Health Care Client Alert

The Eliminating Kickbacks in Recovery Act of 2018 (EKRA)

On October 18, 2018, a combination of seventy bills, known as the SUPPORT Act, were signed into legislation as a response to the opioid crisis. Among the bills passed was the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which broadly prohibits kickbacks related to the solicitation or receipt of remuneration for any referrals to recovery homes, clinical treatment facilities, and laboratories.

One of the purposes of EKRA was to address the problematic practice of “patient brokering,” which occurs when recovery homes and treatment facilities engage third parties (also known as “body brokers”) to recruit patients to their facilities in exchange for certain kickbacks. Despite the fact this bill was established in response to the opioid crisis, it applies to any referrals—whether related to substance abuse or not. Accordingly, EKRA will be implicated in connection with any financial relationship that a clinical laboratory has with any referral source.

EKRA is an all-payor prohibition, meaning it applies to any clinical laboratory service, recovery home services, and/or treatment facility services paid for by any payor (including self-pay patients and commercial insurers). This makes EKRA much broader than the federal Anti-Kickback Statute (the “AKS”). However, there are several exceptions to EKRA, including (i) any payments by an employer to a bona-fide employee or contractor that do not vary based on volume of patients, tests or procedures, or amount billed; (ii) if a discount is properly disclosed and appropriately reflects the costs; (iii) certain waivers or discounts of any coinsurance or copayment; and (iv) remunerations made under an alternative payment model that are approved by the United States Department of Health and Human Services. It is very likely that the government will need to promulgate regulations to clarify the scope of EKRA and its exceptions.

Violations of EKRA may result in severe criminal penalties of up to a $200,000 fine and/or up to 10 years in prison for each occurrence.

Accordingly, it is of extreme importance for clinical laboratories, recovery homes, and treatment facilities to evaluate their relationships and arrangements with all referral sources with respect to their private-pay patients to ensure that they are not in violation of EKRA. Additionally, any providers that render services to these entities should also evaluate their relationships with these entities to ensure they are in compliance with EKRA.