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Sober Nation

Putting Recovery On The Map

12-17-19 | By

An Under-Regulated Industry of Addiction Treatment Places Those Seeking Help at Unique Risk.

Appalled by the ironic circumstances of his friend’s overdose death inside a recovery facility, activist and author Ryan Hampton, immediately reached out to his local U.S. congresswoman for help.

“I was full of a lot of anger and still grieving,” said Hampton in an interview, who believed the system had failed his friend. “If this were to happen in any other kind of an assisted living home setting it would not be tolerated, but because he had a heroin problem nobody really cared.”

Tyler Marquis was alive when he was found overdosing inside his sober living home in California, according to Hampton, who was Tyler’s sponsor at the time of his passing in 2017. “There was no naloxone, nobody was trained on how to respond to an overdose.”

Sharp increases in opioid addiction over the last decade, in addition to the passage of the Affordable Care Act (ACA) in 2010, has led to a burgeoning industry of under regulated substance abuse treatment. As a result, a troubling trend known as “patient-brokering,” and other insurance fraud schemes, have emerged, placing vulnerable addicts in danger and, in some cases, killing them in the very homes where they seek treatment.

“An Understandable Byproduct”

Following the passage of the ACA, coverage for any type of mental health treatment, including substance use disorder (SUD), became mandatory for insurance companies, leading to an infusion of funds into SUD treatment. As a result, combined with the increasing number of opioid addicts seeking treatment, third-party “brokers” began searching out patients for treatment providers looking to cash out the patient’s hefty insurance coverage, which can range anywhere from $20,000 to $40,000 a month.

“Now all of a sudden millions and millions of people have coverage for addiction that never had it before,” said Dave Sheridan, the Executive Director at the National Alliance for Recovery Residences (NARR). Patient brokering, and the resulting insurance fraud that commonly co-occurs, wasn’t an intended consequence of the ACA, according to Sheridan, but rather, “an understandable byproduct of the way that the marketplace has reacted to the Affordable Care Act.”

Economic incentives, in combination with the increasing number of Americans seeking mental health treatment, has created an environment ripe for brokers to prey upon those who need treatment, and often at a low cost.

FAIR Health, an independent non-profit organization, analyzed over 28 billion private healthcare claim records between 2007 and 2017. The decade long study found that the percentage of behavioral health claims, as a percentage of all claims, increased 108%, and opioid dependence claims rose 1,180% overall.

Patient Brokering

The National Association of Addiction Treatment Providers (NAATP) is a non-profit organization whose mission is to advocate for the availability and quality of addiction treatment.

Peter Thomas, the organization’s Quality Assurance Officer, investigates ethics complaints within the industry at NAATP. “Often times those [complaints] do relate to some form of patient brokering,” said Thomas. “There are a lot of different manifestations of patient brokering, and it’s kind of a catch-all term.”

While there is a distinct line between patient brokering and insurance fraud, they often co-occur, because the goal is to maximize profits and earn the quickest return.

“The thing that a lot of people don’t realize is that recovery housing is used as the bait in these schemes usually,” said Sheridan, “as opposed to being the source of the money.”

It isn’t the patient’s place of residence that creates the profit in these scams, but rather their receival of insurance approved “treatment services,” from an often state recognized clinical program, that does. A broker can entice clients to attend a treatment center through “scholarships,” by offering to pay for a patient’s transportation, housing, or even the premiums to get that patient covered by insurance, just to receive the hefty insurance coverage on the back end.

The Government Office of Accountability, a non-partisan government agency, released a report in March 2018, on recovery housing oversight and funding in several different states. The report pointed out that recovery homes are not considered eligible providers for the purposes of billing health insurance, therefore, officials have noted that any potential insurance fraud is likely to rely on “unscrupulous” relationships between SUD treatment providers and recovery housing operators.

These housing operators, or “patient-brokers,” aim to funnel potential clients to their desired treatment centers in order to receive kickbacks from those operators. In some instances, there have been reports of recovery housing operators providing their residents drugs so they will continue to need treatment.

Kenneth Chatman is currently serving a 27-year federal prison sentence for doing just that. “Chatman’s patients were given drugs to trigger a positive drug test so they could be considered in ‘relapse’ when their insurance coverage was about to expire,” according to a CBS News article.

Over A Decade of Fraud

Since 2007, state officials have been conducting investigations into “unscrupulous behavior and potential insurance fraud related to recovery housing,” the outcomes of which have led to both criminal charges and changes to healthcare policy, according to the GAO report.

The type and scope of potential fraud varies from state to state. For example, in Massachusetts, investigators found laboratories paying kickbacks to recovery homes for patient referrals for urine testing that was not medically necessary. In some cases, the laboratories owned their own recovery residences for the sole purpose of self-referring. One Massachusetts-based laboratory was forced to forfeit more than $1 million to settle claims it billed for medically unnecessary urine drug screens, according to an article from

In southeastern Florida, where state officials have called investigations into recovery housing related fraud “extensive,” investigators found recovery housing operators engaging in deceptive marketing tactics to mislead patients and their families. They found that some SUD treatment providers were paying $500 or more to recovery housing operators for every patient referred to them.

The recovery facility staff where Hampton’s sponsee, Tyler, passed away, didn’t even have the training to recognize the signs of an overdose.

“Your Death Should Never Have Happened.”

“Your death should never have happened.” Hampton wrote in an open letter to his friend published in USA Today. “You died because there were no ethical standards for your housing. … The staff that was supposed to care for you didn’t have the most basic lifesaving naloxone training, and said that keeping the medication on hand encouraged overdoses.”

Once Hampton got in touch with his member of Congress, Rep. Judy Chu (D-Calif.), he told her about the injustices of Tyler’s passing, and that he wanted to do whatever he could to keep it from happening to anyone else. 

“The initial goal was to get some regulations in place that stop this from happening ever again,” said Hampton. “We had looked at the federal regulations on the books and quickly realized that while NAAR had standards that were best practices, they weren’t codified anywhere.”

Therefore, the idea was to get those standards written and codified, said Hampton. At the least, he was hoping to get the Substance Abuse and Mental Health Services Administration (SAMHSA) to publish them as best practices and offer up funding for states to implement them.

Moving in The Right Direction

With our federal laws that protect people of all different classes, and the associated healthcare regulations that protect these people, Hampton wondered why such standards didn’t also apply to people like him and Tyler.

Eventually, together with congresswoman Chu, Hampton helped draft a provision of the SUPPORT Act ahead of its passage in October 2018. “4684 as a standalone bill passed the house unanimously, the Senate with one vote against it,” said Hampton, “and then the president signed it into law as a larger part of the SUPPORT Act package.”

“So, we’re moving in the right direction,” said Hampton, who also worked with the White House to adopt another provision that makes patient-brokering under any type of insurance plan a felony.

However, it’s still up to the states as to whether they adopt these standards, said Hampton, but he believes the future is bright. “This is kind of a guiding light for the states to adopt,” said Hampton, “and we are seeing state’s that are adopting them.”


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