The Department of Health and Human Services Office of Inspector General (OIG) recently implemented a new safe harbor to the federal Anti-Kickback Statute and beneficiary inducement statute, which went into effect on January 6, 2017.1 The new safe harbor, which was published by the OIG in a final rule dated December 7, 2016,2 protects the provision of free or discounted local transportation by eligible entities to Medicare or Medicaid beneficiaries, provided that certain conditions are met. While non-compliance with the safe harbor does not necessarily mean that a transportation arrangement will violate the Anti-Kickback Statute, children’s hospitals should take note of the safe harbor requirements and assess whether any of their existing transportation arrangements should be restructured.

Under the safe harbor, “eligible entities” (which are defined to include all entities and individuals except those that primarily supply health care items such as durable medical equipment suppliers and pharmacies) may provide free or discounted local transportation under two scenarios.3 The requirements of the safe harbor for each of these scenarios are outlined below.

Scenario 1: Individual Transportation Arrangements

The first scenario protects the free or discounted transportation of an individual by an eligible entity to a health care provider or supplier, provided that all of the following requirements are met.4

  • The availability of the transportation is set forth in a policy that is applied uniformly and consistently. The OIG declined to mandate any specific parameters for the policy in the final rule, other than that it should comply with the distance requirements of the safe harbor and the prohibition against transporting patients only to referral sources (discussed in more detail below). In addition, the OIG indicated that the policy should not include criteria that bases transportation eligibility on whether the patient is a Medicare or Medicaid beneficiary.5
  • The availability of the transportation is not determined in a manner related to the volume or value of federal health care program business.
  • The transportation is not air, luxury, or ambulance-level transportation.
  • The transportation is not publicly advertised, no marketing of health care items and services occurs during the course of the transportation or at any time by drivers who provide the transportation, and drivers or others arranging for the transportation are not paid on a per-beneficiary-transported basis. Despite these marketing limitations, the OIG indicated in the final rule that for safety reasons, it would be permissible to include signage designating the source of the transportation on vehicles. The OIG also indicated that informing individual patients that transportation is available is not considered prohibited marketing under the safe harbor. However, eligible entities should not advertise the free transportation on their websites or in printed materials distributed to patients.6
  • The transportation is only made available to individuals who are “established patients” of both the eligible entity providing the transportation services, if such entity is a provider or supplier of health care services, and the provider or supplier to or from which the individual is being transported. The safe harbor defines “established patients” to mean persons who have selected and initiated contact to schedule an appointment with a provider or supplier, or who previously have attended an appointment with the provider or supplier. This means that eligible entities are permitted to arrange transportation for both existing patients and new patients, provided that the new patients (or their representatives) have at least contacted the provider or supplier to whom the patient is being transported to schedule an appointment.7
  • The transportation is only provided within 25 miles of the health care provider or supplier to or from which the individual is being transported, or within 50 miles if the individual resides in a rural area.
  • The transportation is provided only for the purposes of obtaining medically necessary items and services. The OIG clarified in the final rule that transportation may not be provided for any other purposes, such as obtaining counseling or to get to food banks or food stores.8 In addition, the OIG indicated that transportation could not be contingent on the patient choosing a particular provider. For example, if a hospital offers transportation to a cancer patient who needs to see an oncologist, the hospital would need to provide the transportation to the oncologist of the patient’s choice (subject to distance limitations) and not just oncologists who are referral sources for the hospital.9
  • The eligible entity that makes the transportation available bears the costs of the transportation and does not shift the burden of these costs onto any federal health care program, other payers, or individuals.

Scenario 2: Shuttle Services

The second scenario to which the safe harbor applies is the provision of a free or discounted “shuttle service” by an eligible entity, which means a vehicle that runs on a set route and schedule.10 The requirements for a shuttle service incorporate some of the same requirements for individual transportation arrangements set forth above, including the restrictions on air, luxury, or ambulance-level transportation, marketing (except that the shuttle schedule and stops may be publicly posted by the eligible entity), driver payments, and cost-shifting. In addition, the shuttle service may only be provided within the eligible entity’s local area, meaning that there may be no more than 25 miles from any stop on the route to a stop where health care items or services are provided (unless one of the stops is within a rural area, which permits the distance between that stop and all providers and suppliers on the route to be 50 miles).11 However, unlike the requirements for individual transportation arrangements, there is no “established patient” requirement for shuttle services, and shuttle service routes may include stops at non-health care locations.12

1 42 C.F.R. § 1001.952(bb). 2 81 Fed. Reg. 88368. 3 42 C.F.R. § 1001.952(bb)(1) and (2). 4 42 C.F.R. § 1001.952(bb)(1). 5 81 Fed. Reg. 88385-86. 6 Id. at 88386-87. 7 Id. at 88382. 8 Id. at 88384. 9 Id. at 88385. 10 42 C.F.R. § 1001.952(bb)(2). 11 81 Fed. Reg. at 88389-90. 12 Id. at 88390.