The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) took effect on October 24, 2018 as part of the SUPPORT for Patient and Communities Act, a piece of comprehensive federal legislation aimed at addressing the country’s opioid epidemic. In particular, EKRA addresses kickbacks, bribes, and rebates involving referrals to recovery centers, clinical treatment facilities, and clinical laboratories. It is worth noting that EKRA is an all-payor statute, meaning that its provisions apply not just to Medicare and Medicaid, but likewise to services paid for by commercial insurers.
EKRA creates criminal penalties for those who give or take remuneration for referrals (what is sometimes referred to as “patient brokering”). Part of the criminal prohibitions set forth in EKRA include tying employee or contractor payments to referrals, numbers of tests, or revenue generated. EKRA effectively lumps employees and contractors together in this regard, which is different from the federal Anti-Kickback Statute (“AKS”), which provided different safe harbors for contractors and employees. These safe harbors made it possible, under certain circumstances and for particular providers, to establish compensation arrangements called “percentage based compensation” whereby compensation was tied to the revenue resulting from an employee’s business-generating efforts.
Over the years, the Office of the Inspector General (“OIG”) and some judicial opinions raised concerns—and thereby provided some guidance—about such arrangements (see, e.g.1, e.g.2, and e.g.3), but the statutory safe harbors nevertheless made percentage based compensation possible within a carefully-crafted employee compensation setup. Now, insofar as these arrangements involve recovery centers, clinical treatment facilities, and laboratories, EKRA appears to have eliminated or severely limited the availability of those safe harbors.
For any organization that offers percentage based (or patient referral) compensation to its sales and marketing team, it is important to take a careful look at those arrangements to ensure that they are still legal in light of EKRA.
For those who appreciate source material, the text of EKRA can be found here at Subtitle J, Section 8121, et seq.
Vasilios (“Bill”) J. Kalogredis, Esquire is Chairman of Lamb McErlane’s Health Law Department. Bill has been practicing health law for over 40 years, representing exclusively physicians, dentists, group practices, other health care professionals and health care-related entities.
Andrew Stein is an associate at Lamb McErlane PC. He concentrates his practice at the intersection of health law and business law. He represents individuals and businesses with a primary focus on licensed medical and dental professionals, medical and dental practices, and other health care entities.