EKRA: More than a Year Out, Major Questions Remain Unresolved

One of the scariest new lab compliance laws in recent memory is the Eliminating Kickbacks in Recovery Act of 2018 (EKRA). While laws banning remuneration in exchange for referrals is nothing new to labs, EKRA is much broader than the Anti-Kickback Statute (AKS) and Stark Law (Stark) that the industry has been dealing with for decades. The scary part is that EKRA is much broader than those laws. Worse, it may cast new doubt on the business, compensation and other arrangements that labs rely on to satisfy AKS and Stark. An arrangement that satisfies AKS and Stark, in other words, may not work for EKRA. The reason for emphasizing “may” and “may not” is that we simply don’t know. The law is vague and lacking in implementing regulation. When it came out more than a year ago, the assumption was that the government would offer guidelines and clarification fairly soon. Unfortunately, that hasn’t yet happened. And there’s no indication of when or even if it ever will. What EKRA Is All About EKRA is part of a larger piece of legislation enacted to combat the opioid crisis called the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) that took effect on Oct. 24, 2018. EKRA is the part of the SUPPORT Act that deals with labs and other providers. It imposes penalties of up to $200K and 10 years in prison for paying remuneration to induce or reward referrals to labs, clinical treatment facilities and recovery homes, including knowingly and willfully:

• Soliciting or receiving any remuneration in return for referring a patient to a lab, clinical treatment facility or recovery home; or
• Paying or offering any remuneration to induce a referral of an individual, or in exchange for an individual using the services of a lab, clinical treatment facility or recovery home.

Of course, those things are also problematic under the AKS and Stark. The difference, though, is that unlike the current kickback laws, EKRA is an “all-payor” statute, i.e., it applies not just to Medicare, Medicaid and other government health programs but also to lab services paid for by commercial insurers. Luckily, many compliance-conscious labs already vet their private payor arrangements for potential kickback issues, notes Savannah, GA, health attorney Adam Walters. The more serious concern is that EKRA doesn’t include the exceptions and safe harbors contained in the AKS and Stark laws to allow leeway for legitimate referral arrangements that may otherwise raise kickback concerns. Result: There’s no way to be sure that arrangements structured to comply with AKS and Stark exceptions and safe harbors will also comply with EKRA. 3 Potentially Problematic Arrangements Walters says that there are three kinds of commonly used lab arrangements that EKRA calls into particular concern.

1. Variable Compensation Tied to Referrals

Although it doesn’t impose a blanket ban on commissions, EKRA does prohibit variable compensation paid by labs that’s based on the value or volume of referrals generated, particularly commissions and bonuses to sales and marketers based on the number of patients referred, tests performed and/or payments the lab receives.

2. Leasing of Space in Physicians’ Offices

 While some states already prohibit this practice, Walters notes that both AKS and Stark create exceptions for labs to make legitimate arrangements to lease space in the offices of referring physicians. But EKRA doesn’t include any such exceptions or safe harbors.

3. Accountable Care Organization (ACOs) Participation Agreements

 Many labs have taken advantage of current federal waivers to AKS, Stark and the Civil Monetary Penalties law that allow labs to enter into participation agreements with ACOs. However, the federal waiver does not include EKRA, which casts doubt on the legality of existing lab ACO participation arrangements.  Takeaway Many have suggested that EKRA was rushed into passage without full consideration of these kickback effects. But the corollary to that school of thought is that once the dust settled and the problems became apparent, the government would step in and fix the problem. Relief could come in the form of:

• Regulatory guidance from the Department of Justice (DOJ) clarifying whether arrangements that meet AKS and/or Stark exceptions or safe harbors also comply with EKRA;
• New DOJ implementing regulations setting out EKRA exceptions and safe harbors for particular arrangements, presumably in coordination with current AKS and Stark rules; or
• Legislation that eliminates, clarifies or revises the EKRA kickback prohibitions.

But nearly 16 months after EKRA took effect, none of these things have happened, despite calls for clarification from the American Clinical Laboratory Association (ACLA) and other lab industry groups. We know that the DOJ and Congress are aware of and presumably looking into the problems. But so far, nobody has made a move. “The DOJ seems to be waiting for Congress and vice-versa,” suggests one expert. In the meantime, the lab industry has no choice but to assume that EKRA does apply to all existing arrangements, including those structured for AKS or Stark, and review or restructure them accordingly. Which Labs Does EKRA Cover? Another unanswered question about EKRA is whether the kickback restrictions apply to all labs or just toxicology labs. The EKRA law’s focus is on toxicology, drug treatment centers and sober homes; on the other hand, the language of the statute is so broad that it seems to cover all clinical labs, not just toxicology labs.