HomeMy WebLinkAboutOrdinance No. 3616 - Fire Department Firemed Fire-Med Progar j o 2 0 J .Ca. rpo
CITY OF HUNTINGTON BEACH
MEETING DATE: August 18, 2003 DEPARTMENT ID NUMBER: FD 03 007
Council/Agency Meeting Held: 100,65
De erred/Continued to: ILY
Approved ❑ Conditionally Approved ❑ Denied �P)-te
Ity Clerks Signatur
Council Meeting Date: August 18, 2003 Department ID Number: 03 007
3
CITY OF HUNTINGTON BEACH -
REQUEST FOR COUNCIL ACTION -
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS -
SUBMITTED BY: RAY SILVER, City Administrator ',/ -
PREPARED BY: DUANE OLSON, Fire Chief
SUBJECT: ADOPT ORDINANCE NO. AMENDING THE MUNICIPAL
CODE PERTAINING TO THE CITY'S FIREMED PROGRAM
Eem:e:nt:o:1 Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: Should the City amend Chapter 8.68 of the Huntington Beach
Municipal Code relating to the City's FireMed Program?
Funding Source: Not Applicable.
Recommended Action: Adopt Ordinance No. --'k Q , an ordinance of the City of
Huntington Beach amending Chapter 8.68 of the Huntington Beach Municipal Code relating
to the FireMed Program.
Alternative Action(s): Do not adopt the Ordinance and instruct staff how to proceed.
Analysis: A legal review of the ordinance related to the City's FireMed Program was
recently conducted. This specialized review was in response to a recommendation from the
City Attorney. The legal review indicated that changes should be made to the definition of
FireMed member benefits regarding unpaid emergency services for membership coverage,
rate schedules and member eligibility. The City Attorney has presented the following
recommendations as illustrated in the proposed ordinance (Attachment 1). The review by
Attorney R. Michael Scarano, Jr., of Foley and Lardner, is included (Attachment 2).
r /
FD 03 007 FireMed Ordinance.doc 8/4/2003 3:26 PM
0 0
REQUEST FOR COUNCIL ACTION
MEETING DATE: August 18, 2003 DEPARTMENT ID NUMBER: FD 03 007
Analysis (continued)
Member vs. Non-Member Rate Schedules
Foley and Lardner has also concluded that FireMed's current procedure of billing members at
a lower rate than non-members is a reasonable practice for the billing of an emergency
medical incident. However, in the future, members and non-members will be billed using
only one rate schedule to simplify the billing process. These fees are proposed for adoption
as a companion public hearing item scheduled for the August 18, 2003 meeting.
Medi-Cal Patients
The City is required by law to accept a Medi-Cal payment as payment in full. Although a
person covered by Medi-Cal may receive no monetary benefit from FireMed membership,
there may be other people in the household who are not covered by Medi-Cal. Based on
Foley and Lardner's recommendation, FireMed Program materials will be revised to state
that people covered by Medi-Cal do not financially benefit from a FireMed membership. This
will not preclude them from joining to cover other household members or to receive other
program benefits.
In addition to the modifications proposed by Foley and Lardner, changes in the ordinance
have occurred due to legal mandates and program modifications. These changes are
reflected in the areas of enrollment, eligibility and additional member benefits.
Enrollment and Eligibility
The FireMed Program began with a specific enrollment period that occurred once a year for
new members. However, membership is now available at any time upon request.
Residents, city businesses, and employees of businesses in Huntington Beach have the
opportunity to join.
Guests at a FireMed member's household who have an emergency medical incident are
regarded as FireMed members for the purpose of billing for emergency services. Employees
at Huntington Beach businesses may enroll as individual members, but customers, guests,
patrons and visitors to a business are not recognized as FireMed members.
Additional Member Benefits
The Emergency Medical Information Program has replaced the existing Medical Information
File and Emergency Contact Files. The former program requested that members send
completed forms to the FireMed Office so that the information could be available to
emergency personnel by computerized access. The new program allows the FireMed
member to retain the record within their residence. Members may now update the
information at any time, and can provide this record to firefighters and paramedics when an
emergency occurs.
FD 03 007 FireMed Ordinance.doc 7e a 8/5/2003 2:58 PM
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REQUEST FOR COUNCIL ACTION
MEETING DATE: August 18, 2003 DEPARTMENT ID NUMBER: FD 03 007
Analysis (continued)
Another FireMed member benefit that has been offered for many years but was not
referenced in the ordinance is free CPR classes. Training classes are offered every month to
pre-enrolled FireMed members. These classes provide life-saving skills to be used before
the Fire Department arrives at an emergency situation.
In summary, the proposed changes to the FireMed Program ordinance address the issues
identified by Foley and Lardner and clarify the definition of member benefits, fees, enrollment
and eligibility.
Environmental Status: None.
Attachment(s):
City Clerk's
. . - Number No. Description
1. Ordinance No. 3�k amending Chapter 8.68 of the Huntington
Beach Municipal Code relating to the City's FireMed Program including
legislative draft
2. Correspondance from Attorney R. Michael Scarano, Jr., of Foley and
Lardner, dated July 29, 2003
RCA Author: Olson/Cameron/Justen
FD 03 007 FireMed Ordinance.doc -jV 3 8/5/2003 2:58 PM
A TTA CHMENT 1
ORDINANCE NO. 3616
AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH
AMENDING CHAPTER 8.68 OF THE HUNTINGTON BEACH MUNICIPAL
CODE RELATING TO THE FIREMED PROGRAM
The City Council of the City of Huntington Beach does hereby ordain as follows:
SECTION 1. Section 8.68.020 of the Huntington Beach Municipal Code is hereby
amended to read as follows:
8.68.020 Definitions Unless a different meaning is apparent from the context or is
specified elsewhere in the code,the following definitions shall be used:
(a) FireMed Services: Those services provided by the Huntington Beach Fire
Department and its designated ambulance provider related to treatment and
transportation provided during the course of an emergency medical incident.
(b) FireMed Program: A voluntary membership plan where its members shall prepay at a
fixed price,the uninsured portion of emergency medical and ambulance services
provided by the Huntington Beach Fire Department, or its equivalent.
(c) Member: Residents of Huntington Beach households,resident businesses and their
employees,who have registered with the City and prepaid the Voluntary.Membership
Fee:
(d) Advanced Life Support(ALS): Any Advanced Life Support medical treatment
performed by paramedics (EMT-P) outside of a hospital. This treatment shall follow
the current "Advanced Life Support Treatment Guidelines" as specified by the
Orange County Emergency Medical Services Agency.
(e) Basic Life Support(BLS): Any Basic Life Support treatment which is authorized by
the State of California Department of Health to be performed by Emergency Medical
Technicians I (EMT-I) and/or paramedics(EMT-P) at the scene of medical
emergency.
(f) Ambulance: The designated ground ambulance service, licensed by the State of
California and the County of Orange,which provide services for the Huntington
Beach Fire Department.
SECTION 2. Section 8.68.050 of the Huntington Beach Municipal Code is hereby
amended to read as follows:
8.68.050 Enrollment Each resident and business of the City will have the opportunity to
join the FireMed program at any time throughout the year.
(1) Persons receiving a residential utility billing from the City may enroll in the FireMed
Program and place the monthly charge on their bill.
03ord/chap 8-68 ord/8/4/03 1
• *nance No. 3616
(2) Households, resident businesses, and employees of resident businesses not receiving a
utility bill may enroll in the Fire Med Program and establish an annual bill.
SECTION 3. Section 8.68.060 of the Huntington Beach Municipal Code is hereby
amended to read as follows:
8.68.060 Member benefits FireMed members shall receive the following benefits by
joining the voluntary membership program:
(1) If the member is insured, prepayment of the Uninsured portion of
(a) ALS charges
(b) BLS charges
(c) Emergency ambulance transportation.
(2) If the member is uninsured, prepayment of twenty percent(20%) of
(a) ALS charges
(b) BLS charges
(c) Emergency ambulance transportation.
Member benefits may be added and modified at the discretion of the Fire Chief.
SECTION 4. Section 8.68.065 is hereby added to the Huntington Beach Municipal
Code, said section to read as follows:
8.68.065 Additional member benefits
(1) CPR Class
(2) Emergency medical information program.
SECTION 5. Section 8.68.070 of the Huntington Beach Municipal Code is hereby
amended to read as follows:
8.68.070 Authorization for fees Advanced Life Support, Basic Life Support and
Ambulance fees are hereby authorized and shall be charged in connection with
emergency medical care and ambulance services provided by the Huntington Beach Fire
Department.
1. The "Fee for Services" shall be a user fee designed to recover costs associated with.
the delivery of emergency medical care and ambulance services. Such fees shall be
based on:
(a) Emergencies requiring Basic Life Support(BLS) services; and
(b) Emergencies requiring Advanced Life Support(ALS) services; and
(c) Emergencies requiring ambulance transportation to the nearest medical facility
best suited to meet the patient's emergency medical needs.
2. The "Voluntary Membership Fee -FireMed" shall be a membership offered to
Huntington Beach residents and resident businesses on a voluntary basis for the
03ord/chap 8-68 ord/8/4/03 2
MOinance No. 3616
purpose of allowing its members to prepay, at a fixed price,the uninsured portion of
emergency ambulance and emergency medical charges for services provided by the
Huntington Beach Fire Department.
(a) Payment of the voluntary fee by households shall entitle membership to
permanent residents of that household,related or not. Household guests who
receive emergency medical care at a residential FireMed address will be regarded
as a FireMed member.
(b) Fees paid by resident businesses and employees of non-member resident
businesses entitle membership to the employee only. Customers,patrons, visitors
or others using the facilities of such businesses shall be charged directly for
paramedic and ambulance services.
SECTION 6. Section 8.68.100 of the Huntington Beach Municipal Code is hereby
amended to read as follows:
8.68.100 Exemptions Determination for an exemption or reduction of"Fee for Services" or the
"Voluntary Membership Fee" by persons claiming a hardship shall be determined by the Fire
Chief.
SECTION 8. This ordinance shall become effective 30 days after its adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 2nd day of September ,2003.
- r
Mayor
ATTE T:
APPROVED AS TO FORM:
City Clerk
4n Cie:�
)IaT3, ity Attorney
REVIEWED AND APPROVED:
TED AN OVED:
City A aministrator
Fire Chief A1 6
03ord/chap 8-68 ord/8/4/03 3
Ord. No. 3616
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing ordinance was read to said City Council at
a regular meeting thereof held on the 18th day of August, 2003, and was again read to
said City Council at a re ular meeting thereof held on the 2nd day of September,2003,
and was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council.
AYES: Sullivan, Coerper, Boardman, Cook,Houchen,Hardy
NOES: None
ABSENT: Green
ABSTAIN: None
I,Connie Brockway,CITY CLERK of the City of
Huntington Beach and ex-officio Clerk of the City
Council,do hereby certify that a synopsis of this
ordinance has been published in.the Huntington Beach
Fountain Valley Independent on
,2003.
In accordance with the City Charter of said City
Connie Brockway, City Clerk City Clerk and ex-officio C rk
Deputy City Clerk of the City Council of the City
of Huntington Beach, California
ORDINANCE NO.
LEGISLATIVE DRAFT
Chapter 8.68
FIREMED PROGRAM
(3026-2/90)
Sections:
8.68.010 Purpose
8.68.020 Definitions
8.68.030 Administration
8.68.040 Eligibility
8.68.050 Enrollment
8.68.060 Member benefits
8.68.065 Additional member benefits
8.68.070 Authorization of fees
8.68.080 Implementation
8.68.090 Duty to respond
8.68.100 Exemptions
8.68.110 Funding
8.68.120 Program termination
8.68.010 Purpose The declared purpose of this chapter is to reduce life loss and disability by
implementing a program funding additional paramedic units in order to meet current response
time standards. A fee for service and voluntary membership program is desired to meet these
goals by offering a mechanism for residents and businesses to cap their emergency medical
service and ambulance transportation costs while supporting the expansion of the City's
paramedic system. (3026-2/90)
8.68.020 Definitions Unless a different meaning is apparent from the context or is specified
elsewhere in the code, the following definitions shall be used: (3026-2/90)
(a) FireMed Services: Those services provided by the Huntington Beach Fire Department and its
designated ambulance provider related to treatment and transportation provided during the
course of an emergency medical incident..(3026-2/90)
(b) FireMed Program: A voluntary membership plan where its members shall prepay at a fixed
price,the uninsured portion of emergency medical and ambulance services provided by the
Huntington Beach Fire Department, or its equivalent. (3026-2/90)
(c) Member: Residents of Huntington Beach households, resident businesses and their
employees, who have registered with the City and prepaid the Voluntary Membership Fee.
(3026-2/90)
(d) Advanced Life Support(ALS): Any aAdvanced Life Support medical treatment performed
by paramedics (EMT-P) outside of a hospital. This treatment shall follow the current
"Advanced Life Support Treatment Guidelines" as specified by the Orange County
Emergency Medical Services Agency. (3026-2/90)
(e) Basic Life Support(BLS): Any Basic Life Support treatment which is authorized by the
State of California Department of Health to be performed by Emergency Medical
Technicians I (EMT-1) and/or paramedics (EMT-P) at the scene of medical emergency.
(3026-2/90)
(f) Ambulance: The designated ground ambulance service, licensed by the State of California
and the County of Orange, which provide services for the Huntington Beach Fire Department.
(3026-2/90)
1egisdrft/MC0868LD/8/4/03 1
8.68.030 Administration The Fire Chief or his/her designee shall be responsible for the
development of rules,policies and procedures relating to implementation and administration of
the FireMed Program. The Fire Chief shall report on a yearly basis to the City Administrator and
the City Council on the status of the FireMed Program. The report shall include a full financial
statement which sets forth the Program's financial status. (3026-2/90)
8.68.040 Eli ibility The FireMed Program is open to residents,businesses and employees of
non-member businesses located in the City of Huntington Beach. (3026-2/90)
8.68.050 Enrollment Each resident and business of the City will have the opportunity to join the
FireMed program annilell,,daring e"men*pee designated by the Fife r''''��at any
time throughout the year. (3026-2/90)
(1) Persons receiving a residential utility billing from the City will autemati.e.-ally hp. plirelle.4
may enroll in the FireMed Program and place the
monthly charge on their bill. (3026-2/90)
(2) Households and busines , resident businesses, and employees of resident
businesses not receiving a utility bill may enroll
in the Fire Med Program and establish an annual bi 1. (3026-2/90)
The Fire Chief shall have atAher-it-y to eharge fee fer-late eP,&e11fneR4. New r-esiden
A1a new bUJllrJJeJ shall be exempt f « thi ,.--fee. (3026-2/90)
8.68.060 Member benefits FireMed members shall receive the following benefits by joining the
voluntary membership program: (3026-2/90)
(1) If the member is insured, pPrepayment of the Uninsured portion of (3026-2/90)
(a) ALS charges
(b) BLS charges
(c) Emergency ambulance transportation.
(2) Medieal infefmatien File the member is uninsured, prepayment of
twenty percent (20%) o
(a) ALS charges (3026-2/90)
(b) ,��:.. ., ,,;, , +,o +..,or+,e,o �o BL charges
(c) Member-'Member-'s physiei Emergency ambulance transportation.
Addifienal mMember benefits may be added and modified at the discretion of the Fire Chief.
(3026-2/90)
8.68.065 Additional member benefits
�1�CPR Class
2 Emergency medical information program
8.68.070 Authorization for fees Advanced Life Support, Basic Life Support and Ambulance
fees are hereby authorized and shall be charged in connection with emergency medical care and
ambulance services provided by the Huntington Beach Fire Department. The .,.r,, ufA of stie .
1egisdrft/MC0868LD/8/4/03 2
fees shall be set ffem time to 0 e by feseittfien of the City-G eei inee ifl. Affe shall be�we (2)
f fees s fellows: (3026-2/90)
1. The "Fee for Services" shall be a user fee designed to recover costs associated with the
delivery of emergency medical care and ambulance services. Such fees shall be based on:
(3026-2/90)
(a) Emergencies requiring Basic Life Support (BLS) services; and (3026-2/90)
(b) Emergencies requiring Advanced Life Support(ALS) services; and (3026-2/90)
(c) Emergencies requiring ambulance transportation to the nearest medical facility best suited
to meet the patient's emergency medical needs. (3026-2/90)
2. The "Voluntary Membership Fee - FireMed" shall be a membership offered to Huntington
Beach residents and resident businesses on a voluntary basis for the purpose of allowing its
members to prepay, at a fixed price, the uninsured portion of emergency ambulance and
emergency medical charges for services provided by the Huntington Beach Fire Department.
(3026-2/90)
(a) Payment of the voluntary fee by households shall entitle membership to permanent
residents of that household, related or not. Fees paid by businesses entitle member-ship te
ser-viees. (3026-2/9o) Household guests who receive emergency medical care
at a residential FireMed address will be regarded as a FireMed
member.
(b)Fees paid by resident businesses and employees of non-member resident
businesses entitle membership to the employee only. Customers,
patrons, visitors or others using the facilities of such businesses shall be
charged directly for paramedic and ambulance services.
8.68.080 Implementation Implementation of user fees for paramedic services shall begin July 1,
1990. The Fire Chief shall be authorized to administer the FireMed Program beginning thirty
(30) days after adoption of this ordinance. (3026-2/90)
8.68.090 Duty to respond Under no circumstances will the delivery and application of available
emergency medical services and ambulance transportation be delayed or refused based upon
whether or not a person is a FireMed member or can demonstrate an ability to pay. (3026-2/90)
8.68.100 Exemptions Determination for an exemption or reduction of"Fee for Services" or the
"Voluntary Membership Fee" by persons claiming a hardship shall be s
established by r-eseb4ien ofthe Git-y Getffi i . determined by the Fire Chief. (3026-2/90)
8.68.110 Funding Revenues derived from the FireMed Program shall be used to improve and
maintain the emergency medical services provided by the Huntington Beach Fire Department.
(3026-2/90)
8.68.120 Program termination The FireMed Program Amy be cancelled by a majority vote of
the Huntington Beach City Council. If the Council chooses to terminate the program prior to the
new program year, the City may, at its option, refund membership fees back to FireMed members
on a prorated basis. The City shall be obligated to provide thirty(30) days written notice to
FireMed members prior to program termination. (3026-2/90)
2/90
1egisdrft/MC0868LD/8/4/03 3
ATTACHMENT 2
0
BRUSSELS F O L E Y ' L A R D N ER
CHICAGO
DENVER A T T O R N E Y S A T L A W
DETROIT
JACKSONVILLE
LOS ANGELES
MADISON
MILWAUKEE
ORLANDO
SACRAMENTO
SAN DIEGO/DEL MAR
SAN FRANCISCO
TALLAHASSEE
TAMPA
TOKYO CCEIVED
WASHINGTON,D.C.
WEST PALM BEACH
July 29, 2003 JUL :5 1 2003
: ity of Huetingten Eeac
PERSONAL AND CONFIDENTIAL
Jennifer McGrath
City Attorney
City of Huntington Beach
P.O. Box 190
2000 Main Street
Huntington Beach, CA 92648
Re: FireMed Program
Dear Ms. McGrath:
You have asked us to review the City's FireMed Program(the"Program"), as _ -
described in Chapter 8.68 of the Huntington Beach Municipal Code (the"Code"), for
compliance with certain healthcare laws. Specifically, we will address the following questions:
1. Does the Program violate insurance licensure requirements under state law?
2. Does the Program violate the federal Anti-kickback Statute or the related provision in the
1996 Civil Monetary Penalties Law prohibiting inducements to beneficiaries?
3. Does the Program result in fraud against Medicare, Medicaid or private insurance
companies?
CONCLUSIONS
1) The Knox-Keene Heath Care Service Plan Act of 1975 (the"Knox-Keene Act") regulates
health care service plans, which are defined as arrangements involving periodic or prepaid
amounts in exchange for health care services. Although the Program falls within the
definition of a"health care service plan," and most such plans must be licensed under the
Act, Section 1349.1 sets forth a specific exemption from licensure for a plan operated by a
public agency for the provision of emergency medical services. The Program falls within
this exemption.
FOLEY&LARDNER WRITER'S DIRECT LINE CLIENT/MATTER NUMBER
11250 EL CAMINO REAL, SUITE 200 858.847.6712 999700-0719
SAN DIEGO,CA 92130
P.O. BOX 80278 EMAIL ADDRESS
SAN DIEGO,CALIFORNIA 92138 0278 mscarano@foleylaw.com
858.847.6700 TEL
858.792.6773 FAX DLMR239715.1
WWW.FOLEYLARDNER.COM
FOLEY : LARDNER
Jennifer McGrath
July 29, 2003
Page 2
2) The Office of Inspector General of the Department of Health &Human Services ("OIG") has
indicated that ambulance membership programs do not violate either the Anti-kickback
Statute or the Civil Monetary Penalties Law, so long as they are operated in conformance
with certain actuarial tests. We understand the Program meets those tests. The Office of the
General Counsel of the Department of Health and Human Services has also recognized the
legality of programs meeting such tests.
3) Arrangements wherein a provider simply waives insurance deductibles and copayments
(collectively, "cost sharing amounts")have sometimes been challenged by private insurance
companies on the grounds that by eliminating the insured's obligation to pay for the services,
they also eliminate the insurer's obligation. Providers who routinely waive cost sharing
amounts are also vulnerable to allegations of misrepresentation to both private and public
insurers if the waiver is not disclosed to them. Under the Medicare program, waivers or
discounts provided to a large segment of a provider's patients can similarly implicate
Medicare's prohibition on charging Medicare in excess of the provider's usual and customary
charges, as defined.
The Program does not present significant risk under any of these theories because it does not _
result in the waiver of cost sharing amounts or the misrepresentation of the City's charges.
Rather, although the Program is exempt from licensure as an insurance product, it operates as
a supplemental insurance product wherein members prepay these amounts. This is a critical
distinction. We also note that scores of public agencies throughout the country have operated
membership programs for many years, and we are unaware that any of these agencies'
programs have ever been challenged either by the government or by any private insurer.
BACKGROUND
Pursuant to Chapter 8.68 of the Huntington Beach Municipal Code(the"Code"),
the City operates a FireMed program(the"Program")which permits Program members to
"prepay at a fixed price, the uninsured portion of emergency medical and ambulance services
provided by the Huntington Beach Fire Department."(§ 8.68.020(c).) "Members"include
residents of the City, resident businesses which have registered with the City and prepaid the
voluntary membership fee(and their employees). (§ 8.68.020(c).)
The Fire Chief or his/her designee is responsible for the development of rules,
policies and procedures relating to the implementation and administration of the Program.
(§ 8.68.030.) FireMed members are entitled to receive, as benefits of the Program: (1)
prepayment of the uninsured portion of their advanced life support ("ALS"), basic life support
("BLS") and emergency ambulance transportation charges; (2) as an optional item, certain
benefits related to their medical information; and (3) also as an optional item, notification of
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Jennifer McGrath
July 29, 2003
Page 3
parents or other family members. Further,the Code states that"[a]dditional member benefits
may be added at the discretion of the Fire Chief'. (§ 8.68.060.)
The Code provides for two categories of fees, to be"set from time to time by
resolution of the City Council." The first category is comprised of the "fee for services"or"user
fee" to be paid to the City by patients (or applicable third party payers) for BLS,ALS and
emergency ambulance services provided to their patients. The second category of fees is the
"voluntary membership fee"to be paid by residents and businesses who wish to receive the
benefits of the Program, on a voluntary basis. (§ 8.68.070.)
The current membership and user fees were established by City Council
Resolution Number 2002-71. The membership fees are set at$36 for a household; $18 for a
low-income household; $36 for a business, to include coverage of the first ten employees; and$3
additional for businesses for each full time employee in excess of ten. The user fees are set at.
two different levels, with non-FireMed members charged more than FireMed members. For
example, the "non-FireMed member rate" for basic life support services (without transport) is
$157.50, while the "FireMed member insurance rate" for the same services is $132.50.
When members receive the specified emergency medical services ("EMS") from
the City, it bills their public or private insurance programs ("third party payors")using the -
member rates. The members are relieved of any cost sharing amounts. We are informed that the
aggregate amount of the membership fees collected from all members during any given year
exceeds the amount of the cost sharing amounts of which all members are collectively relieved.
Our analysis will focus on this aspect of the Program and will assume that it operates as
described above.
DISCUSSION
Membership programs such as FireMed,which are also referred to as
"subscription programs," are a common method for EMS providers to raise funding. Scores of
air and ground ambulance providers throughout the country have operated such programs for
many years. They are particularly prevalent among public and non-profit(e.g., volunteer) _
ambulance services, but are also used by many for profit companies. Such programs raise legal
issues under state insurance licensing laws; Medicare law; and private insurance indemnity
contracts. We will discuss each of these issues below.
Does the Program Violate California Insurance Licensure Law?
The California Knox-Keene Act provides that all "health care service plans" must
be licensed, unless they fall within an exemption. "Health care service plan" is broadly defined
as any entity which provides or arranges for health care services in exchange for a prepaid or
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Jennifer McGrath
July 29, 2003
Page 4
periodic fee. (Health& Safety Code § 1349.) Because ambulance membership programs result
in ambulance providers rendering or arranging for ambulance services in exchange for
membership fees, which are both"prepaid" and"periodic," such programs constitute"health
care service plans"within the meaning of the Act.
Section 1349.1 of the Knox-Keene Act provides an exemption from the licensure
requirement for public agencies that operate EMS membership programs. Specifically, that
section provides as follows:
A health care service plan which satisfies both of the following
criteria is exempt from Section 1349 [the statute requiring
licensure for health care service plans]:
(a) provides only emergency ambulance services or advanced life
support services, as define the Section 1797.52, or both.
(b) is operated by the state of California, any city, county, city and
county, public district, or public authority.
Although the City's program also covers basic life support ("BLS") services, we
believe the California Department of Managed Health Care ("DMHC"), the state agency with
jurisdiction over the Knox-Keene Act,would nevertheless view the City to be in conformance
with this exemption requirement. Other public agencies throughout California which operate
exempt membership programs also provide BLS services.
We note that another current exemption, found in Section 1300.43.3 of Title 28 of
the California Code of Regulations,permits private ambulance companies to operate subscription
programs in"rural areas," as defined. The DMHC has issued a proposed rule which would
amend this regulation so that non-rural providers can also operate subscription plans throughout
California, so long as they comply with certain disclosure obligations. We have confirmed with
the DMHC that it will not deem these requirements applicable to public agency membership
programs, since Section 1349.1 of the Act establishes a separate statutory basis for their
exemption.
Does the Program Violate the Medicare Anti-Kickback Statute or
the Civil Monetary Penalties Law?
The Medicare Anti-kickback Statute, 42 U.S.C. § 1320 a-7b(b), prohibits any
remuneration, in cash or in kind, directly or indirectly, in exchange for ordering or
recommending services which are reimbursed by Medicare, Medicaid and certain other federal
health care programs. The statute has been broadly construed as prohibiting any arrangement
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Jennifer McGrath
July 29, 2003
Page 5
where even"one purpose" is to induce the referral of federal program business. United States v.
Kats, 871 F.2d 105 (91h Cir. 1989); United States v. Greber, 760 F.2d 68 (3rd Cir.) cert. denied,
474 U.S. 988 (1985). Violation of the Anti-kickback Statute is both a federal crime and
constitutes grounds for exclusion of a provider from participation in federal health care
programs.
In 1996, Congress also added a new Civil Monetary Penalties Law, 42 U.S.C.
Section 1320a-7a(a)(5) (the "CMP Law"), which explicitly prohibits remuneration provided to
beneficiaries as an inducement for ordering services from one provider as opposed to another.
This provision is more specific than the Anti-kickback Statute.
The OIG has repeatedly indicated that routine waivers of patient copayments and
deductibles may violate the Anti-kickback Statute as well as the CMP law. Most recently, the
OIG addressed this issue in its Final Compliance Program Guidance for Ambulance Suppliers,
published at 68 F.R. 14245, 14253 (March 24, 2003). In that document, the OIG states:
Arrangements that offer patients incentive to select particular
ambulance suppliers may violate the Anti-kickback Statute, as well
as the CMP law that prohibits giving inducements to Medicare and
Medicaid beneficiaries that the giver knows, or should know, are
likely to influence the beneficiary to choose a particular
practitioner,provider or supplier of items or services payable by
Medicare or Medicaid. [Citations]. Prohibited incentives include,
without limitation, free goods and services and copayment waivers.
The statute contains several exceptions, including financial
hardship copayment waivers . . .
An ambulance supplier should not routinely waive federal health
care program copayments (e.g., no `insurance only' billing),
although the supplier may waive a patient's copayment if it makes
good faith, individualized assessment of the patient's financial
need. Financial hardship waivers may not be routine or advertised. -
In addition to hardship waivers, the OIG indicates in the Compliance Guidance
that membership programs are permissible so long as "the subscription or membership fees
collected from subscribers or members, in the aggregate, reasonably approximate—from an
actuarial or historical perspective—the amounts that subscribers would expect to spend for cost
sharing amounts over the period covered by the subscription or membership agreement." On the
other hand, the OIG notes that"subscription or membership programs that offer patients
purported coverage only for the ambulance suppliers services" are problematic if such programs
are used as a subterfuge"to disguise the routine waiver of cost sharing amounts."
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The OIG's views on this issue are also reflected in a recent OIG Advisory
Opinion, No. 03-11 (issued May 21, 2003), in which a non-profit emergency ambulance services
provider requested an opinion regarding a program which appears very similar to the City's. The
requestor of that opinion had been operating its subscription program since 1963. The program
had two classes of subscribers: individuals who pay an annual $20 subscription fee and
businesses that pay annual subscription fees proportionate to their size ($30 for businesses with
fewer than twelve employees; $50 for those with twelve or more employees).
In reviewing the program, the OIG noted that"the arrangement may implicate the
Anti-kickback Statute [and the CMP Law] to the extent that it might be construed as a routine
waiver of Medicare Part B cost sharing amounts." However, the OIG stated that the program
would not be viewed as a violation if either of the following two alternative tests were satisfied:
(i) the subscription fees collected from subscribers reasonably
approximate the amounts that the subscribers would expect to
spend for cost sharing amounts over the period covered by the
subscription agreement, or
(ii) the amount collected from subscribing Medicare Part B
beneficiaries reasonably approximate the amounts that the -
subscribing Medicare Part B beneficiaries would expect to spend
for cost sharing amounts.
In other words, the OIG indicated that the provider could determine whether its
program was compliant with the Anti-kickback Statute and the CMP Law by establishing and
documenting that the subscription fees charged all members equaled or exceeded the amount the
provider reasonably expected to receive from all members, or could perform this same analysis
based solely on its Medicare beneficiaries. The OIG went on to state that, "[i]f the subscription
amounts are not actuarially or historically reasonable in comparison to the uncollected cost
sharing amounts under one of the two alternatives noted above, then we would view the
subscription program as a potentially illegal practice to disguise the routine waiver of Medicare
Part B cost sharing amounts." In the requestor's case, since one of these tests was met, the OIG
stated that it would not find the requestor to be in violation either under the Anti-kickback
Statute or the CMP Law.` Thus, the OIG has recognized that membership programs which meet
1 Although each Advisory Opinion can technically be relied on only by the party to which it is issued,the
Advisory Opinions are published by the OIG as a means of informing the provider community how the OIG views
particular issues. Consequently,we believe the City and other similarly situated providers can rely on the OIG's
determination, set forth both in this Advisory Opinion and in the Compliance Program Guidance,as providing a
high level of certainty regarding the parameters of an acceptable program
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the foregoing actuarial tests can be viewed as involving the prepayment of copayments as
distinguished from a waiver.
The OIG's recent views on this topic are consistent with the longstanding views
of the Centers for Medicaid and Medicare Services ("CMS") and its parent agency, the
Department of Health and Human Services ("HHS"). In a letter issued August 14, 1991, the
General Counsel of HHS opined that a subscription or membership program will constitute an
unlawful waiver of copayments or deductibles if the membership fee is"very small and... not
based on a good faith assessment of actuarial risk." The letter noted that such"programs are
simply a disguise for illegal routine waiver of co-insurance and deductibles." On the other hand,
similar to the OIG's more recent assessment, the letter states that programs which charge an
amount constituting"a reasonable assessment of the actuarial risk faced by"the provider do not
violate the Anti-kickback Statute. Letter from Michael J. Astrue, General Counsel, HHS, to the
Honorable Lawrence J. DeNardis, dated August 14, 1991.2
CMS has also addressed another aspect of ambulance membership or subscription
programs in its Carrier's Manual. In Section 2306E of the Manual, CMS states that is
permissible for an ambulance provider with such a program to bill Medicare and to collect from
it the portion of the provider's charge that Medicare would ordinarily pay in the absence of the
membership program. Although the Manual does not address the Anti-kickback Statute -
specifically, and that statute is primarily within the purview of the OIG rather than CMS, this
Manual provision provides further indication that the government does not see a kickback(or,
for that matter, any other)problem with a properly structured membership program.
Another issue raised by Medicare law is the prohibition on charging Medicare
beneficiaries rates which are substantially in excess of the provider's usual charges,unless there
is good cause. We will address that issue, and other potential grounds for alleging that the
Program results in fraud against public or private insurance programs,below.
2 See also letter from Elmer W. Smith,Director, Office of Eligibility Policy of the Health Care Financing
Administration,HHS,to David Werfel,Consultant to American Ambulance Association,dated June 3, 1986. That
letter states, in pertinent part,that"[iln accepting Medicare assignments from subscribers and treating annual fees
under subscription agreements as premiums for deductible and co-insurance coverage, ambulance companies
function in a manner similar to group practice pre-payment plans."
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Does the Program Result in Fraud Against Medicare, Medi-Cal or
Private Insurance Companies?
Medicare and Medi-Cal
Federal law prohibits providers from submitting claims to Medicare and Medicaid
(Medi-Cal in California) which contain charges "substantially in excess of the provider's "usual
charges,"unless there is "good cause." (42 U.S.C. § 1320 a-7(b)(6); 42 C.F.R. § 1007.701(c).)
The law further provides that the Secretary of HHS may exclude a provider from participation in
Medicare and Medicaid(as well as other federal healthcare programs) for doing so.
The OIG has liberally construed the meaning of"usual charges." For example, in
the Compliance Program Guidance for Ambulance Suppliers issued by the OIG in March of this
year, the OIG states as follows:
[This rule] is not implicated unless the supplier's charge for
Medicare or Medicaid patients is substantially more than its
median non-Medicare/Medicaid charge. In other words, the
supplier need not worry unless it is discounting close to half of its
non-Medicare/Medicaid business.
We do not believe this rule is implicated in a situation where a differentiation in
charges is based on whether a Medicare beneficiary is a member or non-member in a
subscription program. Rather, this rule is designed to prevent providers from overcharging the
Medicare program(and its beneficiaries) as compared to similarly situated patients who are not
covered by Medicare. Under the City's Program, a Medicare beneficiary who is not a FireMed
member is charged the same amount as a non-Medicare beneficiary who is not a FireMed
member. Similarly, a Medicare beneficiary who is a FireMed member is charged the same
amount as the non-Medicare beneficiary who is a FireMed member. Therefore, similarly
situated patients are charged the same amount regardless of whether they are Medicare
beneficiaries.
We find additional support for our conclusion in the Medicare Carrier's Manual
("MCM"), which is the document created by CMS which sets forth certain rules governing
payment for ambulance and other Part B Medicare services by the government's contractors or
"carriers." The MCM has a specific discussion of both membership programs and differential
charging practices established by many municipalities. Specifically, MCM Section 2306.E
includes the following discussion:
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There are numerous methods of financing ambulance companies.
Some ambulance companies provide services without charge to
residents of specific geographical areas but charge non-residents to
the extent they are able to pay(e.g., through private insurance).
Under those circumstances, the free services provided the residents
would be excluded from coverage, while the service furnished non-
residents would be covered.
Ambulance companies which charge membership fees generally
do not charge additional fees for services covered under the
membership plan, although they may charge for certain other
services (e.g., additional trips or mileage). Services furnished by
such ambulance companies, including services for which payment
is made under the membership plan, are considered to be services
for which there is a legal obligation to pay. Therefore, such
services are reimbursable provided the ambulance company bills
all third party payers. The ambulance company's charges to non-
members and to other third parties would be considered in
determining the reasonable charge. .
Although this discussion does not address our precise question, it does indicate
the government's acceptance of two common municipal practices which are at issue here: (1)
charging differing amounts based on residency, and(2)membership programs in which
copayments are deemed prepaid. Approval of membership programs and residency as a basis for
differential charging practices is also found in recent opinions of the Office of Inspector General
of the Department of Health and Human Services. (See, e.g., OIG Advisory Opinions 03-9 and
03-11.) In effect, the Huntington Beach program combines these permissible practices by
providing lower charges for individuals and businesses which reside in the City, and which have
also joined the membership program. Based on prior acceptance of these factors as a basis for
differential charges, we do not believe the OIG or any other government agency would find that
the Program violates the prohibition on charging Medicare in excess of provider's usual charges.
We also note that although the City's historic charges to the Medicare program
may have some limited impact on the amount it is currently paid by Medicare, Medicare
payments are currently based on a blend of a provider's so-called"reasonable charge" and the
amount specified in the Medicare ambulance fee schedule, subject to limitations. Under Med-
Cal, providers are paid the amounts specified in a state fee schedule,without any regard to their
current or historic actual charges, so long as their charges are above the very low Medi-Cal fee
schedule amount. Therefore, although the City is.prohibited from billing Medicare and Medi-
Cal beneficiaries in excess of its "usual charge," unless there is "good cause,"the amount
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actually charged by the City is of limited relevance to the amount Medicare actually pays and is
of no relevance to the amount that Medi-Cal pays. We are informed that the member rate is still
significantly higher than the amount payable to the City under either Medicare or Medi-Cal.
Therefore, even if the member rates were treated as the City's UCR for purposes of these
programs, this would probably not affect the amount payable to the City by either Medicare or
Medi-Cal. In other words, even if the lower rate were treated as the City's UCR, the programs
would probably not be paying the City any more—and there would be no potential for an
overpayment or recoupment of same, nor do we believe there would be any basis to allege that
the City has filed false claims.
Finally, as indicated above, there is a"good cause" exception to the prohibition
on charging Medicare less than a provider's usual charges. The reason for the differential
between the member and non-member rate is that the provider has received a prepayment for
part of the charge. Thus, even if the member rate were deemed to be the City's UCR, this
prepayment would likely be viewed as constituting"good cause."
Private Insurance Companies
Private indemnity health insurance plans usually indemnify their insureds based
on a percentage (e.g., 80%) of either"actual charges" or UCR, or the lesser of the two. -
Individual health insurance policies have varying definitions of these terms,but there is no
statutory definition under California law that limits health care providers with respect to the
amount they may bill. The California Attorney General has acknowledged that there is no clear
or precise definition of what constitutes a provider's"usual fee" or"usual charge." (64 Op. Cal.
Atty. Gen. 782 (1981).)
Providers are entitled to use their discretion in establishing their fee schedules or
in providing discounts to certain categories of patients. Except to the extent that a provider may
enter into a contract with an insurer agreeing otherwise, it is generally entitled to bill patients and
their insurers according to whatever rate schedule it may establish. As discussed above, we
believe membership in the Program is a reasonable basis for establishing two separate rate
schedules, one of which is discounted' and we do not believe a private insurer could.
successfully argue that the non-member rate is in excess of the City's UCR or its actual charge
based on this practice.
' Providers give a variety of discounts based on a number or factors, and in general this does not affect or
limit provider's UCR for private insurance purposes,except to the extent that the provider may enter into a contract
with a specific insurer that does so. The City has no such contracts.
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Although a provider has discretion in establishing its charges, it does have an
obligation to accurately state those charges in its claim to private as well as public insurers. (See
64 Op. Cal. Atty. Gen. 782 (1981).) We understand that when the City files a claim for payment
with an insurer which covers a member in the Program, it specifies the discounted member rate.
When it files a claim for a non-member, it bills the non-member amount. Thus, there is no
misrepresentation on that basis.
In the event the City were simply waiving copayments, it might be alleged that its
charges for members submitted on its claims misrepresent its actual charge, since its actual
charge could be viewed as only 80%of the amount stated on its claim. However, as noted
above, the Program does not result in the waiver of copayments; rather, the membership fee
constitutes a prepayment of the copayment, in the nature of a supplemental insurance product.
Although not directly on point, a 1998 court decision,Delta Dental Plan of California, Inc. v
Mandoza, 139 F. 3d 1289 (1998), supports this characterization. That case involved the
establishment of a program wherein dentists would waive patient copayments in exchange for an
annual membership fee similar to the membership fee payable in the Program. The provider
called this a"supplemental plan" and obtained licensure for it from the California Department of
Corporations as a limited Knox-Keene plan.' Delta Dental Plan attempted to penalize the
providers who established and participated in the plan, asserting that it facilitated the unlawful
waiver of copayments in violation of Delta's rights and requirements as a primary insurer. The
State Department of Corporations disagreed with Delta's characterization and supported the
validity of the"supplemental plan" as a prepayment,rather than a waiver, of Delta's copayment.
While the City's program is not licensed under the Knox Keene Act, Section
1349.1 of the Act provides a specific exemption from the licensure requirement for public
agencies which establish ambulance membership programs such as the City's. Given the state's
recognition of the program in the Delta case as a supplemental insurance program, we believe it
is reasonable to treat the City's membership Program as a supplemental insurance plan which is
exempt from licensure. Thus, the City can be viewed as collecting 80%of its charges from the
primary insurer and satisfying the 20%balance through its own supplemental prepayment
program, rather than billing only 80% of its charges and waiving the balance. Viewed in this
manner, the City does not misrepresent the amount charged by stating the full amount of the
member rate on its claim form.
Finally, there have been cases in which insurers have challenged cost sharing
waiver programs on the grounds that the if the patient were relieved of all financial liability for
'The California Department of Corporations had jurisdiction over Knox-Keene plans in California prior to
creation of the Department of Managed Health Care, which currently governs such plan.
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the services, the insurer, as an indemnitor only of those amounts the patient was obligated to pay,
was also relieved of all financial liability. For the same reasons discussed above(i.e., cost
sharing amounts due by members are prepaid, not waived), this theory presents no material risk
to the City.
In closing,we note that our analysis and conclusions are based on the facts and
assumptions stated above. To the extent those facts and assumptions are inaccurate or
incomplete, our conclusions and analysis may require modification.
I hope the foregoing answers all of your questions. Please do not hesitate to call
if you have any questions.
Very truly yours,
R. Michael Scarano, Jr.
DLMR239715.1
RCA ROUTING SHEET
INITIATING DEPARTMENT: -_ FIRE
SUBJECT: ;'ORDINANCE NO. AMENDING CHAPTER 8.68 OF'
THE HUNTINGTON BEACH MUNICIPAL CODE RELATING
TO THE FIREMED PROGRAM_
COUNCIL MEETING DATE: August 18, 2003
RCA ATTACHMENTS STATUS=
Ordinance (w/exhibits & legislative draft if applicable) Attached
Resolution (w/exhibits & legislative draft if applicable) Not Applicable
Tract Map, Location Map and/or other Exhibits Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorney) Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney) Not Applicable
Certificates of Insurance (Approved by the City Attorney) Not Applicable
Financial Impact Statement (Unbudget, over $5,000) Not Applicable
Bonds (If applicable) Not Applicable
Staff Report (If applicable) Not Applicable
Commission, Board or Committee Report (If applicable) Not Applicable
Findings/Conditions for Approval and/or Denial Not Applicable
EXPLANATION I OR MISSING ATTACHMENTS
REVIEWED RETURNED FORWARDED
5..
Administrative Staff ( ) )
Assistant City Administrator (Initial) ( ) ( )
City Administrator (Initial)
City Clerk ( )
EXPLANATION FOR RETURN OF ITEM. '
(Below • . For Only)
RCA Author: Olson/Cameron/Justen
0 4
H. B. INDEPENDENT
PUBLISH DATE: 09/18/03
CITY OF HUNTINGTON BEACH
LEGAL NOTICE
ORDINANCE NO. 3616
Adopted by the City Council on September 2,2003
"AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING CHAPTER 8.68 OF THE
HUNTINGTON BEACH'MUNICIPAL CODE RELATING TO THE FIREMED PROGRAM"
SYNOPSIS:
Ordinance No. 3616 amends Chapter 8.68 of the Huntington Beach Municipal Code Relating to the Fire
Med Program. The ordinance clarifies issues relating to Member vs. Non-Member Rate Schedules, Medi-
cal Patients; Enrollment and Eligibility, additional Member Benefits.
THE FULL TEXT OF THE ORDINANCE IS AVAILABLE IN THE CITY CLERK'S.OFFICE.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting held
Tuesday September 2, 2003 by the following roll call vote:
AYES: Sullivan, Coerper, Boardman,Cook, Houchen, Hardy
NOES: None
ABSENT: Green
This ordinance is effective 30 days after adoption.
CITY OF HUNTINGTON BEACH
2000 MAIN STREET
HUNTINGTON BEACH, CA 92648
714-536-6227
CONNIE BROCKWAY, CITY CLERK
glsynopsis/draftsyn