Mid-Atlantic Health Law TOPICS
Commission-Based Payments to Marketing Employees
Eliminating Kickbacks in Recovery Act (EKRA) is a federal law that prohibits the knowing and willful payment or offer of remuneration to induce a referral of individuals to a recovery home, clinical treatment facility, or a laboratory for items or services covered by all health care benefit programs, including but not limited to Medicare, Medicaid and private health insurance.
Facts
In United States v. Schena, the federal appellate court with jurisdiction over California and much of the far west, reviewed Schena’s payments to marketers of 50 percent of sales made to medical professionals of blood allergy tests (more expensive than the standard skin test) between 2015 and 2020. After the onset of COVID-19, Schena bundled those blood allergy tests with COVID-19 blood tests (more expensive than the standard PCR tests) and continued to push marketers to sell the bundled tests by reimbursing the marketers 50 percent of their sales. This resulted in Schena’s laboratory billing Medicare $4000 more per patient than the average laboratory.
Holding
The court held that EKRA does apply to payments made to individuals who do not have the authority to refer patients for the item or service reimbursed by a health care benefit program, but something more than a percentage payment is necessary to find a violation of EKRA. Here, the court found that the marketers were directed to mislead those who could make referrals, and therefore, the percentage payments violated EKRA.
Antikickback Statute
EKRA and the federal Antikickback Statute (AKS), while separate and distinct laws, are used alongside one another when analyzing the legality of a health care marketing program. Curiously, illegality under AKS has sometimes been avoided where the marketer has no power over the health care decision, notwithstanding that fact did not avoid a finding of illegality under EKRA in Schena.
Accordingly, the analysis of the legality of marketing initiatives in health care, especially for recovery homes, clinical treatment facilities and laboratories, has become especially complicated.
Darci M. Smith
410-576-4153 • dsmith@gfrlaw.com