On October 3, 2014, the Office of Inspector General of the U.S. Department of Health and Human Services (OIG) published a proposed rule to expand the safe harbors and make other modifications applicable to the federal Anti-Kickback Statute (AKS). AKS makes individuals criminally liable for directly or indirectly soliciting, inducing, paying or receiving remuneration for referrals of services that can be reimbursed by a federal healthcare program (Medicare, Medicaid, etc.). It is one of the most utilized federal statutes by government agencies to scrutinize arrangements between healthcare providers.

Because the restrictions are very broad, the OIG created safe harbors for arrangements that it felt did not represent a risk of fraudulent abuse. Each element of a safe harbor must be met in order for a particular arrangement to escape further AKS analysis. In its release of this proposed rule, the OIG intended to update its stance on new arrangements and those arrangements that over time have proven to not be used for fraudulent purposes. The commentary period closed on December 2, 2014, with several healthcare and patient interest organizations applauding the introduction of the local transportation safe harbor, but also citing practical concerns for its limitations.

The Proposed Local Transportation Safe Harbor

The newly proposed local transportation safe harbor would protect free or discounted local transportation services to “established patients” by “Eligible Entities.” Thus, if a healthcare provider complied with the safe harbor, then its practices also would be considered an exception to the definition of “remuneration.” OIG proposed this safe harbor after being concerned that its prior interpretation of “nominal value” remuneration of $10 per item or service and $50 in the annual aggregate was overly restrictive in the context of complimentary transportation.

To qualify as an “established patient,” the individual must have attended at least one appointment or used a certain service once before − in other words, new patients are not eligible for free or discounted transportation. An established patient may be accompanied by a family member or other person who is needed to assist the patient or who is involved in the patient’s care. Furthermore, individual or entity healthcare providers are “Eligible Entities” if they primarily supply healthcare items and if the distance from the patient’s location to the Eligible Entity to which the patient would be transported is no more than 25 miles. The OIG solicited comments on whether a more expansive service area should be allowed for rural and underserved areas. The OIG further requested comments on additional protections that could be implemented in the event a healthcare provider wants to arrange for transportation services to another provider, or a health system provides free transportation among various healthcare providers in a large network. Finally, the OIG considered whether to require Eligible Entities taking advantage of the safe harbor to maintain documentation on whether each patient has a financial or medical need for the services.

The Safe Harbor’s Limitations

  1. Durable medical equipment suppliers, laboratories and pharmaceutical companies are excluded from the list of Eligible Entities, and the OIG is also considering excluding home health providers due to the high risk of using the transportation to steer increased use of services.
  2. Services would need to be offered to all established patients and not have strings attached, such as selection of particular providers.
  3. Transportation cannot be offered solely to patients who require frequent appointments or expensive treatment.
  4. Air, luxury and ambulance transportation are prohibited.
  5. Eligible Entities cannot market their transportation services or conduct marketing for healthcare services while providing such transportation; provided that signage on the vehicle naming the organization is not considered marketing.
  6. Eligible Entities cannot pay drivers or others involved in arranging the transportation on a per-beneficiary-transported basis, rather than an hourly or mileage basis.

Relevant Commentary

An overall recurring theme in the comments is that the “established patient” rule is overly prohibitive and could prevent groups of beneficiaries from receiving medical care. For instance, Cleveland Clinic explained that because of the size of its campus and the breadth of the population it serves, it has new or established patients, visitors and guests that rely on its shuttle buses for transportation. Similarly, Cleveland Clinic argued for the creation of eligibility criteria − such as illness, caretaker involvement, access to safe public transportation and lack of financial means for transportation − in case Eligible Entities decide to limit their local transportation program. UnitedHealth Group issued a similar comment, explaining that limiting the safe harbor to include only patients who have had face-to-face visits with healthcare providers would undermine the benefit of free transportation for beneficiaries who seek healthcare but who do not have the ability to see their providers for those initial visits. UnitedHealth Group explained that risks of inducement were mitigated since the beneficiaries have already been selected or have been assigned a provider.

Moreover, the American Medical Association pointed out that the term “established patient” is vague and confusing in non-physician office settings, as it is “unclear whether a patient would only need to visit the entity once or if a more established relationship is necessary.” DaVita HealthCare Partners voiced similar concerns, asserting that the established patient rule must not be narrowly construed and should include a situation where a patient has a physician referral or order to another provider. However, DaVita supported the concept that an established patient has a documented financial or transportation-specific need for such complimentary transportation.

A second common concern the healthcare industry had with the proposed rule was the 25-mile travel limitation for local transportation. The AARP urged the adoption of “primary service area” travel distance, as opposed to the fixed mile limitation, to avoid precluding beneficiaries from seeking medical care in rural areas. The American Dental Association supported this view, explaining that in some parts of the United States, dental patients must travel in excess of 25 miles for access to care. Conversely, Adventist Health System indicated that it believed the 25-mile rule to be reasonable so long as there are exceptions for specific circumstances, such as for indigent patients who may need placement in a chemical dependence facility, skilled nursing unit or Veterans Affairs facility outside of the 25-mile radius.

Several commenters supported the inclusion of home health agencies in the definition of Eligible Entities, while UnitedHealth Group advocated for the inclusion of health plans in the definition of an Eligible Entity. UnitedHealth Group argued that health plans can improve clinical outcomes of their members through better care management, which would be bolstered by a coordinated local transportation policy.

It will be interesting to see how the OIG makes a cut on these concerns raised by these prominent healthcare and patient interest organizations, and we will follow any resulting final rule or guidance on this safe harbor. Regardless of the outcome, the OIG’s broad solicitation of comments reflects a commitment to working with stakeholders to develop regulations that improve the access and delivery of care without inducing behavior harmful to the federal government payor programs.