Jones Day Talks Health Care: The Eliminating Kickbacks in Recovery Act

With the passage of the Eliminating Kickbacks in Recovery Act in October 2018, Congress took aim at the ongoing opioid crisis threatening communities across the U.S.  This new criminal statute targets healthcare providers that knowingly pay for or otherwise incentivise referrals of individuals to recovery homes, clinical treatment facilities, or laboratories. Partner Ann Hollenbeck discusses with Health Care lawyers B. Kurt Copper and John Kirsner, covering the goals, exceptions and other crucial details of the Act.

Podcast: Play in new window | Download

SUBSCRIBE TO JONES DAY TALKS

Subscribe on Apple Podcasts
Subscribe on Android
Subscribe on Google Play
Subscribe on Stitcher

LISTEN TO PREVIOUS PODCASTS

Read the full transcript below:

Ann Hollenbeck:

Welcome to Jones Day Talks Health Care & Life Sciences. I'm Anne Hollenbeck, and our topic today is the new Eliminating Kickbacks in Recovery Act, which was passed in October of 2018. I'm thrilled to have two colleagues with me today, Kurt Copper and John Kirsner, both from our Health Care & Life Sciences group. They come to us from two different angles on the topic. Kurt from a litigation and investigation side, and John from a transactional perspective. Thanks so much. I'm so glad both of you are here with me today.

B. Kurt Copper:

Thanks Ann. Glad to be here.

John Kirsner:

Absolutely.

Ann Hollenbeck:

So I think I'll toss the first question out to you Kurt. Tell us what exactly is the EKRA, which again, we're going to use that acronym today, Eliminating Kickbacks in Recovery Act. Tell us what is that all about?

B. Kurt Copper:

Sure. So in October, Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, also called the SUPPORT Act, that was passed and included a number of different provisions that were aimed at targeting the opioid crisis. One of the pieces of that legislation was the Eliminating Kickbacks in Recovery Act, the EKRA, and what it is is a criminal statute, a new criminal statute that with respect to services covered by a healthcare benefit program targets those who knowingly and willfully pay or offer any remuneration to induce a referral of an individual to a recovery home, clinical treatment facility, or a laboratory, or an exchange for an individual to use the services of that recovery home, clinical treatment facility, or laboratory. And it says that those individuals shall be fined not more than $200,000, imprisons not more than 10 years, or both.

Ann Hollenbeck:

Yikes. So criminal statute. And again, I want to go back over. Who does this apply to? Give us that again with some examples?

B. Kurt Copper:

Sure. It applies to recovery homes, clinical treatment facilities, or laboratories. And so while some of the language, the use of the term remuneration and the discussion of referrals makes many of us in the healthcare industry immediately think of the Anti-Kickback Statute, the federal Anti-Kickback Statute that we've all come to know and love. This is a separate criminal statute that is focused on services at recovery homes, clinical treatment facilities, or laboratories.

Ann Hollenbeck:

And what kind of laboratories? Any details on that we should be aware of?

B. Kurt Copper:

It's any CLIA-certified laboratory. So while the context of this statute was targeting the opioid crisis, this is not a situation where the definition of laboratories is necessarily limited in its text to laboratories performing opioid testing. It's any CLIA-certified laboratory.

Ann Hollenbeck:

Okay. So, Kurt, I've got to figure there are a number of exceptions just like with the Anti-Kickback Statute. Fill us in on how that works.

B. Kurt Copper:

You're right. There are a number of exceptions, some of which are very similar to those in the Anti-Kickback Statute and some of which by their terms are a little different. There are exceptions, for instance, for certain types of discounts. There are exceptions for personal services arrangements like you might see under the Anti-Kickback Statute. There are exceptions for payments made to employees although the express terms of the exception for payments made to employees under the EKRA is slightly different than payments made to employees in that exception under the Anti-Kickback Statute. And there's also an exception for remuneration made pursuant to an alternative payment model.

Ann Hollenbeck:

Oh, wow. So maybe I'll kick that over to John. John, tell us about that exception.

John Kirsner:

Well, it's an important one for a lot of us that are sort of in the transactional space setting up accountable care organizations, MSSP ACOs, because as we think about the alternative payment models, really that ACO is probably a fit for that exception. And so I think what it's getting at is that if you have an ACO or you're part of an ACO, you're a participant in an ACO, then there would be an opportunity to say that we could fit within this EKRA exception and still continue to have our clinical lab or other arrangement. And so that is a powerful exception to be able to come into play. And it sort of tends to show that the government is looking to promote the healthcare reform efforts and really using as a lever, get into one of these alternative payment arrangements.

Ann Hollenbeck:

So what are some other distinctions as you really put the EKRA side-by-side with the Anti-Kickback Statute? What else?

B. Kurt Copper:

Yeah, there's one in particular that really jumps out is that this is an all payer statute. So whereas the Anti-Kickback Statute is focused on patients who are government insured, the EKRA, it applies to patients who are commercially insured and the services provided to those patients as well.

Ann Hollenbeck:

Okay.

John Kirsner:

Kurt and I were discussing this recently, and in this context, it raises some interesting liability issues for those payers because payers have never really had to contemplate the Anti-Kickback Statute in the same way. But if payers are paying for laboratory services or for other services that are covered by one of these organizations and that is something that is violative of the EKRA, their payment arguably is facilitating the improper behavior. And so it'll be interesting to see how liability may or may not attach to the payers in these kinds of arrangements as well.

Ann Hollenbeck:

Interesting. Any other differences?

B. Kurt Copper:

Yeah, another key difference that we've seen is that the EKRA has fewer listed exceptions, such that certain arrangements that perhaps providers have traditionally of course always thought of as falling directly under a safe harbor to the Anti-Kickback Statute, there may not be an express one under the EKRA at least as of yet. Also the employment exception that is under the EKRA that I referenced earlier is actually crafting a slightly different way in that it does not apply if the payment varies by the number of individuals referred to a particular laboratory or the number of tests or procedures performed or the amount billed to or received from the healthcare benefit program from the individuals referred to the particular laboratory.

B. Kurt Copper:

And so you've got a situation where providers are going to have to take a close look at their arrangements given the slight differences in some instances between the safe harbors that have been in existence for a long period of time under the Anti-Kickback Statute on one hand and these newly promulgated exceptions in the statute of the EKRA.

John Kirsner:

Yeah, as a transactional lawyer, so many of the joint ventures that we set up rely on, from an Anti-Kickback Statute perspective, the small entities safe harbor, right? And either we have a venture that fully comports with that safe harbor or it gets awfully close to it and we can make a judgment on overall levels of risk. And hopefully it's a low risk. Here there is no corresponding safe harbor for a small entity, so that if you think about physicians creating a laboratory arrangement that they would have an ownership interest in, there's a way to get that done under the Anti-Kickback Statute, there's a way to get that done under the Stark Law, and yet under the EKRA, there is no corresponding safe harbor at least to this point now.

John Kirsner:

It still doesn't mean that it's necessarily automatically illegal under the EKRA because we are talking about a criminal statute here. So we need to think about the nature of intent, but it is definitely something that needs to be thought through as we're putting new ventures and thinking about our existing ventures that involve these kinds of ownership issues. And ownership is just one example. It's a proxy for many different sorts of relationships where there is a safe harbor or an exception and there isn't something like that under the EKRA at this point.

Ann Hollenbeck:

So what's the interaction with the Stark Law here?

John Kirsner:

The Stark Law is a different law. It's a separate statute. Its penalties are civil in nature as opposed to being criminal in nature. It's a strict liability law, as we all know. And again, there are ways under the Stark Law to have arrangements, transactions, joint ventures, or leases that are protected through the use of a Stark exception. Here though, even if we have an arrangement that say fits within the in-office ancillary services exception and you have gone through the pain of making sure that you are a true group practice under the Stark Law and you have a decision that it's low risk under the Anti-Kickback Statute with regard to small entity safe harbor compliance, or the group practice safe harbor, you still have now the EKRA if we're talking say about a lab where you have to go through now where are we at with regard to the EKRA on compliance and on that statute?

John Kirsner:

So it is interesting because as much as we will comport and have to comport with Stark and have low risk under the Anti-Kickback Statute, this is almost like a third statute as important as the other two when it comes to, for example, these clinical laboratory arrangements.

Ann Hollenbeck:

So what about regulations? When can we expect those?

B. Kurt Copper:

Yeah, unfortunately they have not come out yet. As we all know, a major piece of the analysis under the Anti-Kickback Statute are the safe harbors, the regulatory safe harbors that have been passed over a number of years and that have allowed providers to understand the types of arrangements that the OIG has analyzed and considered to present low risk of raising the types of concerns that Congress originally was trying to combat with the Anti-Kickback Statute, whereas here we're still in the phase where we have this statute that's been passed, it has certain explicit exceptions to it, and then it also provides the authority for the attorney general in consultation with the secretary of HHS to promulgate regulations to try to clarify how this is going to be put into practice and how it's going to be interpreted going forward. And in fact, there've been calls for regulations already, and those just haven't come out yet as of today.

Ann Hollenbeck:

So should healthcare providers be considering their current arrangements and whether they're impacted by the EKRA? What's your advice there?

John Kirsner:

They definitely should. I think the good news is that unlike the Anti-Kickback Statute and unlike the Stark Law that are so all-encompassing, we're really just talking about recovery homes, clinical treatment facilities, and laboratories, right? And so if we don't have those particular kinds of organizations, we don't have to worry about the EKRA, but because laboratories are just so ubiquitous within healthcare organizations, it's very likely that almost every healthcare organization of a certain size from a physician group practice on up will probably have a laboratory as part of their arrangements. And as a result of that, you absolutely are going to need to think about the EKRA and compliance with the EKRA.

John Kirsner:

And I've been talking a lot about investments, but whether it's an investment, whether it's an employment arrangement, whether it's an independent contractor, personal services arrangement, whether it's a lease of space or equipment to the laboratory or from the laboratory, all of these kinds of arrangements need to be viewed through the prism of EKRA compliance as well as a traditional Stark and Anti-Kickback compliance.

B. Kurt Copper:

Yeah. And I think that providers are really going to want to focus on the development of the regulations here to see that the types of arrangements, again, that are viewed as consistent with the EKRA's goals going forward, and also to see whether the regulators recognize the context in which this statute was passed and how it was originally focused on the opioid crisis and making sure that it's being enforced in a way that's consistent with those goals going forward.

Ann Hollenbeck:

Thank you, Kurt and John. We really appreciate talking with you today. And of course, to the audience, thank you as always for listening. All questions and comments are welcome. I'm Anne Hollenbeck and can be reached at ahollenbeck@jonesday.com. Thank you.

Disclaimer:

Thank you for listening to Jones Day Talks. Comments heard on Jones Day Talks should not be construed as legal advice regarding any specific facts or circumstances. The opinions expressed on Jones Day Talks are those of lawyers appearing on the program and do not necessarily reflect those of the firm. For more information, please visit jonesday.com.