Proposed Rule to Amend the Safe Harbors to the Anti-kickback Statute Affects the Provision of Local Transportation Services

October 22, 2014

On October 3, 2014, the Office of Inspector General (OIG) issued a proposed rule to amend the safe harbors to the anti-kickback statute and the civil monetary penalty rules. See 79 Fed. Reg. 59717 (October 3, 2014).  Comments on the proposed rule are due on December 2, 2014.  The OIG’s proposed rule is another example of how regulations that are aimed at reducing fraud and abuse by health care providers and suppliers end up disadvantaging the patients they serve.

“Established Patient” versus “New Patient”

One proposed change is to add a new safe harbor to protect an “Eligible Entity” which provides free or discounted local transportation services to federal health care program beneficiaries, provided the services meet specified criteria. The OIG proposes to add this safe harbor under the authority of section 1128A(a)(5) of the Social Security Act.  The OIG notes that “Congress intended that the statute not preclude the provision of complimentary local transportation of nominal value,” citing H.R. Conf. Rep. No. 104-736 at 255 (1966).  79 Fed. Reg.  59721.  The OIG interprets “nominal value” to mean “no more than $10 per item or service or $50 in the aggregate over the course of a year.” Id.

The proposed safe harbor would protect free or discounted local transportation made available to an “established patient” and a person to assist the patient, if necessary, to obtain medically necessary items and services. However, it would not protect free or discounted local transportation made available to a “new patient.”  As explained by the OIG, an example of an “established patient” is a patient who “has selected an oncology practice and has attended an appointment with a physician in the group.”  79 Fed. Reg. 59722.  Under the OIG’s proposal, “the physician could offer transportation assistance to the patient who might have trouble reliably attending appointments for chemotherapy.” Id.  The OIG states this requirement is designed to reduce the risk of a health care provider or supplier using a transportation program to increase business by transporting patients to its premises or by inappropriately inducing referrals from other providers or suppliers by transporting patients to their premises.

But what about the patient who has not yet been diagnosed with cancer because he/she will not take that first step to schedule an appointment with a physician due to the fact that he/she does not have and/or cannot afford to pay for transportation? For that patient, the availability of free or discounted local transportation to a physician’s office may be a deciding factor in whether the patient lives or dies from the disease.

Eligible Entity

The proposed definition of an “Eligible Entity” excludes individuals and entities or family members of others acting on their behalf that primarily supply health care items, including but not limited to, durable medical equipment suppliers or pharmaceutical companies, as well as laboratories. The OIG believes these individuals and entities would use transportation services to generate business for themselves by steering patients to practitioners and referral sources who order their products.  The OIG is soliciting comments on whether home health agencies also should be excluded, in whole or in part, from protection as an “Eligible Entity” as it is concerned about the overutilization of home health services.  Specifically, the OIG is concerned that if a home health agency provides free or discounted local transportation to physician offices, it might induce the physician to refer to that home health agency and might result in overutilization in the form of unnecessary physician visits or unnecessary home health care prescriptions.  Because of this concern, the OIG is considering excluding home health providers from the safe harbor protections when they provide transportation to referral sources, such as physicians, but including them in the safe harbor protections when they provide transportation to non-referral sources, such as pharmacies.

But what about patients in need of free or discounted transportation services to attend their physician office appointments? If the OIG adopts a final rule which excludes home health providers from the safe harbor protections if they provide patients with free or discounted transportation services to referral sources, those patients will need to find an alternative source for transportation services.

If you have any questions about the OIG’s proposed rule or would like to submit comments on the proposal, please contact Rochelle H. Zapol, a partner in Prince Lobel’s Health Care Practice Group and the author of this post. You can reach Rochelle at 617 456 8036 or

Leave a Reply

Sign up for updates

We publish Client Alerts regularly on a variety of business topics of interest to our clients.  Please let us know if you’d like to be added to our mailing list.