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Fix Up the Hospital Van (Again!): OIG Finalizes Local Transportation Safe Harbor

In early December 2016, the Department of Health and Human Services Office of Inspector General (OIG) finalized the local transportation safe harbor under the Federal anti-kickback statute (81 FR 88368). Health care providers of all types have long offered transportation to patients in need with the primary motivation being increased access to care. In spite of this, these offerings typically raise concerns for regulators under either the Federal anti-kickback statute or the Civil Monetary Penalties law which includes a prohibition against inducements to beneficiaries. The final rule allays these concerns.

Under the final rule, health care providers and suppliers designing local transportation programs—free or discounted programs to their patients—must fulfill the elements of the final rule to avoid fraud and abuse issues (42 CFR § 1001.952(bb)).

First, the provider or supplier offering the service must be an “eligible entity.” This is a broad term that includes any entity or individual but excludes those that primarily provide health care items. OIG—in preamble commentary—indicates that it interprets this to mean excluding DME suppliers and pharmaceutical companies.

Second, eligible entities can only offer the free or discounted transportation services to established patients. An “established” patient is either an individual who has “selected and initiated contact” in order to set up an appointment with the eligible entity offering the program or is an individual who has had a prior appointment with the entity. Arrangements for transportation after patients have selected their source of health care services are less likely to be viewed as inducements or otherwise suspicious.

Third, eligible entities are prohibited from using air, luxury, or ambulance-level transportation in their programs.

Fourth, any entity designing a transportation program or one that has an established program needs to memorialize the structure of the program in a policy outlining the specifics of the transportation program. The policy should then be applied on a consistent basis.

Fifth, any entity offering a free or discounted local transportation program may not advertise the service and may not transfer any costs of the program to Medicare, Medicaid, TRICARE, or any other Federal health care programs through the cost reporting process. The final rule states that providers or suppliers are permitted to include the name of the entity offering the service on the outside of the vehicle but are prohibited from including fliers, pamphlets, videos, or any other sort of material advertising the entity’s services inside the vehicle.

Finally, transportation programs are limited to only local transportation. Urban areas—defined as those cities in a Metropolitan Statistical Area—are limited to any address within a 25-mile radius of its facility or a 50-mile radius if the entity is located in a rural area. Rural areas are simply defined as not urban. In preamble commentary, the OIG indicated that the distances are calculated “as the crow flies.” So, even if it takes longer than 50 miles by road to reach an established patient for a dialysis appointment, it would be permitted under the rule as long as the patient’s address is within the 50-mile radius of the rural entity offering the transportation.

Many elements of the final rule will be familiar for those with existing transportation programs designed to align with current OIG Advisory Opinions. These existing opinions outline an acceptable framework for local transportation programs that pose a low risk of fraud or abuse (i.e., Advisory Opinions 00-7, 09-01, 11-02, 15-13, and 16-10).

In the event your organization has an existing free or discounted transportation program or is in the process of designing a program, plan to prepare a written policy that conforms to the requirements of the safe harbor.

Zachary J. Buxton

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500