The OIG Publishes an Unfavorable Advisory Opinion on a Proposal to Offer Transportation Services to Skilled Nursing Facilities

The Department of Health and Human Services Office of Inspector General (OIG) released an unfavorable Advisory Opinion involving a transportation supplier’s proposal to offer skilled nursing facilities (SNFs) two payment plans for transportation of the SNF’s Medicaid-covered residents.  The OIG determined that the arrangement could potentially violate the Anti-Kickback Statute and that administrative sanctions could be imposed.

The transportation supplier (Requestor) provides transportation services in a state where SNFs receive a per-resident daily rate for ancillary and support services form the state Medicaid program.  SNFs that have residents which are eligible for Medicare and Medicaid are responsible for the amount not covered by Medicare that would otherwise be covered by Medicaid as a secondary payor.  The Requestor will offer two payment plans that respond to SNFs’ responsibilities:

(1) The first payment plan would be a capitated rate per resident per day for Medicaid transports regardless of whether the services were needed and whether Medicaid is the responsible payor.  For residents covered under Medicare and Medicaid, the payment would release the SNF from any further liability (including Medicaid deductibles).  The capitated payment would be less than the Requestor’s cost of transportation for Medicaid patients and more for Medicare patients. 

(2) The second payment plan would be that SNFs pay a fee for services amount for transportation services provided only to Medicaid residents.  The amount would be below the Requestor’s cost for providing the services.

After a thorough analysis, the OIG found that the payment plans could violate the Anti-Kickback Statute and specifically referenced the 2003 Compliance Guidance (CPG) for Ambulance Suppliers and 2008 Supplemental CPG for Nursing Homes. In both of these guides, the OIG stated that the Anti-Kickback Statute is implicated where there is a direct or indirect link between the prices offered by a supplier for business the purchaser’s pays out-of-pocket and referrals of federal program business billable by the supplier.  The OIG noted the connection between the below-cost payment rates and the referral of other federal healthcare program business as a motive for SNFs to direct business to the Requestor.  Finally, the OIG was unable to exclude the possibility that the arrangement was (1) an attempt to offer improper discounts on Medicaid transports in return for more federal healthcare program business or (2) an attempt by the SNFs to solicit improper discounts to alleviate their financial risks and liabilities.