On Dec. 7, 2016, the Department of Health and Human Services, Office of Inspector General (“OIG”) released a final rule (“Final Rule,” see 81 F.R. 88368) modifying certain existing safe harbors to the anti-kickback statute and adding safe harbors that provide new protections or codify existing statutory protections. In the Final Rule, the OIG also amended the definition of “remuneration” in the Civil Monetary Penalties law (“CMP”) and incorporated certain statutory exceptions into the CMP regulations. The focus of this article is on the new safe harbor for free or discounted transportation. You can read the full text of Final Rule here.

The anti-kickback statute (“AKS,” see 42 U.S.C. § 1320a-7b) makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive remuneration of any type (whether in cash or in kind) in an effort to induce or reward the referral of federal healthcare program business. Violation of the AKS is a felony punishable by fines and imprisonment. Recognizing the broad reach of the AKS, Congress gave the OIG authority to adopt “safe harbors” that protect specific arrangements or practices from criminal prosecution that present a low risk of harm to the federal healthcare programs (see 42 C.F.R. 1001.952).

Local Transportation

“Eligible entities” that meet the elements of the safe harbor may provide free or discounted local transportation to federal healthcare beneficiaries for the purpose of obtaining medically necessary items or services.

An eligible entity is any individual or entity that provides healthcare items and services other than those primarily supplying health care items, such as DME or pharmaceutical companies (see 81 F.R. 88368, 88380). Only ordinary transportation may be provided by an eligible entity; luxury, air, and ambulance level transport are excluded from protection. In addition, an eligible entity must have a policy which is uniformly and consistently applied and one in which the availability of the transportation is wholly unrelated to the volume or value of Federal healthcare program business. Moreover, the eligible entity may not market or advertise the free or discounted local transportation services either internally or externally.

Local transportation is protected when it is provided to “established patients” (see 81 F.R. 88368, 88381). This term encompasses anyone who has “made an appointment,” including an initial appointment, with the particular provider or supplier. The OIG construes “made an appointment” as the patient or the patient’s surrogate choosing the provider of his or her own volition, independently of any influence by the selected provider.

The OIG is distinguishing between the provider reaching out to the patient (which is a not protected) and the patient or surrogate initiating contact with the selected provider. In its commentary, the OIG says that the case manager or other physician staff member who calls to schedule the appointment, even a first time appointment, can inquire about the availability of transportation. The key is that the appointment and the discussion was initiated by someone independent from the selected provider.

In the Final Rule, the OIG adopted a distance requirement to define when the transportation would be deemed “local.” The non-rural distance is no more than 25 miles from the provider “as the crow flies.” Thus, the actual mileage of a given route within the 25 mile radius could be more than 25 miles; for rural transports the distance can be no more than 50 miles. The OIG has dropped its proposed language requiring transport to the nearest provider because it hinders patient choice and access. The OIG went on to state, however, that transporting patients to distances outside the ranges is not per se illegal but it would take it out of the safe harbor.

The OIG also adopted provisions in the Final Rule to separately protect shuttle services offered by eligible entities (see 81 F.R. 88368, 88389). The term shuttle means an ordinary vehicle that is not air, luxury or ambulance level transport. As with the general transportation safe harbor, the shuttle service must not be marketed or advertised. It must be made available only within the eligible entity’s local area, (i.e. 25 miles for non-rural areas and 50 miles for rural areas) from any stop on the route to any stop where healthcare items and services are provided.

Takeaway for Providers

Providers currently offering free or discounted transportation or shuttle services should evaluate their existing policies and procedures in light of this Final Rule. Similarly, those seeking to offer these services should develop policies and procedures that incorporate the elements of the Final Rule.