Recently enacted EKRA law prohibits payment activities that were legal under the previous Anti-Kickback Statute, confusing clinical laboratories and legal experts alike
There is a relatively new law on the books that impacts clinical laboratories, and lab leaders tasked with ensuring compliance with federal statutes need to fully understand it because getting it wrong could have dire consequences.
The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (HR 6: aka, the SUPPORT Act), became law effective Oct. 24, 2018, and is primarily intended to address the national opioid epidemic. However, tucked inside the SUPPORT Act is Section 8122: Eliminating Kickback in Recovery Act of 2018 (EKRA), which establishes “criminal penalties for unlawful payments for referrals to recovery homes and clinical treatment facilities.” But how does EKRA apply to clinical laboratories?
“It prohibits any kickback or payment or solicitation of a kickback in exchange for referring patients to clinical laboratories,” Danielle Holley, a health law attorney and shareholder at O’Connell and Aronowitz in Albany, N.Y., told the Dark Daily.
This new law, she says, differs from the previous federal Anti-kickback Statute 42 U.S.C. 1320a-7b(b) and employer safe harbor provisions built into the Patient Protection and Affordable Care Act (ACA), which allowed labs to pay commissions on variable rates to sales and marketing staff.
Thus, it is critical that clinical laboratories understand their requirements under EKRA. Misunderstandings could bring “criminal penalties” which would seriously threaten lab managers and stakeholders.
What Must Labs Do to Comply with EKRA?
Under EKRA, legal experts advise clinical laboratories to no longer pay sales staff on a commission basis.
“Labs are no longer safe by following past advice. They have to rethink payment to sales and marketing personnel,” Holley noted. She explained that labs can no longer pay commissions that vary by:
- Number of people referred to the lab;
- Number of lab tests performed; or,
- Percentage of payment sent to the lab.
EKRA also applies to commercial payers, whereas the federal Anti-Kickback Statute did not, she added.
“Many labs are not coming to grips with what this means to them,” Jeffrey Sherrin, President of O’Connell and Aronowitz, told Dark Daily.
Clinical Laboratories Not Clear on EKRA and Its Implications
EKRA is an all-payer statue that prohibits medical laboratories, clinical treatment facilities, and recovery homes from soliciting payments for referrals, the National Law Review pointed out.
That seems clear enough, but it’s anything but to many legal experts and medical lab industry leaders who are unsure whether EKRA actually applies to clinical labs. It’s possible, some experts claim, that it applies only to toxicology labs, which would make sense given the SUPPORT Act’s original context.
“There is an open issue about whether the description of paying employees applies to toxicology labs or all labs. Even though the focus of this law is toxicology and relationship of labs, sober homes, and treatment centers, the language of the statute seems to cover all clinical laboratories—not just toxicology,” Sherrin said.
“If you want to be safe, you pay on straight salary. The problem is, that does not give an incentive to the salesperson to go out and beat the bushes and hustle to bring in new business (to the lab),” he added.
The SUPPORT Act and EKRA could negatively affect clinical laboratory business should sales and marketing employees choose to work for durable medical equipment companies or other industries that pay them on commission, Sherrin pointed out.
“Some [sales professionals] may find the lab is not lucrative enough. The lab could offer higher salaries, but then the risk is on the lab without assurance business is coming in. These are difficult business decisions,” Sherrin said.
ACLA Seeks Clarity on EKRA and Clinical Labs
The American Clinical Laboratory Association (ACLA) wants clarity on the issue as well. Sharon West, ACLA’s Vice President, Legal and Regulatory Affairs, told The Dark Report, Dark Daily’s sister publication, “We are seeking clarity as best we can from the administration and from Congress. But it’s just not here yet.”
In a letter to the US Department of Health and Human Services Office of Inspector General (OIG), West wrote, “The legislation adds a new section … that would authorize the imposition of criminal penalties for some conduct that currently is permissible under Anti-Kickback Statute safe harbors. As written, section 8122 (EKRA) of the legislation applies to all laboratories, not merely laboratories that perform testing for recovery homes and clinical treatment facilities, and to all services covered by all payers, rather than only items and services covered by the federal healthcare programs.”
Increased Scrutiny of Clinical Laboratories
Barring an act of Congress, it could take a prosecution to ultimately define the issue of whether authorities intended all labs to be covered by EKRA or not, Sherrin said.
“Clinical laboratories need to understand that the environment in which testing is occurring—in particular toxicology testing—is rapidly changing and increasingly sensitive. And, it’s going to be under increasing scrutiny. So, practices that may have passed muster in the past are probably history. Now, this is front-page importance,” Sherrin declared.
During the upcoming Executive War College, Jefferey Sherrin (left) and Danielle Holley (right) of O’Connell and Aronowitz will co-present, “Why the SUPPORT Act and EKRA’s Prohibition on Paying Commissions to Sales Reps was a Surprise and Conflicts with the Federal Anti-Kickback Statute: What Labs Must Know to Stay Compliant.”
Key takeaways Sherrin and Holley will provide to EWC attendees include:
- Understanding what EKRA is and its impact on clinical labs;
- Acknowledging the importance of reviewing payment arrangements to bring labs into compliance;
- Addressing EKRA as an all-payer statute that applies to commercial payers as well as federal healthcare programs.
- Conducting a risk-assessment of your medical lab’s sales compensation program for compliance with EKRA and the federal Anti-Kickback Statute.
Their presentation at the Executive War College (EWC) takes place from 1:45 pm to 2:35 pm, April 30, at the Sheraton Hotel in New Orleans.
To learn more about this and other critical topics affecting clinical laboratories, register to attend EWC presentations by clicking here, or by placing this URL into your Internet browser (https://www.executivewarcollege.com/register/). Reserve your space today by visiting online or by calling 707/829-8495.
—Donna Marie Pocius
Related Information:
ACLA Letter on the Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducement New Opioid Law Hits Labs Paying Sales Commissions
