Referrals In The SUD Treatment Industry (Part 1 of 3)

Legal and regulatory environment aims and limitations

When it comes to referrals in connection with healthcare services, there are many laws and regulations that attempt to provide a safe environment in the SUD treatment industry¹.

These laws and regulations aim at eliminating unethical practices like what is commonly known as body brokerage. Unfortunately, some “marketers” and “providers” unknowingly (or sometimes knowingly) continue to violate these regulations.

While this legal and regulatory environment aims at improving transparency, education, quality of care, and clients’ protection, it can be difficult to clearly define what constitutes a kickback, and, when in doubt, we can only urge providers to consult with their attorneys before implementing creative marketing programs. Applicable penalties include fines of $200,000 and/or 10 years in prison per occurrence.

Therapeutic needs and economic conundrum

Continuum of care is the most common basis for third party sponsored healthcare plans².

It is noteworthy to know that the ASAM scale, which is the reference used for levels of care, barely covers early interventions and does not cover aftercare at all.

Quality treatment requires clients to be provided with appropriate levels of care that will evolve with their needs as they progress in their recovery.

Providing continuum of care requires substantial operational, financial, and HR resources. Therefore, it is rare that one provider will be able to provide all of the necessary levels of care to their actual and potential clients.

Cooperation and referrals, an industry practice used to provide adequate levels of care to clients

Most of the time, inter-provider cooperation will be needed when (1) a provider does not have an open slot for a client, (2) a potential client’s insurance is out of the provider’s network, or (3) a provider does not provide the required level of care.

Most providers focus on specific levels of care, sometimes in multiple locations.

The most common types of providers are (1) residential inpatient services with sub- categories matching various degrees of intensity of care, (2) outpatient services with sub-categories matching various degrees of intensity of care, and (3) “sober living” houses or aftercare centers.

To ensure continuum of care, most providers’ outreach teams informally develop networks of providers. These networks are usually local.

While this has been a great tool for almost twelve years after the ACA enactment, it must be enhanced to meet SB 349 requirements.

One word about SB 349 (California)

a. Ownership disclosures: Currently, the licensure process requires ownership disclosures. Service provider networks often call for the same information. The purpose of the disclosure is to determine if related providers do not – de facto – have kickback procedures. While these initiatives are admirable, they are hard to track and prosecute.

b. Bill interpretation: The bill requires providers and interested parties (e.g. laboratories) to interpret the law in favor of clients’ safety and rights. This interpretation should be a good governance standard

c. Clients’ bill of rights: Clients’ bill of rights is a documented policy that providers must make available to potential and actual clients. This requirement is a good governance standard that will be further reviewed in a separate blog.

d. Referral records: This is a new requirement that applies to all providers (including sober living houses). To satisfy this requirement, a referral log containing a detailed list of referrers and referred clients is mandatory. If implemented through accrediting bureaus like JC and CARF, this requirement may be very helpful in fighting dubious “marketing” practices.

e. Some specific provisions that may be of interest for calling centers For those who are using calling centers, a word of caution is warranted. Indeed Section 11857.3 (f) of SB 349 states “ It is unlawful for any person or entity to include false or misleading information about the internet address of any treatment provider’s website, or to surreptitiously direct or redirect to another website.”.

In our next blog, we will review how providers can enhance their referral procedures to stay within the confines of the law.

¹ Anti Kickback Statute [42 U.S.C. Sec. 1320a-7(b)], False Claims Act [31 US.C. Sec. 3729-3373], Eliminating Kickbacks Recovery Act [18 US.C. Sec. 220], California Health & Safety Code - Section 445, California Business & Professions Code - Section 650, California Business & Professions Code 2273(a), California Welfare and Institutions Code Section 14107.2(a), California SB 349 to name a few.

² See ASAM continuum of care scale with 10 levels of treatment ranging from medically managed intensive inpatient services (4) to outpatient services (1)