Comment: Many commenters objected conditions that: (i) Require a publicly
have simplified the documentation to the ‘‘oversight entity’’ condition conducted restocking arrangement, (ii)
requirements. Under the final included in the proposed rule. Among require uniformity in the restocking
regulations, either the hospital or the other things, commenters argued that arrangement, and (iii) prohibit
ambulance provider may generate the mandating a regional oversight body restocking that takes into account the
necessary documentation, so long as the would unduly burden local volume or value of referrals (other than
other party receives and maintains a communities by requiring the creation the referral of the particular patient to
copy of it for 5 years, a period consistent of a significant infrastructure and layers whom the restocked drugs and medical
with the CMS’s hospital conditions of of bureaucracy. Some commenters supplies were furnished). These new
participation recordkeeping expressed concern that the proposed requirements should effectively exclude
requirements. rule was unclear as to the scope of the improperly selective or preferential
oversight entities’ responsibilities and arrangements from safe harbor
5. Writing Requirement
that such a requirement could lead to protection, while protecting those
Comment: Some commenters objected logistical problems for entities that arrangements that are truly intended to
to the proposed condition requiring the would have to develop, review and promote the safe, efficient and effective
restocking arrangement to be monitor contracts for all regional delivery of pre-hospital EMS.
memorialized in writing. The proposed providers. In some places, this would Comment: One commenter noted that
rule required that the ambulance entail oversight of more than 80 requiring restocking arrangements to be
restocking arrangement be memorialized receiving facilities. A hospital part of a comprehensive regional EMS
in writing, either (i) in a plan or protocol association expressed concern that the delivery plan was an important way to
of general application or (ii) in a written term ‘‘oversight’’ could imply a guarantee compliance on the part of
contract between the parties. Some regulatory, rather than strictly an providers.
commenters misread this condition as oversight, role. Some commenters Response: Participation in a
requiring providers to enter into written thought the proposed rule tasked comprehensive regional EMS delivery
contracts or agreements. In addition, we oversight entities with responsibility for system is an effective means of ensuring
have heard, anecdotally, that some monitoring contractual arrangements that ambulance restocking arrangements
industry consultants and counselors over which they might have little further the public interest in timely,
have been advising ambulance control. Some commenters noted that effective and efficient EMS and are not
providers and hospitals that the coordinated EMS councils do not exist improperly targeted at high referrers.
proposed rule required the creation of in all parts of the country, and, where Under the final rule, restocking
lengthy and detailed contracts. they do operate, it would often not be arrangements that are conducted in
Response: As is typical of most safe realistic to expect them to oversee the accordance with a protocol or plan
harbor regulations, the proposed rule restocking programs of many different established by an EMS council or
required that the protected ambulance hospitals and ambulance providers. comparable body will satisfy the public
restocking arrangement be memorialized Other commenters found the language operation and disclosure requirements
in writing. Under the proposal, the regarding the composition of the of the safe harbor and will likely satisfy
writing could be either a plan or oversight entity confusing and the other safe harbor requirements as
protocol of general application or a questioned whether particular parties, well.
written contract or agreement between such as labor unions, could be Comment: One commenter suggested
the parties. Under the final rule, no participants in the oversight entities. that, as an alternative to the oversight
particular form of writing is mandated. Response: We originally proposed entity condition, the OIG require
Indeed, the writing can take the form of protecting ambulance restocking hospitals (i) to have written policies,
a simple disclosure statement. A sample arrangements that were part of a approved by the governing board,
disclosure statement is being included comprehensive and coordinated EMS stating that their restocking program is
as an appendix to part 1001, subpart C delivery system to ensure that the safe open to all emergency ambulance
of the regulations. This sample is harbor would protect bona fide providers; and (ii) to develop an internal
intended for guidance purposes only. restocking arrangements and not system to confirm and verify this
Parties are free to use other formats or selective arrangements used to attract or arrangement.
to substitute written contracts or reward referrals. To effectuate this Response: We have essentially
protocols. No public disclosure of requirement, we proposed that adopted this commenter’s views in the
 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations 62987

final rule, although hospitals may limit ambulance transport providers above, questions regarding appropriate
the scope of their restocking programs to (independent of any hospital restocking) coverage and payment under Medicare
certain subcategories of ambulance was outside the scope of the proposed should be directed to CMS.
providers. We are not requiring rulemaking and is not addressed in Comment: A commenter expressed
governing board approval or the these final regulations. Such concern that the fair market value safe
development of internal compliance arrangements must be analyzed on a harbor would make it impossible for a
systems as part of this safe harbor case-by-case basis for compliance with hospital to provide the goods on a pro
regulation, but note that such practices the anti-kickback statute. Parties may bono basis to a small volunteer
may be prudent as part of the hospital’s seek an OIG advisory opinion about ambulance service. The commenter
overall anti-fraud and abuse compliance such arrangements.10 believed the proposed safe harbor
program and necessary to ensure proper required facilities either to charge
billing of the Federal health care C. Fair Market Value Restocking volunteer companies the same rates they
programs. Comment: Several commenters raised charge commercial or municipal
Comment: One commenter urged that concerns about the fair market value services or to charge no one.
the proposed safe harbor conditions, safe harbor’s application to the transfer Response: The commenter misread
especially the oversight entity of drugs. As these commenters the proposed safe harbor. Nothing in
condition, be eased for restocking explained, many hospitals participating these regulations precludes bona fide
arrangements in rural or isolated areas in EMS systems historically have charitable contributions by hospitals to
since ambulance providers in these ‘‘owned’’ the medication and supplies volunteer ambulance services. The fair
areas have, in effect, no choice of where used by the ambulances on emergency market value safe harbor at
to deliver a patient. transports without passing title to the § 1001.952(v)(3)(ii) does not require that
Response: We believe the final rule, as ambulance provider. In many cases, the a receiving facility charge all ambulance
modified, accommodates the special drugs are controlled substances under providers the same prices. Rather, the
circumstances of rural and isolated State laws and cannot be the property of safe harbor protects those arrangements
areas. As stated above, we are no longer a fire department or ambulance that are at fair market value.
requiring establishment of an oversight company. The commenters asserted that Arrangements that are not at fair market
entity. We believe the remaining safe if title does not pass to the ambulance value, such as free or deeply discounted
harbor conditions are reasonable and provider, then the hospital does not restocking to volunteer companies or
impose few, if any, additional burdens provide anything of value when it others, may be protected instead under
on providers. replaces the drugs on the ambulance. In the general restocking safe harbor at
addition, several commenters § 1001.952(v)(3)(i).
7. First responders Comment: One commenter was
questioned how prescription drugs
Comment: A commenter requested concerned that market power disparity
could be sold to ambulance providers by
safe harbor protection for restocking for among receiving facilities could affect
hospitals. One commenter stated that
first responders. The commenter the fair market value prices ambulance
the Prescription Drug Marketing Act of
described the following situation: companies pay, in turn creating an
1987 (21 U.S.C. 353(c)) specifically
A search and rescue company delivers a incentive for ambulance providers to
forbids hospitals from re-selling
patient to an ambulance that transports the take patients to larger hospital systems
prescription drugs, except under narrow
patient to the hospital. The search and rescue in a position to negotiate volume
circumstances.
company is restocked for supplies used on discounts for their drugs and supplies
the patient by the ambulance transport Response: We agree that the fair
and pass those discounts on to
provider, which, in turn, is restocked by the market value safe harbor category
ambulance companies. The commenter
hospital. The hospital charges the patient for should be restricted to the resale of
suggested that the OIG add provisions to
the restocked supplies. supplies and non-prescription drugs
guard against this risk.
Response: The final regulations (which are included as ‘‘supplies’’ Response: In applying the fair market
protect hospital restocking of first under Medicare’s ambulance payment value condition, fair market value
responders as described by the system). Nothing in these regulations should be measured in terms of prices
commenter, provided the safe harbor should be construed as permitting any the ambulance provider would pay for
conditions are satisfied. Specifically, the action in contravention of applicable like supplies if it purchased them in an
safe harbor accommodates those Federal, State, or local laws governing arms-length transaction from a seller
arrangements in which a 9–1–1 (or the purchase and administration of (other than a receiving facility) for
comparable emergency access number) controlled substances and prescription whom the ambulance provider is not a
first responder—including, but not medications. Whether the transfer of potential referral source. In many
limited to, a fire department, paramedic drugs that cannot be owned by an situations, fair market value will be a
service or search and rescue squad— ambulance provider, and that remain range of prices, not a single price.
administers drugs or supplies to the the property of the hospital when (Restocking at prices that are below fair
patient, but does not transport the placed on an ambulance in accordance market value is not protected by this
patient to the receiving facility. In these with State or local law, is remuneration safe harbor category, although the
circumstances, the transporting to the ambulance provider that restocking may be protected by one of
ambulance provider may restock the administers the drugs in the field turns, the other restocking safe harbor
first responder and then, in turn, be in the first instance, on whether the categories.) We recognize that there may
restocked by the hospital. Any billing by drugs are covered under Medicare’s be a potential inducement when the fair
the hospital, the ambulance provider, or ambulance benefit or under the market value charged is at the low end
the first responder would be subject to outpatient hospital benefit in the of the range of fair market value prices.
the applicable Federal health care particular circumstances. As noted However, nothing in the anti-kickback
program payment and coverage rules 10 The procedures for applying for an advisory
statute prohibits legitimate price
and regulations. This safe harbor only opinion are set forth at 42 CFR part 1008 and on competition.
addresses restocking by hospitals. the OIG Web site at http://www.dhhs.gov/progorg/ Comment: Some commenters
Restocking of first responders by oig/advopn/index.htm. questioned the reference in the
62988 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations

proposed fair market value safe harbor needy patients to health care services; 1980, and SBREFA of 1996, which
to the Non-Profit Institutions Act (2) increase the quality of health care amended the RFA, we are required to
(NPIA), 15 U.S.C. 13(c). The proposed services for needy patients; (3) have determine if this rule will have a
safe harbor would have protected little, or no effect on, the cost of Federal significant economic effect on a
certain sales of supplies at cost by non- health care programs; (4) have little, or substantial number of small entities
profit hospitals to non-profit ambulance no effect on, competition; and (5) and, if so, to identify regulatory options
providers if the sales were designed to increase, or have no effect on, the that could lessen the impact. For
take advantage of the NPIA exception to quantity of services provided in purposes of the RFA, small entities
the Robinson-Patman Act.11 One underserved areas. We further believe include small businesses, nonprofit
commenter indicated that the proposed that this safe harbor contains safeguards organizations, and Government
language did not appear to address the that limit the potential for agencies. Most hospitals (and most other
situation of a non-profit hospital overutilization and assure that patients providers) are small entities, either by
reselling supplies to a ‘‘for profit’’ retain their freedom of choice of service nonprofit status or by having revenues
ambulance provider. Another providers. of $5 million to $25 million or less
commenter asserted that absent annually. For purposes of the RFA, most
V. Regulatory Impact Statement
definitive guidance from the Federal ambulance companies are considered to
Trade Commission (FTC) that reselling We have examined the impacts of this be small entities. Individuals and States
supplies to an ambulance provider rule as required by Executive Order are not included in the definition of a
would fit within 15 U.S.C. 13(c), 12866, the Unfunded Mandates Act of small entity. In addition, section 1102(b)
hospitals would be wary about 1995, and the Regulatory Flexibility Act of the Social Security Act requires us to
complying with the safe harbor (RFA) (Public Law 96–354). Executive prepare a regulatory impact analysis if
condition. Order 12866 directs agencies to assess a rule may have a significant impact on
Response: We have reconsidered the all costs and benefits of available the operations of a substantial number
need for the language referencing the regulatory alternatives and, when of small rural providers. This analysis
NPIA in the fair market value safe regulation is necessary, to select must conform to the provisions of
harbor. Given the substantial easing of regulatory approaches that maximize section 603 of the RFA.
the conditions applicable to the general net benefits (including potential
While these safe harbor provisions
restocking safe harbor category, we economic, environmental, public health
may have an impact on small entities
believe that the final regulations provide and safety effects, distributive impacts
and equity). A regulatory impact and rural providers, we believe that the
adequate and easily achievable
analysis (RIA) must be prepared for aggregate economic impact of this
protection for all legitimate restocking,
major rules with economically rulemaking will be minimal, since it is
whether at fair market value prices,
significant effects ($100 million or more the nature of the conduct and not the
below fair market value prices or
in any given year). Since this regulation size of the entity that will result in a
without charge. To the extent it may be
will not have a significant effect on violation of the anti-kickback statute.
unclear whether a particular resale of
program expenditures and as there is no Since the vast majority of individuals
supplies is at fair market value, we do
additional substantive costs to and entities potentially affected by these
not believe it will pose any undue
implement the resulting provision, we regulations do not engage in prohibited
burden on non-profit hospitals to seek
do not consider this to be a major rule. arrangements, schemes or practices in
shelter under the general restocking safe
harbor category, which offers protection The provisions in this rule are designed violation of the law, we are not
to restocking without regard to what to permit individuals and entities to preparing analyses for either the RFA or
price, if any, the hospital charges for the engage freely in competitive business section 1102(b) of the Act because we
restocked drugs or supplies. The practices and arrangements; health care have determined, and we certify, that
question whether particular restocking providers and others may voluntarily this rule does not have a significant
arrangements undertaken by non-profit seek to comply with these safe harbor impact on a substantial number of small
hospitals run afoul of the Robinson- provisions so that they have the entities, or a significant impact on the
Patman Act or qualify for the NPIA assurance that their that business operations of a substantial number of
exception is an FTC concern outside the practices are not subject to any small rural providers.
scope of our regulatory authority. enforcement actions under the anti- The Office of Management and Budget
kickback statute. has reviewed this rule in accordance
IV. Meeting the Criteria for Establishing Additionally, in accordance with the with Executive Order 12866.
New Safe Harbors Unfunded Mandates Reform Act of Paperwork Reduction Act
Section 205 of the Health Insurance 1995, we believe that there are no
Portability and Accountability Act, significant costs associated with these In accordance with section
Public Law 104–191, established certain safe harbor guidelines that would 3506(c)(2)(A) of the Paperwork
criteria that the Secretary may consider impose any mandates on State, local or Reduction Act (PRA) of 1995, we are
when modifying or establishing safe tribal governments, or the private sector required to solicit public comments, and
harbors to the anti-kickback statute. We that will result in an expenditure of receive final OMB approval, on any
have considered the criteria establishing $110 million or more, adjusted for information collection requirements set
in our notice of intent to develop inflation, in any given year. Further, in forth in rulemaking. While compliance
regulations (61 FR 69061; December 31, reviewing this rule under the threshold with the provisions in this safe harbor
1996) in developing this final rule, and criteria of Executive Order 13132, rule would be voluntary,
we believe, for the reasons described Federalism, we have determined that §§ 1001.952(v)(2) and (v)(3) include
above, that these final safe harbor this rule will not significantly affect the information collection activities that
regulations for certain ambulance rights, roles and responsibilities of would require approval by OMB. As
restocking arrangements is likely to: (1) States, and that a full analysis under such, we are required to solicit public
Increase, or have no effect on, access for these Acts are not necessary. comments under section 3506(c)(2)(A)
Further, in accordance with the of the PRA on these information
11 15 U.S.C. 13(a)–(f). Regulatory Flexibility Act (RFA) of collection activities.
 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations 62989

Title: Ambulance Replenishing Safe With respect to the disclosure (3) ways to enhance the quality, utility
Harbor Under the Anti-Kickback requirement, a written disclosure notice and clarity of the information collected;
Statute. can take any reasonable form, and we and (4) ways to minimize the burden of
Summary of the collection of anticipate that most parties engaged in the collection of information on parties,
information: While complying with safe ambulance restocking arrangements will including through the use of automated
harbor provisions under the anti- have pre-existing materials that can be collection techniques or other forms of
kickback statute is voluntary, to qualify used for this purpose. For those who information technology. As part of the
an ambulance restocking arrangement need or choose to produce a written OMB approval for the collection of
for safe harbor protection, parties must disclosure notice, we have provided a information contained in this rule, we
satisfy the following recordkeeping and short, sample disclosure form in these are soliciting public comments, thereby
disclosure requirements set forth in the regulations. EMS Council plans and initiating the normal PRA clearance.
regulations: protocols are likely to be existing Comments on these information
• The ambulance provider or the documents used to promote collection activities should be sent to
receiving facility must maintain for five comprehensive and coordinated the following address within 60 days
years records documenting the emergency medical services in local following the Federal Register
replenished drugs and medical supplies, communities. These regulations do not publication of this final rule:
provide copies of such records to the require any drafting of new plans or OIG Desk Officer, Office of
other party within a reasonable period protocols. Nothing in these regulations Management and Budget, Room 10235,
of time (unless the other party is requires parties to draft or enter into New Executive Office Building, 725
separately maintaining records), and contracts or written agreements. We 17th Street NW., Washington, DC 20053,
make the records available to the expect that these regulations will result FAX: (202) 395–6974.
Secretary promptly upon request. These in few public requests for copies of
List of Subjects in 42 CFR Part 1001
records may be in the form of pre- disclosure notices or plans or protocols.
Brief description of the need for, and Administrative practice and
hospital patient care reports already in
proposed use of, the information. The procedure, Fraud, Grant programs—
use for other purposes. See
documentation and disclosure health, Health facilities, Health
§ 1001.952(v)(2)(ii)(A).
requirements set forth in these safe professions, Maternal and child health,
• Except for government-mandated or
harbor regulations are necessary (i) to Medicaid, Medicare.
fair market value restocking, protected
ensure that protected ambulance Accordingly, 42 CFR part 1001 is
restocking arrangements must be
restocking arrangements pose a minimal amended as set forth below:
conducted in an open and public
risk of fraud or abuse and (ii) to enable
manner. This condition may be PART 1001—[AMENDED]
parties to demonstrate—and the
achieved by posting a written disclosure
Government to verify where necessary— 1. The authority citation for part 1001
notice at the receiving facility (with whether all safe harbor conditions are
copies available to the public upon continues to read as follows:
met.
request) or by operating in accordance Description of likely respondents and Authority: 42 U.S.C. 1302, 1320a-7, 1320a-
with a plan or protocol of general proposed frequency of response to the 7b, 1395u(h), 1395u(j), 1395u(k), 1395y(d),
application promulgated by an EMS information collection request. The 1395y(e), 1395cc(b)(2)(D), (E) and (F), and
Council or comparable entity (with 1395hh; and sec. 2455, Pub. L. 103–355, 108
respondents for the collection of Stat. 3327 (31 U.S.C. 6101 note).
copies available to the public upon information described in these
request). See § 1001.952(v)(3)(i)(B). regulations are hospitals, other receiving 2. Section 1001.952 is amended by
We have attempted to reduce any facilities, and ambulance providers that republishing the text and by adding a
paperwork burden associated with participate in ambulance restocking new paragraph (v) to read as follows:
compliance with these safe harbor arrangements and that want safe harbor
regulations by permitting parties to § 1001.952 Exceptions.
protection under the anti-kickback
utilize documentation produced or statute. We believe that a significant The following payment practices shall
developed for other business purposes number of hospitals, receiving facilities, not be treated as a criminal offense
wherever possible, and we believe that and ambulance providers are engaged under section 1128B of the Act and
most, if not all, of these recordkeeping in, or desire to engage in, ambulance shall not serve as the basis for an
requirements will be satisfied using restocking arrangements and that many exclusion:
such documentation. With respect to will want safe harbor protection. We do * * * * *
keeping and maintaining documentation not anticipate any response that exceeds (v) Ambulance replenishing. (1) As
of the restocking, most pre-hospital care routine business practice. used in section 1128B of the Act,
reports (sometimes known as trip sheets Estimated burden that shall result ‘‘remuneration’’ does not include any
or patient encounter reports) already from the collection of information. We gift or transfer of drugs or medical
maintained for other purposes, such as are assigning only one burden hour to supplies (including linens) by a hospital
ensuring continuity of care and billing, this collection, because we believe that or other receiving facility to an
will suffice. It is our understanding that compliance can be achieved with ambulance provider for the purpose of
the preparation of a pre-hospital care existing documents produced in the replenishing comparable drugs or
reports is the standard of care for course of routine business practice. medical supplies (including linens)
transferring a patient to a receiving In accordance with the PRA used by the ambulance provider (or a
facility and is required by law in many requirements, we are inviting comments first responder) in connection with the
States. However, parties may decide on (1) whether the collection of transport of a patient by ambulance to
individually or between themselves to information is necessary for the proper the hospital or other receiving facility if
document restocking using other kinds performance of the functions of the all of the standards in paragraph (v)(2)
of paper or electronic records. The five agency, including whether the of this section are satisfied and all of the
year record retention period is information will have practical utility; applicable standards in either paragraph
consistent with CMS’s hospital (2) the accuracy of the estimate of the (v)(3)(i), (v)(3)(ii) or (v)(3)(iii) of this
conditions of participation. burden of the collection of information; section are satisfied. However, to qualify
62990 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations

under paragraph (v), the ambulance that of this section, provided that it facility may offer replenishing to one or
is replenished must be used to provide documents the specific type and amount more of the categories—
emergency ambulance services an of medical supplies and drugs used on (1) All ambulance providers that do
average of three times per week, as the patient and subsequently not bill any patient or insurer (including
measured over a reasonable period of replenished. Federal health care programs) for
time. Drugs and medical supplies (C) For purposes of paragraph ambulance services, regardless of the
(including linens) initially used by a (v)(2)(ii) of this section, documentation payor or the patient’s ability to pay (i.e.,
first responder and replenished at the may be maintained and, if required, ambulance providers, such as volunteer
scene of the illness or injury by the filed with the other party in hard copy companies, that provide ambulance
ambulance provider that transports the or electronically. If a replenishing services without charge to any person or
patient to the hospital or other receiving arrangement includes linens, entity);
facility will be deemed to have been documentation need not be maintained (2) All not-for-profit and State or local
used by the ambulance provider. for their exchange. If documentation is government ambulance service
(2) To qualify under paragraph (v) of not maintained for the exchange of providers (including, but not limited to,
this section, the ambulance replenishing linens, the receiving facility will be municipal and volunteer ambulance
arrangement must satisfy all of the presumed to have provided an exchange services providers); or
following four conditions— of comparable clean linens for soiled (3) All ambulance service providers.
(i)(A) Under no circumstances may linens for each ambulance transport of (B)(1) The replenishing arrangement
the ambulance provider (or first a patient to the receiving facility. must be conducted in an open and
responder) and the receiving facility Records required under paragraph public manner. A replenishing
both bill for the same replenished drug (v)(2)(ii)(A) of this section must be arrangement will be considered to be
or supply. Replenished drugs or maintained for 5 years. conducted in an open and public
supplies may only be billed (including (iii) The replenishing arrangement manner if one of the following two
claiming bad debt) to a Federal health must not take into account the volume conditions are satisfied:
care program by either the ambulance or value of any referrals or business (i) A written disclosure of the
provider (or first responder) or the otherwise generated between the parties replenishing program is posted
receiving facility. for which payment may be made in conspicuously in the receiving facility’s
(B) All billing or claims submission whole or in part under any Federal emergency room or other location where
by the receiving facility, ambulance health care program (other than the the ambulance providers deliver
provider or first responder for referral of the particular patient to patients and copies are made available
replenished drugs and medical supplies whom the replenished drugs and upon request to ambulance providers,
used in connection with the transport of medical supplies were furnished). Government representatives, and
a Federal health care program (iv) The receiving facility and the members of the public (subject to
beneficiary must comply with all ambulance provider otherwise comply reasonable photocopying charges). The
applicable Federal health care program with all Federal, State, and local laws written disclosure can take any
payment and coverage rules and regulating ambulance services, reasonable form and should include the
regulations. including, but not limited to, emergency
(C) Compliance with paragraph category of ambulance service providers
services, and the provision of drugs and that qualifies for replenishment; the
(v)(2)(i)(B) of this section will be
medical supplies, including, but not drugs or medical supplies included in
determined separately for the receiving
limited to, laws relating to the handling the replenishment program; and the
facility and the ambulance provider
of controlled substances. procedures for documenting the
(and first responder, if any), so long as
the receiving facility, ambulance (3) To qualify under paragraph (v) of replenishment. A sample disclosure
provider (or first responder) refrains this section, the arrangement must form is included in Appendix A to
from doing anything that would impede satisfy all of the standards in one of the subpart C of this part for illustrative
the other party or parties from meeting following three categories: purposes only. No written contracts
their obligations under paragraph (i) General replenishing. (A) The between the parties are required for
(v)(2)(i)(B). receiving facility must replenish purposes of paragraph (v)(3)(i)(B)(1)(i) of
(ii) (A) The receiving facility or medical supplies or drugs on an equal this section; or
ambulance provider, or both, must basis for all ambulance providers that (ii) The replenishment arrangement
(1) Maintain records of the bring patients to the receiving facility in operates in accordance with a plan or
replenished drugs and medical supplies any one of the categories described in protocol of general application
and the patient transport to which the paragraph (v)(3)(i)(A)(1), (2), or (3) of promulgated by an Emergency Medical
replenished drugs and medical supplies this section. A receiving facility may Services (EMS) Council or comparable
related; offer replenishing to one or more of the entity, agency or organization, provided
(2) Provide a copy of such records to categories and may offer different a copy of the plan or protocol is
the other party within a reasonable time replenishing arrangements to different available upon request to ambulance
(unless the other party is separately categories, so long as the replenishing is providers, Government representatives
maintaining records of the replenished conducted uniformly within each and members of the public (subject to
drugs and medical supplies); and category. For example, a receiving reasonable photocopying charges).
(3) Make those records available to the facility may offer to replenish a broader While parties are encouraged to
Secretary promptly upon request. array of drugs or supplies for ambulance participate in collaborative,
(B) A pre-hospital care report providers that do no not charge for their comprehensive, community-wide EMS
(including, but not limited to, a trip services than for ambulance providers systems to improve the delivery of EMS
sheet, patient care report or patient that charge for their services. Within in their local communities, nothing in
encounter report) prepared by the each category, the receiving facility may this paragraph shall be construed as
ambulance provider and filed with the limit its replenishing arrangements to requiring the involvement of such
receiving facility will meet the the replenishing of emergency organizations or the development or
requirements of paragraph (v)(2)(ii)(A) ambulance transports only. A receiving implementation of ambulance
 Federal Register / Vol. 66, No. 233 / Tuesday, December 4, 2001 / Rules and Regulations 62991

replenishment plans or protocols by 3. A new appendix A is added to /s/ lllllllllllllllllll

such organizations. subpart C to read as follows: Appropriate officer or official
(2) Nothing in this paragraph (v)(3)(i) Dated: July 12, 2001.
Appendix A to Subpart C of Part 1001
shall be construed as requiring Michael F. Mangano,
disclosure of confidential proprietary or The following is a sample written
Acting Inspector General.
financial information related to the disclosure for purposes of satisfying the
requirements of § 1001.952(v)(3)(i)(B)(1)(i) of Approved:
replenishing arrangement (including,
this part. This form is for illustrative Tommy G. Thompson,
but not limited to, information about purposes only; parties may, but are not Secretary.

cost, pricing or the volume of required to, adapt this sample written
replenished drugs or supplies) to [FR Doc. 01–29875 Filed 12–3–01; 8:45 am]

disclosure form.
ambulance providers or members of the BILLING CODE 4150–04–P
Notice of Ambulance Restocking Program
general public.
(ii) Fair market value replenishing. Hospital X offers the following ambulance
restocking program: FEDERAL COMMUNICATIONS
(A) Except as otherwise provided in
1. We will restock all ambulance providers COMMISSION
paragraph (v)(3)(ii)(B) of this section, (other than ambulance providers that do not
the ambulance provider must pay the provide emergency services) that bring
receiving facility fair market value, 47 CFR Parts 1 and 76
patients to Hospital X [or to a subpart of
based on an arms-length transaction, for Hospital X, such as the emergency room] in [FCC 01–345]
replenished medical supplies; and the following category or categories: [insert
(B) If payment is not made at the same description of category of ambulances to be Implementation of Interim Filing
time as the replenishing of the medical restocked, i.e., all ambulance providers, all Procedures for Certain Commission
ambulance providers that do not charge Filings
supplies, the receiving facility and the
patients or insurers for their services, or all
ambulance provider must make nonprofit and Government ambulance AGENCY: Federal Communications
commercially reasonable payment providers]. [Optional: We only offer Commission.
arrangements in advance. restocking of emergency transports.]
(iii) Government mandated 2. The restocking will include the ACTION: Temporary procedural
replenishing. The replenishing following drugs and medical supplies, and requirements.
arrangement is undertaken in linens, used for patient prior to delivery of
the patient to Hospital X: [insert description SUMMARY: In this document, the
accordance with a State or local statute, Commission amends its procedures on
of drugs and medical supplies, and linens to
ordinance, regulation or binding be restocked]. an emergency, interim basis to require
protocol that requires hospitals or 3. The ambulance providers [will/will not] the filing or refiling of certain
receiving facilities in the area subject to be required to pay for the restocked drugs documents electronically (i.e., by
such requirement to replenish and medical supplies, and linens. facsimile or e-mail), by overnight
ambulances that deliver patients to the 4. The restocked drugs and medical delivery, or by hand delivery to the
hospital with drugs or medical supplies supplies, and linens, must be documented as
follows: [insert description consistent with
Commission’s Capitol Heights,
(including linens) that are used during Maryland location. Due to recent events
the transport of that patient. the documentation requirements described in
§ 1001.952(v). By way of example only, in Washington, DC, resulting in the
(4) For purposes of paragraph (v) of documentation may be by a patient care unforeseeable and understandable
this section— report filed with the receiving facility within disruption of regular mail delivery and
(i) A receiving facility is a hospital or 24 hours of delivery of the patient that of the processing of other deliveries, the
other facility that provides emergency records the name of the patient, the date of Commission is unable to confirm receipt
medical services. the transport, and the relevant drugs and of certain Commission filings that may
(ii) An ambulance provider is a medical supplies.]
5. This restocking program does not apply
affect processing of applications and
provider or supplier of ambulance other urgent agency business. The
transport services that provides to the restocking of ambulances that only
provide non-emergency services or to the intended effect of this action is to
emergency ambulance services. The general stocking of an ambulance provider’s continue the timely processing of
term does not include a provider of inventory. applications and other urgent agency
ambulance transport services that 6. To ensure that Hospital X does not bill business.
provides only non-emergency transport any Federal health care program for
services. restocked drugs or supplies for which a EFFECTIVE DATE: December 4, 2001.
(iii) A first responder includes, but is participating ambulance provider bills or is FOR FURTHER INFORMATION CONTACT:
not limited to, a fire department, eligible to bill, all participating ambulance Magalie Roman Salas at 202–418–0303.
paramedic service or search and rescue providers must notify Hospital X if they
SUPPLEMENTARY INFORMATION: This
intend to submit claims for restocked drugs
squad that responds to an emergency or supplies to any Federal health care Order, adopted November 21, 2001, and
call (through 9–1–1 or other emergency program. Participating ambulance providers released November 29, 2001, will be
access number) and treats the patient, must agree to work with Hospital X to ensure available for public inspection during
but does not transport the patient to the that only one party bills for a particular regular business hours at the FCC
hospital or other receiving facility. 47 restocked drug or supply. Reference Information Center, Room
(iv) An emergency ambulance service 7. All participants in this ambulance CY–A257, at the Federal
is a transport by ambulance initiated as restocking arrangement that bill Federal Communications Commission, 445 12th
a result of a call through 9–1–1 or other health care programs for restocked drugs or
St., SW., Washington, DC 20554. The
supplies must comply with all applicable
emergency access number or a call from Federal program billing and claims filing complete text is available through the
another acute care facility unable to rules and regulations. Commission’s duplicating contractor:
provide the higher level care required 8. For further information about our Qualex International, Portals II, 445
by the patient and available at the restocking program or to obtain a copy of this 12th Street, SW., Room CY–B402,
receiving facility. notice, please contact [name] at [telephone Washington, DC 20554, telephone 202–
(v) Medical supplies includes linens, number]. 863–2893, facsimile 202–863–2898, or
unless otherwise provided. Dated: lllllllllllllllll via e-mail at qualexint@aol.com.