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November 6, 2018

Sweeping New Opioid Law Extends Anti-Kickback Liability to Private Insurance Market in Three Areas

SWEEPING NEW OPIOID LAW EXTENDS ANTI-KICKBACK LIABILITY TO PRIVATE INSURANCE MARKET IN RESPONSE TO FRAUDULENT PRACTICES INVOLVING RECOVERY HOMES, CLINICAL TREATMENT FACILITIES AND LABORATORIES

Background

On October 24, 2018, President Trump signed into law the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patient and Communities Act (the “SUPPORT Act”), a wide-ranging and comprehensive bill aimed at combating the opioid epidemic that received overwhelming bi-partisan support in the U.S. House of Representatives and the U.S. Senate. One key provision, titled Eliminating Kickbacks in Recovery Act of 2018 (the “‘all-payor’ anti-kickback provision”), expands the reach of the federal government to prosecute not only individuals who offer, solicit or accept payments or other incentives for the generation of business or referrals of federally insured patients (which since 1972 has been prohibited under the federal Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b), (“AKS”)), but also individuals who offer, solicit or accept payments or other incentives for the generation of business or referrals of privately insured patients to three specific health care entities: recovery homes, clinical treatment facilities or laboratories. The prohibitions apply to the solicitation or receipt of remuneration for any referrals to recovery homes, clinical treatment facilities or laboratories, regardless of whether or not related to treating substance use disorders. Similar to the AKS, the “all payor” anti-kickback provision is a criminal statute which carries the potential for even more significant penalties than the AKS, including fines up to $200,000, imprisonment up to 10 years, or both, for each occurrence.

Prosecution Under Which Law?

The SUPPORT Act explicitly states that the “all-payor” anti-kickback provision does not apply to conduct that is prohibited under the federal AKS. Therefore, improper offers and solicitations to generate business or referrals of federally insured patients to recovery homes, clinical treatment facilities or laboratories will continue to be prosecuted under the AKS and not the SUPPORT Act. As a result, violators will be subject to AKS criminal penalties which include fines up to $100,000 or imprisonment up to ten years, or both. In addition, civil fines and remedies under the Civil Monetary Penalties Law are also applicable for federal AKS violations.

However, the SUPPORT Act does not preempt state law, so conduct that violates both the SUPPORT Act and state law could be prosecuted under either the new Act or the applicable state law. Which begs the question, under which statute will violations involving kickbacks to recovery homes, clinical treatment facilities or laboratories for referrals of privately insured patients be prosecuted – the SUPPORT Act or state law?

Exceptions

While both the AKS and the “all-payor” anti-kickback provision contain certain statutory exceptions, the exceptions are not identical and the power to create new exceptions or to clarify the existing exceptions rests with different federal authorities. With regards to the “all-payor” anti-kickback provision, the Attorney General, in consultation with the Secretary of Health and Human Services (“HHS”), has the authority to create new exceptions or to clarify the existing statutory exceptions. In contrast, the secretary of HHS possesses the power to create safe harbors to the AKS. Whether this separate delegation of authority will lead to differing protections under each statute, the answer is unclear.

The “All-Payor” Anti-Kickback Provision (SUPPORT Act, Sections 8121- 8122)

As noted, the “all-payor” anti-kickback provision is a new federal enforcement tool designed to reach fraudulent business transactions and referrals of private insurance patients to three specific types of health care entities: recovery homes, clinical treatment facilities, and laboratories. This provision was created to address the rampant fraud in the substance abuse treatment and recovery industry that targets individuals with private health insurance due to the robust benefits provided by the private health plans. One prolific scheme involves “body brokers” who target and exploit vulnerable individuals seeking treatment for their addictions by luring them, through deceptive advertising and marketing practices, to certain treatment facilities. The “brokers” are paid kickbacks by the facilities to identify and recruit individuals with addictions and refer them to the facility. And, while an illegal kickback would not inherently harm a patient (provided the referral is to a qualified facility or clinician and the patient receives care and treatment that is medically necessary), these brokers often refer the patients to unscrupulous clinicians and treatment centers that do not provide evidence-based addiction treatment. The individuals’ health plans are subsequently billed for excessive treatments, tests, and other services that may not be medically necessary or even provided. While the health plans are victimized by paying for services that are valueless, the impact on the individuals combating their addictions can be devastating as they do not receive the medically necessary and often life-saving services required to treat their addictions.

Exceptions to the “All-Payor” Anti-Kickback Provision

The exceptions specific to this law are:

  1. Properly disclosed discounts under a health care benefit program that are reflected in the costs claimed or charges made.
  2. Payments to bona fide employees or independent contractors if the payments are not determined by or vary by:
    • The number of individuals referred to a particular recovery home, clinical treatment facility, or laboratory;
    • The number of tests or procedures performed; or,
    • The amount billed to or received from, in part or in whole, the health care benefit program from the individuals referred to a particular recovery home, clinical treatment facility, or laboratory.
  3. Discounts in the price of drugs furnished under the Medicare coverage gap discount program.
  4. Payments for services that meet the AKS safe harbor for personal services or management contracts.
  5. Coinsurance and copayment waivers and discounts if:
    • Not routinely provided; and,
    • Provided in good faith.
  6. Remuneration that meets the AKS exception.
  7. Remuneration made according to alternative payment models or arrangements used by a State, health insurance issuer, or group health plan that the Secretary of Health and Human Services (“HHS”) has determined are necessary for care coordination or value-based care.
  8. Any other payment, remuneration, discount, or reduction as determined by the Attorney General, in consultation with the Secretary of HHS, by regulation.

Conclusion

As the opioid crisis continues to reach epidemic proportions across the nation, key stakeholders, such as state and federal governments, law enforcement entities, professional licensing boards, and a wide-range of clinicians, physicians, substance abuse experts, and community organizers are collaborating in the fight to curtail drug abuse. These efforts include expanding resources to those vulnerable individuals seeking to regain their lives through intensive recovery treatment efforts, as well as stringent enforcement and prosecution of individuals and entities who prey on those vulnerable individuals. The “all-payor” anti-kickback provision should serve to enhance the efforts to combat the devastation wrought by the opioid tidal wave.

Please check this website for any new information regarding the implementation of the Eliminating Kickbacks in Recovery Act of 2018.

H.R.6 - SUPPORT for Patients and Communities Act

Caroline Hopland, a law clerk with Summit Health Law Partners, assisted with this article. She is a second-year student at Boston University School of Law where she is an editor on the Journal of Science & Technology Law. You can find her on LinkedIn.

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