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House Hearing Examines Allegations of Addiction Treatment Fraud


PG Bulletin

January 24, 2018

Brad Lerner (Beacon Health Options)

This Bulletin is brought to you by the Behavioral Health Task Force.

Given the severity and pervasiveness of the opioid epidemic, the House of Representatives Subcommittee on Oversight and Investigations held a hearing on December 12, 2017, entitled, Examining Concerns of Patient Brokering and Addiction Treatment Fraud.

Background and Scope of Issue
The impetus for the hearing was recent reports that “patient brokers” are treating individuals seeking treatment for their opioid addiction as a commodity, rather than helping them receive legitimate treatment and ultimately achieve recovery. The hearing examined patient broker schemes and other concerns of fraud and abuse in the treatment industry.

According to reports, patient brokers push consumers to treatment at certain outpatient treatment facilities and affiliated “sober living homes” while undergoing treatment. In exchange for this steering, patient brokers allegedly receive generous financial kickbacks from the business owners.

Patient brokers are paid in one of two ways: a per-head fee that can reportedly range from $500 to $5,000 for each patient who successfully enters a treatment center; or a monthly fee from a facility based on the broker meeting a quota of patients. These kickback schemes can generate tens of thousands of dollars in earnings for the brokers, who are held to no code of professional ethics or licensure in employing their marketing tactics.

Patient brokers and sober living home owners offer incentives such as “scholarships” for treatment, free plane tickets, free housing, discounted groceries, daily yoga sessions, movie tickets, and free cigarettes, among other enticements.

In addition to paying for travel, reports indicate that some brokers offer to assist patients with obtaining private insurance. In some instances, the broker pays the premiums on behalf of the patient until treatment benefits are exhausted, generally after 60 to 90 days. It has also been reported that some treatment facilities bill private insurance at higher out-of-network rates that can easily total more than $10,000 a week. In addition, there have been allegations that some brokers follow the patients after they are released from treatment and provide them with drugs so that the entire process of seeking treatment can be repeated.

Reports indicate that the facilities may engage in abusive billing practices, including billing insurers several times per week, per patient, for unnecessary urine tests that can cost up to several thousand dollars per test. Committee staff learned that there are instances when expensive confirmatory tests are ordered with such frequency that the results of one test are not yet available before another test is ordered. In another example, confirmatory tests were ordered that included unrelated allergy tests as part of the drug test panel; the size of the panel often increases the cost of these tests.

The substance abuse treatment and sober living home industries are largely regulated at the state level. Further, state regulations and policies regarding substance use disorder treatment facilities appear to vary state by state. As Florida is a popular treatment destination, it is often at the fore-front of substance use disorder regulations: Florida has a law that prohibits patient brokering, and in June 2017, Florida passed legislation that targets questionable marketing practices used to recruit individuals for treatment. Both laws are unique to Florida and challenges still exist, especially when an issue crosses state lines. Florida does not mandatorily require certification for sober homes due to fears of violating the Americans with Disabilities Act and Fair Housing Amendments Act, something the committee discussed as a problem needing attention.

One challenge that appears to be consistent across states is that sober living homes are largely unregulated, with few professional certifications required.

Key Takeaways
There was consensus that the lack of standards in substance use disorder treatment makes it difficult for patients and families to know what good treatment looks like and how to find it. It is clear that accreditation may not be enough to supply standards, so Congress may look into requiring some level of certification for sober homes to help with the lack of standard quality review. There was much discussion over what is quality medical treatment and what questions patients should ask before entering treatment. Many Congressmen wanted to codify principles for effective treatment and suggested that SAMHSA should post them or provide a certification framework. When discussing lab abuses, witnesses noted that drug screening should rarely occur in a residential setting, and witnesses stated that the payment of fees to brokers should never be part of a treatment model.

In conclusion, the hearing acknowledged that a problem exists with certain unethical, problematic and illegal provider practices. The above information should be useful for stakeholders helping to curb this malfeasance and plan for the direction regulations will likely seek to impact in the future. Subsequent to the House hearing, California state Senator Pat Bates introduced legislation in mid-January to address California’s poorly-regulated addiction treatment industry. The bill, SB 902, seeks to improve patient well-being and increase public safety of neighborhoods hosting rehabilitation centers and sober living homes.

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