Federal and state legislatures have taken note of the nationwide opioid crisis and recently responded with legislative attempts to—among instituting other legal changes—broaden prohibitions on abusive health care payment arrangements. Examples of such legislative attempts include the enactment of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA) and amendment to the Florida Patient Brokering Act (Florida PBA), via Florida’s HB 369. However, various aspects of these legislative actions, especially their application in light of existing law, remain uncertain.

Given the significant, criminal penalties imposed by EKRA and the Florida PBA, clarification regarding these statutes is needed. Providers and other health care professionals are advised to contact their trade associations, professional boards, and legislators to seek such clarification, ideally in the form of guidance from the government for and/or rewrites of both EKRA and the Florida PBA. 

We can help facilitate these contacts, so please let us know if you need any assistance.

Brief Overview of EKRA

The long-established federal Anti-Kickback Statute (federal AKS)  criminalizes certain health care payment arrangements involving federal health care programs. EKRA, which was signed into law on October 25, 2018, contains similar prohibitions to the federal AKS, though EKRA covers specific entities—recovery homes, clinical treatment facilities, and laboratories—and relatedly creates new federal criminal offenses.

EKRA applies to payment arrangements involving any health care benefit program, which includes federal health care programs, as well as commercial health plans. Preemption, or exemption, language in EKRA states that “[t]his section shall not apply to conduct that is prohibited under [the federal AKS,] Section 1128B of the Social Security Act (42 U.S.C. 1320a-7b).” This language, however, does not clarify whether EKRA applies to conduct that is not prohibited or isprotected via a safe harbor exception, OIG guidance or a facts and circumstances analysis, under the federal AKS.

This lack of clarification regarding how EKRA should be applied in light of the federal AKS generates confusion concerning how federal agencies will interpret EKRA’s exemption provision and administer the two federal laws when there is overlap. For instance, the federal AKS and EKRA have different exceptions for employment arrangements.

Brief Overview of the Florida PBA

The Florida PBA is Florida’s mini anti-kickback statute. This statute was amended by the state legislature through HB 369, which related to substance abuse services and which became effective July 1, 2019. Prior to the recent amendment, Florida PBA contained particular exceptions, and supported numerous safe harbors, for enumerated practices that were exempt from the statute’s prohibitions. These exceptions referenced the federal AKS in a certain manner, as described below.

Specifically, and as noted in our August 16, 2019 Health Care Law Today blog, the preemption, or exemption, language of the old version of Florida PBA stated that the statute did not apply to various conduct “not prohibited by” the federal AKS or related regulatory safe harbors. The amended exemption language of the Florida PBA states that the statute does not apply to various conduct “expressly authorized by” the federal AKS or related regulatory safe harbors.

The new exemption language in the Florida PBA seems to require that payment arrangements now meet the federal AKS exceptions or related regulatory safe harbors. This change is significant because the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has stated that failure to meet a federal AKS safe harbor does not render a payment arrangement per se illegal and that determination as to whether the arrangement poses a risk of fraud and abuse using a totality of the “facts and circumstances” analysis is key. With the revised Florida PBA exception language, it is now unclear whether the critical “facts and circumstances” analysis or even OIG guidance, upon which health care providers in Florida have historically heavily relied, is dependable in protecting arrangements in Florida.

The Path to Uncertainty

The legislative histories of both EKRA and the amendment to Florida PBA reveal how this state of uncertainty came to be. For EKRA, different variations in the legislation appeared between versions of the bill in the Senate and the House and between multiple versions of the bill within the House. Key provisions and language concerning specific entities, particularly laboratories, fluctuated in the House over a short period. Congressman Pallone, on record, expressed worries with EKRA. He stated: “[T]here is one provision that is concerning and that I do want to mention. It did not go through regular order and was not properly vetted. In fact, it was added at the last minute. That is a proposal by Senator Rubio to create a new criminal antikickback statute.”

Congressman Pallone continued: “[S]ince the bill was introduced last Tuesday night, multiple stakeholders have raised concerned that the language does not do what we think it does. It may have unintended consequences.”

Amendment to the Florida PBA seems to have likewise occurred in reaction to the serious problem of patient brokers taking advantage of individuals with opioid use disorders and establishing abusive payment arrangements with providers. Since EKRA, several states have enacted or modified their own patient brokering laws to prohibit similar arrangements as those addressed by EKRA. According to the Bill Analyses of HB 369 and as noted in our August blog, the recent amendment to Florida PBA was intended to clarify the language in the existing version of the statute that created “uncertainty on whether Florida’s patient brokering statute will apply to private insurance-related patient brokering” since the federal AKS only applies to federal health care programs. As was accomplished through EKRA, the Florida Legislature intended to ensure that anti-kickback prohibitions would extend to payment arrangements involving commercial health plans.

However, the seeming unintended result of Florida’s mirroring of EKRA’s unclear, yet expanded, prohibition is perhaps a far broader criminalization of previously accepted payment arrangements in place nationally and in Florida that do not violate the federal AKS.

Why and How to Clarify this Uncertainty

The consequences of the changes promulgated by EKRA and the new amendment to Florida PBA are potentially significant and extensive. Both statutes impose criminal sanctions. Moreover, the willingness to prosecute under EKRA has recently been displayed, with the first EKRA guilty plea in the nation having occurred in January 2020. According to the U.S. Attorney’s Office for the Eastern District of Kentucky and official court documents, a woman pleaded guilty to one count, among others, of violating EKRA. This woman, the office manager of a substance abuse treatment clinic in Kentucky, admitted that between December 2018 and August 2019, she solicited kickbacks, including a $4,000 check, from the CEO of a toxicology lab in exchange for urine drug test referrals. The woman is scheduled to be sentenced on May 1, 2020, and she faces up to 20 years in prison and a maximum fine of $250,000.

Nevertheless, despite the severity of the situation, the legal landscape remains vague, as no clarification has been provided. Such clarification could take the form of: (1) official guidance from the government on the relevant scope and application ambiguities; or (2) revisions of the statutes at issue. Such official guidance could involve: EKRA regulations interpreting EKRA; statements released by a federal or state agency—such as the U.S. Department of Justice (DOJ), the HHS, or the Florida Office of the Attorney General—concerning EKRA or Florida PBA, respectively.

Thoughtful rewrites of both EKRA and Florida PBA could involve the addition of language that states that, irrespective of the type of health care benefit program, conduct and/or payment arrangements that comply with an exception under or otherwise do not violate the federal AKS will not be an offense. Many arrangements can be structured to meet a federal AKS exception and safe harbor; however, there are some arrangements, e.g., percentage arrangements for sales agents or hourly arrangements for medical directors, which do not. Such arrangements that otherwise meet a “facts and circumstances” analysis under the federal AKS should not be deemed illegal under EKRA and the Florida PBA.

In the meantime, while we wait for clarification, providers and other health care professionals should tread carefully and remain alert, and seek advice of counsel with respect to how to craft compliant arrangements and/or how to encourage the needed clarification