EKRA 101: A Brief Backgrounder and How to Stay Compliant

The Eliminating Kickbacks in Recovery Act of 2018, typically referred to as EKRA, is an acronym labs need to pay special attention to when it comes to compensating their sales staff, as well as marketing activities. This bill amended the federal code to make it a criminal activity to “knowingly and willingly solicit, receive, pay, or offer payment” for the referral of individuals to rehabilitation and recovery homes, as well as establishments that offer clinical treatment, including diagnostic laboratories.¹

Based on a recent discussion with a healthcare attorney, here’s what laboratory leaders should know about EKRA’s background and how to comply with it:

How EKRA has changed sales and marketing for labs

Part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, EKRA made it illegal to offer remuneration for referrals to facilities providing a variety of medical treatments, and it completely changed the way laboratories market themselves. No longer was it acceptable for physicians to move their patients’ samples to a new partner laboratory because said lab could offer them a higher percentage referral fee for those samples than their existing partner laboratory did. In fact, EKRA criminalized any referral fee a physician might have previously expected for referencing patients’ samples to a lab, period.

Additionally, and perhaps more impactfully to laboratories, it altered the way labs were able to compensate their salespeople for obtaining patient referrals from physicians and medical practitioners. Prior to EKRA, many laboratory sales representatives were paid on a commission-only or very commission-heavy basis, congruently earning more if they brought in more provider referrals, and thus a higher sample volume, to the lab. EKRA made this blatantly illegal in 2018 and caused a huge shift in the way labs can incentivize their sales teams while remaining above the law and compliant.

What prompted EKRA?

Prior to EKRA’s introduction, the United States enacted the federal Anti-Kickback Statute and other regulatory guidance, so lab leaders may wonder why EKRA was needed. The short answer is the American opioid crisis, according to lawmakers. If physicians are able to refer patients for treatment and medical services and are offered referral fees in exchange, wouldn’t that incentivize them to make more referrals? It’s easy to spot the slippery slope said incentivization creates and how, perhaps, it may have even led to the overprescription of opioids to patients by otherwise well-meaning physicians.

Regulations require physicians who are pain management providers and who prescribe opioids to test their patients regularly via toxicology assays. Such testing ensures the doctor is not overprescribing to that particular patient by measuring the level of opioids in the person’s system. Guided by the results of these tests, the doctor treats the patient with opioid prescriptions to keep that level in a certain range while, at the same time, addressing the person’s pain. The regular toxicology tests also ensure the patient is not consuming opioids from other sources, as is oftentimes common with this highly-addictive class of drugs. There are clear reasons for this testing to benefit the patient and their pain treatment outcome. However, if doctors are paid to refer those needed toxicology samples to a certain laboratory, it can open the door to additional medical recommendations that may not be in the best interest of the patient. Such referral bonuses may cause physicians to prescribe opioids as a first-line treatment going forward, given the financial incentive they will receive for the patient’s toxicology samples at regular intervals, thus potentially leading to the overprescription of opioids andthe addiction crisis we’ve seen develop in the US.

EKRA, being broader and, thus, criminalizing more behavior than the SUPPORT Act and other previously existing regulations, was designed specifically to combat the opioid crisis. Private health insurance plans were excluded in the SUPPORT Act, as it only covered federal healthcare programs. However, under EKRA, no payment for referrals or samples is allowed, regardless of the insurance provider or even if the patient is paying completely out-of-pocket. There are also fewer safe harbors and exemptions from EKRA than with SUPPORT. This includes compensation payments to W-2 employees, as well as contractors and/or commission-based salespeople, all in an attempt to cut down on incentivizing the overprescription of opioids and induced laboratory testing that ignited and fueled the crisis in the first place.

What does my lab need to do to avoid violating EKRA?

Keeping cognizant of the regulatory requirements is the first step. You will next want to evaluate all compensation arrangements with every employee, contractor, vendor, etc. Are any of these payments tied to the number of patient samples referred? If so, you will want to adjust that immediately given it’s an obvious violation. Conducting fair market assessment of services provided and compensating individuals in parallel with that information is another way to ensure you are avoiding inducement of referrals.

Finally, developing and implementing an EKRA compliance program, likely with the help of your legal and human resources departments, is a great way to bring awareness to all employees and keep this information top of mind so as to avoid a violation. Such a compliance program might include policies to guide employees, especially those in sales roles, a list of key stakeholders that employees can turn to with any questions or EKRA-related concerns, and recurring education about EKRA and updates to its handling as the U.S. Department of Justice (DOJ) charges more violators and courts rule on these cases.

Unfortunately, due to the lack of additional federal guidance as to how to properly avoid EKRA violations, many labs experienced significant turmoil in 2018 as they attempted to make their compensation arrangements with physicians and sales representatives compliant with the new statute. This lack of federal guidance has continued, leaving laboratories only able to consider a few court decisions on charges brought by the (DOJ) against individual labs when determining how best to update their operations, policies, and procedures in order to comply with EKRA. Ongoing information gathering from EKRA-related court cases and annual employee education, therefore, will help you identify any potential violations in your own operations and correct them.

References:

1. Eliminating Kickbacks in Recovery Act of 2018. https://www.congress.gov/bill/115th-congress/senate-bill/3254