Addiction Treatment Fraud Gets a Hearing in Congress

A Congressional committee recently held its first hearing on the problem of “patient brokering” – a scam in which unscrupulous treatment providers make money while providing substandard care.

Due to a lack of regulation of treatment providers, and particularly sober living homes, providers are often able to overbill insurance companies for a marginal level of treatment. In particular, medical tests such as urine screens, which cost a few dollars to perform, are sometimes billed for over $1,000 apiece.

Some treatment providers pay referral kickbacks to operators of sober living homes, who entice addicts to sign up with promises of cash payments (and in some cases, drugs). Operators are known to troll AA meetings and detox facilities looking for customers. Sober living residents are then directed to the treatment providers.

Rather than trying to get addicts well, the treatment providers and sober living operators are happy to see addicts continually relapse, because relapse provides an opportunity to further profit from insurance reimbursements.

At a hearing held by the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, the President of Caron Treatment Centers testified that the “lack of regulation and standards within the sector … creates a fertile environment for deceptive business practices, fraud, patient neglect and, ultimately, treatment malpractice.”

A State Attorney from Palm Beach County, Florida testified that a major crackdown had shut down many shady operators in the county, but the result was that they were simply moving elsewhere, and that federal regulation might be needed.

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