Expanded Anti-Kickback Protection to Care Paid by Private-Payers

As of October 24, 2018, a new regulation passed that affects the private sector of the health care industry potentially having lasting effects on clinics, laboratories and even marketing companies. Mirroring the federal Anti-Kickback Statute, the Eliminating Kickbacks in Recovery Act (“EKRA”) aims to fight the opioid epidemic. In particular, EKRA expanded the federal Anti-Kickback criminal statute by expanding it to cover payments by private insurance companies for claims submitted induced by a kickback, whereas the federal Anti-Kickback statute only covers payments made by the state or the federal government. Under EKRA, Congress applies health care fraud laws concerning improper remunerations for patient referrals to, or in exchange for an individual using the services of, a recovery home, clinical treatment facility or clinical laboratory. Absent a prescribed exception, the rule punishes any person or entity that knowingly and willingly offers, pays, solicits, or receives, directly or indirectly, anything of value to induce a referral of an individual, or in exchange for an individual using the services of a laboratory, clinical treatment facility, or recovery home.

EKRA provides several exceptions to the referral prohibition, including but not limited to:

  1. A discount or other reduction in price obtained by a provider of services or other entity under a health care benefit program if the reductions are properly disclosed and reflected in the costs claimed or charges made.
  2. Payments to employees and independent contractors that are not determined by or do not vary by . . . 
    1. The number of individuals referred to a particular recovery home, clinical treatment facility, or laboratory;
    1. The number of tests or procedures performed; or
    1. The amount billed to or received from, in part or in whole, the health care benefit program from the individuals referred to a particular recovery home, clinical treatment facility, or laboratory;

Why was EKRA implemented?

With the current opioid crisis affecting all parts of the country, EKRA was created, in part, to help curb improper patient brokering practices in all payor sectors of health care. Patient brokering occurs when a drug rehab or similar facility pays a third party to bring patients to their establishment. These unethical business practices benefit from the vulnerability of substance abusers.

What does this mean for private clinics, laboratories, treatment facilities and health care providers in general?

Because EKRA’s broad language includes a wide array of healthcare providers, many business relationships may fall under the purview of the statutory language. Examples of improper business relationships that fall within the statutory language may include serving as a medical director for a laboratory to whom a provider makes patient referrals or a business relationship with a marketing company whose job it is to steer patients to certain health care providers, such as, a clinical home or treatment center. A problem arising from EKRA is that the statute may make certain employment areas subject to criminal prosecution, such as the marketing company example provided above. However, unlike the Anti-Kickback Statute, EKRA levels the playing field by making payments made by private insurance subject to criminal prosecution.

Under EKRA, the maximum penalty per offense of illegal remunerations paid by recovery homes, clinical treatment facilities, or clinical laboratories, can result in fines of $200,000 and 20 years of imprisonment for each occurrence.

Overall, EKRA may cause companies to tread lightly in their business relationships with medical companies because now companies are subject to anti-kickback statues no matter who pays for the care (public or private insurance). However, implementation of this statute has removed the financial incentive from an all payor industry. As such, EKRA helps create a solution to one aspect of the opioid crisis by subjecting care paid by both private and public healthcare insurance to criminal prosecution for illegal remunerations.

Leave a Comment

Filed under Uncategorized

Leave a Reply

Your email address will not be published. Required fields are marked *