Congress has activated a new Anti-Kickback law known as Eliminating Kickbacks in Recovery Act of 2018 (commonly referred to as EKRA). The new Anti-Kickback law applies to arrangements involving recovery homes, clinical treatment facilities, and laboratories.
Congressional intent for enacting EKRA was noble. It wanted to clarify that brokering of opioid use disorder patients for profit is illegal. The concern was that vulnerable patients may be directed to ineffective or substandard treatment programs through referral inducement and kickbacks rather than appropriate factors such as quality and effectiveness. Unfortunately, the new EKRA law is so poorly crafted that potential interpretations could extend application way beyond the scope of legitimate congressional purpose. It also makes it very difficult for providers to take steps to proactively assure compliance. Where applicable, an entire new kickback analysis is now necessary on top of the traditional Anti-Kickback Statute (“AKS”), Safe Harbor, Stark Law, and state law analysis.
The ambiguity of the new law has the effect of greatly increasing compliance costs and potential criminal and civil exposure of even honest, well-meaning, and compliance oriented providers. It is not even clear how the new law actually enhances fulfillment of congressional objectives in an area already highly regulated by existing laws. Was another Anti-Kickback law really necessary? Are the costs of interpreting and applying an ambiguous law justified through effectiveness in achieving congressional goals?
So when does EKRA apply and who does it apply to? Generally, EKRA applies to arrangements involving recovery homes, clinical treatment facilities, and laboratories. The law prohibits offering or paying remuneration for referral or use of services of the listed recovery-related providers. The law applies to other providers or individuals on the referral end as well as the recovery-based provider receiving the referral. Nothing here yet that was not already covered in the existing Anti-Kickback Statute.
Statutory definitions of each recovery-based provider type is reflective on the coverage of the statute. At the outset, the law applies to clinical laboratories, but the definitions seem to indicate that all clinical laboratory referrals are covered, not just referrals related to substance abuse issues.
The law also extends to “recovery homes” and “clinical treatment facilities.” Recovery homes include “shared living environments” that purport to be free from alcohol and illicit drug use, and are centered on peer support and connection to services that promote sustained recovery from substance use disorders. Clinical treatment facilities exclude hospitals but include other types of medical settings that provide detoxification, risk reduction, outpatient treatment and care, residential treatment, or rehabilitation for substance use, pursuant to a license or certification under state law.
The general prohibition against remuneration for referrals is similar to the existing AKS. Both the federal AKS and EKRA likely apply to arrangements involving recovery homes, clinical treatment programs, and clinical laboratories. However, EKRA does not apply to arrangements that violate the AKS. EKRA is also ambiguous as it does not clearly define what a “referral” means. It seems logical to borrow definitions from the AKS, but there is nothing in EKRA that endorses the AKS definitions.
The main difference between the AKS and EKRA relates to the statutory exceptions and application of safe harbors under the AKS. EKRA has its own exceptions and the safe harbors do not apply to these arrangements leaving significant opportunity for inconsistent interpretation between the two federal statutes. The end result is an increasingly complex process through which providers are expected to weave a path of compliance.
EKRA contains significant reason to assure compliance. Violation of EKRA results in very serious penalties. Each occurrence of violating EKRA carries a fine of up to $200,000 and federal prison time up to 10 years. Compliance failures will tend to involve multiple violations, making potential legal exposure quite severe.
Similar to other kickback laws, compliance largely comes down to interpretation of applicable exceptions. This is where EKRA is seriously lacking. There can be no reliance on the safe harbors and developed law that applies under the federal AKS. EKRA’s exceptions tend to be narrower than corresponding exceptions or safe harbors. Parties who have arrangements with the type of recovery-related providers covered by EKRA need to dust off those arrangements and assess them for compliance with the new EKRA law. Additionally, recovery related providers need to examine their arrangements with outside referral sources, as well as their own employees and contractors to assure compliance with the new law. As mentioned above, EKRA appears to be much broader in application than necessary to meet congressional objectives. There are also many areas of application that are ill-defined and will require acceptable risk analysis or termination decisions.