Why EKRA Referrals Can Land You in Prison

Effective October 24, 2018, The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) is now law. EKRA is another of several federal laws that regulate the use of referrals in the medical healthcare sector. Stark law regulates self-referrals; referrals by physicians to a designated health service in which the physician (or immediate family member) has a financial interest.

States have their own self-referral laws.

The federal Anti-Kickback statute regulates soliciting referrals of patients who use Medicare, Medicaid, or another federal healthcare program by offering remuneration (basically, anything of value).

Stark Law has exemptions and the Anti-kickback Statute has safe harbors which can be used as a way of authorizing certain types of transactions that might otherwise violate these statutes.

The new Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) is part of a Congressional effort to respond to the dangerous use of opioids which are taking many lives nationwide. EKRA also has exceptions that anyone who works with substance abuse needs to review with a knowledgeable healthcare attorney.

The Elimination Kickbacks in Recovery Act of 2018

The new law makes it a criminal offense to knowingly and willingly engage in the following conduct in interstate or foreign commerce) in:

• soliciting or receiving any remuneration (including any kickback, bribe, or rebate) directly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility
• paying or offering any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in-kind—

(A) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or

(B) in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory.

Offenders can be fined up to $200,000 and imprisoned up to 10 years.

Exceptions to EKRA

Just as Stark Law has exceptions and the Anti-Kickback Law has safe harbors, the Eliminating Kickbacks in Recovery Act of 2018 has its own exceptions a healthcare EKRA lawyer can explain:

1. Discounts and reductions in prices. These may be permissible if the service provider or other entity obtained the discount under a federal health program – if the discount/reduction is:
   1. Properly disclosed
   2. Appropriately reflects the costs claimed or charges made by the provider or entity
2. Employee payments. Payments by an employer to a bona fide employee or independent contractor with a contractual relationship for employment – provided the employment isn’t determined or doesn’t vary by:

• the number of individuals referred to a particular recovery home, clinical treatment facility, or laboratory;
• the number of tests or procedures performed; or
• 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.

3. Discounts. Discounts to applicable Medicare beneficiaries for the price of a drug of a manufacturer – if the discount is under the Medicare coverage gap discount program under section 1860D–14A(g) of the Social Security Act
4. Payments by a principal to an agent. If the payment is for compensation for the services of the agent under a personal services and management contract that meets the requirements of section 1001.952(d) of title 42, Code of Federal Regulations, as in effect on the date of enactment of this section.
5. Other waivers or discounts set forth in the new EKRA Law of any coinsurances or copayments by a health care b if:
   • the waiver or discount is not routinely provided; and
   • the waiver or discount is provided in good faith
6. A remuneration described in section 1128B(b)(3)(I) of the Social Security Act (42 U.S.C. 1320a–7b(b)(3)(I)).
7. A remuneration made pursuant to an alternative payment model (as defined in section 1833(z)(3)(C) of the Social Security Act) or pursuant to a payment arrangement used by a State, health insurance issuer, or group health plan if the Secretary of Health and Human Services has determined that such arrangement is necessary for care coordination or value-based care
8. Any other payment, remuneration, discount, or reduction as determined by the Attorney General, in consultation with the Secretary of Health and Human Services, by regulation.

Additional provisions of the new Eliminating Kickbacks in Recovery Act of 2018

A person doesn’t need specific intent or actual knowledge of the law to be in violation of the law.

Some key definitions in the law are:

• The statute defines “applicable beneficiaries” and “applicable drugs” according to specific provisions of the Social Security Act.
• A clinical treatment facility is “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”
• A health care benefit program is defined in section 24 (b).18 USC Section 24 b defines a health care benefit program as “any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.” Effectively, this means that, unlike the Anti-kickback Statute, EKRA can govern private market plans for violations of specific types of medical referrals in addition to federal programs.
• A recovery home means a shared living environment that is, or purports to be, free from alcohol and illicit drug use and centered on peer support and connection to services that promote sustained recovery from substance use disorders.

How an experienced healthcare lawyer can help

A skilled healthcare lawyer understands Stark Law, Anti-kickback Statute, and other referral prohibitions. EKRA is meant to complement these laws. Experienced healthcare counsel can explain what acts constitute violations, what the violations are, and what exceptions or safe harbors might apply. Understanding all these together can help the medical practitioner or provider take steps to comply with the relevant laws. This includes the roles each provider, officer, employee, and vendor should play in the overall scheme.

A thorough legal review analyzes the different types of relationships, what relationships must be placed in writing, and what the key relationship requirements are. The legal review also reviews existing employment arrangements and relevant contracts.

Distinctions between EKRA and the Anti-Kickback Statute/Stark Law

Some key differences between EKRA and comparable laws are:

Medical practices covered. EKRA only applies to certain entities – recovery homes, clinical laboratories, and clinical treatment centers. Anti-kickback Statute and Stark Law are much broader in the scope of medical practices that are covered.

The entities that pay for medical services. The Anti-Kickback Statute only applies to referrals covered by a federal health care program. EKRA applies to all healthcare programs – public and private that operate in interstate or foreign commerce – and which provide any type of medical benefit.

While EKRA was designed as a response to the opioid crisis, the law applies to illegal referrals to clinical labs, clinical treatment facilities, and recovery homes for any type of medical service – not just substance abuse. Because of EKRA, healthcare providers now won’t be able to separate their Medicare/Medicaid referrals and their private referrals.

Stark Law

Stark law is aimed at physician self-referrals. The driving force behind the law is that doctors should refer patients to medical providers and medical vendors based solely on what’s best for the patient – and not what’s financially rewarding for the physician. Stark law is targeted at referrals where the doctor has a conflict of interest.

The Omnibus Budget Reconciliation Act of 1989 modified Stark Law by disallowing “self-referrals for clinical laboratory services under the Medicare program.”

There are some exceptions to the Stark Law self-referral prohibition. These exceptions which are strictly defined include exceptions for doctor services, in-office ancillary services, renting equipment and office space, bona fide employment relationships, and ownership in publicly traded securities and mutual funds.

The penalties for violating Stark Law include:

• A requirement to return any funds improperly received
• Civil penalties up to $15,000 for each type of improper service
• Treble damages
• Exclusion from participation in Medicare, Medicaid, and state-related programs
• Additional civil penalties

Generally, the Department of Justice must show that the health provider knew or should have known of the improper relationship.

The Anti-Kickback Statute

The Anti-Kickback Statute (AKS) makes it illegal to knowingly and willingly accept remuneration (or to solicit, offer, or accept it):

• In return for referring patients for services or items (such as the need for medical devices) where a federal health care agency will by paying all or part of the cost
• Purchasing, leasing, or ordering (or recommending such) any good, service or facility where the federal health program will be paying for part or all of the bill for the expenses.

Anti-kickback Statute violations include schemes that are for in-kind services or cash, are overt or covert, and are indirect or direct.

The definition of remuneration includes mostly anything of value. The main federal agencies that need protection from these schemes are Medicare and Medicaid.

Violators can be charged with a federal crime, ordered to pay restitution and fines, be denied the right to bill the federal programs any further, lose their license, and suffer other consequences.

Anti-kickback Statute safe harbors can help show that the relationship/scheme is permitted. Anti-kickback Statute safe harbors include renting space or equipment agreements, selling a medical practice, offering discounts, personal service contracts, managed service agreements, group purchases, certain approved investments, and other kinds of relationships set forth in the Anti-kickback Statute or rulings.

Substance abuse in America is continuing to get worse. The Elimination Kickbacks in Recovery Act of 2018 was enacted to protect patients from doctors who put their financial security ahead of providing the patients with the best medical care. Violators of the new law can suffer extreme civil, criminal, and administrative penalties. Some exceptions including discounts and personal service agreements are authorized by the law – but only if the exact criteria of the statute is met.

For help with any type of referral or kickback claim or possible claim, physicians should consult with an experienced federal and state healthcare lawyer. To speak with a skilled healthcare attorney, contact Cohen Healthcare Law Group, PC. today. We have the experience and skills to analyze your relationships and advise you what steps are necessary to comply with the applicable laws.