Government scientists struggled to pinpoint the source of the first U.S. salmonella outbreak linked to peanut butter, the kid favorite packed into millions of lunchboxes every day.

Nearly 300 people in 39 states have fallen ill since August, and federal health investigators said they strongly suspect Peter Pan peanut butter and certain batches of Wal-Mart's Great Value house brand - both manufactured by ConAgra Foods Inc.

Shoppers across the country were warned to throw out jars with a product code on the lid beginning with "2111," which denotes the plant where it was made.

How the dangerous germ got into the peanut butter was a mystery. But because peanuts are usually heated to high, germ-killing temperatures during the manufacturing process, government and industry officials said the contamination may have been caused by dirty jars or equipment.

"We think we have very strong evidence that this was the brand of peanut butter. Now it goes to the next step of going to the place where the peanut butter was made and focusing in on the testing," said Dr. Mike Lynch, an epidemiologist at the Centers for Disease Control and Prevention.

The suspect peanut butter was produced by ConAgra at its only peanut butter plant, in Sylvester, Ga., federal investigators said.

ConAgra said it is not clear how many jars are affected by the recall. But the plant is the sole producer of the nationally distributed Peter Pan brand, and the recall covers all peanut butter - smooth and chunky alike - produced by the plant from May 2006 until now.

"We're talking a lot of jars of peanut butter," said Dr. David Acheson, chief medical officer of the Food and Drug Administration's Center for Food Safety and Applied Nutrition.

FDA inspectors visited the now shut-down plant Wednesday and Thursday to try to pinpoint where the contamination could have happened. The FDA last inspected the plant in 2005. Testing was also being done on at least some the salmonella victims' peanut butter jars, but investigators said some may have already been discarded.

The highest number of cases were reported in New York, Pennsylvania, Virginia, Tennessee and Missouri. About 20 percent of all the ill were hospitalized, and there were no deaths, the CDC said.

About 85 percent of the infected people said they ate peanut butter, and about a quarter of them ate it at least once a day, the CDC's Lynch said. It was the only food that most of the patients had all recently eaten.

Salmonella sickens about 40,000 people a year in the U.S. and kills about 600. It can cause diarrhea, fever, dehydration, abdominal pain and vomiting.

But most cases of salmonella poisoning are caused by undercooked eggs and chicken. The only known salmonella outbreak in peanut butter - in Australia during the mid-1990s - was blamed on unsanitary plant conditions.

ConAgra spokesman Chris Kircher said the company randomly tests 60 to 80 jars of peanut butter that come off its Sylvester plant's line each day for salmonella and other germs, and "we've had no positive hits on that going back for years." But he said the plant was shut down as a precaution for further investigation.

"We're trying to understand what else we need to do or should be doing," Kircher said.

An estimated 974 million pounds of peanut butter are sold each year in the U.S., and peanut butter and jelly is the most popular sandwich among children. Peter Pan is one of the nation's top three brands, though well behind market leader Jif. Great Value peanut butter is also produced by some other manufacturers for Wal-Mart.

In a measure of peanut butter's popularity, ConAgra's hot line was swamped with so many calls after the recall was announced on Wednesday that many people got a busy signal. School officials in Houston confiscated students' sandwiches from home and replaced them with those made at schools. And in Georgia, a lawmaker representing one of the nation's biggest peanut-producing areas warned colleagues to throw out jars of peanut butter that he recently handed out.

The outbreak was detected by the CDC and state health agencies when they noticed spikes in the cases of people sickened by an unusual type of salmonella, starting in August. Once peanut butter emerged as a link, the CDC notified the FDA.

Salmonella commonly originates in the feces of birds and animals, and could be introduced at a multitude of stages in the peanut butter-making process. But many safeguards are in place.

While rodents and birds commonly get into peanut storage bins, germs are killed when raw peanuts are roasted. When making peanut butter, the nuts are again heated - above the salmonella-killing temperature of 165 degrees - as they are ground into a paste and mixed with other ingredients before being squirted into jars and quickly sealed.

"The heating process is sufficient to kill salmonella, should it be present," said Mike Doyle, director of the University of Georgia's Center for Food Safety, in the state that produces nearly half of the nation's peanuts.

Experts say the point in the process where salmonella could be introduced and survive would be as the product cools down, is placed in the jars and then sealed. At most plants, those steps take just minutes.

But "there is quite a lot that happens after that heat step ... before it's put in jars. So there's definitely an opportunity for contamination after the roasting," the FDA's Acheson said.

Acheson speculated a small, on-again, off-again source of contamination caused the outbreak, which would explain the relatively small number of illness. That "will make finding it in peanut butter difficult. But that's not going to stop us from looking," he said.

Other states reporting cases are Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Iowa, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Mississippi, Montana, North Carolina, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Texas, Vermont, Washington, Wisconsin and West Virginia.

The strain in this outbreak, Salmonella serotype Tennessee, is comparatively rare, as is salmonella contamination of peanut products, said Caroline Smith DeWaal, director of food safety at the Center for Science in the Public Interest.

It may have taken a long time to identify peanut butter as the source because "it's just not one of the first things you'd suspect," Smith DeWaal said.

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To get a refund, consumers should send lids and their names and addresses to ConAgra Foods, P.O. Box 3768, Omaha, NE 68103. For more information, call (866) 344-6970.

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Associated Press Writers Andrew Bridges in Washington, Josh Funk in Omaha, Neb., and Elliott Minor in Butler, Ga., contributed to this report.

Jems Article

Legal Consult: Municipal Pay-to-Play Arrangements Raise Kickback Concerns

By DOUG WOLFBERG

Many municipalities rely on private companies to provide ambulance service for their citizens. In many cases, the municipality selects a single ambulance company as its exclusive provider, typically through a competitive procurement process using a request for proposals. In recent months, several such RFPs have signaled a disturbing trend and raised significant questions under the federal anti-kickback statute.

The AKS prohibits giving or receiving anything of value in exchange for the referral of health care business that is reimbursable by any federal health care program (Medicare and Medicaid, for instance).  But some recent RFPs require the ambulance company winning the bid to pay substantial remuneration to the municipality as a condition of receiving the exclusive contract. This is commonly called a "pay-to-play" arrangement, and such arrangements currently present some of the most complex economic and compliance challenges for ambulance services.

Three Case Studies 
Three recent municipal ambulance procurements illustrate the surfacing of such pay-to-play concerns. 

Example 1. A city of more than 250,000 people in the Eastern United States issued an RFP that required the winning bidder of the contract to be the municipality's exclusive ambulance provider to pay a "franchise fee" of $350,000 to the city. One bidder unilaterally proposed to pay the city $500,000-or nearly 43% more than the fee established by the city-in an attempt to obtain the valuable exclusive ambulance contract. 

Example 2. An RFP issued by a city of approximately 200,000 in the Western United States made it clear that the bidder that proposed to staff more of its ambulances with city firefighter/paramedics would receive a higher score in the RFP evaluations. The winning bidder would be required to pay the city for the salaries, overtime and benefits of those firefighters at rates far exceeding what a private ambulance company would have to pay its own employees for the same work. The RFP also asked potential bidders to provide an open-ended EMS "enhancement fund," which would be used at the sole direction of the city's fire chief. The RFP established no precise amount of required "contributions" to this fund-thus inviting bidders to pour cash into it to improve their chances of winning the contract. In fact, the winning bidder promised to give 175 AEDs as well as bomb-sniffing dogs to the city-in addition to the cash it contributed to the "enhancement fund"-although the RFP required neither of these. When asked about this fund at the pre-bid conference, a city consultant even joked that the city would like to use the money to buy a "red Porsche for the fire chief."

Example 3.  This city of approximately 175,000 people in the Western United States issued an RFP that required the winning provider to staff ambulances with city firefighters and pay the city the costs of the firefighters' salaries and benefits; locate ambulances in city fire stations and pay rent to the city for the use of that space; pay the city to put new firefighter recruits through their initial training (paying both the recruits' salaries plus their training costs); pay to establish and staff a training vehicle for city firefighters; pay to fill a new "city EMS transport manager" position; and pay into the city's EMS "enhancement fund."

OIG Advisory Opinions 
The Centers for Medicare & Medicaid Services Office of Inspector General has addressed pay-to-play issues related to EMS on at least two occasions. In Advisory Opinion 99-5, the OIG concluded that a city could charge a fee to ambulance companies to reimburse the municipality for its legitimate costs of providing EMS dispatch services. In Advisory Opinion 04-10, the OIG concluded that a municipality could award an exclusive ambulance contract to the provider that bid the highest per-call dollar amount to reimburse the city for the costs of its fire department EMS first response. Central to the OIG's rationale in 04-10 was the city's assertion that even the highest per-call fee proposed by the winning bidder would not exceed the city's costs in providing its first response services. The OIG also cited the fact that the arrangement would not adversely impact competition because the city utilized an open, competitive bidding process to select its exclusive provider.

Although Advisory Opinions 99-5 and 04-10 related specifically to the reimbursement of dispatch and first response costs (and have no binding effect on any other municipal RFPs), they appear to have emboldened other municipalities to seek more and more reimbursement from private ambulance companies as a condition of awarding them exclusive contracts. Other municipalities seem to have taken these limited, non-binding Advisory Opinions and used them to justify many unreasonable and unrelated financial demands-perhaps more broadly than the OIG ever intended these Advisory Opinions to be viewed. This creates an unlevel playing field between public and private providers and threatens the economic stability of the commercial ambulance providers that are forced to pony up for unreasonable or indirect "system costs" to secure a 9-1-1 contract.

These aggressive pay-to-play demands also implicate reimbursement policy. The ambulance industry simply cannot afford to be a funding source for local governments to cover general public safety or other municipal services. Medicare is the single largest payer for most ambulance companies, and the federal government intended the Medicare fee schedule to cover such essential ambulance service costs as personnel, equipment, overhead and supplies provided to Medicare beneficiaries-not to supplement municipal taxes. Moreover, federal and state "balance billing" laws and fee caps in many states prevent many ambulance services from passing along these costs to the consumer.

An ambulance company providing reimbursement to cover direct EMS system costs, such as dispatch or even first response is one thing. But requiring substantial payments for marginally related (or even outright questionable) "system costs" as a condition for winning an exclusive city contract is another. Every dollar an ambulance service must pay a municipality to secure a contract is another dollar that cannot go to fund training, capital improvements, QI programs or a salary increase for deserving EMTs and paramedics.

Fortunately, most municipalities that expect payment from their private ambulance companies recognize that the ambulance reimbursement pie is only so big and confine their reimbursement requests to modest payments for dispatch services or per-call first response fees to offset legitimate and direct costs. Some municipalities even pay their private provider a subsidy to ensure a high level of quality and responsiveness, which is difficult to provide on Medicare and insurance reimbursement alone. Those arrangements provide shining examples of effective public-private relationships that will go much farther in ensuring the long-term success and stability of the EMS system than will the short-sighted attempts by some municipalities to squeeze every penny they can out of their local ambulance service. Such practices miss the mark in protecting the public and can only lead to a weaker emergency response system.  Perhaps it is time for the OIG to take a closer look at these unintended consequences of their earlier pay-to-play opinions in light of these new municipal pay-to-play RFPs.

Author Note: Thanks to my law partner, Steve Wirth, Esq., and fellow EMS Insider columnist Mike Scarano, Esq., for their reviews of this column and their helpful suggestions.

Doug Wolfberg is an attorney with Page, Wolfberg & Wirth, LLC, a national EMS industry law firm that represents private, public and non-profit EMS organizations. He also is a longtime former EMS provider and administrator. Contact him via e-mail at dwolfberg@pwwemslaw.com or visit www.pwwemslaw.com.