Chasing Ambulance Stories

On Tuesday, the City of Richardson issued this press release:

Richardson Among Several Texas Cities Settling Dispute Concerning Medicare/Medicaid

(Richardson, TX) -- The City of Richardson is one of many Texas cities that contracted with Southwest General Services of Dallas, L.L.C. (SGS) to perform all aspects of ambulance billing services. SGS was selected based on its substantial experience and expertise in Medicare and Medicaid billing and compliance with state and federal laws, and those representations and obligations were included in Richardson's contract for services.

In 2006, SGS failed to incorporate changes in its billing methodology to comply with new federal rules regarding the standards for ambulance transport charges for Medicare and Medicaid reimbursement. The failure to change the billing method resulted in Medicare and Medicaid being over charged for some services. Billing for all other ambulance transports was not affected.

The City has reached a settlement agreement in the amount of $160,979.56 with the U.S. Attorney's Office to release the City from any claims arising from the failure of SGS to properly bill for services. Although Richardson disputes responsibility for any penalties, a settlement of the matter will avoid further defense expenses and exposure to higher damages and penalties.

The City has also put SGS and the contractor's insurance company on notice that the City's rights under contract indemnify the City from all claims arising out of SGS's performance of the contract and from any violation by SGS of federal, state, and local laws, ordinances, regulations and policies. The City also put SGS on notice that it will seek full restitution of damages that have come as a result of improper billing practices.

After the jump, interpreting the doctor's handwriting.

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Richardson was one of several north Texas cities settling with the feds on this matter. The City of Dallas paid $2.5 million to settle. Richardson's ambulance bill of $160,000 is relatively small. What connects all of the cases is that the cities all outsourced their ambulance billing practices to SGS.

Although the press release omits details of the lawsuit, it's my understanding that Richardson was overbilling Medicare for ambulance services, charging for advanced life support services whether or not the patient required more than basic services. Medicare law specifically requires that the patient's needs be used to determine the level of billing and not whether or not the ambulance and crew are equipped and trained to provide advanced care.

The Richardson press release leaves a lot of questions unanswered. Does Richardson claim this was an innocent mistake arising out of ignorance of the law? Or, as has been alleged in other cities, did anyone suggest fraud may have played a role here? How was that $160,979.56 settlement figure arrived at? How much of it is a refund for overbilling, how much is penalty and interest? How much money did the feds originally demand? What is the monetary estimate of the "damages" that the press release claims Richardson will seek full restitution for?

If this were Washington, where the Executive Branch paid out $160,000 to settle a lawsuit, I can't help thinking that the Legislative Branch would hold public hearings to get to the bottom of the questions. Instead, the government body settling this case is a city government where the boundary between executive and legislative functions tends to blur. The City Manager and City Council all sit together and work together on Monday nights and deal with inconvenient situations like this ambulance lawsuit in closed, executive session. Those Washington hearings may be more for show, for scoring political points than for good governance, but closed executive sessions can sometimes also appear to be for show, for avoiding political embarrassment. The public is left with an unsatisfactory, bare bones press release, requiring Richardson residents to use their imaginations in conducting their own post mortems. That's not a wise practice by the City Council. As we've seen in the past, some Richardson residents have pretty vivid imaginations.