Healthcare attorneys advise medical laboratory leaders to ensure staff understand difference between EKRA and other federal fraud laws, such as the Anti-kickback Statute
More than four years have passed since Congress passed the law and yet the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) continues to cause anxiety and confusion. In particular are the differences in the safe harbors between the federal Anti-Kickback Statute (AKS) and Stark Law versus EKRA. This creates uncertainty among clinical laboratory leaders as they try to understand how these disparate federal laws affect business referrals for medical testing.
According to a news alert from Tampa Bay, Florida-based law firm, Holland and Knight, “EKRA was enacted as part of comprehensive legislation designed to address the opioid crisis and fraudulent practices occurring in the sober home industry.” However, “In the four years since EKRA’s enactment, US Department of Justice (DOJ) enforcement actions have broadened EKRA’s scope beyond reducing fraud in the addiction treatment industry to include all clinical laboratory activities, including COVID-19 testing.”
It is important that medical laboratory leaders understand this law. New cases are showing up and it would be wise for clinical laboratory managers to review their EKRA/AKS/Stark Law compliance with their legal counsels.
“Keeping in mind that [EKRA is] a criminal statute, clinical laboratories need to take steps to demonstrate that they’re not intending to break the law,” said attorney David Gee, a partner at Davis Wright Tremaine, in an exclusive interview with The Dark Report. “[Lab leaders should] think about what they can do to make their sales compensation program avoid the things the government has had such a problem with, even if they’re not sure exactly how to compensate under the language of EKRA or how they’re supposed to develop a useful incentive compensation plan when they can’t pay commissions.” David Gee will be speaking about laboratory regulations and compliance at the upcoming Executive War College in New Orleans on April 25-26, 2023. (Photo copyright: Davis Wright Tremaine.)
How Does EKRA Affect Clinical Laboratories?
The federal EKRA statute—originally enacted to address healthcare fraud in addiction treatment facilities—was “expansively drafted to also apply to clinical laboratories,” according to New York-based law firm, Epstein Becker and Green. As such, EKRA “applies to improper referrals for any ‘service,’ regardless of the payor. … public as well as private insurance plans, and even self-pay patients, fall within the reach of the statute.”
In “Revised Stark Law, Anti-Kickback Statute Rules Are Good News for Labs,” Dark Daily’s sister publication The Dark Report noted that EKRA creates criminal penalties for any individual who solicits or receives any remuneration for referring a patient to a recovery home, clinical treatment facility, or clinical laboratory, or who pays or offers any remuneration to induce a referral.
According to Epstein Becker and Green, EKRA:
Applies to clinical laboratories, not just toxicology labs.
Has relevance to all payers: Medicare, Medicaid, private insurance plans, and self-pay.
Is a criminal statute with “extreme penalties” such as 10 years in prison and $200,000 fine per occurrence.
Exceptions are not concurrent with AKS.
Areas being scrutinized include COVID-19 testing, toxicology, allergy, cardiac, and genetic tests.
“For many clinical laboratories, a single enforcement action could have a disastrous effect on their business. And unlike other healthcare fraud and abuse statutes, such as the AKA, exceptions are very limited,” Epstein Becker and Green legal experts noted.
“Therefore, a lab could potentially find itself protected under an AKS safe harbor and still potentially be in violation of EKRA,” they continued. “The US Department of Health and Human Services (HHS) and the DOJ have not provided any clarity regarding this statute (EKRA). Without this much needed guidance clinical laboratories have been left wondering what they need to do to avoid liability.”
EKRA versus AKS and Stark Law
HHS compared AKS and the Stark Law (but not EKRA) by noting on its website prohibition, penalties, exceptions, and applicable federal healthcare programs for each federal law:
AKS has criminal fines of up to $25,000 per violation and up to a five-year prison term, as well as civil penalties.
The Stark Law has civil penalties only.
AKS prohibits anyone from “offering, paying, soliciting, or receiving anything of value to induce or reward referrals or generate federal healthcare program business.”
The Stark Law addresses referrals from physicians and prohibits the doctors “from referring Medicare patients for designated health services to an entity with which the physician has a financial relationship.”
EKRA is more restrictive than AKS, as it prohibits some compensation that AKS allows, healthcare attorney Emily Johnson of McDonald Hopkins in Chicago told The Dark Report.
Recent enforcement actions may help lab leaders better understand EKRA’s reach. According to Holland and Knight:
Malena Lepetich of Belle Isle, Louisiana, owner and CEO of MedLogic LLC in Baton Rouge, was indicted in a $15 million healthcare fraud scheme for “allegedly offering to pay kickbacks for COVID-19 specimens and respiratory pathogen testing.”
In S-G Labs Hawaii, LLC v. Graves, a federal court concluded the laboratory recruiter’s contract “did not violate EKRA because the recruiter was not referring individual patients but rather marketing to doctors. According to the court, EKRA only prohibits percentage-based compensation to marketers based on direct patient referrals.”
In another federal case, United States v. Mark Schena, the court’s rule on prohibition of direct and indirect referrals of patients to clinical labs sent a strong signal “that EKRA most likely prohibits clinical laboratories from paying their marketers percentage-based compensation, regardless of whether the marketer targets doctors or prospective patients.”
What can medical laboratory leaders do to ensure compliance with the EKRA law?
In EKRA Compliance, Law and Regulations for 2023, Dallas law firm Oberheiden P.C., advised clinical laboratories (as well as recovery homes and clinical treatment facilities) to have EKRA policies and procedure in place, and to reach out to staff (employed and contracted) to build awareness of statute prohibitions and risks of non-compliance.
One other useful resource for clinical laboratory executives and pathologists with management oversight of their labs’ marketing and sales programs is the upcoming Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management. The conference takes place on April 25-26, 2023, at the Hyatt Regency in New Orleans. A panel of attorneys with deep experience in lab law and compliance will discuss issues associated with EKRA, the Anti-Kickback Statutes, and the Stark self-referral law.
Medical laboratory leaders need to take opportunities to stay abreast of government and payer activity, particularly as payer audits become tougher, say legal experts
Even compliant clinical laboratories and anatomic pathology groups are reporting tougher audits and closer scrutiny of the medical lab test claims they submit for payment. This is an unwelcome development at a time when falling lab test prices, narrowing networks, and more prior-authorization requirements are already making it tough for labs to get paid for the tests they perform.
Clinical laboratory leaders can expect continued scrutiny of
their labs’ operations and financials as government and commercial payers move
forward with invasive programs and policies designed to ferret out fraud and
bad actors.
Federal officials are focusing their investigations on healthcare providers who mismanage or inappropriately use Medicare and Medicaid programs, while commercial payers are closely scrutinizing areas such as genetic testing prior authorization, say healthcare attorneys with Cleveland Ohio-based McDonald Hopkins, LLC.
“The government is looking at fraud, waste, and abuse, and all the different ways they come into play,” said Elizabeth Sullivan, Esq., a Member and Co-Chair of the firm’s Healthcare Practice Group, in an exclusive interview with Dark Daily. “We anticipate there will be more enforcement [of fraud and abuse laws] centered around different issues—anything that can be a false claim.”
Specifically, government officials will key in on violations of the Stark Law, EKRA (the Eliminating Kickback in Recovery Act of 2018), and other anti-kickback statutes and laws, Sullivan said.
“And clinical laboratories, by virtue of the type of
services and service arrangements they offer, will continue to be a target,” she
added.
Medical laboratory leaders also must prepare for aggressive tactics by insurance companies. “On the commercial side, payers are getting more aggressive and more willing to take things to ligation if they don’t get what they want and don’t see a settlement that satisfies their concerns over issues,” said Courtney Tito, Esq., also a Member with McDonald Hopkins, in the Dark Daily interview.
Current Investigations Likely to Impact Clinical
Laboratories
Sullivan and Tito advise clinical labs to be aware of the
following issues being fast-tracked by government and private payers:
EKRA (Eliminating Kickback in Recovery Act of 2018).
The TPE audits program, according to CMS, is focused on providers with high claim error rates or unusual billing practices. During a TPE, a Medicare administrative contractor (MAC) works with a provider to identify and correct errors.
“The TPE audits are real hot right now. We are seeing a lot
of clients go through this,” Tito said.
Feds Crack Down on Genetic Testing Fraud Schemes
Genetic testing is another “hot button” issue for
enforcement by government and private payers, Sullivan and Tito state.
CMS is taking action against testing companies and
practitioners who submitted more than $1.7 billion in claims to Medicare, the
statement added.
The scheme involved medical laboratories conducting the genetic tests, McDonald Hopkins noted in an Alert about the DOJ investigation. The alert described how the scam operated:
Scam recruiters approached Medicare
beneficiaries at health fairs;
In exchange for a DNA sample (in the form of a
cheek swab) and a copy of the victim’s driver’s license, the “representative”
offered a free genetic test;
Representatives allegedly asked the seniors’
doctors to sign-off on test orders. If the seniors’ physicians refused, the
scammers offered kickbacks to doctors already in their group;
Clinical laboratories that performed the tests
were reimbursed from Medicare and, allegedly, shared the proceeds with the scammers.
“Although these opportunities may seem appealing as an
additional revenue source for providers, it is always important to review the
regulatory requirements as well as the potential anti-kickback statute and
Stark implications for any new arrangement,” Sullivan and Tito wrote in the McDonald
Hopkins Alert article.
Criminal Behavior in CMS Programs
Effective Nov. 4, 2019, CMS issued a final rule intended to stop fraud before it happens by keeping “unscrupulous providers” out of the federal healthcare programs in the first place, states a CMS news release.
Additionally, EKRA establishes “criminal penalties for unlawful payments for referrals to recovery homes and clinical treatment facilities,” Dark Daily recently reported. However, as the e-briefing points out, it is unclear whether EKRA applies to clinical laboratories.
Nevertheless, Sullivan points out that, “Even without EKRA,
the anti-kickback statute applies to any arrangement between individuals. And,
it is good to have an attorney look at those arrangements. What your sales reps
are doing in the field, how they are communicating, and their practices warrant
oversight. EKRA just makes it all the more important.”
During an upcoming Dark Daily webinar, attorneys Elizabeth Sullivan (left) and Courtney Tito (right) of McDonald Hopkins, LLC, will advise clinical laboratory leaders and financial staff on how to prepare for future aggressive payer audits, rigid enforcement of fraud and abuse laws, and more. (Photos copyright: LinkedIn/Dark Daily.)
Clinical Laboratories Need Compliance Plan, Focus on
Payers
With so many legal requirements and payer programs, Sullivan
advises medical labs and pathology group practices to work with resources they
trust and to have a compliance plan at the ready. “Have resources in place,
including but not limited to a compliance officer, a committee, and someone who
is spending time on these issues. Monitoring government enforcement and payer
activity is the most critical,” she said.
To assist labs in remaining fully informed on these critical
compliance topics, and the federal government’s latest legislation to combat
fraud, Dark Daily is offering a webinar on November 20th at 1pm Eastern
time. Sullivan and Tito will offer their insights and advice on how labs should
prepare for CMS’ battle to reign in fraud and commercial payers’ increased
scrutiny into prior authorizations.
Clinical laboratory leaders, compliance officers, and
finance staff will benefit greatly from this crucial resource.
Kaiser
Health News (KHN) recently
reported on investigations by the OIG into hospitals allegedly offering
unusually high salaries and other perks to specialists because they attract highly
profitable business.
Wheeling, KHN reported, paid one anesthesiologist $1.2
million per year, which, Rau notes, is higher than the salaries of 90% of the
pain management specialists around the country. Rau went on to describe how
Wheeling also paid one obstetrician-gynecologist $1.3 million per year, and a
cardiothoracic surgeon $770,000 per year along with 12 weeks of vacation time.
In each of those cases, the whistleblower who prompted the qui tam investigation reported
that the specialists’ various departments were frequently in the red, reported KHN.
“The problem, according to the government, is that the
efforts run counter to federal self-referral bans and anti-kickback laws that
are designed to prevent financial considerations from warping physicians’
clinical decisions,” wrote Rau.
Wheeling not only contests the lawsuits brought against it,
but also has filed a countersuit against the whistleblower. KHN said the
hospital claims “its generous salaries were not kickbacks but the only way it
could provide specialized care to local residents who otherwise would have to
travel to other cities for services such as labor and delivery that are best
provided near home.”
“We are confident that, if this case goes to a trial, there will be no evidence of wrongdoing—only proof that Wheeling Hospital offers the Northern Panhandle Community access to superior care, [and] world class physicians and services,” KHN reported Gregg Warren (above), Vice President of Marketing and Public Relations at Wheeling Hospital, saying in a statement. (Photo copyright: LinkedIn.)
OIG’s Fraud and Abuse Laws: A Roadmap for Physicians
The KHN article mentions
five laws the OIG lists on
its website that are particularly important for physicians to be aware of. They
include the:
False Claims Act: states that it’s illegal to file false Medicare or Medicaid claims.
Anti-Kickback Statute: states that paying for referrals is illegal, that physicians can’t provide free or discounted services to uninsured people, and that money and gifts from drug and device makers to physicians are prohibited.
Stark Law(physician self-referral): says that referrals to entities with whom the physician has a familial or financial relationship are off-limits.
Exclusion Statue: describes who cannot participate in federal programs, such as Medicare.
Civil Monetary Penalties Law: authorizes the Secretary of Health and Human Services, which operates the OIG, to impose penalties in cases of fraud and abuse that involve Medicare or Medicaid.
“Together, these rules are intended to remove financial
incentives that can lead doctors to order up extraneous tests and treatments
that increase costs to Medicare and other insurers and expose patients to
unnecessary risks,” KHN said.
Other Hospitals Under Investigation
Wheeling Hospital is not the only healthcare institution
facing investigation. The Dallas
Morning News (DMN) reported on a case involving Forest
Park Medical Center (FPMC) in Dallas that resulted in the conviction of
seven defendants, including four doctors. Prosecutors outlined the scheme in
court, saying that FPMC illegally paid for surgeries.
“Prosecutors said the surgeons agreed to refer patients to
the Dallas hospital in exchange for money to market their practices,” DMN
reported, adding “Patients were a valuable commodity sold to the highest
bidder, according to the government.”
One of the convicted physicians, Michael Rimlawi, MD,
told DMN, “I’m in disbelief. I thought we had a good system, a fair
system.” His statement may indicate the level to which some healthcare
providers at FPMC did not clearly understand how anti-kickback laws work.
“The verdict in the Forest Park case is a reminder to
healthcare practitioners across the district that patients—not payments—should
guide decisions about how and where doctors administer treatment,” US Attorney Erin Nealy Cox told DMN.
Know What Is and Is Not a Kickback
Both the Wheeling Hospital investigation and the Forest Park
Medical Center case make it clear that kickbacks don’t always look like
kickbacks. Becker’s Hospital Review
published an article titled “Four
Biggest Anti-Kickback Settlements Involving Hospitals in 2018” that details
cases in which hospitals chose to settle.
These four incidents involved hospitals in Tennessee,
Montana, Pennsylvania, and New York. This demonstrates that kickback schemes
take place nationwide. And they show that violations of the Stark Law, the
False Claims Act, and the Anti-Kickback Statute can happen in numerous ways.
Whether in a clinical laboratory or an enterprisewide health
network, violating laws written to prevent money—rather than appropriate
patient care—from being the primary motivator in hiring decisions, may result
in investigation, charges, fines, and even conviction.
“If we’re going to solve the healthcare pricing problem,
these kinds of practices are going to have to go away,” Vikas Saini, MD, President
of the Lown Institute, a Massachusetts
nonprofit that advocates for affordable care, told KHN.
Though these recent OIG investigations target hospitals,
clinical laboratory leaders know from past experience that they also must be
vigilant and ensure their hiring practices do not run afoul of anti-kickback
legislation.
Radiology and pathology associations are supporting a new bill in Congress to address self-referrals made by urologists
Criticism is mounting against urologists who refer their patients to radiation providers in which they have an ownership relationship. This criticism is strikingly similar to concerns that pathologists and others have expressed about situations where urologists refer their patients to anatomic pathology laboratories in which they have an ownership relationship.
Study about Radiation Therapy Referrals Published in NEJM(more…)
To hasten the day when all Americans have an electronic health record (EHR), last year, on August 8, 2006, the U.S. Department of Health and Human Services (“HHS”) issued regulations that would allow hospitals to provide certain software and technical support services to physicians without violating federal antikickback law. Because many physicians have been slow to invest in electronic health record systems, this new regulation is designed to encourage hospitals and health systems to step into the gap and offer software and services that support EHR systems.
This is a significant development for hospital-based laboratories. It creates new opportunities to build relationships with referring physicians. But it also creates new compliance exposure for laboratories which fail operate within the parameters of the law.
Since the IRS lingo is complicated, to say the least, we asked Jane Pine Wood, attorney for McDonald Hopkins and a specialist in clinical laboratory and anatomic pathology legal matters, how this change would affect hospital laboratories. Wood responded, saying:
“The IRS memorandum offers greater assurance to tax-exempt hospitals that they can provide EHRs to members of their medical staffs, in compliance with the applicable Stark exception and the applicable safe harbor under the Medicare and Medicaid anti-kickback law, without jeopardizing their tax-exempt status. It is important to note that this memorandum provides approval only to those arrangements which comply fully with the numerous criteria of the Stark exception and anti-kickback law safe harbor.”
We also asked Wood if hospital laboratories should take any special steps to react to this memo. “For many laboratory clients, particularly gastroenterology and endoscopy providers, EHRs are increasingly important,” said Wood. “So,this IRS memorandum is of significant benefit to those tax-exempt hospitals who wish to make EHRs more accessible for their clients.”
And there you have it. Hospital laboratories that want to take advantage of the memo should carefully study the Stark exception and the applicable safe harbor under Medicare and Medicaid anti-kickback law to ensure full compliance. Once this due diligence is complete, hospital laboratories can safely make EHRs more accessible to their medical staff.
