On December 7, 2016, the Health and Human Services Office of Inspector General (OIG) issued a Final Rule expanding safe harbors to the federal Anti-Kickback Statute and amending the definition of remuneration in the federal Civil Monetary Penalty law. While the Final Rule implements several new safe harbors that apply to health centers,[1] this blog focuses on the new safe harbor protection for free or discounted local transportation services for federal health care program beneficiaries.

Safe Harbors under the Anti-Kickback Statute

The purpose of the Federal Anti-Kickback Statute[2] is to prevent fraudulent or abusive arrangements that could result in higher costs to the Federal Government or compromise the quality of care provided to beneficiaries of federal and state health care programs such as the Medicaid and Medicare programs. In particular, the Anti-Kickback Statute prohibits any person or entity from knowingly or willfully soliciting or receiving (or offering or paying) remuneration directly or indirectly, in cash or in kind, to induce patient referrals or the purchase or lease of equipment, goods or services, payable in whole or in part by a federal or state health care program.

A series of statutory and regulatory safe harbors have been established to protect certain business practices and arrangements that the OIG has deemed to present a low risk of fraud and abuse.  Arrangements that meet the requirements of these safe harbors are exempted from scrutiny under the Anti-Kickback Statute.[3]  Health care providers may voluntarily seek to comply with safe harbors so that they have the assurance that their business practices will not be subject to enforcement action.

New Safe Harbor for Free or Discounted Local Transportation Services

The Final Rule creates a safe harbor to protect free or discounted local transportation services for Federal health care program beneficiaries.

In order to be protected under the safe harbor, free or discounted transportation services must meet all of the following conditions:

• Documented in policy: Entities must have a set policy regarding the availability of transportation assistance, and the policy must be applied uniformly and consistently. While the OIG recommends maintaining documentation for each patient to whom transportation is provided, such documentation is not required under the Final Rule.
• Availability must not be related to the past or anticipated volume or value of Federal health care program business: For example, transportation services cannot be offered only to individuals on Medicaid or Medicare. Instead, a health center may take into account an individual patient’s need for transportation.
• Limited modes of transportation: The modes of permissible transportation are limited and exclude air, luxury and ambulance-level transportation.
• Prohibition on marketing: Transportation assistance may not be publicly advertised or marketed to patients or others who are potential referral sources. This prohibition includes marketing on websites, in printed materials or during transportation.  Providers may inform patients that transportation is available if it is done in a targeted manner. For example, when a patient schedules a procedure that requires a safe ride home, the provider may ask if the patient has transportation.
• Available only:
  • To established patients: Under the definition in the Final Rule, a patient is “established” with a provider once an appointment is made. It is not necessary that the patient previously received care from the provider to be considered “established.”
  • Within local area: The safe harbor protects local transportation which is defined as up to 25 miles in urban settings and up to 50 miles in rural areas.  The distance is measured directly and includes any route within that radius (even if such route is more than 25 or 50 miles when driven).
  • For purposes of obtaining medically necessary items and services: The safe harbor does not protect free or discounted local transportation for other purposes (such as applying for government benefits, obtaining social services, or visiting food banks or food stores).

The Final Rule will go into effect on January 6, 2017.  Reviewing and/or establishing a free and discounted transportation policy should be part of your health center’s compliance work plan.  For more information on how to include this Final Rule and the OIG’s Work Plan for 2017 in your health center’s compliance program, join us for our upcoming webinar, “OIG Year in Review.”

If you have additional questions on the Final Rule, please contact our Health Care practice group at Feldesman Tucker Leifer Fidell LLP, www.FTLF.com or 202-466-8960.

[1] Also included in the Final Rule are safe harbor protections for payments between Medicare Advantage organizations and health centers and for waivers by pharmacies of cost-sharing obligations imposed under any Federal health care program.  More details can be found in the Final Rule.

[2] 42 U.S.C. §1320a-7b.

[3] In 2007, the OIG issued the final rule establishing regulatory standards for the “Federally-Funded Health Center Safe Harbor.” The Federally-Funded Health Center Safe Harbor protects certain arrangements between health centers that receive grant funds under Section 330 and providers / suppliers of goods, items, services, donations and loans from prosecution under the Anti-Kickback Statute.  Other safe harbors commonly utilized by health centers include employment arrangements, referral arrangements and equipment and space rental.