Key Considerations for Lab Leaders Regarding the Eliminating Kickbacks in Recovery Act of 2018 (EKRA)

  • Rina Wolf and Marty Barrack

The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) signed into law in October 2018, was intended to address the national opioid crisis. One of its accompanying bills, however, the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), codified at 18 U.S.C. Section 220, has potential impact on many laboratories that provide no services related to substance abuse treatment. A number of safe harbors that had been previously applied to compensation do not apply to this legislation as it was enacted. Practices that may have been acceptable in some commercial arrangements are now also outlawed by this legislation. So as we wait to receive greater clarification, which doesn’t seem to be imminent, it is imperative to be aware of all the relevant components.

EKRA creates federal criminal penalties for anyone soliciting, offering, paying or receiving compensation in exchange for referring a patient to a substance abuse recovery home, clinical treatment facility, or laboratory. Violations are punishable by a fine of up to $200,000 and/ or imprisonment of up to 10 years for each occurrence.

While EKRA may have been intended to address patient brokering and kickbacks in the substance abuse treatment market, hence the use of the term “recovery” in the bill’s name, as written it is far more expansive. EKRA adds an all payor (public and private) anti-kickback rule and establishes more narrow exceptions than the federal AntiKickback Statute. The broad language enables the federal government to monitor provider arrangements intended to generate business for any laboratory services, not only those related to substance abuse treatment.

Rina Wolf, Vice President Commercialization Strategies, Consulting & Industry Affairs, XIFIN

Marty Barrack, Senior Vice President & General Counsel, XIFIN

Billing Impact

Much has been written about the compensation aspects of EKRA. Less has been written so far on the impact on laboratory billing practices. There are things that labs can do within their billing and revenue cycle management processes to help compliance with EKRA. For example, review policies related to writing off co-pays and deductibles. Under EKRA, these write-offs, even for charges subject to commercial insurance that may previously have been lawful, when done on a “routine” or “bad faith” basis may be found to be criminal. It may also be a violation if a provider “obtains” a discount or reduction in price if it is not properly disclosed and reflected in the costs claimed or charges made by a provider.

It is now a risk that writing-off these patient responsibility balances as a standard of practice for private payors may be found to be a federal crime, as it already is under Medicare. Safe practice means that when there are waivers and discounts, these cannot be fixed amounts, nor have an upper limit, such as “you’ll never pay more than $XXX out of pocket.” To meet the statutory exception of EKRA, any discounts or waivers must be made on the basis of a bona fide financial assistance program, for which there are patient-specific balance determinations and documentation, and that is not routinely provided to patients. Safe practice also dictates that to fall within this exception, there also needs to be valid and documented efforts to collect on balances due.

It’s also important to note that where in the past individual state laws varied and there was a certain amount of “grey” to balance billing requirements, we are now seeing parity on a federal level. The parity brought by EKRA to write-offs and discounting for patient responsibility is a positive change. For instance, labs may choose to provide a better patient responsibility estimate up front which can reduce the overall cost of billing. We are already seeing laboratories changing their policies to be more compliant.

The right RCM solution provider can advise you on mitigating the impact of EKRA by optimizing reimbursements, including pursuing a secondary payor to further reduce the patient out-of-pocket and maintaining documentation of your compliant activities. The right RCM solution provider can also advise you to take the best advantage of your data and help you formulate your strategy for maximizing potential “in-network” opportunities.

Compensation Impact

EKRA provides an exception for payment made by an employer to an employee or independent contractor so long as the payment does not vary by the number of referrals to a laboratory, the number of tests or procedures performed, or the amount billed to or received from a health care benefit program from referrals. This means that typical sales commission plans may be subject to analysis under EKRA and could be found to be prohibited remuneration and result in criminal liability.

Based on an unscientific canvass, most laboratories do not yet appear to be changing their compensation structure in response to EKRA. Many are eliminating 1099 sales forces and we have already seen a few moving away from compensation based on volume (e.g., number of referrals or number of tests) to compensation based on activity (e.g., number of calls, number of clean requisitions, etc.). Overall, laboratory executives indicate they need a better understanding of EKRA and education on its implications. It is also important to understand that regulations interpreting EKRA that could provide more clarity on the behaviors that would violate EKRA, or on the behaviors exempt from EKRA violation, and clear up what may be unintended consequences for labs, must be made by the DOJ, who has not yet promulgated such clarifications to align EKRA with the exemptions outlined in the anti-kickback regulations that address the industry’s concerns.

What Lab Leaders Need to Consider Regarding EKRA

The two most important things for lab leaders to consider related to the billing impact of EKRA are that not everything about EKRA is negative. First, the parity brought by EKRA by creating the risk of a federal felony for “routine” write-offs and discounting for patient responsibility is a positive change that can help reduce the overall cost of billing, remove the “grey” from billing policies and level certain playing fields. Second, the risk brought by EKRA to traditional incentive-based compensation, even compensation previously permitted under federal law.

Your RCM solution provider can advise on mitigating the impact of EKRA by optimizing reimbursements, assisting with documenting and tracking of patient financial programs and pursuing secondary payors before assigning non-reimbursed balances to patient responsibility.




Published by XIFIN
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