Is your practice compliant with The Eliminating Kickbacks and Recovery Act of 2018 (EKRA)? If you are asking, “What is the EKRA?” you are not alone—and that is part of the problem.
EKRA is part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT for Patients and Communities Act) that President Donald Trump signed into law Oct. 24, 2018.
On the surface, EKRA may appear to be just a rehash of the federal Anti-Kickback Statute that applies to a subset of behavioral health service providers. However, EKRA’s broad definitions of a “healthcare benefit program” and “laboratory” makes the law potentially applicable to almost all physician practices and clinical laboratories.
As its name infers, the EKRA and SUPPORT for Patients and Communities Act was initially intended to be centered on behavioral health services, specifically the problem of “patient brokering” at certain treatment centers, usually in the area of addiction treatment. This means a third party enrolls a patient who needs addiction treatment into a private health insurance plan and then coordinates the patient’s entrance to a treatment facility in exchange for a payment, or kickback. Since commercial insurance is not subject to the federal Anti-Kickback Statute, and many states have little or no additional state level protections, patient brokering has become a widespread practice.
EKRA was drafted to combat this problem and protect a potentially vulnerable patient population. EKRA mirrors language in the Anti-Kickback Statute that specifically prohibits knowingly and willfully soliciting, offering, paying, or receiving anyremuneration in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory. (See 18 USC (a)(1) & (2)). Penalties for each occurrence of violating this law include fines up to $200,000, imprisonment for no more than 10 years, or both.
Most physicians who are not actively involved in behavioral health may not have much interaction with recovery homes or treatment facilities. Physician practices, however, inevitably have countless interactions with laboratories, which the statute defines as to have the same meaning as used in the Clinical Laboratory Improvement Amendments (CLIA). As such, the statute’s prohibition applies to any remuneration associated with any referral for such services, whether or not the laboratory test is related to addiction treatment or recovery.
Furthermore, EKRA is not limited to only federal healthcare programs, such as Anti-Kickback Statute and Stark Law. Rather, the statute applies to any “healthcare benefit program,” defined as any public or private medical benefit plan or contract, i.e., all commercial insurance plans. This is a significant expansion of federal law from what has historically only been subject to state level oversight.
Similar to the Anti-Kickback Statute, EKRA also grants some statutory exceptions to permit certain relationships. These exceptions mirror a number of Anti-Kickback Statute’s safe harbors, including discounts, personal services, and management contracts. However, there are some notable exceptions.
Most importantly, unlike the Anti-Kickback Statute that provides a safe harbor for any amount paid by an employer to an employee with whom there is a bona fide employment relationship, EKRA only exempts compensation when the employee’s and independent contractor’s reimbursement does not vary by the number of individuals referred, the number of tests or procedures performance, or the amount billed or received. (See 18 USC, 220 (b)(2)). As such, the limitations on compensation for independent contractors and employees are essentially the same.
This is dramatic shift from the precedence under the Anti-Kickback Statue that generally allows commissions or percentage-based compensation to employees but not independent contractors. Physician practices and clinical laboratories, as a result of this new ban, will need to re-evaluate their compensation methodology for employees and referring physicians to ensure such reimbursement complies with the EKRA’s more stringent requirements.
For example, physician practices who self-refer to their own laboratory will now, in addition to Stark Law, need to ensure their compensation to employed physicians will not vary based on the number of referrals. Similarly, clinical laboratories will be prohibited from paying their marketing employees on a commission basis. This applies even if physician practices and clinical laboratories have taken steps to ensure they are not treating patients covered by a federal healthcare program. EKRA expressly applies to all health plans.
We must wait and see whether this significant expansion of prohibited conduct, which is well beyond the targeted behavioral health industry, will be limited by Congress or whether future regulations promulgated under this law will provide additional safe harbors. In the meantime, since EKRA is now in effect, physician practices and clinical laboratories need to be attentive to and ensure their operations are in compliance with this new law.
Peter J. Domas is Of Counsel at Dickinson Wright. Peter’s practice is devoted to representing clients in the healthcare industry and assisting them in navigating the complex statutory and regulatory environment unique to healthcare corporate, transactional, and litigation matters.