One of the most frustrating issues for hospitals, particularly during a public health emergency with extremely limited bed capacity, is the inability to discharge a patient in a timely manner because they do not have transportation home. The Health and Human Services Office of Inspector General (OIG) has taken a step toward easing this bottleneck by amending the local transportation safe harbor to the Anti-Kickback Statute. The amendment expands the mileage allowance for patients residing in rural areas and eliminates the mileage limitation for patients being discharged home. A copy of the amendment to the safe harbor was published in the Federal Register today and is available online. This article reviews the background and key terms of the safe harbor as modified by the OIG.

Background

Providing free items or services to patients participating in federal health care programs creates risk of violating the Anti-Kickback Statute and the Civil Monetary Penalty Statute.

The federal Anti-Kickback Statute (AKS) applies to Medicare, Medicaid, and other federal health care programs (except the Federal Employees Health Benefit Program). The AKS prohibits the offer, payment, solicitation or receipt of any remuneration, directly or indirectly, covertly or overtly, in cash or in kind, for (1) the referral of patients, or arranging for the referral of patients, for the provision of items or services for which payment may be made under federal health care programs; or (2) the purchase, lease or order, or arranging for the purchase, lease or order, of any good, facility, service or item for which payment may be made under federal health care programs.¹ The offense is classified as a felony and is punishable by fines of up to $25,000 and up to five years’ imprisonment.

The Civil Monetary Penalty (CMP) statute prohibits a provider from offering or providing “remuneration” to any individual eligible for Medicare or Medicaid “that such person knows or should know is likely to influence such individual to order or receive from a particular provider ... any item or service for which payment may be made” by Medicare or Medicaid.² Providing a free service, like transportation, would meet the definition of “remuneration.” Violations are punishable by a civil money penalty of $20,866 per indictment.

Congress authorized the OIG to promulgate “safe harbors” in order to protect certain business practices that could arguably violate the AKS or CMP statute but are considered non-abusive, beneficial, or innocuous arrangements. Health care providers who tailor their business practices to the contours of a safe harbor can be assured their business practices will not be subject to enforcement action under the AKS statute or the CMP beneficiary inducement statute.

On December 7, 2016, the OIG created a safe harbor for health care providers offering free transportation to their patients under certain circumstances (the 2016 Rule).³ The regulation was recently amended as described below (the 2020 Rule).⁴ Adopting a transportation policy that comports with all elements of the safe harbor will eliminate risk of an enforcement action. Adopting a policy that adheres to most but not all of the requirements of the safe harbor mitigates, but does not eliminate, the risk of an enforcement action.

Key Elements of the Local Transportation Safe Harbor

The local transportation safe harbor⁵ contains certain key elements.

• The transportation provided must not involve air, luxury or ambulance-level transportation

• The transportation may only be provided to an “established patient”

• The transportation must be provided within a provider’s primary service area, which is identified as a certain radius from the provider’s location

• The transportation may be in the form of a shuttle service

• The provider must not publicly market or advertise the free or discounted local transportation services

Types of Transportation

The 2020 Rule did not modify the text prohibiting the use of air, luxury or ambulance-level transportation. But the OIG did clarify in commentary to the final rule that ride-sharing services (such as Uber or Lyft), or other taxi services, can be used by a provider to provide the free or discounted local transportation. The OIG did not believe that a modification to the safe harbor was required. The OIG did note, however, that such ride sharing services can advertise that free or discounted transportation may be available and urge riders/patients to contact their medical providers for more information. However, they cannot advertise which medical providers they are contracted with who provide free or discounted transportation.

Established Patient

The safe harbor contains a very broad definition of the term “established patient.” It includes “a person who has selected and initiated contact to schedule an appointment with a provider or supplier to schedule an appointment, or who previously has attended an appointment with the provider or supplier.”⁶ In the 2016 Rule, the OIG explained it does not want free transportation to serve as a recruiting tool or to bring patients in for unnecessary services. Given the fact that providers cannot market the availability of this service (as discussed below), the OIG was satisfied that — as long as the patient initiated the contact with the provider — they would be eligible for free transportation.

It should be noted that the patient does not have to personally make the appointment in order to fit the category of an “established patient.” Comments in the final rule note that the appointment can be scheduled by somebody on the patient’s behalf with the consent of the patient, such as “a family member, a case manager or a provider or supplier where the patient is attending an appointment.”⁷

There were no substantive changes made to the definition of an “established patient” in the 2020 Rule.

Distance Limitation

Historically, the provision of free or discounted local transportation could only be offered to patients within a provider’s local service area, which was a somewhat ambiguous concept.⁸ The 2016 Rule identified bright lines, establishing a radius from the provider’s location that would be considered the provider’s primary service area. In urban areas,⁹ free transportation can only be provided to patients within a 25-mile radius of the provider. The 2020 Rule expands the radius for providers in rural areas from a 50-mile radius to a 75-mile radius. Although some commenters urged the OIG to adopt a 150-mile radius for rural providers, the OIG settled on 75 miles as a distance that is not likely subject to abuse.

There was some discussion in the 2020 Rule regarding distinct distance limitations for special groups of patients. The OIG declined to create an exception for groups of patients with special needs, but noted the availability of a new safe harbor for patient engagement tools and supports,¹⁰ which could be used to provide transportation or transportation vouchers (of a value not to exceed $500 annually) to patients in a target population.¹¹

The 2020 Rule also eliminates the distance limitation if the patient is being discharged from an inpatient facility. The patient may be provided free or discounted transportation if they had been admitted to the facility or if they had been placed in observation status at the facility for at least 24 hours. The patient’s residence can include transportation back to a custodial care facility, such as a nursing facility or a homeless shelter.

Shuttle Service

The rule also creates a safe harbor for providers who provide a shuttle service to and from certain locations. The shuttle service is also limited to a 25/75-mile radius. However, the shuttle service may be provided to patients who are not “established” patients. In other words, a patient could just show up at a certain location and not have contacted the clinic previously for an appointment. Likewise, there is some ability to advertise the availability of the service, but only the schedule and stops can be posted. There were no substantive changes made to the shuttle service provisions in the 2020 Rule.

Marketing

Finally, in order to meet the safe harbor, the provider “does not publicly market or advertise the free or discounted local transportation services.”

In the 2016 Rule, the OIG noted the marketing prohibition does not prohibit signage on the vehicles. If patients were transported in a van labeled with the provider’s name, that would not be prohibited by the final regulation.

The regulation also does not prohibit a provider from proactively discussing transportation when scheduling appointments: “it would be permissible to ask if the patient has a reliable mode of transportation.” As a part of that discussion, the provider can inform the patient of the availability of free transportation if needed.

The regulation clearly prohibits advertising the availability of free transportation on the provider’s website, or in printed materials distributed to the public.

The OIG also noted if the patient receives transportation in the form of a taxi or bus, “the transportation would be paid for or reimbursed to individual patients through, for example, taxi vouchers or bus fare, or cash reimbursement if the patient has a receipt to show that he or she incurred the cost of the transportation.”

The 2020 Rule did not make any substantive revisions to the marketing prohibition, other than adding “ride-sharing services” to the examples of using a taxi or a bus.

1. S.S.A. § 1128B(b); 42 U.S.C. § 1320a-7b(b).

2. 42 U.S.C. § 1320a-7a(a)(5); 42 C.F.R. § 1003.101, et seq.

3. Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements, 81 Fed. Reg. 88368, 88409 (December 7, 2016).

4. See this Federal Register Article online

5. 42 C.F.R. §1001.952(bb).

6. 42 C.F.R. § 1001.952(bb); Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements, 81 Fed. Reg. 88368, 88409 (December 7, 2016).

7. Id. at 88382.

8. Please note that the word “provider” as used in this article applies not only to providers such as hospitals, but also to suppliers such as a physician office or clinic, and other individuals or entities that primarily supply health care items.

9. The word “rural” is defined in the regulation as an area that is “not an urban area,” and “urban area” is defined as a Metropolitan Statistical Area.

10. 42 C.F.R. §1001.952(hh).

11. For more information regarding the new safe harbor for patient engagement tools and supports, see our article.