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Health Care Blog

New Safe Harbor Permits Some Free Transportation to Patients

Authored by Emilu E. C. Starck
Posted on April 6, 2017
Filed under Health Care

A new safe harbor was recently issued by the Health and Human Services (HHS) Office of Inspector General (OIG) that permits eligible health care providers to offer free or discounted transportation to established patients.  The safe harbor addresses concerns that offering free goods and/or services to patients might be considered payment of illegal “remuneration” in exchange for referrals. Use of free offers in connection with overt marketing remains a suspect practice, but the new safe harbor opens a limited window to permit providers to offer much needed transportation services to existing patients.

Provided that a number of specific requirements are met, the transportation safe harbor permits certain health care providers to offer regular route “shuttle service” and/or transportation to established patients.  The transportation service can only be provided within a 25 mile radius (50 miles in rural areas) for the purpose of obtaining medically necessary services.

Most health care service providers, such as hospitals, physician offices, skilled nursing facilities, ambulatory surgery centers, and others are eligible to provide transportation services.  However, organizations that primarily supply health care items, such as providers of durable medical equipment and pharmacies, cannot take advantage of the safe harbor.  In its commentary, the OIG noted many types of entities that do not directly render health care services to patients, such as Medicare Advantage organizations, managed care organizations, accountable care organizations, clinically integrated networks, and charitable organizations, may qualify for safe harbor protection as long as they do not shift the cost to federal health care programs or payers.

Providers that operate transportation programs should adopt policies and procedures that define the operation of their program and include requirements that minimize potential risk of providing free transportation service.  Reliance on the safe harbor requires that the free or discounted local transportation services be included in a policy that is applied uniformly and consistently.  The program cannot be offered in a manner related to the past or anticipated volume or value of federal health care program business.  Free transportation must be offered to all patients regardless of the level or profitability of their service. 

Complete compliance with the new safe harbor is the best way to ensure compliance.  Policies should include reference to the various safe harbor requirements.  For example, free or discounted services are subject to the following limitations:

  • The services may only be provided to established patients.  An “established patient” is 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;
  • The services cannot include air, luxury, or ambulance-level transportation;
  • The services cannot be publicly marketed or advertised by the eligible entity or the driver during the course of the transportation, and the drivers or others arranging for the transportation cannot be paid on a per-beneficiary-transported basis;
  • The services may only be provided within 25 miles of the health care provider or supplier to or from which the patient would be transported, or within 50 miles if the patient resides in a rural area;
  • The services can only be for the purpose of obtaining medically necessary items and services; and
  • Associated costs cannot be shifted to Medicare, a state health care program, other payers, or individuals.

The safe harbor also protects the offering of a shuttle service by eligible entities.  The term “shuttle” is defined as a vehicle that runs on a set route and on a set schedule.  The final rule allows eligible entities to provide shuttle services by complying with most of the criteria applicable for services to existing patients.  If the service is operated on a defined and regular route, the service is not limited to existing patients.  Most of the other provisions of the safe harbor for existing patients will apply to the shuttle service.

Organizations that provide shuttle or patient transportation services should review their programs in view of the new safe harbor regulations.  The new regulations mandate written policies and procedures which must be uniformly enforced and followed.  This requires records be maintained that document compliance with safe harbor requirements.  Transportation programs that do not strictly meet all requirements of the safe harbor do not necessarily violate the anti-kickback statute.  However, safe harbor compliance is the best way to mitigate potential risk.