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EKRA Law: Common Medical Lab Referral & Compensation Arrangements Could Lead to Criminal Charges

EKRA stands for the Eliminating Kickbacks in Recovery Act, and it has become a prominent enforcement tool against fraud in the healthcare and medical testing industries. Although the law was developed in 2018 to help combat the opioid epidemic, it creates new rules for all types of diagnostic testing labs – not just toxicology labs – and bans traditional commission-based compensation programs.

Failure to adhere to EKRA could result in up to $200,000 in fines and up to 10 years in prison – and penalties are per occurrence.

Which Activities Are Illegal Under EKRA?

Under EKRA, it is a federal crime to knowingly and willfully do the following:

  1. Solicit or receive any remuneration (including kickbacks, bribes, or rebates) directly, or overtly in return for referring a patient to a recovery home, clinical treatment facility, or laboratory; or
  2. Pay or offer any remuneration either to induce a referral or in exchange for an individual using the services of a recovery home, clinical treatment, or laboratory.

Common medical lab referral and compensation arrangements that could lead to criminal charges under EKRA include:

  • Marketing deals that involve multiple LLCs owned by the same party(ies) to get around annual compensation limits fixed in advance
  • A physician directing patients to a particular medical testing lab in exchange for routinely waiving or discounting co-pays for that physician’s patients
  • A medical lab that pays it sales team based on volume of new business
  • Referrals to privately paid services in exchange for fees or kickbacks
  • Marketing arrangements that involve direct marketing to patients that do not fall within one of EKRA’s exceptions
  • Accepting services below fair market value in exchange for special consideration

For more updates on compliance and regulatory issues that impact your practice or healthcare business, follow Hendershot Cowart P.C. on LinkedIn.

Does EKRA Apply to Labs and Physicians Not Involved in Substance Abuse Treatment?

Although the law was passed as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, EKRA extends to all physician-laboratory relationships – not just those involved in the treatment of substance abuse and addition.

EKRA broadly defines a laboratory as “a facility for the biological, microbiological, serological, chemical, immuno-hematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings.”

As a result, under EKRA, no medical provider may not solicit or accept payment, kickbacks, bribes, or rebates for laboratory referrals. Physicians and laboratories may have special relationships, but they cannot structure financial arrangements based on the number of people referred to a lab, the number of tests or procedures performed, or any billable amount.

In addition, clinical or diagnostic labs may not compensate employees or contractors based on volume- or value-based payment structures.

Exceptions to EKRA

The following types of offers or compensation arrangements are exceptions to the prohibitions under EKRA Law:

  • Discounts – laboratories can provide medical professionals with discounts, as long as they are properly disclosed and reflected in the costs claimed or charges made by the provider.
  • Bona fide employee compensation – compensation paid by an employer to an employee or contractor that does not depend on the volume of referrals, tests, procedures, or billings.
  • Personal services – medical professionals can pay for personal services under a personal services and management contract that complies with Anti-Kickback Statute safe harbors.
  • Copay waivers – it is not illegal to write off a patient’s copay balance if the provider makes a good-faith attempt to collect, and not as a matter of routine.
  • Federally qualified health centers – exempt under section 1128B(b)(3)(I) of the Social Security Act.
  • Alternative payment models – payments made under an alternative payment arrangement in use by a state, health insurance issuer, or group health plan are allowed if the Secretary of Health and Human Services has determined that such arrangement is necessary for care coordination or value-based care.

Some of these exceptions align with existing federal anti-kickback statutes, while others are new or more stringent. An attorney experienced in health care compliance and investigations can review your existing arrangements and structure to ensure EKRA violations are not taking place.

EKRA as a COVID-19 Testing Fraud Enforcement Tool

As medical testing labs race to form new relationships to meet the demand for COVID-19 testing, the federal government has initiated a crackdown on COVID-19 testing fraud, using EKRA as one of its enforcement tools.

Marketing agreements, employee arrangements, incentive- or performance-based compensation plans, and management structures are all subject to heightened scrutiny as the Department of Justice sniffs out bad actors taking advantage of the pandemic. Providers and COVID-19 testing labs should carefully evaluate any new relationships for EKRA compliance to avoid unwanted federal attention.

EKRA Compliance Plans for Medical Labs

Many medical labs and professionals already have compliance plans in place for Stark Law and the Anti-Kickback Statute (AKS), but you also need to ensure compliance with EKRA. Revisiting your health care compliance plan is strongly recommended.

EKRA is a criminal law, which means your freedom is at stake. Don’t go to jail or pay excessive fines because of a simple mistake. Contact Hendershot Cowart P.C. to review your policies and agreements for alignment with the EKRA law.

With over 100 collective years of quality legal representation, we have navigated decades of changes in the regulatory landscape for medical providers and labs. We value relationships, and we want to work with you to ensure success now and well into the future.

To help ensure EKRA compliance and remain within federal health care regulation safe harbors, please call us at (713) 909-7323 or contact us online today.

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