Friday, January 6, 2017

When Can Patients Be Offered Free or Local Discounted Local Transportation Without Violating the Anti-Kickback Statute? OIG Releases New Rules and Safe Harbor Guidelines for Free and Discounted Transportation to Established Patients. 

One persistent and tricky regulatory issue in healthcare is when can patients be offered free or discounted local transportation without it being deemed a violation of the Anti-Kickback Statute (AKS)? 

In other words, when is offering transportation part of promoting access to care and not a prohibited inducement or a recruiting tool?  

Good news: the healthcare industry have new guidance from the Office of the Inspector General (OIG). However, these sets of rules will be effective on January 6, 2017 and if your transportation program does not meet the criteria, your business will be out of compliance.

The OIG's final rule 42 CFR 1001.952 adds certain “low risk” safe harbors under the AKS including protection for free or discounted local transportation services that meet specified criteria. Transportation is the focus in this blog post.

How and When Can You Give Free or Discounted Local Transportation Services to Patents Without Violating the AKS?

The regulations contain a new safe harbor that protects free or discounted local transportation provided by physician, physical therapists, hospitals. surgery centers, laboratories and many other providers.  It does not apply to any person or entity whose primary business is to supply health care items (such as pharmaceutical companies or durable medical companies).  There are clearly patients who would benefit from free or discounted transportion, such as those who cannot drive or take public transportation, mentally ill patients or isolated/homebound patients.

What are the basic rules a physician, hospital, surgery center or other provider needs to follow in order to fall within this new safe harbor when it gives free or discounted transportation to patients? These are the starting guidelines that need to be evaluated on a case-by-case basis:

1.  There should be a company policy that sets forth the availability of the free or discounted transportation. It is to be applied uniformly and consistently. It is not determined in a manner related to past or anticipated volume or value of federal health care program business.

2.  The transportation should be offered to all established patients, not just Medicare patients for example, that meet the established criteria in the policy.

3.  It should be for an "established patient" of the entity that is providing the transport. A patient can be “established” for purposes of this safe harbor after he or she selects and initiates contact with a provider or supplier to schedule an appointment. If a patient is unable to call a provider or supplier himself, or has otherwise given consent for a person (such as a family member, a case manager, or a provider or supplier where the patient is attending an appointment) to schedule appointments for him, then a request for an appointment made on behalf of the patient is sufficient to meet this criterion.

4.  Do not market or advertise "free or discounted" transportation. This will make it appear the purpose of the transport is to induce referrals and violates the rules.  Do not have any heath care marketing (such as brochures) during the transports or at any other time by the drivers who provide transportation. 

5.  Drivers or others arranging for the transports are not to be paid on a per-beneficiary-transported basis.  

6.  It is to be "local" transportation made available only to patients within 25 miles of the health care provider or supplier to or from which the patient would be transported (or within 50 miles if the patient resides in a rural area). 

7.  The transport is to be for the purpose of obtaining medically necessary items and services. 

8.  The cost of the free or discounted transportation is borne by the entity that is providing or arranging the transport and is not shifted to any federal health care program. 

9.  The free or discounted transportation does not involve air, luxury or ambulance-level transports.  

10.  You can have a “shuttle service” which is defined as a “vehicle that runs on a set route, on a set schedule.” Unlike the safe harbor conditions for free or discounted transportation, a shuttle service does not have to be limited to “established patients.” The shuttle service that includes stops at locations that do not relate to a particular patient's medical care but it would be best if the stops are related to improving health care as this will be monitored by OIG and subject to future rulemaking.  

These are just an outline of the rules and individuals and entities seeking to offer transportation and be protected by the safe harbor should apply these conditions and guidance to their desired program. As it is being crafted, have it reviewed by counsel. There is a concern that larger entities will benefit since they can afford shuttle services and transportation but this may be a way for smaller medical providers to ensure patients keep their appointments and have good continuity of care.

Anti-Kickback Statute: Why Do You Want to be in a Safe Harbor? If the conduct of your business is in a safe harbor, it will be deemed not to violate a rule or regulation. In many businesses, it is common to forge ahead regardless of regulations and seek forgiveness later (such as Uber and Airbnb) but when you're in the healthcare business which involves billing government funded healthcare or insurance companies, violation of rules can result in even medically necessary services being transformed into "false claims" and can result in losing a provider number or facing an administrative or criminal investigations.

The federal AKS provides criminal penalties for individuals or entities that knowingly and willfully offer or receive remuneration in order to induce or reward the referral of business reimbursable by federal health care programs. The statute ascribes criminal liability to parties on both sides of an impermissible “kickback” transaction. The offense is classified as a felony and is punishable by fines of up to $25,000, imprisonment for up to five years or both. Violations may also result in the imposition of civil monetary penalties, program exclusion and liability under the False Claims Act.

So when you're tempted to roll your eyes at compliance (which is understandable at times), be smart and get ahead of your competitors. Be here for the long run.

For more information on the content of this newsletter you can contact Green and Associates' Managing Partner Tracy Green at or 213-233-2260.


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