March 18, 2009Client Alert

OIG Reviews a Complimentary Transportation Program, Outlines Possible Abuses

On March 13, 2009, the Department of Health and Human Services Office of Inspector General (“OIG)”) posted Advisory Opinion 09-01. This advisory opinion reviewed a skilled nursing facility’s (“SNF”) proposed program to provide a complimentary local transportation program for residents’ friends and family to determine whether it violated the Anti-Kickback Statute, which prohibits the payment of any remunerations with the intent to induce referrals for items or services which are reimbursable by a Federal health care program.

Complimentary Transportation Program
The proposed arrangement included free local transportation for friends and families of nursing home residents. The proposed arrangement did not involve transportation for residents to obtain federally-payable items or services or for the benefit of the SNF’s referral sources. The proposed arrangement would be offered to all residents, regardless of financial status or ability to pay, and include Medicare and Medicaid beneficiaries as well as other insured patients. Further, the proposed arrangement would utilize a van, rather than a more expensive form of transportation, and the geographic area serviced would be local and limited to the SNF’s service area. The proposed arrangement would be advertised in a few local newspapers, in materials provided to local hospital discharge planners and directly to residents. Other sources of public transportation were limited and a toll bridge separated the SNF from its primary service area. Finally, the costs of the proposed arrangement would not be shifted directly or indirectly to any federal health care program.

Legal Analysis
The OIG’s analysis of free or below fair market value transportation service programs are conducted on a case-by-case basis. Several factors are evaluated including: (1) whether the transportation is being offered in a manner related to referrals, (2) whether the means of transportation is considered luxurious, (3) whether the transportation service is limited to a small geographic area, (4) the availability of other means of transportation, (5) the extent of advertising and marketing of the program, (6) the destinations offered by the transportation program, and (7) whether the provider absorbs the costs associated with the transportation program. Suspect arrangements include transportation services offered to out-of-state patients, offering free limousine services, transportation to and from a physician’s office or free ambulance services without making individual determinations of financial need.

While the complimentary transportation program could potentially violate the Anti-Kickback Statute by providing an economic benefit to the SNF’s residents in excess of $50 per year, the OIG decided, based on the facts and circumstances related to OIG by the SNF, that it would not subject the proposed arrangement to sanctions. While this may be good news to providers looking for creative ways to remedy the transportation difficulties for their residents’ families and friends, it should be noted that the OIG has limited this Advisory Opinion to the particular facts and circumstances of the proposed arrangement and, therefore, this Advisory Opinion does not have the force of law.

For help in ensuring legal compliance in crafting a similar plan, or with other questions, please contact David J. Hanson at 608.283.2241, or, or Kate L. Bechen at 414.225.4956, or, members of Michael Best's Health Care Practice Group.

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