New Law Expands the Reach of Federal Anti-Kickback Principles

New Law Expands the Reach of Federal Anti-Kickback Principles

In late 2018, Congress enacted the Eliminating Kickbacks in Recovery Act (“EKRA”) as part of the larger effort to combat the national opioid addiction crisis. EKRA significantly expands the federal government’s regulation of transactions in healthcare by applying federal Anti-Kickback Statute (“AKS”) principles to select activities not involving federal health program reimbursement and exposing certain industry participants to sanctions they would face for engaging in conduct similar to that prohibited by the AKS. The Centers for Medicare & Medicaid Services (“CMS”) and the Department of Justice (“DOJ”) were given a statutory option by Congress to issue EKRA regulations.

Under § 8122 of EKRA, it is a federal crime, that carries a fine of up to $200,000 and/or a maximum sentence of 10 years in prison, to knowingly or willing conduct the following activities in regards to services provided by a government or commercial Healthcare Benefits Program, in interstate or foreign commerce:

  1. Solicit a payment; including a kickback, bribe or rebate (cash or in-kind) directly or in-directly for the referral of a patient or support to a Recovery Home, Clinical Treatment Facility, or Clinical Laboratory; or
  2. Pay or offer payment; including a kickback, bribe, or rebate (cash or in-kind) directly or in-directly (a) to induce a referral for an individual to receive care in a Recovery Home, Clinical Treatment Facility or Clinical Laboratory; or (b) for the exchange for an individual using the service of a Recovery Home, Clinical Treatment Facility, or Clinical Laboratory.

As mentioned above, unlike the AKS, EKRA’s jurisdiction extends to commercial Healthcare Benefit Programs. EKRA’s definition of “Healthcare Benefit Program” is consistent with 18 U.S.C. § 24, which states that a “Healthcare Benefit Program” is any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract (i.e., EKRA applies to private and public patient insurance plans).

Under EKRA, a “Clinical Treatment Facility” is defined as any entity that provides rehabilitation services, and a “Recovery Home” is a shared living environment free of alcohol and illicit drug use. Interestingly, EKRA defines “Clinical Laboratories” as any medical laboratory.  Given the absence of implementing regulations, it is unclear at this time whether the application of the statute will be triggered by the specific type of care received or service used at a Clinical Laboratory (that is, does it have to be a “Recovery Service” as defined or is the trigger the connection the diagnosis requiring addiction services?). The second interpretation could create significant challenges for compliance initiatives given that an outsourced Clinical Laboratory will not necessarily be aware of the individual’s diagnosis or receipt of additional services in connection therewith, at the point of lab testing. Clinical Laboratories should therefore follow further regulatory developments closely.

Like the AKS, EKRA provides “safe harbors” for what it deems legitimate activities related to services provided in a Recovery Home, Clinical Treatment Facility, or a Clinical Laboratory.  The safe harbors include protection for:

  1. A discount or reduction in price given to a provider of services if properly disclosed;
  2. Amounts paid to by an employer to an employee for covered services;
  3. Amounts paid by a vendor if the person (a) has a written contract which specifies a fixed amount and (b) in the case of a recovery home that provides services, the person discloses to the benefit program remuneration received from said vendor;
  4. Discount in the price of an applicable drug that is furnished under Medicare’s discount program under the Social Security Act;
  5. Payment made as compensation for the services of an agent under a personal services contract;
  6. A waiver or discount of a copayment by a benefit program; or
  7. Any remuneration between a health center and someone providing services to them pursuant to a contract if the agreement contributes to the ability of the health center to provide services.

However, because CMS and the DOJ have not yet issued EKRA regulations, many of the questions related to the application of the safe harbors are unanswered, although, it is readily apparent that Congress intends the Act to carry the same enforcement weight as other Healthcare Anti-Fraud Laws, including exclusion and suspension from federal healthcare programs as well as fines. Thus, it is important for the industry to stay abreast of potential EKRA guidance or regulations and submit comments to the Agencies on the likely impact of EKRA regarding patient access to care, costs, compliance challenges, and the quality of services provided.  For example, CMS recently announced several EKRA relevant educational opportunities on the Medical Learning Network.

If you have any questions on EKRA, including if your organization should update its operational procedures as a result of its enactment, or more general questions regarding the AKS and its potential application to your healthcare business processes, please contact DB Health Law Team leaders Rafael A. Ruiz-Ayala at rruizayala@dugganbertsch.com  or Mori A. Hall at mhall@dugganbertsch.com.

Team Members: