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Watch Out for New Opioid Law's Unintended Consequences

John Wisiackas (left) and Yussuf Aleem, right, of Joseph Aleem & Slowik. (Courtesy photos)

John Wisiackas (left) and Yussuf Aleem of Joseph Aleem & Slowik. (Courtesy photos)

The importance of addressing the nation’s drug epidemic cannot be understated. The National Institute on Drug Abuse estimated that opioid-related drug overdoses in 2018 caused over 115 deaths per day. This is to say nothing of the economic burden caused by opioid abuse, which the Centers for Disease Control and Prevention estimates could be as much as $78.5 billion a year. In light of these human and economic costs, on Oct. 24, 2018, President Donald Trump signed into law the bipartisan Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, or SUPPORT Act. The act is intended to “reduce access to the supply of opioids by expanding access to prevention, treatment, and recovery services.”

As counsel for various health care providers throughout the country, our firm regularly represents clinical laboratories and treatment facilities involved in disputes with private health insurers and government-sponsored health care programs. Based on our experience, we expect that some of the act’s provisions, however well-founded, may have unintended consequences that could actually frustrate its goal of combating the opioid epidemic.

The SUPPORT Act addresses many aspects of the epidemic, ranging from prevention and treatment to recovery. The final statute contains a number of provisions related to Medicaid’s role in helping states provide additional treatment services. Section 8122 of the act (commonly referred to as the Eliminating Kickbacks in Recovery Act of 2018, or EKRA) includes certain anti-kickback restrictions on “referral-based” compensation to sales representatives who recruit patients for laboratories and addiction recovery centers.

In the health care industry, providers often acquire patients by engaging sales representatives who market their services. EKRA effectively prohibits any compensation to sales representatives that is made on a referral basis (meaning that the higher volume of services the representative refers, the more money they make). EKRA generally prohibits such arrangements, even where the sales representative is an employee of the provider. Moreover, the prohibition applies to services covered by private health insurers (not Medicare or Medicaid).

While referral-based compensation arrangements have long raised concerns in the health care industry because of the potential for fraud, it is unclear how EKRA assists in the SUPPORT Act’s overall purpose of remedying drug abuse. To the contrary, a categorical prohibition against such compensation arrangements to sales representatives may actually disincentivize patient outreach and is out of line with previous legislative measures. Indeed, when Congress established the Medicare Shared Savings Program for Accountable Care Organizations in 2013, it gave the secretary of Health and Human Services specific authority to waive certain fraud and abuse laws, such as the federal Anti-Kickback Statute. (42 U.S.C. 1320a-7b(b)).

Moreover, numerous existing federal and state laws appear to adequately curb abusive behavior in the industry. In 1972, Congress passed the AKS, prohibiting certain referral-based compensation on reimbursements from federal health care programs. Many states have passed similar legislation prohibiting certain kickbacks and physician self-referrals. For example, in 1993, the state of Georgia passed its own law prohibiting certain referral-based compensation on reimbursements from state health care programs, codified in in the Patient Self-Referral statute, O.C.G.A. § 43-1B-4. These regulations share commonalities with EKRA; however, unlike EKRA, they typically provide broad “safe harbors” for certain referral arrangements, whereas EKRA’s exceptions are more restrictive.

In addition to the regulatory framework, private insurers zealously prosecute abusive referral practices in the health care industry. Large health insurers, seeing record-high profits, are no stranger to the courthouse, often filing multimillion-dollar lawsuits alleging fraudulent referral practices, overbilling, lack of medical necessity and the like. This makes matters even more difficult for clinical laboratories and treatment facilities, which are already expensive to develop and operate. Definitive drug testing requires costly technology, sophisticated personnel and various licenses. Recovery centers often have to act as an all-inclusive medical facility, hotel and recreation center. To make matters more challenging, many clinical laboratories and treatment centers often fail to obtain participation status with large private health insurers and are thus often forced to eat their costs for many of the services they render. Simply put, health care providers need patient referrals in order to be sustainable.

While the implications of the SUPPORT Act on the health care industry are far from fully fleshed out, the potential adverse effect on patient access to laboratories and addiction centers is concerning. In the coming months, legislators may take a closer look at the implications of it and visit the possibility of amendment. Late last year, the Trump administration asked the health care industry to propose recommendations to relax the rules on referral-based compensation relating to Medicare and Medicaid. If similar requests are made with respect to the act, it would be an opportunity for providers to share some of the benefits of referral-based compensation and work with the government to more effectively combat opioid abuse. In the meantime, health care counsel and providers should take a closer look at the implications of the SUPPORT Act, particularly the potential for kickback allegations.

Yussuf Aleem is a graduate of Harvard Law School and a partner at Joseph, Aleem & Slowik, where he and associate John Wisiackas focus on fraud and abuse defense, compliance and regulatory matters.