Houston Ambulance Service Providers Focus of Moratorium

The federal government on Friday announced a six-month moratorium under the Affordable Care Act to halt enrollment of Houston-area ambulance service providers in Medicare, Medicaid and the Children's Health Insurance Program in a bid to combat waste.

The moratorium marks the first use of a new law created by the ACA that allows the Health and Human Services secretary to issue a moratorium to combat fraud, waste or abuse in Medicare or Medicaid. The department said in a statement that it issued the moratorium “based on data analysis and agency experience,” and cited six cases filed in Houston by the local U.S. attorney’s office since April 2012 that allege ambulance transport companies in the area submitted $9.5 million in fraudulent claims. Seven individuals were charged in connection to those cases, and so far, three have pleaded guilty and one was convicted by trial.

"CMS carefully examined Medicare beneficiary access to ground ambulance services in Houston and concluded that the moratorium will not affect access to care," according to a statement released by the Centers for Medicare and Medicaid Services. "The agency also worked closely with the state Medicaid Agency in Texas to evaluate patient access to care, and the State determined that Medicaid and CHIP beneficiaries will continue to have access to services."

As the Houston Chronicle reported in 2011, fraudulent billing for medically unnecessary ambulance transports has cost taxpayers millions of dollars.

“Many of the patients are neither physically debilitated nor confined to a sick bed. They are not headed to, or coming from the hospital, and there is no medical emergency,” the Chronicle article says. “Their reason for traveling in an ambulance — equipped with a driver, a medical technician, a gurney, a defibrillator and red sirens — is a mystery even to some of them.”

The Texas Legislature also made efforts to combat ambulance fraud during the 2013 legislative session. The omnibus Medicaid fraud legislation that Gov. Rick Perry signed into law, Senate Bill 8, authored by state Sen. Jane Nelson, R-Flower Mound, and sponsored by state Rep. Lois Kolkhorst, R-Brenham, requires emergency medical service companies to meet stricter licensing standards in order to weed out fraudulent providers banking off unnecessary ambulance transportation.

The new state law, which takes effect Sept. 1, will require EMS firms to obtain a $100,000 line of credit and provide the Department of State Health Services with a $50,000 surety bond. If EMS firms seek license renewal in subsequent years, the required credit line and surety bond would be reduced.

Supporters of the measure argue that it’s relatively easy to set up an EMS firm in Texas, which has allowed the proliferation of fraudulent providers. The financial requirements would not harm legitimate providers, they argue.

“These businesses sometimes fail to meet basic regulations or overcharge for services to make a quick profit,” according to supporters cited in a House report. “If the state begins an investigation of the firm, the owner can simply shut the firm and begin a new one through a friend or relative.”

Opponents of the measure argued that the credit and surety bond requirements would increase costs for legitimate providers, which already operate on small profit margins. 

This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.