[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
 EXAMINING CONCERNS OF PATIENT BROKERING AND ADDICTION TREATMENT FRAUD

=======================================================================

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 12, 2017

                               __________

                           Serial No. 115-87
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                          
                           


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                        
                          _________

            U.S. GOVERNMENT PUBLISHING OFFICE
                   
 28-931               WASHINGTON : 2019         
 
 
 
 
                        
               COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana                 Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, California
RICHARD HUDSON, North Carolina       RAUL RUIZ, California
CHRIS COLLINS, New York              SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota           DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina

              Subcommittee on Oversight and Investigations

                       GREGG HARPER, Mississippi
                                 Chairman
H. MORGAN GRIFFITH, Virginia         DIANA DeGETTE, Colorado
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas            KATHY CASTOR, Florida
SUSAN W. BROOKS, Indiana             PAUL TONKO, New York
CHRIS COLLINS, New York              YVETTE D. CLARKE, New York
TIM WALBERG, Michigan                RAUL RUIZ, California
MIMI WALTERS, California             SCOTT H. PETERS, California
RYAN A. COSTELLO, Pennsylvania       FRANK PALLONE, Jr., New Jersey (ex 
EARL L. ``BUDDY'' CARTER, Georgia        officio)
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Gregg Harper, a Representative in Congress from the State of 
  Mississippi, opening statement.................................     1
    Prepared statement...........................................     3
Hon. Diana DeGette, a Representative in Congress from the state 
  of Colorado, opening statement.................................     4
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     6
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................    92

                               Witnesses

Douglas Tieman, President and CEO, Caron Treatment Centers.......     8
    Prepared statement...........................................    11
    Answers to submitted questions...............................   126
Pete Nielsen, Chief Executive Officer, California Consortium of 
  Addiction Programs and Professionals...........................    37
    Prepared statement...........................................    39
    Answers to submitted questions...............................   138
Dave Aronberg, State Attorney, 15th Judicial Circuit.............    45
    Prepared statement...........................................    47
    Answers to submitted questions...............................   153
Alan S. Johnson, Chief Assistant State Attorney, 15th Judicial 
  Circuit........................................................    49
    Prepared statement...........................................    51
    Answers to submitted questions...............................   176
Eric M. Gold, Assistant Attorney General, Chief, Healthcare 
  Division, Office of the Massachusetts Attorney General.........    56
    Prepared statement...........................................    58
    Answers to submitted questions...............................   179

                           Submitted Material

Article entitled, ``Standards for Sober Living Environments,'' 
  California Consortium of Addiction Programs and Professionals..    93
Chart of patients' rights submitted by Mr. Tieman................   101
Charts submitted by Mr. Aronberg.................................   102
Standards by Caron Treatment Centers.............................   105
Report entitled, ``2017 Opioid Overdose & Death in Orange 
  County,'' Orange County Health Care Agency.....................   109
Article entitled, ``How some Southern California drug rehab 
  centers exploit addiction,'' Orange County Register, May 21, 
  2017 \1\

----------
\1\ The article can be found at: https://docs.house.gov/meetings/
  IF/IF02/20171212/106716/HHRG-115-IF02-20171212-SD007.pdf.


 EXAMINING CONCERNS OF PATIENT BROKERING AND ADDICTION TREATMENT FRAUD

                              ----------                              


                       TUESDAY, DECEMBER 12, 2017

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:16 a.m., in 
Room 2322, Rayburn House Office Building, Hon. Gregg Harper 
[chairman of the subcommittee] presiding.
    Present: Representatives Harper, Griffith, Burgess, Brooks, 
Barton, Walberg, Walters, Costello, Carter, DeGette, Castor, 
Tonko, and Ruiz.
    Also Present: Representative Bilirakis.
    Staff Present: Jennifer Barblan, Chief Counsel, Oversight 
and Investigations; Samantha Bopp, Staff Assistant; Adam 
Buckalew, Professional Staff Member, Health; Kelly Collins, 
Staff Assistant; Adam Fromm, Director of Outreach and 
Coalitions; Ali Fulling, Legislative Clerk, Oversight and 
Investigations, Digital Commerce and Consumer Protection; 
Brittany Havens, Professional Staff, Oversight and 
Investigations; Katie McKeogh, Press Assistant; Kristen 
Shatynski, Professional Staff Member, Health; Jennifer Sherman, 
Press Secretary; Alan Slobodin, Chief Investigative Counsel, 
Oversight and Investigations; Everett Winnick, Director of 
Information Technology; Christina Calce, Minority Counsel; 
Chris Knauer, Minority Oversight Staff Director; Miles 
Lichtman, Minority Policy Analyst; Kevin McAloon, Minority 
Professional Staff Member; C.J. Young, Minority Press 
Secretary; and Theresa Tassey, Minority Health Fellow.

  OPENING STATEMENT OF HON. GREGG HARPER, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF MISSISSIPPI

    Mr. Harper. The subcommittee will come to order.
    I want to thank each of the witnesses for being here with 
us today.
    The subcommittee today holds a hearing entitled, 
``Examining Concerns of Patient Brokering and Addiction 
Treatment Fraud. This is another chapter of the subcommittee's 
ongoing extensive look at the opioid epidemic and the toll that 
it's taken on countless lives across our Nation.
    The most recent data from the Centers for Disease Control 
and Prevention notes that opioids killed more than 33,000 
people in 2015, more than any year on record. What's worse, 
it's estimated that 91 Americans die every day from opioid 
overdose. Not only has the epidemic lead to record numbers of 
overdoses and overdose deaths, but it has also resulted in an 
increased need for treatment. In a recent Washington Post 
article, it is estimated that there are 2.6 million Americans 
with opioid addiction. 2.6 million.
    Sadly, today we are here to examine a newer side of the 
opioid epidemic that is impacting individuals who are seeking 
treatment for their substance use disorder. Earlier this year, 
news reports began surfacing of patient or addict brokers that 
profit by recruiting individuals suffering from a substance use 
disorder and luring them to treatment facilities and sober 
living homes, oftentimes in other states. The individuals who 
are brokered are lured into these schemes by promises of 
scholarships for treatment, a free plane ticket, free housing, 
along with other incentives such as free cigarettes, movie 
tickets, and even yoga. The patient brokers themselves receive 
generous financial kickbacks from facilities. The incentive is 
not to find an evidence-based treatment option that meets the 
needs of the individual, but instead to simply fill beds with 
heads.
    These brokers often send individuals to treatments in 
states with higher numbers of treatment facilities and sober 
living homes per capita, such as Florida and California. The 
sales pitch tout the warm, sunny weather of these states in 
luring individuals away from their homes and out of their 
states of residence. Florida and California to be the two 
states hit hardest by these practices. But that doesn't mean 
that other states aren't starting to face these challenges as 
well. Concerns have been raised that other states, including 
Arizona and Texas, are starting to face these issues. Some have 
said that this is already becoming a national problem.
    Whether it's where the treatment facility or sober living 
home are physically located or it's where the individual is 
recruited from, these schemes are happening all over our 
nation, frequently crossing state lines. That's why we're here 
today. This isn't just a state issue. It has become and is 
becoming a national issue.
    These schemes are often very complex. They can include 
deceptive marketing practices, kickbacks, overbilling for 
treatment and urine drug tests, low-quality treatment or, in 
some cases, no treatment. The most concerning allegation is 
that patient brokers or, in some cases, people that work for a 
treatment facility or are affiliated with a sober living home, 
provide drugs to an individual so that they can relapse. This 
unethical practice keeps the individual in treatment and allows 
those involved in the scheme to restart the billing cycle and 
continue racking up bills.
    These practices are immoral but are even more monstrous 
because they prey on people that are already in a very 
vulnerable state. These individuals with substance use 
disorders get caught in a scheme that incentivizes relapse and 
profit rather than treatment and, ultimately, recovery.
    It's important that we shed light on the fraud and abuse in 
the substance use disorder treatment industry. Make no mistake, 
we want those who are suffering from addiction to seek 
treatment and the treatment that is most appropriate for them. 
We also want to ensure that when individuals or their loved 
ones are looking for a treatment option, that they're well-
equipped to find a legitimate provider that meets their needs 
so that they don't fall victim to this inexcusable and 
unacceptable practices that are prioritizing profits over 
recovery and, in some instances, life.
    We thank our panel of witnesses for joining us this morning 
who are on the front lines of this issue and provide invaluable 
perspectives that we'll hear from you today.
    My hope for today's hearing is for us to learn about 
patient brokering and related fraud and abuse within the 
treatment industry. This discussion will help us identify 
potential solutions that will allow us to better protect 
individuals who are seeking treatment for themselves or their 
loved ones.
    We thank you for appearing before the subcommittee today 
and look forward to hearing your testimony.
    The chair will now recognize the ranking member, Ms. 
DeGette, for the purposes of an opening statement.
    [The prepared statement of Mr. Harper follows:]

                Prepared statement of Hon. Gregg Harper

    The Subcommittee will come to order.
    Today is my first hearing as the Chairman of the Oversight 
and Investigations Subcommittee. I want to thank Chairman 
Walden for his confidence and look forward to working with 
Ranking Member DeGette, Vice Chairman Griffith and all members 
of the subcommittee in the coming year.
    Today, the Subcommittee holds a hearing entitled, 
``Examining Concerns of Patient Brokering and Addiction 
Treatment Fraud.'' This is another chapter of the 
Subcommittee's ongoing extensive look at the opioid epidemic 
and the toll that it has taken on the countless lives across 
our nation. The most recent data from the Centers for Disease 
Control and Prevention notes that opioids killed more than 
33,000 people in 2015, more than any year on record. What's 
worse--it's estimated that 91 Americans die every day from an 
opioid overdose.
    Not only has the epidemic led to record numbers of 
overdoses and overdose deaths, but it has also resulted in an 
increased need for treatment. In a recent Washington Post 
article, it is estimated that there are 2.6 million Americans 
with an opioid addiction. 2.6 million. Sadly, today we are here 
to examine a newer side of the opioid epidemic that is 
impacting individuals who are seeking treatment for their 
substance use disorder.
    Earlier this year, news reports began surfacing of 
``patient'' or ``addict'' brokers that profit by recruiting 
individuals suffering from a substance use disorder and luring 
them to treatment facilities and sober living homes, often 
times in other states.
    The individuals who are brokered are lured into these 
schemes by promises of ``scholarships'' for treatment, a free 
plane ticket, free housing, along with other incentives such as 
free cigarettes, movie tickets, and yoga.
    The patient brokers themselves receive generous financial 
kickbacks from facilities. The incentive is not to find an 
evidence-based treatment option that meets the needs of the 
individual, but instead to simply ``fill beds with heads.''
    These brokers often send individuals to treatment in states 
with high numbers of treatment facilities and sober living 
homes per capita, such as Florida and California. The sales 
pitches tout the warm, sunny weather of these states in luring 
individuals away from their homes and out of their states of 
residence. Florida and California appear to be the two states 
hit hardest by these practices, but that doesn't mean that 
other states aren't starting to face these challenges as well.
    Concerns have been raised that other states including 
Arizona and Texas are starting to face these issues. Some have 
said that this is already becoming a national problem. Whether 
it's where the treatment facility or sober living home are 
physically located, or it's where the individual is recruited 
from--these schemes are happening all over our nation, 
frequently crossing state lines. That's why we are here today. 
This isn't just a state issue, it's becoming a national issue.
    These schemes are often very complex. They can include 
deceptive marketing practices, kickbacks, overbilling for 
treatment and urine drug tests, low-quality treatment or, in 
some cases, no treatment. The most concerning allegation is 
that patient brokers, or in some cases people that work for a 
treatment facility or are affiliated with a sober living home, 
provide drugs to an individual so that they will relapse. This 
unethical practice keeps the individual in treatment and allows 
those involved in the scheme to re-start the billing cycle and 
continue racking up bills.
    These practices are immoral, but are even more monstrous 
because they prey on people that are already in a very 
vulnerable state. These individuals with substance use 
disorders get caught in a scheme that incentivizes relapse and 
profit rather than treatment and, ultimately, recovery.
    It's important that we shed light on the fraud and abuse in 
the substance use disorder treatment industry. Make no mistake, 
we want those who are suffering from addiction to seek 
treatment, and the treatment that is most appropriate for them. 
We also want to ensure that when individuals or their loved 
ones are looking for a treatment option, that they are well 
equipped to find a legitimate provider that meets their needs 
so that they don't fall victim to these inexcusable practices 
that are prioritizing profit over recovery, and in some 
instances life.
    We thank our panel of witnesses for joining us this 
morning. You are on the frontlines of this issue and provide 
invaluable perspectives. My hope for today's hearing is for us 
to learn more about patient brokering and related fraud and 
abuse within the treatment industry. This discussion will help 
us identify potential solutions that will allow us to better 
protect individuals who are seeking treatment for themselves or 
their loved ones. We thank you for appearing before the 
Subcommittee today and look forward to hearing your testimony.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you very much, Mr. Chairman, and 
welcome. We're happy to have you as the new chairman of the 
Oversight and Investigations Subcommittee. And in what I hope 
is not a rare incidence, I'm just going to associate myself 
with everything you said in your opening statement. I agree 
with you that this issue is a bipartisan and national concern. 
I'm glad that we're having this hearing today.
    As we have been exploring in this subcommittee and the full 
Energy and Commerce Committee, we're in the midst of the worst 
addiction crisis in the United states' history. And substance 
use disorder has ravaged the families and communities. In 
Colorado, my home state, more people died from overdoses than 
from car wrecks last year, just to put this in some kind of 
context.
    And as people are seeking addiction treatment services for 
themselves and their loved ones, it really, really puts a 
punctuation point on the fact we need to make sure that they're 
getting services that are useful and that are actually treating 
them and that we don't have fly-by-night operations that are 
just taking advantage of families' desperation.
    High-quality, evidence-based treatment, both inpatient and 
outpatient, is a key part of recovery from substance use 
disorder. And in a lot of cases, it does involve recovery 
residences also known as sober living homes. As SAMHSA said, 
properly managed recovery residences, quote, empower people by 
providing support as they transition towards living independent 
and productive lives in their respective communities.
    But, Mr. Chairman, as you said, some of these patient 
brokers and some sober homeowners and treatment providers are 
fraudulently exploiting coverage of addiction treatment 
services in order to defraud insurers. I'd really like to know, 
and I'm hoping our panel can help us today, just exactly what 
the extent of this problem is or how widespread it is. I've 
seen the media accounts, like you have, and I was just as 
appalled as you were. But we really need to understand the 
scope of the problem so that we can determine what laws, rules, 
and regulations we need to look at to effectively deal with the 
issue.
    As you said, the reports say that patient brokers solicit 
desperate individuals and direct them towards deceitful 
providers who offer substandard treatment or sometimes even no 
treatment at all. They push people to live at these sham sober 
homes even though they know, in many cases, drugs and alcohol 
are readily available at these houses. And, of course, as you 
said, they've got these deceptive websites. They promise a 
vacation-like atmosphere in warm locales. They buy people 
airline tickets, and they help people get insurance just to 
cover the cost of these sham houses. So it's a problem.
    The fraudulent treatment centers are no better. Reports 
suggest that these facilities treat patients as commodities, 
not people. For example, insurance companies told us that these 
centers require people to take daily urine tests for which the 
treatment facilities bill insurers thousands of dollars per 
day. How is it that a facility can bill thousands of dollars a 
day for urine tests, which based on all the reports, are almost 
never clinically necessary? Also, the facilities bill for 
addiction treatment that they do not actually provide. I'd like 
to know how a presumably licensed treatment facility can get 
away with this.
    And, finally, and perhaps most disturbing, we heard that 
patient brokers push individuals with substance use disorders 
to live at particular sober homes where they know the drugs and 
alcohol are available. So, apparently, the goal is to keep them 
addicted so that they can continue to get reimbursements.
    Now, as I said earlier, Mr. Chairman, I hope we can get a 
scope of this problem as it relates to drug treatment. I'd like 
to hear what the panel's views are on how we can reduce this. 
What do the states need to police treatment providers and sober 
home living? What does optimal evidence-based treatment look 
like? And how do we ensure these families get it?
    I hope we can add some context to the problem because I 
really don't have any idea how extensive it is. And I'm one 
that doesn't think we should overreact but, on the other hand, 
this is a serious problem.
    With that, I know that Congresswoman Castor has a 
constituent here she'd like to introduce, and I'll yield the 
balance of my time to her.
    Ms. Castor. Well, thank you, Ranking Member DeGette.
    I'd also first like to congratulate my friend and 
colleague, our new chairman, Gregg Harper.
    Congressman, you're a very thoughtful Member of Congress. 
I've enjoyed working with you in the past and look forward to 
working with you on the oversight committee.
    I'd like to thank the State Attorney for the 15th Judicial 
Circuit, Dave Aronberg, and the Chief Assistant, Alan Johnson, 
for their work and welcome them here to the committee. They are 
the ones that have been at the forefront of protecting families 
and taking on this issue in the State of Florida, including 
leading to the adoption by the state legislature of our patient 
brokering act. Thank you for being here today, and thank you 
for your public service.
    Mr. Harper. The gentlelady yields back.
    The chair will now recognize Dr. Burgess for purposes of an 
opening statement.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Chairman. And let me add my 
congratulations to your position. You reference that we're on 
the front lines of this debate, and the subcommittee that I 
chair, the Health Subcommittee, and your Subcommittee of 
Oversight and Investigations, yes, we are partners in this and 
very much on the front lines of this.
    I also want to thank Morgan Griffith for ably stepping in 
and keeping a firm hand on the tiller during the transition. 
That was very helpful as well.
    This hearing is important. We're here to examine the 
possibility, the likelihood of unethical behavior in our 
substance abuse treatment system. In the past few years, 
Congress has worked to find thoughtful and effective ways to 
respond to the opioid epidemic. In fact, in the Health 
Subcommittee, we did have our first oversight hearing of the 
Comprehensive Addiction and Recovery Act. It's been about a 
year since it was enacted, and we thought it was appropriate to 
take a look at how the agencies were responding to the 
legislation that Congress passed.
    And, additionally, we held sort of an open forum, a 
Members' Day, where any Member, not just on the Health 
Subcommittee, not just on the Energy and Commerce Committee, 
but any Member of Congress, from both sides of the dais, could 
come and talk about problems that they were seeing in their 
districts. And we also were interested in hearing the solutions 
that people had in mind. So out of that very thoughtful day, 
where over 50 Members of Congress came and testified to the 
subcommittee, out of that exercise, we are looking forward to 
developing some legislation.
    I think the other lesson--and I do appreciate so much the 
testimony that was provided by our witnesses, and I appreciate 
them being here. You certainly opened or broached the subject 
that I had wondered about in the past, and that was seeing the 
law of unintended consequences was on full display with some 
things. And having been on this subcommittee now for 12 years, 
and having been on the Energy and Commerce Committee a like 
amount of time, certainly saw many of those things as they were 
enacted in 2008, 2009, 2010, watched the rules come through the 
agency in 2012 on setting the parameters with which several of 
you have acknowledged now becomes--it was done with the best of 
intentions, but now it's adding to the problems.
    The Comprehensive Addiction and Recovery Act in the 21st 
Century Cures Act included provisions that increased access to 
treatment for individuals suffering from opioid addiction and 
providing communities with additional prevention grants. That's 
a good thing. Now we want to be certain in this oversight 
exercise that that is all being used to the highest purpose for 
the patients it was intended to serve.
    Thank you, again, Mr. Chairman, for the recognition. I'll 
be happy to yield to any other member on this side of the dais 
or yield back to you.
    Mr. Harper. The gentleman yields back.
    I ask unanimous consent that the members' written opening 
statements be made part of the record.
    Without objection, will be entered into the record.
    Additionally, I ask unanimous consent that Energy and 
Commerce members not on the Subcommittee on Oversight and 
Investigation be permitted to participate in today's hearing.
    Without objection, so ordered.
    Finally, we welcome non-Energy and Commerce Committee 
members who may be with us today. Pursuant to House rules, 
Members not on the committee are able to attend our hearings 
but cannot ask questions.
    I would now like to introduce our witnesses for today's 
hearing. And I will start by yielding to Mr. Costello of 
Pennsylvania to introduce our first witness.
    Mr. Costello. Thank you, Mr. Chairman.
    I am very proud to introduce Douglas Tieman, President and 
CEO of Caron Treatment Centers in Berks County, Pennsylvania, 
in my congressional district. I have visited the Caron 
Treatment Center and I can say with confidence that it provides 
lifesaving addiction and behavioral healthcare treatment. And 
they make a tremendously positive impact, both in southeastern 
Pennsylvania and across this country, with the services they 
provide and the leadership that they provide.
    I look forward to hearing Mr. Tieman testify this morning 
about standards for quality treatment, ways to improve our 
healthcare system to better treat the millions of Americans 
struggling with substance abuse disorder, and obstacles that 
Caron and other organizations face as bad actors, as Ms. 
DeGette has suggested or raised, as bad actors seek to take 
advantage of vulnerable individuals seeking help.
    Thank you, and I yield back.
    Mr. Harper. The gentleman yields back.
    Today we also have Pete Nielsen, who is the CEO of the 
California Consortium of Addiction Programs and Professionals. 
Next is Mr. Dave Aronberg, the State Attorney for the 15th 
Judicial District in Palm Beach, Florida. Then we have Mr. Alan 
Johnson, the Chief Assistant State Attorney for the 15th 
Judicial Circuit in Palm Beach and the head of the Palm Beach 
County Sober Homes Task Force. And finally, we have Mr. Eric 
Gold, the Assistant Attorney General and the chief of the 
healthcare division for the Office of the Massachusetts 
Attorney General.
    Thank you all for being here today and providing testimony. 
We look forward to the opportunity to discuss concerns of fraud 
and abuse in the treatment industry, and I know it'll be very 
helpful testimony.
    You're aware that the committee is holding an investigative 
hearing. And when doing so, we have had the practice of taking 
testimony under oath. Does anyone have any objection to 
testifying under oath?
    The chair then advises you that under the rules of the 
House and the rules of the committee, you're entitled to be 
accompanied by counsel. Do you desire to be accompanied by 
counsel during your testimony today?
    Seeing no one, in that case, if you would, please rise and 
raise your right hand, and I will swear you in.
    [Witnesses sworn.]
    Mr. Harper. Thank you. You are now under oath and subject 
to the penalties set forth in Title 18, section 1001 of the 
United states Code. You may now give a 5-minute summary of your 
written statement.
    You have a light system in front of you that'll be green 
for 4 minutes. It'll turn yellow for the final minute and red 
when it's time to bring it in for a landing. So we look forward 
to that.
    So at this point, we will recognize Mr. Tieman for 5 
minutes to summarize his opening statement.

TESTIMONY OF DOUGLAS TIEMAN, PRESIDENT AND CEO, CARON TREATMENT 
  CENTERS; PETE NIELSEN, CHIEF EXECUTIVE OFFICER, CALIFORNIA 
   CONSORTIUM OF ADDICTION PROGRAMS AND PROFESSIONALS; DAVE 
   ARONBERG, STATE ATTORNEY, 15TH JUDICIAL CIRCUIT; ALAN S. 
JOHNSON, CHIEF ASSISTANT STATE ATTORNEY, 15TH JUDICIAL CIRCUIT; 
AND ERIC M. GOLD, ASSISTANT ATTORNEY GENERAL, CHIEF, HEALTHCARE 
     DIVISION, OFFICE OF THE MASSACHUSETTS ATTORNEY GENERAL

                  TESTIMONY OF DOUGLAS TIEMAN

    Mr. Tieman. Representative Costello, thank you for the 
introduction and the service to our community.
    Mr. Chairman and distinguished members of the House Energy 
and Commerce Committee, thank you for the opportunity to 
testify on behalf of patients and families seeking help with 
their substance use disorder.
    As Representative Costello mentioned, I am the CEO of Caron 
Treatment Centers. We are a nonprofit addiction and behavioral 
healthcare provider based in Pennsylvania and Florida, with 
more than 60 years of experience in treating substance use 
disorder. We are one of the oldest and largest nonprofit 
addiction treatment centers in our country. And over the past 
six decades, we have helped more than 100,000 individuals begin 
a life of recovery.
    I personally have been in this field for 35 years, so I 
have some sense of perspective. During the first 30 years of my 
career, I was mostly proud of the treatment sector and the work 
that all of our peers in the field were undertaking to help 
families suffering from this chronic illness. However, in the 
past 5 years, I've become increasingly disappointed as it has 
become clear that many are now putting profits ahead of a life 
that they're supposed to be saving.
    As stated, we're all well aware in our nation that we're 
facing an opioid epidemic and an addiction crisis. Opiates, 
along with alcohol and other drugs, are part of a chronic 
illness that is called substance use disorder, a disorder that 
affects one out of every three families in our country.
    Substance use disorder is a chronic and progressive brain 
chemistry disease that, unless treated, oftentimes leads to 
death. Last year, 155,000 Americans lost their life to this 
disease. What you may not know is that of all chronic 
illnesses, substance use disorder is the most effectively 
treated, a fact to which the more than 23 million Americans 
living in recovery today can attest, leading sober, productive 
lives.
    But here's the problem. When the pain and suffering that a 
family is experiencing and they finally overcome what I call 
the misery index, it becomes so high that they finally overcome 
the stigma and denial and cobble together the necessary 
financial resources to seek help, the question is: Where do we 
go? For any other illness, it's simple. You go to your doctor. 
They do an assessment and evaluation and send you on an 
appropriate clinical path.
    Rarely does that happen with substance use disorder. So 
they turn to the internet. And there are a whole host of 
abuses, such as call aggregating, website piracy, patient 
brokering, kickbacks, insurance fraud, and the list goes on. 
The bottom line is that when a suffering family looking for 
help reaches out on the phone and think that they are receiving 
clinical help, they are actually talking to a telemarketer who 
is incented by placing them in the place where they and the 
company they represent gets the biggest payback. This feels a 
whole lot more like vacation timeshare marketing rather than 
healthcare promotion. Deceptive and disgraceful.
    So what can we do? To restore trust in the treatment 
sector, I have four recommendations. The first is around law 
enforcement. We must enact the laws that are currently on the 
books. And we need to come up with other regulations that 
specifically address website accuracy and transparency.
    Number two, the treatment field needs to work with our 
associations to establish ethical standards for marketing, 
evidence-based treatment, and ethical billing. The National 
Association of Addiction Treatment Providers and the American 
Society of Addiction Medicine are already working towards that 
and, in 2018, we will have a list of those providers. More 
importantly, we will also have a list of those that are 
violating those policies.
    Three, we need to educate consumers so that they know where 
and how to get help. We need to work with government, 
particularly SAMHSA, so that there is an effective way to 
identify an appropriate treatment center. Caron Treatment 
Centers, along with Hazelden Betty Ford centers, has actually 
established such a mechanism. We also have a bill of rights, 
which you'll see up on the screen, that we think everyone needs 
to be aware of so that they can know how to get help and what 
they can expect when they're in treatment.
    And fourth, within the healthcare, we need to make sure 
that healthcare now includes substance use treatment so that 
when people go to the doctor, they are assessed and screened 
appropriately. We have a model. The UNAIDS PROJECT developed 
the 90-90-90 goal, which means that 90 percent of the people 
with the AIDS virus get screened, 90 percent of the people 
screened get help, and 90 percent of the people who get help 
get well. That's what we need to have for addiction treatment 
as well.
    The 23 million Americans who are living today are living 
proof that treatment works. I am one of those 23 million 
Americans. Thank you.
    [The prepared statement of Mr. Tieman follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    
    Mr. Harper. Thank you, Mr. Tieman, for that incredible 
testimony.
    Mr. Nielsen, we now recognize you for 5 minutes for the 
purposes of an opening statement.

                   TESTIMONY OF PETE NIELSEN

    Mr. Nielsen. Good morning, Chairman Harper and Ranking 
Member DeGette, as well as the entire subcommittee. My name is 
Pete Nielsen, and I am the CEO of CCAPP, the California 
Consortium of Addiction Programs and Professionals, the largest 
statewide consortium of community-based substance use disorder 
treatment agencies and addiction-focused professionals, 
providing services to over 100,000 Californian residents 
annually in residential, outpatient, and private practice 
settings.
    CCAPP has actively supported residential recovery for over 
30 years. We are responsible for credentialing and professional 
oversight of tens of thousands of addiction treatment and 
prevention professionals in the most populous state in the 
Nation. We have also published and disseminated standards for 
sober living facilities.
    At this time, I would like to ask the chairman permission 
to submit a copy of these standards for the record.
    Mr. Harper. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Nielsen. There is, indeed, a nexus between sober living 
and fraud in the treatment industry. They can easily be 
approached as two separate issues, yet they merge when 
treatment centers engage in unsavory marketing practices, prey 
upon the vulnerable, and offer sober living as a part of the 
deal.
    At some call centers where the process of enrollment for 
treatment and recovery often begins, workers are paid bonuses 
for performance based on how many admissions they sign up and 
marry the high pressure sales tactics on very desperate 
callers. The sales environment is high pressured and all about 
getting heads in beds.
    As a result, marketers should be properly educated and 
properly even--or potentially even credentialed. The better 
trained, better organized, and better coordinated our industry 
is, the better our services will be. And not only will 
consumers benefit, but so will all of society.
    The first step in ending fraud is to assure that all 
involved in the industry meet certain standards, both in terms 
of knowledge and ethics, bad actors using the stigma of 
addiction against people they claim to care for.
    Before anything else, a patient and their caretaker must 
find the right environment and best suited treatment protocol. 
This includes proper screening and evaluation. Simply because 
someone meets the eligibility requirements of the facility, 
this does not automatically mean the facility is right for 
them. In a treatment facility, every employee, from the janitor 
to the manager, the patient and their well-being must be top 
priority.
    Those struggling with addiction are often in need of a 
stable environment. Cooperative housing offers a bridge to 
independent living, which is a critical piece of the puzzle. 
Sober living environments, or SLEs, is a term used to describe 
a specific type of housing. Sober living is not, nor has it 
ever been, intended to be the same as residential inpatient 
treatment. It is its own entity with its own set of standards 
and goals.
    The difference between residential addiction treatment and 
sober living is there are typically no clinical services 
offered in sober living. It is more so about an environment of 
recovery and cooperation and communal living to support 
recovery.
    In order to ensure that consumers are protected and fraud 
reduced, CCAPP recommends standards be followed in five 
categories for SLE in California. We recommend standards for 
physical environment, for management, for record keeping, for 
house rules, and for residency requirements. Physical 
environment standards can include aspects such as design and 
upkeep. Also, good neighbor policies assure the home and its 
residents are accepted as part of the community. The person in 
charge of the facility shall be clearly identified to all 
residents and on the premises to function properly and achieve 
management efficiency.
    House rules must exist. These rules must be clearly 
defined: completion of formal alcohol and drug recovery program 
or documented stability in a self-help group and willingness to 
abide by house rules.
    In California, Assembly Bill 285 was introduced earlier 
this year. And this bill would offer drug and alcohol-free 
residents a--and to have proper oversight.
    Again, I reiterate to--and thanks to the subcommittee for 
addressing this critical issue and for inviting me to testify 
on behalf of CCAPP.
    [The prepared statement of Mr. Nielsen follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
   
    
    Mr. Harper. Thank you very much.
    Mr. Aronberg, we now recognize you for 5 minutes for the 
purposes of an opening statement. Thank you for being here.

                   TESTIMONY OF DAVE ARONBERG

    Mr. Aronberg. Thank you.
    Good morning. My name is Dave Aronberg. I'm a state 
attorney from Florida's 15th Judicial Circuit, which covers all 
of Palm Beach County.
    As the chief law enforcement officer for a county at the 
forefront of the national opioid crisis, I want to thank you, 
Mr. Chairman and all the committee members, for your leadership 
in confronting this unprecedented epidemic, and also for your 
advocacy of the much-needed 21st Century Cures Act.
    Because of Palm Beach County's tropical climate and long-
established drug treatment industry, we've always been a 
destination for people with substance use disorder. This is the 
Florida model. In theory, you have someone battling addiction, 
oftentimes it's heroin. They'll come down to Florida to get 
inpatient detox and other treatment. Insurance will cover 3 to 
7 days of detox and then about 10 days of inpatient treatment. 
It used to be 28 days, but insurance has cut back. Then they'll 
go to outpatient care.
    Outpatient care is--those acronyms just mean 4 to 6 weeks, 
paid by insurance, of group counseling and urinalysis. And then 
to live in a sober home while they're doing that. The sober 
home, as said previously, there's no treatment there. It's just 
a group living place, 6, 8, 10 people living together in a 
drug-free, supportive environment. And then, hopefully, after 
the insurance runs out, that individual is now sober and can go 
home. That's in theory.
    Together, the Affordable Care Act and the Mental Health 
Parity Act provide coverage for rehab on a traditional fee-for-
service basis, with no yearly or lifetime limits, and with 
relapse always covered as an essential health benefit.
    In recent years, however, we've had a surge of unscrupulous 
individuals enrich themselves by misusing well-intended Federal 
laws to prey on opioid addicts who are often willing to 
participate in patient brokering, illegal kickbacks, and 
insurance fraud, in exchange for illicit benefits, such as 
cash, free rent, transportation, and even drugs themselves. 
This is the Florida shuffle. This is the reality on the ground. 
Everyone's getting rich.
    You have a patient coming down to Florida, sent by a 
marketer with a free plane ticket, and then going into an 
inpatient facility that kicks back money to the marketer, then 
going into an outpatient facility where kickbacks occur, and 
then living in a sober home, often for free, because the sober 
home owner will get a kickback from the outpatient care center. 
And the lab even makes money on kickbacks because urinalyses 
are very lucrative. And everyone's making money, except there's 
one area that's not profitable. And that's sobriety. We are 
incentivizing failure. This is a relapse model, not a recovery 
model.
    What's also important to note, is that when it comes to the 
sober home area, the Americans With Disabilities Act and the 
Fair Housing Act together prevent the regulation or inspection 
of these residences. And so many are little more than 
flophouses where drug abuse, human trafficking, and other 
crimes are prevalent.
    It's hard enough to remain sober as it is for someone 
battling addiction, let alone knowing that their sobriety is 
going to cost them their free rent, their free gifts, their 
transportation, their friends, and now they got to move back 
home, in a chilly climate, and live with their parents and find 
a job. And this is why 75 percent of all private-pay patients 
in Florida rehab, come from out of state, and they rarely 
leave. Too often, they leave in body bags and ambulances.
    In July 2016, our office formed a task force to crack down 
on this fraud and abuse. We have since made 41 arrests. We also 
impaneled a grand jury and created two additional citizens' 
task forces to recommend changes to Florida law that led to the 
passage of an important act that Congresswoman Castor 
mentioned. But we can't fix this problem alone. We need your 
help, and that's why we're making the following 
recommendations.
    First, address private insurance abuses by adopting the 
ACA's outcome-based reimbursement model used in the Medicare 
program instead of the current fee-for-service reimbursement 
model. This would reward the best recovery centers while 
shuttering rogue operators. It could also improve patient 
outcomes as providers will be incentivized towards a longer 
term, lower-level continuum of care rather than ineffectual 
short bursts of intensive forms of treatment with no followup.
    Second, address the abuses in the sober home industry by 
clarifying the ADA and FHA to allow states and local 
governments to enact reasonable regulations for the health and 
safety of vulnerable sober home residents. DOJ and HUD 
attempted to issue such a clarification last year, but their 
joint statements seem to miss the point that the very Federal 
laws designed to protect individuals in recovery are instead 
being used to shield those who do them harm.
    Chief assistant Alan Johnson, who heads our Sober Homes 
Task Force, will provide our other three recommendations.
    And I want to thank you, members of the committee, for your 
time.
    [The prepared statement of Mr. Aronberg follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    Mr. Harper. Thank you for your testimony.
    The chair will now recognize Mr. Johnson for 5 minutes for 
purposes of his opening statement.

                   TESTIMONY OF ALAN JOHNSON

    Mr. Johnson. Thank you, Mr. Chair, members. Thank you for 
the opportunity.
    As we succeed in Palm Beach County in arresting and 
prosecuting rogue providers and shuttering corrupt facilities, 
we've seen the criminal element leave Palm Beach County for 
other communities and states that may not be aware of the 
Florida shuffle. We have held training sessions for prosecutors 
and law enforcement officers throughout Florida, and we're 
offering our assistance to other jurisdictions throughout the 
country.
    However, there are a number of roadblocks facing local, 
state, and Federal prosecutors in effectively combatting these 
abuses. The following are several concrete steps that can close 
loopholes in the law, protect the vulnerable patients with 
substance use disorder from exploitation, and assist 
prosecutors in their efforts to reign in the corruption that 
has plagued the treatment industry. In the interest of brevity, 
I'll highlight these recommendations. My written testimony is 
more detailed.
    Currently, under the Federal Anti-Kickback Statute, which 
is known as AKS, Federal agents and prosecutors only have 
jurisdiction to pursue kickbacks related to federally assisted 
insurance programs, such as Medicare and Medicaid. Patient 
brokering abuses, regardless of whether the insurance is public 
or private, hurts patients and increases the cost of healthcare 
to everyone. In other words, the same public purpose behind the 
Anti-Kickback Statute applies equally to both federally funded 
and private treatment. The private industrywide fraud has been 
estimated in the billions of dollars. I know you know that. The 
human cost of substandard care motivated by greed is 
incalculable.
    We ask that this committee explore an amendment to the AKS, 
the Anti-Kickback Statute, that would bring this law 
enforcement tool to bear on the rampant exploitation occurring 
in the private-based sector. At a minimum, jurisdiction should 
be extended to private insurance contracts obtained through the 
ACA exchanges.
    Second, we ask that the bona fide employee safe harbor, BFE 
it's known as, within the Anti-Kickback Statute be modified. 
Now, Florida, along with many states, has patient brokering 
statutes that adopt the Federal safe harbors like bona fide 
employee.
    Currently, rogue actors in the treatment industry are 
hiring marketers as employees to circumvent the Federal Anti-
Kickback and state patient brokering statutes. Employers are 
paying bonuses and commissions based on the value or the volume 
of the patients their employees refer. Many of these marketers 
who are employees have no credentials in traditional marketing, 
are recovering addicts themselves and, in many cases, own sober 
homes where they steer the residents to the employer's 
facilities.
    The bona fide employee exception needs to be clarified in 
two ways. First, an employee should not be permitted to receive 
bonuses and commissions on the basis of the value of the 
services or the volume of the customers they refer. The 
delivery of healthcare is not the same as selling automobiles 
or computers.
    This can be achieved by applying the safe harbor rules in 
the Federal statute regulating independent contractors to apply 
to employees. For example, independent contractors under the 
Anti-Kickback Statute cannot be paid on the basis of the volume 
or value of their referrals. This rule should apply to 
employees as well. By making a marketer an employee should not 
absolve the employer and the employee from liability for these 
abuses.
    Additionally, the bona fide employee safe harbor exception 
to the Anti-Kickback Statute allows an employer to pay ``any 
amount to an employee for the employment in the provision of 
covered items or services.'' This safe harbor should be 
clarified to mean that any payment to an employee must be for 
the performance of services that are actually covered by the 
applicable Federal program. And this would flow down to the 
states as well in their patient brokering statutes.
    While the current wording of the statute is clear to us, 
Federal courts continue to disagree as to the meaning of the 
phrase, and it's hurting our oversight of these abuses.
    Third, an increased effort should be made to use 
appropriate Federal agencies to go after the corrupt marketers 
and marketing schemes. This is a national problem, and 
thousands of families throughout the country are affected by 
false and fraudulent misrepresentations. State and local 
agencies do not have the resources or jurisdiction to go after 
large interstate marketing operations.
    Lastly, and perhaps most importantly, the rules regulating 
the application of the ADA and FHA, as they pertain to sober 
homes, need to be clarified to allow standards to be required 
for the protection of the residents. There are standards out 
there. Oxford House is recognized by Congress, as well as the 
National Alliance of Recovery Residences.
    Running out of time, so thank you very much.
    [The prepared statement of Mr. Johnson follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
        
    Mr. Harper. Thank you for your testimony, Mr. Johnson. I 
look forward to hearing more in response to the questions.
    The chair will now recognize Mr. Gold for 5 minutes for the 
purposes of an opening statement.

                   TESTIMONY OF ERIC M. GOLD

    Mr. Gold. Chairman Harper, Ranking Member DeGette, and 
members of the subcommittee, thank you for inviting me to 
testify this morning on this very important issue.
    I'm an assistant attorney general, Chief of the Healthcare 
Division in the Office of the Massachusetts Attorney General, 
and I'm privileged to be here today on behalf of Attorney 
General Healey.
    In 2014, Massachusetts became the first state in the 
country to declare the opioid epidemic to be a public health 
emergency. Last year, there were 2,190 overdose deaths in our 
state, and thousands more are in need of treatment for opioid 
use disorder.
    Attorney General Healey has made combating the opioid 
epidemic her top priority, and dedicated the full resources of 
our office to address the problem from all sides using criminal 
and civil law enforcement, and promoting treatment, prevention, 
and education.
    Earlier this year, the office began hearing devastating 
stories from young men and women from Massachusetts who were 
lured out of state by paid recruiters who promised them free 
travel to addiction treatment centers in a warm-weather state.
    When the patients arrived, they often discovered that the 
treatment they were to receive was low quality or even 
nonexistent. In those cases, they were left thousands of miles 
from home with no health insurance, no access to the medical 
care they needed, and no resources to return home. In the most 
tragic cases, these young people suffered fatal overdoses 
following their continued use of opioids without treatment.
    Following these concerns, our office has opened a criminal 
investigation into addiction treatment fraud, and issued a 
consumer advisory alerting patients and their families that 
they should be wary of unsolicited offers for free out-of-state 
addiction treatment.
    Based on our experience in Massachusetts, I have three 
recommendations for the subcommittee. First, we need additional 
resources for Federal, state, and local law enforcement to 
combat patient brokering and addiction treatment fraud. Every 
time a recruiter lures a young person from Massachusetts to 
travel far from home for treatment, that person's life is on 
the line. While state and local law enforcement are working 
aggressively on these cases, this is a national problem, and it 
requires a coordinated national law enforcement solution.
    Second, patients need transparency into the quality of 
addiction treatment providers nationwide. If patients are going 
to travel out of state for treatment, they need a reliable way 
to identify the high-quality providers. Right now, families 
rely on a patchwork of incomplete state directories, providers' 
own websites, and personal reviews online. Because so many 
patients are receiving treatment outside of their home state, 
there is an opportunity for the Federal Government to play a 
role in getting patients and their families the information 
they need about treatment providers.
    Finally, we need to be sure that any attempts to address 
patient brokering advance the ultimate goal of ensuring that 
patients with substance use disorder have access to the 
treatment that they need. Thanks to changes in Federal and 
state law, most insured patients now have access to treatment 
for substance use disorder. And while you could imagine 
regulatory changes that reduce the risk of patient brokering, 
in our state, we do not want to change the rules in a way that 
would reduce access to treatment for many patients living with 
substance use disorder.
    Thank you, again, for the opportunity to share my 
perspective and that of the residents of Massachusetts with the 
subcommittee. Thank you to the subcommittee for careful 
consideration of this important issue, and I look forward to 
answering any questions that you have.
    [The prepared statement of Mr. Gold follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
       
    Mr. Harper. Thank you, Mr. Gold.
    Before we proceed to member questions, I'd ask for 
unanimous consent that Mr. Tieman's chart of patient rights and 
Mr. Aronberg's two charts, The Florida Model in Theory and The 
Florida Shuffle, be made a part of the record.
    Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Harper. The chair will now recognize himself for 5 
minutes to ask questions.
    And I want to thank all of you for your testimony. It is 
troubling to each of you, and certainly to us, that patient 
brokers, as well as unscrupulous facilities and sober living 
homes, are treating individuals seeking treatment as a 
commodity rather than trying to assist them in seeking 
legitimate treatment and achieve sobriety. Sadly, there have 
been instances where people have died, and I think it's very 
important that we flush out and expose these schemes.
    My first question will be to Mr. Aronberg and Mr. Johnson. 
And then, Mr. Tieman, I may have you follow up in response to 
that after their answers.
    From your experience in the Sober Homes Task Force, what 
consumer information would you provide to families seeking drug 
abuse treatment for their loved ones to help them distinguish 
between good actors in the drug treatment industry from the 
rogue providers or corrupt facilities?
    Mr. Johnson. Mr. Chair, that hits the heart of the matter. 
There are no effective means of communicating the Caron 
organizations from the flophouses and the strip mall providers 
that may or may not be run by convicted felons. Because 
everybody gets a license, they get somebody to prepare a 
license for them, answer all the questions correctly, have a 
medical director or a clinical director, and they get their 
license. And, just like everybody else, people can come through 
the door.
    And that would be incredibly helpful to be able to have a 
registry. How do you do it? That's hard, because how do you 
pick and choose? But, clearly, accreditation is not the answer. 
Because there are--a Joint Commission and CARF, they can 
accredit. And I can tell you that there are some really bad 
places that we have arrested that were accredited facilities.
    So that is an issue that should be explored. There is none. 
We have no capacity. People call us--we have a hotline--from 
all over the country worried about their kids that are in 
Florida, in Palm Beach County. And what do we tell them? We 
can't recommend a particular place.
    There is one thing we can recommend in Florida, and that is 
the FARR, Florida Association of Recovery Residences' sober 
homes. Because those residences, the rules that govern those 
residences, there's a certified recovery administrator that 
oversees. They're not flophouses. They're actual places that 
promote sobriety.
    And one of the things that we ask is that this committee 
explore a way to make the states more comfortable with being 
able to require certification of sober homes for that very 
reason, to protect the residents within. I can tell you right 
now the State of Florida will not mandatorily require 
certification of sober homes in the Florida Association of 
Recovery Residences because they are afraid of violating the 
ADA and the FHA. Thank you.
    Mr. Harper. Thank you for that.
    Mr. Aronberg, add to that?
    Mr. Aronberg. Yes. Thank you, Mr. Chairman. It's an 
excellent question. As Al said, we have a Sober Home Task Force 
hotline, and we get a lot of tips on rogue operators. But we'll 
also get calls from families from around the country wanting to 
know if their child's sober home or drug treatment center is 
legitimate. And in one case, we had to tell a mother to come 
down and get your daughter out of this facility right now. And 
when she tried, the daughter said, no, why would I want to 
leave? I have everything I need right here. She had free rent, 
transportation, friends. Why would she want to leave? And so 
there needs to be a way to separate the good from the bad.
    I would recommend--and to build on what Al said--some sort 
of certification. We have that in Florida, but it's only 
voluntary. Because the state won't require mandatory 
certification or registration, even because they're scared of 
the ADA and the FHA preventing this. So we have FARR, which is 
a voluntary organization. And the good sober homes are 
registered with FARR and they're certified. They get inspected. 
And those are the ones we say, hey, they've got at least a 
level of accountability and quality. But it would be better if 
it was mandatory as opposed to just voluntary, because there's 
only a few homes relative to the population that are certified.
    Another way you can improve things, I think, is to adopt an 
outcome-based reimbursement model. So, right now, the bad guys 
get more money than the good guys. So Mr. Tieman's facility, 
they lose patients to the bad guys who are encouraging relapse 
because that's where the money is. But, under the ACA's 
Medicare reimbursement model, there's money that's held back, 
and the good providers for hospitals, they get more money in 
the end. Good providers get more money. The bad providers get 
less. I'd love to devise a formula where we can reward the good 
providers, even if it takes peer reviews to be part of that 
calculus, and punish the bad providers. If you dry up the money 
source, you'll see a lot of these guys go away.
    Mr. Harper. Great. And my time has expired. So, Mr. Tieman, 
hopefully, we will get an opportunity in a little while to 
respond to any followup that you may have.
    At this point, the chair will now recognize the ranking 
member, Ms. DeGette, for 5 minutes for questions.
    Ms. DeGette. Thank you, so much, Mr. Chairman.
    As I said in my opening remarks, I'm trying to figure out 
the breadth of this problem. We sent a letter to the Florida 
Department of Children and Families and asked how many drug 
treatment facilities and sober living homes have been shut down 
due to patient brokering. Florida said they've pulled the 
license of five facilities since December 2016, so in the last 
year or so.
    Mr. Aronberg, I know you've made more arrests and that this 
problem's probably larger than just a few facilities. Can you 
tell me how many patient broker arrangements you're aware of 
that are not legitimate?
    Mr. Aronberg. Thank you for your question, Congresswoman 
DeGette.
    Ms. DeGette. And recognizing I've got 5 minutes.
    Mr. Aronberg. Right. OK. Yes, ma'am.
    Ms. DeGette. Thank you. Sorry.
    Mr. Aronberg. We don't even know how many sober homes there 
are in Palm Beach County.
    Ms. DeGette. I see. So you don't have a sense of the extent 
of it really?
    Mr. Aronberg. Well, what happens is someone opens up a 
sober home, they do it today.
    Ms. Degette. Right.
    Mr. Aronberg. They don't have to get any licensing.
    Ms. DeGette. Right. There's no regulations. Yes.
    Mr. Aronberg. Right. The only way that--I'm sorry.
    Ms. DeGette. Well, let me ask you, do you know how many 
licensed physicians might be taking part in this?
    Mr. Aronberg. Well, licensed physicians aren't affiliated 
with the sober homes.
    Ms. Degette. Right.
    Mr. Aronberg. They're affiliated with the outpatient 
facilities and the inpatient facilities.
    Ms. Degette. Right.
    Mr. Aronberg. As far as how many, I wouldn't know offhand. 
I would have to defer to Al.
    Ms. DeGette. Mr. Johnson, do you have any idea?
    Mr. Johnson. We can't put a number on the abuse because, 
when we find abuse, we prosecute it.
    Ms. DeGette. Sure. How many have you prosecuted?
    Mr. Johnson. We have one physician that we filed felony 
charges on. And, of course, I can't discuss with you the----
    Ms. DeGette. Sure.
    Mr. Johnson [continuing]. The other investigations.
    Ms. Degette. I understand. So----
    Mr. Aronberg. We've had 41 arrests so far in the last year.
    Ms. DeGette. Forty-one arrests. OK. And who are the arrests 
of?
    Mr. Aronberg. The arrests are individuals who operate sober 
homes and outpatient drug treatment centers.
    Ms. Degette. OK.
    Mr. Aronberg. We even----
    Ms. DeGette. And how many of these centers are associated 
with these 41 arrests? Are they 41 different centers or do they 
all work for one or two centers?
    Mr. Johnson. If you look at it as a hub and the spokes of a 
wheel----
    Ms. DeGette. Yes, yes.
    Mr. Johnson [continuing]. The hub is the facility that 
provides treatment----
    Ms. DeGette. Yes. I understand.
    Mr. Johnson [continuing]. The spokes are going to be the 
sober homes.
    Ms. Degette. Right. So how many hubs are there?
    Mr. Johnson. The majority are sober homes.
    Ms. DeGette. How many?
    Mr. Johnson. Oh, I would say probably 70 percent, maybe 80 
percent, are sober homes.
    Ms. DeGette. How many facilities are you investigating? I'm 
trying to figure out how widespread this problem is.
    Mr. Aronberg. Twelve.
    Ms. Degette. Twelve.
    Mr. Aronberg. Twelve. In addition to that----
    Ms. Degette. OK.
    Mr. Aronberg [continuing]. There have been many others who 
have packed up and left----
    Ms. Degette. OK. Yes.
    Mr. Aronberg [continuing]. Because of our----
    Ms. DeGette. Yes. Thank you.
    Now, in California, Mr. Nielsen, do you have any sense of 
how many of these rogue actors there are?
    Mr. Nielsen. We do not.
    Ms. DeGette. OK. Is anybody trying to do any factfinding to 
figure that out?
    Mr. Nielsen. Yes. But it's hard to be able to boil down 
what's actually happening. Because it's like Windex----
    Ms. DeGette. Right.
    Mr. Nielsen [continuing]. A lot of them look like they're 
good actors, but really they're rotten to the core. So it's 
peeling away the layers----
    Ms. Degette. Yes.
    Mr. Nielsen [continuing]. To get to them.
    Ms. DeGette. And, as Mr. Aronberg said, since there's no 
requirement that they meet certain standards, anybody can just 
open one of these things.
    I want to ask you, Mr. Aronberg, one thing I talked about 
in my opening was this ridiculous billing of laboratories for 
unnecessary urine tests. And I'm just wondering--maybe some of 
the rest of you can talk about this too--why would insurance 
companies pay for these tests? Any of us who've tried to get a 
prescription for anything know they'll give you like five pills 
and say you're good. Why would insurance companies pay 
thousands of dollars for daily urine tests which aren't 
medically necessary?
    Mr. Aronberg. In my experience in speaking--and I'll defer 
to others--but in speaking to the insurance company folks, 
they've said they worry about being sued under Federal law if 
they don't reimburse. But they have self-corrected in that they 
used to pay $3,000 for a urinalysis. Now that's drastically 
reduced to a few hundred dollars. But it's still very 
lucrative. But I would defer to the others.
    Ms. DeGette. Mr. Johnson?
    Mr. Johnson. The problem is insurance companies are like a 
battleship and they're slow in maneuvering. And they are 
finally catching up. Unfortunately, sometimes the pendulum 
overcorrects.
    Ms. DeGette. Yes. I know.
    Mr. Johnson. But you mentioned medical necessity. That's 
the key.
    Ms. DeGette. Yes.
    Mr. Johnson. The insurance companies are battling with 
providers over what is and is not----
    Ms. Degette. Medically necessary.
    Mr. Johnson [continuing]. Medically necessary, and that 
includes urine testing.
    Ms. DeGette. OK. I have one last question for you. And I 
apologize for romping through these questions. We really do 
only have 5 minutes.
    Florida passed a law, the Practices of Substance Abuse 
Service Providers Law, in June and which will take full effect 
in February. This law makes patient brokering a criminal 
racketeering offense under Florida law, prohibits dishonest 
treatment provider advertising, and increases penalties for 
both of these things.
    Mr. Johnson, do you think this is going to help in 
enforcement efforts against these rogue actors in Florida?
    Mr. Johnson. We can't prosecute our way out of this 
problem, but, yes.
    Ms. Degette. OK.
    Mr. Johnson. The enhanced laws that were passed--actually, 
they went into effect July 1--are going to be significant. 
Resources on the state and local level, however--we noticed 
that other circuits in the state do not have a task force like 
we do--very difficult. But the laws do help.
    Ms. DeGette. Thank you. Thank you, Mr. Chairman.
    Mr. Harper. The chair will now recognize the vice chairman 
of the committee, Mr. Griffith, who has done an exceptional job 
these last couple of months for our subcommittee. And we now 
recognize him for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. It was an 
honor to fill in. It will also be a great honor, and I look 
forward to serving with you and the great work that we're going 
to do together as a team, along with Ms. DeGette and others, 
because this subcommittee really does like to try to find 
answers and solve problems.
    So here's a problem I've got. Between Mr. Johnson and Mr. 
Gold, both of you have touched on the issue. You've identified 
two sides of the argument. And it's one that has concerned me 
as we've looked at this issue, and that is you've got some 
legitimate folks out there that are trying to do drug 
treatment. In my very rural district, with 29 geopolitical 
subdivisions, there aren't. And one of the big complaints is we 
don't have enough drug treatment centers. I know for sure that 
one of my drug treatment centers pays either based on volume or 
commission, a couple of people that they send out to interface 
with the court services units, when they have people who may 
need their services, they say, OK, here's what we can provide, 
does that help your person? They also interface with some of 
the physicians' offices that are dealing with this where they 
don't have drug treatment themselves, but they identify that a 
patient has a substance abuse problem.
    So between the two of you, how do we resolve the problem 
that Mr. Gold raised and the problem Mr. Johnson has raised? 
We've got bad actors, we want to shut them down. But if we 
eliminate commissions and volume--I get value--but volume 
referrals for these folks that are out in the field, I fear 
that, particularly in rural areas like mine, we may be, as Mr. 
Gold pointed out, limiting access to the substance abuse 
treatment itself.
    So, Mr. Gold, I don't know if you want to go or, Mr. 
Johnson, if you have some solution to that dilemma that I'm 
trying to figure out up here. Because we want to stop the bad 
actors, but we want to make sure people get drug treatment 
services. Now, the sober homes is completely alien to my 
knowledge and--before starting to study this issue. And very 
concerned about those. But for drug treatment.
    Mr. Gold. Sure. Thank you, Congressman. I obviously don't 
know the specifics in your district. From where we are in 
Massachusetts, we have a tremendous demand for treatment 
services, a large number and a limited supply. So from our 
perspective, if we can cut off the money that's flowing to 
these commissions, to the brokers that are trying to lure folks 
out of state, we think that would help in Massachusetts. People 
would still get access to the treatment that they need, and if 
they need to go out of state, can do so.
    Mr. Griffith. So let me translate, if I might, and make 
sure I'm hearing it correctly, because I'm going to translate 
it into my verbiage. So what you're saying is you're worried 
about the people who are out recruiting people from out of 
state, but if they were in state, you see where there might be 
some validity in having somebody out there working with the in-
state folks, like the court services units, as opposed to 
getting on the phone--I never even heard of telemarketers 
selling these services--but getting on the phone and trying to 
recruit people. Is that what you're saying?
    Mr. Gold. Yes. I'm concerned about the people being paid 
commissions in-state too. I think my point was, in 
Massachusetts, there's not actually a lot of recruiting going 
on to keep people in the state.
    Mr. Griffith. Right.
    Mr. Gold. Because people who are already in this--all the 
treatment centers in Massachusetts are pretty much full. And so 
my understanding is they're not out there on the ground doing 
that. But what I am concerned about is because some people do 
legitimately need to travel out of state to get treatment, and 
I want to make sure insurance is still going to be able to 
cover that and people can go out of state if needed. But 
they're going to the treatment that they want, not just that 
the recruiter/broker is getting paid a commission to send them 
to that treatment.
    Mr. Griffith. Right.
    Mr. Johnson.
    Mr. Johnson. I have not yet heard a compelling argument why 
an employee needs to have commissions or bonuses. If you have a 
good salesperson--if you're selling automobiles, they're on 
commission, that's fine. When you're talking about health 
issues, when you give somebody a commission, you incentivize 
overutilization. You incentivize the standard of care that's 
not the appropriate standard of care, because all they're 
interested in is getting that commission for that person.
    You can pay somebody to do the job of going out and talking 
to doctors and going to court services without giving them a 
bonus----
    Mr. Griffith. So they just have to a rearrange their 
business model.
    Mr. Johnson. Fair market value.
    Mr. Griffith. OK.
    Mr. Johnson. Fair market value for the product, yes.
    Mr. Griffith. Let me go to Mr. Tieman. I only have about a 
half minute left, but talk about what you all do with drug 
screening and drug testing. And you all are one of the good 
players. How do we create rules that make sense?
    Mr. Tieman. That's a good question. Thank you so much, 
Vice-Chairman. The whole idea of urine drug screening, 
particularly in a residential setting, should rarely happen, 
because you're in a safe environment. We utilize it if someone 
needs to go home on a home pass. They go home for the weekend. 
There is a funeral in the family and they need to be gone, we 
would do a urine drug screen when they come back.
    When this whole scam came up about 5 years ago, like all 
treatment centers, we were inundated with calls. You should do 
this--and, frankly, it sounded quite attractive. People say, 
invest a million dollars, you'll have it paid back in 10 
months. We said, this doesn't pass the smell test. And, 
unfortunately, now, the light is on that we have talked to 
insurance companies. And as I think Mr. Johnson pointed out, 
insurers are now saying--they were slow to react to it, but 
they see it, and now that has been slowed down dramatically and 
will continue to do so, which has now put other pressures on 
the charlatans because they've got to find other ways to make 
that money. But it should be used when medically necessary, 
clinically appropriate.
    Mr. Griffith. I thank you, and yield back.
    Mr. Harper. The gentleman yields back.
    The chair will now recognize the gentlelady from Florida, 
Ms. Castor, for 5 minutes for questions.
    Ms. Castor. Thank you, Mr. Chairman.
    Mr. Aronberg and Mr. Johnson, thank you very much for your 
very direct and concise recommendations to the committee. It's 
very helpful. I think your first one relating to changing the 
ACA health insurance plans to the Medicare reimbursement 
approach is--that's very helpful. The one that's a little more 
difficult involves the ADA and the Fair Housing Act.
    You write in your testimony, Federal law prevents the 
regulation or inspection of these residences, and many are 
little more than flophouses or drug abuse, human trafficking, 
and other crimes are prevalent. And you recommend to the 
committee that we address these abuses by clarifying the ADA 
and Fair Housing Amendments Act to allow states and local 
governments to enact reasonable regulations for the health, 
safety, and welfare.
    How do you recommend that be done, while we maintain the 
important protections of the ADA and Fair Housing?
    Mr. Aronberg. Thank you, Congresswoman Castor. I realize 
also the challenge of opening up the ADA for amendment, so 
that's why we're suggesting clarification. This was requested 
for some time to HUD and DOJ because the Fair Housing Act and 
the ADA, they're the ones who had issued the clarification, and 
they did last year, but the clarification they issued was not 
helpful. It was a joint statement, and it seemed to ignore the 
realities on the ground. They were talking about senior housing 
and all these other issues, but they did not give any good 
guidance.
    The only thing they did help us with was that the 
clarification did say that a local government can prevent the 
clustering of sober homes in one small area. That that's not 
conducive to recovery. But we wanted to know, well, can we 
require mandatory certification or inspection of these 
facilities? They didn't answer that.
    And so we're left now where local governments are starting 
to require these things, but they're doing so out on their own, 
waiting to get sued. The City of Boca Raton tried to zone sober 
homes into an industrial area a few years ago. They got sued 
and they paid out and lost, and they had to pay out $3 million.
    So local governments are scared to challenge the ADA and 
FHA without some guidance. So I don't think you need to amend 
it; you just need to maybe give a better clarification that 
acknowledges the realities on the ground. The ADA and the FHA 
were designed to protect these individuals. And in reality, 
it's being used a shield to protect people who are harming 
these folks.
    Ms. Castor. Good. And, hopefully, that's something the 
committee can work on.
    I'm being advised by a father back home in the Tampa area 
who has struggled with his son's addiction for many years, 
probably not unlike many of the members on this committee 
dealing with folks back home. He says--and he wrote in advance 
of the hearing just what you had said and showed that--that our 
current system incentivizes the cycle of addiction and relapse. 
And he wrote: The current system is designed to maintain a 
perpetual healthcare crisis. There is no incentive to help 
addicts as their illness creates wealth, profits shielded by 
the illusion of healthcare. They are left to those that will 
pretend to help and provide some initial safety net, so long as 
they profit from the disease.
    He says: The mechanism for getting healthy does not exist 
right now, given the paradox between the insurance companies 
and the providers of healthcare. Insurance carriers put 
downward pressure on cost and addiction care, providers put 
upward pressure on creating recurrence.
    And he is advocating for an entire paradigm shift, a 
separate system, because of the waste in the system, because of 
the huge amount of dollars lost in productivity all across the 
country. He says our entire system must be revamped. He 
suggests maybe a VA-style system or something new.
    Mr. Tieman, clearly, we have to change the paradigm here. 
This is not working, and it's costing the Federal Government 
and the folks we represent a whole lot of money. What do you 
think about a revamped system that really directly provides 
care?
    Mr. Tieman. Thank you so much for that question, 
Congresswoman Castor. As I enter the last chapter or last lap 
of my career, one I began 35 years ago, and at the time, it was 
a bunch of do-gooders that cared desperately about families 
that were suffering from substance use disorder. And seeing the 
abuses of today and the kind of comments I hear really reflect 
what you have stated.
    I had one guy say to me, we want to treat people so well 
that when they relapse, and we surely expect they will, that 
they want to come back, which is that whole idea of almost 
having an annuity when someone comes to treatment. So we've 
adopted the practice and, in fact, are slow in his recovery for 
life. But we want you to get well. We'd love you to come back 
for an alumni reunion. We'd love you to come back as a sponsor. 
We'd love for you to come back and share your story, but we 
really don't want you to come back as a patient. And you're 
absolutely right.
    And I think Mr. Aronberg mentioned the whole idea of 
incenting quality, incenting outcome. We're currently working 
with Independence Blue Cross trying to develop that exact 
model, where people who get substance use treatment costs 
Independence Blue Cross less money for other kinds of 
healthcare. They save money in the jail system, the court 
system, emergency room system. That's where we need to get to, 
which is an outcome-based system, as opposed to just continuing 
to look at this as an acute episode.
    Substance use disorder is a chronic illness. You have it 
for the rest of your life. We need to put it in remission. 
Unfortunately, not everyone gets there. Just like other chronic 
illnesses, not everybody goes into remission from cancer or 
diabetes, but this is very successfully treated when we do it 
for the long haul. And the savings to society are enormous and 
the savings of pain is beyond comprehension.
    Ms. Castor. Thank you very much.
    Mr. Harper. The chair now recognizes Dr. Burgess for 5 
minutes.
    Mr. Burgess. Thank you, Mr. Chairman.
    Again, thanks to our witnesses. This has been a fascinating 
discussion and clearly a problem that needs our attention.
    I've got a number of questions that I will submit for the 
record as written questions, but our discussion has actually--
I'd like to ask for some clarification on some of the points 
that have already been raised.
    And, Mr. Aronberg, in your written testimony, you talked a 
little bit about this, in response to the last questions--
address private insurance abuses by adopting the Affordable 
Care Act's outcome-based reimbursement model used in the 
Medicare program. I just need to add here that that is a 
process in evolution. Payment reform in Medicare actually 
predated the ACA by some time, and again, it is still a work in 
progress. It is far from settled.
    But so many of the nongovernment insurances, the private 
insurances, so many of them, as the ranking member suggested, 
it's hard to get reimbursement. I was in private practice in 
medicine for 25 years. It's hard to get money out of insurance 
companies. They don't part with it willingly. How is it that 
they're giving it so freely in this instance?
    Mr. Aronberg. Thank you, Dr. Burgess. It's the big question 
we've been trying to answer, is why do the insurance companies 
continue to pay out these large amounts. And as Al Johnson 
said, it's like a battleship where, at first, they were caught 
by surprise by this, and they're worried about being sued, so 
we're paying out $3,000 per urinalysis, which is egregious. And 
now, they have cut back dramatically. Mr. Tieman could probably 
tell you what they get reimbursed now on it.
    But in talking to the executives, they have said they were 
concerned about being sued. And then there was another issue, 
which I'm not an expert on, but, apparently, the 80/20 rule 
within the Affordable Care Act exists. And so, I guess, for 
some insurance companies, if you pay out more on the 80 
percent, you can keep more, the 20 percent, the pie is 
expanded. So the 80/20 rule may have created incentives to pay 
out as much as possible. You just get reimbursed by the 
taxpayers, and now you get to keep that 20 percent which you 
get to keep for profits is now expanded. So it's something to 
pursue, but we are seeing a correction.
    Mr. Burgess. You're referring to the medical loss ratio. 
You expand the pie and your 20 percent is a larger piece of 
pie.
    Mr. Aronberg. Correct.
    Mr. Burgess. Actually, I had not considered that, and I 
thank you for bringing that point up.
    The other aspect is we're all familiar with hearing from 
our constituents, the difficulties with the out-of-pocket 
expenses within the Affordable Care Act and the high 
deductibles. And I can't tell you this is happening, but what 
it looks to me, one of the things that may be happening is, 
let's get through that deductible as fast as we can, and then 
everything else is a covered benefit, and the checks will 
continue to come in. Again, I have no proof that that is 
actually happening, but from what I've heard discussed here 
this morning, it's something certainly worthy of our 
investigation.
    On the whole issue of the urine tests, a urine test has to 
be ordered by a physician. You can't just go down to a lab and 
say, I want you to test my urine for drugs today, and get your 
reimbursement check. That doesn't happen in the real world. So 
how is that happening?
    Mr. Aronberg. Congressman, we've seen physicians just leave 
pads for prescriptions for urinalyses and just walk away. The 
corrupted physicians who are part of this----
    Mr. Burgess. So that has to be a violation of your state 
law. There's probably a False Claims Act violation in there 
somewhere. Does any of this ever get prosecuted?
    Mr. Aronberg. Yes. It is harder to prosecute a physician, 
just like it's harder to prosecute a lab, but we're going after 
labs, and we have gone after physicians. But it's tougher. To 
determine a violation of standard of care--and maybe Al can 
speak to that a little more, but we have gone after physicians 
and labs.
    Mr. Burgess. Well, Mr. Gold, before I run out of time, let 
me just ask you, because the compelling testimony that you 
provided, and you've lost constituents who have gone places for 
treatment and ended up not surviving. Is that correct?
    Mr. Gold. That's right.
    Mr. Burgess. So has any family ever brought an action 
against one of these locations? I'm not one to think that 
medical liability cases are ones that should be brought, but it 
begs the question, if an avoidable death has happened, 
generally, there's some questions asked and some liability 
assigned.
    Mr. Gold. That's a good question. I'm not aware of any 
medical malpractice cases that have been brought on this issue 
that I'm aware.
    Mr. Burgess. You're not aware of any medical malpractice 
cases?
    Mr. Gold. No.
    Mr. Burgess. And how many deaths in your state, in 
Massachusetts?
    Mr. Gold. I don't have any statistics. I'm aware of public 
reports of at a least a handful of them. But, again, many of 
these cases, the healthcare treatment was provided out of 
state. It's not even clear that the families are aware of the 
particular healthcare providers that were providing that 
treatment. So I don't know that there have been any of those 
cases brought.
    Mr. Burgess. Well, OK. Again, I thank all of you for your 
testimony. I do have some questions that I'll submit for the 
record.
    Thank you, Mr. Chairman. I yield back.
    Mr. Harper. The gentleman yields back.
    The chair will now recognize the gentleman from New York, 
Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair. And congratulations on 
your appointment.
    Mr. Harper. Thank you, sir.
    Mr. Tonko. These schemes we have heard about today are very 
upsetting, and that's all the more reason why we need to 
encourage and support access to evidence-based addiction 
treatment as we address the opioid crisis.
    I would like to ask our panelists today what good treatment 
looks like, and what people in need and their families should 
look for when seeking treatment.
    Mr. Nielsen, your organization offers credentialing in 
California for agencies and professionals in substance use 
disorder treatment. What are the hallmarks of effective 
evidence-based treatment?
    Mr. Nielsen. So it's important not only for the facility to 
be competent, but the professionals that they employ to be 
competent as well. Everybody has to be brought in the process 
that this is about the person and not about the profits. And 
for a facility to really be outstanding, and they have to go 
above and beyond to make sure that the clients' rights are 
protected and that they give quality care, meaning that the 
individual is the driver of the care, not the facility. And 
that there is a way for them to have a say in the process. They 
need to be a part of the process and they need to be 
stakeholders. And it's very important that they not only are 
given input, but their family is also given input as well, and 
that this is a whole team approach and not just the facility 
driving the bus for profits.
    I also think that it's very important that there's 
credentials for the executives, which do not exist, for the 
telemarketers, and admission specialists, and sober living 
specialists, that there should be credentialing. That there's a 
legal aspect and there's also an ethical aspect as well. And I 
really think at the heart of this, it's an ethical aspect of 
them putting the profits and treating the individuals as a 
commodity versus as an individual that needs care.
    Mr. Tonko. Thank you.
    And, Mr. Tieman, a similar question. How can a patient know 
if a particular treatment facility offers evidence-based 
treatment?
    Mr. Tieman. Thank you so much for that question, 
Congressman. We were so concerned about that 2 years ago that, 
along with a Hazelden Betty Ford center, we actually authored a 
paper on how to select a treatment center. It's something that 
we would really love to see a part of the SAMHSA website so 
that people can look at it.
    One of the things that we encourage folks to do is to look 
at whether or not it is being promoted as healthcare. If you 
look at the Caron website, you would see the credentials of all 
of our healthcare providers, the doctors, the psychiatrists, 
the psychologists. You would see outcomes, something that we've 
been doing for the last 15 years with the University of 
Pennsylvania, and it talks about what you can expect at Caron, 
as far as the likelihood of being sober at the end of the year. 
We would talk about our academic affiliations, where we provide 
training and where our staff have teaching credentials of 
places like Penn state Hershey and University of Pennsylvania 
and Drexel and Temple.
    When a patient looks at that, this looks like healthcare. 
When they look at another website that talks about yoga, that 
talks about thread count, that talks about meals, that talks 
about free things that you get, that's not healthcare. So these 
are the types of things that we encourage people to look at. 
Because if it looks and feels like healthcare, you're certainly 
a long ways toward that.
    One other thing I'd like to just mention, National 
Association of Addiction Treatment Providers is trying to put 
together the kind of list that you heard Mr. Aronberg talk 
about. That's what we need. Who are the good guys? And it's 
something that we're looking at. Because licensure and 
accreditation is a bar, it's a low bar, but we also need, who 
does provide evidence-based practices. And while CARF and Joint 
Commission looks at things, they don't look at the ethics 
behind it. So it's something that between the National 
Association of Addiction Treatment Providers and the American 
Society of Addiction Medicine, we're trying to put that 
together so that the state, the Federal Government, and 
insurers can have the list of who should we be paying for to go 
to what kind of treatment.
    Mr. Tonko. Beyond examining those websites, are there any 
particular questions that patients or their families should be 
asking before enrolling in a treatment facility?
    Mr. Tieman. Yes. I think good ones to ask are: Are your 
medical, psychiatry, and psychology, are they on your staff or 
are they outside consultants? That's a great start. If they're 
on your staff, that is a terrific start. What is the staff to 
patient ratio? Are you gender separate? Are you age separate? 
An 18-year-old with a 48-year-old is not good treatment. Do you 
have a family program that's more than just an educational 
program? Do you do follow-up studies? Do you have outcomes?
    And any program that does followup and has outcomes is 
committed to some level of quality. Can you tell me what those 
are? And, like I say, on a website like Caron's, we put them 
out there and we talk about the process that we go through, so 
it's completely transparent.
    Mr. Tonko. Thank you very much for the insight.
    I yield back.
    Ms. DeGette. Mr. Chairman, could we ask Mr. Tieman for a 
copy of those standards that he wants to give to SAMHSA so that 
we can put them in the record of this hearing? And I'd ask 
unanimous consent they be included.
    Mr. Harper. Yes. Yes. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Tieman. Absolutely. Thank you.
    Mr. Harper. The chair will now recognize Mr. Barton for 5 
minutes for questions.
    Mr. Barton. Well, thank you, Mr. Chairman. And, again, as 
I'm sure everybody has, congratulations on your chairmanship. 
You follow me, Fred Upton, Gregg Walden, and when we were in 
the minority, John Dingell, Bart Stupak. So this is kind of a 
mini committee of the full committee. The Oversight 
Subcommittee looks at everything the full committee does. So 
I'm sure you'll do an excellent job, and I think on both sides 
of the aisle we'll do our best to make you a successful 
chairman.
    Mr. Harper. Thank you.
    Mr. Barton. So congratulations.
    I want to ask Mr. Aronberg and Mr. Gold some basic 
questions. Is so-called patient brokering illegal under any 
state law currently?
    Mr. Aronberg. Yes, Congressman. In Florida, it's a third-
degree felony, punishable by up to 5 years in prison, but 
because of sentencing guidelines, it's rare that anyone would 
get that. So our recent legislation we passed got tough on it, 
and now it's easier to get a tougher sentence, but still it's 
rare to get the full 5 years.
    Mr. Barton. Mr. Gold.
    Mr. Gold. So Massachusetts does not have a specific law 
related to patient brokering for substance use treatment, but 
we do have a general anti-kickback statute that applies to 
commercial insurance as well. So paying for referrals for any 
commercial health insurance is illegal in Massachusetts.
    Mr. Barton. Are there any other states that would have a 
state law that patient brokering is illegal? No?
    Mr. Gold. I'm not aware of others.
    Mr. Barton. OK. Does any----
    Mr. Aronberg. Congressman, we believe there are. I'm sorry, 
off the top of our heads, we don't know how many.
    Mr. Barton. That's OK.
    Mr. Aronberg. But we can get that information.
    Mr. Barton. Just if you can get it, if there are.
    Does anybody on the panel think that we should pass a 
Federal law criminalizing patient brokering? Anybody?
    Mr. Barton. I see some nods. You have to say something.
    Mr. Johnson. There is a Federal anti-kickback statute, 
which is a patient brokering--you can't pay for the volume or 
value of referrals into treatment. And there are states that 
have fashioned patient brokering. I know there are, if not a 
majority, a minority of states have some sort of patient 
brokering.
    Mr. Barton. I think Mr. Nielsen had a comment.
    Mr. Nielsen. Chairman, my understanding of the Federal law, 
I believe it's the Stark Law. And my understanding of that is 
that it's for medical services, and within Medicaid, but not 
non-Medicaid. So some of the facilities fall under nonmedical 
facilities, and it wouldn't apply to them. That's our issue in 
California.
    Mr. Barton. OK.
    Mr. Tieman. I'd like to just comment, we looked at the 
Stark Laws and the anti-kickback laws, and not being a lawyer, 
it seems like most of the things that we're seeing, at least to 
us, feels illegal, and kind of like if it looks like a duck and 
walks like a duck, it is probably a duck. But not being a 
lawyer, it's really a concern.
    I actually just talked to Governor Wolf this last week 
about some of those issues, and there really gets to be a 
question about what's state and what's Federal. So the kind of 
point about this is it's providing a lot of loopholes right now 
for folks to call it like speeding in North Dakota, I mean, 
there's no speed traps, so you can go as fast as you want to 
go, and if you do happen to get caught once in awhile, it's 
kind of the price of driving fast. And that's what we're seeing 
from a lot of these charlatans is we're not going to get 
caught, and if we do, there's probably an escape hatch there.
    Mr. Barton. What percent of the claims that are paid under 
the current system are private pay or family out-of-pocket 
versus Medicaid/Medicare? Anybody know that?
    Mr. Tieman. Yes. Of the $36 billion that will--the rough 
estimate on what will be paid for substance use disorder 
treatment this year, about 70 percent of that will be public 
fund.
    Mr. Barton. Public?
    Mr. Tieman. Public fund. About 30 percent of that will be a 
combination of insurance, along with private pay----
    Mr. Barton. So Medicaid----
    Mr. Tieman. Medicaid and Medicare is a large part of that 
70 percent. I can't remember the exact number.
    Mr. Barton. I would have thought it would be reversed.
    Mr. Tieman. No, it's not. The government is far and away 
the largest payor of substance use treatment disorder in the 
United states today.
    Mr. Barton. Since the Federal Government, based on what you 
just said, is paying the majority of these claims, should we 
require at the Federal level a certain cure rate for treatment 
per facility or per company?
    Mr. Tieman. Again, with any chronic illness that is 
progressive, there is no cure. Diseases can be put into 
remission. I think there are certain standards that----
    Mr. Barton. I guess an outcome--a positive outcome.
    Mr. Tieman. Right. I think definitely demanding some level 
of outcome based--I think Mr. Aronberg talked about that as 
well--there should be some level of outcome for any kind of 
healthcare that's provided today.
    Mr. Barton. We'll let Mr. Aronberg, and then my time's 
expired.
    Mr. Aronberg. Thank you, Congressman. Most of the fraud we 
see, the Florida shuffle is being fueled by private insurance 
payments, not government insurance payments. The Florida 
shuffle really is being fueled by the overpayments and the 
payments from private insurance companies, not a Medicare----
    Mr. Harper. Thank you for clearing that up.
    The gentleman yields back.
    The chair will now recognize the gentleman from California, 
Mr. Ruiz, for 5 minutes.
    Mr. Ruiz. Thank you very much.
    This is such an important conversation. I'm going to start 
big idea, then go into the granular. I think it's very 
important that we do get a grasp on the severity and the 
intensity and the frequency of these type of illnesses, because 
we need to prioritize how we're going to address the mental 
health/addiction opioid crises that we have in the United 
States of America. And the bigger picture here is that we are 
woefully short in providing the resources, in providing more 
providers, and in being able to improve healthcare access to 
mental health services. And instead of taking away health 
insurance or coverage for mental health services, that we will 
take care of our patients.
    So having said that, this is an important issue. I think 
that this is an issue that we can all focus on bringing justice 
towards. But let's not forget the big picture here and how we 
are going to address the overall mental health crisis and get 
patients the adequate care.
    I have heard of stories where these recruiters will go into 
my local parks, from constituents of mine, and offer them free 
room and board. And they would sign them up in a homeless--it 
can be either hot in the desert or it can be really cold in the 
winter at night. They'll take room and board, they'll get 
reimbursed, they'll get sent out, and they'll do it again over 
and over and over again. And the homeless just want a place to 
stay. And some of them may be addicted, some may not, but 
they'll go through whatever is necessary to get the care that--
or a shelter and a warm plate of food to eat.
    So I know that Congresswoman Chu has been working on 
legislation that would direct SAMHSA to publish best practices 
for operating recovering housing. And I know that you've said 
that you want a certification. Perhaps SAMHSA could develop 
these kind of best practices, and those that can meet them can 
get this kind of certification for consumer marketing purposes.
    Mr. Tieman, what do you think about this idea?
    Mr. Tieman. I love it. Great question and great 
observation. And it's really the thing that we're trying to 
work through with some of our associations to establish 
standards, and then work with SAMHSA so that there is a bona 
fide list. We think that, you know, it should be easy for 
people to find at the Federal level, we think people should be 
able to find it at the state level, we think the insurer should 
know it as well, as to where are those facilities that are 
providing ethical evidence-based treatment with legitimate 
results.
    Mr. Ruiz. Yes, I think that's a very simple solution whose 
time has come. And I think that by working with all the 
different agencies that are out there, with your best 
standards, I think that SAMHSA could provide something like 
this. And I know it can gain bipartisan support here in this 
committee as well.
    Now, getting a little more to the granular. In terms of the 
excessive urine drug tests, my understanding is that the 
insurance companies have the ability to apply very good data 
analytics to claim submissions--for claim submissions to detect 
potential abusive or fraudulent practices. So a single patient 
responsible for multiple billings for urine tests, each of 
which may be many thousands of dollars, I would think that this 
would be something that could be looked at more closely through 
insured data analytic tools.
    So, Mr. Johnson and Mr. Aronberg, have any insurers reached 
out to you to discuss this issue?
    Mr. Aronberg. I have spoken to Blue Cross Blue Shield and 
been working with them. But our Sober Homes Task Force--we have 
two different groups that meet once a month--we've had trouble 
bringing the insurance companies to the table. We would love a 
way to discuss these issues with them.
    Mr. Ruiz. OK. And why do you think it's so hard for the 
insurance companies to get their arms around what appears to be 
one of the primary drivers of this problem? And why is it 
difficult for them to discuss this with you?
    Mr. Johnson. That's an excellent question. And if you look 
at this behavioral health, and it's a parity now with physical 
health, if you have a heart condition or if you have diabetes, 
there are protocols that are involved. There are 
preauthorizations that--and everybody has had that issue with 
getting an MRI or something of that nature. The 
preauthorization situation for behavioral health, because you 
have these doctors saying, I need urine confirmation with 50 
panels, which is going to cost $1,500, there's no 
preauthorization for that. The insurance companies haven't 
caught up yet in terms of standards for the behavioral health, 
especially substance use disorder.
    So we've spoken to investigators for insurance companies, 
and they say, look, there's no preauthorization. They do it, 
and then it's a matter of grappling with, after the fact, 
whether we will pay or we won't pay.
    Mr. Ruiz. Yes. I mean, most of these drug urine tests, 
they're very complicated and they take awhile to get the 
results to begin with. So having daily checks is medically even 
unnecessary.
    Thank you very much.
    Mr. Harper. The gentleman yields back.
    The chair will recognize the gentlelady from California, 
Mrs. Walters, for 5 minutes.
    Mrs. Walters. Thank you, Mr. Chairman.
    Sadly, like so many other communities, Orange County, which 
is where I live, has been ravaged by the opioid epidemic. In 
August, the Orange County Healthcare Agency issued its 2017 
Opioid Overdose and Death in Orange County Report. I have it 
right here.
    And, Mr. Chairman, I would like to submit this article for 
the record.
    Mr. Harper. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mrs. Walters. This report found that the rate of opioid-
related emergency room visits increased by over 140 percent 
since 2005. Drug overdose deaths in 2015 have increased by 88 
percent, and nearly half of those deaths were due to accidental 
prescription drug overdose.
    Orange County officials and health providers are working 
hard to combat this epidemic, but sadly, some bad actors are 
doing far more harm than good. And I want to be clear that not 
all rehab centers are taking advantage of patients. It's the 
bad actors in this space that require us to hold this hearing.
    A four-part series published in May 2017 by the Orange 
County Register exposed the practice of patient brokering and 
insurance fraud.
    And, Mr. Chairman, I'd also like to submit this article for 
the record, please.
    Mr. Harper. Without objection.
    [The information can be found at: https://docs.house.gov/
meetings/IF/IF02/20171212/106716/HHRG-115-IF02-20171212-
SD007.pdf]
    Mrs. Walters. It found that a lack of oversight of rehab 
centers contributed to these practices. One issue is that there 
are nearly 2,000 rehab centers throughout the state, yet only 
16 inspectors are employed to monitor the centers. According to 
state regulators, between 2013 and 2016, consumer complaints 
about licensed rehab centers nearly doubled to 509 complaints 
per year.
    Bad actors in the rehab center business are exploiting this 
epidemic through deceptive advertising and third-party 
recruiters to persuade addicts from around the country to 
travel to southern California for treatment. In fact, some 
rehab centers will pay for an individual to travel to 
California and then sign them up for insurance. Some recruiters 
will seek out those suffering from the addiction at AA or NA 
meetings or drug courts to find people to send to rehab centers 
who will then pay the recruiters a kickback. These bad actors 
run up medical bills for patients, yet do little to provide 
effective treatment and recovery services.
    Court documents and state records found that some centers, 
including sober living homes, provide street drugs to patients 
to restart the fraudulent process. I'm incredibly troubled by 
these practices, particularly given how rampant it is 
throughout my district and state.
    Mr. Nielsen, my questions are for you. It is our 
understanding that, in California, the Department of Healthcare 
Services licenses residential or inpatient treatment 
facilities, but does not license outpatient treatment 
facilities. Do you know why that is?
    Mr. Nielsen. That's a great question, Congresswoman 
Walters, and I ask myself the same question as well. It should 
be. They should license or certify outpatient facilities; they 
do not. And I think it's just something that's been passed 
through time, that originally it was voluntary to have an 
outpatient facility. And we don't even have a licensure for 
drug and alcohol counselors to do private practice. So, 
actually, anybody can hang up a shingle and do private practice 
in California.
    So I think that there needs to be licensure for drug and 
alcohol counselors and private practice, as well as the 
outpatient facilities need to be either licensed or certified 
and make it mandatory.
    Mrs. Walters. Do you know if there are outpatient 
facilities licensed or overseen by any other body to ensure 
that these facilities meet standards to ensure safe and 
effective treatments?
    Mr. Nielsen. So part of our network, we have a provider 
network, and there are many of them that do adhere to our 
standards and are a part of it, but they usually are not the 
ones that are part of the problem. Also, one of the issues is 
that the out-of-network providers versus in-network providers. 
We're finding in California that it's the out-of-network 
insurance providers that are the largest issue and not so much 
the in-network providers.
    Mrs. Walters. OK. Interesting.
    OK. You state that sober living homes serve as a bridge to 
independent living. This stage of the recovery process is 
obviously distinct from inpatient treatment, yet clearly, the 
patient is not prepared to resume complete independence. Should 
these sober living homes be subject to state licensing?
    Mr. Nielsen. I think they should be certified. And I think 
that Riverside County is a really good model to what it should 
look like statewide. They actually protect the ADA, and also 
make sure that there's actually proper oversight of those 
facilities. And there also has to be a mandatory complaint line 
for neighbors and individuals to complain, and somebody needs 
to be able to investigate those. And I think they don't 
necessarily need to be a part of the state, but it could be 
independent oversight by a nonprofit that would take on that 
responsibility.
    Mrs. Walters. OK. Thank you. And I'm out of time.
    Mr. Nielsen. Thank you.
    Mrs. Walters. Thank you very much.
    Mr. Harper. The gentlelady yields back.
    The chair will now recognize the gentlemen from 
Pennsylvania, Mr. Costello, for 5 minutes.
    Mr. Costello. Mr. Tieman, my first question maybe can be 
the one that you end on, and that is, if you just think about 
any testimony that's been provided that you may want to add to, 
as well as when we look through your written testimony, in 
terms of defining the problem and the various problems and the 
largely unregulated sector, I think you mentioned, if there's 
anything that you would like to add that you think that we need 
to be looking at or where you think Federal legislation may be 
required. You conclude to suggest that it might be a 
combination of state and/or Federal laws that we may need to 
bring about in order to address some of these problems.
    What I'd like to focus on for a minute is the role of call 
centers and call aggregators. We have discussed them a little 
bit this morning. You also speak about how Caron was--the name 
of Caron was manipulated there.
    Do the call centers provide any value? Number one. Do call 
aggregators provide any value to a legitimate treatment 
provider?
    Mr. Tieman. Thank you so much, Congressman. Call 
aggregators and call centers, by and large in our industry, 
have really become marketing opportunities to put heads on 
beds. There's a lot of common schemes that are used. One of the 
real common one is, go to to a city some time and just type in 
``top ten treatment centers.'' If you're in Kansas City, St. 
Louis, wherever. And you will probably always see Hazelden 
Betty Ford, very legitimate, high quality. You'll probably see 
Caron Treatment Centers. You might see one other good one 
locally. And then there will probably be seven that are owned 
by whoever the call center is.
    Now, here's the catch. All of the phone numbers are going 
to go to the place, even if what you think is calling Hazelden 
Betty Ford, calling Caron, calling another reputable place, 
you're going to end up at the place that owns the call center. 
So call centers have become synonymous with a way for a 
marketing firm to be able to either sell that person to the 
highest bidder, wherever their insurance will pay them the most 
money, or if it's owned by a treatment center, it puts them in 
one of their facilities, the telemarketer is instructing you. 
Yes, you may be wanting to go to Minnesota, but let me tell you 
why our place in Florida is far better this time of the year. 
So that tends to be the ploy.
    For example, we have a call center at Caron, but when you 
call----
    Mr. Costello. But it's identified as your call center.
    Mr. Tieman. You are calling Caron. You are calling Caron 
Treatment Center. Hazelden has a call center. You are calling 
Hazelden. You know that you're calling them. But when you're 
calling one of these obscure ones, you just think you're 
calling something like the American Cancer Society. I'm trying 
to get information about cancer. So most of these are set up. 
I'm trying to get information about addiction treatment, but 
you're actually calling a place that's going to funnel you to a 
specific treatment center. And we think that is morally wrong.
    Mr. Costello. Well, that strikes me that way too. I guess 
the question is, at what point in time does it become a 
deceptive business practice? And is there just too much room 
for interpretation or ambiguity to allow what would otherwise 
be a deceptive business practice to continue to persist?
    Mr. Tieman. And that's where we think the whole idea of 
laws regarding accuracy and transparency. If somebody calls a 
call center, they should know who is the treatment center that 
they've called.
    Mr. Costello. I think the answer is no. But working at a 
call center, does it require any sort of training or 
certification that makes them qualified to advise people on 
drug treatment options?
    Mr. Tieman. No, you could do it today.
    Mr. Costello. Do you think that I should be allowed to do 
it today?
    Mr. Tieman. No.
    Mr. Costello. Good. I don't either.
    Do you believe there should be some level of accreditation 
in that respect?
    Mr. Tieman. We definitely think there should be 
credentialing around anybody that is dealing and directing 
people to patient care.
    Mr. Costello. Speak a little bit more, I saw you nodding 
your head when, I believe, Mr. Aronberg was speaking on the 
role of accreditation. You said that that was the lowest common 
denominator there.
    Mr. Tieman. Yes.
    Mr. Costello. What if we wanted to up that? What if we 
wanted to add to it? Let's enhance the accreditation process. 
What would that look like? Do you think that that would be of 
value? Would that help to Mr. Barton's question on the issue of 
public? Two-thirds of the money being spent here is government 
dollars. What do you think that we should be doing?
    Mr. Tieman. Well, I definitely think the accreditors, right 
now, we are working with CARF and JCAHO to try to deal with 
them from an ethical perspective. They basically look at the 
standards, but we just think there needs to be more. And so 
having this higher level, this gold or platinum level is 
something that we think would be very important.
    The thing that's kind of interesting, as it relates to the 
public and private piece, is more money, is insurance per case, 
which to Mr. Aronberg's reason, why the Florida shuffle has 
primarily gone after private insurance, as opposed to public. 
But with the public paying between Medicare, Medicaid, and 
state grants, which is a big portion of this, there's a lot of 
money there, and I'm sure we will find abuses in that as well.
    Mr. Costello. I have more questions, but I'm out of time. I 
will yield back.
    Mr. Harper. The gentleman yields back.
    The chair will now recognize the gentlelady from Indiana, 
Mrs. Brooks, for 5 minutes.
    Mrs. Brooks. Thank you, Mr. Chairman. And congratulations. 
We look forward to your leadership on this committee.
    I am a former U.S. attorney, and so I'm very curious--I was 
very involved in a lot of different fraud task forces as a U.S. 
attorney between 2001 and 2007, but I have to admit, a sober 
living task fraud force is not something that came across my 
plate during that time period. And I'm curious, are there other 
sober living task forces, that you're aware of, in the country, 
Mr. Aronberg and Mr. Johnson?
    Mr. Aronberg. Thank you, Congresswoman. Not that I'm aware 
of. And, also, I think we're the first jurisdiction that 
empaneled a grand jury to look into fraud and abuse in this 
area.
    Mrs. Brooks. And I saw that--and because of the grand jury 
recommendations, then went to your state legislature to try to 
increase penalties and really raise the level of awareness of 
this problem?
    Mr. Aronberg. Yes. Congresswoman, we successfully were able 
to pass House Bill 807, which did tighten oversight and 
penalties in this area. And we're going back to the legislature 
this coming session to ask for additional reforms.
    Mrs. Brooks. And I saw that you had 41 arrests. And I 
realize it might be early in the process, just out of 
curiosity, any convictions yet?
    Mr. Aronberg. Yes. I think 10 convictions already. We 
started the task force about a year ago, so it's happening 
pretty quickly, but----
    Mrs. Brooks. That's in one county?
    Mr. Aronberg. Oh, yes. Yes.
    Mrs. Brooks. OK. So this is one county in Florida where 
you've got 41 people arrested. And just out of curiosity, on 
the 41 arrests, how many of those are actually county 
residents? Do you know? Or is this a national network, just out 
of curiosity, if you know?
    Mr. Aronberg. They're all residents. The 41 are all 
residents. I think there were a few who may not be citizens, 
but they are all county residents.
    Mrs. Brooks. OK. And can you share with me maybe, Mr. 
Johnson, what has been the involvement of the U.S. Attorney's 
Office? And what have been some of the impediments that maybe 
you've seen in working with the U.S. Attorney's offices as to 
challenges they might have in these types of cases?
    Mr. Johnson. Thank you, Congresswoman, for asking. We've 
had a great relationship with the Federal prosecutors and the 
FBI. As a matter of fact, we frequently meet to make sure we 
don't conflict with each other. We don't want to be tripping 
over each other in our investigations. We've been involved and 
shared intelligence with them. They've made a very significant 
arrest and conviction on a fellow by the name of Kenneth 
Chatman. He got 27 years prison, and his abuses were about the 
worst of the worst. And we----
    Mrs. Brooks. And was this violation of which statute, if 
you recall?
    Mr. Johnson. The problem is it had to be conspiracy to 
commit insurance fraud, because they don't have the ability 
under either the Stark Act or the Anti-Kickback Statute, to do 
patient brokering. So they had to go obliquely, and it was 
mainly fraud, human trafficking as well, because one of the 
abuses is the patients are made to be prostitutes or labor pool 
workers, et cetera.
    Mrs. Brooks. Did that individual plead guilty or go to 
trial?
    Mr. Johnson. He pled guilty.
    Mrs. Brooks. And I assume the 27 years was because of the 
amount of money that had been defrauded?
    Mr. Johnson. Amount of money and the egregious factual 
basis.
    Mrs. Brooks. And I'm curious, in your cases, are patients 
or the participant--the residents of the sober living homes, 
rather than patients, but residents. Are you using residents as 
witnesses in your cases, Mr. Aronberg or Mr. Johnson?
    Mr. Johnson. Yes, we are.
    Mrs. Brooks. OK.
    Mr. Johnson. Yes, we are. And we cannot prosecute the 
patients, nor would we want to, but that's one of the unique 
things about this fraud, is that one of the members of the 
conspiracy is a willing participant but also a victim at the 
same time.
    Mrs. Brooks. And so it's very, very difficult to figure out 
who the bad actors are, who's in charge.
    Mr. Johnson. And they're transient, so it's very 
difficult--in one case we had 1,500 potential witnesses, and I 
think we're at a 2 percent rate of being able to find them and 
have them cooperate.
    Mrs. Brooks. Because I was not aware of these websites that 
have been discussed, on one particular website run out of a 
group out of California, it indicates that Indiana has 310 
sober living facilities, which I find fascinating that--now, 
some I recognize, some of these service providers, but I have 
to admit, they don't direct you directly to phone numbers, from 
what I can tell. And then they also are putting up a time where 
a person has the last 10 phone numbers requested.
    Mr. Tieman, why would they be putting up these by the 
minute?
    Mr. Tieman. I'm not sure I understand the question.
    Mrs. Brooks. So the question is, oddly, on this website it 
says, last 10 phone numbers requested: 12/12, 10:55, and they 
direct to a provider. Then 12/12, 10:55, to a southern 
California provider. This is on the Indiana website.
    Mr. Tieman. Wow, I don't know how to answer that question. 
There's so much that happens through the internet. That is 
fascinating. I don't know the answer.
    Mrs. Brooks. OK. Thank you.
    Mr. Tieman. Sorry.
    Mrs. Brooks. My time is up. I yield back.
    Mr. Harper. The gentlelady yields back.
    The chair will now recognize the gentleman from Georgia, 
Mr. Carter, for 5 minutes.
    Mr. Carter. Thank you, Mr. Chairman. And thank all of you 
for being here today. This is certainly an important subject.
    Mr. Chairman, I would certainly be remiss if I didn't join 
in congratulating you on your new position, and let you know 
how much I look forward to working with you.
    Gentlemen, as a practicing pharmacist and currently the 
only pharmacist serving in Congress, this is a big problem that 
I have worked with closely over the years. And I can assure you 
that no two people are the same, you all know that, that people 
react differently. And some people can rehab through little 
therapy, some people it's going to take a lifetime of therapy, 
and we all understand that.
    The opioid problem, in particular, if we're going to get 
more specific about a problem, the opioid problem, to me, is a 
twofold problem. One problem is prevention. How do we prevent 
it? And we've certainly talked about that on this committee, 
and certainly it's one of our concerns. But the second part of 
the twofold problem is just what we're talking about, and 
that's those people who are addicted now. We can talk about 
prevention, how we prevent it. But what about those people who 
are already there? What do we do with them? And that's what 
we're talking about here.
    Just like every profession, there are bad actors in this 
area. We all understand that. And that's why we're here today. 
We want to know how we can help in the Federal Government to do 
away with these bad actors. We know that there's patient 
brokering. We understand that and we know that that's a big 
problem. And I guess the question I have for you, and it's a 
very general question, is just, what can we do from a Federal 
perspective to give you, Mr. Aronberg, at the state level, the 
resources you need and the ability that you need to get rid of 
these bad actors?
    Mr. Aronberg. Thank you, Congressman. I think more than 
providing money, it's to help us by closing loopholes in 
Federal law that----
    Mr. Carter. And that's what I'm talking about. Please 
understand, I'm not interested in throwing money at this 
problem. I want to know specifically what we can do to help you 
legislatively.
    Mr. Aronberg. Thank you, Congressman. Yes. And that's why 
we're not coming here to ask for money. We're just asking for 
help in the form of reforming the Federal laws that have 
enabled and exacerbated this problem. You can't attack the 
opioid epidemic without going after the increased number of 
deaths from fraud and abuse in the drug treatment industry 
that--and those deaths are preventable. These are people who 
are looking for help and, instead, get caught up in the Florida 
shuffle until they leave Florida in an ambulance or a body bag. 
And there's stuff that can be done.
    As we mentioned earlier, clarifying the ADA to allow 
reasonable regulations at the local level for the sober homes. 
To change the fee for service model of the ACA to an outcome-
based reimbursement model. And then Mr. Johnson also had some 
areas we're dealing with a kickback statute.
    Mr. Johnson. Reforming the Anti-Kickback Statute and the 
Stark Laws. So that these safe harbors, you can drive a truck 
through them right now----
    Mr. Carter. Right. Right.
    Mr. Johnson [continuing]. With boots on the ground.
    Mr. Carter. And that's exactly what I'm looking for. What 
do we need to put in code that's going to help you, that's 
going to give you the ability to get rid of these bad actors?
    All of you, I suspect, are familiar with drug courts. We 
certainly use them in the State of Georgia. They've been very 
successful. We've been very pleased with the results that we've 
gotten there.
    Just wondering, how do you and your states employ who 
you're going to use in those drug treatments? If it's a 
pretrial motion to get someone to go through drug therapy, how 
do you go about in selecting the company that you'll be using 
there? Are there any kind of qualifications?
    Mr. Johnson. Most of the court-referred cases are Medicare, 
Medicaid, or other federally assisted programs. Very few are 
private, but when there is a private one, the Court doesn't get 
involved in picking and choosing where somebody will go for 
treatment.
    Mr. Carter. They just say you've got to go to one.
    Mr. Johnson. Now, we had a judge, he's just been 
reassigned, who administered drug court, and would only 
recommend or send people to certified sober homes. Again, no 
treatment at the sober homes, but the sober homes themselves 
had to be certified.
    Mr. Carter. So sober living facilities have to be 
certified?
    Mr. Johnson. No, not under state law. It's voluntary only, 
which is a problem.
    Mr. Carter. Is that something we can handle through Federal 
law? Should we require it?
    Mr. Johnson. Yes. By clarifying the ADA and FHA, to give 
some comfort to the states, that they indeed can have some 
requirement of certification of the sober homes, where right 
now they're afraid to do that. They're afraid that that is in 
violation of the FHA.
    Mr. Carter. And I too am hesitant to get more Federal 
involvement in these things. However, I want to give you the 
tools you need. And it's just a dilemma, and I understand it 
firsthand, I've seen it firsthand.
    Mr. Johnson. Nobody's asking you to open up the FHA or ADA, 
that's not the ask. The ask is to get DOJ and HUD to do a real 
clarification applying the fact that if a resident needs 
protection that----
    Mr. Carter. I understand. Well, please hear the message: We 
want to help. This is a serious, serious problem.
    And, thank you, Mr. Chairman, and I yield back.
    Mr. Harper. The gentleman yields back.
    The chair will now recognize the gentleman from Florida, 
Mr. Bilirakis, for 5 minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman. Congratulations 
again. I know you're going to do a great job running this 
committee.
    And I also want to welcome Mr. Aronberg. We served in the 
legislature together. And thanks for coming up and advocating 
on behalf of our great State of Florida.
    I have a couple questions. Mr. Nielsen and Mr. Tieman, is 
there currently an industrywide uniform code of ethics that 
bans patient brokering?
    Mr. Nielsen. There's not an industrywide. There is some. 
There should be an industrywide that's agreed upon. I know that 
there are----
    Mr. Bilirakis. Why don't we have an industrywide code? I 
mean, my goodness, you would think we'd have something like 
that.
    Mr. Nielsen. Because it affects both for-profit and 
nonprofit, and it seems that they run in separate circles, and 
that there needs to be a unified ethical code because fraud 
happens both in for-profit and nonprofit organizations. And so 
there should be. Just as there's a patient bill of rights, 
there should be ethical standards for treatment facilities, 
just as there are for social workers, for drug and alcohol 
professionals.
    Mr. Tieman. Congressman, that's a great question. And there 
should be, and it's one of the real high priorities of the 
National Association of Addiction Treatment Providers, as we've 
just initiated something called Quality Control Initiative, 
which actually outlined, for the first time, what is ethical 
and what is nonethical. There needs to be standards.
    One of the things that amazed me was, for the last 3 years, 
some of the most unethical practitioners would hold conferences 
on what is ethical. And what I found out was that ethics was 
defined by every individual. I actually had treatment providers 
tell me about the urine drug screening. It's OK to do that 
because the end justifies the means. The insurance company 
doesn't pay for this, so you know what, they will pay for urine 
drug screens, so we'll have them pay for that. And the net 
result is the person gets treatment. That was ethical in their 
minds.
    So one of the things we've taken upon our national 
association is, you know what, someone's got to put the line in 
the sand and determine what is ethical. So we've now done that. 
And in 2018, we're going to be, with all of our association 
members, saying, ignorance is no longer a defense, your own 
interpretation isn't a defense. We're going to tell you what's 
ethical and nonethical, and we'll determine whether or not it 
is. But you're absolutely right, that needs to be done.
    Mr. Bilirakis. Very good. We need to make progress in that 
area.
    Mr. Nielsen. I have a followup.
    Mr. Bilirakis. Yes. Go ahead, please.
    Mr. Nielsen. If you don't mind. It's not just the treatment 
centers, but the executives should be held accountable as well. 
Part of the problem is it's at the top. And so I think that 
they should have a code of ethics that they should follow, and 
they should be credentialed. That these executives that run 
these treatment facilities should--and then you would have a 
list of the individuals that are unethical because they would 
lose their credential around that.
    The International Certification and Reciprocity Consortium 
is an organization that credentials counselors. We need 
something like that for executives, and even for marketers and 
admissions specialists.
    Mr. Tieman. And really to that, that's what we're looking 
at with this ethical certification. It's just like a CEO, I 
have to sign off on our audit. I have to sign off on our 990. I 
would have to sign off and saying that Caron Treatment Centers 
has--we have provided the training, and I verify that we are 
adhering to ethical standards. Mr. Nielsen's absolutely correct 
that you start at the top.
    Mr. Bilirakis. Absolutely. Let's get it done.
    A question for Mr. Aronberg. As you're well aware, patient 
brokering continues to be an issue in the State of Florida. 
Upon learning that various mental health and substance abuse 
facilities were making payments to individuals for the referral 
of patients identified in Alcoholics Anonymous meetings, 
homeless shelters, and other similar environments, Florida's 
legislature recently passed a Patient Brokering Act to prevent 
it by making the perverse practice a third-degree felony, 
punishable by 5 years in prison. However, monitoring and 
enforcing continue to challenge our state.
    What are other states doing? And then whoever wants to 
speak on the--please give us if you have anything to 
contribute. What are other states doing to monitor and enforce 
patient brokering laws?
    Mr. Aronberg. Congressman, thank you. And thank you for 
your service to Florida and Pinellas County in particular. 
We're seeing that a lot of our sober homes are moving to your 
coast because of our crackdown, and so we're all in this 
together.
    I can't speak to what other states are doing, but we do 
know that other states do have patient brokering laws on the 
books. And we were discussing earlier whether the Federal 
Government should have a more effective anti-patient brokering 
law. They do have an anti-kickback law.
    But this is something that you're going to see a lot of the 
scam--the Florida shuffle move to other communities that are 
not as aware of this problem and don't have effective laws on 
the books. And that's why we're offering ourselves as a 
resource for any community that would like to see what we're 
doing. We've trained prosecutors and law enforcement from 
throughout the state, and we'd be happy to help folks from 
across the country so they will be aware and ready to stop the 
Florida shuffle when it comes to them.
    Mr. Bilirakis. Very good. Thank you. Great work.
    Mr. Aronberg. Thank you.
    Mr. Bilirakis. I yield back, Mr. Chairman.
    Mr. Harper. The gentleman yields back.
    In conclusion, I want to thank our witnesses and members 
for participating in today's hearing. I remind members that 
they have 10 business days to submit questions for the record. 
And if so submitted, I would ask that the witnesses agree to 
respond promptly to those questions.
    With that, the subcommittee is adjourned.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Greg Walden

    Thank you, Mr. Chairman, for holding this hearing. 
Congratulations again for taking over this esteemed 
Subcommittee.
    Today's hearing subject is classic oversight and 
investigations territory: fraudsters and knaves who exploit the 
vulnerable for profit. This particular outrage involves 
unscrupulous people trying to make a buck off of the nation's 
opioid epidemic with unethical practices such as patient 
brokering, identity theft, kickbacks, and insurance fraud.
    How do these abuses happen? One such story was reported in 
STAT News. A 30-year old man in Massachusetts suffering from 
heroin addiction was approached by a prominent figure in the 
Boston-area drug recovery community with an offer too good to 
be true. The patient could get treatment in South Florida, with 
all expenses paid, including airfare. This young man took the 
deal and two months later he was dead. He was treated as a 
paycheck by a middle man, a ``patient broker'' who recruits and 
arranges transportation and insurance coverage for vulnerable 
patients seeking treatment for their addiction.
    These patient brokers can earn up to tens of thousands of 
dollars a year from finder's fees of $500 to $1,000 per person 
by steering patients to out-of-state treatment centers that 
often provide few services and sometimes are run by shady 
operators with no training or expertise in drug treatment. 
Worse, people are getting paid to relapse so that treatment 
facilities can collect more insurance money.
    A Palm Beach Post investigation of the county's $1 billion 
drug treatment industry found that testing the urine in the 
substance use disorder treatment industry is so lucrative that 
treatment centers are paying sober living homes for patients. A 
basic urine drug screening test in cup can detect ten types of 
drugs or more, costs less than $10, and can display the results 
within minutes. Yet we've heard of instances where individuals 
are tested daily and the treatment facility or sober living 
home sends the samples for more expensive confirmatory tests 
that can costs thousands of dollars.
    Another nefarious problem is ``black hat marketing'' where 
some providers overstate their treatment capabilities and use 
established treatment program names to market and attract 
patients, a form of identity theft. The fraudsters also use 
misleading websites or call centers to recruit out-of-state 
patients who were looking for a legitimate treatment provider 
in their local area.
    These abuses have consequences. It threatens patients, 
communities, taxpayers, and insurance policyholders. It 
undermines the ethical and legitimate treatment facilities that 
provide life-saving treatment to patients.
    The Committee's investigation has revealed that while many 
of these schemes involve steering patients to warm-climate 
destinations such as California, Florida, and Arizona, it is 
increasingly emerging as a nationwide problem.
    Today's hearing will help bring needed attention to this 
issue, highlight some effective actions taken, and start a 
thoughtful discussion on the best solutions to combatting these 
corrupt practices while protecting good and legitimate 
treatment programs and those that are seeking treatment.
    I welcome our witnesses and look forward to their 
testimony.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]