Opioid Law Includes New Kickback Penalties for Drug Treatment Facilities/Labs

Last month, President Trump signed into law a bill designed to address matters relating to opioid use and abuse. Dubbed the “Support Act” an acronym for Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment, it includes a broad assortment of provisions to address the nation’s opioid crisis.

One of the more significant provisions is Section 8122 known as Eliminating Kickbacks in Recovery Act of 2018 (EKRA). It creates an all-payor, anti-kickback prohibition that extends to arrangements with recovery homes, clinical labs, and clinical treatment facilities and comes with criminal penalties for taking or paying a kickback.

Senators Marco Rubio and Amy Klobuchar, who were behind this bi-partisan legislation, said it was needed to “help states, law enforcement, private insurers and patients identify potentially illicit treatment centers and sober homes to ensure those who need treatment are able to find legitimate facilities.”

Patient brokering, which involves paying a third party to recruit patients for treatment and testing at recovery homes, clinical labs and clinical treatment facilities, has plagued the industry in recent years.

The law does the following:

  • Makes it illegal to provide, or receive, financial kickbacks for referring patients to recovery homes and clinical treatment facilities. These kickbacks are already illegal under Federal health care plans, like Medicare, but there is no federal law to prohibit them in private health insurance plans;
  • Fines anyone found guilty up to $200,000 or 10 years of prison, or both

Unlike AKS, EKRA, relates to services covered by all payors, not just federal healthcare payors (i.e. Medicare/Medicaid). Proponents argue that the law was needed because patient-brokering kickback schemes were legal under federal law if paid for by private insurers. Critics, on the other hand, argue this new law wasn’t needed because this kind of fraud was already addressed in federal law.

EKRA includes several exceptions and directs agencies to create additional ones. Those exceptions include:

  • A discount or other price reduction obtained by a provider if that reduction is properly disclosed and appropriately reflected in the costs claimed, or charges made, by the provider.
  • A payment made by an employer to a bona fide employee or independent contractor (if the employee’s payment is not determined by or varies by referrals, the number of tests or procedures performed, and several other factors
  • Drug discounts furnished to an applicable beneficiary under the Medicare Coverage Gap Discount Program.
  • A payment made by a principal to an agent as compensation for the services of the agent under a personal services and management contract that meets the requirements of Federal AKS safe harbor.
  • Certain coinsurance and copayment waivers and discounts.
  • Certain federally qualified health center arrangements that meet the federal anti-kickback exception.
  • Payments made in accordance with certain arrangements that the Secretary of HHS has determined is necessary.

The new provision likely will result in challenges to existing arrangements and require a new standard to be established for compensation to recovery homes, clinical treatment facilities, and laboratories.

If you have any questions or concerns contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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It is not intended as professional advice and should not be construed as such.