M E M O R A N D U M

TO: Hospitals and Ambulance Services

FROM: Grant Carrow, Director, Drug Control Program
Louise Goyette, Director, Office of Emergency Medical Services
Paul Dreyer, Director, Division of Health Care Quality

DATE: December 18, 1997

RE: Drug Restocking Arrangements between Hospitals and Ambulance Services

We are writing with regard to concerns raised about an Advisory Opinion from the Office of the Inspector General ("OIG") of the federal Department of Health & Human Services, issued on October 8, 1997, regarding a hospital's restocking of supplies and medications for ambulances.

Please be advised that the Department of Public Health ("the Department") has determined that hospitals should continue to provide drugs to ambulance services pursuant to their affiliation agreements. The OIG has assured the Department's Office of General Counsel that there is no cause for hospitals to terminate current policies of supplying drugs to ambulance services, based on the Advisory Opinion. The OIG supports the Department's position that the drug supply for ambulance services and patients in the Commonwealth should not be interrupted.

Enclosed is correspondence dated November 25, and December 10, 1997, from the OIG that clarifies the Advisory Opinion (also enclosed) and should allay concerns about hospitals continuing to supply drugs to ambulance services. The OIG explained in its letters that ambulance restocking arrangements with receiving hospitals do not necessarily violate the federal anti-kickback statute. According to the OIG, there are many relevant factors that would be considered in evaluating any particular arrangement for restocking drugs. The Advisory Opinion of October 8, 1997, applies only to the specific factors with which the OIG was presented. Therefore, it is not possible to conclude that the Advisory Opinion applies to any specific hospital or its agreement with an ambulance service to restock drugs. Significantly, even for the specific case outlined in the opinion that the OIG concluded may be in violation of the statute, the OIG recognized "that patient care is of paramount concern and should not be jeopardized during any transition period." The OIG supports the allotment of time for restructuring of any improper or suspect restocking arrangements.

Another important factor in interpreting the Advisory Opinion is that the anti-kickback statute is a criminal statute that requires evidence of criminal intent in order to establish that there has been a violation. That is, even if a particular restocking arrangement does not appear to conform to the statute, there would not be a violation unless it could be proven that the hospital intended to induce referrals through the restocking of drugs.

The Department's Drug Control Program also received assurances from the U.S. Drug Enforcement Administration that it has no objection to affiliation agreements entered into pursuant to regulations of the Office of Emergency Medical Services (OEMS) at 105 CMR 170.986, which permit ambulance services to obtain drugs from hospitals for restocking their ambulances.

The Department maintains that it is imperative that hospitals continue to supply drugs to ambulance services. The Department will continue to work with all concerned parties at state and federal levels to clarify any remaining issues with regard to the supply of drugs to ambulance services.

If you have any questions or comments, please feel free to contact Grant Carrow, Director of the Drug Control Program, at (617) 983-6700 or Tracy Miller, Deputy General Counsel, at (617) 624-5220.


Office of Emergency Medical Services

Division of Health Care Quality


This information is provided by the Drug Control Program within the Department of Public Health.