The Eliminating Kickbacks in Recovery Act of 2018—What Does It Mean?

1. The waiver or discount is not routinely provided; and
2. The waiver or discount is provided in good faith;

The language of the act is broad, and the term laboratory is not limited to just those laboratories associated with substance abuse services. Instead, laboratory is defined as “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.”

Therefore, enforcement action under EKRA could potentially reach laboratories outside the scope of substance abuse treatment. Additionally, EKRA seems to implicate engagement of sales and marketing representatives, because such individuals are compensated for inducing referrals.

Among other things, EKRA creates criminal penalties for any individual who ‘solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory.’

Impact of the Law

This law appears to be the federal government’s way of addressing relationships within the substance abuse and clinical laboratory industry that can fall outside the scope of Medicare/Medicaid enforcement (i.e., Stark law and Anti-Kickback Statute) due to the fact that claims for these types of services often are not submitted to government healthcare benefit programs and instead are only submitted to private payers. This act is significant in that it appears to create an anti-kickback equivalent that impacts all payers (including private payers).

Violation of EKRA is punishable by a fine of up to $200,000 and/or imprisonment of up to 10 years for each occurrence.

Next Steps for Healthcare Facilities

EKRA is still very new, and as a result, the scope of its enforcement is yet to be determined. However, it is important to keep EKRA in mind when structuring arrangements with recovery homes, clinical treatment facilities and laboratories to ensure the arrangement complies with the prohibitions specified in the act or, in the alternative, that it falls within one of its exceptions. Existing arrangements should also be re-evaluated to assess compliance under the new law. We recommend you follow EKRA closely to determine the scope of its impact.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC. Contact him via email at [email protected].