New law expands kickback liability for laboratories, recovery homes, and clinical treatment facilities

Clinical laboratories, recovery homes, and clinical treatment facilities should take note of a new law that expands kickback liability to non-governmental payors. Late last year, President Donald Trump signed into law the “Eliminating Kickbacks in Recovery Act of 2018” (EKRA) as part of the larger “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” (SUPPORT Act).

Prohibition

Similar to the prohibitions under the federal anti-kickback statute (AKS), EKRA generally prohibits (1) the solicitation or receipt of any remuneration in return for referring a patient to a laboratory, clinical treatment facility, or recovery home, and (2) the payment or offer of any remuneration to induce a referral of an individual to a laboratory, clinical treatment facility, or recovery home or in exchange for an individual using the services of a laboratory, clinical treatment facility, or recovery home.

Health care providers should note three key features of EKRA:

• First, EKRA applies to any “health care benefit program” which includes commercial payors and government programs. This is broader than the AKS which is limited to governmental payors.
   
• Second, EKRA covers clinical laboratory services provided at any laboratory subject to CLIA including services unrelated to opioid treatment and recovery.
   
• Third, EKRA is a criminal statute that contains a “knowing and willful” intent requirement.
   

Exceptions

EKRA contains eight exceptions to its basic prohibition including a discount exception, a compensation exception for employees and independent contractors, and an exception for payments made in connection with alternative payment models. While similar, the exceptions under EKRA do not always perfectly align with the AKS safe harbors. For example, EKRA’s employee exception is narrower than the AKS employee safe harbor, but EKRA’s personal services and management contracts exception incorporates the requirements of the AKS personal services and management contracts safe harbor.

Penalties

Penalties for violations include fines up to $200,000, a prison term up to 10 years, or both, for each occurrence.

Preemption

EKRA contains two preemption clauses. First, EKRA does not apply to conduct prohibited under the AKS. This preemption appears to prevent liability under EKRA for conduct that is subject to the AKS. Second, EKRA contains a preemption clause that states: “[n]othing in [EKRA] shall be construed to occupy the field in which any provisions of [EKRA] operate to the exclusion of State laws on the same subject matter.” This language is not clear but appears to mean that ERKA does not preempt state law.

Regulations

Upon the implementation of EKRA regulations, providers may have more clarity on the applicability of the prohibition, its exceptions, and the preemption provisions. Until that time, all laboratories, recovery homes, and clinical treatment facilities should review their business arrangements to ensure compliance with EKRA as it stands in addition to other applicable regulatory requirements.

If you have any questions regarding EKRA or the SUPPORT Act, please feel free to contact the authors of this blog.

Nicole Jobe is a partner in the firm’s health care practice.