Current President Donald Trump signed The SUPPORT for Patients and Communities Act Of 2018 on Wednesday October 24, 2018, which along with authorizing $8 Billion to combat the opioid epidemic over 5 years, there were additional provisions that specifically dealt with the rampant ‘patient brokering’ that the substance abuse industry has been plagued with.
There has been significant concern nationally about patient brokering in connection with substance use disorder treatment centers. While some state laws, such as those in Florida, California, Massachusetts and Texas, address some of these issues, many states don’t specifically address it.
There are other Federal laws that prohibit patient referral or brokering fees. For instance, the well known Federal Anti-Kickback statute, 42 U.S.C. 1320a-7b(b) (Federal AKS)] applies only to Federal health care programs, such as those connected to Medicaid, Medicare, Tricare, etc. The Federal AKS does not apply to privately insured patients.
The ‘Recovery Kickback Prohibition’ law is focused specifically on patient brokering connected to private insurance based treatment centers and the overutilization of laboratory-based toxicology (urine drug testing) screening. The Recovery Kickback Prohibition is Congress’ attempt to close the gap left by the Federal AKS and to reach certain patient brokering arrangements, including those involving laboratories, that fall outside its scope.
Section 8122 of the SUPPORT for Patients and Communities Act sets forth the referral prohibition as follows:
a) OFFENSE.—Except as provided in subsection (b)[, which establishes certain exceptions to the prohibition], whoever, with respect to services covered by a health care benefit program, in or affecting interstate or foreign commerce, knowingly and willfully:
(1) solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory; or
(2) pays or offers any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—
(A) to induce a referral of an individual to a recovery home, clinical treatment facility, or laboratory; or
(B) in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory, shall be fined not more than $200,000, imprisoned not more than 10 years, or both, for each occurrence.
The Federal AKS makes it a crime to knowingly and willfully provide anything of value in return for or to induce or reward referrals of Federal health care program business. (emphasis added) Section 8122 of the SUPPORT Act creates a new, separate prohibition in Title 18 of the U.S. Code. There are some similarities between the Federal AKS and the new Recovery Kickback Prohibition. For example, both laws make it a crime to offer, pay, solicit, or receive “remuneration (including any kickback, bribe, or rebate)” in connection with referrals. The Federal government has interpreted the term “remuneration” broadly to cover “anything of value.”
And there are differences: The Federal AKS applies to only federal health care programs and does not apply to privately insured patients. The Recovery Kickback Prohibition would apply to any health care benefit program, which is defined as “any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.” Additionally, the Recovery Kickback Prohibition applies only to referrals and services of certain types of entities, namely recovery homes, clinical treatment facilities, and laboratories as defined in the statute. In this way, the Recovery Kickback Prohibition is narrower than the Federal AKS.
The Exceptions to the Prohibition
The Recovery Kickback Prohibition includes certain exceptions including the following:
1. Certain properly disclosed discounts under a health care benefit program;
2. Certain payments to bona fide employees and independent contractors;
3. Discounts on drugs furnished under the Medicare coverage gap discount program;
4. Payments for services that meet the Federal AKS safe harbor for personal services and management contracts;
5. Certain coinsurance and copayment waivers and discounts;
6. Certain federally qualified health center arrangements that meet the Federal AKS exception; and
7. Remuneration made pursuant to alternative payment models and certain payment arrangements that the Secretary of HHS determines to be necessary for care coordination or value-based care.
Of note, the exception for bona fide employees and independent contractors is an instance in which the Recovery Kickback Prohibition differs from the Federal AKS in a significant way. The Federal AKS exception for bona fide employees is quite broad, protecting any payment for furnishing covered items or services. In addition, another exception, the Federal AKS personal services and management contracts safe harbor, which applies to independent contractors, is narrow, requiring that the aggregate payment over the term be set in advance, effectively making an hourly or other event-based payment outside of the safe harbor.
In contrast, the Recovery Kickback Prohibition exception for payments to bona fide employees and independent contractors, payments cannot be determined by or vary by the number of individuals referred, the number of tests or procedures performed, or the amount billed to or received from the health care benefit program (insurance) of the referred individual.
While all this is complicated, speaking to a healthcare attorney to sort out what your marketing contracts would be worth your time to make sure you are not accidentally breaking Federal or state laws.
If you have questions or comments about any of this, please email Khatri Med Law at Info@Khatrimedlaw.com or visit www.KhatriMedLaw.com