CEO SUMMARY: At the last minute, Congress added all clinical laboratories to a far-reaching provision in the newly-enacted Support for Patients and Communities Act. Unlike the Anti-Kickback Statute, this provision applies to all payers, both government and private, and offers no safe harbors. Lab experts say this new law could turn relatively innocuous and heretofore permissible practices, such as placing phlebotomists in physicians’ offices, into criminal offenses.
THERE’S A NEW FEDERAL LAW applicable to both government and private health plans that could put every clinical laboratory and pathology group with commission-based sales staff at risk of compliance violations.
Within 24 hours of this legislation becoming law, the American Clinical Laboratory Association (ACLA) was communicating its concerns to officials at the federal Department of Health and Human Services (HHS). That communication came as part of its response to a request for information from the Office of Inspector General of HHS (OIG) on the Anti-Kickback Statute.
On Oct. 25, the day after the Support for Communities and Patients Act was signed into law, Sharon L. West, the ACLA’s Vice President, Legal and Regulatory Affairs, asked the Inspector General of HHS to ensure that healthcare providers would be protected under the new law.
OIG should make clear to healthcare providers and law enforcement agencies, “that conduct protected by a safe harbor under the current Anti-Kickback Statute would not be treated as a criminal offense under a different federal law,” West wrote. One point of significant confusion is because the Support Act’s anti-kickback provisions cover all payers, while the federal Anti-Kickback Statute applies just to federal healthcare programs.
Earlier this year, as the Support Act moved through Congress, the ACLA noticed that, late in the process, language was added that put certain practices at risk even though those practices are common among clinical laboratories, West said in an interview with The Dark Report. Coincidentally, the ACLA was preparing to respond to the request for information from the OIG about the federal Anti-Kickback Statute.
Implications for Clinical Labs
In the weeks since the Support Act became law, healthcare attorneys have begun to learn about its potential onerous implications for laboratories that pay commissions to sales staff, whether they are employees or independent contractors.
In a warning note to clients on Nov. 29, Charles C. Dunham IV, a healthcare attorney with Epstein Becker Green, explained that all clinical laboratory managers and pathologists need to be aware of provisions in the Support Act that appear to eliminate the ability of laboratories to compensate sales personnel (including W-2 employees and 1099 contractors) on a commission-based formula related to any third-party payer business they generate, whether from a government health program or a private health insurer.
Originally, the provision in question was called the Eliminating Kickbacks in Recovery Act (EKRA) before it became Section 8122 of the Support Act, he wrote.
Provision Added at the 11th Hour
EKRA was added to the Support Act, he wrote, “at the 11th hour, along with the inclusion of laboratories, and there are a number of unclear and questionable provisions that appear to pre-empt the safe harbors under the federal Anti-Kickback Statute and certain state anti-kickback rules.” While the laboratory industry is lobbying for amendments to the statutory language, whether and when such amendments will be forthcoming is unknown, he added.
West cautioned that clinical laboratories need to be aware that the law has potentially negative effects on existing specimen-collection arrangements and could make labs criminally liable for placing phlebotomists in physicians’ offices to draw patients’ blood.
Clearly, the new legislation is a significant concern. “In an effort to address the opioid crisis and some of the bad actors in that space, Congress added these far-reaching and significant anti-kickback provisions that now create confusion and potential liability for labs and those providers that refer [lab tests] to them,” West commented.
“Primarily, this language was designed to address potential bad actors working in recovery homes and addiction treatment facilities,” West added. “But then language was added to the bill extending that far beyond treatment facilities to include clinical labs. Now the new law extends to all payers and all laboratory testing services provided to patients.”
The Future of Phlebotomists in Physicians’ Offices
One of the ACLA’s concerns involves the Support Act’s potentially negative effect on patient care. “It’s important to note that these provisions could affect arrangements that are truly beneficial to patients and to the community,” West said. She was referring to situations in which clinical labs use phlebotomists to collect specimens in physicians’ offices—a practice that this law could make illegal.
“It’s fairly common to have a lab provide a phlebotomist in a physician’s office to draw the blood and send it to the lab,” she added. “Under the federal Anti-Kickback Statute, placing a phlebotomist in a physician’s office is not an inducement as long as the phlebotomist is not involved in other tasks that would normally be the responsibility of the physician’s office staff.
“This kind of arrangement benefits patients because it increases the chance that the patient gets the test. Not having to leave the office to get the blood work done also speeds turnaround time for physicians who need timely lab test results,” noted West.
“The OIG has already said this practice of placing phlebotomists in physicians’ offices is not an inducement when implemented correctly,” she added. “Therefore, it’s hard to imagine that these arrangements should go away. But, the breadth of the way the Support Act is written—covering both government and commercial payers—calls into question this practice.”
An issue of similar concern involves specimen collection. “Many labs provide specimen collection devices to physicians’ offices, a topic OIG has addressed,” West explained. “The OIG has said providing collection devices to physicians’ offices for the sole purpose of collecting and transporting specimens is not necessarily an inducement to refer specimens. But even though it’s permissible under the current federal Anti-Kickback Statute, there’s no language that says this is permissible in the Support Act.”
Of greatest concern to clinical labs may be how they pay sales staff. “In the federal Anti-Kickback Statute, there’s an employment exception,” noted West. “But under the Support Act, the exception applies only if the employee’s payment doesn’t vary with the number of tests or procedures performed and billed. Yet that’s a common practice for how sales personnel are compensated right now.”
Is your lab in danger of violating the new opioid law? If so, how will you change your operations? Please share your thoughts with us in the comments below.