Providers beware: a new statute brings criminal anti-kickback-like penalties to services paid for by private insurers.
James Junger, U.W. 2015, is an associate in the Milwaukee office of Hall Render, where he focuses his practice on health care compliance issues including policy development, investigations, and incident response.
Passed as a component of the anti-opioid SUPPORT for Patients and Communities Act in October 2018,1 the Eliminating Kickbacks in Recovery Act (EKRA or the Act) establishes criminal sanctions for soliciting or receiving remuneration in exchange for a referral to a recovery home, clinical treatment facility, or laboratory, including when a private insurer pays for the services. Violations carry a fine of up to $200,000 and a 10 year prison term.
While EKRA’s stated purpose is to reduce kickbacks in recovery services, its scope is much broader. As can be expected in a fraud and abuse law, understanding the law’s definitions and exceptions (discussed below) are important to establishing an EKRA compliance plan.
EKRA’s language and structure (see the full text) will be familiar to those who have worked with the federal Anti-Kickback Statute.2
With limited paraphrasing, the statute provides that whoever – with respect to services covered by a health care benefit program – knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind:
a) in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory;
b) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or
c) in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory
is subject to a fine of not more than $200,000, imprisonment of not more than 10 years, or both for each occurrence.
The Statute’s Definitions
EKRA defines prohibited remuneration as payments to a “recovery home, clinical treatment facility, or laboratory” for services covered by a “health care benefit program.”
The statute defines each of these terms:
A recovery home is a shared living environment that is or purports to be free from alcohol and illicit drug use, and centered on peer support and connection to services that promote sustained recovery from substance use disorders.
A clinical treatment facility is a medical setting other than a hospital that provides detoxification, risk reduction, outpatient treatment and care, residential treatment, or rehabilitation for substance use, pursuant to licensure or certification under state law.
A laboratory is a facility 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.
A health care 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.
EKRA’s Definitions Represent a Seismic Shift
EKRA’s broad definition of a health care benefit program is perhaps the most consequential provision of the new law. EKRA criminalizes payments for referrals, regardless of whether the referred services are covered by a public or private health insurance program. Previously, the federal fraud and abuse laws only applied to services covered by federal health care programs.
EKRA’s broad scope represents a seismic shift in the fraud and abuse landscape. And, despite the EKRA’s purported focus on recovery services, its reach extends further.
While the definition of recovery home is clearly designed to apply strictly to providers of substance abuse services (and the definition of clinical treatment facility probably does not extend much further, although the point is debatable), EKRA defines the laboratory without regard to whether the services provided by the laboratory are related to substance abuse.
Thus, any provider that contracts with a lab for testing should consider EKRA when negotiating or renegotiating those agreements.
Because of these broad definitions, providers should be aware that contracts they already have in place could create risk under EKRA. Providers should evaluate their contracts to determine whether they meet a statutory exception, as described below.
EKRA’s Statutory Exceptions
Like the Anti-Kickback Statute, EKRA contains a number of statutory exceptions that act as a safe harbor for otherwise prohibited conduct.
These exceptions include:
Discounts to providers or other entities if properly disclosed and reflected in the provider’s or entity’s costs or charges.
Medicare coverage gap drug discounts.
Payments to employees and independent contractors, provided that the compensation not be determined by or vary with:
the number of individuals referred to an entity;
the number of tests or procedures performed; or
the amount billed or received from the health care benefit program.
Arrangements that meet the Anti-Kickback Statute Safe Harbor for Personal Services and Management Contracts.
Waivers or discounts of certain coinsurance or copayments by a health care benefit program, provided that they are given in good faith and are not given routinely.
Transfers to Federally Qualified Health Centers under the Anti-Kickback Statute Safe Harbor.
Remuneration made pursuant to approved Alternative Payment Models.
Other payments, remuneration, discounts, or reductions as determined by the U.S. Attorney General in regulation in consultation with the Secretary of Health and Human Services.
Conduct that fits into one of these exceptions is permissible.
Bear in mind, however, that these exceptions will likely be applied in the same way as are safe harbors to the Anti-Kickback Statute. This means that the conduct in question must meet all the elements of the applicable exception or else it will not be protected.
While it is likely that the U.S. Attorney General will issue regulations interpreting EKRA in the future, providers party to noncompliant contracts risk being the target of criminal enforcement actions. Any person or entity that bills Medicare or Medicaid for services should take account of EKRA in their business relationships.
Steps providers can take at this time include:
training employees responsible for contracting with other health care entities to ensure that they are aware of EKRA’s restrictions and the requirements for fitting into its exceptions;
clearly communicating expectations to employees;
consider establishing a policy addressing EKRA compliance or updating existing fraud and abuse policies; and
reviewing current agreements with laboratories, recovery homes, and clinical treatment facilities to determine whether adjustments need to be made. Importantly, both parties to a prohibited transaction are subject to penalties, therefore the parties should work together to determine how to amend existing agreements.
Congress authorized the U.S. Attorney General, in consultation with the Secretary of Health and Human Services, to issue regulations interpreting EKRA and its exclusions. Any such interpretations may provide more certain routes for compliance, so providers and their attorneys should also monitor the Federal Register and other sources for the attorney general’s interpretations of EKRA.
Notably, because EKRA contains an intent element similar to that found in the Anti-Kickback Statute, providers comfortable with more aggressive risk positions may decide that no significant changes are necessary. However, in light of the lack of government guidance, appropriate caution is advisable.
This article was originally published on the State Bar of Wisconsin’s Health Law Blog. Visit the State Bar sections or the Health Law Section web pages to learn more about the benefits of section membership.
1 Pub. L. 115-271
2 42 U.S.C. § 1320a-7b