Author Archives: Jeffrey Lynne

About Jeffrey Lynne

Jeffrey C. Lynne is a South Florida native, representing individuals and business entities relating to licensing, accreditation, regulatory compliance, business structure, marketing, real estate, zoning and litigation pertaining to substance abuse treatment facilities and sober living residences. Mr. Lynne has been recognized across the region as a leader in progressive public dialogue about the role that substance abuse treatment has within our communities and the fundamental need and right to provide safe and affordable housing for those who are both in treatment for addiction and alcoholism as well as those who are established in their recovery.

The Feds Get Creative Prosecuting Kickbacks

In various health care law blogs and posts, lawyers across the country have been writing about the “Eliminating Kickbacks in Recovery Act” (EKRA) which was adopted as part of the SUPPORT Act of 2018 (the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act”). Most if not all of the writings, opinions, and lectures lawyers have been giving are understandably all based upon conjecture, since the federal government has not (to anyone’s knowledge) brought a prosecution yet pursuant to that law.

As a general premise, and much like Florida’s Patient Brokering Act, EKRA prohibits kickbacks between providers of services or between third parties and service providers. The reason for the importance of this law is: (1) many states, aside from Florida, did not have a state-level “anti-patient brokering” law to address the fraud and corruption epidemic amongst various treatment providers and their marketing arms; (2) existing federal law addressed only federally-funded plans such as Medicare, Medicaid and TriCare.  EKRA was viewed as bridging that gap to capture similar criminal behavior amongst persons who obtain reimbursement from private insurance.

Most of the concern expressed is that the law, as drafted, is not (in their opinion) not as clearly articulated as the federal Anti-Kickback Statute (AKS) which has Safe Harbors and other regulatory interpretations which have guided health care lawyers since adoption.  Their concern is in their inability to counsel clients as to what behaviors are allowed under EKRA and which would violate that law.

While Congress may have had its own intent, it comes down to the Justice Department to enforce the law, and health care lawyers have been sounding the alarm that governmental overreach in prosecuting what is not otherwise a kickback but “looks” like a kickback is certain to happen, if for no other reason, but due to the constant negative publicity that addiction treatment providers regularly receive in the press.

In contrast, what does not occur in the press with much frequency is the daily arrest, indictment, conviction and plea deals struck with MEDICAL health care providers who violate the AKS (or its similar counterparts, the Stark Law and the False Claims Act).

However, a “tip of the cap” is to be given to the Dallas Morning News and reporter Kevin Krause, who revealed the federal government’s novel attempt to address kickbacks in health care – the federal Travel Act.

In his story published on 4/14/19 entitled “Here’s why doctors should worry about the feds’ novel approach to prosecuting health care kickback cases,” he write the following (with our editorialization in BOLD within):


Texas doctors who cut business deals with hospitals thought they were in the clear, as long as they avoided Medicare patients and those covered by other federal health insurance programs.

That way, they couldn’t run the risk of violating the federal anti-kickback law. That’s the way it’s always been.

Not anymore.

Using a 60-year-old law, federal prosecutors have found a way to target health care kickback schemes that involve private insurance. The guilty verdicts against surgeons and others in the Forest Park Medical Center case are sending shock waves throughout the U.S. medical community and could upend many doctor-hospital relationships. The trial also revealed just how important doctors are to the financial survival of hospitals, and how far hospitals will go to attract them.

Some attorneys are crying foul, saying the government has moved the goalposts by using the Travel Act, which was passed to crack down on organized crime. Many attorneys are scrambling to advise their clients accordingly. A lot of money is at stake. Marketing agreements, in particular, are suddenly in the hot seat. But consulting agreements, medical directorships and office leasing arrangements are all in the mix, too.

“I think there is a lot of worry,” said Carolyn McNiven, a San Francisco health care lawyer who, like others, was closely watching the seven-week trial in Dallas. “I think a lot of people are walking into a buzz saw that they don’t know is coming.”

The Travel Act gives federal jurisdiction to a wide range of crimes, including bribery, if state lines are crossed using mail or electronic communications. But until recently, it’s never been used in health care fraud cases.

Federal prosecutors used it in Dallas successfully for the first time, in the Forest Park trial that wrapped up last week.

The jury found that Forest Park paid lucrative benefits to surgeons in the form of free advertising in exchange for them bringing their expensive surgeries to the hospital. Such quid pro quos are considered illegal kickbacks.

Dr. Michael Rimlawi, one of the convicted Forest Park surgeons, appeared stunned by the guilty verdict against him last week. He faces up to 15 years in prison.

“I’m in disbelief,” Rimlawi told supporters gathered around him at the federal courthouse in Dallas. “I thought we had a good system, a fair system.”

McNiven and other health care lawyers say they believe the government will view the Forest Park case as a green light to launch more prosecutions in similar cases involving private insurance provided by such companies as Aetna and United Healthcare.

“The entire health care industry is looking at Dallas,” said Nick Oberheiden, a Dallas health care lawyer. “I think this is a complete shakeup.”

James A. Fisher, who has represented whistleblowers in health care fraud cases, said the new enforcement effort is a major step forward.

“I am glad the government aggressively prosecuted that case, because this is a serious problem. If the doctor’s decision is influenced by anything other than the patient’s best interest, then that is a corrupted process,” he said. “It will bring more integrity into decision-making by physicians.”

Two of the nine Forest Park defendants on trial were found by the jury to have violated the Travel Act: Wilton “Mac” Burt, a founder and top manager of the hospital, and Dr. Shawn Henry, a Fort Worth spine surgeon who referred patients to the hospital. The Forest Park prosecution also involved some federal insurance programs like Tricare, the military’s health program.

Four of the defendants were acquitted of charges related to the Travel Act, which some lawyers say should temper the government’s enthusiasm for the law.

Tom Melsheimer represented Dr. Nick Nicholson, a bariatric surgeon, the only Forest Park defendant to be acquitted last week of all charges against him.

“The verdict can be viewed as a pretty serious rebuff of the Travel Act theory as applied to the doctors,” he said. “No doctor who participated in the marketing program was convicted of a Travel Act count.”

Two other Forest Park founders and physicians, Dr. Richard Toussaint and Dr. Wade Barker, pleaded guilty to violating the Travel Act.

Most Forest Park defense attorneys declined to comment after the verdicts. Some said they plan to appeal. The convictions are not final until affirmed by an appellate court.

Doctors and their surgeries are critical for a hospital’s bottom line, and thus getting patients in the door and on the operating table has become big business — to such an extent that prosecutors say Forest Park had to bribe doctors for surgeries when it opened and for several years afterward.

Two Forest Park doctors, for example, operated there up to 14 times a day, from early morning until night, according to trial testimony. A recent survey found that doctors legally generate an average of $2.4 million per year for their affiliated hospitals.

The survey shows that doctors “continue to drive the financial health and viability of hospitals,” said Travis Singleton, executive vice president of Merritt Hawkins, a Dallas physician search firm that conducted the survey. The results were released as the Forest Park trial got underway.

Certain medical specialties generate the most revenue. Orthopedic and cardiovascular surgeons, for example, bring in an average of over $3 million for their hospitals each year, according to the survey.

Marketing arrangements between doctors and hospitals are commonplace across Texas, according to testimony during the Forest Park trial. Under such contracts, hospitals pay to advertise the practices of doctors who bring their surgeries to the hospital. But Forest Park picked up 100 percent of the tab even though the ads barely, if ever, mentioned the hospital.

That is a benefit, prosecutors argued — a lucrative one that helped the doctors grow their practices significantly.

The Forest Park surgeons argued there were no strings attached to that money. But prosecutors convinced a jury otherwise, showing that the doctors were being paid to steer their patients to Forest Park — and hiding behind legal contracts to do so.

At least three other Dallas hospitals have paid doctors for patients using marketing agreements, according to federal prosecutors.

Two of them, Vista Hospital and Victory Hospital, have since shut down like Forest Park. The third, Pine Creek Medical Center, paid a $7.5 million fine to the government in 2017 for a scheme similar to the one at Forest Park — paying doctors for patient referrals with free advertising on billboards, radio and TV, and the internet, according to the U.S. attorney.

The Pine Creek case came to light in a whistleblower lawsuit filed by two of the hospital’s former marketers. That scheme, however, involved Medicare and Tricare beneficiaries and did not employ the Travel Act and Texas’ commercial bribery law.

Pine Creek’s new chief executive, Dan Gideon, said his hospital has some new owners and is meeting the terms of its five-year corporate integrity agreement with the government. He said no additional concerns have been raised.

At Forest Park, surgeries meant big bucks.

When the hospital opened in 2009, there was already a healthy competition for patients. Forest Park had another challenge: It wasn’t in any insurance networks and it didn’t accept Medicare patients.

Forest Park’s top administrator, Alan Beauchamp, didn’t mince words about the urgency of patient referrals.

“We need more bodies on the table,” he told Israel Ortiz, a clinic owner and co-defendant who admitted to selling patients to Forest Park.

The question then for hospitals, especially new ones, is how to legally attract patients without offering improper financial incentives.

Jacob T. Elberg, an associate professor at Seton Hall University School of Law in New Jersey, understands those business pressures.

When he was a federal prosecutor, he led a massive kickback prosecution in New Jersey that ultimately resulted in the convictions of over 50 defendants, including 38 doctors. The case, which wrapped up last year, involved a lab called Biodiagnostic Laboratory Services, which paid kickbacks to doctors for patient referrals.

Elberg’s case is believed to be the first time a federal jury convicted someone of violating the Travel Act in a health care fraud case.

The Travel Act was passed in 1961 to crack down on organized crime. The law makes it illegal to use the mail or other forms of interstate commerce to commit any “unlawful activity,” such as bribery. The federal law essentially piggybacks on state commercial bribery laws like the one in Texas, which apply to health care schemes involving private health insurance.

The government doesn’t even have to show patient harm in such cases.

Elberg, who was chief of the District of New Jersey’s health care and government fraud unit, said many states don’t have the resources or the expertise to take on large-scale prosecutions for health care bribes and kickbacks.

Texas has never enforced its commercial bribery law, according to testimony in the Forest Park trial.

“This is an area where there hasn’t been as much enforcement as there should be,” Elberg said.

Certain health care providers have taken advantage of that for years, he said. But Elberg said his case had a major deterrent effect.

“We were aware of misconduct that was ongoing that stopped as a result of this,” he said.

Oberheiden, the Dallas lawyer, said having a marketing contract that on its face complies with the law will no longer suffice for doctors.

“If the motives behind it are not legitimate, then the contract is not worth the paper it’s written on,” he said.

Lawyers, Oberheiden said, will need to be careful about authorizing such contracts and then closing their eyes to what they will be used for. And clients need to understand that “if undisclosed motives don’t match the language of the contract, then it’s useless.”

Jeff Ansley, a Dallas health care lawyer, called the Forest Park case and its use of the Travel Act a creative yet “very aggressive prosecution.”

He said the case will add confusion to the question of which doctor business practices are appropriate. The Justice Department should provide more legal guidance on the matter, Ansley said, particularly since doctors aren’t trained in the business of medicine.

“There is a lot of gray out there,” he said of doctor marketing arrangements. “It’s increasingly unclear where the lines are.”

In the Forest Park case, well-educated and respected practitioners had their business agreements vetted by lawyers and still got convicted, Ansley said. They included surgeons who pioneered techniques that cut down on infection and speed up recovery.

“You wouldn’t think they went to medical school to commit fraud, and here they are,” Ansley said.

McNiven, the San Francisco lawyer, echoed those concerns, saying those in the health care industry rely on “predictability” in enforcement.

“The application of the Travel Act really upended what people thought were the acceptable rules of the road,” she said. “I do feel like this is hiding the ball.”

Most lawyers are familiar with the federal Stark and anti-kickback laws, but they aren’t thinking about state commercial bribery laws like the one Texas has on the books, she said.

Jason Ross, an attorney for Burt, said the government’s prosecution should concern “individuals and companies in the health care industry.” He said it “marks an expansion of federal law enforcement” by “alleging fraud against private insurers by way of the Travel Act’s ability to federalize state laws.”

“The specter of more aggressive federal criminal enforcement of this type could certainly shift the balance of power in favor insurance companies, to the detriment of health care providers,” Ross said.

Ansley and McNiven said the ultimate impact of the Forest Park case might be to discourage many doctors from engaging in any sort of business relationships.

And that would be bad for doctors and patients, they said.

EDITORS NOTE: We have been reading stories like this for years, and the common answer has always been, “how are we to conduct business if the standard commercial business rules don’t apply?” The answer is very simple – do not engage in any form of quid pro quo, any form of incentive or benefit, or anything that would steer clients as a result of a pecuniary gain, rather than what is in the best interests of the patient. While many providers across all health care paradigms complain that the intent of the laws passed are being abused by law enforcement and causing unreasonable and unpredictable disruption in the health care economy, the issue continues to emphasize the serious conflict between free market enterprise and the public policy regarding healthcare. This issue is clearly going to be a constant theme in the 2020 Presidential election and for many years to come.

The re-posting of this story is for informational purposes only. We are neither endorsing or commenting on any statement made by any lawyer or person in the article. Language inbold letters is for illustration and emphasis purposes only.

SAMHSA Grants for State Targeted Responses (STR) to the Opioid Crisis Appear to be Working

Every so often, we are very happy to report what is otherwise good news.

On March 28, 2019, the US Department of Health and Human Services, Office of Inspector General (OIG) completed Audit A-03-17-03302 of the Substance Abuse and Mental Health Services Administration (SAMHSA) management of the awarded State Targeted Response to the Opioid Crisis (Opioid STR) granted to States and territories to use for programs that address opioid addiction. The 21st Century Cures Act allowed SAMHSA to award $1 billion in funding, half in Federal fiscal year (FY) 2017 and the other half in FY 2018 based on a formula developed by agencies and offices within the Department of Health and Human Services (HHS).

OIG’s stated objective was to determine whether SAMHSA followed HHS grant regulations and program specific requirements when awarding Opioid STR grants authorized under the 21st Century Cures Act.

OIG’s audit covered SAMHSA’s Opioid STR grant award process for FY 2017 (October 1, 2016, through September 30, 2017). During FY 2017, SAMHSA awarded 57 Opioid STR grants totaling $484.5 million. They reviewed documentation provided by SAMHSA pertaining to the grant award process and also evaluated whether SAMHSA’s funding formula was based on the 21st Century Cures Act, reviewed the funding formula elements, and obtained SAMHSA’s explanation for why the elements were chosen.  The OIG also reviewed the formula calculation methodology that SAMHSA used to determine the funding amounts for each of the 57 grants.

The results of that audit were very positive – the OIG found that SAMHSA followed HHS grant regulations and program-specific requirements when awarding Opioid STR grants authorized under the 21st Century Cures Act. Specifically, SAMHSA performed an adequate review of all 57 grant applications and adequately followed up with applicants to address their concerns. As part of the pre-award process, SAMHSA created teams of expert staff members to review the applications and evaluate the information.

OIG also determined that SAMHSA’s funding formula elements (unmet need for opioid use disorder and drug poisoning deaths) were based on the 21st Century Cures Act. According to SAMHSA, these funding elements provided the most comparable and uniform data on a national scale to assess the prevalence of the opioid crisis.

Lastly, the OIG found that the 2018 State Opioid Response grant legislation provides an additional 15-percent set-aside for the 10 States with the highest mortality rates related to drug poisoning deaths.

It’s always good to learn that when such significant federal funds are set aside for a specific purpose, particularly a response to the national opioid epidemic, that those funds appear to be spent as and where they are supposed to be.

A summary of the report can be found here.

The full report can be found here.

Google Quietly Explores Addiction Treatment in Ohio

The Dayton Daily News reported on March 2, 2019, that a “health care start-up with ties to Google is working to open the new opioid rehab campus that officials hope will become a national model for combating the deadly drug overdose and addiction crisis.”

According to the article, “The state-of-the-art ‘recovery campus’ will treat about 1,000 people in the first year. Clients can refer themselves or come from referrals made by health care providers, family members or drug courts.”

The program is being called “OneFifteen” and is a joint venture between Verily, Kettering Health Network and Premier Health.  OneFifteen will operate the facilities, in partnership with Samaritan Behavioral Health, which will provide clinical care across the entire campus. Premier Health and Kettering Health are partners on the project and will provide leadership and financial and other support.

OneFifteen was developed in partnership with Verily, which is a sister organization of Google, and under the Alphabet umbrella. Verily says its focus is to use technology to better understand health and prevent and manage disease.

What We Are Reading This Week

Hello all!  We haven’t written in a while because there seems to be “news” updates that come out almost daily.  Please “Like” and follow our Facebook page if you would like to see the latest news stories that we post.

Here is what we have been reading that is of great interest:

  1. Mom, When They Look at Me, They See Dollar Signs” by Julie Lurie.  After a 9-month investigation, Ms. Lurie wrote this article that not only addresses the epidemic of patient brokering that itself is sweeping the nation, but also does an excellent job discussing current trends and historical perspectives to better understand “how we got here.”  A “must read” in our opinion.
  2. United loses in court on behavioral health coverage rules” by Modern Healthcare reporter Harris Myer, and “Mental Health Treatment Denied to Customers by Giant Insurer’s Policies, Judge Rules” by NY Times reporter Reed Abelson. As reported in the NYT, the federal judge in the consolidated cases of Wit v. United Behavioral Health and Alexander v. United Behavioral Health, ruled that a unit of UnitedHealth Group, the giant health insurer, had created internal policies aimed at effectively discriminating against patients with mental health and substance abuse disorders to save money. The cases are both class-action lawsuits filed in 2014 against UnitedHealth and involved United members, including children, being denied coverage by self-insured and fully insured employer health plans for residential and outpatient treatment from 2011 to 2017. The plaintiffs claimed United adopted an unreasonable interpretation of plan rules which required coverage for treatment that was consistent with generally accepted standards of care.  However, the article rightfully points out what most of us already know – different insurers use widely different criteria for covering behavioral care, even though medical experts have sought to standardize those guidelines. Many states require providers and carriers to use criteria developed by the American Society of Addiction Medicine, or ASAM, for addiction-treatment coverage. Those are the criteria the plaintiffs want United to adopt. In his decision, Judge Spero found that United had a structural conflict of interest in applying its own restrictive coverage rules because it felt pressure to keep benefit expenses down so it could offer competitive rates to employers. “UBH’s refusal to adopt the ASAM criteria was not based on any clinical justification,” Spero wrote. “Indeed, all of its clinicians recommended that the ASAM criteria be adopted. The only reason UBH declined to adopt the ASAM criteria was that its finance department wouldn’t sign off on the change.” D. Brian Hufford of Zuckerman Spaeder, the co-lead attorney for the plan members, called the ruling “a monumental win for mental health patients, who face widespread discrimination in attempting to get the coverage they were promised and that the law requires.”
  3. Buprenorphine Coverage in the Medicare Part D Program for 2007 to 2018” is the title of a recent research paper published in the Journal of the American Medical Association (JAMA), authored by Daniel M. Hartung, PharmD, MPH; Kirbee Johnston, MPH; Jonah Geddes, MPH; Gillian Leichtling; Kelsey C. Priest, MPH; and P. Todd Korthuis, MD, MPH. Their research concluded that, eliminating Medicare Part D coverage restrictions on the medication buprenorphine would immediately improve patients’ access to opioid use disorder treatment. About 300,000, or 12 percent, of Americans diagnosed with opioid use disorder in 2013 were Medicare beneficiaries. Buprenorphine, which may cause less dependence and fewer withdrawal symptoms than other opioids, is often used to treat the disorder. The research, funded by the Agency for Healthcare Research and Quality (AHRQ) which is part of HHS, analyzed drug formularies and found that Part D coverage for buprenorphine was relatively high. In 2018, generic buprenorphine tablets were covered by all plans. And about three-fourths of plans covered brand-name and generic versions of buprenorphine-naloxone, which is another opioid medication. Access to both brand-name and generic formulations was often delayed, however, by prior authorization requirements.
  4. Alexion agrees to pay $13 million for illegally using charities to pay kickbacks to Medicare patients” by Ed Silverman and published in STAT is the ongoing story of entities trying to create charitable non-profits to cover their patients/consumers out of pocket expenses. Alexion disclosed that it agreed last December to pay $13 million to resolve civil claims concerning payments made to Patient Services and the National Organization of Rare Disorders, which provide financial assistance to Medicare patients taking its medicines. This concern is nothing new to the HHS OIG and we wrote about this back in December 2016 in the post “Donation to Charity in Exchange for Patient Referrals Violates Federal Law.”
  5. Insurer skips doctors and sends massive checks to patients, prompting million-dollar lawsuit” by Wayne Drash for CNN (finally) brings attention to the horrendous practice of insurance providers (namely Anthem and its BCBS federal policies) directly paying patients rather than treatment providers for services rendered. “Those allegations are part of a lawsuit winding its way through federal court that accuses Anthem and its Blue Cross entities of paying patients directly in an effort to put pressure on health care providers to join their network and to accept lower payments. The insurance giant is accused of sending more than $1.3 million in payments to patients — money, the suit claims, that is owed to the facilities that treated people with addiction and mental health problems.” Critics say it’s a revenge tactic against doctors, hospitals, treatment facilities and other medical providers that don’t agree to insurance companies’ demands to be “in-network,” by making them chase down money. At the same time, trying to become an in-network provider is often a monumental task and regularly rejected by insurance companies. The insurance industry disputes any such characterization.  But the known reality is that, instead of paying the facilities, Anthem sends checks directly to patients, some while they were still in rehab. It’s a strategy that put the providers in the tricky and tenuous position of trying to collect money — in some cases, very large sums — from the very people they were trying to help. Health care providers, medical professionals and attorneys familiar with this insurance practice told CNN that, while many patients send the money on to the providers, others realize they’re onto a bonanza, pocketing the money and ducking and dodging every time a doctor or medical office reaches out.
  6. NAATP Releases Version 2.5 of its Code of Ethics, Prohibiting Provider Operated Directories. According to Marvin Ventrell, Executive Director of NAATP: “All NAATP members, as a condition of their NAATP membership, must act in compliance with the NAATP Code of Ethics. Noncompliance can result in removal from membership. Our goal with the new Ethics Code, as with previous versions, is not to exclude providers but rather to create a professional membership environment in which all providers agree to common, values-based, professional, and ethical conduct. By doing so, we demonstrate to the public, payers, and policymakers that NAATP is committed to helping families find reliable, responsible, and fully transparent care.” Amongst the changes to the Ethics Code is provision IV, B, 6, which provides as follows: “NAATP Members may not own, operate, or otherwise control directory type websites.” NAATP believes that it is a fundamental conflict of interest for a treatment provider to operate a directory purporting to unbiasedly direct consumers to care providers. “Unlike a Yellow Pages or Yelp-type service, which is truly independent from the providers to which consumers are directed, a provider-operated directory is indisputably and integrally connected to the provider itself.” Additional changes to the code include: (i) Clarifying the branding requirements for advertising, including television ads that do not identify the specific provider that is paying for or promoting the ad; (ii) Prohibiting advertising that refers to a competitor name while promoting one’s own program; and (iii) Prohibiting the display of services that are not actually offered by the provider.  This Code of Ethics follows in large part the changes to addiction treatment marketing space adopted by the Florida Legislature.

U.S. attorney sues to stop supervised injection sites in Philadelphia

The Associated Press (AP) has reported that the U.S. Attorney in Philadelphia, William McSwain, has filed a federal suit to stop a local non-profit from opening a supervised drug injection site.

The lawsuit seeks a declaration from the federal courts “to declare illegal the Defendants’ proposed establishment and operation of a place for the unlawful use of controlled substances.”

The case, United States of America v. Safehouse, a Pennsylvania nonprofit, and Jeanette Bowles, as Executive Director, Case No. 2:19-cv-00519-GAM, filed in the Eastern District of Pennsylvania,

According to Mr. McSwain, “Normalizing the use of deadly drugs like heroin and fentanyl is not the answer to solving the epidemic…. For purposes of this action, it does not matter that Safehouse claims good intentions in fighting the opioid epidemic. What matters is that Congress has already determined that Safehouse’s conduct is prohibited by federal law, without any relevant exception.”

Philadelphia has the highest opioid death rate of any large U.S. city, with more than 1,000 deaths per year. In response, Mayor Jim Kenney and others have come to support a nonprofit group’s plan to open a safe injection site.

Philadelphia District Attorney Larry Krasner, who’s visited a safe injection program in Vancouver, said McSwain is relying on the failed drug policies of the past. He said workers at the site don’t administer drugs, but instead nudge users if they fall asleep or have trouble breathing and, as a last resort, administer Naloxone.

Former Pennsylvania Gov. Ed Rendell, a fellow Democrat, serves on the board of Safehouse, the nonprofit working to raise $1.8 million to open an injection site this spring. He’s willing to be arrested over the issue, given the overdose death of a 30-year-old family friend.

Rendell also sanctioned the city’s first needle exchange program as Philadelphia mayor in the 1990s. It’s been in place for 26 years without any interference from federal prosecutors, until now.

Editor’s Note: A clear distinction MUST be made and understood between a needle exchange program and a “safe injection site,” the latter of which is what is at issue in Philadelphia.

Either way, and aside from the clear public health concern to avoid the spread of HIV and Hepatitis C from sharing of needles, there have been recent studies confirming that needle exchange sites show positive progress towards making contact with heroin users and providing them with on-site initiation of Medication Assisted Treatment (MAT), wound care, and referrals to primary care, social services, and housing opportunities that they otherwise would not be aware of.  Original research just published in the November/December 2018 Journal of Addiction Medicine found that 77.5% of participants at needle exchange/injection sites reported interest in getting help to reduce or stop substance use. That study concluded: “Findings point to [syringe exchange programs] as an important venue for treatment engagement, and suggest subgroups who may be targeted for engagement interventions.”

The State of Florida in 2016 amended Florida Statute s. 381.0038 to approve a pilot program through the University of Miami for a needle exchange site, but NOT a safe injection site, which has apparently been so promising that the Palm Beach County Sober Homes Task Force has come out in support of an expansion of the program in 2019 under bills filed by Florida House Reps Jones and Plasencia (HB 171) and in the Florida Senate by Senator Braynon (SB 336) under what is being termed the “Infectious Disease Elimination Act (IDEA)” which seeks to allow other eligible entities aside from the University of Miami to establish such programs. The pilot program under the former law would expire/sunset on July 1, 2021.

HB 171


Feds Reconsidering Stark and Anti-Kickback Safe Harbors

The concepts of the federal Stark Law and its companion Anti-Kickback Statute (AKS) are often used interchangeably by health care industry providers, though both laws are different in applicability.

A chart detailing the differences has been prepared by HHS and can be found here:
Health & Human Services (HHS) and its Office of Inspector General (OIG) HHS has been taking comments from industry as to ways to “update” the rules implementing the Stark Law and the AKS to meet modern evolutions in physician/employee compensation and other financial arrangements which industry believes are outdated and stifle innovation.

According to recent reporting by

“Hospitals have urged HHS’ Office of Inspector General to recognize that payments between providers in the same alternative pay models do not violate federal anti-kickback laws, warning they may not participate in the programs otherwise. Alternative pay models can violate anti-kickback laws because they can include incentives and shared savings payment agreements to reduce the cost of care, which could influence a provider to use a certain vendor, refer patients to specific facilities or order more services that are paid for by federal healthcare programs. But providers told the OIG that the laws are too broad and they’re getting in the way of the move to value-based care. Some providers called on the agency to create a so-called safe harbor for payments made between hospitals, physician groups and skilled-nursing facilities in value-based arrangements to allow them to split shared savings payments.”

Relevant to the addiction treatment industry was commentary about forms of “payments” to patients.

“Providers also want to protect payments to patients to address their social determinants of health. These payments may violate anti-kickback statute because a beneficiary could feel obligated to continue receiving care from that provider.  But patients are more likely to lose weight if they have a financial incentive, according to American College of Cardiology President Dr. Michael Valentine. If physicians can pay for food, clothing or even transportation to and from healthcare visits, that could improve patient health. Valentine called for an expanded safe harbor that would allow physicians to pay patients to improve their social determinants of health.  Karen Ali, general counsel at the New Jersey Hospital Association, agreed that OIG should not penalize hospitals for these payments, as they could reduce unnecessary readmissions. ‘Hospital responsibility for patient care no longer begins and ends at the hospital door,’ Ali said. The comments are in response to a Request for Information issued by HHS’ OIG this past summer. The agency asked providers how it could encourage value-based pay arrangements. It received more than 350 responses. The CMS is also looking to soften anti-kickback regulations. It issued its own RFI to determine how it can minimize the regulatory barriers around the so-called Stark law.”

At the local (Florida) level, and now at the federal level with the adoption of the new “Eliminating Kickbacks in Recovery Act” (EKRA), the importance of updates to the AKS is relevant for two main reasons:

  1. Florida’s Patient Brokering Act (PBA), s. 817.505, Fla. Stat., holds out as “defenses” anything that is deemed a “safe harbor” within the federal AKS (meaning, if HHS/OIG says a certain action does not violate the AKS, then Florida law says it also does not violate the PBA); and
  2. EKRA, which passed at part of the SUPPORT Act of 2018, does specifically include certain “safe harbors” but also explicitly contemplates that DOJ and HHS will adopt rules to further clarify those exceptions.

As proposed rules relaxing the AKS are rolled out, we will certainly keep everyone updated.  However, we continue to strongly believe (if not know) that any such benefit given to a patient with the intent to induce patronage will continue to be disfavored as being against public policy.

Modernizing Addiction Medicine Requires Medical Professionals

I wrote back in October 2016 (“Primary Care Doctors Staying Out of Addiction Treatment”) about how primary care doctors have shied away from taking their place on the front lines of preventing addiction and helping patients who find themselves in its grasp, and have posted more recently on the science being pumped out by the government and academia that addiction is a brain disorder and should be medically treated as such.

However, there remains a core old school dispute over the “right” way to address the current opioid epidemic and SUD overall, as was recently addressed in a December 29, 2018 NY Times article, “In Rehab, Two Warring Factions: Abstinence vs. Medication” We seem to currently remain be at a stalemate of sorts.

While there can be no doubt of the efficacy of AA and other Fellowships in recovery from SUD, the outcome-based measurements from abstinence stem back to mostly alcoholism studies; success with heroin (dating back to the 1970’s) remains “hit or miss.”  This is likely due, in part, to the “hijacking of the brain” that opioids has over its victims, contrasted with the psychological and biological impacts of other substances.

My response to this highly-charged discussion has always come down to a simple truth: we are still not in a position to medicalize addiction treatment without a sufficient medically-trained workforce.

And why don’t we?

It is because our society has shunned and stigmatized people with mental health issues and certainly ostracized (and jailed) people with SUD.  People seeking professions in psychiatry themselves were relegated to “second class status” in medical school, and that small population stayed away from “addiction medicine” overall.

Even the scant few who were inclined to become involved in addiction medicine found that the science was woefully lacking (due to no federal funding or private grants for such science and research) and the reality that brain science requires higher levels of brain scanning technology (fMRI, etc.) to understand how the brain and addiction impact one another.

Simply stated, there was no money, science, nor glory, in addiction medicine, and therefore a large population of medical professionals have stayed away.

However, in response to this workforce shortage, on December 27, 2018, the National Health Service Corps (NHSC) under the umbrella of HHS, launched the “Substance Use Disorder Workforce Loan Repayment Program” to provide eligible health care clinicians with student loan repayment assistance in exchange for their service on the front lines of the opioid crisis in underserved communities. As a result, it is anticipated that more patients who need help with substance use treatment will  have access to highly qualified clinicians.  Clinicians accepted to the program may receive up to $75,000 for three years of full-time service at a health care facility that has been designated by HRSA as an NHSC-approved substance use disorder site.  A part-time service option, with a maximum award of $37,500, is also available.

In the interim, even extremely populated states like Texas are finding that they are facing a shortage of SUD providers due to a shortage of professionals (which is also due, in part, the insurance carriers’ gamesmanship in reimbursement and violations of the Parity Act).

While this loan forgiveness program may not jumpstart the immediacy of need for a robust SUD workforce that is so desperately needed, it absolutely is a start in the right direction.

Lawsuits Continue Against Insurance Companies for Refusing to Pay for Mental Health Care

Happy Thanksgiving to all of our readers.

Before the holiday break, I wanted to quickly give everyone a brief update on some interesting recently filed federal lawsuits against insurance providers relating to behavioral health.  We all have a lot to be thankful and grateful for as it relates to the plaintiffs and their lawyers who are fighting the “David v. Goliath” battle against many health insurance companies who continue to deny reimbursements for critical mental health care including behavioral health and Substance Use Disorders.

  1. Utah

In the pending case of K.H.B. v. UnitedHealthcare Insurance Co.,  in the U.S. District Court for the District of Utah, UnitedHealthcare is seeking to convince a Utah federal judge to reject most of a proposed class action brought by plaintiffs accusing it of improperly denying health insurance claims for wilderness therapy, a form of therapy said to be able to treat young people with substance abuse and mental health issues.  UnitedHealthcare moved to dismiss three out of four claims in an Employee Retirement Income Security Act suit that claims the company should have paid for the trip to a wilderness program attended by the plaintiff identified only as K.H.B.

Plaintiff K.H.B. alleged UnitedHealthcare is illegally disregarding the 2008 “Mental Health Parity and Addiction Equity Act”, a law that requires health care plans to provide about the same coverage for mental health and substance abuse claims that they provide for medical and surgical claims.  United responded that the pleadings “fell short on the claim for an alleged violation of that statute.”

According to K.H.B.’s amended complaint in August, he suffers from a wide range of mental illnesses, and sought help at a wilderness program after trying to commit suicide for the second time.

While he was insured by a UnitedHealthcare ERISA-governed health plan that covered mental health services, coverage for outdoor and wilderness behavioral programs are denied by UnitedHealthcare, even when the programs are required to treat mental issues, the amended complaint had alleged. He has said that he personally had to pay up almost $38,000 for his time spent at the program. And while K.H.B. has argued that outdoor and wilderness behavioral programs offer a cost-effective method for treating young people with mental health issues, UnitedHealthcare said that there hasn’t been a consensus reached in the scientific community as to whether such programs are effective.
[NOTE: Any waiver or reduction in the published costs of services could rise to an allegation of a state’s Patient Brokering laws, or potentially the new federal “Eliminating Kickbacks in Recovery Act” (EKRA) which makes any form of kickback within the addiction treatment space a federal crime.]

  1. Massachusetts

Also recently filed is the case of Steve C., et al., v. Blue Cross Blue Shield of Massachusetts Inc., in the U.S. District Court for the District of Massachusetts.  The suit’s plaintiffs are identified by the aliases Steve C. and Kelly W., along with daughter Jane Doe. The suit alleges that claims for Jane’s treatment for depression, anxiety and obsessive-compulsive disorder at a Utah inpatient facility were denied by the insurer despite being medically necessary.

The policies provided by Blue Cross of Massachusetts include coverage for inpatient intermediate residential treatment of mental health and substance use disorders, but the insurer improperly denied claims for such treatment, the suit alleges.  “However, BCBSMA interprets the language of the class policies in a way that improperly limits that coverage to only what it characterizes as ‘acute residential treatment’ to the exclusion of sub-acute residential treatment that is medically necessary,” the suit alleges.

After Jane was admitted to the inpatient facility on Feb. 26, 2016, Steve and Kelly submitted claims to their insurer, Blue Cross of Massachusetts. The insurer agreed to pay for the first 16 days of Jane’s treatment, but it said any treatment provided after March 14, 2016, would not be covered because it was not medically necessary, the complaint said.

After Steve and Kelly appealed Blue Cross’ decision, the company responded in October 2016 that it had made a mistake and would not be covering any of the treatment costs, citing the insurance plan provisions that it said excluded any intermediate inpatient treatment, even when it is medically necessary, the suit claims.

Steve and Kelly initiated a second appeal in March 2017, quoting the language of the insurance policy indicating that intermediate treatment was covered for mental health and substance abuse treatment, and that Blue Cross’ application of the “acute” limitations violated the policy and the Parity Act.

Blue Cross never responded to the second appeal, the complaint alleges, and never paid for any part of Jane’s treatment at the Utah facility. Jane received inpatient treatment for more than 10 months, and the suit said she experienced great progress and has become more functional.

Jane’s parents paid in excess of $185,000 for treatment that the suit claims should have been covered by Blue Cross because it was medically necessary.

The suit seeks restitution for the out-of-pocket expenses incurred by the proposed class members and an injunction preventing Blue Cross of Massachusetts from continued violation of its own insurance policies and of the Mental Health Parity and Addiction Equity Act, and a reprocessing of the class’ residential treatment claims.

  1. California

And then there is the case of Smith et al. v. United Healthcare Insurance Co. et al., in the U.S. District Court for the Northern District of California. In this case, a proposed class of employees who received psychotherapy through their employers’ health care plans sued United Healthcare Insurance Co. and United Behavioral Health in California federal court, accusing them of flouting the Employee Retirement Income Security Act (“ERISA”) by imposing unfair reimbursement limits on psychotherapy services.  The lawsuit targets a policy allowing United to pay therapists less when they have their master’s degrees and even lesser when they are certified psychologists. When United pays less to these therapists, customers foot larger portions of the bill, the workers state.

“Through these penalties, United is devaluing psychotherapy and is ultimately limiting access to an essential health benefit that plays a critical role in addressing pervasive public health issues, such as mental health and substance abuse disorders,” said the lead plaintiff’s counsel.

The lawsuit seeks to enjoin United from imposing its reimbursement reduction policy, which allows the insurer to pay 25 percent less to psychologists and 35 percent less to master’s-level therapists.

The suit also looks to require United to pay for or reprocess all claims that it denied under that policy.

Why Isn’t Housing Deemed “Medically Necessary” in SUD Treatment?

I shock friends and colleagues from time to time by telling them that, “Did you hear…. from now on, insurance is no longer going to cover the cost of a hospital stay associated with any medical procedure, and that the costs of room and board while in post-surgical recovery all must come out of pocket.”

The look of incredulity and anger on their faces is priceless.

I entertain the discussion for a while and let it play out, enjoying listening to all of the justifications why that is abhorrent public policy (and equally bad health care).

Only afterwards, I take the time to tell them that, while I was joking, that it really isn’t a joke when it comes to mental health, behavioral health, and addiction treatment; that after detoxification (and for the lucky few, inpatient residential treatment), that the vast majority of people entering the drug and alcohol treatment space will be forcibly placed by their insurance carriers into an outpatient program but will not cover the necessary costs of a properly trained and supervised recovery residence.

At this point in my experience in this space, I am no longer surprised when they start to try to make a distinction.

However, in a news report that was admittedly surprising to me, HHS Secretary Alex Azar said in prepared remarks (as reported by that Medicaid may soon allow hospitals and health systems to directly pay for housing, healthy food or other solutions for the “whole person.”


“What if we gave organizations more flexibility so they could pay a beneficiary’s rent if they were in unstable housing, or make sure that a diabetic had access to, and could afford, nutritious food,” Azar said in a speech supported by the Hatch Foundation for Civility and Solutions and Intermountain Healthcare.

Azar said the Center for Medicare and Medicaid Innovation is looking “to move beyond existing efforts to partner with social services groups and try to manage social determinants of health as they see appropriate…. If that sounds like an exciting idea … I want you to stay tuned to what CMMI is up to.”

“We believe we could spend less money on healthcare—and, most important, help Americans live healthier lives—if we did a better job of aligning federal health investments with our investments in non-healthcare needs,” he said.  According to, Azar didn’t elaborate on when the model would be launched, but the program could help Medicaid enrollees who need housing.

Granted, the discussion related mostly to seniors, medically-necessary improvements to homes, and home health care visits:

“These interventions can keep seniors out of the hospital, which we are increasingly realizing is not just a cost saver but actually an important way to protect their health, too,” Azar said. “If seniors do end up going to the hospital, making sure they can get out as soon as possible with the appropriate rehab services is crucial to good outcomes and low cost as well. If a senior can be accommodated at home rather than an inpatient rehab facility or a [skilled nursing facility], they should be.”

Azar was focusing on the agency’s approach to social determinants a day after it was announced that CMS would begin allowing states to cover a broader range of mental health services under Medicaid.

Specifically, CMS would consider Medicaid demonstration waivers (referred to as a §1115 waiver) covering short-term stays for acute care provided in psychiatric hospitals or residential treatment centers in return for states expanding access to community-based mental health services (these proposals would waive the so-called institutions for mental diseases (IMD) exclusion, a section of the Medicaid law (within the Social Security Act) that prohibits the use of federal Medicaid funding for most inpatient psychiatric services).

“It is the responsibility of state and federal governments together, alongside communities and families, to right this wrong,” Azar said. “More treatment options are needed, and that includes more inpatient and residential options that can help stabilize Americans with serious mental illness.”

However, Azar is speaking to psychiatric illness, not Substance Use Disorders, which appear to remain the “ugly stepchild” of health care, generally.

Back in 2014, the State of Illinois asked the Centers for Medicare and Medicaid Services (CMS) for permission to spend $60 million in Medicaid funding to help vulnerable enrollees find and maintain stable housing, joining New York and counties in Minnesota and California in efforts to try to add housing to the list of healthcare services offered to chronically ill Medicaid patients.

Under the waiver, Illinois wanted to offer managed-care plans incentive payments for enrollees specifically with mental illness or substance abuse disorders to successfully find temporary or permanent stable housing.

New York unsuccessfully sought $75 million from the CMS to develop housing capacity for high-cost Medicaid enrollees. The state ended up removing the request from its pending Medicaid waiver. But New York continues to seek $75 million to help chronically homeless, mentally ill or otherwise vulnerable adults live independently. Assistance—including counseling, employment aid, legal and budget help and case management—would be directed at those with high Medicaid costs.

At the present time, CMS determined that waivers cannot be used to pay outright for housing. Instead, these state programs can pay for assistance in finding housing, providing home modifications, and educating beneficiaries about tenant rights.

However, CMS has paid rent for Medicaid beneficiaries in the past through grant programs. The “Money Follows the Person” (MFP) demonstration project that was launched in 2008 transitioned Medicaid enrollees from an institutional setting back into the community. 43 states including California, Texas, New Jersey, Ohio, New York, Georgia and the District of Columbia participated in the grant program. Florida opted out.

By the end of 2016, there were 9,995 participants. In 2008, 289 people participated in the demonstration, according to federal data.

Though that grant program expired on September 30, 2016, the authorizing legislation required that the Secretary of HHS provide for a national evaluation of the MFP demonstration and submit a final report to the president and Congress that presents the findings and conclusions of this evaluation.  That report can be found here.

The report concluded:

MFP also provides strong evidence of success at improving the quality of life of participants. After transitioning to the community, participants experience increases across all seven quality-of-life domains measured, and the improvements are largely sustained two years post-transition. The changes in the quality of life that occur when participants move to the community are remarkable and important indicators that this demonstration has had positive impacts on participants’ lives. Estimating the value of the quality-of-life improvements reported by MFP participants would be extremely difficult, and any dollar value placed on these improvements would not adequately reflect what it means for people with significant disabilities when they can live in and contribute to their local communities.

This reads like it was taken verbatim from The American Journal of Community Psychology’s 2013 study on “The Role of Recovery Residences in Promoting Long-Term Addiction Recovery Outcomes.”

However, it was not, and the need for more-than-adequate sober living accommodations for people in recovery from addiction should be at the top of the list when it comes to health care public policy.

As I said before, we would never make a heart surgery patient go find a hotel to recover in and we would never let insurance carriers refuse to pay for such accommodations.

Let’s hope that HHS Secretary Azar is picking up the mantle from his predecessor and continuing to move addiction treatment health care into the full medical health care continuum, rather than to accept society’s generalized and simplistic view that addicts choose to be addicts, and we should not spend valuable resources on saving their lives.

“We can support both inpatient and outpatient investments at the same time,” Azar said. “Both tools are necessary and both are too hard to access today.”

Federal Government Seeks to Commentary Relating to Anti-Kickback Laws

According to an article published by, there continues to be a groundswell of opposition from hospital trade groups to the continued application of the federal anti-kickback laws to the extent they “stand in the way of growing participation in value-based models.”

Comments and opposition to existing payment structures came from major hospital groups and other industry stakeholders in response to the Department of Health and Human Service Office of Inspector General’s request for information on ways to reform the Stark and anti-kickback laws.

In its letter to OIG, the Federation of American Hospitals (FAH) said value-based payments are “hindered by the existing fraud and abuse regime.” To address this, OIG should build an overarching waiver to anti-kickback laws for advanced payment models run by the Centers for Medicare & Medicaid Services.

Provider groups, including the American Hospital Association, have long argued that the Stark and anti-kickback laws pose a major barrier to care coordination, a crucial piece of these new payment arrangements.

“Provided that the compensation to be received is fair market value, does not take into account the volume or value of referrals and is commercially reasonable, the arrangement should be deserving of safe harbor protection,” the group said.

Another hospital trade industry group, America’s Essential Hospitals (AEH), also wrote in favor of the OIG consider narrowing its use of anti-kickback and civil monetary penalty statutes.

Anti-kickback provisions, AEH said, are overly broad and could apply to any payment that has an impact on referrals, even if ultimately it leads to better care or otherwise benefits patients. At the same time, existing anti-kickback safe harbors are very narrow, the group said.

Narrowing the use of these statutes would offer providers greater certainty in the work they’re doing and would allow for clarification of regulatory requirements, AEH said.

“Regulatory uncertainty has put essential hospitals in an untenable position,” AEH said. “The very activities our members undertake to support new delivery system and payment models—actives the Centers for Medicare & Medicaid Services and Congress have encouraged—increase their exposure under the AKS and CMP law.”

The Association of American Medical Colleges (AAMC), which represents academic medical centers, noted in its commentary to OIG that “the Stark and anti-kickback laws are relics of a healthcare system that hadn’t yet conceived of value-based models.”

According to their argument, because alternative payment models are tightly regulated, it’s unlikely that patients would receive poor care, AAMC said.

“It is critical that CMS, the OIG, and other associated agencies coordinate their efforts to allow waivers of the physician self-referral law, the civil monetary penalties and anti-kickback laws, as appropriate to support the clinical and financial integration needed for the success of these new delivery and payment models,” AAMC said.

At the same time, and just last week, President Trump signed the “Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” or the “SUPPORT for Patients and Communities Act”, H.R.6 — 115th Congress (2017-2018), which we reported about back on October 4th.

Included within that legislation was a section sponsored by Senators Marco Rubio and Amy Klobuchar entitled the “Eliminating Kickbacks in Recovery Act” (EKRA) which essentially makes the federal Anti-Kickback Statute applicable to private health care plans. As adopted, the new law:

  • Makes it illegal to provide, or receive, financial kickbacks for referring patients to recovery homes and clinical treatment facilities. These kickbacks are already illegal under Federal health care plans, like Medicare, but there is no federal law to prohibit them in private health insurance plans;
  • Fine anyone found guilty up to $200,000 or 10 years of prison, or both; and
  • Establish exceptions to enable legitimate cases of patient referral.

Those “exceptions” would be generated by HHS through adoption and publication in the Code of Federal Regulations (CFR).

We have reported in the past that it seems fundamentally unfair that healthcare providers involved in federally funded programs could seek guidance from OIG as to their behavior, while private pay providers could not. This was specifically true for providers in the SUD treatment space, who could only seek such input from their regulating agencies, such as the Department of Children and Families (DCF) in Florida. But since only the Florida Patient Brokering Act applied to such behavior, which is a state (not federal) criminal law, DCF was not authorized to comment upon such behavior.

With the adoption of EKRA and the anticipated development of regulations adopting “safe harbors,” SUD treatment providers should have clarity on what behaviors would trigger federal penalties. That law, however, does not cause state laws, such as Florida’s Patient Brokering Act, to be superseded. Those laws will remain on the books and will be prosecuted separately, without interpretation of the new federal law having any impact.