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EKRA Creates Risk and Uncertainty for Substance Abuse Treatment Providers

Mon 30th Dec 2019, Blog

As anyone working in health care knows, the industry is a complex minefield of rules.  Federal and state laws regulate referrals between health care providers and violations can carry heavy civil and criminal penalties. 

One way to avoid the federal Anti-Kickback Statute (“AKS”) is to stay away from services reimbursed under federal insurance programs like Medicare, Medicaid, and Tricare.  The federal AKS doesn’t apply to services that are reimbursed solely by private insurers (however, state laws can apply, and aggressive prosecutors have been known to charge violations of state law under the Travel Act). 

But even that option is no longer available to recovery homes, clinical treatment facilities, and labs.  In October 2018, Congress passed the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”), which targeted a perceived rise in “patient brokering” in substance abuse treatment centers.  The EKRA applies to health services reimbursed by all payors, including private insurers.  And unlike the AKS, which has detailed regulations and “safe harbors” developed with input from treatment providers, the “safe harbors” in EKRA are confusing and unclear, and we’re still waiting on the Attorney General to provide guidance in the form of regulations. 

The EKRA was a well-intentioned and perhaps overdue regulation in a field that is rife with corruption.  In the past, substance abuse treatment providers relied on “interventionists” and recruiters to find patients and encourage them to seek treatment.  Treatment providers compensated the recruiters based on the number of patients they recruited and the level of care those patients required.  When implemented by patient-centered treatment providers and interventionists, this model had the potential to incentivize necessary substance abuse treatment.  And providing treatment is far less costly than failing to do so.

But the law also provided incentives for unscrupulous marketers to pay kickbacks directly to patients, resulting in patients who did not need treatment (or who needed a less intensive category of care) taking up bed space and interfering with the treatment of others.  Treatment providers found themselves constantly confronted with rogue marketers and patient populations motivated by profit, not by a sincere desire to get clean.   

The EKRA bans all marketing arrangements based on the volume of patient referrals or revenue, and it has left treatment providers scrambling to find a new way to find and treat insured patients.  Unfortunately, it also placed treatment facilities that attempt to comply with the new law at a competitive disadvantage relative to those who ignore it.  These unintended consequences have the potential to harm patient care in the name of cleaning up the industry.  But prosecutors aren’t likely to show any sympathy for treatment providers who fail to adapt to the EKRA. 

As of this writing there have been no federal criminal prosecutions under EKRA, but no doubt there will be in 2020.  Treatment providers should quickly get into compliance to avoid being caught up in the first wave.