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TCEM Spotlight: Navigating New Patient Brokering Laws

May 23, 2019

Lawmakers are ramping up regulations on the marketing of substance use disorder treatment programs with recently passed legislation such as the Eliminating Kickbacks in Recovery Act. New laws on the books are aimed at cracking down on patient brokering, fraud and improper referrals, but even the lawmakers who wrote the bills admit some of them were written in haste, opening the door for unintended—and severe—consequences.

It’s an increasingly complicated minefield for providers to navigate. To help provide some guidance, Paul Gomez, principal and chair of the Polsinelli Behavioral Health Law Group, Mark Hardiman, founder and partner at Nelson Hardiman LLP, and Rick Rifenbark, principal at Polsinelli, will share strategies for providers to protect themselves from fraud allegations and more during the Treatment Center Executive and Marketing Retreat next month in New Orleans.

Ahead of the session, Gomez spoke with Behavioral Healthcare Executive about EKRA, mistakes addiction treatment marketers are making, and ways in which they can limit their legal liability.

(Editor’s note: This interview has been edited for length and clarity.)

Can you discuss some of the most notable laws passed within the past year or two that have the biggest impact on the business practices of addiction treatment center marketers?

What the Eliminating Kickbacks in Recovery Act does that will be of particular interest to TCEM attendees is put at risk a lot of marketing arrangements and other arrangements that behavioral healthcare facilities have entered into. If you analyzed these even just a few years ago, they posed little-to-no risk from a compliance standpoint. Many of those may now pose a significant liability because of this new law.

A lot of these laws, especially EKRA, appear to have been passed through on a fairly rushed basis. There are a lot of pieces of that legislation that are ambiguous. It’s not entirely clear if certain errors were made because of the rushed nature in which the legislation was passed. There is even some recognition on the part of the politicians passing the laws that they were probably rushing these through and there might be unintended consequences and some need for fixes. This puts behavioral health providers in a precarious position in some ways because the laws are ambiguous in some respects, there’s not a lot of guidance or interpretive enforcement history to get a better handle on how these laws will be enforced and what really falls within their scope. But the potential liabilities if you’re found to be in violation are severe. That suggests behavioral health providers should take a careful look at the arrangements they’re involved in with all of that in mind and approach it with a sound strategy about how they respond in light of the current situation. It’s not a great position to be in.

We think there is going to be more guidance and change coming up. In the meantime, providers have to deal with the landscape they are presented with. You have to make some careful considerations about what you do.

Can you share an example of one mistake you see marketers making right now?

One thing that a lot of substance abuse treatment facilities and marketers are going to have to look at are the compensation arrangements paid either to in-house marketers who are employed by these treatment facilities or arrangements with large call centers, which could be an outside company or independent contractor. The compensation in many of these arrangements is structured around the number of referrals or leads generated. This has been a practice that has been in place for some providers, call centers and marketers for some time. Under EKRA, that law would appear to prohibit those kinds of compensation structures. A lot of providers are going to have to look at their existing contracts and compensation arrangements, and consider making certain revisions to put them at less risk of violating that law.

So, is it fair to say that business relationships between providers and call centers can continue, just that they have to operate in a very specific way?

I think that’s right. There are ways you can comply with the law. One thing about EKRA is that it appears to be modeled on the federal anti-kickback statute. There are certain exceptions or safe harbors to that statute, meaning if you comply with a prescribed kickback or exception, you should be able to shield yourself from liability under the law. But under the anti-kickback statute, even if you don’t meet all the terms of a safe harbor, it doesn’t necessarily mean you have violated the law, you just don’t have the protection of the safe harbor exception. It’s still very early because the law has just been passed and there isn’t much guidance out yet or an enforcement history, but we think at this point EKRA will be enforced and interpreted in some ways that are similar to the anti-kickback statute so that if you don’t meet a safe harbor, it doesn’t necessarily mean you are in violation. But it would be a good idea to try to meet an available safe harbor or exception, or come as close as you can, to give yourself greater protection. If you look at certain compensation arrangements, you have to structure compensation so that it is not tied to the number of people who are referred to any particular provider or treatment facility, or any certain number of tests or services provided.

Outside of what we have discussed so far, do you have a piece of advice for providers to help them protect themselves against fraud allegations?

What providers need to do at this point is take a look at and assess arrangements that may present a particularly high risk under the new fraud and abuse statutes out there, and consider their plans for the future, whether they’re looking at a transaction coming up or if they may have been subject to other enforcement actions or similar providers have been subject to other enforcement actions. Look at those plans and see how likely you are to be on an enforcer’s radar screen, and consider how you might strategize about prioritizing particularly high-risk arrangements and what you might want to do to restructure those arrangements to bring your organization into a safer compliance posture.

The Treatment Center Executive & Marketing Retreat, June 10-12 in New Orleans, provides CEOs, CFOs, COOs, directors, senior marketing/business development/admissions leaders, and other executives with the tools they need to effectively and ethically grow their services in a rapidly changing market. For more information, visit executiveandmarketingretreat.com.

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