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Can labs legally pay marketers?

The law is constantly evolving. Arguably, this is a good thing. In many cases this evolution helps to better ensure the laws remain relevant. However, in some cases the changes may cause more problems than they fix. That is the issue diagnostic labs are currently dealing with due to the passage of a law in 2018 that is continuing to cause frustration and confusion.

What is the law?

Back in 2018 Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act. Lawmakers likely intended the law to help address the opioid crisis in the country, but it has had a much more expansive impact.

This law included a provision known as the Eliminating Kickbacks in Recovery Act (EKRA). EKRA prohibits kickbacks for laboratory services paid by a federal health care program or commercial health insurer. It specifically includes payments to sales and marketing personnel based on volume or value of testing.

Is there anyway labs can pay for marketing anymore?

The law states labs would not violate EKRA if the payment is not determined based on the number of referrals, tests or amount billed. This is similar to the Personal Services and Management Contract safe harbor that is part of the federal Anti-Kickback Statute (AKS). As a result, safe harbor can serve as a strong defense in the event the government attempts to accuse a lab of a violation.

Although this safe harbor will likely help, confusion over the application of EKRA remains. It is important to review current compensation practices to better ensure compliance with both AKS and EKRA. As noted in a recent publication in Medical Lab Management, the government may find programs that were previously compliant with the AKS in violation with EKRA.

Why should we care?

Because the penalties are severe. In addition to licensing issues, an EKRA violation is a criminal violation. As a result, each violation can come with a fine of up to $200,000 and up to 10 years imprisonment.