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Clinical labs: How does a new federal law impact your business?

Lawmakers often pass or change laws with good intentions. In some cases, those intentions may not translate in the real world. An attempt to thwart wrongdoing can result in an unnecessarily confining situation.

A recent change to the federal laws regarding payment to clinical laboratories may be one such case.

What did lawmakers change? Lawmakers recently passed the Eliminating Kickbacks in Recovery Act of 2018 (EKRA). As of As of October 24, 2018, this law changes how clinical laboratories can collect payment for referrals. These changes extend to include arrangements present in sales and marketing relationships.

Why did lawmakers make this change? Lawmakers pushed the change through in an attempt to combat fraud and the current opioid crisis.

In reality, the change has expanded restrictions under the Federal Anti-Kickback Statute (AKS) in such a way that it now covers essentially all compensation arrangements between clinical labs regardless of the insurance provider responsible for reimbursement. The law now gives the federal government the ability to monitor all provider arrangements designed to generate business for any laboratory services. This was exemplified by language in EKRA that exempts payments made to employees and contracts that does not vary based on the number of individuals referred, procedures performed or the amount of final bill.

What does this mean for clinical laboratories? The Centers for Medicare and Medicaid Services (CMS) will need to provide additional guidance to confirm payments that fit existing safe harbors of AKS are compliant with EKRA. However, it is important for clinical laboratories to remain up-to-date of these changes to avoid allegations of kickback violations.

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