The Anti-Kickback Statute
Those in the business of providing healthcare services to Medicare and Medicaid beneficiaries are all too familiar with the federal Anti-kickback Statute (AKS). Among other dreadful sanctions, it imposes criminal penalties on those individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under federal healthcare programs. A violation of the AKS is a felony punishable by fines of up to $25,000 and imprisonment for up to five years. An offense may also result in the imposition of civil monetary penalties, government program exclusion, and liability under the federal False Claims Act. The U.S. Department of Health and Human Services (HHS) has the authority, however, to protect certain provider arrangements and payment practices under the AKS. To that end, HHS has established safe harbors in various areas. While compliance with a safe harbor is not mandatory, healthcare providers and others may voluntarily seek to comply with safe harbors so that they may have substantial assurance that their business practices do not violate the AKS.
A New Safe Harbor
On January 20, 2017, a new safe harbor became available for local transportation services furnished by healthcare providers to Medicare and Medicaid beneficiaries.  The safe harbor protects an offer of free or discounted local transportation services when paid for by an “eligible entity.” An eligible entity may be a direct provider of healthcare services or one that arranges for the provision of healthcare services to patients, such as a health plan or clinically integrated network. The definition of an eligible entity excludes organizations that primarily supply healthcare items rather than services, such as a durable medical equipment suppliers or pharmacies. However, entities that primarily provide services, but also provide items, such as a hospital, may provide patients with transportation to the hospital for items or services provided by the hospital (such as for obtaining items at the hospital’s on-site pharmacy).
The safe harbor is available for two types of transportation. First, the safe harbor protects an offer to provide transportation of an “established patient” to or from an eligible entity for medically necessary items or services. An “established patient” is a person who has contacted the eligible entity to schedule an appointment or had a previous appointment with the eligible entity furnishing the transportation.
Second, the safe harbor protects certain types of shuttle services that are generally available to the public, as well as patients on a non-discriminatory basis.
Local Transportation for Established Patients
An offer to provide local transportation to an established patient (or others assisting the patient) must satisfy the following requirements to fall within the safe harbor:
- It must be set forth in a written policy, which is applied uniformly and consistently;
- It may not be structured in a manner that is related to the past, or anticipated future, volume or value of federal health care program business;
- It may not be air, luxury, or ambulance-level transportation;
- It may not be marketed or advertised publicly (although an eligible entity may offer to provide transportation when the patient schedules or attends the appointment);
- There may be no marketing of healthcare items and services during the course of the transportation or at any time by drivers who provide the transportation;
- The drivers or others arranging for the transportation may not be paid on a per-beneficiary-transported basis (although they may be paid on a per-mile basis);
- The person being transported must be an established patient of the eligible entity that is providing the free or discounted transportation;
- The distance travelled may not be more than 25 miles from the healthcare 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 purpose of the transportation is to obtain medically necessary items and services; and
- The eligible entity that makes the transportation available bears the costs of the free or discounted local transportation services and does not shift the burden of these costs onto any federal health care program, other payers, or individuals.
If the patient is being transported to a different provider than the eligible entity that is providing the transportation, and the eligible entity providing the transportation is itself a provider or supplier of federally payable services, then there must be an established patient relationship between the eligible entity providing the transportation and the patient being transported, as well as an established patient relationship between the patient and the provider to which the patient is being transported. An eligible entity that does not itself provide health care services (such as a health plan) is not required to have an established relationship with a patient in order to provide transportation that is protected by this safe harbor.
A ‘‘shuttle service’’ is a vehicle that runs on a set route, on a set schedule. A qualified shuttle service may provide transportation to persons who are not established patients (such as provider employees or the general public) if the arrangements meet the following requirements:
- It may not be air, luxury, or ambulance-level transportation;
- It may not be marketed or advertised (other than posting necessary route and schedule details);
- There is no marketing of health care items and services during the course of the transportation or at any time by drivers who provide the transportation;
- The drivers or others arranging for the transportation may not be paid on a per-beneficiary-transported basis (but may be paid on a per-mile basis);
- Transportation is only within the eligible entity’s local area, meaning there are no more than 25 miles from any stop on the route to any stop at a location where health care items or services are provided, except that if a stop on the route is in a rural area, the distance may be up to 50 miles between that stop and all providers or suppliers on the route; and
- The eligible entity that makes the shuttle service available must bear the costs of the free or discounted shuttle services and not shift the burden of these costs onto any federal health care program, other payers, or individuals.
This new safe harbor is a welcome relief for both providers and their patients who often face daunting challenges just getting to the doctor’s office or healthcare facility for necessary medical services. Given the potentially devastating consequences of an AKS violation, healthcare providers that intend to rely upon the local transportation safe harbor should carefully review their policies for compliance with these new requirements.
 42 CFR § 1001.952(bb); 81 FR 88368 (Dec. 7, 201