Despite some regulatory flexibilities granted to clinical laboratories during the COVID-19 crisis, there are two separate federal anti-kickback laws labs must strictly adhere to throughout this public health emergency and beyond – the Anti-Kickback Statute (AKS) and EKRA. Violating these federal kickback laws can lead to steep civil and criminal penalties, including up to $200,000 in fines and up to 10 years behind bars for each violation.

Medical Labs and the Anti-Kickback Statute

AKS makes it illegal to willfully and knowingly exchange payment or anything of value for referrals for healthcare services paid for by a federal government healthcare program, such as Medicare or Medicaid.

Penalties for violating AKS include:

• Criminal fines of up to $25,000;
• Civil fines of up to $50,000 plus up to three times the damages suffered by the government; and
• Up to five years in federal prison per violation.

AKS includes certain safe harbors that protect certain financial arrangements, but laboratories should be aware that AKS safe harbors do not necessarily align with EKRA safe harbors, meaning some activities acceptable under one federal law could be illegal under the other.

EKRA and COVID-Testing Labs

EKRA stands for the Eliminating Kickbacks in Recovery Act, a law designed to prevent bribery and healthcare fraud in testing labs and certain treatment facilities.

The 2018 law was originally introduced as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the SUPPORT Act) and geared toward limiting the overprescribing of opioid painkillers. However, the U.S. Department of Justice (DOJ) is currently using it to detect, deter, and punish fraud and abuse during the COVID-19 pandemic.

Under EKRA, recovery homes, clinical treatment facilities, and laboratories are prohibited from paying for patient referrals via patient brokering, kickbacks, bribes, and rebates. Because EKRA applies to entities receiving payments from the government “in or affecting interstate or foreign commerce,” all laboratories offering COVID-19 tests are subject to EKRA – including private and commercial entities.

The consequences of violating EKRA are:

• Up to 10 years in prison per violation;
• A fine of up to $200,000 per violation, or both.

Labs should be especially rigorous about EKRA compliance when it comes to marketing and sales personnel and patient broker services. The courts are still defining the parameters of EKRA and its definition of “referral” is unclear. At the same time, there is a growing trend of federal agencies using EKRA as an enforcement tool against fraudulent activity at COVID-19 testing labs.

Read more on common medical lab referral and compensation arrangements that could lead to criminal charges under EKRA.

EKRA Imposes Greater Restrictions on Medical Labs than AKS

Since EKRA’s passage in 2018, the Department of Justice and Department of Health and Human Services’ Office of Inspector General (OIG) have provided little insight into the interpretation and application of EKRA. As a result, caution is advised.

Some activities that are legal under AKS are treated as a criminal offense by EKRA. If your practice based its compliance practices on AKS safe harbors, you may be overdue for a compliance check. Historically acceptable arrangements – such as commission-based payments to sales staff – are no longer protected activities under EKRA.

Additionally, EKRA applies to private health payors and out-of-pocket payments – not just government healthcare programs. By contrast, AKS applies only to federal healthcare dollars.