Volume Eleven Number Nine September 2009 Published Monthly

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1 Volume Eleven Number Nine Published Monthly Rebecca Walker DANIEL ROACH Shawn DeGroot JOSEPH E. MURPHY Sara Kay Wheeler JENNY O BRIEN LEE BRAEM SCOTT KILLINGSWORTH ROY SNELL MICHAEL PAUL THEODORE BANKS

2 Designing a compliant patient transportation program Editor s note: Susan Tuite is an attorney who serves as the Corporate Director of Compliance and Legal Services for University Community Health in Tampa, Florida. She may be reached at stuite@mail.uch.org. The precipitous economic decline of the past year has contributed to an increase in the number of patients who lack reliable means of transportation. Individuals have lost their personal automobiles at the same time that communities have been forced to slash public transportation services. The end result is that lack of transportation has become an increasingly common impediment to patients obtaining needed health care. Concerned about the well being of their patients, as well as about their own economic health, a variety of providers are implementing or expanding complimentary transportation services for patients and their family members. These programs aim to provide a reliable means of transportation that helps encourage patients to obtain needed health care services, especially when the service, such as chemotherapy, radiation therapy, or dialysis, requires regular and repeated visits to the provider. Despite the obvious patient benefits offered by free or reduced-cost patient transportation programs, the Health and Human Services Office of the Inspector General (OIG) remains wary of the intent and the impact of these services, because of their potential to steer patients to certain providers or to encourage the overutilization of services. By Susan K. Tuite, JD A thoughtfully planned and implemented transportation program can be tremendously beneficial to patients and to the providers who sponsor it. A carelessly designed program can result in civil and/or criminal liability, both as a violation of the federal Antikickback Statute, 1 section 1128B(b) of the Social Security Act (SSA), and as a prohibited patient inducement under section 1128(a)(5) of the SSA (the Patient Inducement Statute). 2 As with so many aspects of health care compliance, the devil is in the details. Patient Inducement Statute The Patient Inducement Statute is implicated whenever a person offers any remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary s choice of a health care provider. Providers who offer gift cards, meals, goodie bags, complimentary massages and other spa services, or other inducements to recruit prospective patients can implicate the statute. Each individual violation may support civil monetary penalties of up to $10,000. Any type of gift, discount, or service provided at less than fair market value can violate the SSA, if it could influence the recipient to choose one provider over another. However, for enforcement purposes, inexpensive gifts or services that have a value of no more than $10 individually, and no more than $50 in the annual aggregate per patient, are exempted. 3 A transportation program offered by a provider to patients has the capacity to serve as an inducement for the patient to choose that provider. OIG has cited luxury patient transportation programs, such as free airline tickets or limousine services, as examples of abusive practices. However, it has also recognized that transportation programs can provide a sorely needed service to low-income, disabled, or elderly patients. In 2002, OIG indicated that it would provide bright line guidance on acceptable transportation programs by issuing a regulatory exception to the Patient Inducement Statute for complimentary local transportation programs provided by health care entities to their patients. 4 Unfortunately, the promised regulatory guidance has never materialized. Anti-kickback Statute In addition to possible civil liability as a patient inducement, transportation programs may also implicate the criminal Anti-kickback Statute that prohibits offering anything of value to any person (including a patient) in order to reward or induce referrals for health care services that are reimbursable under any federal health care program. The Anti-kickback Statute may impose criminal penalties and automatic exclusion from the Medicare program for the same behavior targeted by the Patient Inducement Statute offering a free or discounted service to a patient with the intent of influencing his/her choice of health care providers. OIG guidance on transportation programs OIG has addressed the propriety of transportation programs under the Patient Inducement Statute and the Anti-kickback Statute a number of times through its advisory opinion program. The most recent such opinion was published only a few months ago, in March Taken together, these advisory opinions provide an excellent guide for designing a compliant patient transportation program. The advisory opinions also highlight features that may invite government sanction. 36

3 Advisory Opinion No In November 2000, OIG approved a hospital s free patient transportation program that was designed to serve patients who had been referred to the hospital for extended courses of treatment, such as chemotherapy, dialysis, radiation therapy, or cardiopulmonary rehabilitation. The hospital was located in a city, but also served a large rural area that offered very limited public transportation. The hospital s transportation program was set forth in a written policy and procedure. The program was provided through the use of two hospital-owned vehicles. No ambulance service was provided. Either one-way or round-trip transportation was provided, solely between the hospital and the patient s residence. Transportation was provided only to patients who resided within the hospital s primary service area for whom the hospital was the nearest provider of prescribed treatment. In order to be eligible for free transportation, a patient had to: n have been referred to the hospital for a continuing course of treatment, n indicate that he or she had no other regular and reliable means of appropriate transportation; and n be at significant medical risk if the prescribed treatment was not provided. The hospital certified that it would not claim the cost of providing the patient transportation services on any federal health care program cost report or claim or otherwise shift the cost of the transportation services to any federal health care program. The hospital did not market or advertise the availability of its transportation program. Patients who might benefit from the service were identified through an informal system of referral, based on perceived need by hospital staff. Patient qualification for the free transportation depended solely on the patient s informing the hospital that he/she lacked other reliable means of safe transportation. No consideration was given to the patient s ability to pay for medical care or to the existence of insurance coverage. OIG affirmed that it would not seek sanctions under either the Patient Inducement Statute or the Anti-kickback Statute against the hospital s patient transportation program, based on the following factors: n The lack of public transportation in the hospital s service area; n The hospital did not advertise its free transportation services; n Patient transportation services were offered only to individuals who had already been referred or who were already receiving services at the hospital; n The free transportation services were offered on a case-by-case basis, based upon an informal, individualized determination of need by hospital staff; n The services were available to all patients who needed them, subject to available resources. The transportation services were not limited to a particular profitable product line or to patients with certain insurance; n The cost of the transportation program was not passed on to the federal government; n The free transportation services were offered primarily to patients residing in the hospital s primary service area. Patients who lived outside the hospital s primary service area were eligible for the transportation services only if the hospital was the nearest provider of their needed treatment; and n The transportation services advanced the hospital s not-for-profit mission by giving the elderly and low-income residents of its service area access to medically necessary treatments that they might otherwise be forced to forego because of the lack of adequate transportation. Advisory Opinion No In March 2007, OIG reviewed a proposal by a hospital to subsidize the cost of ambulance transportation for patients transported to a hospital from outside its primary service area. The hospital was a large regional acute care facility that was recognized as a leader in cardiovascular services. When patients who required cardiovascular services were transferred to the hospital by ambulance from other hospitals, the transport often bypassed en route other hospitals that provided cardiovascular services. Because Medicare regulations prohibit paying for non-local transportation beyond that required to take the patient to the nearest institution that offers the appropriate services, transported Medicare beneficiaries received bills for the uncovered portion of the non-local ambulance transportation when their transport bypassed other providers. According to the hospital, the billings had prompted patient complaints and had made physicians in remote regions less willing to refer their cardiovascular patients to the hospital. The hospital proposed to pay for the uncovered portion of the ambulance bill for any patient transported to its facility. It anticipated that most of the affected patients would have cardiac-related conditions. The subsidized ambulance transport would be offered to all patients, and eligibility would not be based on insurance status or financial need. The program would not be advertised or used for marketing purposes. OIG concluded that the proposed patient transportation subsidy would violate both the Patient Inducement Act and the Anti-kickback Statute. OIG concluded that by paying the Continued on page 38 37

4 Designing a compliant patient transportation program...continued from page 37 extra expense of ambulance transportation to its facility that normally would be borne by the Medicare beneficiaries, the hospital would likely influence patients to choose it for initial and subsequent hospital services, in violation of the Patient Inducement Act. If the requisite intent to influence patient referrals was present, OIG concluded that the transportation subsidy could also violate the Anti-kickback criminal statute. Interestingly, OIG stated that the fact that the hospital would not advertise the existence of the subsidized ambulance service program to patients was not a meaningful safeguard, because referring physicians would soon learn of the program s existence. Advisory Opinion Most recently, the OIG reviewed and approved a complimentary local transportation program for friends and family of nursing home residents. In this advisory opinion, a not-for-profit skilled nursing facility was located in an area that was not easily accessible by public transportation. The nursing home proposed to provide free transportation to and from designated public locations for friends and family members of its residents, utilizing vans owned by the nursing home and driven by its employees. Individuals with disabilities could request transportation to and from their homes if resources allowed. The nursing home proposed to offer the free transportation services to friends and families of all its residents, regardless of financial needs, payer status, or the level of care provided to the resident. The nursing home certified that it would not claim the costs of the transportation program on any federal health care program cost report or otherwise shift the program s cost. The nursing home proposed to advertise the free transportation program within its primary service area in community newspapers and in handbooks and materials provided to prospective patients by discharge planners at area hospitals. The nursing home also planned to notify all its residents about the program and to educated discharge planners at hospitals within its primary services area. The program would be governed by a written policy and procedure. OIG concluded that the proposed transportation service was acceptable under both the Patient Inducement Act and the AKB Statute, citing a number of factors: n The transportation was not for the benefit of referral sources, such as physicians; HEALTHCARE HEADLINERS The healthcare attorneys at Husch Blackwell Sanders provide a comprehensive range of compliance counseling, regulatory and reimbursement advice, internal and government investigation guidance, and transactional services to leading organizations and professionals in the healthcare industry. Our clients rely on our industry knowledge and expertise to provide sound legal advice and strategic solutions to their complex health law matters. Curt Chase Chair, Health Law Practice Group curt.chase@huschblackwell.com HUSCH BLACKWELL SANDERS LOCATIONS COLORADO DENVER ILLINOIS CHICAGO PEORIA KANSAS OVERLAND PARK MISSOURI JEFFERSON CITY KANSAS CITY SPRINGFIELD ST. LOUIS NEBRASKA LINCOLN OMAHA TENNESSEE CHATTANOOGA MEMPHIS DISTRICT OF COLUMBIA WASHINGTON ENGLAND LONDON The choice of a lawyer is an important decision and should not be based solely upon advertisements. 38

5 n The program was not for the purpose of transporting patients to obtain medical supplies or services for which Medicare would be billed; n The program was available to friends and family of all the nursing home residents. It was not selectively targeted to residents receiving expensive services; n The type of transportation provided was modest and reasonable. A van driven by an employee of the nursing home was used, not a limousine; n The transportation was offered only locally; n The program was advertised locally, in a limited and modest way. No television or radio advertising was proposed; n Local public transportation options in the nursing home s primary service area were limited; n The transportation program would further the nursing home s charitable mission by improving the quality of life of its residents through increased interaction with their friends and family; and n The cost of the transportation program would not be directly or indirectly shifted to any federal health care program. Conclusions Although the facts of individual programs may differ, OIG has largely stayed true to a set of criteria in distinguishing between acceptable patient transportation programs and those that may risk violating the Patient Inducement Act and the Anti-kickback Statute. Relevant factors to consider in designing a compliant Transportation Program include: n The population to which the transportation services are offered. Free transportation services offered selectively to patients who likely will receive expensive services or supplies are highly suspect. Services offered to single patients or to a class of recipients, based on established personal need, will present the lowest risk of sanctions. n The nature of free transportation services offered. OIG clearly has no love for expensive or luxurious means of transportation, such as airplanes or limousines. It also is suspicious of subsidized ambulance transport. Because such services are more expensive, OIG reasons that patients may be more likely to be influenced by expensive means of transportation in choosing a provider. Simple and straightforward local transport programs provided in standard vans or automobiles driven by provider employees are most likely to receive OIG s approval. n The geographic area in which the free transportation services are offered. Local transportation programs are clearly favored. Free transportation should be offered only within the provider s service area. Free transportation services offered to patients who reside outside a provider s historic service area are more likely to be considered an abusive attempt to recruit patients. n Destination. Transportation should be from the individual s home or a public pick-up point directly to and from the provider site that offers the transportation program. Hospitals or other providers should never provide free transportation between a physician s office and the hospital for services, because this carries a high risk of be viewed as a kickback for patient referrals. n Alternate means of transportation. Free transportation services are easiest to justify in areas when reliable public transportation, including taxi services, is unavailable. Alternatively, characteristics of the target patient population, such as advanced age, poverty, physical impairment, or disease state, may make available public transportation options impractical. n Advertising and marketing of the free transportation program. Although OIG lists this as an important factor, it is probably not determinative. An unacceptable transportation program will not be saved by the decision not to overtly market it, and an acceptable program can be advertised through at least modest methods within the provider s services area, such as newspaper ads, brochures, and postings on the provider s website. n The type of provider offering the transportation program. OIG has explicitly stated that it disfavors transportation services offered by individuals or small groups of providers or by freestanding clinics. Its antipathy is generated by the record of past abuses of Medicaid mills that used free transportation as one means of recruiting patients for unnecessary or sham services that were billed to federal health programs. n Whether the cost of the free transportation services will be directly or indirectly shifted to Medicare or other federal health care programs. OIG will not accept such cost shifting. Any health care provider who sponsors a transportation program for patients or their family and friends should ensure that its program closely adheres to the guidance summarized in these standards. Doing so will ensure that the valuable service provided by transportation program does not expose the sponsoring provider to legal liability. n 1 42 U.S.C. 1128B(b) U.S.C. 1128(a)(5) C.F.R Special Advisory Bulletin: Offering Gifts and Other Inducements to Beneficiaries, 67 Fed. Reg , (August 30, 2002). 39