Rehab patient brokering is rampant, but it’s hard to stop, industry says

May 30--Your mother has a heart attack. An ambulance arrives. But instead of taking her to the cardiac center that offers the best health care, or the one that's closest, the ambulance takes her to the center that pays the ambulance staff the most money.

In virtually every corner of the health care business that practice wouldn't be tolerated. The exception, experts say, is addiction recovery.

Middlemen -- known sometimes as "junkie hunters," "body brokers" or "interventionists" -- find patients around the country and essentially sell them (and their insurance coverage) to the center willing to pay the most, often to centers in Southern California. The practice warps an already arduous corner of the health care system, rehab operators and officials say, blurring the line between care and profiteering.

Yet a bill to forbid and punish such patient brokering -- SB 636 by Sen. Steven Bradford, D-Gardena -- has been sitting in the California Senate since February, confined to a committee, with no hearings scheduled.

"Who would be for patient brokering? Why would they kill that bill?" asked an exasperated Michael Cartwright, chief executive of American Addiction Centers, one of the nation's largest for-profit, publicly traded treatment chains. "That makes absolutely no sense. We are 100 percent in favor of that bill."

The bill is not exactly dead, but its stagnation does illustrate the difficulty of making change in the recovery business, even when most everyone agrees change is urgently needed.

The Southern California News Group recently investigated the addiction industry and found it peppered with financial abuses that bleed untold millions from public and private pockets, can upend neighborhoods and often fails to set addicts on a path to sobriety. The revolving door between detox centers, treatment facilities, sober living homes and back again generates huge money for operators who know how to game the system.

Even those who run treatment centers say state regulation of their industry is so weak and ineffectual that it's essentially mired in the dark ages.

"California is a very odd state," said Cartwright of AAC, which operates in eight states. "You have to change some laws. You need to get your Legislature to work. But I think you can get support for that from the treatment industry. We want to see the field go in the right direction.

"Unfortunately, we spend a lot of time looking at the treatment centers, rather than the politicians."

Limbo

Rehab operators have told the Southern California News Group that they know it's wrong to offer money to middlemen in exchange for well-insured patients, but that the practice is so ubiquitous in California they'd have no patients at all if they stuck to the high ground.

So they forge a legal and moral gray zone, putting "interventionists" on retainer for $5,000 or $10,000 a month, regardless of how many patients are ultimately enrolled. That skirts the pay-per-patient taboo, but creates a host of other problems.

Addicts start to see their insurance cards as credit cards, operators said, demanding better food, cell phones, even cash from providers in exchange for staying in treatment. If the provider doesn't deliver, the addict bolts to a different treatment center that will give him more of what he wants.

Technically, the buying and selling of patients to the highest bidder is illegal, according to a Senate analysis of SB 636. But California law provides that wiggle room, allowing for "the payment or receipt of consideration for services other than the referral of patients which is based on a percentage of gross revenue or similar type of contractual arrangement if the consideration is commensurate with the value of the services furnished," according to the analysis.

Bradford introduced SB 636 because he has been horrified by accounts of patient brokering and wants to close that loophole. His bill would do two things: Make patient brokering a misdemeanor subject to a $2,500 fine, as well as possible revocation or suspension of facility licenses and professional certification; and allow out-of-network treatment providers to collect payment directly from insurance companies.

While some argue that the penalty is too weak, it's the direct-payment idea that's sparking the most debate.

Right now, many private insurance plans reimburse their enrollees -- the patients -- for treatment. Once the patient has that insurance check in hand -- which can be tens of thousands of dollars, or even hundreds of thousands of dollars -- the patient is supposed to forward that money to his treatment provider.

But that doesn't always happen. "Direct payment to individuals in early recovery can have dramatic impacts, including relapse or even death by overdose encouraged by ready access to otherwise unavailable cash," the bill analysis says.

Others put it in more blunt terms.

"What (they) do is cash it and overdose and die," said Joan Borsten, a former rehab center owner and vice president with the Addiction Treatment Advocacy Coalition. "It takes a long time for (an addicted) brain to repair," she added. "You have cravings. You see this $30,000 check and you see images of heroin floating in front of you."

Supporters of Bradford's bill include Borsten's group as well as the California Consortium of Addiction Programs and Professionals (CCAPP), the California Access Coalition, County Behavioral Health Directors Association of California and several others.

At least 27 states have outlawed insurance payments directly to patients in addiction recovery.

Still, in California, the health insurance industry stands in opposition.

Allowing direct insurance payments to out-of-network providers -- that is, to recovery centers that don't contract directly with the insurance company and don't ncessarily agree in advance on reimbursement rates and standards of care -- would remove one of the few tools insurers have to encourage providers to come in-network and provide higher-quality care, insurance officials said. Being in-network, as opposed to out-of-network, lowers costs, tightens oversight and provides more consumer protection, they argue.

The Association of California Life and Health Insurance Companies and the California Association of Health Plans oppose SB 636 unless it's amended to address those concerns.

Sen. Ed Hernandez, D-Azusa, chair of the Senate Committee on Health, agrees that patient brokering needs to be controlled. But he won't support Bradford's bill because of the payment provision. Hernandez asked Bradford to split the bill into two parts, so they could move on the patient brokering part. But deadlines for this year have slipped by, meaning the bill will be taken up again in the next legislative session. Bradford is working on amendments to address concerns, his spokeswoman said.

Tougher rules vs. self-policing

A coalition of residents who live near rehab centers and sober living homes in Orange and San Bernardino counties is demanding action from the state Attorney General and legislators in Sacramento. They want a bill forbidding patient brokering.

While Bradford's bill is a start, it's not strong enough, they say.

A $2,000 fine is less than some centers pay for a single patient referral and it will not deter bad behavior. Classifying brokering as a misdemeanor is also a mistake; brokering should be a felony carrying a stiff $50,000 fine, they say.

"A misdemeanor is not going to be enforced, and isn't being enforced," said Mick Meagher, an attorney and consultant in the industry, who said there are already laws on the books that makes paying for patients a misdemeanor. "The question is the magnitude of enforcement. What I'd love to see personally is an enhancement of the penalties up to a felony. I think that would be significant. That would catch people's attention."

Florida, the only state with more addiction treatment centers per capita than California, adopted a much stiffer law last year to deter patient brokering. Lawmakers there made paying for patients a third-degree felony punishable by up to five years in prison.

"Tighten the law," said Jerrod Menz, co-founder of American Addiction Centers. "Make it as strict as you want -- $25K and a felony. If you're marketing against these brokers getting $5K, $8K, 10K a patient, it creates such an un-level playing field. Anyone spending that kind of money is not leaving much for treatment."

The payment piece of Bradford's bill must be addressed, though, as well, he said. "In-network, out-of-network -- other states do not allow insurance companies to pay drug addicts," Menz said.

David Skonezny has worked as an addiction counselor, served on the board of directors for California Consortium of Addiction Programs and Professionals, and is now a consultant in the treatment industry. He's working on a uniform code of ethics that he'd like to see embraced industry-wide, which would forbid brokering as well as other unsavory practices. But he wants the industry to clean itself up before more regulations are enacted.

"I'm a big hockey fan," Skonezny said. "If the players are allowed to police themselves on the ice, there's a real beautiful symmetry and flow. But if the referees get involved, the lines get chopped up and it loses its synergy and looks a lot different.

The recovery industry, he says, is similar. "We want to police ourselves... Once the referees get involved, we lose a lot of the autonomy that we need to do our jobs well."

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