Senate GOP Leader Bates' Bill to End "Patient Brokering" Clears First Hurdle

Wednesday, April 25, 2018

SACRAMENTO - The Senate Health Committee today unanimously approved Senate Bill 1290 by Senate Republican Leader Patricia Bates (R-Laguna Niguel) that would end the practice of treating people with drug addiction as commodities that can be bought, sold and exploited by residential treatment facilities (RTF).

"Fraud in the residential treatment facility industry has harmed patients and wasted taxpayer dollars, and I am encouraged that the Senate Health Committee agrees with the need for my bill," said Senator Bates. "Ending patient brokering will help ensure that the legitimate needs of patients are actually met, instead of filling the pockets of dishonest owners and operators."
Patient brokering is the practice of RTFs paying people a referral fee to get access to a patient. Once a patient is signed up with an RTF, the owners charge the patient's insurance company for numerous procedures and tests, most of which are either not needed or not actually performed. The RTF then pockets the insurance payments.
SB 1290 would prohibit any licensee, operator, manager, consultant, employee, or patient of an alcoholism or drug abuse recovery or treatment facility from offering, paying, soliciting, or receiving a kickback to induce the referral of a patient to or from an RTF. Additionally, SB 1290 creates the "Commission on Substance Abuse and Recovery" to confront California's addiction and substance abuse crisis with appropriate care and consideration of local effects.
Senator Bates authored SB 1290 after reading the Southern California News Group's (SCNG) investigation on the "Rehab Riviera" that found unscrupulous rehab operators rushing in to take advantage of mandatory mental health treatment coverage required by the Affordable Care Act. It found that the state's hands-off approach to regulating the industry makes it easy for almost anyone to open a treatment center and charge insurance companies hundreds of thousands of dollars per client.
SB 1290 is modeled after Florida law championed by Dave Aronberg, the Florida State Attorney for the 15th Judicial Circuit (Palm Beach County). Florida has experienced similar challenges in regards to patient brokering and RTFs.
"As we clean up the drug treatment and sober home industries in Palm Beach County, we've seen many players move to other warm weather destinations such as California," said State Attorney Aronberg. "This is why it's so important to pass Senator Bates' legislation before the evils of patient brokering cost more lives."
Senator Bates also authored SB 902 this year that would require the California Department of Health Care Services to conduct background checks before a person can be issued a license to own or operate an RTF. SB 902 recently won bipartisan support in the Senate Health and Public Safety Committees and is now pending in the Senate Appropriations Committee.