[Federal Register Volume 65, Number 99 (Monday, May 22, 2000)]
[Proposed Rules]
[Pages 32060-32065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12697]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1001

RIN 0991-AB05


Medicare and State Health Care Programs: Fraud and Abuse; 
Ambulance Restocking Safe Harbor Under the Anti-Kickback Statute

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would set forth a new safe harbor, as 
authorized under section 14 of the Medicare and Medicaid Patient and 
Program Protection Act of 1987, to protect certain arrangements 
involving hospitals that replenish drugs and medical supplies used by 
ambulance providers when

[[Page 32061]]

transporting emergency patients to the hospitals.

DATES: To assure consideration, public comments must be delivered to 
the address provided below by no later than 5 p.m. on July 21, 2000.

ADDRESSES: Please mail or deliver your written comments to the 
following address: Department of Health and Human Services, Office of 
Inspector General, 330 Independence Avenue, SW, Room 5246, Attention: 
OIG-62-P, Washington, DC 20201.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file OIG-62-P.

FOR FURTHER INFORMATION CONTACT: Vicki L. Robinson, Senior Counsel, 
Office of Counsel to the Inspector General, (202) 619-0335.

SUPPLEMENTARY INFORMATION:  

I. Background

    Section 1128B(b) of the Social Security Act (the Act) (42 U.S.C. 
1320a-7b(b)) provides criminal penalties for individuals or entities 
that knowingly and willfully offer, pay, solicit or receive 
remuneration in order to induce the referral of business reimbursable 
under the Federal or State health care programs. The offense is 
classified as a felony and is punishable by fines of up to $25,000 and 
imprisonment for up to five years. Violations of the anti-kickback 
statute may also result in the imposition of a civil money penalty 
(CMP) under section 1128A(a)(7) of the Act (42 U.S.C. 1320a-7a(a)(7)) 
or program exclusion under section 1128(b)(7) of the Act (42 U.S.C. 
1320a-7(b)(7)).
    The types of remuneration covered specifically include kickbacks, 
bribes and rebates, whether made directly or indirectly, overtly or 
covertly, in cash or in kind. In addition, prohibited conduct includes 
not only the payment of remuneration intended to induce referrals of 
patients, but also the payment of remuneration intended to induce the 
purchasing, leasing or ordering of any good, facility, service or item 
reimbursable by any Federal or State health care program.

Establishing the Original Safe Harbors

    Since the statute on its face is so broad, concern had been 
expressed that some relatively innocuous commercial arrangements were 
technically covered by the statute and therefore were subject to 
criminal prosecution. As a response to the above concern, section 14 of 
the Medicare and Medicaid Patient and Program Protection Act of 1987, 
Public Law 100-93, specifically required the development and 
promulgation of regulations, the so-called ``safe harbor'' provisions, 
designed to specify various payment and business practices which, 
although potentially capable of inducing referrals of business under 
the Federal and State health care programs, would not be treated as 
criminal offenses under the anti-kickback statute. Beginning in July 
29, 1991, we have published in the Federal Register a series of final 
regulations establishing ``safe harbors'' in various areas.\1\ These 
OIG safe harbor provisions have been developed to limit the reach of 
the statute somewhat by permitting certain non-abusive arrangements, 
while encouraging beneficial and innocuous arrangements.
---------------------------------------------------------------------------

    \1\ 56 FR 35952 (July 29, 1991); 61 FR 2122 (January 25, 1996); 
64 FR 63518 (November 19, 1999); and 64 FR 63504 (November 19, 
1999).
---------------------------------------------------------------------------

    Health care providers and others may voluntarily seek to comply 
with these provisions so that they have the assurance that their 
business practices are not subject to any enforcement action under the 
anti-kickback statute, the CMP provision for anti-kickback violations 
or program exclusion authority related to kickbacks. In giving the 
Department the authority to protect certain arrangements and payment 
practices under the anti-kickback statute, Congress intended the safe 
harbor regulations to be evolving rules that would be updated 
periodically to reflect changing business practices and technologies in 
the health care industry.

OIG Advisory Opinions on Restocking Ambulance Supplies

    The OIG has issued four advisory opinions regarding arrangements 
between hospitals and other facilities providing emergency medical 
supplies, i.e., ``receiving facilities'' and ambulance companies, under 
which the receiving facilities replenish ambulances with drugs and 
medical supplies used during the transport of emergency patients to the 
receiving facilities. In many of these arrangements, the drugs and 
supplies are replenished without charge to the ambulance company.
    In OIG Advisory Opinion 97-6 (October 8, 1997), we responded to a 
request for an advisory opinion involving an ambulance replenishing 
arrangement that presented a specific set of facts clearly implicating 
the anti-kickback statute. The arrangement, as presented in the facts 
certified by the requesting party, contained no appropriate safeguards 
against fraud and abuse of the Federal health care programs and their 
beneficiaries. Accordingly, we concluded that the arrangement 
potentially violated the anti-kickback statute.
    Subsequently, in 1998, we received several additional advisory 
opinion requests that involved ambulance replenishing arrangements, and 
issued three additional advisory opinions approving ambulance 
replenishing arrangements.\2\ The facts of those three arrangements 
differed significantly from the facts that led to OIG Advisory Opinion 
97-6. Specifically, the latter three opinions involved ambulance 
replenishing programs conducted in accordance with comprehensive, 
coordinated emergency medical delivery systems involving all of an 
area's ambulance providers and hospitals (as well as other components 
of the emergency medical system, such as physicians and local 
government officials). The OIG approved the three arrangements (with 
the limited exception of a portion of one of the three programs), 
persuaded that the arrangements posed little risk of Federal health 
care program fraud or abuse and that the arrangements promoted 
comprehensive and coordinated efforts to improve emergency medical 
care.
---------------------------------------------------------------------------

    \2\ OIG Advisory opinion 98-7 (June 11, 1998); OIG Advisory 
Opinion 98-13 (September 30, 1998); and OIG Advisory Opinion 98-14 
(October 28, 1998).
---------------------------------------------------------------------------

    Since the release of OIG Advisory Opinion 98-14 in October 1998, 
the OIG has received no further advisory opinion requests on the topic 
of ambulance replenishing and few informal follow-up inquiries 
regarding these arrangements.

II. Provisions of the Proposed Rule

    The OIG believes that, in general, the ambulance and hospital 
industries understand the distinction between the first unfavorable 
advisory opinion and the subsequent three favorable opinions and are 
generally able to assess and structure arrangements accordingly. 
However, the OIG is aware of anecdotal reports that some receiving 
facilities are curbing or eliminating ambulance replenishing programs 
in order to cut emergency room costs, while other receiving facilities 
feel pressured to participate in ambulance replenishment arrangements. 
Some receiving facilities would like to implement or continue operating 
replenishing programs, but are concerned about possible liability under 
the anti-kickback statute.
    We continue to believe that properly structured replenishing 
arrangements serve a significant public interest by providing a means 
of ensuring that ambulances are fully stocked with current medications, 
sanitary linens and

[[Page 32062]]

appropriate supplies, and that those supplies are compatible with 
equipment used in local emergency rooms so as to expedite the transfer 
of critically ill or injured patients to emergency room systems. Such 
replenishing arrangements are consistent with Federal policy 
established over the past 25 years.\3\
---------------------------------------------------------------------------

    \3\ See, e.g., Emergency Medical Services Systems Act of 1973 
(EMSSA), Public Law 93-154 (providing Federal funding for the 
development of regional Emergency Medical Services (EMS) systems at 
the State, regional, and local levels, and defining ``emergency 
medical services system'' as ``a system which provides for the 
arrangement of personnel, facilities and equipment for the effective 
and coordinated delivery in an appropriate geographical area of 
health care services under emergency conditions * * * and which is 
administered by a public or nonprofit private entity which has the 
authority and the resources to provide effective administration of 
the system.''); Highway Safety Act of 1966, Public Law 89-594 
(establishing an EMS program in the Department of Transportation); 
Emergency Medical Services for Children Program, under the Public 
Health Act, Public Law 98-555 (providing funds for enhancing 
pediatric EMS); and Trauma Care Systems Planning and Development Act 
of 1990, Public Law 101-590.
---------------------------------------------------------------------------

    In an effort to further assure those providers engaged in innocuous 
and beneficial replenishing arrangements, we are proposing a new safe 
harbor under Sec. 1001.952 of our regulations to protect certain 
arrangements between receiving facilities (including hospitals) and 
ambulance companies under which the receiving facilities replenish 
ambulances with drugs and medical supplies used during the transport of 
emergency patients to the receiving facilities. Under this proposed 
rule, we would provide safe harbor protection for ambulance 
replenishing arrangements that satisfy all of the conditions in one of 
two categories established by the safe harbor. Both categories pertain 
only to emergency ambulance services; the safe harbor would not protect 
replenishing of ambulance supplies, linens or medications following 
routine ambulance transports.

Replenishing Arrangements Where Ambulance Provider Pays Receiving 
Facility Fair Market Value

    The first new proposed safe harbor would protect replenishing 
arrangements where an ambulance provider pays the receiving facility 
fair market value, based on an arms-length transaction, for replenished 
drugs or supplies (including linens) used in connection with the 
transport of an emergency patient. Payment would not need to be made at 
the time of the replenishing, provided commercially reasonable and 
appropriate payment arrangements have been made in advance. For linens, 
an exchange of a comparable quantity of laundered linens for soiled 
linens would be considered fair market value, notwithstanding any 
economic value attributable to the laundering of linens by receiving 
facilities, which often have specialized laundering equipment needed 
for compliance with sanitation requirements. A non-profit receiving 
facility would be protected under this safe harbor if it sells 
replenished drugs or medical supplies to a non-profit ambulance 
provider at cost in order to comply with the Non-Profit Institutions 
Act.\4\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 13(c) exception to the Robinson-Patman Act (15 
U.S.C. 13(a)-(f)). Inquiries as to the applicability of, or 
compliance with, the Non-Profit Institutions Act or the Robinson-
Patman Act should be directed to the Federal Trade Commission.
---------------------------------------------------------------------------

Remuneration in the Form of Contemporaneous Replenishing of Drugs or 
Medical Supplies

    The second proposed safe harbor would protect remuneration in the 
form of contemporaneous replenishing of drugs or medical supplies 
(including linens) used during an emergency transport of a patient to 
the receiving facility, even if the replenishing is for free or at 
reduced prices. We are proposing that the following seven conditions be 
met in order to qualify for protection under this safe harbor:
    (1) Receiving facilities must provide replenishing on an equal 
basis for all ambulance providers who bring emergency patients to the 
receiving facility. This condition is intended to prevent receiving 
facilities from inappropriately using replenishing to attract or reward 
high referring ambulance providers.
    (2) The replenishing arrangement must be part of a comprehensive 
and coordinated effort to improve the EMS delivery system in the 
relevant service area and must be open to all emergency ambulance 
providers and receiving facilities operating in the service area. It 
must be implemented with the participation of, and monitored by, a 
regional EMS Council or functionally similar entity, organization or 
association (the Oversight Entity). The Oversight Entity must be a non-
profit entity composed of representatives of a broad array of 
participants in a service area's emergency medical system, such as 
hospitals, ambulance providers, emergency room physicians and nurses, 
public safety organizations, paramedics, local educational institutions 
and community residents. The involvement of a wide range of 
representatives of the local EMS community provides substantial 
assurance that the replenishment arrangement is intended to benefit the 
local community, rather than a single provider or group of providers. 
Participation in the Oversight Entity should be open to all interested 
parties in the service area on equal terms and conditions, i.e., the 
Oversight Entity cannot be composed solely of representatives of a 
single health system. Typically, Oversight Entities will engage in the 
following types of activities:

--Standardization of EMS practices and equipment;
--Education and training for pre-hospital care providers;
--Ongoing evaluation and improvement of EMS capabilities in the service 
area;
--Public information campaigns; and
--Other activities designed to promote EMS care for the service area.

    We recognize that the size, composition, structure and scope of 
activities of Oversight Entities may necessarily vary depending on the 
size and resources of the particular service area. We would expect, for 
example, an Oversight Entity in a small rural area with one hospital, a 
few physicians and one ambulance provider to look and operate 
differently than one in a densely populated urban area with several 
hospitals, a number of transport providers and diverse physicians, 
teaching facilities, Government agencies and the like. Oversight 
Entities should be part of a comprehensive and coordinated regional EMS 
system appropriate to the size and resources of the service area. We 
are not specifying any particular structure or legal form for the 
Oversight Entity; it must simply be functionally similar to a regional 
EMS Counsel. The participants in the Oversight Entity should be 
representative of the service area's EMS system. We are specifically 
soliciting comments on our proposal that safe harbored replenishing 
arrangements must be a part of a comprehensive and consolidated 
regional EMS system.
    (3) The replenishing arrangement must be memorialized in writing, 
whether through a contract signed under the auspices of the Oversight 
Entity by all participating ambulance providers and receiving 
facilities or by a generally applicable plan or protocol promulgated or 
approved by the Oversight Entity. The replenishing arrangement must in 
practice comport with the terms of the written documentation.
    (4) The receiving facility must not bill any Federal health care 
program or Federal program beneficiary for the replenished drugs or 
supplies, or write off such drugs or supplies as bad debt. The purpose 
of this requirement is to

[[Page 32063]]

prevent double payments by Medicare, which pays hospitals under Part A 
(through fiscal intermediaries), but which typically pays ambulance 
providers for drugs and supplies used during emergency transports under 
Part B (through carriers).
    (5) In order to prevent ``double dipping,'' ambulance providers may 
not bill any Federal health care program or Federal beneficiary 
separately for the replenished drugs or supplies.
    (6) The receiving facility and the ambulance provider must maintain 
records of the replenished drugs or supplies and make those records 
available to the Secretary upon request.
    (7) The receiving facility and ambulance provider must otherwise 
comply with all Federal, State and local laws regulating emergency 
medical care and the provision of drugs and medical supplies, including 
laws relating to the handling of controlled substances such as 
morphine.
    Nothing in this preamble or the proposed regulations is intended to 
express any view as to the appropriate billing of the Federal health 
care programs for supplies used during emergency transport services. 
Parties seeking to comply with these proposed safe harbors would still 
need to comply with all relevant billing and claims filing rules. The 
fifth and sixth conditions described above for the second proposed safe 
harbor merely set forth criteria for determining whether a particular 
arrangement qualifies for safe harbor protection under the anti-
kickback statute; the conditions do not purport to establish any 
reimbursement rule. Questions regarding reimbursement under the 
Medicare and Medicaid programs should be addressed to the Health Care 
Financing Administration or the party's relevant fiscal intermediary or 
carrier.
    As with the existing safe harbor provisions currently codified in 
Sec. 1001.952, compliance with these proposed safe harbors would be 
voluntary. Failure to fit into one of these safe harbors would not mean 
that an ambulance replenishment arrangement is illegal. Rather, it 
would simply mean that the arrangement would need to be evaluated on a 
case-by-case basis.

Meeting the Criteria for Establishing New Safe Harbors

    Section 205 of the Health Insurance Portability and Accountability 
Act, Public Law 104-191, established certain criteria that the 
Secretary may consider when modifying or establishing safe harbors to 
the anti-kickback statute. We indicated our intent to consider these 
criteria in evaluating proposals for new safe harbors in our Notice of 
Intent to Develop Regulations (61 FR 69061; December 31, 1996). We have 
considered these criteria in developing this proposed rulemaking, and 
we believe, for the reasons described above, that the proposed safe 
harbor for certain ambulance replenishing arrangements is likely to: 
(l) Increase or have no effect on access for needy patients to health 
care services; (2) increase the quality of health care services for 
needy patients; (3) have little or no effect on the cost of Federal 
health care programs; (4) have little or no effect on competition; and 
(5) have little or no effect on the quantity of services provided in 
underserved areas. We further believe the proposed safe harbor contains 
safeguards that limit the potential for overutilization and assure that 
patients retain their freedom of choice of service providers.

III. Regulatory Impact Statement

Executive Order 12866, the Unfunded Mandates Reform Act, Executive 
Order 13132, and the Regulatory Flexibility Act

    The Office of Management and Budget (OMB) has reviewed this 
proposed rule in accordance with the provisions of Executive Order 
12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and has 
determined that it does not meet the criteria for a significant 
regulatory action. Executive Order 12866 directs agencies to assess all 
costs and benefits of available regulatory alternatives and, when 
rulemaking is necessary, to select regulatory approaches that maximize 
net benefits, including potential economic, environmental, public 
health, safety distributive and equity effects. Section 202 of the 
Unfunded Mandates Reform Act, Public Law 104-4, requires that agencies 
prepare an assessment of anticipated costs and benefits on any 
rulemaking that may result in an expenditure by State, local or tribal 
Government, or by the private sector of $100 million or more in any 
given year. Further, Executive Order 13132, Federalism, requires 
agencies to determine if a rule will have a significant affect on 
States, on their relationship with the Federal Government, and on the 
distribution of power and responsibility among the various levels of 
government.
    In addition, under the Small Business Enforcement Act (SBEA) of 
1996, if a rule has a significant economic effect on a substantial 
number of small businesses, the Secretary must specifically consider 
the economic effect of a rule on small business entities and analyze 
regulatory options that could lessen the impact of the rule. In 
addition, under the Regulatory Flexibility Act, if a rule has a 
significant economic effect on a substantial number of small 
businesses, the Secretary must specifically consider the economic 
effect of a rule on small business entities and analyze regulatory 
options that could lessen the impact of the rule.
    Executive Order 12866 requires that all regulations reflect 
consideration of alternatives, costs, benefits, incentives, equity and 
available information. Regulations must meet certain standards, such as 
avoiding unnecessary burden. We believe that this proposed rule would 
have no significant economic impact. The proposed safe harbor 
provisions set forth in this rulemaking are designed to permit 
individuals and entities to freely engage in business practices and 
arrangements that encourage competition, innovation and economy. As 
indicated above, in doing so, these regulations impose no requirements 
on any party. Health care providers and others may voluntarily seek to 
comply with these provisions so that they have the assurance that their 
business practices are not subject to any enforcement actions under the 
anti-kickback statute. We believe that any aggregate economic effect of 
these safe harbor regulations would be minimal and would impact only 
those limited few who engage in prohibited behavior in violation of the 
statute. As such, we believe that the aggregate economic impact of 
these proposed regulations is minimal and would have no effect on the 
economy or on Federal or State expenditures
    Additionally, in accordance with the Unfunded Mandates Reform Act 
of 1995, we believe that there are no significant costs associated with 
these proposed safe harbor guidelines that would impose any mandates on 
State, local or tribal governments, or the private sector that will 
result in an expenditure of $100 million or more in any given year. 
Further, in reviewing this rule under the threshold criteria of 
Executive Order 13132, Federalism, we have determined that this rule 
would not significantly affect the rights, roles and responsibilities 
of States, and that a full analysis under these Acts are not necessary.
    Further, in accordance with the Regulatory Flexibility Act (RFA) of 
1980, and the Small Business Regulatory Enforcement Act of 1996, which 
amended the RFA, we are required to determine if this rule will have a 
significant economic effect on a substantial number of small entities 
and, if so, to identify regulatory options that could lessen the 
impact. While

[[Page 32064]]

these safe harbor provisions may have an impact on small entities, we 
believe that the aggregate economic impact of this rulemaking would be 
minimal, since it is the nature of the violation and not the size of 
the entity that will result in a violation of the anti-kickback 
statute. Since the vast majority of individuals and entities 
potentially affected by these regulations do not engage in prohibited 
arrangements, schemes or practices in violation of the law, we believe 
that these proposed regulations would not have a significant economic 
impact on a number of small business entities, and that a regulatory 
flexibility analysis is not required for this rulemaking.

Paperwork Reduction Act

    In accordance with section 3506(c)(2)(A) of the Paperwork Reduction 
Act (PRA) of 1995, we are required to solicit public comments, and 
receive final OMB approval, on any information collection requirements 
set forth in rulemaking. While compliance with the provisions in this 
safe harbor rule would be voluntary, proposed Sec. 1001.952(v)(3) 
contains information collection requirements that would require 
approval by OMB. As such, we are required to solicit public comments 
under section 3506(c)(2)(A) of the PRA on these requirements. 
Specifically, in order to qualify for safe harbor protection for 
ambulance restocking arrangements under Sec. 1001.952(v)(3), the 
regulations would require that replenishing agreements be set forth in 
writing in the form of (1) a contract signed under the auspices of the 
oversight entity by all participating ambulance providers and receiving 
facilities or (2) a generally applicable plan or protocol promulgated 
or approved by the oversight entity. There is no obligation to submit 
these agreements to the Secretary, however, in order to achieve initial 
compliance with the safe harbor. In addition, to qualify for safe 
harbor protection for ambulance restocking arrangements under 
Sec. 1001.952(v)(3), the receiving facility and the ambulance provider 
must maintain records of the replenished drugs and medical supplies 
(including linens) and make those records available to the Secretary 
promptly upon request. However, as indicated above, the safe harbor 
does not require any submission of reports, data collection or other 
documents in order to be in compliance with the anti-kickback statute.
    In accordance with the PRA requirements, we are inviting comments 
on (1) whether the proposed collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility; (2) the accuracy 
of the estimate of the burden of the proposed collection of 
information; (3) ways to enhance the quality, utility and clarity of 
the information collected; and (4) ways to minimize the burden of the 
collection of information on parties, including through the use of 
automated collection techniques or other forms of information 
technology. As part of the OMB approval for the collection of 
information contained in this rule, we are soliciting public comments 
on this requirement, thereby initiating the normal PRA clearance.
    Title: Ambulance Restocking Safe Harbor Under the Anti-Kickback 
Statute.
    Summary of the collection of information: Proposed Sec. 1001.952(v) 
would set forth a new statutory exception to the anti-kickback statute 
that covers any gift or transfer of drugs or medical supplies 
(including linens) by a hospital or other receiving facility to an 
ambulance provider for the purpose of replenishing comparable drugs or 
medical supplies (including linens) used by the ambulance provider in 
connection with the transport of an emergency patient to the hospital 
or other receiving facility. Safe harbors do not create any affirmative 
obligation on any individuals or entities. Seeking protection under 
these safe harbor provisions is purely voluntary.
    The aggregate information burden for the information collection 
requirements contained in this proposed rulemaking is set forth below.
    Respondents: In accordance with proposed Sec. 1001.952(v), the 
respondents for the collection of information described in these 
regulations are parties involved in written agreements between (1) a 
hospital or other receiving facility that replenishes drugs and medical 
supplies, and (2) ambulance providers who bring emergency patients to 
the receiving facility.
    Estimated number of respondents: The safe harbor being proposed in 
Sec. 1001.952(v) would protect those restocking arrangements between 
receiving facilities that replenish drugs and medical supplies on an 
equal basis to all ambulance providers who transport their emergency 
patients to the receiving facility. Virtually all such replenishing 
arrangements already are memorialized in written contracts as a matter 
of prudent business practice, irrespective of the existence of the 
proposed safe harbor. We believe that few, if any, parties will enter 
into written arrangements specifically for the purposes of safe harbor 
protection. Accordingly, we estimate that the number of parties 
entering into written agreements to qualify for safe harbor protection 
will be negligible.
    Estimated number of responses per respondent: None.
    Estimated total annual burden on respondents: We believe that the 
burden of preparing written agreements and the aggregate information 
burden for the information collection requirements contained in this 
proposed rulemaking would be minimal. As indicated above, in most, if 
not all, cases the parties already have written agreements as part of 
the parties' replenishing arrangements, independent of the safe harbor 
requirements. Accordingly, any burden imposed by these proposed 
regulations would impose no burden on such parties.
    Comments on this information collection activity should be sent to: 
Allison Herron Eydt, OIG Desk Officer, Office of Management and Budget, 
Room 10235, New Executive Office Building, 725 17th Street. NW, 
Washington, DC 20053, FAX: (202) 395-6974.
    Comments on these paperwork reduction requirements may be submitted 
to the above-cited individual within 60 days following the Federal 
Register publication of this proposed rule.

IV. Public Inspection of Comments and Response to Comments

    Comments will be available for public inspection June 5, 2000 in 
Room 5518, Office of Counsel to the Inspector General, at 330 
Independence Avenue, SW, Washington, DC on Monday through Friday of 
each week (Federal holidays excepted) between the hours of 9 a.m. and 4 
p.m., (202) 619-0089.
    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this preamble, and will respond to the comments in the 
preamble of the final rule.

List of Subjects in 42 CFR Part 1001

    Administrative practice and procedure, Fraud, Grant programs--
health, Health facilities, Health professions, Maternal and child 
health, Medicaid, Medicare.

    Accordingly, 42 CFR part 1001 would be amended as set forth below:

[[Page 32065]]

PART 1001--[AMENDED]

    1. The authority citation for part 1001 would continue to read as 
follows:

    Authority: 42 U.S.C. 1302, 1320a-7, 1320a-7b, 1395u(h), 
1395u(j), 1395u(k), 1395y(d), 1395y(e), 1395cc(b)(2)(D), (E) and 
(F), and 1395hh; and sec. 2455, Pub.L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note).

    2. Section 1001.952 would be amended by republishing the 
introductory text and by adding a new paragraph (v) to read as follows:


Sec. 1001.952  Exceptions

    The following payment practices shall not be treated as a criminal 
offense under section 1128B of the Act and shall not serve as the basis 
for an exclusion:
* * * * *
    (v) Ambulance restocking. (1) As used in section 1128B of the Act, 
``remuneration'' does not include any gift or transfer of drugs or 
medical supplies (including linens) by a hospital or other receiving 
facility to an ambulance provider for the purpose of replenishing 
comparable drugs or medical supplies (including linens) used by the 
ambulance provider in connection with the transport of an emergency 
patient to the hospital or other receiving facility if all of the 
applicable standards in either paragraph (v)(2) or (v )(3) of this 
section are satisfied.
    (2)(i) Except as otherwise provided in paragraph (v)(2)(ii) of this 
section, the ambulance provider pays the receiving facility fair market 
value, based on an arms-length transaction, for the replenished drugs 
or medical supplies (including linens). A non-profit receiving facility 
will be deemed to meet this standard if it sells replenished drugs or 
medical supplies to a non-profit ambulance provider at cost in order to 
comply with the Non-Profit Institutions Act (15 U.S.C. 13(c)), 
exception to the Robinson-Patman Act (15 U.S.C. 3(a)-(f)).
    (ii) If payment is not made contemporaneously with the replenishing 
of the drugs or medical supplies (including linens), the receiving 
facility and the ambulance provider make commercially reasonable 
payment arrangements in advance.
    (3)(i) The receiving facility replenishes drugs and medical 
supplies (including linens) on an equal basis for all ambulance 
providers who bring emergency patients to the receiving facility.
    (ii) The replenishing arrangement must be implemented with the 
participation of, and monitored by, an oversight entity (as defined in 
paragraph (v)(4)(ii) of this section) as part of a comprehensive and 
coordinated regional emergency medical system appropriate to the size 
and resources of the service area and must be open and available to all 
emergency ambulance providers and receiving facilities in the service 
area.
    (iii) The replenishing arrangement must be memorialized in writing. 
The writing may be in the form of--
    (A) A contract signed under the auspices of the oversight entity by 
all participating ambulance providers and receiving facilities or
    (B) A generally applicable plan or protocol promulgated or approved 
by the oversight entity.
    (iv) The receiving facility refrains from billing any Federal 
health care program or Federal health care program beneficiary for the 
replenished drugs or medical supplies (including linens) and does not 
write off the cost of such drugs or medical supplies (including linens) 
as bad debt.
    (v) The ambulance provider refrains from billing any Federal health 
care program or Federal health care program beneficiary separately for 
the replenished drugs or medical supplies (including linens).
    (vi) The receiving facility and the ambulance provider maintain 
records of the replenished drugs and medical supplies (including 
linens) and make those records available to the Secretary promptly upon 
request.
    (vii) The receiving facility and the ambulance provider otherwise 
comply with all Federal, State and local laws regulating emergency 
medical care and the provision of drugs and medical supplies, 
including, but not limited to, laws relating to the handling of 
controlled substances.
    (4) For purposes of paragraph (v)(3) of this section--
    (i) A ``receiving facility'' is a hospital or other facility that 
provides emergency medical services; and
    (ii) An ``oversight entity'' is a regional emergency medical 
services council or functionally similar entity, association or 
organization that--
    (A) Is described in section 501(c)(3) or 501(c)(4) of the Internal 
Revenue Code and exempt from taxation under section 501(a) of that 
Code;
    (B) Includes, or is composed of, representatives of a broad array 
of participants in a service area's emergency medical system (e.g., 
hospitals, ambulance providers, emergency room physicians, paramedics, 
public safety organizations, local educational institutions and 
community residents);
    (C) Is open to all interested parties in the service area on equal 
terms and conditions; and
    (D) Has as its mission the improvement of the emergency medical 
services delivery system in the relevant service area.

    Dated: November 2, 1999.
June Gibbs Brown,
Inspector General.

    Approved: November 18, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 00-12697 Filed 5-19-00; 8:45 am]
BILLING CODE 4150-04-P