A Bill to Regulate Rehabs Faces Opposition—From Rehabs

An industry group claims it “creates a burden.”

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It seemed like a bill everyone could get behind, one that would protect drug users seeking addiction treatment from unscrupulous rehabs in California, home to roughly 2,000 certified treatment providers. Many are concentrated in sunny Southern California, which has been dubbed the Rehab Riviera.”

The only group against the bill: A small but vocal coalition of rehabs.

Last week, the Addiction Treatment Advocacy Coalition (ATAC), a trade group representing 66 addiction treatment programs in California, sent an email to its members and supporters with the subject line, “PLEASE READ URGENT Take Action AGAINST SB 1228.” ATAC had taken issue with the Substance Use Disorder Patient Protection Act, legislation that recently passed the state Legislature unanimously and now awaits the signature of Gov. Jerry Brown.

The bill attempts to crack down on “patient brokering,” a common practice through which rehab facilities pay referral fees, often to middlemen or “brokers,” in exchange for clients who will attend drug treatment. Referrals can be a big money maker, as a single patient at a residential facility can bring in tens of thousands of dollars from insurance. But opponents of brokering argue the practice amounts to buying and selling people by putting profits before patients: Rehab operators and brokers are motivated to recruit more drug users, regardless of whether they are a good fit for a particular treatment facility. Prospective patients are often wooed with perks, from cross-country flights to attend rehab to free rent, food, clothes, cigarettes—and even drugs. 

The recruitment practice “is so well accepted that business models have been built on it,” said Ryan Hampton, a recovery advocate who helped draft the bill. “There are tons—in the hundreds in Southern California—that have built their business models on referrals with financial incentives.” The lucrative practice is taking business from treatment centers that aren’t engaging in brokering, Hampton added. “We’re seeing good providers closing their doors. It’s heartbreaking to watch.”

As the opioid epidemic sends scores of drug users to rehab, a handful of states are considering similar bills that attempt to clean up the addiction treatment industry—an industry that is worth an estimated $35 billion, yet remains haphazardly regulated. SB 1228, sponsored by Southern California Sen. Ricardo Lara, allows the state to suspend or revoke the licenses of state-certified addiction treatment facilities or individuals who are found to be paying or receiving money for patients. Some say it doesn’t go far enough: It doesn’t deem the practice of brokering criminal, like Florida’s recent anti-brokering legislation, and it doesn’t apply to the many treatment centers and sober homes that aren’t certified by the state. Still, the legislation has been celebrated as an incremental step toward policing the state’s rehab facilities.

“All the other health industries manage to run their businesses without selling their patients,” said Sherry Daley of the California Consortium of Addiction Programs and Professionals, a group of some 500 treatment centers.

ATAC, the bill’s lone opposition, advocates primarily on behalf of for-profit addiction treatment centers. Its website describes its president, Stampp Corbin, as a “serial social entrepreneur” who has “successfully built socially responsible organizations that have achieved annual revenues of over $100 million.” Corbin, a prominent Los Angeles gay rights advocate who published San Diego’s LGBT Weekly for years, is the president of Reliatox, a drug testing company that provides urine screen lab tests.

In its email to supporters, ATAC said the legislation “creates a burden” on licensed treatment facilities. “Unlicensed and uncertified organizations are the primary businesses participating in the fraud and abuse of patient brokering,” Corbin wrote in a letter to Brown asking him to veto the bill. “ATAC agrees with the prevention and elimination of patient brokering in all its forms, but SB 1228 does not accomplish the goal and may exacerbate the problem.”

California undoubtedly has a problem with unlicensed treatment centers: In order to open an outpatient program or sober home in California, one needs to simply hang a shingle, explained Daley. Most insurance providers, however, will only cover treatment at facilities that are state-certified. (A prior version of the bill included a provision requiring all addiction treatment centers be certified, but it was cut for budgetary reasons.)

Some suspect the prospect of losing referral revenue could be what’s driving ATAC to oppose the bill. “There is no other reason to come out against an attempt to end patient brokering, unless they are engaged in patient brokering,” Hampton said.

In an interview with Mother Jones, Corbin said his organization and its members are staunchly against patient brokering, but that legislation that only applies to a portion of providers won’t address the issue. ATAC would support the bill with the caveat that “all substance abuse treatment facilities must be licensed and/or certified,” he said. The legislation affects ATAC members, he added, “because their competitors who do brokering, who are stealing patients from them, aren’t included in the bill.”

“My response to these people is, if it’s going hurt your business model, you have a problem,” Daley said.