While the HHS Office of Inspector General (OIG) since 2002 has considered enacting a safe harbor for complimentary local transportation for beneficiaries, the OIG continues to evaluate local transportation proposals on a case-by-case basis under the advisory opinion process. In the latest Advisory Opinion No. 09-01, a skilled nursing facility proposed offering complimentary local transportation for family and friends of its residents to the facility. The facility, which was not readily accessible by public transportation, also was separated from part of its primary service area by a $9.00 toll bridge. The proposed complimentary transportation service generally would pick up and drop off friends and family at designated public locations within the facility's service area and only provide transport to and from the facility.

The OIG analyzed the proposal by first reviewing the following adverse factors, that have been a touchstone in past advisory opinions:

  1. Is the transportation offered in a manner related to referrals, such as selection of passengers based upon a diagnosis, condition or treatment that might result in lucrative revenues or selection based on a patient's insurance coverage? In this case the OIG found that it was not. However, in its review of this factor, we believe the OIG may have made its most important observation in this opinion. The OIG stated in a footnote that the likelihood that the free transportation might induce a passenger to choose the facility as his or her Medicare or Medicaid nursing facility in the future "was too speculative to constitute an impermissible inducement." This may open the door to other friend and family convenience programs.
  2. Is luxury or specialized transportation such as limousines, airline tickets or ambulance transports involved? The OIG, in this case, approved the provider's plan to use a facility van.
  3. Does the program involve longer-distance transports, especially to beneficiaries residing outside an offeror's primary service area such as "leap-frog" arrangements that provide free or subsidized transportation to beneficiaries traveling from outside the provider's local area, potentially bypassing other providers? See OIG Advisory Opinion No. 07-02 prohibiting subsidization of long distance ambulance transports. In this case, the transportation was local, although for a $9.00 toll, the bridge should be a relatively long span!
  4. Are no other reasonable means of transportation available? Does the area have adequate public transit service? In this case, no reasonable public transport was available to the facility.
  5. Does the provider intend to market or advertise the free transportation arrangement? In this case, the OIG approved the facility's proposal to utilize limited advertising of the proposed arrangement locally within a few community newspapers and through handbooks and/or written materials provided to patients by discharge planners at local hospitals and by notice to the facility's residents. This appears to be an area of apparent liberalization by the OIG, as most prior local transportation opinions precluded advertising such service.
  6. Does the provider provide free transportation only to or from its premises? In this case, the provider only offered service to its facility. Facilities that offer scheduled transportation from public locations, as discussed in the Advisory Opinion, also should confirm that their transportation plan and vehicles comply with state and local public transportation statutes and regulations.
  7. Does the provider bear the costs of the free transportation? Transportation arrangements that shift costs to federal healthcare programs are suspect. In this instance no cost shifting was involved.


The program approved by the OIG in this instance goes beyond the local transportation approved in the OIG Letter Clarifying the Provision of Complimentary Local Transportation for Program Beneficiaries and prior opinions, but we believe it is consistent with congressional intent not to impose civil monetary penalties against persons offering complimentary local transportation of nominal value. H.R. Conf. Rep. No. 104-736, at 255 (1996).