On Dec. 7, 2016, the U.S. Department of Health and Human Services’ (HHS’) Office of Inspector General (OIG) published a final rule revising federal Anti-Kickback Statute (AKS) safe harbors and the beneficiary inducement provisions of the Civil Monetary Penalties Law (CMP Law). The final rule became effective Jan. 6.

The following provides a detailed overview of the long-awaited new AKS safe harbor for free or discounted local transportation services, as well as a brief summary of other key provisions of the final rule.

New AKS Local Transportation Safe Harbor

The newly promulgated local transportation safe harbor to the AKS protects free or discounted local transportation services to “established patients” by “eligible entities” as long as the following conditions are met:

1. The availability of the transportation services is set forth in a policy applied uniformly and consistently and is not determined in a manner related to the past or anticipated volume or value of federal health care program business.
2. The transportation services are not provided via air, luxury or ambulance-level transportation.
3. The transportation is not publicly marketed or 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 transportation are not paid on a per-beneficiary-transported basis.
4. The transportation is made available only to an individual who is an “established patient” of (a) the eligible entity that is providing the free or discounted transportation, if the eligible entity is a provider or supplier of health care service; and (b) the provider or supplier to or from which the individual is being transported. For purposes of this requirement, “established patient” is defined under the new rules as “a person who has selected and initiated contact to schedule an appointment with a provider or supplier … or who previously has attended an appointment with the provider or supplier.”

5. The transportation is made available only within 25 miles of the provider or supplier to or from which the patient would be transported, or within 50 miles if the patient resides in a “rural area.” For purposes of this safe harbor, “rural area” means any area that is not an “urban area” (defined as a Metropolitan Statistical Area or New England County Metropolitan Area, or the following New England counties: Litchfield County, Connecticut; York County, Maine; Sagadahoc County, Maine; Merrimack County, New Hampshire; and Newport County, Rhode Island).

6. The eligible entity makes the free or discounted transportation available only for the purpose of obtaining medically necessary items and services. (Transportation back to a patient’s home is protected.)
7. The eligible entity bears the costs of the free or discounted local transportation and does not shift the burden of such costs onto federal health care programs, other payers or individuals.

Note that “eligible entity” is defined under the local transportation safe harbor to include any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items (e.g., durable medical equipment suppliers or pharmaceutical manufacturers).

In addition, the final rule separately establishes safe harbor protection for “shuttle services” (i.e., a vehicle that runs on a set route and schedule, which may include stops at locations that do not relate to a particular patient’s medical care) so long as all of the requirements described above are satisfied, with two important exceptions:

1. Shuttle services need not be operated in accordance with a policy that is applied uniformly and consistently. However, the implementation of such a policy may be advisable for purposes of risk mitigation.
2. Shuttle services need not be limited to established patients or provided for the sole purpose of obtaining medically necessary items and services (e.g., family members of a patient may utilize the shuttles). However, the shuttle service must be local and will qualify only if there are no more than 25 miles (or up to 50 miles in rural areas) between any stop on the route and any stop at a location where health care items or services are provided.

Be aware that a practice permissible under the AKS is also excepted from the beneficiary inducement prohibitions under the CMP Law. 42 U.S.C. § 1320a-7a(i)(6)(B). Thus, compliance with the newly created local transportation AKS safe harbor will protect the practice under the CMP Law.

Additional Revisions to the AKS Safe Harbors

The following is a brief summary of certain key additional changes to the AKS safe harbors adopted by the OIG in the final rule.

1. Referral Services. A technical correction to the safe harbor protecting referral services clarifies that the safe harbor precludes protection for payments from participants to referral services that are based on the volume or value of referrals to, or business otherwise generated by, either party for the other party.
2. Cost-Sharing Waivers for Emergency Ambulance Services. The OIG finalized a safe harbor to protect waivers and reductions for “emergency ambulance services” furnished by a Medicare Part B ambulance provider or supplier owned or operated by a state, a political subdivision of a state, or a tribal health program. 
3. Medicare Coverage Gap Discount Program. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (ACA), amended the AKS to create a statutory exception for discounts under the Medicare Coverage Gap Discount Program, which provides Medicare beneficiaries with discounts on covered Part D drugs while they are in the coverage gap (i.e., “donut hole”). A new safe harbor protects discounts for “applicable drugs” furnished to an “applicable beneficiary,” as those terms are defined in the Medicare Coverage Gap Discount Program statute.

Revisions to the CMP Law

Various changes to the CMP Law include, among other things, the implementation of ACA-mandated exceptions to the definition of “remuneration” that would not trigger application of the CMP Law. Key changes in this regard are highlighted below.

1. Promotes Access to Care and Low Risk of Harm. The final rule exempts from the definition of remuneration under the CMP Law “items or services that improve a beneficiary’s ability to obtain items and services payable by Medicare or Medicaid, and pose a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs.”  Items or services that pose a “low risk of harm” are those that: “(i) are unlikely to interfere with, or skew, clinical decision making; (ii) are unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (iii) do not raise patient safety or quality-of-care concerns.”  While “items or services that support or help patients to access care, or make access to care more convenient than it otherwise would be” would often be covered by this exception, the OIG stated that “inducements to comply with treatment or rewards for compliance with treatment” would not be covered.
2. Retailer Rewards Program.  The offer or transfer of items or services for free or below fair market value are exempted from the definition of “remuneration” under the CMP Law if: “(i) the items or services consist of coupons, rebates, or other rewards from a retailer; (ii) the items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status; and (iii) the offer or transfer of the items is not tied to the provision of other items or services reimbursed in whole or in part by the program under” Medicare or a state health care program. Note that the term “retailer” is interpreted by the OIG to exclude entities that primarily provide services (e.g., hospitals and physicians). 
3. Financial Need. The final rule provides an exemption to the definition of “remuneration” for offers or transfers of items or services (excluding cash or instruments that can be converted into cash) for free or below fair market value if: (i) the items or services are not offered as part of any advertisement or solicitation; (ii) the offer or transfer is not tied to other services reimbursed under Medicare or a state health care program; (iii) “there is a reasonable connection between the items or services and the medical care of the individual; and (iv) the person provides the items or services after determining in good faith that the individual is in financial need.”