A Possible Green Light for Patient Transportation Services: OIG Proposes Revised Safe Harbors to the Anti-Kickback Statute for Health Care Providers

by K&L Gates LLP

On October 3, 2014, the Office of Inspector General of the Department of Health and Human Services (“OIG”) published a proposed rule and request for comments (“Proposed Rule”), which would amend the Anti-Kickback Statute (“AKS”) safe harbors, most notably to allow certain health care providers to offer free or discounted transportation services to their patients.[1] Comments to the Proposed Rule are due no later than 5 p.m. Eastern Standard Time on December 2, 2014.

Note that the Proposed Rule also addresses the Civil Monetary Penalties Law, which is the subject of another K&L Gates Alert to follow.

Proposed Safe Harbor for Free or Discounted Transportation Services
The federal AKS makes it a crime to knowingly or willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under federal health care programs. However, the Secretary of Health and Human Services has promulgated “safe harbors” protecting certain payment and business practices from prosecution under the AKS. Consistent with prior subregulatory guidance, the Proposed Rule would establish a new safe harbor to protect free and discounted local transportation services provided to beneficiaries of federal health care programs.

The OIG proposed to define “Eligible Entities” for purposes of this safe harbor as “any individual or entity, except for… [those] that primarily supply health care items” such as durable medical equipment and pharmaceuticals, as well as family members and agents of these suppliers.[2] In commentary, the OIG also proposed to exclude clinical laboratories from being Eligible Entities. Citing concerns about home health providers in particular, the OIG also requested comment on whether health care providers should be excluded from using this safe harbor if free transportation is provided to their referral sources. Noting that this potential restriction could be problematic for “health systems, health plans, accountable care organizations, or other integrated networks of providers and suppliers,” though, the OIG specifically requested comments from these entities.[3]

The Proposed Rule also includes the following requirements:

  • Eligible Entities could only provide transportation services to established patients (i.e., not new patients) in order to obtain medically necessary items and services.  If necessary, the Eligible Entity could also transport a family member or other person assisting the patient.
  • Services would have to be determined in a manner unrelated to the past or anticipated federal health care program business
    • For example, the Eligible Entity would not be allowed to limit the services to only patients who were referred from particular sources. Likewise, the Eligible Entity could not make the transportation offer contingent on a patient seeing a particular provider who is a referral source of the Eligible Entity.
    • However, the Proposed Rule would expressly allow Eligible Entities to place limitations on the furnishing of transportation, as long as such limitations were unrelated to the value or volume of referrals (e.g., a mileage limit or a limit on the number of trips offered).
    • The Proposed Rule would require that the availability of the services not be based on the type of treatment a patient might receive (e.g., it could not be limited to cancer patients receiving only the treatment with the highest reimbursement). However, a transportation program could be restricted to patients whose conditions require frequent or critical appointments and who do not have reliable transportation. In this regard, the Proposed Rule expressly states that offering transportation based solely on the number of appointments and without consideration of the patient’s need for transportation raises the possibility that the offer is based on the volume of federal health care program business and, thus, would not be protected
  • The transportation methods could not include air, luxury, or ambulance transportation. The Proposed Rule does not differentiate between emergency and non-emergency use of an ambulance vehicle.
  • The transportation services could not be publicly advertised or otherwise marketed to patients or other potential referral sources, and no marketing of health care items or services could occur during the course of the transportation (other than simple signage). Additionally, Eligible Entities would not be allowed to compensate drivers or others involved in arranging the transportation on a per-rider basis.
  • Only local transportation services could be provided. The Proposed Rule defines “local” to mean that the patient is transported no more than 25 miles. The OIG also requested suggestions for alternative methods of determining whether the transportation is considered “local,” particularly for rural or underserved areas.
  • Eligible Entities would have to bear the costs of the free or discounted local transportation services and could not shift the burden of these costs onto state or federal health care programs, other payors, or individuals. Safe harbor protection would not be available if the Eligible Entity providing the transportation and a destination provider had any referral agreement tied to the transportation. “For example, if an ambulance supplier had an agreement with a hospital to provide certain free transports to hospital outpatients (e.g., via van service) in exchange for receiving the hospital’s transports that are payable by Medicare Part B, the free transportation would not be protected.”[4]

The Proposed Rule also solicits comments on (i) whether Eligible Entities should be allowed to provide transportation for non-medical purposes that are related to the patient’s health care (e.g., transportation to a government benefits office, social service agency, or grocery store), and (ii) whether the safe harbor should separately protect Eligible Entities providing transportation in the form of a bus or van service on a regular route that serves neighborhoods, public locations, and health care providers.

Additional Safe Harbors and Amendments
The Proposed Rule also seeks to add new safe harbors to protect the following arrangements, which generally correspond to existing statutory language:

  • Certain pharmacy cost-sharing waivers for financially needy Medicare Part D beneficiaries;
  • Certain cost-sharing waivers for emergency ambulance services furnished by state- or municipality-owned and operated ambulance services;
  • Certain remuneration between Medicare Advantage organizations and federally qualified health centers pursuant to a written agreement; and
  • Drug discounts offered by manufacturers at the point of sale to beneficiaries under the Medicare Coverage Gap Discount Program.

Further, the Proposed Rule would also make a technical correction to the safe harbor for referral services in order to revert back to the language promulgated in the 1999 final rule, which was inadvertently changed during subsequent revisions. The intent is to restore the requirement that the payment amounts cannot be based on the volume or value of referrals from either party to the other.[5]

Next Steps
Health care providers should consider whether the proposed transportation safe harbor would be broad enough to protect any transportation services that they would like to offer to their patients. Provider types that could be excluded from the definition of “Eligible Entity” under the Proposed Rule should pay particular attention to this issue in their comments. The OIG has signaled a willingness to craft this safe harbor in a way that will permit a variety of types of transportation programs, as long as they pose a low risk to federal health care programs, so the comment period is an opportunity for providers to help define this exception. Comments to the Proposed Rule are due no later than 5 p.m. Eastern Standard Time on December 2, 2014.

[1] Medicare and State Health Care Programs: Fraud and Abuse; Revisions to Safe Harbors Under the Anti-Kickback Statute; and Civil Monetary Penalty Rules Regarding Beneficiary Inducements and Gainsharing: Proposed Rule, 79 Fed. Reg. 59717 (Oct. 3, 2014).

[2] Id. at 59732.

[3] Id. at 59723.

[4] Id. at 59724.

[5] 42 C.F.R. § 1001.952(f) (emphasis added).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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