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OIG Finalizes New Transportation Safe Harbor

On December 7, 2016, the Department of Health and Human Services Office of Inspector General (“OIG”) released a final rule (“Final Rule”) codifying new safe harbors to the Anti-Kickback Statute (“AKS”) and new exceptions to the beneficiary inducement provisions of the Civil Monetary Penalties law (“CMP”). The Final Rule will go into effect on January 6, 2017. The final rule can be found using the following link, https://www.gpo.gov/fdsys/pkg/FR-2016-12-07/pdf/2016-28297.pdf.

The Final Rule creates several new safe harbors to the AKS and new exceptions to the beneficiary inducement provisions of the CMP. Below is a summary of the newly codified Local Transportation Safe Harbor to the AKS.

The Local Transportation Safe Harbor that protects free or discounted local transportation made available by an “eligible entity” to federal health care program beneficiaries 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 is 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, and drivers or others arranging for transportation are not paid on a per-beneficiary-transported basis.
  4. The eligible entity makes the free or discounted transportation available only to an individual who is an “established patient” of the eligible entity if the eligible entity is a provider/supplier of health care items/services and, if applicable, of the provider/supplier to or from which the patient is to be transported.

Note that an “established patient” is defined as any person who has selected and initiated contact to schedule an appointment or who has previously attended an appointment with the provider/supplier in question.

  1. The eligible entity makes the free or discounted transportation available only within 25 miles of the provider/supplier to or from which the patient is transported, provided that, if the provider/supplier is in a “rural area,” the Final Rule extends that limit to 50 miles.

Note that the Final Rule defines rural area as any area that is not an “urban area” (an urban area is 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).

  1. The eligible entity makes the free or discounted transportation available only for the purpose of obtaining medically necessary items and services (although the Final Rule also affirms that transportation back to a patient’s home is protected).
  2. 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” includes any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items (for example, durable medical equipment suppliers or pharmaceutical manufacturers). An eligible entity can be a hospital or a physician, or can also be an entity that does not directly render health care services, such as a Medicare Advantage organization or an accountable care organization.

Last, the Final Rule separately establishes protection under this safe harbor for shuttle services providing local transportation using a set schedule and route. Shuttle services must comply with all of the requirements described above, with two important exceptions: (1) shuttle services need not be operated in accordance with a policy that is applied uniformly and consistently, although implementation of such a policy may be advisable from a risk perspective, and (2) shuttle services need not be limited to established patients or for the sole purpose of obtaining medically necessary items and services (for example, employees and/or family-members may utilize the shuttles). A shuttle service must be local, however, and will qualify if there are no more than 25 miles between any stop and any location where health care items/services are provided along the shuttle’s route (in urban areas or up to 50 miles in rural areas).

The Local Transportation Safe Harbor has the potential to apply to a wide range of Medicare-enrolled entities to reduce the cost of care for their patients. Overall, the new AKS safe harbors will be beneficial for Medicare-enrolled entities to use when developing strategies for reducing the cost of care to patients.

For more information about this topic, please contact Adrienne Dresevic, Esq. at (248) 996- 8510 or by email at adresevic@thehlp.com.

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