Recently Passed Opioid Bill Targets Fraud in Addiction-Recovery Business

October 28, 2018 Updated: October 28, 2018

Tucked inside a package of opioid bills signed by the president on Oct. 25 is a measure that will make it easier for law enforcement to crack down on kickbacks in the addiction-recovery business, which have hurt addicts and their private insurers.

Those using kickbacks, bribery, or rebates to either get or give referrals to recovery homes, clinical treatment facilities, or laboratories can now be fined as much as $200,000 and face up to 10 years in prison. Using kickbacks to get business from Medicare and Medicaid patients has been illegal since 1972 but until now, the private insurance industry hasn’t had any such federal protection.

Earlier this year, the Massachusetts Attorney General issued a warning to residents about marketers who were luring people to addiction-recovery facilities in warmer states, with incentives such as paid airfare and free rent. They also offer to pay patients’ insurance premiums, the warning says.

The reason they can offer these types of benefits, experts say, is that they charge patients’ insurance companies a premium to care for them once there.

“According to some reports, the out-of-state treatment centers provide little or no care to patients,” the warning says. “If someone is offering to arrange travel or cover insurance costs for treatment, call the treatment facility or your insurance company to confirm if the person is an employee and the offer is legitimate.”

The most common states for these types of facilities are Arizona, California, and Florida, the state warns.

About 75 percent of all privately insured patients seeking treatment in Palm Beach County, Florida, which has a robust drug-treatment industry, come from out-of-state, according to Dave Aronberg, state attorney for the 15th Judicial Circuit, which includes Palm Beach County. “And for too many of them, they leave our community only in ambulances or body bags,” he said at a congressional hearing last year.

The county has seen an “influx” of people in recent years, he said, who take advantage of federal laws to milk the insurance companies of those struggling with addiction.

Drug-recovery facilities have been known to pay referral fees to hotlines and marketers, i.e., “body brokers,” in exchange for getting patients. Sober houses, meant to help people transitioning from inpatient treatment, have been accused of paying referral fees and providing dubious care to patients. And laboratories have been known to pay treatment facilities kickbacks for processing their drug tests, which treatment facilities have overused or faked to bill insurance companies.

For example, the insurance company for Alison Flory, 24, paid $1.2 million for her 15 months of care in Florida, according to an NBC News investigation. Flory went to nine different facilities before she overdosed at a Florida sober home in October 2016. It took Flory’s family a while to realize what was happening. Some treatment centers illegally waive co-pays and deductibles, according to NBC, so families won’t necessarily question the charges.

Both the Affordable Care Act and the Mental Health Parity and Addiction Equity Act of 2008 made it easier for people struggling with drug addiction to have their treatment covered. But these laws have also created a cash cow for a largely unregulated industry that, due to being relatively new, has few benchmarks for success.

“One challenge that all stakeholders are facing is that the quality measurement infrastructure in SUD [Substance Use Disorder] treatment is less mature than in medical and surgical care,” American’s Health Insurance Plans (AHIP) said in a report on sober-home fraud.

The report lauds the Eliminating Kickbacks in Recovery portion of the recently signed opioid bill, called the SUPPORT for Patients and Communities Act, but wants to see more done to reform the industry. It suggests better oversight of sober homes, more transparency in the financial relationships of body brokers and call aggregators, and lowering barriers for sharing information on substance-abuse treatment to eliminate fraud.

Follow Holly on Twitter: @HollyGailK