Substance Use Disorder Treatment Centers: Uncovering Fraud and Advancing Policies to Promote Best Practices

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On June 9, 2021, Arnold Ventures, researchers from the Boston University School of Public Health and Faegre Drinker hosted a virtual event to explore the issue of fraud in substance use disorder (SUD) treatment. In response to a growing incidence of SUD — including opioid use disorder — in the United States over the past several years, there are more providers offering treatment for this condition (although still not enough in some parts of country). Unfortunately, the rising number of providers has also given rise to the number of bad actors seeking to defraud patients and insurance companies out of funds for illegitimate or even risky treatment services. Speakers at the event delved into various efforts to address this issue by means of law enforcement, data analysis and advocacy.

Background on SUD Treatment Fraud

Faegre Drinker Consulting Principal and Health Care Strategy Lead Mike Adelberg opened the event by proving background on SUD treatment fraud. He noted that SUD is a chronic disease, and chronic diseases are difficult to manage — treatment is expensive, averaging $17,434 per patient, and approximately half of people who receive treatment will experience a relapse. Other factors, such as minimal regulation of SUD treatment providers and recently expanded coverage for their services under the Affordable Care Act (ACA), make this an area ripe for opportunistic fraudsters.

Adelberg explained that Congress attempted to crack down on SUD treatment fraud when it passed the SUPPORT Act in 2018, legislation that included the Eliminating Kickbacks in Recovery Act. Known as EKRA, this law prohibits much of the actions used by those committing SUD treatment fraud but has led to relatively few indictments thus far. States are also making strides to pass similar legislation, but progress has slowed.

Describing what he referred to as a perfect storm, Adelberg noted that SUD treatment fraud is likely to increase again from the combination of an increased number of individuals receiving healthcare coverage through the ACA Exchanges and a resurgence of the opioid epidemic during the COVID-19 pandemic.

The Human Cost of SUD Fraud

Austin Frakt, Ph.D., moderated a discussion with two journalists who investigated the impact SUD treatment fraud has on individuals and families. In a piece they wrote for the Philadelphia Inquirer, Aneri Pattani and Ed Mahon detailed the story of a young man in Pennsylvania who fell prey to scam SUD treatment and ultimately committed suicide after receiving inadequate care. The journalists shared how they explored the relative lack of regulation of such facilities in Pennsylvania and how even in more glaring cases, such as the one highlighted in the story, enforcement actions have been limited.

Current Enforcement Actions

To highlight current law enforcement efforts to address SUD treatment fraud, Faegre Drinker Partner Tony Pozos moderated a panel featuring Jim Hayes from the Criminal Division of the U.S. Department of Justice (DOJ) and Special Agent William Stewart from the Federal Bureau of Investigations. They shared summary outcomes of recent prosecutions, many of which have occurred in Florida, sometimes referred to as the “Relapse Riviera” given the density of treatment centers in the state. Florida’s anti-patient brokering statute (F.S.S. 817.505) has served as a model for similar laws in other states. The panelists highlighted the cooperation between federal and state law enforcement and human services agencies to successfully prosecute fraudsters and better ensure that people suffering from SUD receive the care they need.

Using Algorithms to Detect Waste and Fraud in SUD Treatment

Melissa Garrido, Ph.D., and Siva Palani, Ph.D., both researchers at the Boston University (BU) School of Public Health, presented findings from a study they led to identify indicators of SUD treatment fraud that might be used by health plans and other payers. In a project supported by Arnold Ventures and conducted in partnership with Faegre Drinker, the BU team identified several red flags that might be indicative of fraudulent activities. Examples of these indicators include frequent or unbundled billing for lab testing, a high proportion of utilization by out-of-state patients, billing the same service for multiple people and treatment patterns that do not align with a patient’s diagnosis. To try to identify patterns in these behaviors in real-world data, the BU team then analyzed multi-payer claims data from 25,000 unique providers who submitted claims for multiple patients with a substance use disorder diagnosis.

The team used this analysis to develop an algorithm that could one day be used by health insurers to weed out fraud. The algorithm generates a percentage probability of fraud based on eight specific, weighted indicators that help predict whether the treatment provider will exhibit certain behavior patterns.

In a separate portion of the study, BU and Faegre Drinker also conducted mystery shopping of health plans to see how the results reported by the shoppers compared to those generated by the algorithm. Three health plans used the algorithm to identify potentially fraudulent providers, then a mystery shopping company called those providers to get more information on their services. After two rounds of mystery shopping to more than 180 facilities, the researchers did not find a correlation between the algorithm and mystery shopping results. They did, however, find the latter to be a potentially stronger predictor of fraudulent behavior, suggesting that mystery shopping is a promising way for health plans to identify SUD treatment fraud.

The research team will continue to refine components of the algorithm and the mystery shopping techniques and, in the next phase of the project, will explore policy solutions that minimize incentives for providers to engage in predatory and unethical treatment practices.

Following the presentation, panelists representing health plans and treatment facilities shared their reactions with Kiersten Strombotne, Ph.D. from the BU School of Public Health. Aneta Andros and Thomas Hixson from Cigna, who both have roles to help Cigna’s regional plans identify and address fraud, noted that plans devote significant resources to such activities. Although plans can use data to flag suspicious behaviors, definitively confirming fraud requires manual investigations, which can be time consuming. Brad Sorte of Caron Treatment Centers noted that a focus on finance rather than patient care — such as inquiring about the patient’s insurance coverage before asking about specific care needs — is often an indicator of a fraudulent treatment provider. All panelists spoke of the need for better tools to quickly identify fraud and were encouraged by the research being undertaken by the BU team.

Efforts to Weed Out Fraudulent SUD Treatment Providers

In the final panel of the event, Mike Adelberg was joined by representatives from trade associations and advocacy organizations to speak about broader efforts to address SUD and fraudulent treatment services. The panel included Jen Velez of Shatterproof (a nonprofit dedicated to ending the addiction crisis in the U.S.), Peter Thomas of the National Association of Addiction Treatment Providers (NAATP) and Caroline Lannon of the National Association of Attorneys General (NAAG).

The panelists spoke of the need to make good quality treatment services readily available to those suffering from SUD. Shatterproof has an online tool to provide quality information on treatment centers in six states and plans to expand to four additional states in the coming months. NAATP has removed members who were not complying with its standards for ethical treatment and has developed resources for members including a code of ethics, quality assurance guidebook and an outcome measures toolkit.

Caroline Lannon of NAAG spoke of her organization’s past and future efforts to increase the resources for states in order to better oversee treatment centers and prosecute unethical providers. She also discussed NAAG’s broader educational programs.

All of the panelists also spoke of the need to address the stigma of SUD and to treat it as a medical issue. As one panelist noted, people are less likely to encounter fraudulent treatment services if they shift away from Google when seeking treatment and instead felt that they could approach a doctor. The COVID-19 pandemic, which has exacerbated the opioid crisis, has also provided important innovations in SUD treatment, especially telehealth services. Panelists urged regulators and providers to continue to facilitate such services even when the pandemic is over to better reach more people suffering from SUD.

Complementary Initiatives Supported by Arnold Ventures

To close out the event, Chris Hensman of Arnold Ventures spoke about complementary projects his organization is supporting to address the opioid epidemic and related substance abuse challenges. Arnold Ventures is currently funding multiple grants in this area and has a particular focus on ensuring equitable access to evidence-based SUD treatment, quality and accountability in treatment and access to treatment tools. Arnold Ventures has invested heavily in this research over the past several years and is currently partnered with research institutions across the country working to tackle the substance abuse epidemic in the U.S.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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