Does New Far-Reaching Anti-Kickback Law Apply To All Labs?

Hastily passed opioid legislation, signed into law by President Trump on October 24, outlaws the use of volume-based compensation for laboratory sales reps, regardless of the type of testing involved. The new law, Section 8122 of the “Eliminating Kickbacks in Recovery Act of 2018” (EKRA), authorizes criminal penalties for some conduct that is currently permissible under antikickback statute safe harbors.

The new law prohibits commission payments based on the number of patients referred to a laboratory, the number of tests performed, or the amount billed to or received from a “health care benefit program” (which includes commercial insurers as well as Medicare and Medicaid). As written, Section 8122 of EKRA applies to all laboratories, not merely labs that perform testing for recovery homes and clinical treatment facilities, and to all services covered by all payers, rather than only services covered by Federal healthcare programs.

Karen Lovitch, attorney at Mintz Levin, notes that Senators Marco Rubio (R-FL) and Amy Klobuchar (D-MN) introduced this provision in an effort to target patient brokers who recruit patients for addiction treatment centers and allegedly receive financial kickbacks in return. Brokers have reportedly paid for patients’ travel, rent, or other expenses to make it easier for them to seek treatment, and even helped uninsured patients obtain private insurance coverage by paying their premiums while in treatment.

Lovitch says the EKRA fails to carve out lab testing that has nothing to do with opioid or drug abuse. Furthermore, it applies to all labs when doing business with all payers. The legislative history fails to clarify whether Congress intended to construct this anti-kickback provision so broadly
with respect to laboratories and, if so, whether Congress had any rationale for doing so, according to Lovitch.

Lovitch believes that it’s unlikely that Congress will remove laboratories from the new law entirely, but expects that there will be significant pressure on Congress to limit its applicability to services related to opioid use and treatment.