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Clinic Can’t Exchange Housing For Medicaid Treatment

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at April 6, 2015

U.S. Southern District of NY Judge John G. Koeltl last Thursday (4/2/15) cited a “preponderance of evidence” that Bronx-based Narco Freedom Inc. runs its so-called “Freedom Houses” in part to induce Medicaid recipients to enroll in the clinic’s outpatient programs, whether they need them or not.

Narco Freedom argued that it didn’t offer residents payment for Medicaid reimbursements, but this assertion was rejected by Judge Koeltl.

“Providing below-market housing to Medicaid recipients increases costs to the Medicaid program through over- and inappropriate utilization,” Judge Koeltl said in his ruling. “For those who need housing, the prospect of nearly free housing creates a strong incentive to overuse Narco Freedom’s drug treatment programs.”

According to Judge Koeltl’s ruling, former Narco Freedom CEO Gerald Bethea has testified that the clinic’s business model depends on requiring all Freedom House residents to attend Narco Freedom’s substance abuse programs.

Also cited was Jay Deutchman, the largest single owner of buildings leased to Narco Freedom, who testified that Alan Brand, another former Narco Freedom CEO, added the residents’ monthly housing allowance from the New York City Human Resources Administration to expected Medicaid funds, then subtracted operating costs to see if opening a house was profitable.

NOTE:  Notwithstanding the business model, and though the letter of the law is being upheld, what is being lost in the discussion is the need in Substance Use Disorder (SUD) treatment is associated recovery residence housing.  The two cannot be readily separated. Simply using the term “outpatient treatment” does not equivocate to a lower level of necessary care for the patient.

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