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On March 13, 2009, the HHS Office of Inspector General (OIG) issued Advisory Opinion No. 09-01 analyzing the propriety of a free local transportation program for friends and family of the residents of a skilled nursing facility ("SNF"). Advisory Opinion 09-01 provides helpful guidance on the topic of free transportation, which the OIG had previously addressed in Advisory Opinion 00-07 (November 17, 2000) and in a December 10, 2002 letter, in which the OIG offered protection from administrative sanctions to those free transportation programs that were in existence prior to August 30, 2002 and met certain requirements.

The SNF proposed offering free local transportation for family and friends of its residents to the facility. The facility, which was not readily accessible by public transportation, also was separated from part of its primary service area by a $9.00 toll bridge. The proposed free transportation service generally would pick up and drop off friends and family at designated public locations within the facility's service area and only provide transport to and from the facility.

The OIG acknowledged that free transportation programs can have a beneficial effect on patient care if they are narrowly tailored to address issues of financial need, limited transportation resources, treatment compliance or safety, and do not exhibit any of the characteristics of fraudulent schemes. However, the OIG explained that free transportation services are also sometimes an integral part of fraudulent or abusive schemes that lead to inappropriate steering of patients, overutilization, and the provision of medically unnecessary services, and therefore such arrangements should be evaluated on a case-by-case basis. The OIG indicated that factors to be evaluated in analyzing arrangements where providers or suppliers offer free transportation to potential sources of Federal health care program business, including beneficiaries should include, but not be limited to, the following:

• Transportation offered in a manner related to referrals. Selective criteria related to the volume or value of Federal health care program business are suspect. Examples of suspect criteria include the selection of passengers based upon a diagnosis, condition, or treatment that might result in lucrative revenues to the offeror or selection based on a patient's insurance coverage.
• Luxury or specialized transportation. Luxury or specialized transportation, such as limousines, airline tickets, or ambulance transports, raise greater concerns because such transports are more valuable to the recipient and therefore more likely to be an improper inducement
• Geographic area for transportation. Local transportation services are typically less valuable to the recipient than longer-distance transports. Free transportation services offered to beneficiaries residing outside an offeror's primary service area are subject to abuse, particularly if the free transportation is used to expand the provider's historical service area. For example, "leap-frog" arrangements that provide free or subsidized transportation to beneficiaries traveling from outside the provider's local area, potentially bypassing other providers that could provide services for the beneficiary, are problematic.
• Availability of other means of transportation. When examining free transportation services, we consider whether services are offered in areas lacking public transportation or areas without affordable alternatives. Free local transportation arrangements in areas lacking affordable alternative transportation are less likely to be vehicles for generating referrals.
• Marketing or advertising. When a free transportation arrangement is marketed or advertised, there is greater risk that the arrangement is being offered as an inducement for referrals.
• Transportation destination. Free transportation provided to or from the offeror's premises may be appropriate based on the totality of the facts and circumstances. However, free transportation of beneficiaries to a different provider raises concerns. The transportation could be an inducement for referrals from the provider to the offeror of the transportation.
• Treatment of the costs of the free transportation. Costs of free transportation should be borne by the provider of the transportation. Arrangements that shift costs to Federal health care programs are suspect.
• Other characteristics that raise concerns. Where the offeror of the free transportation is also a provider that will provide Federally payable items and services to passengers, there is increased risk that the provider could be using free transportation services to gain access to beneficiaries, potentially to provide services that are unnecessary or inappropriate. For example, we have a long-standing concern about Medicare and Medicaid mills that provide free transportation to attract patients.

Section 1128A(a)(5) of the Act (the "CMP") provides for the imposition of civil monetary penalties against any person who gives something of value to a Medicare or state health care program (including Medicaid) beneficiary that the benefactor knows or should know is likely to influence the beneficiary's selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a state health care program, including Medicaid. The OIG may also initiate administrative proceedings to exclude such party from the Federal health care programs. Section 1128A(i)(6) of the Act defines "remuneration" for purposes of section 1128A(a)(5) as including "transfers of items or services for free or for other than fair market value." The OIG has previously taken the position that "incentives that are only nominal in value are not prohibited by the statute," and has interpreted "nominal value to be no more than $10 per item, or $50 in the aggregate on an annual basis." In addition, in the Conference Committee report accompanying the enactment of section 1128A(a)(5), Congress expressed its intent that, with respect to allowable remuneration, the statute should not preclude the provision of items and services of nominal value, including free local transportation services.

After analyzing the proposed SNF arrangement, the OIG concluded that, although the arrangement potentially implicates the anti-kickback statute, it would will not impose civil monetary penalties or administrative sanctions because sufficient safeguards had been built into the transportation program, and the program did not include any of the following potentially abusive arrangements:

• Providers offering out-of-state patients free transportation to receive services at their facilities
• Van drivers soliciting, and offering free transportation services to, Medicaid patients for health care providers who compensate the drivers on a per patient or per service basis
• Providers offering residents of nursing facilities and other congregate care facilities free transportation services to and from their offices for services of questionable necessity
• Providers offering patients free limousine services
• Hospitals or other providers offering patients free ambulance services without making individual determinations of financial need
• Hospitals or other providers inducing referrals from physicians by offering the physicians' patients free transportation to the physicians' offices or to a facility where the physician furnishes services

The SNF arrangement was open to the friends and families of all SNF residents and was not limited to targeted populations of federal health care program beneficiaries. The transportation provided under the arrangement was reasonable and did not include luxury services. The arrangement was offered and advertised only locally. Moreover, the proposed arrangement was narrowly tailored to meet the needs of a community where the availability of public transportation was limited and the SNF was separated from its primary service area by a costly toll bridge. The cost of the transportation would not be claimed by any federal health care program cost report or otherwise shifted to the federal government. The OIG noted that the proposed arrangement would align with the SNF's mission to provide residents with quality care in a residential setting through increased companionship resulting from access to friends and family.

Conclusion

Advisory Opinion 09-01 is the first guidance the OIG has provided regarding free transportation exceeding "nominal value" ($10 per item or $50 annual aggregate amount), and the first applicable to family and friends of a patient (rather than the patient). The advisory opinion provides useful guidance regarding how to structure a compliant transportation program, and is good news for health care organizations looking for creative ways to remedy transportation difficulties for patients and patients' families and friends. Theodora Oringher Miller & Richman has substantial experience in advising health care organizations regarding compliance with Anti-Kickback Law and Self-Referral Prohibition laws. If you have any questions or desire additional information please contact Michael Dowell at mdowell@tocounsel.com or the lawyer in the firm who generally handles your health care legal matters.