Legislature bans referral payments that hurt patients in recovery from addiction

Substance Use Disorder Patient Protection Act (Senate Bill 1228) will prevent patient brokering in state-licensed and certified treatment facilities

SACRAMENTO – Responding to reports of fraud and abuse of patients in recovery from opioid and other addictions, the California Legislature passed the state’s first bill that outlaws patient brokering in the treatment industry.

Senator Ricardo Lara (D-Bell Gardens) authored the Substance Use Disorder Patient Protection Act, Senate Bill 1228, which passed the Legislature with a unanimous vote.

Governor Jerry Brown has until September 30 to act on SB 1013 or allow it to become law.

Media reports reveal a rising number of scams involving patient brokering, which is the payment of kickbacks or fees for referrals. Some patients have been recruited with the offer of cash payments or drugs. Patients with acute medical needs have even died after being referred to facilities that cashed in on referrals. Payments for patient referrals undercut ethical providers and encourage practices that are not in patients’ best interest, and California currently prohibits such payments by physicians.

Senate Bill 1228 prevents treatment facilities that are licensed or certified by the state Department of Health Care Services from making or receiving payments in exchange for patient referrals.

“Patient brokers prey on vulnerable patients and thrive in California’s climate of loose regulations and lack of consumer protections,” said Sen. Lara. “Safe recovery should be a right for every Californian who struggles with substance use, and SB 1228 gives gives the state a powerful new tool to protect Californians from fraud and unethical providers who put profits over what is best for patients.”

SB 1228 is sponsored by Recovery Reform Now, a national patient advocacy group dedicated to consumer protections and higher standards.

Ryan Hampton, a recovery advocate for Recovery Reform Now and person in recovery, said: “This is a step in the right direction for our state. Loud and clear, the legislature has shown its intent to take on the bad operators who put profit before patient. We can no longer stay silent while our communities are ripped apart and loved ones continue to die. So let the passage of this bill be a message to all those who continue to take advantage of people with substance use disorder: your time is up. We look forward to continuing the important work ahead and building upon the success of this critical piece of legislation in the next session — until every Californian has a fair shake at the qualified addiction care they deserve.”

The prohibition on payments for patient referrals also applies to an owner, partner, officer, director, or shareholder who holds an interest of at least 10 percent in a licensed or certified treatment facility, or a person employed by the facility, including a counselor.

The Department may investigate allegations and if it finds violations may assess a penalty, suspend or revoke a license or certification, suspend or revoke a certification of a counselor, or recommend discipline against a licensed professional by the respective licensing board.

The opioid epidemic claimed nearly 1,900 lives in California in 2017, and drug and opioid overdoses are in the top 20 causes of death statewide. Excessive alcohol use claims approximately 2,100 lives per year.

The Department of Health Care Services licenses or certifies 2,300 in-patient treatment facilities providing 24-hour care and out-patient treatment, detoxification and recovery facilities that provide medical care and counseling to people with substance use disorders.

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