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One Year Later, EKRA Still Poses Uncertain Liability for Health Care Providers

The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) is approaching the one-year anniversary of its October 24, 2018 enactment, and all health care providers should be mindful of the broad reach of this statute and its impact on financial relationships, which extends beyond substance abuse and addiction treatment providers.

EKRA is an anti-kickback statute that was enacted as a provision within the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” (the “SUPPORT Act”), a comprehensive federal legislative initiative aimed at confronting the nation’s opioid epidemic.  EKRA was a last-minute addition to the SUPPORT Act, and was intended to address the proliferation of patient brokering and other problematic payment arrangements affecting vulnerable patients seeking treatment for substance abuse.  The language of the statute itself, however, is not confined to those circumstances, and as a result, EKRA may have a much broader impact than its drafters intended.

Specifically, EKRA makes it a criminal offense to knowingly and willfully solicit, receive, offer, or pay any remuneration, directly or indirectly, in return for referring a patient to, or in exchange for a patient using the services of, a recovery home, clinical treatment facility, or laboratory with respect to services covered by a health care benefit program.  “Health care benefit program” is defined by EKRA to include both public and private insurance plans, distinguishing it from the federal Anti-Kickback Statute (the “AKS”), which only applies to referrals that are reimbursable by federal health care programs, such as Medicare or Medicaid.  The penalties for failure to comply with EKRA are significant.  Each violation carries a fine of up to $200,000, imprisonment of up to 10 years, or both.

Notably, the term “laboratory” is not limited by EKRA to only those laboratories that perform testing related to substance abuse treatment.  Rather, EKRA defines laboratory to include any facility that is used “for the biological, microbiological, serological, chemical, immuno-hematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings.”  Consequently, all clinical laboratories, and all practitioners who refer patients to any clinical laboratory, will need to ensure that any such referrals comply with EKRA, regardless of the connection that the laboratory or referral has with substance abuse testing or treatment.

Compliance with EKRA may prove more difficult than compliance with the AKS.  In addition to its application to both public and private payors, EKRA also contains fewer exceptions to its broad prohibition against impermissible remunerations than the exceptions and safe harbors enumerated within the AKS and its related regulations.  Specifically, EKRA only contains eight express exceptions: (1) properly disclosed discounts or other reductions obtained by service providers; (2) payments made by an employer to an employee or independent contractor that do not vary based on the volume or value of referrals; (3) drug manufacturer discounts furnished under the Medicare coverage gap discount program; (4) payment made pursuant to a personal services and management contract that meets the requirements of the applicable AKS safe harbor; (5) a waiver or discount of any coinsurance or copayment by a health care benefit program, if the waiver or discount is not routinely provided, and is provided in good faith; (6) a remuneration made pursuant to agreements that contribute to the availability of services provided to medically underserved populations; (7) a remuneration made pursuant to an alternative payment model or pursuant to a payment arrangement used by a State, health insurance issuer, or group health plan that the Secretary of Health and Human Services has determined is necessary for care coordination or value-based care; or (8) any other payment, remuneration, discount, or reduction promulgated by the Attorney General, in consultation with the Secretary of Health and Human Services.  If an otherwise impermissible remuneration does not fit within any of these eight exceptions, then it could constitute an EKRA violation subject to criminal liability.

Of these exceptions, health care providers should be particularly aware that EKRA’s employee compensation exception is much narrower than the AKS employee compensation safe harbor.  Specifically, the AKS permits any payments between an employer and an employee as long as those payments are made pursuant to a bona fide employment relationship.  In contrast, EKRA permits such payments only if those payments do not vary based on: (A) the number of individuals referred, (B) the number of tests or procedures performed, or (C) the amount of time billed to or received from the health care benefit program from the individuals referred.  This means that employee compensation arrangements that were previously permitted under the AKS—such as commission-based compensation—may now be prohibited under EKRA, and health care practitioners and entities should review any potentially relevant payment arrangements to ensure compliance with the new legislative framework.

To date, neither the Attorney General nor the Secretary of Health and Human Services have promulgated regulations or provided additional guidance concerning their interpretation or intended enforcement of EKRA, leaving health care practitioners with the express language of the statute’s broad prohibitions against previously permissible financial arrangements.  Until additional guidance is provided, health care providers should evaluate their financial arrangements involving any clinical laboratory and consult with counsel to ensure that any such arrangements comply with all applicable laws.

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Adler Pollock & Sheehan P.C.

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