Treatment: Kickbacks and other Unethical Business Practices

Drug and alcohol treatment and rehab transforms lives for people around the world. Most treatment centers are well-managed and staffed with conscientious, highly trained professionals who strive to provide the best treatment possible.

However, there is a growing number of treatment providers and intermediaries that place high priority on profit margin while quality care and client welfare takes a back seat. Unfortunately, this is bad news for unsuspecting clients seeking help for addiction.

For example, some treatment providers engage in a nefarious practice known as patient brokering, in which bonuses and kickbacks are offered for referrals. In some cases, a referral agent can net as much as 40% of the total treatment cost! This is bad enough when the referring party is a professional placement service; but it becomes very disturbing when commissions are paid to therapists, psychiatrist, GPs and other healthcare providers who are ethically and legally obliged to advise their patients of the best possible treatment option for them rather than the one that pays the highest kickbacks. The practice has developed to a point where some rehabs proactively offer to buy clients via hefty commissions, which are often a significant percentage of the treatment cost.

Marketing firms consisting of sophisticated call centers or referral agencies are often located via online searches. This is a serious problem in the U.K., where the practice is unregulated. The agencies have tremendous control over the Internet market while many treatment providers find the funnel has dried up and direct client contact has become very difficult.

Some treatment providers may also offer cash bonuses or enticements such as gym memberships, smart phones or gift cards in exchange for client acquisitions to their own sales staff.

Sober living homes in the U.S., also known as halfway houses, are often of tremendous benefit for people in recovery. However, sober living homes are unregulated, making it difficult for federal investigators to catch on to client brokering and other illegal practices. Dishonest owners and managers reap massive benefits.

Taking Unfair Advantage of the Affordable Care Act

Unfortunately, the number of dishonest treatment providers has grown in the U.S. since 2008 when the federal government approved legislation known as the Parity Act as part of the Affordable Care Act (Obamacare). The Parity Act requires insurance providers to fund drug and alcohol treatment and rehab, which means that more people have access to some level of treatment. Unfortunately, it has also opened the door for skyrocketing insurance fraud.

Recurring insurance payments create a situation in which clients relapse again and again – a bonanza for providers who cycle addicts through a revolving door of one failed treatment after another.

Profiting from Unnecessary Lab Work

Investigators have discovered that kickbacks and ill-gotten referrals are only one part of a very large problem. Some treatment providers stand to make big money on unnecessary lab work or expensive, sophisticated drug tests, even when only simple urine tests are required.

Clients may be tested frequently — sometimes daily, with insurance companies paying $1,000 or more for tests that normally cost less than $5 and that are not necessary at such frequencies.

Some treatment centers may operate their own labs, although it is illegal for providers in the U.S. to send client tests to a lab in which the treatment provider has a financial interest. Funneling payments through a separate corporation often helps such companies get around the law.

The Good Guys

Vulnerable people seeking help for an addiction are easy targets for unscrupulous providers. The practice makes all treatment providers in the U.S. and U.K. look bad and in some cases, make it very difficult for legitimate drug and alcohol treatment centers and rehabs to compete with fly-by-night companies who have a tight grasp on the market.

At Paracelsus

At Paracelsus, we do not offer or pay any form of commission, and we are adamant that we will never accept referral fees of any type when we recommend patients to other providers. We are open and transparent about our business practices, and client wellbeing is always our first priority.

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