New Georgia Statute Prohibits Patient Brokering for Substance Abuse Providers

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On July 1, 2021, Georgia’s new anti-kickback statute related to substance abuse patient brokering began prohibiting payment, or the offer of remuneration, to induce the referral of a patient to or from a substance abuse provider. The Georgia legislature passed the statute after lawmakers identified a pattern of substance abuse treatment centers seeking patient referrals from providers in exchange for fees. Under Georgia’s new statute, such payment or offers of payment in exchange for patient referrals with government or commercial insurance may result in criminal liability, including potential imprisonment.

The Georgia statute also builds upon an increasing number of state and federal laws related substance abuse and patient brokering such as the federal Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which prohibits soliciting or receiving remuneration in exchange for referrals related to drug treatment services. Entities and individuals operating in the healthcare space in Georgia and elsewhere, including substance abuse treatment centers and individual healthcare professionals, should remain vigilant and avoid violating the Georgia statute or other applicable state and federal patient brokering laws. Such entities and individuals should also ensure that safeguards are in place to prevent prohibited referrals and ensure that any referrals comply with exceptions permitted by applicable laws.

Background on the Georgia Statute

Previous to the enactment of the statute, Georgia prohibited improper patient referrals under the Title 43 Patient Self-Referral law, which remains as a broader prohibition of kickbacks for patient referrals for any provider type licensed under Title 43 (e.g., physicians, pharmacists). As mentioned above, the new statute prohibits any person from soliciting, receiving, paying or offering to pay remuneration to induce patient referrals to or from substance abuse providers.

The new Georgia statute states that remuneration includes, “but is not limited to, a commission, benefit, bonus, rebate, kickback, or bribe, directly or indirectly, in cash or in kind, or a split-fee arrangement, in any form.” A substance abuse provider includes any “state owned or state operated hospital, community mental health center, or other facility utilized for the diagnosis, care, treatment, or hospitalization of persons who are alcoholics, drug dependent individuals, or drug abusers, and any other hospital or facility within the State of Georgia approved for such purposes by the Department of Behavioral Health and Developmental Disabilities.” Notably, the Georgia statute applies to both public and private payors. The law contains exceptions, including arrangements that are not prohibited under the federal Anti-Kickback Statute (AKS) and its associated safe harbors.

The Georgia statute also imposes criminal penalties for excessive and fraudulent medical testing related to the treatment of seniors, disabled individuals or individuals affected by pain, substance abuse, addiction or any disorder.

Penalties for violating any part of the Georgia statute include both fines and imprisonment, depending upon the number of patients involved. Conduct in violation of the statute involving fewer than 10 patients could result in a misdemeanor punishable by a prison sentence of up to 12 months and a fine of up to $1,000 per violation.

Application and Takeaways

The Georgia statute’s practical implications may not be significant for most Georgia substance abuse providers due to EKRA. EKRA imposes prohibitions similar to the Georgia statute, but at the federal level. EKRA applies to drug treatment services paid for by all payors, including private commercial healthcare insurers as well as federal and state healthcare programs. It prohibits the solicitation, receipt, payment or offering of any remuneration directly or indirectly, in cash or in kind, in return for referrals to a recovery home, clinical treatment facility or laboratory. EKRA also prohibits the payment or receipt of remuneration in exchange for an individual using the services of a recovery home, clinical treatment facility or laboratory.

Increasingly, states are also creating laws to regulate substance abuse treatment and enforce penalties against those who may inappropriately procure patients in their own state. Florida passed its anti-kickback law in 2016. California, New York, Tennessee, Utah and other states passed similar laws. The following is a list of highlights related to the Georgia statute:

  1. Ensure Compliance. Healthcare provider entities and individuals operating in Georgia should determine whether the Georgia statute affects their operations and ensure that they do not receive or pay remuneration for any referrals unless they comply with the statutory exceptions. All healthcare providers should be aware of EKRA and any other applicable state laws related to patient brokering and substance abuse, as potential criminal liability for kickbacks related to such arrangements continues to expand.
  2. Maintain Safeguards and Documentation. Healthcare providers should ensure that policies and procedures are in place to comply with applicable laws, and appropriate training for individual providers and staff may be necessary to implement any compliance standards. For any referral arrangements made with respect to a permissible exception, a healthcare provider should ensure that such arrangements are properly documented to align with each element of the applicable law.
  3. Expect Additional Regulation. Especially with the increasing focus on substance abuse, mental health and the provision of healthcare services for individuals living with such conditions, healthcare providers should expect greater attention on laws applicable to such services. At the federal level, EKRA is regulated by the attorney general, not the Department of Health and Human Services, and therefore it is unclear how existing AKS safe harbors will apply to EKRA. States may have similar ambiguities with existing laws. As evidenced by the growing numbers of states passing similar laws, regulation of drug treatment services and government scrutiny of arrangements related to such services likely will increase, and must be considered in light of other state laws.

As states enact laws in this space and the extent of EKRA’s implications remains uncertain, healthcare provider entities and individuals operating in Georgia and elsewhere should remain vigilant in understanding their enforcement. Please contact the authors for more information regarding the Georgia statute and EKRA and their application to certain arrangements under current understanding of the law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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