Labs, Clinical Treatment Facilities and Recovery Homes Subject to New All Payor Anti-Kickback Law

The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) became effective October 24, 2018. ERKA makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration (i.e., anything of value), directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral (or in exchange for a referral) to a lab, clinical treatment facility or recovery home.  Unlike the Federal Anti-Kickback Statue, ERKA applies to all payor sources.

Notably, the broad language of the ERKA permits the federal government to monitor arrangements intended to generate business for any laboratory, clinical treatment facility or recovery home for services payable by a federal health care program or commercial health insurers.  ERKA includes certain exceptions, as well as “preemption” language tied to the Federal Anti-Kickback Statute.

It is important that labs, clinical treatment facilities (i.e., 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), and recovery homes, critically examine current compensation arrangements with employees and contractors, as certain types of payment arrangements will now be prohibited.

Specifically, with regard to payment arrangements with sales personnel, there is a statutory exemption which allows payment to an employee or independent contractor, if the payment is not determined by or does not vary by:

• the number of individuals referred to a recovery home, clinical treatment facility, or lab;
• the number of tests or procedures performed; or
• the amount billed or received from, in part or in whole, the health care benefit program from the individuals referred.

 

In light of EKRA, labs, clinical treatment facilities, and recovery homes should carefully review current compensation arrangements with sales personnel, including both its employees and independent contractors to ensure compliance with this new law.  ERKA carries harsh maximum penalties for each violation: up to $200,000 in fines, 10 years imprisonment, or both.

For more information on this topic, please contact Adrienne Dresevic or Carey Kalmowitz at the Health Law Partners, (248) 996-8510.