HomeMy WebLinkAboutDocumentation_Workshop_Tab 07_01/29/2018Lori McWilliams
From: Lori McWilliams
Sent: Thursday, January 25, 2018 10:57 AM
To: Nilsa Zacarias; Michael Couzzo; 'Abby (email 2)'; 'Frank D'ambra'; 'Steve Okun'; Tom
Paterno; 'Vince Arena'; 'Vince Arena (email 2)'
Subject: Additional Information from Legal Regarding Future's Request
The document were provided as back up in the agenda packet for your information in advance of the Council Workshop
on the 29'. Basically, they want to allow in network insurance payments now. Currently our code only allows either
direct payment from the client or non -negotiated out of network insurance that is not pre -negotiated to a lesser
rate. They have removed their detox request and it is now off the table.
This is also tied, as I understand it, to the minimum 30 day stay for short term care as some insurance does not pay for
the full 30 days and instead allows only a shorter stay followed by outpatient treatment ( we allow outpatient treatment
in a very limited basis).
March, 2011- Ordinance 1-11 created "rehabilitation facility" as a special exception use in the MU Zone. Important
features of the code that was adopted are the following —
• It's a "private" facility, meaning no government funding is allowed to be accepted or used for operations,
research, or maintenance or anything. Also meaning no insurance (or any third party billing) is allowed to be
accepted for client payments.
It provides in -patient services at a variety of different levels (extended care, short-term care and follow-up
care), with a set mix of client rooms (1 vs 2 bedroom).
Medical / emergency detox is prohibited. This is specifically defined in the ordinance.
May, 2011- "Futures" is granted Special Exception Use approval to operate a "rehabilitation facility on Old Dixie Highway
in the former "cornerstone" building. Significant site work is completed; 2 of the 3 existing stories are built out.
August, 2013- via Ordinance 22-13, Futures is granted text amendments which do the following —
• Allow outpatient treatment on a limited basis which is specified in the ordinance.
• Allow out of network insurance payments to be accepted so long as there is no pre -negotiated reduction in
the fees.
• Re -affirm the prohibition on medical / emergency detox.
• Institute a monthly reporting requirement to the Village, as well as an annual report/audit.
February, 2014- E-mail correspondence between the Village and DCF, explaining detox prohibitions at Futures and
distinctions between state definition of detox and the Village's prohibition.
October, 2016, via Ordinance 11-16, Futures is granted a text amendment which does the following —
• Increases the maximum percentage of allowed two -bedroom units from 40 to 45% in order to accommodate
the 3rd floor build out in the manner desired by Futures.
• As a result, Futures is granted a modification to their special exception and site approvals to allow the
additional two -bedroom units to be built.
Futures has now requested further revisions to the rehabilitation facility code. Their initial request included a relaxing of
the definition of medical / emergency detox. In addition, the request included further relaxing of the insurance
restrictions.
I - aq_o-
Although the initial request regarding revision to the detox definition has been withdrawn, Futures does request that
the code be amended to allow in -network insurance payments. Their November 17, 2017 letter is attached.
Keith W. Davis, Esquire
Attorney
Village of T'equesta
345 Tequesta Drive 561-768-0700
Tequesta, FL 33469 www.tequesta.org
:�
Village Clerk's Office Memorandum
TO: Michael Couzzo,Village Manager
FROM: Lori McWilliams,Village Clerk
DATE: 11/27/17
SUBJECT: Futures Request to Amend Code of Ordinances
r1t your direcrion, I have placed the Futures request to change Section 78-4(2) Defuurion of
Rehabilita.tion Facility, Section 78-4(3) Defuutions Short Term Care, and Section 78-4(7) Defuutions
Allowable Detox of our Code of Ordinances on the January 29, 2018 Workshop agenda.
Included with the agenda item as backup is the following:
• Letter from Mr. Holloway making request
• Presentation from Futures
• Past minutes regarding GMH and Insurance and Facility Language
• Ordinance 22-13
• Request for Special Exception Amendment Order SEUA 1-13
�'ice-�fayor Vince�lrena Vlayor r1bUy Brennan Council\fembet Tom Patemo
Council�fember Steve Okun Council ldember Frank D'.�mbra
Village\-lanagex:14ichael Couzzo
Minutes Regarding GMH and Insurance
and Facility Designation:
1/25/11
2/8/11
2/22/11
3/10/11 (with Ord 1-11)
5/9/13
7/11/13
8/8/13
MINUTES
VILLAGE OF TEQUESTA
VILLAGE COUNCIL SPECIAL MEETING MINUTES
January 25, 2011
CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Pat Watkins at 5:00 p.m. A roll call was taken by
Village Clerk Lori McWilliams. Present were: Mayor Pat Watkins, Vice-Mayor Tom Paterno,
Council Member Jim Humpage, Council Member Vince Arena and Council Member Calvin
Turnquest. Also in attendance were: Village Manager Michael R. Couzzo Jr., Village Attorney
Keith Davis, Village Clerk Lori McWilliams, and Department Heads.
APPROVAL OF AGENDA
MOTION: Council Member Humpage moved approval of the agenda; seconded by Council
Member Tumquest, motion carried unanimously 5-0.
1. Continued Discussion on the Rehabilitation Facility Language
Mayor Watkins explained the Village had spent a great deal of time assisting with the proposed
rehabilitation project and language issues were ongoing. She noted Council's desire was to be
cautious and not to rush an approval process as their priority was the best interest of the�Ilage
and its residents. Mayor Watkins clarified that this evening's discussion was regarding proposed
language changes to the Villages mixed use and did not pertain to any one specific project.
Village Manager Couzzo discussed the need to ensure the language was clear, concise and
complete as the Village had sought an independent expert in the field of impact analysis to
determine an impact on the community. He advised suggestions he received from a facility
director in Utah would be incorporated into the language and believed the new proposed
language was well crafted and better met the needs of the community.
Mayor Watkins pointed out that a doctor in the Village had questioned detoxification in the
facility as he did not feel this would be a good fit for the Village and believed detox�cation
facilities were usually located in non-residential areas.
Vice Mayor Patemo voiced his concerns with the text amendment changes and stated his
desires were in the best interest of the community. Council Member Humpage asked the
applicant if there were particular issues they believed existed. Mr. Jim Kennedy, GMH, Legal
Counsel responded that he had confirmed (with the appointed doctor on staf� that the facility
would not take anyone under the age of 18.
Mayor Watkins asked for clarification regarding responsibility of the 24 hour security. Mr.
Kennedy reassured Council that 24 hour onsite security would be covered by staff, trained and
licensed for patient security, and it was not their intention to utilize Tequesta patrol officers.
Minutes—Special Council Meeting 1/25/11
Page 2
Council Member Humpage asked how the facilify would know if a client was to leave on their
own acxoni. Mr. Kennedy responded that staff would be awa�e, but persons' would not be
tracked. Manager Couzzo noted his understanding of policy which escorted patierrts bo outside
activitie.s. Joe Macchione, GMH's Chief Operating Officer explained their plan offered a step
program which would monitor clients on ofFsite routine activities urrti! they feit the clients was
strong enough to advance to the next level as it was crucial for dierrts to progress badc into
normal existence. Council Member Humpage questioned the prooess if a resident did not retum.
Mr. Kennedy replied that he would need to get confiRnation on what their prooess would be.
Counal Member's Are�a and Tumquest questioned the addfion of gates and surveillance. Mr.
Kennedy stated that their interrt was to cxeate a we�ome, relaxed feeting and felt too much
security could generate a false sense of negativity, and if a potential thre�t developed staff
would call the Tequesta Police Departrnent Counal Member Arena asked about formalities
conceming celebrifies and potential staNcers. Mr. Shaun Gallagher, GMH Investrnent Analyst,
responded that cameras onsite (around the fenang) could assist and they would further
investigate the installation of gates. Mr. Kennedy responded that they were trying to be as
thorough as possible and did not have answers for every possible scenario, but were open to
suggestions and more research as dient privacy was importarrt.
Joe Macchione offered their Executive Director by phone to discuss detox and explained that
detoxfication was an enhancement to the program and a vital component of the facility as it
added another level of comple�dty for dients as part of an extended program and not a single
service. Mayor Watkins questioned ciieMs coming off the streets to detoxiTy. Mr. Macxhione
responded that clieMs were required to be pre-scxeened and assessed before admittance and
the facility would not take someone off the street. He further explained that they would not offer
detoxifica6on abne and their research showed a one loc�ation t�eatrnent faality would be more �
suocessful.
Council Member Humpage mentioned Palm Beach Counfies detox facility (CARP) which offered
a 72 hour evaluation and then the person would be released. Lieutenant Jason Tumer,
Tequesta Polioe Departinnerrt confirtned. Mr. Macchione suggested that language be added to
clarify that detoxification could not be of�ered as an individual senrice and must be tied to a 30 or
60 day program. Attomey Keith Davis recalled his conversation with Dr. Caddy regarding detox,
and the difference between natural (an observation, no medicine or chemicals) and medical
de#ox (hospital setting whid� involves constant supervision and medicines). He noted that this
information was not in the language before them. Mr. Kennedy responded that GMH was not
offering a medical type detoxificafion program and their desire was to assist ciierrtele with their
recovery from start to finish.
Minutes—Special Council Meeting 1/25N 1
Page 3
Council Member Tumquest stafied that the text amendmerrt would affect the errtir�e Viltage and
was not GMH Partners specfic. Council Member Humpage stated another facility would have to
go through the special exception prooess and Counals examination.
Manager Cou�o voiced his concems regarding Council taking the necessary time to address
the amendment comections.
Public Comment
Dr. Kim Koger, 140 Gulfstream Drive, expressed his beliefs that this type of facility was not
usually in a neighbofiood setting, and voiced his conoerns for residents' safety. He felt the
applicant had sugarcoabed the issue, and detox centers w�ere typically located in commeraal
areas and near hospitals.
Dr. Evan Rosen, Rio Vista area resident, stabed he agr�eed with Dr. Koger (Tequesta resident)
as Tequesta was not the appropriate venue for a detox facility and he did not want to open the
community to this.
Council Member Are�na commented that if he understood correcNy, a rehab faality was okay, but
detox was a problem. Dr. Koger agreed and commer�ted that he and Dr. Rosen were familiar
with treatrnent and explained the medical detox prooess was a unique part of inedical care
dealing with addictive personalities and was not appropriate for the Village. Village Manager
Couzzo advised that staff re�commendation was not to indude detox facility in the language, and
should not be a oomponent of a rehabilitative faality.
Geraldine Genco Dube stated she agreed with the previous public commer�ts, but understood
that it was almost impossible to separate detoxification from dn�gs and akkbhhol and doctors
vould not just allow patients to go through withdrawals. She e�ressed vonoem on how this fit
into the Villages comp plan versus the long term community needs and did not feel this was
something the c�mp plan antiapated.
Mayor Watkins commented that she understood Jupiber had approved a detox only facility, and
noted it had been virtitten in that GMH could not use any govemment funding. She advised the
Council that detox was going to be a big issue. GMH representative commer�ted that they
would be applying for grants. Councif Member Tumquest noted there w�e�e different ways of
doing research and grants could be funneled to a facility that would do research on their behalf.
Attomey Lacry Smith, represerrting GMH, requested clarfication that the�Ilage wished to avoid
opening this facility to publicly funded patients. Council Member Tumquest oommerrted that, that
would eliminate any data research ever being done by this facility. Attomey Smith commented
there could be grant sources other than state or federal, and if a federal grant was received they
would be obligated to take patients from a federal program. Mr. Kennedy commented that GMH
Minutes—Special Council AAeeting 1/25/11
Page 4
would be okay with the special exception stating that they would not take patients from such a
program, and if that meant they cou� not take the funding from that program, then they wou{d
not take the funding.
Attomey Smith suggested Dr. Worden clarify his understanding of recipierrts obligations
regarding federal grarits and patients. Mr. Kennedy stated that GMH would agree to language
in the special exception confirming that patients would not be taken pertaining to specific
funding programs. Chief Weinand offered darification on wording irrtentions to avoid forced
patients at the facility against the applicants'desired patierrt type.
Shaun Gallagher discussed section 16c and clarified the definition of efficiency units. Nilsa
Zacarias, Village Planning Consuttant confirmed. Mayor Watkins stated she did not have an
issue with efficiencies. Manager Couzzo stated that the language would only albw a facility as
much as 10 peroerrt of the building to efficiencies.
�ce Mayor Patemo re#erred to D and voioed that 10 units per acxe was too much. Chief
Weinand clarfied the bui{ding would have a total of 84 units and a total of 117 beds once the
building was at 100 percent build out. He noted the applicant was proposing to do only two (of
the three)floors with 75 beds.
Manager Couzzo offered his advice reganiing (H) interior and exterior security and utilizing
�Ilage personnel at the facility 24 hours a day as the ideal situation. Mayor Watkins did not feel
it neoessary and did not care for the prison feel that it would of�er. She feft what GMH had
intended fof security would be suffiae�. Shaun Gallagher agreed that resident safety was of
great importance but believed their facility was equipped and prepared. Manager Couao stated
that his research on the security issue did show that his inifial suggestion of 24 hour Tequesta
stafF monitoring may be too much for this situation.
Manager Cou�o suggested a security plan be submitted during the special exoeption process
to be approved by administration, the police departmerrt and Council. Mayor Watkins did not
believe it to be the duty of the Village to have a police officer manning parlcing lots.
Manager Cou�o stated the Village may at their discrefion request studies. He requested
direction from Counal if their desire was to perform an impact analysis. Manager Cou�o did not
believe the c�st of the analysis would be excessive. Mayor Watkins and Nilsa Zacarias
supported obtaining the analysis report. Ms. Zacarias noted concems regarding different types
of addictions oould be answ�ered through the analysis. Manager Couzzo noted he was more
concemed with the impact on the community.
V'�ce Mayor Patemo questioned pobentiai code issues. Attomey Keith Davis responded with
details of the code process and special magistrate with r�egards to violations and fines which
Minutes—Special Council Meefing 1/25/11
Page 5
he added wouid generate revenues but would not shut down a business. He noted once the
adoption of the language took aNect there would be multipie steps GMH would need to complete
before their doors oould be opened for business.
�ce Mayor Patemo voioed his conoems regarding room sizes (D}, He felt the rooms should be
smaller with tess traffic, stafif and people. He believed the vllage could attract more facilities
with this leniency. Manager Couzzo offered adjustmerrt options on footage calculations. Council
Member Arena recalled past thoughts regarding penthouses on the third story. Manager Couzzo
noted that restrictions should be plaoed on units and persons as compared with the original
ooncept of 70 units versus present projections of 84 units and 117 beds. Chief Weinand
responded the original approval was for an assisted living facility with 24 unit,s per acre which
coincided with the 84 units. Counal Member Arena fett the original proposal ftom GMH had
changed. Mr. Gallagher stated that they w�ere holding off on developing the thind floor.
Attomey Smith �minded that the building was designed for 84 units and changes could leave
the developer studc with the building. Vice Mayor Patemo voiced his concem with the project
growing too large. Mayor Watkins established Counciis approval of ten units per acne. Four out
of five Council members confirmed approval, Vice Mayor Patemo against.
Council took a break at 6:44 p.m. and reconvened at 6:57 p.m.
Mr. Jim Kennedy, Attomey for appticant(GMH) stabed deto�cation was a critical componerrt for
the facility and suggested their Director Tim Worden speak to Village utilized doctor, Dr. Glenn
Ross Caddy, Ph.D., Clinical and Forensic Psychology, at their (GMH's) expense to offer clarity
on the detox issue to the Vllage Manager. Manager Couao replied that their ofFer would be
acceptable, and exprsssed his conce�n that this may require additional time which would push
the item past next month's Council meeting. Council AAember Tumquest offiered opinions from
his wife, an emergency room doctor, who believed that r�ehabilitation would have to involve
detox and security measures should be in place. Mayor Watkins stated she was not
comfortable at present with de�tox and would like more darity and understanding.
Manager Couzzo suggested more specific language be added regarding detoxification. At6amey
Larry Smith questioned the time line and if another w�orkshop could be considered in an attempt
to make the next scheduled meeting. Manager Couzzo noted that would be possible and
explained that the Yllages' stanoe was to be thorough in their process regardless of time and
outside agendas. Council Membe� Humpage expressed support for the facility but noted his
resistance toward detoxfication being offered and his urifamiliarity. He stated he would be fi�e
with another meeting. Vice Mayor Patemo pointed out that the meeting shou� be held at a
convenient time for the public. Mayor Watkins suggested the Village make every effort to include
the public and not rush the process. She pointed out positive 000Neration by the applicarrt and
that she had not heard major negatives from residents and that the project would benefit from
Minutes -Special Council IUleeting �i25/11
Page 6
educating the Village as a whole. Man�ger Couuo suggested that Tuesday meetings would not
preclude anyone from attending. Attorney Smith suggested utilizing Dr. Caddy for presentation
purposes since he was working for the Viilage and GMH would be paying f�r fiis time. Manager
Couzzo felt the finro doctors language could be developed within two weeks. Councii Member
Humpage agreed on utilizing Dr. Caddy and a meeting on the next Tuesday. He asked that the
Village alert residents as diligently as possible.
Manager Couzzo asked to add language clarifying that the impact analysis would primarily
determine the impact of any rehabilitative facility on the quality of life in the community as he
was not concemed with potential profits of developers. Mayor Watkins voiced her concem
regarding her input and the ent! of her term on the Councii. Attomey Davis and Lori McWiltiams,
Village Clerk offered cla�i�cation regard+ng Mayor Watkins concem. Mayor Watkins asked to
advertise the Tuesday meeting in the Palm BeacM Post.
MOTION; Counci!Member Humpage moved fo hotd a Speciat Jt�leeting on Tuesday Febrvary
8, 2091 at 6;00 p.m. to further discuss rehabilitafion /anguage; secondetl by Counci! Member
Tumquesf; motion carried unanimously 3-2 with Mayor Watkins and Vice Mayor Patemo
dissenting.
Manager Couzzo stated the revised langu�e wouid be available within two days regarding
tonight's detox�cation language. Mayor Wa#kins confiRned#hat the Viilage would hire Dr. Caddy
and he woukl attend the next meeting.
ANY OTHER MATTERS - None
ADJOURNMENT
MOTION: Council Member Humpage moved to ad1oum; seconded by Council Member A►nena;
the motion to ad'�oum carried unanimously 5-0; thenefore, the rr�eting was adjoumed at 7:20
p.m.
RespectFully submitted,
�� rr���.��
Lori McWilliams, MMC
ViNage Clerk
Note: These summary minutes are prepared in compliance with 28fi.011 F.S. and are not
verbatim transcripts of the meeting. A verbatim audio record is available from the Office of the
Viilage Clerk. All referenced attachments are on file in the Village Clerk's office.
MINUTES
VILLAGE OF TEQUESTA
VILLAGE COUNCIL SPECIAL MEETING MINUTES
February 8, 2011
CALL TO ORDER AND ROLL CALL
The meeting was called to order by Mayor Pat Watkins at 5:00 p.m. A roll call was taken
by Village Clerk Lori McWilliams. Present were: Mayor Pat Watkins, Vice-Mayor Tom
Patemo, Council Member Jim Humpage, Council Member Vinoe Arena and Council
Member Calvin Turnquest. Also in attendance were: �Ilage Manager Michael R.
Couzzo Jr., Vllage Attomey Keith Davis, Village Clerlc Lori McWilliams, and Depa�tment
Heads.
APPROVAL OF AGENDA
MOTION: Council Member Humpage moved apprnval of the agenda; seconded by
Council Member Tumquest; motion carried unanimous/y 5-0.
1. Continued Discusaion o� the Rehabilitation Facility Language (continued
discussfon from 1/75✓11 Specia/Meeting)
Mayor Watkins noted additional language and a letter from the applicant was received.
The Manager mentioned the Ordinance language had been updated on February 4,
2011 reference detox language.
Council Member Humpage mentioned the biggest issus was the detox language and
understood the current language was now acceptable to GMH. He questioned why
GMH wanted to add the behavioral health treatrnent language. Mr. Larry Smith, GMH
attomey, understood this was a text amendment and not GMH approval. He explained
he planned to request a corrtinuance during the next Council Meeting. He further noted
the Executive Director suggested the behavioral health language component and
wanted him to explain the purpose.
Dr. Tim Worden, clinical psychologist and Euecutive Director of Futures Wellness and
Recovery Center, explained Mr. Gary Holloway wanted to create this program in order
to give back to society in addition to creating a profit. He stated the facility would
provide impeccable high-end service and that he would only become involved if a health
and awareness prog�am was created. He explained their clients were involved with
behaviors that prevented them from obtaining a high level quality of life. Mr. Holloway
wanted to create a behavioral and health or health and wellness cutting edge program.
He noted the proposed language provided a broader offe�ing than just an alcohol
awareness program.
Special Council Meeting Minutes—February 8, 2Q11
Page 2
�oe-Mayor Pat�emo asked why the behavioral healtl� treatrnent wor+ding was neoessary
and Dr.Worden stabed the tr�eatrnent wouid assist a person in stopping their prob�matic
behavior and refiemed to it as health psychology. He befieved a person's motivation
lev�ei was a m�ns af sucoeeding; thereby peating a behavio�a� health program as a
science.
�ce-Mayor Patemo asked about dual diagnostic and Dr. Worden statied substanc�e
abuse problems c�ould have unde�lying merrtal health issues and when part of
sub�tance abuse it should be treated.
V'�oe-Mayor Pabemo asked if the faciMy would primarily�serve Vllage residents and Dr.
Worden stabed they would take clients from a variety of are�s. �oe-Mayor Pa�emo
inquired on how they planned bo serve the c�ornmunity and noted it did not sound like it
was going to do much for or be a good fit for the anea. He stated the use must be
designed to serve the resider�s of the Vllage. Dr. Worden stated the fap7ity would be
an innovafiive behavioral health program that would assist anybody; and would affer
w�eekend interventions for smoldng and i�ood disorders. V'�ce-Mayor Pabemo clarified for
Dr. Worden that the program was r�equired to be a 30-day residerrtial program; Dr.
Worden e�lained tt�y would sponsor corrferences at local twtiels bo ofier the additional
interv�e�ions. V'�oe-N�ayo� Patemo na�ed his iMerpr+etation was that they did not meet
the requiremenffi o�f the Maed Use(MU) District.
Council Member Tumquest believed Coundl was jumping ahead and relay�ed the
cument conversaation should be left to deciding t�w the rehab facility w�ould be allowed
in MU. V'�c�e-Mayor Patemo advised the MU zoning district was only to hav�e certain
types of businesses that served the are� residerrts and reiberated he believed it did not
meet the current mning and would not be in the best intenest of the oomm�ity.
Mayor Watkins c�onfim�ed Council's task was to dpal with the language and further
noted the language proposed in January was a �+esult of the citizen comments during
that special meeting. She pointed out the new proposed language definitan did not
include emergency or detox language and asked Council to review the Nang�rage as
proposed by staff and determine if it was adequate or if it needed further r+eview.
Council Member Tumquest believed the definition in 78-4 (1) was too narrowly defined
and did not like the la�uage. Attomey Davis reminded Council to author the Ordinance
and leave little room for irrterptetation - specificaNy state what vwuld be allow�ed — be
precise and rat subjed to in�erpret�tion.
Special Council Meecting Minutes—February 8, 2011
Page 3
Mayor Watkins believed the language was narrow enough that if another applicarrt
obtained the propertY theY would know what they could and could not buiid. Attomey
Davis mentioned a r�ehab facility applicant would be required to go through the special
exc�ption prooess; a� onoe a special exoeption use was approved, it would continue
bo run for a new property owner or corne back to Council for a difbererrt use. There
would be no surprises if it changed hands. Council Member Tumquest stabed he was
fine with the r+ehab car�e definiaon if that that was the case.
�oe-Mayor Patemo questioned if this was the face Council wanted to put on the
cortxnunity and r�eibera�ed it was not right for the MU Distrid a�d did not want to change
the oomple�don ofi the cammunity for a rehab facility.
Council Member Tumquest agr�eed - trying to giMe a dif�erent view on it and believed
Vioe-Mayor Pateemo was right and that sometimes Counal w+e� too far with Projec�
and it was hard to pull badc. He did not believe a deasion needed to be made right now
and requesbed mone fime to oomplete additional r+esparch and c�nsult with physicians.
He concuRed it needed to be appropriate for the culture and lifestytes of the community.
Mayor Watkins agreed it was never beneficial to n�sh and wished to sbw down and
�9�P•
Council Member Anena sta�ed he had not r�eceiv�ed a bt af r�gative t�eedbacic r+egarding
a rehab center, haw�ever was happy to allow additional time for further review, and was
pleased the de�ox element was removed from the language.
Council Member Humpage pointed out the MU was a fairly new zoning district to the
�Ilage a�d was pleased with efforts of the �Itage staff and GMH. He felt relativvely
com�ortable with the �liage language and sta�ed behavioral language wonding just
implied trying to change ones behavior.
Attomey Davis stated he would like to define behavioral health treatment mor�e
thoroughly and Mayor Watkir�s had questions about the behavioral health tr�eatiment
aspect, but liked the second proposed language by GMH. Council Member Humpage
stated he I'ked the word 'tivellness."
MOTION: Vice-May+nr Pat+emo mov�sd tn posq�one the sevond reading of the
Ordinanoe u�il Mart�► 1 D, but still albw residents to speek on the issue at the Febivary
Courx,l!meeting if desiied.
Special Council Meeting Minutes—February 8, 2011
Page 4
Attorney Davis opined the item should be postponed during the February Councii
meeting since it had aiready advertised.
The motion to postpone failed for leck of a second.
ADJOURNMENT
MOTION: Counci! Member Tumquesf moved fo adjoum the meeting at 5:53 p.m.;
seconc�d by Vice-Mayor Patemo; motion ca►ried unanimous/y 5-0.
Respectfuily submitted,
41 t7� ��(.t��,c:4�-+-..
Lori McWilliams, MMC,
Village Cierk
Note: These summary minutes are prepared in compliance with 286.011 F.S. and are
not verbatim transcripts of the meeting. A verbatim audio record is availabie from the
Offioe of the Viilage Cierk. All referenced attachments ace on �le in the Viilage Clerk's
office.
MINUTES
VILLAGE OF TEQUESTA WORKSHOP
VILLAGE MANAGER'S CONFERENCE ROOM
TUESDAY, FEBRUARY 22, 2011
Cali to Order and Roll Call
The meeting was called to order by Mayor Pat Watkins at 6:00 p.m. A roll call
was taken by Village Clerk Lori McWilliams. Present were: Mayor Pat Watkins,
Vice Mayor Tom Patemo, Council Member Calvin Tumquest, Council Member
Vince Arena, and Council Member Humpage. Also in attendance were: Village
Manager Michael R. Couzzo, Jr., Village Attomey Davis, Village Clerk Lori
McWilliams and Department Heads. Council AAember Elect Abby Brennan
attended via telephone.
1. Continued Discussion on the Rehabilitation Facility Language
(continued discussion / from 2/811 Special Meeting and 2/10/11 Council
Meeting
Mayor Watkins described previous efforts to obtain input ftom the residents on
this issue, and noted Council Member Humpage had requested this workshop to
ascertain the Council's feelings. Representatives of the applicant, GMH, were
p�esent to answer questions.
Village Manager Couzzo repo�ted that since the last meeting he had made a
change to the amendment, which included language that would prohibit any
patient of the facility from obtaining an address of their own there. Also, the
Manager advised that on page 15 of the original proposal from GMH, he had
found the language confusing reganiing the applicant certifying to the Vllage that
residential occupancy will not exceed 70°r6 of the total residential beds during any
30�iay period of time. He worked with Mr. Smith and Shaun Holloway to come
up with language to amend the ordinance that would do what this had been
intended to do by reducing the density from 10 units per acre to 8 units per acre.
Mayor Watkins announced that first reading of the ordinance had already taken
place and second reading was scheduled for the March 10, 2011 Council
meeting.
Public Comment
John Diniro, 236 Village Boulevard in Lighthouse Cove, next door to the
proposed facility, commented he was the President of the condominium
association. He advised that the condo association board had never taken a
position on the rehab center issue, thanked the Council for thei� work on this
issue, and reported the applicant and Council Member Humpage had met with
them to provide a better understanding of the project. Mr. Diniro stated that as a
resident, he was in favor of the rehabilitation center, which he felt was better than
Minubes—Vltage Cou�cil Workshop 2/22/11
Page 2
having an empty buiiding, a� felt it w�ould be a very nioe, wetl mairrtained, well
dev�eloped facility. He felt the dev�ebper's willingness �o mov�e the ga�e to Old
Dixie was a real plus, and felt the property would add value to the real estate
within Lighthouse Cove.
Mary HiMon, 12 Oakiand Court� questioned if an analysis had been done as to
the amourrt of tax revenue this build'mg was generafing now and w�ouki generate
for the Village. Ms. Hi�rton oommented she was in favor of the project since the
detox fac:ility had been r�emoved� and it would get rid aF an ey�esore. She asked
about � uses for this property. Atbomey Davis e�lained the t�i-party use
agreement was the document that r�estric�ed this the mos� other uses w�ould be
condos and�own homes.
Elizabeth Schauer, 85 Teakwood Cirde, m�nber of the Ptanning and Zoning
AdvisorY Boand, commenbed she had been on the �Ilage Council when this
building was approved to be built, and the whole oo�oept had been this building
had to be oomplebed before Sbe�la�g House finisF�ed the building in the badc,
which was now their Alzheimers and dementia unit The Council had war�ted the
building finished so they w�ouldn't be looking at an u�'inished building� but for 10
years they had bee� looking at an empty building. Ms. Schauer commenfied she
had knawn the Hotloway f�nily, and the Holbway Foundation, the primary owrier
of th� project, and they had had roats in Tequesta for over 25 years. She
exp�+essed her opinion that Mr. Holloway would never do anything that would hurt
the Village, and w�ould aMrays do what was best for the Village. Ms. Schauer
indic:�ted she was in fav�or of the projec;t.
Bill Watkins. 167 River Drnre, commented the term "rehab facility~ automatically
conjur+ed up drug rehab facilihr, but people came for w�eight and smoking
problems, and the drug rehab had been curtailed by eliminaating the detox facility.
He believed the facility w�ould insist on privacy and confidentiafity. Mr. Waticins
felt if this oode change was not approved that the building would nemain vacant,
and envoureged the Council�votie in iavor of the code amendment.
Peggy Guiffre, 266 V'dlage Boulevard, Lighthouse Cove, thanked the Council and
especially Council Member Humpage for providing the residents with an
ov�erview of the projed and changing their misoonceptions about the project.
She urged the Counal to go forward with this project.
Mary Hinton, 12 Oakland Court, c�ommented the nursing hane where the hospital
is had been a r�ehab center when she first moved here.
Sarah Jacks, affiliated with the de�bx facility in Jupi�er, oommented she was very
excited about this project, and a�fered assistance.
Minufies—vllage Council Workshop 2/22/11
Page 3
Council Comments
Counal Member Tumquest requested a definition for "high end factility". � Shaun
Gallagher, CMH, explained the wellness and r+ecovery covered everything from
food to c�tering b� atl dient needs; their CGnical Dinec.ta's pr+ogram had patients
seeing psychiahis�s and coaches at least 4 times a week—mone than ather
fac�tities—and leaving virith a writfien full y�ear �+etapse preventio� plan and follow-
up for a whole year; and the bcation was gr�eat.
Council Member Arena catunented �4p,000 a month se�r�ed pr+etty high end.
He asked how the landscaping would ouUine the property. Mr. Gallagher replied
the dectaration of use agreement required a significarrt landscape buffer on the
east side of the property to be in plaoe within 365 days of signing. They w�ere in
discussions fio dose the entranoe to Yllage Boulevard and gating the Old D'aie
Highway entrance; w�ould sutxnit landscape plan with the speaal exception use
and site phan; tl�ere was ample time to w�ork with staff, Council and residents so
that e�e�yone was happy. The border would be approximatieiy 6 feet high, and
they would de�n up the�enoe. Attomey Davis advised that the landscape buffier
at all times was to provide a reasonable obstruction and read the requir�ements
from the agreemerrt. He e�tained the agr�eement did not provide hard numbers
but must be reasonable. Mayor Watkins c�mmented that landscaping would be
discussed during the special exoeption process.
A r+esideM asked ff Lighthouse Cov�e could get the same shn�bbery as Sterfing
House. V'illage Manager Coumo indicated this oould be discussed during the
special exception.
Council Member Arena asked what the patient to w�o�icer ratio would be; Mr.
Gallagher responded it w�ouki be gneafier than the zoning requiremerrt, and would
be subrnitted with the special except�n. Mr. Gallagher oonfim�ed for Counci!
Member Arena that the applicant had discx�ssed tl�e wounded warrior program
with Ms. H�rton and they w�ere going to gnre funds. He advised they vwuld make
an an�ual presentation outlining everything they had done in the oommunity.
Council Member Tumquest oommented on o�her applicants making these same
promises, and aslced what the starting time would be to get the projec� off the
ground. Mr. Gallagher e�lained that Gary Hdbway had paid cash fior the
property, and had no equity partners and no debt oovenants; which altowed them
to mov�e faward without partners holding things up, and they wanted to be open
as soon as possible. Construction was estimabed bo talce approximately 4-6
months to complete the sibe, landscaping, interior, and exterior, and �ain a
oertificate of ocxxipancy; they could not submit fior their lic�ense without a
certific�e of occupancy in hand. Council Member Tumquest noted that GMH
was petitioning for a fiext amendme�nt in mixed use zoning, and if approved this
would affect not only their prope�ty but all mixed use areas; so that another rehab
Minutes—Village Counctil Woricshop 2/22/11
Page 4
facility could be plaoed at a 1/Z mile radius, which would be on Bridge Road or
the Paradise Park area.
Attomey Davis darifred for Counal Member Arena that GMH w�ould be able to
accept oertain grants. Council Member Tumquest noted they would not be able
to acx�ept federal patients. Attiorney Davis advised they could treat soldie�s from
the war that might need help if it was privately funded.
A resident asked how many oo�struction and full-fime jobs this would cx�eate and
what type of tax base. Village AAanager Cou�o exphained the tax base w�ould be
based upon assessment by the courriy, which was based on how much theY P�
itrto it, which was tl� multiplied by the millage rate.
Eleanor Howe, member of the Board af Directors of Lighthouse Cove, asked if
the applicant had been aslced to put up a bond. Vioe May�cx Pafiemo commented
this shouldn"t be discussed now as this was the text amendment phase. vNage
Manager Cou�o agreed with the Vioe Mayor and noted ther�e w�ere things that
oould �t be discx�ssed at this point in the project•
Council Member Humpage oommenbed he had been troubled by the stigma of
dnx,�s and aloohol, and li�b�d the a6aens' primary issues. Initially, detox had
been a conoem, but that had been removed; through negotia#ions the number of
beds had been reduoed from 117 �o never exc�eed 70% of ratio o� patients to
beds (82 would be max); GMH had agreed bo dose the acvess on vllage
Bouleward; in-house security seemed to be well managed; Lighthouse Cove
residerrts had wan�ed bo know if the empby�ees could be sc�eened, and GMH's
�PbY�� �PHcation required appNcarrts to pass substanoe abuse, cximinal,
badcground and r�efer�enoe cttec*s. The existing maed use allow�ed density of 18
dw�elling uniL�a per gress acne, equal tio 270 residerrts and 250 cars. Counal
Member Humpage expr�essed his opinion tltat building the rehab facility wouid
help property values, and bring employmerrt and r�evenue to the v�age. He
repoited he had looked up similar facilities bo see what was going on and to see
what the polioe depattrne�rts had to saiy about th�n. One high end rehab was in
Destin, Fbrida, and he had been ama�ed to leam the m�ority of their dients
w�ere athlefies at several high end facilides. The Destin facilih►had been open for
7 years and the polioe had been to the fac��ty 4 times--for 3 cases of fraud
(where a client passed bad c��edcs) and one case of disputie betw�een an
employee and staff inember. The other high end facility was in south side Palm
Beach, which had no issue with polic�e. Paramedic issues w+ere responses to
patierrts falling, and if the paramedics responded the facility paid, not the patierrt.
Council Member Humpage envisioned this facility as an asset to the Vllage,
providing another means of rev�enue.
Mayor Waticins oommer�ed it was obvious Council Nlembers w�ene doing their
homework. She believ�ed the impact to tfiose living next bo the f�cility would be
positive, sinoe this would be a reso�t quality oasis with the goal of being a world
Minutes—�Ilage Counai Walcshop 2/22/11
Page 5
class facility that would be a model. She commer�ted she did not believ�e it would
be intrusive to the vllage or a detriment to quality of lifie; she would nev�er bring
something to the vllage she feft was harmtul, and she was oomfortable with i�
Villaage AAanager Couzzo c�onfim�ed for the Vic�e Mayor that the language would
be changed fnom 10 units to 8 units with Council oonsensus. V'�ce Mayor Pafiemo
commented if this business was approved he wanted to make sure it woriced for
the community rather than the c�ommunity fitbing into the applicanYs plan. He
wanbed to make sur+e thene w�er�e enough safeguands that GMH could attract the
patients they wanted. He had visited the Juno faalihr and the polioe calls w�ere
abng the lines of what Council Mernber Humpage had r�eporbed. He was on the
fenc�e about the facility—he fielt this could be a great thing t�the oommunity, but
had reoeiv�ed three emails against it The 8 units had been a big hur+dle for him.
Abby Brennan oommented she was comfortable with the �ommeM,s that had
been made.
Eleanor Howe, Lighthouse Cove, asked about this property being sold to
someone else. Mayrx Watldns responded GMH oould sell the property; hovaever,
the vNage,Alberra, and the new o�wner had to agree what would be placed there-
-a rehab facility, town houses or muitiffamily homes. Attomey Davis advised
ther�e was nothing in the oode or use agreement that addressed price points or
bw income or worlcfioroe housing, so that was a possibility. If GMH was
unsucxessful, someone could buy it and put in tiown homes that sold for$70,000
each.
John Parker, Lighthouse Cov�e - oommented on Vioe Mayor Patemo's struggle
ov�er'the issue and asked if thene was something speafic he was looking for. The
V'�ce Mayor responded it was just the idea of whether w�e wanfied a �ehab in the
vllage. Mr. Paricer cornmented he had taught in Mal�u, Califomia, and tfiey
were woricing out there.
ANY OTHER MATTERS
Counal Member Anena oorrnr�en�ed he liked U�e Lighthouse Lines newsletter.
Council Member Humpage asked for Council's permission to have the Fire
Deparhner�t sfiand by while the American Legion bumed American nylon flags.
Y�ce Mayor Patemo respaxied this could be discussed at the special meeting,
since no acdon c�uld be taken at a workshop.
Minutes—Viilage Council Workshop 2/22/11
Page fi
ADJOURNMENT
MOTION: Councii Member Humpage moved #o adjoum the meeting at 7:29
p.m.; seconded by Councii Member Pafemo, motion canred unanimous/y 5-0.
Respectfully submitted,
�10't,c:�Yl[.�,c��4n-�—
Lori McWiHiams, MMC
�Nage Clerk
Note: These summary minutes are prepared in compliance with 28fi.011 F.S.
a�are not verbatim transcripts of the meeting. A verbatim audio record is
avaitable from the Office of the Village Clerlc. All referenced attachments are on
file in the Village Clerk's office.
Minutes— Regular Council Meeting 3/10/11
Page 2
Council Member Brennan expressed her joy to be part of the Council and congratulated
the Mayor and Vice Mayor on their appointments.
Vice Mayor Arena congratulated Mayor Paterno and thanked him for all his
accomplishments and welcomed Council Member Brennan. He thanked the Village staff
for their dedication and the Village's volunteers for going over and above.
Chief Weinand, Fire Chief noted a charitable event organized and supported by the fire
department which would be held on March 18, 2011.
Mayor Paterno expressed his gratitude for the Council Members, their support and
strength.
REGULAR AGENDA
OLD BUSINESS
3. Ordinance 1-11. Second Readins�, Amending the Village Code of Ordinances at
Chapter 78. Zoning. At Article I. In General. Sec. 78-4. Definitions. By Creating
an Entirely New Definition for "Rehabilitation Facility" and by Amending the
Definition of "Residential Use"; at Article VI. Schedule of District Regulations.
Sec. 78-180 MU Mixed Use District. By adding "Rehabilitation Facilities" as a
Special Exception Use, by Creating Conditions to be met by all Rehabilitation
Facilities and by Limiting the Density for such Special Exception Use to 10 Units
per Acre; and at Article X. Off-street and On-Street Parking and Loading
Regulations. By Adding "Rehabilitation Facilities" as a Category and Requiring
Rehabilitation Facilities to Provide One Off Street Parking Space Per Patient Bed
(First Reading 1/13/11, Postponed 2/13/11)
Attorney Davis read Ordinance 1-11 title into the record.
Mayor Paterno opened the public hearing for public comment.
Pat Watkins, 167 River Drive noted that the Village has gone to great extents regarding
this item and she had heard only positive feedback. She congratulated all involved on
their work and compromise.
Geraldine Genco Dube', 7 Country Club Circle, spoke to the amendment regarding
mixed use as she believed the applicant accommodated the concerns of the Village and
have gone above and beyond. She voiced her concems for the proposed change and
offered an alternate option.
Minutes—Regular Council AAeeting 3/10/11
Page 3
Harold Taytor, 15 Chapel Court questioned the number of units per acre.
Mayor Patemo opened the public hearing for Counal c�mment
Counal Member Humpage stated he was a proponent of the project and of6ered a
history regar�ding the item. He voioed his beliefs on GMH's hiring and faality guidelines
and praoesses and felt they were sufficient and more stringent than other surrounding
business's. He also noted the vllage blemish would be removed with green space
obtained through the ventur+e. Council Member Humpage also noted the third party
agreement restrictions and the possibility of negafives surfaang if GMH was rejected.
Council Member Tumquest expressed his understanding of neighboring prope�ties
approval of the facility and his belief that property values will be affected negafively. He
felt the facility was possibly harmful to the vllage's reputation and expressed tt�e Village
will hold GMH responsible for keeping with what they pronounoe. �ce Mayor Arena
pointed out that the faality's clientele would have goals toward improving their lives and
would spend a great deal of money for that purpose. He also noted the Village would
implemerrt guidelines that would maintain the promises of the applicarrt and he believed
GMH would do a fine job.
Mayor Patemo reiterated his concem was for the Village and fett the ten foot fence
height proposed should be lawered so not to appear prison like and thanked everyone
for their efforts and input on the item. Council Member Brennan e�ressed her
appreciation for the great deal of education she had obtained regarding the venture as it
had eliminated her initial oonoems. She added that she believed clientele would prefer
anonymity.
MOTION: Council Member Humpage moved approval of Ordinance 1-11; seconded
by Vice-May�orArena;motion carried 41 witi►May�orPatemo dissenting.
4. Ordinance 2-11. Second Readino. Amending the vllage Code of Ondinances
Walls and Fenoes by Amending this Section to Clarify the vllage's Interrt
Regarding Wall and Fence Plaoement Relative to Associated Strudures, and by
Requiring Er�try Features to Provide Adequate Clearance for Emergency
Vehides; and Unenclosed Uses in Corrxnercial Distric�s, Awnings and other
Projections over Sidewalk or Required Yard Area by Amending this Section to
Allow for the Oubdoor Sale of Ice, and the Outdoor Sale of LP Tanks under
Certain Circumstance.s (First Reading 2J13/11)
Attomey Davis read Ordinanoe 2-11 title into the record.
ORDINANCE NO. 1-11
AN ORDINANCE OF THE VILLAGE COUNCIL OF THE VILLACE OF
TEQUESTA, FLORIDA, AMENDING THE VILLAGE CODE OF
ORDINANCES AT CHAPTER T8. ZONING. AT ARTICLE I. IN
GENERAL. SEC. 78-4. DEFINfTION3. BY CREATING AN ENTIRELY
NEW DEFINITION FOR "REHABILITATION FACIUTY" AND BY
AMENDING THE DEFINITION �F "RESIDENTIAL USE"; AT ARTICLE
VI. SCHEDULE OF DISTRICT REGULATIONS. SEC. 76-180 MU MIXED
USE DlSTRICT. BY ADOING "REHABILITATION FACILITIES" AS A
SPECIAL EXCEPTION USE, 8Y CREATING CONDITIONS TO BE MET
BY ALL REHA9ILITATION FACILITIES AND BY LIMITING THE
DENSITY FOR SUCH SPECIAL EXCEPTION USE TO 8 UNITS PER
ACRE; AND AT ARTICI.E X. OFF�TREET AND ON-STREET PARKING
AND LOADING REGULATIONS. BY ADDING "REHABILITATION
FACILITIES" AS A CATEGORY AND REQUIRING REHABILITATION
FACII.ITIE3 TO PROVIDE ONE OFF STREET PARKING SPACE PER
PATIENT BED; PROVIDING THAT EACH AND EVERY OTHER
SECTION AND SUBSECTION OF CHAPTER 78. SHALL REMAIN IN
FULL FORCE AND EFFECT AS PREVIOUSLY AOOPTED; PROVIDING
A CONFLICTS CLAUSE. A SEVERABILITY CLAUSE AND AUTHORITY
TO CODIFY; PROVIDING AN EFFECTIVE DATE; AND FOR OTHER
PURPOSES.
VYHEREA3, the �Ilage of Tequesta has reoeived a privately initiaated appiicati�on
from GMH Tequesta Holdings, LLC to amend the Vllage's zoning oode text to allow
rehabilit,ation faalities as a special exoeption use in the MU Mixed use zoning district;
and
WNEREAS, said application provides a de�finfion for "rehabilitation faality" as
wefl as density restriations, parki�g requir�ements and other condidons of approval that
all rehabilitation faciliaes would have to meet in or�der to receive approval to operate
from the vlMage Counal; and
WHEREA3, the applicaM has previously advertised and held a public"town hall"
meeting to discuss with the citizens of the Vllage its intentions to operate a
rehabilitation facility in the MU Mixed use zorting district; and
WHEREAS, the applicarrt has met with vllage staff on numerous occasions in
order to prepar�e its applic�ition in a manner that will serve not oniy its own purposes, but
also those of the Village ;and
i
WHEREAS, the aPP��u�t has previouslY met with the vllage Counal in a
publidy notioed workshop meet�ng to further diacuss and refine its application; and
WHEREAS. the applic�nt has taken ir�fi� acoou�t all the input ob�ained at all the
aforesaid meetings and vMorkshops, rosulting in the zo�ing oode be�d amendments as
set torth her�ein� which the V'�age Council belieMes will be in the best inter+e�s af the
V'�lege vf Teques�a, and will promo�be 1he public he�llh, safely and w�elfare.
N�N, THEREFORE, BE IT ORDAINED BY THE VILLACsE COUNClL OF THE
VtLLAGE OF TEQUE8TA, PALM BEACH Cp111i1T1(, FLpRIpA�AS FOLLOW3:
S�etlon_1: Chap�er 78. Zonir�g. aF the Code of Ordinanoes aF the ViNage of
requesta is ner�eby amendea at Arbde �. �n cenera�. sec. 78-a. Definibons. by creatir�q
an entirey new de�'inidon for"Rehabili�ion fac;iM�'tio be ir�sereed alphabeficaly into the
existing iist of definitions, and by sn�ending the exi�ing definitan of "Residential use";
pr�oviding that these deAni�or�s shall heresf�er reed as�ollows:
Sacdon 78-4. DoAnitlons
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• ��_�.�:.: - - -
:'�' I : l : ' 1: _ _ - • �� � :yl hl - 1 :.•� •� ' • • I�•. 1 =.�' " "
• _ ' i • • �: ♦c • • : • • : - _ _ • • • � 1.�. .� I1.� l=- �,• -:1l� - 1=:1 � •: 1�=1�.�:1
t .�_.�.-:- J �1.= �� II.�.t=_�r [:- � r:���r � • �i�1.=:�,� -.- i f � � • r� • : •
� : : :;i - �r • c- �� i-. • u - � r
�'1' " • '- • • • I - • � : • • � •_._ • i : � - �
- • -;'�' _ • � : � � � : r : � - • ���._�i r c.• :ii •
: 1 � 1�..• - • -:�i r • : • • � : � r:i� • : r i : . � =.r�: _ ��:.• � •,
_ � � - : � • �• � � � • � _ � : • r.ii � : � i : ' • � i � i
� • • : • . ► : _ ♦_.� � • �• 1 �_ • _ : r - � • � • i - ;��
- - - _ • - • •
S�c.78-180. MU mi�ud-uN district
(a����• Crn� Pe�O�Ph shall �emain in fuq foroe and e�ec� as P�Y
tb) Ap�ab�lY of dbv�b�rne�nt reg�eaar►s to miaed-us+e al�H�oiprr�ent [This
Pa►�a8r�h shaY remain in fi�8 fonoe and eAect as pneviously enacbed,]
(c) Conf�ds w�h o(hesr nigu�v,r� (This pe�raph shaN nemaiin in fuN for+oe and effsc�
as pr�eviousfy enax�ed.J
(d) Ge�erel recWiir�ments end specla/►egWati�ons. The followirg geneYal r�equir�emen�s
and apacial regulations shaN apply t� planned mboed-uae de�ebpmerrt within the moa�d-
use distric�
(1 j Loc�or►. (This para8raph shaN remain in full for+oe and eifect as p+eviousl�l
enac�ed.)
(2) Co+►figurat�ori of sde. [This pera�taph shaN remain in iuA ior�ce and ei�ect as
Pnevioush►enecbed•j
(3) Uruljr of �de. [Fhis paragreph shall nemain in fu1 foroe and e�ect as
Pne�riot�sl!/ertecbed.)
(4) D�er►s�y. For the purpose of this sedion, if dw�ell� tuiits are fi� be
develo(�ed as part of a Proposed developn�errt within the maed-use distric�, the
tio�d nurt�er of dweNinB units permit�ad in the mnaed-use distric� shaU be
oompuled on the basis o#18 dweNinB wti�s per grosa ac�e ior all residential uses,
with 1he j���a e000e�otinns: e�ee�lien-e�ACLFa�MA�ieh shaN be compu�ed on
the b�sis af 24 dw�elpng units per gross acne•
s�ID�ed an the basis af 8 dwallira �■±ils ner ar�nan�.
t5) B�g' �►e�'8�i►r CT'h� P��B� shaa remain in fup �oroe and eT�led as
Previot�sly e�ac�ed.]
(e) �P�►^�� ITh� Pa�D� shaN rerrtain in tuN for�oe ar�d et�ect as pnevio�sly
ens�ed.)
(fl V�► d��8�► P�s- (This ParaBr�h sl�all �in in fuN foroe �d ef�ect as
pneviousy enac�ed.]
(9) Ur�n de�n ab�ec��. IThis Pe�graph shaN remain in full i000e and eff� as
Pnevious�Y e�ed.]
(h) P�ermdt�ed us+es. [This paragraph sh�l r+�nain in fuN for+oe and e�fed as p�eviousy
enacted.]
(� SPecaie� excae�ion uses. Spedsl e�aoeption uses in the mbaed-use distric� ar�e as
fdbws:
��(1j - (15) IThese Para9rapf�s shaq �emain in full toroe and e�tiect as previously
b. Nie�t oerear�t af the dw�all'ino �� sh�ll t�s a minim�� af �7�
c. A ma�dmum af fiaiv oenoent (4096) af the dwelNrro ��+ils a� be
4
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. �1
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' rr_ •.:• • = •; : • • •-• • - : r � - • ,
:. r r,: •
: • '� : � � : - � � - : � : ♦ ��- :�� :�� - •� ♦-
� - --�' � �•� - : r:� �
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- : �i- •
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:�� I: • � • I - • � _ • � � � •�-_ •'� I ! •�_ •
- � - -'r _ _ � _ � _ � - ��r - • � _ �� 1� � - � - � r= • �
Regula�ons. Sec. 7&705. Required nun�af parldng spaces, by adding -r+sheb�n
fac�ities' as a ca�egory and requiring reF�ab�1ita�ion fac�nies bo pr�ovide one patkin9
sPe�Pef Ps�bed; Providi�'�g that Sec. 78-705 shall hereaAer r�ead as foNotivs:
S�c.7a-706. Rputnd numb�r of p�ricpq sp�o�s,
(�)-(32) IThese p�ra9raPhs shaq rerrrein in fuN foroe and ef�ec:t�pr�ewously enac�ed.]
S�on 4: Each and ev�ety othe� sec:tion and subsection of Chap�er 18.
Zoning. shall remain in full foroe and elf�t as pr�aviously enac�ed.
.S�e�r�� Ali Oniinanaes or parts af Or+dinanoes i� �or�lict heneMritli be and
the sarne are Nereby repe�eled.
tion : StwWd any Sec�ion or p�n af this Ordi�anoe or a�y portion
��. �Y P���Ph, sen�er�ce or w�nrd be dedated by a Court of aompetent
jurisdicxion 10 be invalid, such decision shaN not afCec:t the validily of the remainder of
this Ordinar�c�e.
.��' r�.� s�p�ifiC suthOrilY is herebY�an�ed to oodify this Ordinanoe.
S�C�on 8: This Ordi�anoe ahaN becc�mme e4�ec�nre inxnediatelY upon passa9e.
�
Upon 5�oond Readir� this 10�' day c�F Marah 2011, tha foregoing O�dinance was
offerod by Councii Mmrrtber Ntnt�page whc �oved its adoption. The rnotion was
secor�ded by Vice-M�yor Arena snd upon bein� put to a vote, the vote was as foliows:
For Adoption Against Adoptlon
Mayor Tom Patemo X
Vice�Nayor Vince Arer�a x
C�ur�cif Memb�ar Abby Br�nnan �
Council Member Jim Humpaae �
Cour�11 Member Calv�r� Tumqueat X
The Mayor thereupon dec�ared the Ordinano� duiy passed and adopted this i 0"'day of
March, 2011.
MAYOi2 OF TEC�l1ESTA
, _
�
Tom Pat o �
ATTEST: `�, ,i,,,N��,
3�' v��aE ����+''
, .-•��•��GORAp��;:
�� rY�C(.c��C.�t4..,r�� ,���,�� '9y,�?�:
Lor1 McWillfems, MMC -+; ����� �"�m+
Village Cterk =��� �'�'�rFd ;;s`'fi£
, �, ,� ,�,�( ;� ,,�
��'�, fi'• '�'�!: o-`�
''�-�,�toa�oP��*`
,
��r�AN�ttIN�NN
ViJlags Councii Minute8 May 9, 2013
Pag� 2
M�yor Br�nnan introduced Teques#a's summ�r interr�s Ka#ie Hoiland and Gregary Fabiano.
4. Proaiamation Deslgnating Ma�r 2013 as Water Conservation Month
�1 repr�sentativ� for Water Conserva#ion was not in attendance, Proclama#ion was na# read.
5, Ganerat Employee Pension �oard Update
Michael Rhodes, Generai Employee Pension Board Chair, offered current and historical data
reiated wi#h the pension plan. Council Member D'Ambra questioned bond investmen#s and
funding of the plan. Mr. Rhodes responded with research fac#s associated. Mayor Brennan
thanked Mr, Rhodes for his volunteerism.
6. Conceptuai Plan Presentafion by GMH
iUlichael Holloway, Representa#ive of GMH Ventures, offered a presen#ation and background
regarding #heir need for a zoning #ext amendment. Mr. Holloway expiainer! outpatient and
inpatient services, insurance provider's stipulations and he in#erpreted licensing language. He
also noted their relationship with DCF (Department o# Childreri and Families) and the strict
stipulations which came with that business relationship.
Council voiced their concerns regarding development of a transient environment and felt an
agreement s#ating acce�iable boundaries should be �eveioped for clari#y and future owners.
Counci! Member Patemo expressed his feelings regarding their success bu# was concerned
with the outpatier�t element of the industry. He also noted Viliage resident's previous �oncerns
with detoxification fiacili#ies.
Mayor Brennan did not support #he insurance request and felt the origina! Council approved
agreement was sufficieni.
Brian Nilan, 254 Vi!lage Blvd., voic�d his concerns with #he request to change the original
agreement and assurances.
Michael Holloway respon�ied that thei� request was changing language and definitions strictiy
intended for insurance purposes which allowed #hree outpatient clients and would not change
the intent of the origina! agreement.
7. Presentation by the Gehring Group on the Determination of the Taxabie/�air
Market Value of Overage Dependant Health Insura�ce Covera�e
Ms. Merlene Reid, Human Resources Director, explained that the IRS had no guidelines
regarding fair market value in rela#ionship ta employ�es insurance coverage on children over
th� age of 26. Cindy Thompson, �ei�ring Group offered data from similar groups to assist witi�
estabiishing a value.
Mayor Brennan shared that the decision wouid impact deductions for employees and made
retroactive to January 1, 2013. Counci! Member Paterno stated he supported number option
ViN�ge �c�unci! Minut�s July 11, 2013
F'�g� 9
MO�TI4N: Counci! M�trtber Q',Ambra mov�d approval af C?rdinance 20-93 with arnendments
rr�ade from the VilJage Attomays resear�h; seconded by �ounci! Member Okun; motion carried
una��imously 5�0.
22. prdinance 21-�13. First Readin�, Amending the Villa�e Code vf Ordinances at Chapter
50. Na#ufal Resource Protection; by Amending this Chapter to Provide Internal
Consistency, to Update Certain Permitting Requirements and App�al Requirements, to
make Reference to State Man�rove Protection Laws and County Weilfield Protection
Regulations; to Relocate Vegeta#ion Obstruction Regulations from Chapter 30; and to
Provide Code Enfarcement Penalties for Unlawful Tree Removal
Attomey Davis read Ordinance 2'I-13 title into the record.
Council Member D'Ambra questioned the need for Council's approval regarding tree removal
and felt it should not be a requirement. Council Member Paterno suggested approval be
imposed on larger trees only and felt mangroves should be addressed at the State level.
Mayor Brennan opened the hearing #or public comments; there being none she closed the
public hearing.
MOTiON: Council Member D'Ambra mvved approva! of Ordinance 21-93 with modifications to
be addressed by legal; seconded by Counc�J Member Okun; mofion carried unanimously 5-0.
23. Ordinance 22-13, First Readins�, Amending the Viliage Caie of Ordinances at Chapter
7$. Zoning. Article 1. 1n General. Sec. 78-4. Definitions. By Amending the Definition for
"Rehabilitation Facility" to Provide for #he Limited Provision of Ou#patient Trea#ment, and
the Limited Collection of Insurance Paymen#s for Patient Care; and by Amending Article
VI. Schedule of Distriet Regulations. Sec. 78-180(i)(16) MU Mixed Use District. Speciai
Exception Uses. Rehabilitation Facilities. To Require 8oth Monthly Reports and an
Annual Independent Audit be Provided to the ViHage Regarding Compiiance with
Funding, Occupancy and Trea#ment Requirements; and at Article X. Off-street and On-
street Parking and �oading Reguiations. By Increasing the Parking Requirements for
Rehabilitation Facilities that Provide Outpatient Treatment
Attorney Davis �ead Ordinance 22-13 title into the reco�d.
Counci! Member Paterno questioned penalties and/or enforcement ta ensure proper reports
were received by the Village. Attomey Davis noted that penalties for nonconformity wouid attach
to properties. Anthony Cardamane, Senior Vice President for GMH Partners explained their plan
to ensure monthly compliance.
Mayor Brennan voiced her prsvious opposition but stated she no�N believed this rnet the o�igina!
intent.
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Village Gouncil Minutes July 11, 2013
Page 10
MOTION: Counci! Member Patemo moved approvat of Orrlinance 22-13 with; seconded by
Councii Member D'Ambra; motion carried unanimousiy 5-0.
Consensus of Council was that Mayor Brennan work with the Viliage Manager to get this
updated information out to the public.
2S. Resolution 23-13. Supporting the Palm Beach Island Beach Management Agreement
Pilot Project
Mayor Brennan offered back ground on the item and her support and stated that she would
compose a letter in response if Counci! approved. Council Member D'Ambra felt the agreements
focus did not appear to affect Tequesta and questioned the purpose of writing a letter, and
Ma�ager Couzzo responded for support.
MOT10N: Council Member O'Ambra moved approval of Reso/ution 23-93; seconded by
Council Member Okun; mofion carr�ed unanimously 5-0.
STANDING REPORTS
Vi)laqe At#ornev
Attorney Davis offered upda#es regardir�g the Inspector General (iG) and a Land Development
case rega�ciing permitting denial.
Consensus of Council was to offer no latitude regarding the IG case and raising the .25°lo fee.
Viilas�e Manas�er
The Manager offered no report.
ANY OTHER MATTERS
Council Member Patemo questioned a letter referencing part time employees and
OBAMACARE and suggested part time emplayees would need to be placed at 28-hours as
soon as possible. Manager Couzzo responded that direction had already been specified and a
28-hour restriction was being implemented.
Mayor Brennan noted that she and the Manager had discussed a iette� recently received from
Jupiter Inlet Colony (JIC) regarding ongoing negotiatio�s. Manager Couzzo stated that he had
spoken to Mayor Comerf'ord and was toid to prepare a contract, with the terms discussed, for
approval from the JIC Board. Manager Couzzo asked Council for di�eetion. Council Member
Paterno questioned Councif if fhei� originai positions had changed. Council Member Okun
suggested a special meeting be set on the item.
Counci!took a break at 9:15 p.m. Meeting reconvened at 9:23.
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Vilia�e Cou�cii Minutes August 8, 2013
Pag� 3
information she believed was perplexing and which was factual.
Mr. Hoffman noted his understanding concerning emergency services and interlocal agreements
with adjacent cities regarding emergencies. Mayor Brennan clarified the essence of the Village
agreements. Manager Couzzo noted that Tequesta was the only city in Palm Beach County
providing contractuai services to the county and receiving a fee.
Mr. Hoffman questioned emergency coverage to unincorporated residents. Manager Couzzo
explained response was dependent on the units available; however, Tequesta was not the
primary responder for unincorporated areas. He explained that fire t�uck purchases were funded
over years and that increases to health insurance was an issue for everyone.
Council Member Paterno stated his support for holding the current millage rate unchanged.
COMMUNICATI�NS FROM COUNCIL
Council had no comments.
REGULAR AGENDA
OLD BUSINESS
7. TABLED FROM JULY
Resolution 22-13, Adopt Amendments to Fund Balance Policy fior Government Funds in
Accordance with GASB Statement No. 54
Ms. JoAnn Forsyth�, Finance Director, requested the item be postponed.
8. Ordinance 18-13 Second Readinq, Amending the Village Code of Ordinances at Chapter
62. Planning and Development, by Amending this Chapter to Provide Internal Consistency
and Consistency with the Village's Comprehensive Development Plan, to Update Certain
References to State Law, and to Repeal the Requirement for an Annual Concurrency
Report (first reading 7111/13)
Attorney Davis read Ordinance 18-13 title into the record.
Mayor Brennan opened the public hearing to Council for comments; there being none she
opened the hearing to the public. There being no public comment the public hearing was closed.
MOT10N: Council Member Paterno moved approval Ordinance 18-13; seconded by Counc+l
Member Qkun; motion carried unanimously 5-0.
9. Qrdinance 22-13, Second Readinq, Amending the Village Code of Ordinances at
Chapter 78. Zoning. Article I. In General. Sec. 78-4. Definitions. By Amending the
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Village Council Minutes August 8, 2013
Page a
Definition for "Rehabilitation �acility" to Provide for the l.imited Provision of Ou#patient
Treatment, and the �.imited Callection of Insurance Payments for Patient Care; and by
Amendin� Article VI. Schedule of District Regulations. Sec. 78-180(i)(16) MU Mixed Use
District. Spacial Exception Uses. Rehabilitation Facilities. To Require Both Monthiy
Reports and an Annual Independent Audit be Provided to the Village Regarding
Compliance with Funding, Occupancy and Treatment Requirements; and at Articis X. Off-
street �nd �n-street Parking and Loading Regulations. By Increasing the Parking
Requirements for Rehabilitation Facilities that Provide Outpatient Treatment— (first reading
7/11113)
Council Member Okun requested the item be postponed in consideration of seasonal residents.
Attorney Davis suggested moving forward and explained that the applicant had paid fees and was
entitled to have the item processed. He then read Ordinance 22-�3 title into the record.
Mayor Brennan noted that she had spoken with the president of Lighthouse Condo Association
and agreed to read his email into the record. She read the following {transcribed verbatim):
As the president of the Lighthouse Cove Condominium Association 1 represent 250 owners and
over 500 full time and seasonal residents. At the time that GMH's originai application #or the
rehab center, the residents of Lighthouse Cove where reassured by representatives of GMH that
there would be no outpatien# treatment. This was a critica! issue in our support of GMH's
application. Had GMH indicated that there was to be outpatient treatment the Lighthouse Cove
residents would have objected to the application.
GMH is part of a biilion dollar company and if outpatient treatment is needed to receive insurance
payments the people at GMH should have been aware of that requirement at the time of the
original application. Frankly this company seems to be following a nose under the tent strategy
"that is in quotations marks", "get the initial approval and start asking for other exceptions".
The Lighthouse Cove Baard of Directors on behalf of the more than 500 people who live in
Tequesta object to GMH Tequesta Holdings LLC Special Use Amendment. We requsst that the
Village delay approval until the winter. Thanks you for your consideration (end of verbatim).
Mayor Brennan stated that she had spoken wi#h Mr. DiNiro and another resident regarding their
concerns. She explained that Village staff and the applicant had worked tirelessly to keep the
intention of the facility and the ordinance as intended. Mayor Brennan expressed her beliefs
regarding her original apprehension and felt reassured that the best interest of the Village was
considered. She stated that the remaining issue was that GMH had not contacted the Lighthouse
Cove residents directly, Council Member D'Ambra suggested that the lines of communication be
open with the surrounding residents.
John Isleib, 561 North Cypress Drive, noted that he lived close to the facility, was a resident and
a business owner. He stated businesses were important and felt GMH took a blighted property
and improved it grea#ly. Mr. Isleib stated that businesses aften need to adapt to succeed.
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Vill�g� Council Minutes August 8, 2013
P�ge 5
Mr. Mike HoNoway, Futures of Paim Beach, noted they had not applied during the summer
months and had brought forth their concerns in February. He stated as a business they needed
to move forward quickly and explained that he had contacted a board member following the May
9, 2013 meeting and placed severai calls before he received any response. Mr. Holloway
explained his intentions were not to avoid residents and that going forward he would make every
effort to keep the lines of communication open.
MOT/ON: Council Member D'Ambra moved app�ova! of Ordinance 22-i3; seconded by
Council Member Paterno; motion carried unanimously 5-0.
10. SEUA 01-13. Application of GMH Tequesta Holdings �LC for a Special Exception Use
Amendment to an Existing 118,716 Square Foot Three-story Building and Adjacent
Grounds as a Rehabilitation Facility, Pursuant to Sec. 78-4; Sec. 78-180 (i)(16); and Sec.
78-705 of the Village of Tequesta Code of Ordinances. Address of Proposed Application is
701 Old Dixie Highway.
Attorney Davis placed four persons under oath and asked far Council ex-parte communication;
there were none. Attorney Davis explained the code was written to exclude outpatient services
and summarized the particulars.
Mayor Brennan opened the public hearing to Council for comments; there being none she
opened the hearing to the public. There being no public comment the pubiic hearing was closed.
MOTION: Counci! Member D'Ambra moved approval of SEUA O1-i3; seconded by Council
Member Paterno; motion carried unanimously 5-0.
11. Ordinance 19-13, Second ReadinQ, Amending the Village Code of Ordinances at
Chapter 30. Environment, By Renaming this Chapter "Environmental Control; Nuisances"
and by Clarifying certain Language, providing for Internal Consistency; Revising Maximum
Height for Excessive Weeds; Updating Enforcement Procedures in Conformance with the
Village's Code Enforcement Process; Relocating Vegetation Obstruction Regulations to
Chapter 50; Relocating Construction Debris and Construction Site Maintenance
Regulations to Chapter 14; Revising Abatement Procedures Related to Certain Private
Property Violations; and Updating Noise Enforcement Regulations in Accordance with
Recent Changes to the Law (first reading 7/11/13)
Attorney Davis read Ordinance 19-13 title into the record and noted the changes requested
during the first reading.
Vice Mayor Arena asked if the Village wouid purchase a noise level meter. Manager Couzzo
responded that would be possible.
Mr. David Green, Tequesta resident suggested Councii look at 240 Fairway East.
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ORDINANCE 22-13
AN ORDINANCE OF THE VII.LAGE COUNCII. OF 'I'HE VII.LAGE OF
TEQUESrA, FLORIDA, AMENDING 1'SE VILLAGE CODE OF
ORDINANCES AT CHAPTER 78. ZONIlVG. ARTICLE L IN GENERAL.
SEC. 78-4. DEFINITTONS BY AMENDING TAE DEFINITION FOR
"REHABILITATION FACII.ITY" TO PROVIDE FOR THE LIlVIITED
PROVLSION OF OUTPATIENT TREATMENT, AND THE LIlVIITED
COLLECTION OF INSURANCE PAYMENTS FOR PATIENT CARE;
AND BY AMENDING ARTICLE VI. SCHEDULE OF DISTRICT
REGULATIONS. SEC. 78-180(ixl6) MiJ �D USE DISTRICT.
SPECIAL EXCEPTION USES. REHABILITATION FACii.��- TO
REQUIRE BOTH MONTHLY REPORTS AND AN ANNUAL
INDEPENDENT AUDIT BE PROVIDED TO THE VD..LAGE
REGARDING COMPLIANCE W1TH FUNDING, OCCUPANCY AND
'I'REATMENT REQUIREMENTS; AND AT ARTICLE X. 4FF-STREET
AND ON-STREET PARI�TG AND LOADING REGULATIONS BY
INCREAS'Il�TG THE PARI�NG REQUIREMENTS FOR
REHABILITATION FACII.ITIES THAT PROVIDE OUTPAI'IENT
TREATMENT; PROVIDING THAT EACH AND EVERY OTHER
SECTION AND SUBSECTION OF CHAPTER 78. SHALL REMAIN IN
FULL FORCE AND EFFECT AS PREVIOUSLY ADOPTED; PROVIDING
A CONF'LIGTS CLAUSE, A SEVERABILITY CLAUSE AND
AUTHORITY TO CODIFY; PROVIDING AN EFFECTIVE DATE; AND
FOR OTHER PURPOSES.
WHEREAS,tl�e Village of Tequesta has received a privately initiated application from
GMH Tequesta Holdings, LLC to amend the Village's zoning oode text to allow rehabilitation
facilities to provide limited outpatient tr�ent and to allow the limited colledion of insurance
payments for patient care;and
WHEREAS, said application provides for both mondily reports and an annual
independent audit to be made to the V'illage regarding compliance with fiinding, occupancy and
t�ment requiremeuts, and aiso provides additional off-s�treet P�8 �luirements for
rehabilitation facilitie.s thaR p�ovicie outpatient treatmen�and
WHERTAS,t�e applicant has previously provided informational presentations at Village
Council mee�tings and workshops;and
WI�REAS,the applicant has met with Village staff in order to prepare its application in
a manner that will serve not only its own purposes,but also those of the Village;and
WHEREAS, the appGcant has taken into accoimt all the input obtain�ed at all the
aforesaid meetings and workshops, resulting in the zoning code text amendments as set forth
1
henein,wluch the Village Council believes will be in the best interests of the Village of Tequesta,
and will promote the public health,safety and welfare.
NOW,THEREFORE,BE IT ORDAINED BY THE VILLAGE COUNCII.OF THE
VII.LAGE OF TEQUESTA,PALM BEACH COUNTY,FLORIDA,AS FOLLOWS:
Section 1: Chapt�er 78. Zoniag, of the Code of Ordinances of tl�e Village of Tequesta
is l�reby amended at Article I.In General. Sec. 78-4.Defimtions.by amen�ding the definition for
"Rehabilitation faciliiy" to prnvide for limited outpatieat trea�ment and to provide for limited
insurance billing for patient care;providing that this definition shall hereafter read as follows:
Section 78-4. Defi�itions
Rehabilitation facilily means a private State of Florida licensed facility that provicies
rehabilitation care for patients who ar�e eighteen years of age or older. The p�imary puipose of a
rehabilitatioa facility is to provide�t for drug an�d alcohol addiction a�i eating disorders;
however,the rehabilitation facility must be a dual diagnostic facility sta,ffed snd equipped to
provide tre,atment for co-occumng disorders. Rehabilita�ion facilities may also provide
proStams that promote health,w�ellness and oveiall lif�tyle enhanceme�s for their residents.
Rehabilitation f�ccilities must provide a structured residential living environment which includes
the following featiu�es:24-hour ott-site security;24hour p�tient supervision by li�nursing
staff;and quality of life serrrices such as sv�►imming pools,�arden areas,sport-courts,exterior
patios or sitting areas,communitY living areas,meditation area.s,fitness rooms,libraries,
recreation rooms,televisions,on-site food preparation,and teleQhone and internet service.
Rehabilitation facilities must provide rehabiliffition cac+e by means of s�rt term care�aent
and ex�c�re treatment as�eeded,and may also provide follow-up trea�and outp�tient
treatment to c�urent residential pa�tients of the Rehabilitation facility,as well as a limited number
of non-residential p�tients who have,at a minimum,successfully completed short-term care
h�a�ent at the Rehabilitation facility. Rehabilitation facilities shall not offer any services for
individuals with a history of violent behavior or threats to the public health,safety and welfare or
the health, safety and vwetfare of other patieats. The fotlowing definitions apply to the definition
of reharbilitation facility:
1. Rehabilitation care means diag�nosis aad h+�eat for diug and alcohol addiction
disorders, eating disorders and physical, behavioral, mental or emotional iss�es that
are directly attn'buted to those disorders. Rehabilitation care c�oes not inchsde
emergency or medical d�toxification, which is specifically considered a prohibited
use. Should a rehabiGtation facility patient require emergency or modical
detoxification, this must be completed at an off-site facility prior to beginning
rehabilitation c.are.
2. Private means privately owned and funded with no use of state or federal (including
Medicare or Medicaid) fimds for the ope,�ation of the facility, th�e treatment of
patieats, or research work that would require the �p�ance and treatment of
federally or sta#e fiinded p�tients. Pr#vate also means tl�t the �ehabilit�tion facility
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sl�all not �ccept third P�Y PaYments or reimburseme�ts from health maiatsnance
organi�tions or from pr�negotiated in-network in.suraace plans for p�.tient ca�+e.
Pmtial payments fmm out-of-�etwork insurance plans may be accepted by the
Rehabilitation facility for petie�care so long as such pertial payments are n,ot a pr�
negotiatsd reduced amount meaat to constitute full payment for Rehabilitation care.
3. Short-term care means a program designed for a minimum residential stay of 30
calendar days.
4. Exterided care treatment means an additional 30 to 60 calendar day stay in residential
tr�nent aftez completing the initial short term care residential tc+eatment program.
5. Follow-� treat�reent means a program designed far an sdditional one week stay in
residential t�eatment, subsequent to the�evious completion of 1i�e Short term care or
Extended care treatment progcam, and must oc�ur at the same f�cility where S�ort-
term care or Extended care h�ent was received. Follow-up treatment is for those
patients who nced additional stcuctuc+ed follow-up h�eatment that dces not require the
clinical intensity of the Short term or Extended care treatment prograin. At any given
time, Follow up treatment shall not acc;ount for more than ten percent (10'�0) of the
Rehabilitation facility's patieat clientele. Follow up treatment can also be in flie form
of electronic oomespondence or telo-conferencing, and in such ca�es has no limit or
res�rictions regacding the duration of tl�e care, th�e location of the treatment or the
number of paRicipating patients.
6. Dutpatie»t treahnerrt means a regimen of tr+eatment that may include any or all of the
following services: group counveling, individual oounseling, relapse prevention
cotmseling, and educational lect�u+es. Outpatient h�ent may be offeted at the
following levels: "Day or Night with Communifiy Housing" which provides a
minimum of 25 houts of seavic.es per patient pa week; "Day or Night" which
provides 12-24 hours of setvices per pstient per vwcek, "Intensive Outpatient"which
provides 9-11 hours of services per patiie�t per week; and "Outpatie�" which
provides le.ss than 9 hours of services per patient per week. At any given time,
Outpatient�ent may only be provided to a maximum number of non-residenti.ai
patients equival�t to five percent (5%) of d�e Rehabilitation facility's cunent Short
term care, Exten�d care and residential Follow-up treatment clientele. Outpatient
treafinent services can also be provided to the Rehabilitation facility's patieats who
are cun�dy receiving Short term care, Extended care or residential Follow u�
�t,and in such cases the number of pacticipating patients is only limited by the
Rehab�ilitation facility's residential ocxupancy iimit4 as set forth at Sec.78-180(i�16).
7. Emergency or medicnl detaxification means the elimination of toxins such as alcohol
or controllad substances from the body of individuals who require acute care and/or
may have serious health risks as a result of their substance abuse. Medical or
emergency detoxification is performed imder the direct supeivision of inedical
doctors an,d medical support staff, and may include tbe administxation of inedication
or tranquiliz�ers in order to ease the withdrawal pmooess. Emergency or medical
dexoxification is a prohibited use in a Rehabilitation Facility.
Section 2: Chapter 78.Zotii�ng.of the Code of Ordinances of the Village of Tequesta
is hereby amended at Article VI. Schedule of District Regulations. Sec. 7&180(i�16). MU
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mixed use district. Rehabilitation facilities; by amending the nequiremeats of t�is special
exception use to require that monthly reports and an amnual inde�dent audit be p�+ovided to the
Village regardin8 funding re9uire�a�i the provision of both resi�ential care and ou�atient
treatment;providing that Sec. 7&180(ixl�shall hereafter read as follows:
Sec.T8-180. MU mized-use diate3ck
(i) Special exception uses. Speciai exceprion uses in the mixed-use district are as follows:
(1)-(15) [These paragraphs shatl ranain in full force and effect as previously enacted.]
(16) Rehabilitation f�ilities,subjoct to t�e following conditions:
a Rehabilitatian �acilities shall be pmhibited from being located within a
one half mile radius of another rehabilitation facility.
b. Ninety percent of the dwelling units shail have a minimum of 575 square
feet. The remaining ten percent of the dwelling units may have a minimiun of
500 square feex.
c. A maximum of forty pement (409�0) of the dwelling units shall be
permitte�to have two (2)bedrooms. In no case shall a dwelling unit have more
thaa twn (2) bedroo�ms. Two (2) bedroom dwelling units shall have a minimum
of 750 square feet.
d. Ocxupant lo�d for individuals receiving tr�nent s�all not exceed the
number of bedrooms. Bodrooms and studio dvwelling units s�all be for single
occupancy onty. Overall deffiity for a rehabilitation f�cility shall not exceed ei.ght
(8)dwelling units per gc+uss a�+e.
e. Dvwelling units shall be configiu+�d as follows:
1. Stadio units,if pravided, sl�all have a one(1)combination bedroom/living
area/lritchen,and a private bathroom.
2. O�e-bedroom units, if providcd, shall have onc (1) private bedroom, one
(1)P�ivate bat6room,private living areas and a private ldtch�en.
3. Twe-bedroom units,if provided,shall have tw�o(2)priva�tee bedrooms,two
(2)Private b�ooms,common living�+eas and a common kitchen.
f. Dwelling units shall not have separate individual mailing addresses.
Rather, the rehabilitation facility shall maintain one master address which all
residents shall reside under during th�eir stay at the rehabiliffition�a�cilitY-
g. Re.habilitarion fscilities must be equipped with a oofltrolled space,
effectively scr�ed from public view, for arrivals and depa�tta�es of paCients.
This space shall be large enough to accommoda�te an ambulaace for tiransportin8
p�tients in and out of the fscility.
h Rehabilitation fscilities shall bc sucmunded on all sides by a fence or wall
located as close to the prop�rty lines as is practical. The fe�n,oe or wall shall be a
minimum of six (� feet in height but may be as lrigh as ten(10) f�et, meas�u+ed
from finis�ed grade, in order to ensure privacy for both rehabilita�ion facility
pati�s and for Village resideats. The fenoe or wall shall be a�nstructed in such a
manner as to oompliment and soceatuate the piincipal si�chu+es of the
rehabilitation facility. Both the i�erior aad exterior sides of the fence or wall
shall be landscaped in accordaace with the principles set forth at Sec.22-84 of the
Village Code of Ck�dinances. If a fence,wall or hedge is located on a corner lot or
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a double finntag�c lot, a vehicular and pedestrian visibility triangle of a size and
dimen.Sion which complies with ciurent traff c ea►gineering sta�ndards of the
American As.9ociation of State Highway and Transportation Officials(AASHTO)
and the cotmty shall be prnvided in both directions from ti�e inteasection point of
the propetty lines.
i. T�e rehabilitation facility shall include a b�ckap generator system. The
sy�stem shail be si�ed for the building occiipancY load and have a fuel source
suffiicient to opera�e the facility for a minimum of seven days.
j. 'The rehabilitation facilitY � b3' �� �S� Pa3'Q►�
to the primary fire rescue provider for patient ambulance transport service.
k. In conjunction with the applic�tion for special exception use, the
rehabilitation facility shall submit a security plan that includes patient off-site
visits. The socurity pian sl�all be approved by the V'illage Council with iuput fi�om
the Chief of Police.
1. The rehabilitation facility shell, thr�ugh its legal counsel or corporate
officers, submit montiily re�potts to tt�e Village's Community Developmcnt
Director na later than the 15 day of the mo�h,that establish and document the
previous mo�h's compliance with all rehabilitation f�cility fiinding mqiureme�s
a� as well as oc,cupancy and treatment requirements and res�rictions, with an
empl�is on the ratio of the number of p�tients receiviag outpatient treatmeat to
the number of patie�ats receiving short teim and extended care services.
Additionally,the i+ehabilitation f�cility shall provide the Village Manager with an
annual md�epe�1ent audit documenting campliance with those requirements and
restrictions during the psevious calendar year,no later tham June 30 of e�ch ye,ar.
m. In conjimction with the application for special exoeption use, the Village
may, at its discretion, secure an impact analysis study, performed by an
independent e�ity, detailing the Pi'oPosed rehabilitation facilitY's Pl'o.l�
community wide imPa�cts. This studY� �PnP� � ��lY sddress t�e
r�habilitgtion f�cility's pobential economic impact to the V'illage,the creation and
continuatioa of jobs, t�e po��ential impact on law enforcement and criminal
ac�ivity, aad the pote�ial imp�ct on the Village's emergency medical resot�ces.
In addition, the sh�dy should address the groposed rehabilit�tion facilitY'S imP�ct
on the quaiity of life for neighboring propeities and the V'illage as a whole.
n. In oonjuwction with the applic�tion far a busin�.ss tax receipt ar�d the
annuat renewal thereof, a rehabilitation facility shall submit to the Village, in the
form of a swom affidavit by the rehabilitation facility's le�al representative who
is a�ized to do so, writt�a docume�tion that the rehabilitation facility is in
compliaace with all requirements of this sedion as woell as the definitional
nequirements of Sec.78-4. Should the rehab�ita�ion fac�ity's business tax receipt
be issued ba.9ed upon a false affidavit, ii�e Village may se�c to impose all
penalties allowed by law,pursuant to Chapter 70,Adicle II of the Village Code of
Ordinances.
o. Should the rehabilitation facility at any time violate any of the
requirements of this section or any of th�e definitionel requirennents of Sec. 78-4,
the Village may obtain relief through the cod�e enforcement special maSistiate
proc;ess putsuant to Chapter 2,Article IV of the Village Code of Or�dinances. For
5
pu�poses of the code enforcemeat special magistcate prooess, ea�ch day that the
rehabilitation facility is found to be in violation shall be considered a sep�rate
offense. In ac�dition to the code enfom.ement special magist�ate Pmces.s, the
Village may seek any and all relief available to it by law ar in equity, including,
but not limited to injunctive relie�re�overy of money damages,or both.
SecNon 3: Chapter 78.Zoning, of the Code of�of the V'illage of Tequesta
is hereby amended at Article X.Off-Street and On-Street Parking and Loading Regulations. Sec.
78-705. Required number of parking sp�ces. by amending the"rehabilitation f�cilities"category
to provide for additional parldng for the provision of outpatient tireatment; providing that Sec.
78-705(33)shall hereafter re�d as follows:
Sec.78-705. Req�ired��b�r oi parl��spac�a.
(33) Rehabilitation facilities: One sp�ce Per Patiernt bod. In addition, rehabilitation facilities
that provide outp�tie�t hr,a�ent to non-r�al patients shall provide an additional number of
pmi�i�g spaces equivalent to 5% of the psrldng spaoes required#o be pmvided b�ased on patient
bods.
Section 4: F..a�ch and every other Section and Subsection of Chapter 78.Zoning. shall
remain in full foroe and efFect as previously adopted.
Sectan S: All ordinances or p�rts of ordinances in conflict be and the ssme are
hereby repealed.
Sedioa 6: Should any section or provision of this Ordinance or any po�rtion thereo�
�Y �P� 9enteace or word be�clared by a coiat of competent juri�diction tfl be invalid,
such decisioa shall not affect the validity of the remainder of this Ordinance.
Sedion 7• Specific authority is he�+eeby gcanted to codify this Ordinauce.
Sa�ion S: This Ordinance shall take effect immediately upon passage.
6
tJp�n Second Reading this R"' day �f August 2Q13, the foregoing nrdinance was off'ered by
COU11Cl� M�Ii'I�T D'Amhra who moved its ad��ption. The motion wa.s seconded by Cauncil
Memt�er Pater+no and u�n being put to a vate,the v�ie was as follows:
For Adoption Against Ado�tion
Mayar Abby Brennan X
Vice-Mayor Vince Arena X
Council .Member St�ve Okun X
Council Merr►ber Tom I'aCemo X
Gouncil Memt�er Frank D'Ambra X
7`he Mayor thereupon declared the Urdinance duly passed and adopted this 8�' day of August
2013.
- . MAY�R OF 7'EQ
/
i
� '
ig ' Brennan
ATTEST:
� ,�•������,��,�,,,,,
. � ���,.\��,p.GE p��.,,,��
�J. •
�- ��, •�'�ORA' � �,
Lori McWillia�ns, MMC =�."�,y�,� ��y-�QG=
Village Glerk _...�: �9,���,�' rn;�=
�,y�� 9q�.�D ;���
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�''�,,,F��O R���P.�°�
7
REQUEST FOR SPECIAL EXCEPTION
AMENDMENT
o�n�x oF�va.i.�►cE couxcn,
VII.LAGE OF TEQIIESTA
RF.QUEST FOR SPECIAL EXCEPTION AMENDMENT
CASE NO.: SEUA 1-13(Ameading SE-02-11)
IN RE: GMH Tequesta Holdings,LLC,Ownet,Applicant
PROPERTY LOCATION:
217 Village Boule�rard,Tequesta,FL 33469 �
LEGAL DESCRIPTION:
ALS PLAT OF VII,LAGE OF TEQUESTA PT OF TR A LYG W OF 8t ADJ TO PAR 1,
TRS K THRU M 8t NOT LABII,ED AREAS A/K/A PAR 2
PARCEL CONTROL NUMBERS:
60-43-40-30-46-002-0000
SPECIAL EXCEPTIOI�i AMENDMENT REQUESTED:
Provision of limited outpaticat services and limited use of insurance billing in accoc+dance
with new code adopbed in Ord'maace 22-13.
ORDER APPROVIIVG APPLICATION
T7�is cause came on to be heard�pon the above apQlic�tion and the Tequesta Village Council having
considered the evidence presented by the applicant and other i�ereste� pessa�s at a hearing called and
ProP�'iy noticed,and the T�Village Council,being othe�wise duly advised,
THEREUPON,TI�TEQUESTA VILi.AGE COUNCII.FINDS AS FOLLOWS:
1. The subjed propeity is locabod in the MU Mixed Use Zoning Distrid in the Villa�e of
T�.
2. Ttie a�plica�t has submittcd all documems t�equired by the Yillage's Code of Ordinances for
special excxption review.
3. The application, the slaff neport and all other suppating documentation and presartation
materials as reviewed by t�e Villa$e Council at its August 8, 2013 meeting, and as kept on
Sle by the Yills�e,are made a part henaof and are hereby incorpo�ed by refec+ence.
4. According to Soction 78-180 of the Village Code of Ordinanoes,a Rehabilitation Facility is
permitted as a special exo�ption in die MU Mixed Use Zoning Distriict upon approval by the
Village Council.
5. The applicauts originally were granted rehabilitation facility special exceptian approval on
May 12,2011,and pursuant to existing code requirements at that time,were prohibited from
utilizing any insucaace billiog and were prohibihed from providing any outp�tient services.
Page 1
The Applicant bas requested aa amendmei�t to their prcvious special exception approval to
alivw For the provision of limited outpati�nt services and I�mited insurRnce biiling in
aceordaa�ce with code amsndments adopted in(hdina�ice 2?-13.
fi. Under Ihe provisic�ns of the Viilage Code af Ordinanccs, the Viliage Ccwncil has the right,
pc�w�r and atrth�rity to act upon the request herein made.
IT 1S TI-I�R�I.JP�N CUNSIDEREU, URDER�D AND ADJUDGED BY THE VILLAGE
GC)UNCIL 0�'THE VIGI.AGE OF TEQUFSTA, FL()RIDA, AS FQLLUWS:
The application for Speciai �xception Amendment, Case No. SEUA 01-13 {amending SE 02-1 l)
wiih r�fe�ence ta the above describeci p�operty wiihin the Viliage of Tequesta, Aalm Beach County, Florida,
ro permit the following:
the provisian of limiied outpatient s�rvicss and limiied insurance billing in
accorda��c� with code amendments adopted in Ordinftnce 22-13, in
accordance with the s�iai exception �mendment application attached
}�ereto as Exhibix:`A"
is hereby �1PI'ROVED sincc tl�e Vi11ag�Councii he,�by finds fhat the�plicants have met ihe standards set
forth in Sections 78-362, 7$-363 and 78-180(ixlb) nf thc Tequesta �aning Cade for rehabilitation facility
special caceptiQn approval, 'Tl� A�piicant has agreed, and shaN comply with the monthly reporting and
annuai audit requirements ccmtained in Urdinance 22-13. All other canditions and waivers as set forth in SE
2-I 1 shull remain in!'ull forc;e and ef'�ect.
* `I'he t�rm applicant(s)a.�used herein shall inciude all successors and assigns.
DUNE AND URDERED'THIS O DAY OF U�T,2013.
OR BtGAIL B ENNAN,
•�`�`�C�.E..`':; � VIL,I,A E OF TEQUESTA
�Jl�- , , 1 �P'., �R��
9,�;GR,.
i.,ORI McWI1:LIAM , i�►9 ,� :A; r'IL�D: V�II 0'�T��q�
VILLAGF CLERK �tl��: ApdRqj�O ; � Dste: 8
.,�v,, : ,.
� ..4 i9',�r1..: '
" �,, :.r_. . �pQ;,•-•� �'ime: !Z�''
'�•i,'..f. , .-���y�.
Page 2
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_ ; FU URES
___.
i i� � i ni i�, i � � i i
�_ _--_ >-.-- —__ >_-
f ERSONALIZED TRfATMENT FOF
DRUG�ALCO{IOL ADDICTION
November 17, 2017
Mr. Midlael R. Couzzo, Jr.
Village of Tec�uesta
345 Tequesta Drive
Tec�uesta, FL 33469
RE: Futures of Palm Beach Zoning Request
Dear Mil<e:
Since Futtu�es of Palm Beach("Futures")opened in October 2012,the Substance Use Disorder indushy
has and continues to go through many changes.
Iiisuraiice carriers continually limit the amount of authorized Residential level of care treatment days,
sometimes requiring that patients transfer directly from Detox to Outpatient levels of care. Additionally
many carriers are ptishing their subscribers to use only In-Network providers,often making it difficult and
costly to etlgage Out-of-Network care("OON").
We have continued to scrvc our local Florida community with approximately one third of our patients
coming from in state. With that being said,the opioid crisis is a national epidemic and Futures has
provided services to patients from all across the country. Unfortunately, due to a fiew bad actors in the
South Florida treatment community, our geography has been painted with a broad brush of skepticism
despite Futures being a clearly differentiated faciliry and program. As a result, many ins�u�ance carriers
will no longer allow for out of state patients to seek OON treatment in Florida.
In order to l<eep up with the changing payor-provider landscape, Futures respectfully requests that the
following changes be considered by the Village of Tequesta:
Sec. 78-4(2) Defruilion of RehaGi/itrrtion Frrcility
Rehabilitation faci/iry-Remoi�e the defrnition "Pri>>nte n(so means thai the rehabilitation facilrtJ�sl�all
»ot accept third parry p�r��ments or�•eimbansements fi�om I�ealth marntena�7ce orga��izations or fi•o�n pre-
negotinted i»-»ehi�ork i��san�nnce plans for patient care. "
Remo>>e "Partial peryn�e»ts fi�om out-of-nehi�ork insan��mce plans m�ry be accepted by the rel�abilitnlion
facility for patient care so long as st�cl�partial payments rn�e r�ot a pre-negotiated recla�ced amozmt mern�t
to coi7stita�te fi�ll prp�mei�t for rehabililation care." OR change senterace to r•end: "Prn•tial payments fi�om
commercial or self-fimded inszn�ance plar�s mtr��be accepted by the rehnbilita�ion faciliry for patie�at
crn•e. "
��.
t��,/�;,
�� 855.45.FUTURES www.FuturesOfI'almBeach.com rou �
'�OI OLD DIXIE HIGHWAY "TEQUL•STA, F[.334G9
II.I - � ``,'/^`-� 1: ___- _ --i'
}
\`���/�� ���.1\\(S-�
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' FU URES �
�' i� � i �i i, r� -� �� ii �
, _ _--- -- _ ._ �I
f ERSONAUZEn TR6\TMENT FOR
DRuc t:�nLc�)I IOL nDDICI loN
We would like to make it clear that Futures is not seel<ing revised language to allow for the use of state or
federal funds. We are simply interested in etecuting in-network contracts with commercial health insurers
and self-funded plans, many of tlle same g►�oups we are currently doing business with as an oiit-of-
nerivork pcovider.
Sec. 78-4(3)De�nilions Sltorf Ternr C�rre
GVe ri�oa�ld like to re>>ise t1�e defrnitio�� of"SI�o�7-Tern�Crn•e"to rend "slaol•t-tei•m cai�e mern7s a pr•ogrcn�r
designed for a mii�innnn residentiaJ stay of 30 calendar dcrys, unless otl�e��i�ise dictated ai�d docamaei�ted
by a c/i��ica!or medical licensed pi•ofessioJ�a/or ir�stn�ance carrieJ•case nrnnageme��t professio�7crl"
Futures residential progcam is designed to be a 30 day program and that is what is explained to evety
patient prior to their arrival. Ho�vever, insurauce carrier case managers often detennine that prior to the
end of the 30 days, patients no longer eYhibit criteria for medical necessity and must be discha�ged to
Outpatient care, which cannot be provided at Futin�es.
Sec. 78-4(7) Defrnitions A/low�rGle Detoz
YVe��voa�ld lil�e to elimi�aate tlae term "Medical Detox"and redefrize allori�able detox to mirror tl�e
defii�itio�a provicled i�7 oarr license by DCF
The term"Medical detox"has caused confusion to some refen•ing practitioners. There is specific
language in the DCF regulations that we are licensed for which refeis to sub-acute deto�. We are fine
with the term"Emergency" remaining in the definition of what is not allowed.
We appreciate your consideration and look forward to working alongside you and the Village of Tequesta
Council to help Futures continue to make a positive impact on so many lives. We are hoping to schedule
a conference call with 1<eith Davis and yourself sometime before Thanksgiving to review our request, and
we would like to target presenting our request to Council at the December 14th Council meeting.
Sincerely, ,
- �
�' .�/'L
Michael Holloway�� ��
� •-�.y
,./�
President, GMH Ventw�es, LLC �- •''
855.45.FUTURES -www.FuturesOfI'almBeach.com vou
�� ]O I OLD DIXIE HIGHWAY 'TEQUESTA,FL 33469 �""��
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FUTURES OF PQLM BEACH
As used herein,"Confidential Material"refers to the Zoning Presentation and any other information regarding the
Company furnished or communicated to the Shareholders(the°Recipients")by or on behalf of the Company in
connection with the Zoning Presentation.The Recipients acknowledge that the Company considers the Confidential
Material to include confidential,sensitive and proprietary infortnation and agree that they shall keep the Confidential
Material confidential and not disclose it to any third party except with the Company's prior written consent or as
required by applicable law,court order,govemmental agency or other regulatory authority(including any self-regulatory
organization)or in connection with any legal proceedings.The Recipients agree that they will notify the Company as
soon as practical in the event of any such disclosure.
3
FUTURES OF PALM BEACH
• Futures opened its doors as an all cash-pay model with 75 beds in October
2012
\'� f,r +1� �
� �� /
■ In August 2U14,Futures worked with the village of Tequesta to revise zoning �`��/ � �,���,�1r��
language to allow for inwrance reimbursements through out-of-network `�'�. (,r �,. �. ' � �
benefits � �� � /` /����'r
/��/F/{� 1�\��
• Additional 30 bed build-out completed September 2017 � T T T T T � ^
• Facility now features 105 total beds,all zoned and licensed for residential ' I � K `
and detoxification treatment V J
� November 2017-seeking approval from Tequesta Zoning Board to allow for ' '
in-network and single-payor contracts
Began accepting out-
of-network insurance �
reimbursements , ��
I -- ,
2012 2014 2017 � �
- - -J _��
Opened doors in 30 additional beds
August officially opened in
September
4
FUTURES OF PALM BEACH
� Major private insurers are shifting away from out-of-network coverage to in-
network contracts through a number of practices:
• Pressuring physicians to refer in-network
• Some states have seen instances of insurers threatening revoke
contracts with physicians who have a high rate of out-of-network
referrals
■ Bifurwted deductibles
� Separating in-network and out-of-network deductibles,which may
discourage the use of out-of-network providers
• Capping out-of-network benefits
--�
• Recent examples of I'rtigations between payors and out-of-network providers
highlight the changing environment and increasingly turbulent payor-provider � �" � � +
relationship �� � f � �
• Humble Surgical,a Texas hospital,was sued by Cigna for alleged A� � ��1
overpayments �1��
■ The court found no evidence of overpayment,and Cigna was required
to pay approximately$16M in damages,penalties,and other costs.
• A consumer group sued Anthem Blue Cross for attempti�g to `
automatically renew policies that no longer cover out-of-network costs �
(lawsuit ongoing)
■ North Cypress Medical Center,an out-of-network provider,filed a lawwit ' �, �
against Cigna claiming underpayment as a result of a Cigna"fee forgiving" � � , � � �
policy that aims to reduce out-of-network payments to providers � � � � ��
■ The court dismissed both the initial lawsuit from North Cypress � �
Medical Center and counterclaims from Cigna
■ In addition to lawsuits,the move towards an in-network model has weighed
heavily on providers who rely on out-of-network contracts
• The industry has seen increases in bankruptcies associated with out-of-
network payment challenges
5
FUTURES OF PALM BEACH
• As insurers move towards in-network contrects,major providers have followed suit
• American Addiction Centers
■ Payor diversification plan from the most recent investor presentation shows a desire to add In-networlc contracts:
PayormixMlPO�ld2/14) Payarmixonl3/31/16 TafgetMiz
� � . �
I '��^4�1 1 I Indrvitlual
IMrvbutl ��h I work GOulrnmtr�t 5%
8M m 16% t 5%
• AAC added three major in-network facilities in 2016 -two in Louisiana and one in Las Vegas
• AAC also acquired Adcare in September 2017,a 114 bed in-network facility in the Northeast
� RecoverY Centers of Americo
• Recently announced the addition of in-network contracts with Magellan and Independence Blue Cross at multiple locations
• Acadia Healthcare
• Includes the following language in their 2016 Annual Report:
• "...PPACA currently works in conjunction with MHPAEA to require that third-party payors reimburse providers of certain mental
health and wbstance abuse treatment services on an out-of-network basis.If PPACA or this particular provision of PPACA is
repealed,we may experience a significant decrease in out-of-network reimbursement at certain of our facilities."
■ In reference to Risk Factors the company faces:
■ "The trend by insurance companies and managed care organizations to enter into sole-source contracts may limit our ability to
obtain patients."
6
FUTURES OF PALM BEACH
■ In 2016,Cigna,in an attempt to limit authorized Residential treatment days,determined that clients
who had stepped down to PHP/IOP levels of care could no longer stay at Futures
■ Futures is attempNng to settle a demand of repayment based upon retro denials of claims
■ Insurance companies nationwide are moving towards Detox only,and then right to Outpatient care
■ United has followed suit and demands that patients be transferred out after Detox and Residential
treatments
■ Horizon will only let NJ patients come for detox and some residential days
�o
Average Census by Month
60 1
50 49 52 49
40
38
39 39 38
30 30
20
17
10
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Od-17
7
FUTURES OF PALM BEACH
• In order to keep up with the changing payor-provider landscape that features a significant shift to in-network
contracts,Futures is requesting the following changes be made:
• Remove"Private also means that the rehabilitation facility shall not accept third party payments or
reimbursements from health maintenance organizations or from pre-negotiated in-network insurance plans
for patient care."
■ Remove"Partial payments from out-of-network insurance plans may be accepted by the rehabilitation facility
for patient care so long as such partial payments are not a pre-negotiated reduced amount meant to
constitute full payment for rehabilitation care." OR chan�e sentence to read: "Partial payments from
commercial or self-funded insurence plans may be accepted by the rehabilitation facility for patient care."
■ We would like to eliminate the term"Medical Detox"and redefine allowable detox to mirror the definition
provided in our license by DCF
• We would like to revise the definition of"Short-Term Care" to read"short-term care means a program
designed for a minimum residential stay of 30 calendar days,unless otherwise dictated and documented by
clinical or medical licensed professionals or insurance carriers case management professionals"
■ Futures is NOT seeking revised language to allow for the use of state or federal funds. We are simply interested
in executing in-network contracts with commercial health insurers and self-funded plans,many of the same
groups we are currently doing business with as an out-of-network provider
■ Value Based Treatment-who does it benefit?
■ Patient-Provider has discretian to dictate length of stay on a client by client basis to enhance the efficacy of
treatment
■ Payor-will allow for better data/outcomes in addition to reduced ancillary health cost post Patient discharge
■ Provider-more sustainable rate and occupancy,and ultimately more effective outcomes
8
No Text
FUTURES OF PALM BEACH
Futures of Palm Beach("Futures")is a state-of-the-art residential
�1'�'fi�,`�
substance use disorder treatment facility located in Tequesta,FL(30 (, �1 � � �
� � :�� <
minutes from Palm Beach International Airport). The facility is zoned and \`��`� � ��'�� ��,��
licensed for 105 residential and detoxification beds,with 75 beds currently ��'� (/ � ! i � �
built out on the first and second floors and an additional 30 beds on the � ��+ � / /��'��
third floor. ��r/"�''\ �,�\��
■ Gass A real estate asset-appraised at$23,400,000 F U U R L S
• Campus model vs.Florida model-gated and secure,with cameras throughout
• Total acreage-9.33 ' � �
■ Building square footage-84,000 with expansion to 118,000 in October
2016
• Each client resides in a private unit(average 545 sf),with each client
having their own bedroom and bath,with a washer/dryer in each unit
■ Clean,moral,ethical business approach with goal of increasing treatment - _ -= =`
success/outcomes —' 1 -
■ 112 total employees wrrenNy,our clients have a 2:1 ratio of staff to client � � -
■ Approximately 77°6 of reimbursements from commercial insurence payors in �
2016 with no government reimbursement " � �
■ Less than 1%revenue from Urinalysis
■ Experienced operational management and investment management team -
• Amenities:16,379 sf courtyard with a 900 sf pool,spa and koi pond,tennis _ -_ _„
court,volleyball court,basketball court,1,100 square foot fitness center(with
full time personal treiner),relaxation center,media room/library and arts and
craft center
• Full continuum of care model in place
• Free standing PHP/IOP located in West Palm Beach,FL
10
FUTURES OF PALM BEACH
Futures prides itself on the excellence of its Clinical Program supported by a strong Medical Team
■ Full Time Medical Director
■ Dr.Gloria Dunkin is triple board certified,n General Psychiatry,Addretion Psychiatry and Addictron Medicine
■ Medicaf team includes fuff t�me psychiatric nurse practitioners and medical nurse practitioners that provide seven
day perweek coverage(fouremployed,three independentcontractors)
■ Reg�steredNurseoneveryshift
■ Ability to manage more complex medical and psychiatric issues
■ Nursing Staff
• Linda Spencer,RN-Director of Nursing,15 yrs.experience in Substance Abuse Nursing Management
- Nine registered nurses-one per shift
• Six LPNs
• Detox staffing ratio 1:10
• Residential sta�ing ratio 1:15
■ Detox�ng
■ 20 designated detox beds with camera copabifities that are closely monitored for any high risk needs
■ Licenses and Accreditation
■ 1CANO Accreditation
■ DCF Licenses:
■ Residentia!Detox(20 beds)
■ Residential Leve!I!
■ Intensive Inpatient
• Day or Night Treatment(Campus and Outpatient Center)
■ Intens�ve Outpat�ent(Campus and Outpatient Center)
■ Outpatient(Campus and Outpat�ent Center)
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FUTURES OF PALM BEACH
Futures prides itself on the excellence of its Clinical Program supported by a strong C/inical Team
■ Clinical Program
• John Maguire,MBA,LMNC,CAP-Ginical Director
• Seven Primary therapists-aJl master's level therapists(therapist to client ratro-1:9)
■ A(1 clients recerve a minimum of two individua!sessions per week.
■ Four case managers(Case manager to dient ratio 1:14}
■ A!1 clients are seen ot a minimum of once per week
� Relapse prevention plan and aftercare plan�s inrtiated rn the f rst week
■ CJinical program is seven days per week,with on ca11 therapists available after haurs daily
• Fufl time hypnotherapist
• Part time dietician to address nutritiona(needs-Nutritiona!assessment is performed on every dient
■ Individualized treatment plan to address addiction,relapse prevention and identified co-occurring
core issues
■ DBT focus treatment program based upon the four key elements(Mindfulness,Distress Tolerance,
Emotional Regulation and Interpersonal Effectiveness)
■ Residential Program
■ Omar Kampl.MS-Program Director
■ 19 Resident Assistants RA to client ratio 1:1Q 24 hours per day.
■ Fuf!time Fitness Trainer-Every dient receives a physical fitness program
■ Futures also has a full time Krtchen.Maintenance and Housekeeping stalf
■ Campus Model vs.Florida Model
• Futures is a campus model whrch provides a safer and more secure environment vs.the classic Florida Model which
houses and treats cfients at separate locations
• Alumni Program
• Two tull time staf�members run the Afumni Program
■ Keep regufar communicatron with a!I Alumni and hold regional meetrngs in cities wrth s+gnificant Futures Alumni
populatrons
■ Days of Ascent
• Alumni and famify participation in returning to fauhty to take part in three day program consisting of group sessions and
recovery oriented activities.Days of Ascent is o{fered as a lifetime benefit to af!Alumni to support their af tercare program
12
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11l8/2017 Network and Out of Network Care�Aefia
�etn�
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Network and Out oF Network Care
Aetna Individuals & Families Using Your Aetna Benefits Network&Out-of-
Network Care
Save rnone b
y y
sta in in networl�
y g
Maybe you've read that one of the best ways ta save on health
care costs is to "stay in network." But you're not sure what that
means.
You're not alone. Many people find the term confusing. We're
here to help you understand.
A network is a group of health care providers. It includes
doctors, specialists, dentists, hospitals, surgical centers and
other facilities. These health care providers have a contract with
us.
As part of the contract,they provide services to our members at
a certain rate.This rate is usually much lower than what they
would charge if yau were not an Aetna member. And they agree
to accept the contract rate as full payment.You pay your
coinsurance or copay along with yaur deductible.
htlps:/lwww.aetna.cornfindividuals-famiNes/using-your-aetna-benefits/network-out-0f-network-care.html 1/6
11/8/2017 Nelwork and Out of Network Care�Aefia
Some plans do not offer any out-of-network benefits. For those
pians, out-of-network care is covered only in an emergency.
Otherwise,you are responsible for the full cost of any care you
receive o�t of network.
The information on this page is for plans that offer both
network and out-of-network coverage.
How much you can save
You can see detailed examples of how much you might save—
on the same service—just by staying in network.
Save money with Aetna's medical provider network
(http://www.aetna.com/individua Is-families-health-
insura nce/document-libra ry/2012-aetna-provider-
network.pdf)
Save money with Aetna's behavioral health provider network
(http://www.aetna.com/individua Is-families-health-
insura nce/document-libra ry/2013-aetna-bh-provider-
network.pdf)
Why out-oF-networlc care
costs more
There may be times when you decide to visit a doctor not in the
Aetna network. If you go out of network,your out-of-pocket
costs are usually higher.There are many reasons you will pay
more if you go outside the network. Keep reading to learn
more.
The health plan pays less
Your Aetna health benefits or insurance plan may pay part of
the doctor's bill. But it pays less of the bill than it would if you
got care f�om a network doctor.
https:/lwww.aetna.com(ndividuals-Familieslusing-your-aetna-benefits/networic-out-0f-network�are.htrnl 2/fi
11/8/2017 Network and Out oF Network Care�Aetna
Also, some plans cover out-of-network care only in an
emergency.
Out-oF-network rates are higher
An out-of-network doctor sets the rate to charge you. It is
usually higher than the amount your Aetna plan "recognizes" or
"allows:'
We do not base our payments on what the out-of-network
doctor bills you. We do not know in advance what the doctor
will charge.
An out-af-network doctor can bill you for anything over the
amount that Aetna recognizes or allows.This is called "balance
billing"A network doctor has agreed not to do that.
Cost sharing is more
What you pay when you are balance billed does not count
toward your deductible, And it is not part of any tap your plan
has on how much you have to pay for covered services.
Many plans have a separate out-of-network deductible. This is
higher than your network deductible {sometimes,you have no
deductible at all for care in the network}.You must meet the
out-of-network deductible before your plan pays any out-of-
network benefits.
With most plans,your coinsurance is also higher for out-of-
network care. Coinsurance is the part of the covered service
you pay after you reach your deductible (for example,the plan
pays 80 percent of the covered amount and you pay 20 percent
coinsurance).
You'll have moreworl<, too
https://www.aetna.comfindividuals-famiies/using-your-aetna-benefitslnetworlc-out-0f-networkcare.htrnl 3/fi
11l8/2017 Network and Out of Network Care�Aetna
We need to approve some medical procedures before they are
done. We call this precertification.
Some common procedures that require precertification include
non-emergency surgery, out-patient physical rehabilitation,
inpatient hospice, CT scans, and MRIs.
If you visit a network doctor,that doctor will handle
precertification for you. If you go out of network, you must take
care of precertification yourself.That means more time and
more paperwork for you.
How we determine what to
pay For ou t-oF-networl<
care
The plan you have determines how much you pay for out-of-
network care.The exact amount depends on:
� The method your plan uses to set the "recognized" or
"allowed" amount
� The percent of the allowed amount to be paid by the plan
(like 80 percent or 60 percent�.
Your plan may base the allowed amount on:
• Medicare-based rates,which are determined and
maintained by the government
• "Reasonable,", "usual and customary" and "prevailing"
charges, which are obtained from a database of provider
charges
� Other types of rate schedules
To find the method and percent, check your plan documents. Or
contact us at the toll-free number on your member ID card.
https:/lwww.aetna.cornfindividuals-famiNes/using-your-aetna-benefits/nerivork-out-of-network-care.html 4/6
11/8/2017 Nelwork and Out of Network Care�Aetna
Read more about how we pay for out-of-network bene�its
(http://www.aetna.com/individuals-families-health-
insurance/document-library/aetna-pays-oon-benefits.pdf)
See how we might calculate costs for an out-of-network office
visit(/individuals-families/using-your-aetna-
benefits/network-o ut-of-network-care/cost-of-o ut-of-
network-doctors-haspitals.ht m I)
You are covered For
emergencycare
• You are covered for emergency care. You have this coverage
while you are near your home or traveling.That includes
students who are away at school.
• When you need emergency care (for example, due to a heart
attack or car accident),go to any doctor, walk-in clinic,
urgent care center or emergency room. When you have no
chaice, we will pay the bill as if you got care in network.You
pay your plan's copayments, coinsurance and deductibles for
your network level of benefits.
• We'll review the information when the claim comes in. If we
think the situation was not urgent, we might ask you for
more information and may send you a form to fill out. Please
complete the form,or call Member Services to give us the
information over the phone.
News Bertolini at Techonomy 17: future of health care is hyper-local
(http://news.de h"�sQ'�'i��etna.com/2017/11/bertolini-at-techonomy-l7-future-
f-health-ca re-is-hyper-loca I/j
Copyright �O 2001-2017 Aetna Inc.
https://www.aetna.comfindividuals-fami6es/using-your-aetna-benefitslnetwork-oul-0f-networkcare.htrnl 5/6
11l8f2017 Legal-Payment of Out of Network Benefits�UnitedHeafthcare
Alreaciy a membrr�
I L1111rP,(�HPi�It��1C��,I'E', sea��n • Espanol Log In—
• - . . • - �
� Legal Information on Payment of Qut-of-Network Benefits
Certain health care benefit plans administered or insured by affiliates of UnitedHealth Group
Information on Payment of �ncorporated provide"outof-network"medical and surgical benefrts for members.With out-0f network
Out-of-Network Benefits benefits,members may be eniitled to payment for covered expenses if they use doctors and other
health care professionals outside of the UnitedHealthcare network.The member or health care
professional.depending on whether or not the member has assigned his or her claim,may send a
claim for such out-of-network professional services to be paid by a UnitedHealth Group affiliate.The
UnitedHealth Group affillate will pay based on the terms of the member's health care benefit plan that in
many cases provides for payment for amounts that are the lower of either:
• the out-of-network provider's actual charge billed to lhe member,or
• "the reasonable and customary amount.""the usual,customary.and reasonable amount.""the
prevailing rate."or other similar terrns that base payment on what other healthcare professionals
in a geographic area charge for their services.
What Do These Terms Mean?
The terms°the reasonable and customary amount.""the usual,customary.and reasonable ainount,"
and"the prevailing rate"are among the standards that various health care benefit plans may use to pay
out-of-network benefits.Such plans determine the arnounts payable under these standards by
reterence to various availabie resources.These resources contain intormation on the charges or costs
for professional services or supplies The resource used for payment of professional services is based
on what other heaith care professionals in the relevant geographic areas or regions charge fortheir
services.
These standards do not apply to plans where reimbursement is determined using Medicare rates
Further,UnitedHeaith affiliates use different resources in applying these standards with respect to
services provided by facilities such as c�eneral hospitals or ambulatory surgical centers or in
determining the reimbursement for phannaceutical products(as further discussed belowl.�Iso,a
member's health care benetit plan may detlne these standards differently or contain additional
standards,and lt is the ianguage of the member's heaith care benetit plan or the plan's interpretation ot
such language that�s controlling.Therefore,a member should always consult hls or her health care
benefit plan when assessing how much he or she may be reimbursed for outof-network benefits.
How Dces This Affect Members?
If a healih care benefit plan requires payment using ihe lerm"reasonable and cusloi7iary"or sirnilar
lanc�uage mentioned above with respecl to medical and surgical procedures perforrned and billed by
health care professionals or heallh care pro(essional group praclices,then lhe afflliates of UnitedHealth
Group most commonly refer to a schedule of charges created by FAIR Health,Inc.("FAIR Health")to
determine the amount of the payment.
What is FAIR Health?
FAIR I IeaRh is a not-for-profrt company,independent of Unitedl lealth Group affiliates,established
followfng the New York Attorney General's("NYAG")investigation into allegPd conflir,ts of interest related
htips://www.uhc.com/legatiinfortnation-0n-payment-0f-out-of-network-benefits 1/6
11/8/2017 Legal-Payment of Out of Network Benefits�UnitedHeatthcare
to the ownership and use of Ingenix.Inc.'s Prevailing Healthcare Charges System database!"PHCS
Database")and Medical Data Research database("MDR database")and the fairness of their rates.
Inyenix,Inc.("Inyenix"I,now known as Optum Insight,Inc.("Optum InsiyhY'),is a wholly-owned
subsid�ary of UnitedHealth Group Incorporated.Under a January 2009 settlement agreement between
UnitedHealth Group Incorporated and the NYAG,Ingenix's PHCS�3nd MDR Databases closed following
the establ�shi7ient of the new database to be owned and operated by FAIR Health.
FAI�Heaith provides health care consumers with an estimate ot how much out-ot-network services will
cost thern.Health care consumers Can aCCess FAIR Health's Consumer Price Lookup.
Additionally,FAIR Health publishes two Benchmark data products called the FH Benchmark Database
and the FH RV Benchmark Database.The information m these FAIR Health Benchinark databases is
updated and published by FAlfi Health at scheduled times each year.UnitedHealth Group affiliates
which adininister health care plans based on the term"reasonable and customary"or similar standards
use the medical!surgical module ot one of these FAIR Health Benchmark Databases to deterinine the
maximurn amount they will pay for reimbursement of professional fees for medical and surgical
services. By using the schedule of charges in the inedical/surgical module of these FnIR Health
Benchmark databases,the maximum amount a UnitedHealth Group affiliate will pay to members will,at
times,be iess than the amount billed for particular professional services.Use of this maximum amount
then affects the members'"outt�f-pockeY'cost they must pay to out-of-network he�lth care
professionals,under the terms Uf many health Care benefit plans,members are responsible for the
differ�nce between the professionals'charges and what the UnitedHeaith Group affiliate pays.
How are the FAIR Health Databases Used For Out-of-Network Payments?
Various health insurers and plan administrators periodically send FAIR Health data about claims for
services of health care professionals.The claims include the date and the place of the service,the
procedure code,and the provider's charge.FAIR Health combines this informatlon mto databases that
show how much health care professionals have charged for nearly all services m defined geographic
areas in the United States FAIR Health creates and publishes two Benchinark Databases named the
FH 8enchmark Database and the FH RV Benchmark Database Depending on the applicable health
care plan,UnitedHealth Group affiliates may use one ot these databases as a resource for
determination of reimbursement amounts for out-of-network services of health care professionals
Thc following cxamplc illustralcs the information gathcred by FAIR Hcalth in thc FH Benchmark
Database FAIR Health receives charge information of health care professionals who perform
colonoscopies in a particular geographic area for a particular time period.The charges of these health
care professionals for colonoscopies are arranged from low to high and tfien percentiles are identified
from that arrangement.Here is a simplified illustration of a percentile chart for a colonoscopy for one
geographic area.
PT Code Description 50th 60th 70th 75th 80th 85th 90th 95th
378 COLONOSCOPY $764 $783 $859 $887 $907 $939 $1008 $1105
Affiliates of Unitedl lealth Group frequently use the 80th percentile nf the FAIR I lealth[3enchmark
Databases to calculate how much to pay for out-of-network services of health care professionals,but
plan designers and administrators of particular health care benefit plans���ay choose different
�JP.fCP.IIIIIP,S f0�USP.Wllh���7IIC8hIP.hP.Blfh Cd�P,hP,flP.flt�18f1S.MP.f11hP.�S�71fly COf11f3Ct►hP,CUSlOtT1P.f
service line of the appl�cable UnitedHealth Group affiliate shown on the back of the iYiember's health
identification card to learn of the percentile applicable to the member's health plan.
Health care benefit plans managed by UnitedHealth Group affiliates began to use FAIR Health's
E3enchmarking Databases to determine payment for out�f-network professional services with�n 60 days
of first receiving the applicable FAIR I lealth Benchmark Database Modules at various times in 201 1.
Priorto receiving the FAIR Health[3enchmarking Database Modules.UnitedHealth Group affiliates used
https:!lwww.uhc.com/IegaUinformation-on-payment-0f-out-of-nerivork-benefits 2!6
11/8/2017 Legal-Payment of Out of Network Benefits�UnitedHeatthcare
Ingenix's PHCS database schedules and MDR database schedules to determine payment for out-of-
network professional serv�ces when re�mbursed under standards such as"reasonable and custornary"
and other similar standards.
For additional inforination regarding the FAlfi Health Benchmark Databases,please visit FAIR Health's
website.
How were the Ingenix Schedules Prepared and Used for Payments?
The PHCS Database was designed to use actual,fee-for-service health care professional charges for
�riv82P.SP,CtOf hB�lth Cd�P,SP.fViCP.S.Of 1S P,XF)I21f18d t)P.IOW,when not enough information was available,
il�P.pOrtPd vBIuP,S bdSP.d O�l�3�T1P,thOdOlO9y uSIYl9 dP,fiVP.d Ch�3�gP.S 8f1d fP.1�1iVP.v81UP,S.IngP.(lix COIIP.CtP.d
information(rom insurers and othcn c�alch plan adrrnrnstrators nat�onwidc,including informa[ion from
Puer to Rico and the Virqin Islands.Ingenix asked these contributors to subm�l only actual fee-for-service
charges lhat professionals billed.Data contribulors received a discounl on their license fees for thc
PHCS or MDR Databases based on how much of their charges information was accepted and used by
Ingenix.
After Inyenix c;Ullected billed charye informatiUn from data contributors,Inyenix reviewed the
information before using i2 t0 CIP.BtP.1hP, PI'�CS�fid M�R DBt�]b�SP.S.SpP,CifIC8lly,If1gP.nIX P.XCIUdP,d
information that(i�was out of date,;ii1 was incomplete(r7iissing data fields such as a procedure code,
zip code,or billed chargel,{iiij conta�ned invalid zip codes or procedure codes,or(ivj had billed
arnounts that fcll oulsidc of ccrtain high and low chargc pararnetcrs sct by In�cnix lo idcntify what it
dcemed to be"outller"charges.
The PHCS Database set forth amounts determined by the Ingenix process,organi�ed by medical
procedure codes,known as CPT codes,and geographic area(geozipsl.For CPT code�geozip
combinatipns with 9 or more actual charges used by Inyenix�n creatiny the PHCS product,the
Database reported those charges at the 50th.60th, 7pth,75th,80th,85th,90th,and 95th"percentiles."
By way of example,the 90th percent�le was the artioun[equal to or greater than 90'�.of the charges
used by Ingenix in creating the PHCS Database for that CPT code/geozlp combination.Affiliates of
Un�tedHealth Group frequently used lhe 80th percentile of the PHCS Dalabase as their benchmark,bul
plan sponsors may have chosen different percentiles for use wilh iheir plans.For CPT codc;!geo�ip
combinations with fewer than 9 actual charges in the repository of data collecied from contributors for
use in lhe PHCS Databasc.che Database reporled"dcr�ved charges''in lhe percentilc tablcs.To
calculate derived charges,Ingenix pooled billed charges for similar services from the relevant
geographic area.The charge data was standardized using"relative values,"wh�ch were numbers that
were assigned to procedure codes based on an assessment of the difficulty and expense of the
procedures.More complex and more expensive procedures received higher relative values.while less
complex and less expensive procedures received lower relative values.For the PHCS Database.Ingenix
licensed its relative values from a company not affiliated with UnitedHealth or Ingenix called Relative
Value Studies Incorporated.
The MDR Dalabase consisted enlirely of der�ved charges.Ingenix used�ts own proprietary relative
values in creating the MDR Database,and the derived charges methodology used for the MDR
Database was different from,though similar to,that used for the PHCS Database.
The medical and suryical modules of the PHCS and MDR Databases contained tables cover�ny over
a,OOO diffP.fP,11t COdP.S�3CfOSS OVP.f 4OO diffPrP,flt GP.OZipS.EACh fP,IP.�lSP,nf thP.DBt�L�flSP.S USP.C11.hP.CJ�]Ya
contributed with dates of service durmy a 12-�nonth moving window between 3 and 15 months priorto
the date each module is released.
The service and product codes empioyed m the Databases were based on e�ther the Current
I'rocedural lerminology("Cf'f")coding system developed and mainta�ned by the American Medical
htlps:/lwww.uhc.com/1egaUinformation-on-payment-of-0ut-0f-nerivork-benefits 3/fi
11/8/2017 Legal-Payment of Out of Nelwork Benefits�UnitedHeaRhcare
Association("AMA")or the Healthcare Common Procedure Coding System("HCPCS")developed and
maintained by the Centers for Medicare and Medicaid Services("CMS"j.The Datahases were divided
into"modules,"which were compilativns of the various tables for different codes that were generally
related to one another�e.g.,there is a PHCS medical services module and a PHCS surg�cal services
module�.There were eight different mndules for the PHCS Database and nine iYiodules for tha MDR
Database UnitedHealth affiliates used only the medical and surgical modules of the PHCS Database
when they reimbursed claims under"reasonable and customary"or olher sirr�ilar slandards as
described above for pro(essional services dellvered and billed by health care professionals or health
care provider groups.Geoaps were used to group the charges for a part�cular CPT code by similar
gcographical arca for summarication and presentation in lhe databasc tables.Gco�ips wcrc based on
the first three digits of United States Zip codes and were either a single three digit zip code area or a
combination of two or more three-digit zip code areas.Whether a Geozip covered only one or more
than one three-digit zip code area was based upon:(i)an analysis of submitted charge data for each
PHCS release:(ii)the volume of available data;and(iii)geographical similarities involved with the zip
code areas underlying each Geozip The zip code areas that are combined in particular Geozips could
vary trom year-to-year.
A samplc PHCS percenlilc table is prov�ded bclow.
o� Description 50th 60th 70th 75th 80th 85th 90th 95th
1050 RADIOLOGICAL EXAMINATION(2 VIEWS) $102$103$106�107$107$id7$113$122
OFFICE VISIT;EVALUATION AND
9211 MANAGEMENT;MINIMAL PRESENTING $62 $70 $75 $80 $85 $85 $100$100
PROBLEM
Important Exclusions
UnitedHealth Group affiliates will not use the FAIR Health E3enchmarking Databases to determine out-of-
network benefits fvr professinnal serviCes if a m�mber's health care benefits plan does not require
payment under standards such as"the reasonable and custornary amount,""the usual,customary,and
fP.�350f18bIP,11T10Uflt:��tihP.�fP,Vlilll'1C�. f�tP."Of Si�Tlll�f iHffl'1S.FOi"P,X�3f11K)IP.,I(�tT1P.fi1b8f'S plan provides for
payment based upon Medic:are rates.UnitedHealth Group affiliates wlll not use the FAIR Health
Benchmarking Databases as a resource for determining paymenl amounts.
Reimbursement Policies
UnitedHealth affiliates may apply certam payment policies that can affect both the amount they pay for
such benetits and a member's out-ot-pocket costs.For example,the Multiple Procedure Policy applies
when multiple procedures are pertormed on the same day bythe same healthcare professional.Under
this policy,coverage for the primary,•"major procedure�s 10�%of the allowable amount.and 50%of the
allowable amount for the secondary procedure.Coverage for all subsequent procedures is 2b or 50�'0
of the allowable amount.depending on a member's health plan.This accounts for the fact that many
medlcal and surgical services include pre-procedure and post-procedure work,as well as generic
services lnteyral to the standard medicaljsuryical service{like recording preoperative,intraUper�tive,
and postoperative documentation)that would be performed for the pri�7iary procedure and not
duplicated for additional pro<;edures.See desc:riptions of the Multiple Procedure Policy and other
payment policies.
Physician Administered Pharmaceuticals
UnitedHealth Group affiliates consider pharmaceutical products administered and billed by heafth care
professionals or health care provider groups to be protessional services or supplies for purposes ot
claims reimbursement when such drugs are covered under a member's health plan.UnitedHealth
Group attiliates generally deem the�verage Wholesale Price("�WP"1 tor such pharmaceutical products
to be an amount which satisfies plan standards such as"reasonable and customary"or similar
https://www.uhc.com/IegaUinfortnation-on-paymeni-0f-out-of-network-benefits 4!6
11/8l2017 Legal-Payment of dut of Network Benefits�UnitedHeafthcare
standards��entioned above,and thus use AWP to determine out-0f-network reimbursement for such
products.
The AWP values considered by UnitedHealth Group affiliates are provided by a comprehensive
database coverinc�virtually every drug product approved by the Food and Drug Administration for
manufacture and distributlon.This database is developed and maintained by an independent vendor,
Thomson Reuters,and is collected from over 1,200 pharmaceutical manufacturers and distributors.
UnitedHealth Group a((illates reimburse(or pharmaceulical products administered and billed by healih
care professionals or heallh care provider groups by reference to AWP for a number of reasons.AWP is
an industry standard of reimbursement and is widely accepted by health care professionals,
governments.and managed care companies as appropriate payment for such products.In addition,
government studies demonstrate that reimbursement at AWP typically is significantly higher than actual
pnces paid by health care professionals for pharmaceutical products.Finally,the prices paid by health
care professionals for these products do not vary across geographic regions to the degree that charges
for protessional services vary across geographic regions,which makes a national standard on
reimbursement for these products more appropriate and more consistent with the plan standards
mentioned above
Glossary
Albwable amount-as used in circumstances covered by this notice,the dollar amount eligible for
rcimburscmenl wilh respect to a claim for out-ot-nelwork benciits.Thc standard for de[crmining lhc
allowed amount can vary by hcalth plan,and may be based(depcnding upon[hc language of a
member's heallh plan)upon the lower of cilher ihe provider's charge or thc"rcasonable and customary
amount,"as explained m the beginning of this notice.This dollar amount may not be the amount
ultimately paid to the member or provider as it may be reduced by any co insurance or deductible that
is owed by the member.
AWP(AVefclge WhOleS81e P�CB}-the Average Wholesale Price for ph�r�tt�lcP.utic;�l products whit;h
UnitedHealth Group affiliates determine based on a comprehensive database developed and
maintained by Thomson Reulers
CPTcodes-a set of codes and descriptions of services and procedures performed by physicians and
other healTh care profess�onals �ach service and procedure is identified by its own five-cligit code.
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("NYAG")to provide the health care consumer with data associated with out-of network services.
FH Benchmarking Q�abase-one of two compilations of�n(ormation on health care professional
charges crcated by FAIR Heallh and used by aftdiates of UnitedHealth Group to determine paymenl for
out-of-nclwork professional scrvices whcn rcimbursed under standards such as"thc reasonablc and
customary amoune,""thc usual,cuslomary,and reasonable amounL""the prcvailing rate,"or olher
similar terms that base payment on what other healthcare professionals in a geographic area charge for
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FH RV Benchmarking Databese-one of two compilations of mformatlon on health care professional
r,harges created by FAIR Health and used by affiliates of UnitedHealth Group tc�determine payment for
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custornary amount,""ihe usual,cuslomary,and reasonable amounl,"°the prevailiny ratc,"or other
similar tcrms thal base payment on what othcn c�althcare profcssionals in a gcoyraphic area charge for
lheir scrvices.
htips:!lwww.uhc.coMlegaUinfortnation-o�-payment-0f-out-0f-network-benefits S/fi
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� Healthcare
��, EXECUTIVE
COPYRIGHTED MATERIAL, DO NOT REPRODUCE
The in-network advantage
By Tom Valentino, Senior Editor
Before Retreat Premier Addiction Treatment Centers accepted its first patient in Lancaster County, Pa., in August 2D11, CEO Peter
Schorr had made up his mind: His new venture was going to w�rk with insurers as an in-network provider.
Many in the field might consider it a risk, but Schorr says he felt going in-network was actually the safe bet.
"This was a conscious decision I made before we opened,"says Schorr, a 36-year veteran of the addiction treatment field. "One of
the reasons is,obviously, it opens up your market much more broadly, and you can take many more patients.The reimbursement is
less than out-of-network benefits,but the reward is that you do have a much larger pool to grab from among those who have
contracted insurance."
As providers are plagued by the unknowns of being out-of-network—when they will receive reimbursement or how much-�oing in-
network coutd become an advantage for many within the field who seek sustainability through reliable reimbursement.
While in-network providers can receive lower payments from insurers than those out of network,contracts negotiated with insurers
reliably deliver the expected payments for specified treatment. Bill for agreed upon services, receive agreed upon reimbursement.
IYs a model that stabilizes budgets and helps providers map out strategies to sustain their businesses.
Making the cut
An estimated 38 million people in the United States had access to behavioral healthcare and benefits through their health plans as
of 2014, according to a whitepaper published in 2016 by America's Health Insurance Plans(AHIP}, an advocacy group for health
insurers. For their part, insurers say they are actively trying to bring more behavioral healthcare providers into their networks, but
haven't always found treatment centers willing to participate.
"Health plans regularly assess the adequacy of their provider networks to ensure that members have timely access to behavioral
healthcare while accepted metrics are used to track and improve patients'outcomes,"says Cathryn Donaldson,AHIP director of
communications. "However,there is a well-documented national shortage of behavioral health providers, coupled with many
behavioral health clinicians who refuse to participate in health plan networks, resulting in patients having to pay out-of-pocket for
treatment or forgo it altogether."
Still, even for Retreat and other willing providers, the path to going in-network isn't always smooth. Overcoming that hurdle comes
down to having the ability to prove your value and demonstrate the delivery of successful outcomes. Insurers seek providers with a
track record in evidence-based practices and those who take a holistic and coordinated approach to care, Donaldson says.
"Some plans have created behavioral health homes and are leveraging patient-centered
medical homes to ensure more integrated care,"she says. "Others are embedding I
behavioral health providers in primary care doctors'offices to help identify these ± `
conditions and improve outcomes." 1
r,.
However, Donaldson says, readily available infoRnation on the quality of facilities is t"'� ` '1
significantly lacking, including data on patient outcomes. �
"Overall quality measurement for even the more common behavioral conditions is less
well developed than for comparable general medical conditions,"she says.
�ti:
In its efforts to align with insurers, Retreat has found success by illustrating its competitive
differentiators and by hosting insurers on-site to demonstrate its programs, at both its
Lancaster Counry facility as well as its second loca6on in Palm Beach, Fla.,which _
opened in June 2016.
_�
"It wasn't something made up or pulled out of the air,"Schorr says of RetreaYs
programming. "We showed proof of what we're doing and how we're doing it."
Operating in network
Providers and insurers alike say they are invested in achieving
successful outcomes, but exactly which party is the driving force behind
improving the standard of ca�e is a matter of perspective. For example, ,
longer lengths of stay are consistently associated with superior t
outcomes, however, securing prior authorization for detox and the � ' +4 � � ,
length of stay necessary for residential patients is oftentimes � .,''
challenging, Schorc says.And so is advocating for intense residential
` �
care rather than outpatient treatment.
"You try to present the case for the patient in front of you,"Schorr says. ♦ �
"A lot of times, insurance companies don't want to hear it.They'll give _
patients a lower level of care to start with. ThaYs a challenge we have i, , �_ �
with any insurance company—getting the right amount of treatment time
for our patients."
Schorr points to the example of patients going through opioid withdrawal. Retreat has, on average, been able to secure
reimbursement for 22 to 24 days, a victory Schorr chalks up to the organization's nurses performing utilization reviews and to
changing attitudes of insurers.
"It's kind of a battle on educating people where behavioral health and substance abuse are a small part of the insurance industry,
and there hasn't been a lot of focus on it over the years," he says. "But now,the opioid epidemic is so out in the forefront in the news
all the time,they're starting to look at things differently."
Donaldson, meanwhile, says insurers view addiction as a chronic condition that needs to be treated with a holistic approach,and
that integrating behavioral healthcare and addiction treatment with primary care is critical.
An example of this type of coordination, outlined in the 2016 AHIP whitepaper, is seen with Anthem. One of the insurer's models
involves mental health professionals working directly within primary care physician practices, where they can meet with and scxeen
patients, offer coaching and assist with referrals. Primary care staff also are trained in how to treat behavioral health issues and how
to assist with referrals when specific patient needs have been identified.
Best practice
While it isn't a perfect system, Schorr remains confident that being an in-network
provider is the best course of action,both for Retreat and its patients, and that if other ,� /��,� �
providers want to be considered among the best in the field,they will adhere to the , �;=,+:.-% =fi�
t y
same standards. � '�1�_ �_
"Anyone who is in this business for the right reasons for the long term would probably � �f
look at the model we're doing,"Schorr says."The people in it for a quick buck, no, �
they wouldn't do that. First,they wouldn't be qualified to do it. Fty-by-night places
open up, and they're not gang to qualify to go in-network with any insurance
company, so they stay out of network. �
"All the top facilities that take insurance,they're all in-network with the insurance
companies. They're doing the right thing."
Tom Valentino is Senior Editor of Behavioral Healfhcare Executive.
Photography OThe Picture Producer CLC
COPYRIGHT 2017 BY VENDOME GROUP. UNAUTHORIZED REPRODUCTION OR DISTRIBUTION
STRICTLY PROHIBITED
Source URL: https:/lwww.behavioral.net/article/managemenUnetwork-advantage
No Text
11l8/2017 Access Denied-Modem Heatthcare Special Report
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Insurers slowly removing barriers to
addiction treatment
Story by SHELBY LIVINGSTON (HTTPS://TWITTER.COM/MHSHELBYL}
Graphics by FAN FEI (HTTPS://T'WITTER.COM/DATUMFAN) and PAT FANELLI
(HTTP://WWW.MODERNHEALTHCARE.COM/STAFF/PAT FANELLI}
April 14� 2017
sychiatrist Dr. Jerry Halverson had just finished a frustrating phone
call with a health insurer. The insurer had refused to authorize a
troubled teenager's inpatient stay at Rogers Memorial Hospital, a
behavioral health facility where Halverson serves as medical director.
The patient, from West Virginia, was using opioids and other drugs and
suffering from depression. He recently dropped out of college. He
stopped taking showers. His desperate parents wanted him to receive
intensive residential treatment at Halverson's �conomowoc, Wis.,
facility, which is part of the Rogers Behavioral Health System.
But the insurer insisted residential treatment wasn't medically necessary.
And the family couldn't afford the program's high cost on their own.
Without insurance, a 30-day stay at Rogers Memorial would cost
$30,000. The average stay is 30 to 45 days. Out of options, the patient
had to go back to a less-expensive outpatient program that he had
previously failed.
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insurers make patients and families jump through too many hoops to get
coverage for needed inpatient and outpatient care for addiction, including
medication-assisted treatment, doctors say.
"We don't tell folks who are having a heart attack
that we're not going to give them bypass surgery or
we're not going to do a stent—that they have to do
eight weeks of aspirin before we'll do that:'
— Dr. Jerry Halverson, a psychiatrist and medical director of adult services at Rogers Memorial
Hospital
The medical necessity requirement is just one obstacle. Health insurers
also apply lofty deductibles and copayments. Prior authorization rules
delay medication-assisted treatment, or MAT, when it's most needed.
Low reimbursement rates for MAT are one reason for the shortage of
physicians and other professionals willing to treat addiction patients,
experts say.
But some insurers are taking steps to improve access and coverage for
addiction treatment in the face of the nation's opioid crisis. That's come
in response to pressure from the public, policymakers and law
enforcement officials, as well as the soaring cost of opioid prescriptions.
Insurers also are working to reduce inappropriate prescribing of opioid
pain medications to prevent patients from becoming addicted.
Advertisement
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"We have a lot to bring to the table to help address the different pieces of
the epidemic," said Dr. Sherry Dubester, vice president of behavioral
health and clinical programs for national insurer Anthem, which has
doubled down on efforts to reduce the number of opioids prescribed and
ensure patients receive holistic substance-abuse treatment.
Still, experts say insurers aren't doing nearly enough to increase access to
treatment for the millions of Americans suffering from addiction. It's
"very little, very late," said Dr. Andrew Kolodny, co-director of opioid
policy research at Brandeis University.
Beyond that, advocates for better addiction treatment fear the limited
progress that's been made will be rolled back if Republicans in
Washington succeed in dismantling the Affordable Care Act. That law
boosted access to addiction treatment and behavioral healthcare through
its requirement that all ACA-compliant health plans provide treatment
for substance abuse disorders and mental health issues, and through its
expansion of Medicaid coverage to low-income adults.
It is estimated that as many as half of the beneficiaries of expanded
Medicaid in some states have mental health and/or addiction problems.
Led by Ohio's John Kasich, governors have said the Medicaid expansion
has been critical in broadening access to addiction treatment services.
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It's relatively easy for patients to get a prescription from
a physician for powerful addiction-causing opioids to
treat pain. But it's hard for the same patient who
becomes addicted to access substance-abuse
treatment.
ll/usiraiions by Fan Fei.
Barriers to treatment
It's relatively easy for patients to get a prescription from a physician for
powerful addiction-causing opioids to treat pain. But it's hard for the
same patient who becomes addicted to access substance-abuse treatment.
Insurers often require patients to be diagnosed as suicidal before they
will pay for a stay at a detox facility or residential rehabilitation center,
Halverson said. Patients instead must tough out detox at home, where
they face a greater risk of relapse than they would in a facility. And
patients seeking treatment are often referred to an outpatient program
with less oversight than a residential inpatient program.
For some patients, an outpatient program is effective. But others may
require the structure and 24-hour care provided in a residential facility.
ht1p://www.modemhealthcare.com/speciaVopioidaddiction S/22
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in South Florida. That's when his health insurer's medical-necessity
requirement got in the way. While at the residential facility, the health
insurer would abruptly end Mattos' stay and try to transfer him to a lower
level of care, even though he and his doctors felt he wasn't ready. Mattos
even had to call his insurer while in treatment to convince it to let him
stay. He ended up paying $8,000 out of pocket, while his insurer covered
the rest of the $15,000 bill for the 28-day stay.
Insurers "rush the process as quickly as possible so they don't have to
pay for it," said Mattos, who finally kicked his substance abuse disorder
after moving to a sober living community, which isn't covered by
insurance. He now works at the GateHouse Sober Comrnunity, a Nashua,
N.H.-based residential treatment program, where he witnesses the same
insurance issues that frustrated him.
"Instead of letting a client do it right one time, (insurers)
are paying triple the amount because a client's going to
treatment three, four, five, six times" before they get
better, Mattos said.
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Health insurers argue that medical-necessity requirements are in place to
ensure patients receive appropriate care at the right level. Bloomfield,
Conn.-based Cigna Corp. and Hartford, Conn.-based Aetna said they
don't require patients to fail at outpatient treatment before they will
authorize residential care. And Anthem said it doesn't place any time
limits on services. The Indianapolis-based insurer said it approves
treatment based on medical necessity, and more than 95% of its patients'
requests for inpatient and residential care are approved.
Prior authorization for medication-assisted treatment is another big
roadblock.
MAT combines medication with behavioral counseling. It is considered
ef�ective at reducing the risk for relapse and irnproving chances of
recovery. But just one in 10 patients who need treatment receive it,
according to the National Center on Addiction and Substance Abuse.
Insurers' prior authorization policies require physicians to answer
numerous questions about a patient's treatment and medication history
before they receive approval to prescribe MAT. It can take days or even
months. But patients often won't return for treatment if there are lengthy
delays, experts say.
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In recent months, Aetna, Anthem, Cigna and UnitedHealth Group—the
nation's largest insurer—lifted prior authorization policies for MAT.
Anthem and Cigna did so after New York Attorney General Eric
Schneiderman investigated barriers to treatment resulting from the
policies.
That's a step in the right direction, said Mady Chalk, senior policy
adviser at the Treatment Research Institute and a former official at the
federal Substance Abuse and Mental Health Services Administration.
Insurance barriers can rnake the difference between someone getting and
not getting treatment.
When somebody is ready to receive treatment and they
come into the doctor's office, "that is not the time when
you get in their way," Chalk said.
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When somebody is ready to receive treatment and they come into the
doctor's office, "that is not the time when you get in their way," Chalk
said.
High deductibles and copays further prevent patients from accessing care
when they are ready. Many patients can't afford treatment because of
sky-high out-of-pocket costs. It's much cheaper for a patient to stick with
heroin, Halverson said.
The Mental Health Parity and Addiction Equity Act of 2008 prohibits
insurers from applying cost-sharing and benefit limits on treatment for
substance use disorders that are more restrictive than those placed on
other medical services. But there's little enforcement of the law, experts
say.
On top of that, there aren't enough physicians trained and licensed to
administer MAT, partly because of low payment rates and the many
administrative hassles associated with providing this type of care.
If payment rates aren't adequate, patients won't receive treatment, said
Dr. Shawn Ryan, president and chief inedical officer at BrightView
Health, a Cincinnati-based outpatient addiction treatment center. "We do
what we get paid to do," he said.
The ACA requires insurers to cover substance use and behavioral health
treatment as an essential benefit. But that doesn't necessarily mean
insured patients have access to treatment that works.
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interchangeable, and that a particular drug or form of a drug may work
better for an individual patient.
For instance, the naltrexone injection, which blocks the effects of
opioids, may work better than the pill form of the drug for a patient who
has a hard time staying sober. The injection requires one monthly shot,
while the pill must be taken daily. Insurers rarely pay for the injection,
Halverson said.
A 2016 report from the National Center on Addiction and Substance
Abuse found that among 2017 state benchmark health plans, none
explicitly covered all three MAT medications. (Benchmark plans
determine the minimum level of benefits available to those covered in
state exchange plans. States defined their 2017 benchmark plans in
2015).
Nearly all state Medicaid programs cover some form of substance-abuse
treatment, but the services covered vary widely. Just 13 states and the
District of Columbia covered all seven services in the American Society
of Addiction Medicine guidelines for substance use disorder treatment in
2014, a December 2016 Health Affairs study found.
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Insurers and industry groups, including UnitedHealth, the Blue Cross and
Blue Shield Association and America's Health Insurance Plans, have
argued the federal government shouldn't force insurers to pay for specific
treatments.
Targeting overprescribing
Some insurers, however, have taken proactive steps to address the opioid
addiction crisis. They have established prograrns to reduce cases of
opioid addiction that arise from physicians overprescribing pain
medications and abusive marketing of these products by drug companies.
Prescription opioid abuse often leads to use of heroin, fentanyl and other
street narcotics.
Experts point to Stamford, Conn.-based Purdue Pharma as one of the
biggest culprits in the epidemic. In 1996 the drugmaker developed
OxyContin, a form of the opioid pain medication oxycodone, and soon
began marketing it as a safe, non-addictive drug that could effectively
treat chronic pain.
Professional groups, such as the American Pain Society, advocated for
the use of prescription opioids to relieve pain. The Joint Commission,
which certifies quality and safety at U.S. hospitals, urged providers to
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It was a perfect storm, said Dr. Joel Hyatt, emeritus assistant regional
medical director of community health improvement at Kaiser Permanente
Southern California. "The medical community and doctors were being
accused of underneating pain, so there was an emergence of efforts to
treat or eliminate pain, which is impossible to do totally."
Opioid prescriptions and sales, 2006 to 2015
■ Sales ($ in billions)
39.60 59.58
Total prescriptions 279.5 282.� ��
278.8
272.7 274.3
267.7 267.3
257 �8.9`~ � �$8.79
S8.78
245.2
�8.45 $8�3 249
�57.76
$7.12
$6.1
� 1 � � � � � � � �
2006 2007 2008 2009 2010 2011 2012 2013 2U14 2015
Source:!MS Hea/ih
Opioid drug sales surged. So did overdose deaths. The sales of opioid
painkillers reached $9.6 billion in 2015, according to IMS Health. In that
year, opioids led to more than 33,000 overdose deaths, up more than 15%
from 28,600 in 2014, according to the Centers for Disease Control and
Prevention. In half the fatal cases, the overdose involved a prescription
opioid.
Opioid overdose deaths,
2�00 versus 2015
2�0�
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Not sufficient data.
United States � �+7.4 Data supressed to ensure
Alabama �+5.1 confidentiality. change from 200U
Alaska �+7.p � ?
Arizona � +5.4 � +2,3
Arkansas �+fi.4 I I
Califomia �+1.9 2000 year chosen
Colorado �+4.8 for comparison
Connecticut � +14.4
Delaware �+11.1
istrict of Columbia �+6.8 Mouse over to see overdose death rates
Florida �+5.8
Georgia �+7.0
Hawaii • +1.8
Idaho �+3.8
Illinois � �.2
Indiana �+7.8
lowa �
Kansas �+4.5
Kentucky �+18.7
Louisiana � +5.1
Maine � +16.1
Maryland �+9.0
Massachusetts �+18.5
Michigan � +11.8
Minnesota �+5.1
Mississippi �
Missouri •+9.3
Montana �
Nebraska �
Nevada �+5.0
New Hampshire �+29.1
New Jersey � +5.7
New Mexico �+7.9
New York � +8.2
North Carolina � +8.4
North Dakota �
Ohio � +22_5
Oklahoma �+7.4
Oregon �+4.8
Pennsylvania �+8.5
Rhode Isiand �+18.1
South Carolina � +9.2
South Dakota �
Tennessee �+74 2
Texas � +2.9
Utah � +8.3
Vermant �+9.8
Virginia �+6.5
Washington �+3.5
West Virginia � +33.2
Wisconsin �+9.1
Wyaming �
0 5 10 15 20 25 30 35
per 100,000 population
Note:Age-adjusted death rates were calculated by applying age-specific death rates to the 2000 U.S.standard
population age distribution. Death Rates are deaths per 100,000 population{age-adjusted}.
Source:Kaiser Family Foundation
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by not-for-profit Fair Health.
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maxirnurr� �mour�ts �riv�t� ir��ur�r� �ill p�y far ��i�i� ��use
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■ Total charged am�unt �� i n mi II i�n��
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The growing cost burden has spurred many insurers to action.
In 2012, Blue Cross and Blue Shield of Massachusetts, after experiencing
an uptick in claims related to opioid addiction treatment, launched its
Prescription Pain Medication Safety Program.
The Massachusetts Blues plan requires doctors to seek prior approval for
opioid prescriptions, except in the case of cancer and terminally ill
patients. It puts quantity limits on how many opioids doctors can
prescribe. It also requires patients to take a risk assessment for addiction.
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— Dr_ Ken Duckworth, a psychiatrist and the insurer's senior medical director for behavioral health.
In the first three years of the Massachusetts program, about 21 million
fewer opioids were dispensed to the insurer's members, according to the
CDC, which studied the program. State policymakers have since
implemented parts of the program statewide.
The Blues plan also eliminated deductibles and copays in its coverage of
methadone treatment, a form of inedication-assisted treatment for opioid
addiction. It hired social workers to contact plan members when they are
admitted to detox facilities to help them figure out next steps for
treatment. And it successfully advocated for the state to require insurers
to pay for a 14-day residential stay for patients addicted to opioids.
Cigna is another insurer that has taken steps to reduce inappropriate
opioid pain prescriptions. In addition to eliminating prior authorization
for MAT, last year the insurer set a goal to reduce the amount of opioids
dispensed to members by 25% over three years.
Earlier this month, Cigna said its customer's use of prescribed opioids
has declined by almost 12% in the last year.
Cigna builds opioid prescribing profiles of the physicians and
accountable care organizations in its network. That information is sent to
the doctors on a regular basis so they can see how they compare with
their peers. The insurer also encourages its participating ACOs to pledge
to fight the opioid epidemic. About 160 have signed the pledge so far.
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11/8/2017 Access Denied-Modem Heatthcare Special Report
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partners."
Anthem is also expanding access to comprehensive opioid addiction
treatment by maximizing reimbursement for doctors who treat substance-
use disorders. It's working with doctors in rural communities and linking
them with behavioral health providers.
By building awareness among providers on how to bill for these services,
Anthem said it increased the number of claims for screening, brief
intervention and referral to treatment, known as SBIRT, by 60% from
2015 to 2016.
"We feel very strongly that MAT is there to assist therapy—it's not there
as a solo treatment," Anthem's Dubester said. Anthem set a goal to
reduce the amount of opioids dispensed to plan members by 30% by the
end of 2019.
In Connecticut and New Hampshire, Anthem mernbers can receive in-
home addiction treatment. The insurer also is considering using
telehealth for providing addiction treatment.
Aetna uses claims data to pinpoint and contact opioid "superprescribers."
It sends those doctors a letter to make them aware of how their
prescribing behavior deviates from the norm.
The insurer also notifies clinicians if patients have been prescribed more
than three opioids, dangerous combinations of opioids or if they have
multiple prescriptions from multiple prescribers.
Advertisement
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11/8J2017 Access Denied-Modem Heatthcare Special Report
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Fear of losing ground
Experts in addiction treatment fear the progress made in expanding
access to treatment is in jeopardy. That's because of continuing
Republican efforts to roll back the Affordable Care Act's Medicaid
expansion and its mandatory coverage for substance abuse treatment and
behavioral healthcare.
http:/(www.modemhealthcare.comispecial/opioid-addiction 17/22
11/8/2017 Access Denied-Modem Heatthcare Special Report
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Before the ACA, few insurers covered addiction treatment and when they
did, coverage was poor and expensive.
Some House Republicans, with support from the Trump administration,
are pushing hard to erase the ACA's minimum essential benefits
requirement. They argue that would make coverage more affordable for
consumers. But experts say that measure, along with the phaseout of the
Medicaid expansion, would make coverage and care inaccessible to
many patients who need substance-abuse and behavioral-care services.
Without a mandate, there's little incentive for insurers to cover treatment
for substance-abuse disorders. There is evidence that paying for opioid
addiction treatment will save insurers costs in the long run. At least one
study published in the American Journal of Managed Care found that
MAT was associated with fewer hospitalizations.
But patients often switch insurers. The insurer that paid for addiction
treatment may not be the one that reaps the benefit of lower medical
costs down the road, Chalk explained.
http://www.modemhealthcare.comispeciallopioid-addiction 1 g�22
11/8/2017 Access Denied-Modem Heatthcare Special Report
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time asking insurers to cover things that they ultimately don't want to
cover." •
Getty images
Provider-owned plans have an edge
in addiction treatment
rovider-owned health plans have a leg up over traditional insurers
when it comes to tackling the opioid epidemic.
Integrated systems that own health plans are better able to directly
address over-prescribing of opioid painkillers and expand access to
addiction treatment.
http:l/www.modemhealthcare.comispecial/opioid-addiction 19122
11/8/2017 Access Uenied-Modem HeaRhcare Special Report
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— Dr. Perry Meadows, medical director of gavernment programs at the not-for-profit Geisinger
Health Plan
Geisinger Health Plan's special investigations unit analyzes claims data
to pinpoint providers who are prescribing opioids inappropriately and
removes them from the plan's network.
Through a state center of excellence grant, Geisinger plans to open three
clinics this year devoted solely to medication-assisted treatment, or MAT,
which combines medication and behavioral health therapy to treat
addiction. The plan will use case management to identify patients early
and help them complete the treatment program.
Geisinger also holds community forums on opioid abuse, where
Meadows speaks about his own family's harrowing experience with his
stepson's long-term addiction problems. The stepson got hooked on
opioid painkillers after suffering a workplace injury. He still uses heroin
and cocaine even after experiencing a near-fatal overdose, during which
Meadows had to perform CPR to save his life.
"It can happen to anybody," Meadows said.
At Kaiser Permanente, providers, pharmacists and the health plan
collaborate in addressing opioid abuse. The integrated system removed
most of the high-potency opioids from its prescription drug formulary.
Only Kaiser's pain management specialists, oncologists, and hospice and
palliative-care doctors are authorized to prescribe these drugs.
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painkillers. The plan's pharmacy mines data to monitor physicians'
prescribing patterns.
In addition, Kaiser doctors don't face the disincentive of low
reimbursement rates that discourage other doctors from providing needed
medication-assisted treatment to addicted patients. That's because Kaiser
doctors are salaried.
"We don't sit there and worry if the reimbursement for that treatment is
too low to be worth our while," said Dr. Michael Kanter, the system's
chief quality of�icer.•
(Design and web development:Fan Fei and Paf Fanelli. Copy editor.�Dave May and Julie Johnson. Editor.Aurora
Agurlar.}
Advertisement
Copyright OO 1996-2017 Crain Communications, Inc. (http://www.crain.com/)
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�� EXECUTIVE
COPYRIGHTED MATERIAL, DO NOT REPRQDUCE
10 ways private equity investors evaluate addiction treatment
centers
By Ron Lebow and Kelly M. Hagemann
In recent years, there has been a flaod of private equity(PE)investment into the addiction treatment community,fueled in large part
by the Affordable Care AcYs requirement that health plans cover treatment for substance abuse disorders, including for those
patients with pre-existing conditions. However, investors are entering a market with numerous variables and considerable grey area,
as the qualitative and quantitative differences between addiction treatment operations can be vast. Below are 10 things private
equity groups look at to ensure a significant return on their investment in the addiction treatment sector.
1.The"skeletons"
Priority#1 for an equity investor is to perform the diligence necessary to uncover problem areas, and this is certai�ly true in the
addiction treatment space, where legal noncompliance is commonplace (though often unintentional). Payers are increasingly
conducting reviews of behavioral health and substance abuse treatment program providers and are looking for cases of fraud and
abuse. Many providers are cutting some type of comer. PE groups want to find that comer early and identify a feasible and cost-
effective solution. The diligence may even result in the seller lowering the purchase price.
2. Marketing relationships and patient inducements
A fundamental question that a potential investor needs to ask is: "Where are the patients coming from?"Many addiction treatment
providers have taken to entering into marketing/consulting agreements with independent contractor companies and individuals
serving as call center or marketing/salss representatives having direct contact with patients for the purpose of recommending the
treatment facility to those patients. Paying any person or entity who or which has direct contact with patients themselves and
recommends a specific faality to them in exchange for a fee for the recommendaiian is a likely violation of the federal Anti-Kickback
Statute, unless safe harbors are met. Laws also differ at the state level.
Some providers take steps to induce patients to seek treatment at their facility. This indudes,but is not limited to, providing
transportation,gift bags and on-site store vouchers.At a minimum, the availability of these types of benefits should not be
advertised to the general public or referral sources. If a facility is engaging in this type of inducement, and advertising it widely,it will
raise an immediate alarm.
3.Contract or out-0f-network model?
Some providers contract with the majar health plans, and others do not, and this is an important distinction. Providers are seeing
significantly increased efforts from payers that are attempting to avoid paying out-of-network providers.This comes in the form of
records requests, recoupment demands and SIU investigations. Illegal kickback relationships are also scrutinized,with payers often
refusing to issue authorizations or single case agreements while the investigation process plays out.
Depending upon the payer mix at a given facility,this economic gamesmanship can be devastating. At the same time,facilities are
having difficulty becoming in-network providers as insurers keep their networks small.
4.Thorough documentation review
Is the operation up to standard in its documentation? Faulty documentation is one of the most common causes of nonpayment
and/or administrative investigation. If the provider's documents are disorganized and noncompliant, you will want to know this from
the outset.Contracts must also be vetted by experienced healthcare diligence counsel.
5. Length of patient stay
What is the average length of a patient's stay at a facility?Tumover rate can certainly impact the value of an equity investment in a
substance abuse treatment facility.Although most facilities plan to provide treatment for 30 to 90 days, or sometimes longer,these
stays are not guaranteed and patients might leave at any time. Facilities with high tumover rates often have other underfying
problems.
6. Lab testing
Drug testing labs are experiencing an increase in fraud investigations from health plans related to urine drug testing(UDT).This
often involves dose examination of the relationships between addiction treatment facilities, physicians, marketers and laboratories.
When looking to invest, PE firms will carefully consider the frequency,type and duration of UDT.What is the charge for UDT? Does
the provider have a business relatianship with the lab?
There is hgh risk of financial self-dealing under many lab arrangements, and if this is not addressed right away it can invite
significant litigation. Common ownership of labs is certainly possible, but it requires specific structuring to avoid kickback allegations
and p�event potential jaint liabiliry of the treatment center for labo�atory matters.
7.Compliance with zoning and licensing
Rapid growth within the addiction treatment and sober living sectors,as well as increased media attention due to some recurring
concerns expressed by frustrated communities, have led many states and municipalities to rethink their approach to substance
abuse treatment and explore new modes of regulation. For example,the topic has become a lightning rod within many Southern
California coastal communities. Arguments over residential treatment centers have recently evolved into litigation as the issue
continues to spur local regulatory challenges and incite great passion.
Before PE firrns invest in an operation,they will seek to understand if there are any zoning or licensing issues that, if left unresolved,
might result in administrative sanctions o�litigation.
8.Collecting co-pays and deductibles
Is the facility organized and timely in its collection of co-pays and deductibles?Knowing the goal is to maximize the value of your
investment, it is imperative for PE firms to discern whether the operators'collections infrastructure is sound.
9. Medical directorship arrangements
This is an increasingly scrutinized method to pay kickbacks to referral sources. Fraudulent medical directorships are easy to spot
and have become a"hotbed"risk area in very recent years. It is critical that bona fide involvement by the director can be
substantiated,which means actual recordkeeping of their clinical and administrative activities. Directors who are not immediately
recognized by staff are a clear giveaway.
10.The uncertain future of the Affordable Care Act
While financing options for these services continue to improve as a result of the Affordable Care Act(ACA)and the Mental Health
Pariry and Addiction Equity Act(MHPAEA), the lack of available behavioral health service options is creating a growing demand.
President Trump's selection of Tom Price to head the Department of Health and Human Services has created considerable
uncertainty as to the potential repeal of the ACA. For example, a proposal previously floated by Price allows for pre-existing
condition exclusions in sorne circumstances.The ultimate fate of the ACA remains to be seen, but early indications suggest that
there will, at a minimum, be significant tweaks.
This uncertainty means risk for potential private equity investors if they believe that center operators will be hesitant to expand
operations,ar hire new staff, given that there might be a dramatic reduction in the income stream (i.e. if inental health and addiction
treatment is no longer an essential health benefit).
Citizens, politicians and the media are raising the profile of the addiction treatment community, and even the slightest misstep could
result in front page news. Fraud and abuse investigations and lawsuits are becoming quite frequent. Some providers have been put
in the tenuous position of refusing patients the care they desperately need or assuming the risk of providing care that will never be
reimbursed.
In this current climate,those who wish to invest in an addiction treatment facility are now paying close attention to items above. In
order to ensure full compliance with the law, and maximize return on investment, purchasers will be diligent, asking the tough
questions, and asking them early.
,�;v :�
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Ron Lebow and Kelly M. Hagemann are members of Michelman 8 Robrnson LLP, a national law
frrm.
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STRICTLY PROHIBITED
Source URL: https://www.behavioral.neUarticle/finance/10-ways-private-equity-investors-evaluate-addiction-treatment-centers
11/8/2017 Addiction and Mental Illness:Fighting Insurance Denials
Money
They Fought a Daughter's Heroin Addiction and Their Insurer, at the
Same Time
�
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Gisselle Dubox—Getty Images/EyeEm
By Elizabeth O'Brien December 21, 2016
Don and Sally Vail of Stonington, Conn., first learned that their daughter Maddie had
an addiction problem when they received an explanation of benefits from their
insurer about her stay at a rehab center. At 19, Maddie had checked herself into the
facility with the help of a family friend, telling her parents only that she'd be away
for a while.
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11l8/2017 Addiction and Mental Illness:Fighting Insurance Denials
Turns out, Maddie was one of the roughly 27 million Americans who use illicit drugs
or misuse prescription drugs, accarding to the recent U.S. Surgeon General's report
on alcohol, drugs, and health. She started out as one of the fortunate ones: She was
among the scant 10� to receive any kind of treatment for misusing alcohol or drugs.
While she first sought help on her own, her parents joined the effort as soon as they
learned of her problem.
Their two-year struggle ended in tragedy on Jan. 23, 2016, when Maddie died of a
heroin overdose at age 21. But it wasn't before she and her parents put up a fight—
against the family's health insurance carrier, against a society that discriminates
against addicts, and against a powerful disease that in 2014 claimed the lives of a
record 28,647 Americans who fatally overdosed on some type of opioid, including
prescription pain relievers and heroin. To address this staggering toll, lawmakers
earmarked $1 billion for states to fight the opioid epidemic over two years in the 21 st
Century Cures Act, which President Obama signed into law on Dec. 13.
• Read MONEY's special report: The High Cost of Caping
The Vails' fight left them emotionally and financially drained. "You love the people
in treatment, and you'll do anything to save them," says Don.
An Uneasy Feeling
A talented artist and cook, Maddie suffered from dyslexia and hadn't enrolled in
college after graduating from high school. She'd been withdrawn and
uncommunicative, spending more time in her childhood room—her parents had let
her paint each wall a different color—in the five-bedroom house she shared with her
parents and siblings overlooking Little Narragansett Bay.
Her parents, a dentist and a former insurance broker, thought Maddie might be
taking marijuana but didn't press the issue for fear of pushing her away. "If you have
an uneasy feeling, don't ignore it," Don says.
The first facility Maddie visited was inside her insurance plan's network, and the
carrier covered her treatment in full. But that stay proved inadequate when Maddie
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11/8/2017 Addiction and Mental Illness:Fighting Insurance Denials
overdosed on heroin soon after her return. She spent just four hours in the
emergency room before being discharged. "She shouldn't have been tossed to the
curb," says Sally.
The Vails then admitted Maddie to the well-regarded, not-for-profit Caron Center in
Wernersville, Pa. The facility asked for $32,000 upfront to cover some of the first
month's treatment, a not-uncommon practice since facilities can't count on getting
money from patients' insurance, experts say. The Vails borrowed that money from a
relative.
While Caron Treatment Centers would not comment on this particular case, in a
statement president and CEO Doug Tieman said, "At Caron, we work to effectively
utilize insurance as much as possible. However, we choose to deliver the highest
standard of care to patients and their families instead of sacrificing quality or
shortening a treatment plan to accommodate insurance policies." The organization
provided more than $10 million in treatment scholarships to patients during its past
fiscal year, according to Tieman.
The Financial Blows
Maddie thrived at Caron. The facility was out-of-network for her health plan, and the
total tab came to $34,186 for a 20-day stay. Caron submitted bills to the Vails'
insurer, UnitedHealthcare, in hopes that the family cauld at least get reimbursed for
Maddie's treatment at the lower, out-of-network rate.
Instead, the claims were denied on the grounds that the Vails did not receive pre-
certification for Maddie's stay, Don says. There had been no time for paperwork: The
Vails had rushed Maddie to Caran after her overdose and swift discharge from the
hospital.
"We try to assist members in better understanding their coverage options and, if
necessary, their appeal rights," a UnitedHealthcare spokeswoman said in a
statement. "We sympathize with the Vail family for their terrible loss."
http://time.com(money/45905461insurance-claims-denial-addiction-mental-health/?xid=frommoney_soc_socialflow_rivitter_money 3/6
11/8/2017 Addiction and Mental Illness:Fighting Insurance Denials
The Vails appealed their insurer's decision and their claim was denied again, this
time based on lack of inedical necessity, according to the Vails. Maddie clearly
needed help, but she received a type of denial that is relatively common when it
comes to mental health claims: 29� of patients reported having a mental health
claim denied based on medical necessity, versus 149� of patients for purely medical
claims, according to a 2013 survey reported in JAMA Psychiatry.
What do you think of our current healthcare system?
It's wonderful,I wouldn't It's terrible and needs
change a thing! drastic reform
� 11998 Votes B
OPINARY.
Congress passed a law in 2008 aimed at preventing insurers from treating mental
health claims any differently than purely medical claims. But these types of denials
suggest that the playing field remains uneven, and the 21st Century Cures Act
contains provisions to boost enforcement of the 2008 mental health parity law.
UnitedHealthcare said the carrier followed "independent evidence-based guidelines"
in setting coverage parameters.
Fighting Back—With Help
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11/8/2017 Addiction and Mental Illness:Fighting Insurance Denials
The Vails decided to fight their denial. Don worked as an insurance broker to small
and mid-sized businesses, advising them on health benefit design. But claims are a
different specialty, and even he needed help with the appeal. "Not many people are
equipped to deal with insurance on that level—we're out of our depth," he says.
That fact isn't lost on insurance companies, which "count on attrition," he adds.
"They count on wearing you down." It's too complicated and dispiriting to appeal
their denials, Don says, so lots of people give up.
Instead, the Vails hired Katalin Goencz, an insurance appeals advocate at
MedBillsAssist in Stamford, Conn. Her efforts over the course of a year caused the
Vail's insurer to ultimately pay most of the Caron bill, Don says. Goencz also helped
the Vails recoup about 40% of the cost of Maddie's subsequent, three-month stay at
what's called a step-down facility, which provides less intensive care, according to
Don's records. In appealing mental health claims, "you need to address why the
patient is there for so long," Goencz says.
Maddie was there for so long because heroin rewired her brain circuitry Addiction
disrupts whole sections of the brain, reducing executive functioning while increasing
tolerance to the harmful substance, according to the U.S. Surgeon General's report.
There's evidence that these changes in the brain persist long after substance use
stops.
A Cruel Irony
In the end, Maddie couldn't stop. "She wanted to quit, but it had her by the scruff of
the neck," Don says. She lived for three weeks after her ultimately fatal overdose last
ianuary, spending part of that time on life support.
UnitedHealthcare covered all of Maddie's expensive, end-of-life care, which was
more than double her total treatment bill. "The cost of dying was much more
expensive than the cost of treatment," Don says.
The emotional cost of Maddie's struggle cannot be so neatly calculated. Don and
Sally included Maddie's true cause of death in her obituary. Addiction carries an
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11/8/2017 Addiction and Mental Illness:Fighting Insurance Denials
unfair stigma, they wrote. It is clearly an illness, yet society still makes an artificial
distinction between physical and mental health. "We are losing the war against
drugs," Don says. "I have enormous empathy for anyone battling this disease."
htlp:lltime.coMmoney/4590546linsurance�laims-denial-addiction-mental-health!?xid=frommoney_soc_sxialflow_twirier_money 6/6
11I8/2017 Addiction TreaUnent Attack by Payers Grows-Florida Heafthcare Law Firm
�. (561) 455-7700
Blog
Addiction Treatment Attack by Payers Grows
by admin (http.//www.floridahea/thcarelawfrrm.com/author/admrn/) on Aprrl 13, 2016 1 commenr
(h ttp.//www.floridaheal thcarelawfrrm.com/addiction-treatment-attack-by-payers-grows/#comments)
�. , By: Jeff Cohen
Addiction treatment providers continue to react to an assault by payers to
^Py • "
- run them "out of town." The first round of attacks (in the Fall of 2014)
'3:` focused on the practice of copay and deductible write offs
(http://floridahealthcarelawfirmblog.com/2014/06/18/collect-now-or-pay-
later/). The phrase cooked up by lawyers for Cigna, "fee forgiveness,"
wound its way into the courts system in Texas in a case (Cigna v. Humble Surgical Hospital, Civ.
Action No. 4:13-CV-3291, U.S. Dist. Ct., S.D. Tex., Houston Division) against a surgery center,
where Cigna argued that the practice of a physician owned hospital in waiving "patient
responsibility" relieved the insurer from paying ANYTHING for services needed by patients and
provided to them. Though the case did not involve addiction treatment providers, it gave
addiction treatment lawyers a look into what was going ta come. The same argument made in
the Texas case was the initial attack by Cigna in a broad attack of the addiction treatment
industry, especially in Florida (http://floridahealthcarelawfirmblog.com/2015/10/27/cigna-points-
to-tox-costs-and-fraud-in-quitting-florida-obamacare/).
As addiction treatment providers fielded Cigna's "fee forgiveness" attack in the context of
"audits," providers held firm to the belief that justice would prevail and that they would soon
restore a growing need for cash flow. "If we �ust show them that we're doing the right thing,"
providers thought, "surely they will loosen up the purse strings." After all, this was a patient
population in terrific need of help, with certain [untested] protection by federal law (the Mental
Health Parity Act).
After, in many cases, more than a year, the basis of the audit expanded to include claims that
addiction treatment providers and tox labs lack the medical necessity
(http://floridahealthcarelawfirmblog.com/2015/07/15/medical-necessity-and-payment-who-
decides/) to provide the care at all (AFTER care was authorized and provided). To illustrate the
bizarreness of the payer attack, a couple payers required the tox labs to provide medical
records justifying the treatment provided. Now, mind you, labs have no legal basis to obtain
http:/Jwww.floridahealthcarela�rm.com/addiction-treatment-attack-by-payers-grows/ 1/9
11/8/2017 Addiction Treatrnent Attack by Payers Grows-Florida Heatthcare Law Firm
those records. Moreover, patient privacy laws forbid them obtaining those records. Still, the
payers developed expanding bases for their audits
(http://floridahealthcarelawfirmblog.com/2016/Ol/04/audit-decisions-leading-to-absurd-
outcomes/), while treatment providers' resolve to respond to the audit on their own (or with
counsel, but instructed not to file suit} persisted, to the point that cash reserves dried up and
their leverage to withstand even the time required by litigation (now an inevitability) weakened.
So where are providers now? Some have sold (presumably at drastically reduced prices from
when the buying spree started in early 2014). Some have closed. There is now a trend to fewer,
larger options for patients. And the payers? Their "deal of the day is typically a "wash"
proposal. "If you release us [insurance company] from claims for payment for services you
[treatment pravider] rendered, we'll release you from claims that you basically stole money from
us for years." This sort of unbelievable approach can only occur when the "audit attack" has
succeeded in substantially weaken�ng provider and also in cases where the treatment provider is
unsure of its ability to withstand a countersuit for wrongdoing (e.g. improperly paying for
patient health insurance premiums).
But it's worse than all this In fact, behind the scenes lay scads of unfiled lawsuits against
addiction treatment provider billing and collection companies that sometimes made the
situation far worse by misbilling, altering records and, in some instances, not billing at all. The
next wave of lawsuits should be by providers against BOTH payers and billing and collection
companies whose misdeeds causes many in the industry to flop.
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11/8/2017 Anthem is cutting out-of-network health coverage in a'bait and switch,'lawsuit says-LA Times
Anthem is cutting out-of-network health coverage
in a 'bait and switch,' lawsuit says
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An exter�or view of the Anthem Health Insurance headquarters in Indianapolis in February 2015. (Aaron P. Bernstein J Getty Images}
B�-Mclody Petcrscn
NOVEh4BER 1 2016 3'S5 PM
n the first day of�bamacare open enrollment, a consumer group sued Anthem Blue Cross for
attempting to automatically renew policies that no longer cover out-of-network costs for hundreds of
thousands of Californians.
A lawyer for Consumer Watchdog said Tuesday that Anthem was"railroading existing members into bare-
bones plans"without properly disclosing the change to them in recent renewal letters.
On top of the loss of out-of-network coverage, many of the customers also face big premium hikes.
d in the lawsuit,would pay 33%more next year for
:ording to his renewal letter.
htip:!lwww.latimes.com/business/la-fi-anthem-obamacare-lawsuit-201611U1-story.html 1/3
11/8/2017 Anthem is cutting out-of-network health coverage in a'bait and switch,'lawsuit says-LA Times
Consumer Watchdog's lawsuit says Anthem engaged in a"bait-and-switch"scheme.The group's attorneys said
Anthem should have sent the customers a�discontinuation"notice to properly inform them that they were
losing their out-of-network coverage. Instead the insurer sent notices saying the policies would automatically
renew if the member takes no action hy Dec. i5.
"We believe that Anthem is trying to take advantage of consumers during the open enrollment period,"said
Travis Corby, a lawyer representing the consumer group."They are selling 2oi�Affordable Care Act health
plans as being the same as their 2oi6 products."
Anthem customers are not the only ones facing big premium hikes for 2oi�.
Statewide average premiums on the online marketplace known as Covered California will rise an average of
i3z%in 2oi�.That is roughly half as much as the 25%rise for a mid-level plan on the federally run online
marketplace used by 39 other states.
Darrel Ng, an Anthem spokesman,said his company had changed the plans'design"to mitigate rate increases
and keep monthly premiums affordable."
He said Anthem helieves that the lawsuit"is without merit."
"The benefit package being offered in 2oi�was approved by the Department of Managed Health Care and
Covered California and is consistent with federal guidance,"Ng said. "Affected members have been mailed
written notice of this change so they can make an informed decision on their healthcare needs during the apen
enrollment period for the coming year."
The change,effective Jan. i,affeets policyholders who had signed up for Anthem's preferred provider
organization,or PPO.
In most areas in the state,Anthem is changing its PPO into a so-called exclusive provider organization,or EPO
—which means that it will no longer pay even a portion of bills from doctors or hospitals not in its network.
Leslie Burkes of Los Angeles,another Anthem customer,said Tuesday that she had picked Anthem's PPO
because a family member has a serious medical condition and sees specialists outside the network.
"I'm trapped in a double blind,"she said. "We will have no coverage to doctors we need."
The lawsuit,filed in Los Angeles County Superior Court, asks the judge to force Anthem to renew the plans as
PPOs for aoi�. It also seeks monetary damages for customers who are harmed and payment of the consumer
group's attorney fees.
Open enrollment, a period when consumers can sign up for or change their health insurance coverage for neact
year,began Tuesday on Covered California.To get coverage that begins Jan. i,people must sign up by Dec. i5.
For insurance with later start dates,people can sign up through Jan. 3i.
http:/lwww.latimes.com/businesslla-fi-anthem-0bamacare-lawsuit-20161101-story.himl 2/3
11/8/2d17 Anthem is cutting out-of-network health coverage in a'bait and switch,'lawsuit says-LA Times
Jan Spencley,executive director of San Diegans for Healthcare Coverage,a nonprofit that offers free enrollment
counseling,said her phone has been ringing as beneficiaries open notices from their current carriers showing
how much their premiums will climb ne�ct year.
Rate increases are softened significantly for most enrollees because they receive taxpayer-supported subsidies
based on their income.
But for many people,the subsidies are rising more slawly than their premiums,Spencley said.That may mean a
large rate hike unless they are willing to switch to a less expensive policy.
"Some of the calls I get from people are just heartbreaking," Spencley said, "because they're one flat tire or dead
car battery away from not being able to pay for health insurance anymore."
Paul Sisson at the San Diego Union-Tribune contributed to this report.
melody.petersen@latimes.com
Follow @melodypetersen on Twitter
A�SO
Column: Inside those big Obamacare rate increases
Obamacare open enrollment on Covered California starts today
Column: This couple put $�,000 on gift cards. Then the money disappeared
UPDATES:
3�55 P•m.:This article was updated with additional comments from Darrel Ng and Jan Spencley and with
background information about Covered California.
This article was originally published at i2:45 p.m.
Copyright O 2017, Los Angeles Times
This article is related to: Healthcare Policies and Laws, Affordable Care Act
http:l/www.latimes.com/business/la-fi-anthem-obamacare-lawsuit-20161101-siory.html 3/3
� Bhvirl
e a oa
� Healthcare
,r EXECUTIVE
COPYRIGHTED MATERIAL, DO NQT REPRQDUCE
Betty Ford adds in-network options
By Julie Miller, Editor in Chief
The Betty Ford West Los Angeles outpatient center now has in-network status among 14 managed care health plans, such as
Anthem Blue Cross and Beacon Health Options. IYs a move meant ta increase access to services for those who use insurance
benefit5 for treatment, according to Jim Steinhagen,vice president and administrator of the Betty Ford Center.
"It allows us to reach more people than if we had a private-pay model only,"Steinhagen tells Behavioral Healfhcare.
Betty Ford has traditionally been a private-pay model, but currently 50%of its residential patients are leveraging health insurance
benefits to finance their care. He says with the West Los Angeles outpatient center moving to in-network status,the number could
reach as high as 80%.
Working with payers
The administrative burden on treatment centers can be significant, so iYs in the best interest of the provider to be prepa�ed for
commercial payer contracting and the required data gathering,for example.Steinhagen says Betty Ford Center has met with payer
groups to find ways to streamline the processes for patients when they use their insurance.
"Chalk up the relationship with payers and providers as a responsibility in which both have to develop a business partnership,"he
says."And with that we have to put in place the practices that allow that to be effective and efficient to meet the needs of our
stakeholders and policy holders."
California has been scrutinizing treatment centers in recent months, even filing law suits for what it considers questionable practices
in some cases. Likewise,the insurers have created their own special investigation units, looking to identify fraudulent practices
among treatment centers that fail to follow regulations or agreed-upon contractual terms.
Steinhagen says iYs unfortunate that there are behavioral health organizations that take liberties with their business practices,
especially considering that most treatment centers are working to do the right thing. The result is that the whole industry is ultimately
painted with a broad brush before the public, as if no one can be trusted, even though thaYs simply not true.
"We welcome the regulatory oversight because we think iYs been lacking in the field,"he says. "And the Betty Ford Center has
always held itself to standards above regulatory compliance and holds itself accountable for best practices and accountability for
outcomes."
In addition to Joint Commission accreditation,state and federal authorities should hold the entire industry accountable to produce
outcomes,just as they do for any health system in the United States, he says.
11/8/2017 Cigna Loses Texas Case Against Humble Surgical Hospital,Hit with$16 Mil Judgment-Florida Orthopedic Community
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Cigna Loses Texas Case Against Humble Surgical Hospital, Hit with S16 Mil
Juagment
Thursday,July 14,2016 (0 Comments)
Posted by: Diane Berg
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By:
Cigna recently sued a Texas hospital, Humble SurgicaL for overpayments. Humble Surgical is an
(OON) provider. Cigna alleged fraudulent billing practices and that the hospitaL engaged in a scheme to
defraud payors by waiving members'financial responsibility.
While the suit involved many other allegations our article focuses on the arguments Cigna made on failure to
collect co-payments, ,and co-insurance and fee-forgiving practices by the hospital. There were
several other issues raised that are important to various practices that Cigna has engaged in with out-of-network
providers. Cigna has consistently audited South Florida providers alleging failure to collect
or fee-Forgiveness,then informing the provider that it was not entitled to any reimbursement
because these practices fel�within the exclusionary language of the member's plan.
The suit braught under federal law, ERISA and also Texas common law seeking reimbursement for all
overpayments. Cigna was seeking equitable relieF including imposing a lien or constructive trust on fees paid to
the hospital.
Humble SurgicaL counter sued against Cigna for nonpayment of patients'c�airns, underpayment of certain claims
and delayed payment of all claims in violation of ERISA, including other causes of action. Here's what happened:
The facts show that from 2010-2014 the hospital's claim's"continue to langui5h in Cigna's SIU (special
investigative unit}" and for the most part remained unpaid. Cigna asserts that the daims were not paid because it
either never received the information that it requested or noticed that the member had not fully paid his/her co-
payments or co-insurance.
Cigna asserted that when it received notice of additional payments from the patient/member it"re-adjudicated"
Humble Surgical claims using what it referred to as a "proportionate share analysis." In other words, claims were
processed proportionately to what the provider collected from the patient.
Cigna interpreted the language in its self-funded plans to mean that if a member owed a deductible, co-pay or co-
insurance, and the provider did not collect it then Cigna would either not pay the daim or pay only a portion
based on its"proportionate share analysis".
http:llwww.floridaorthopediccommuniry.coMnews1298546/Cigna-Loses-Texas-Case-Against-Humble-Surgical-Hospital-Hit-with-1�'rMil-Judgment.htm 1!3
11l8/2017 Cigna Loses Texas Case Against Humble Surgical Hospital,Hit with$16 Mil Judgment-Florida Orthopedic Community
Cigna has also consistently said that if the provider did not collect the patient's financial obligation,or waived a
portion of the bill,Cigna believes it was excused from making full payment under the terms of the plan.
The Court rejected Cigna's position. Reviewing the plan language the Court found that a patient/Cigna member
would not understand that his/her coverage is conditioned on whether the provider collects upfront the co-pay
and co insurance before Cigna pays. Likewise The Court found that the average patient/Cigna member would not
interpret the plan language to mean that Cigna would pay their bill in proportion to the payments that a member
made to the provider. Instead the Court found that the average patient/Cigna member would expect Cigna to pay
its full share in accordance with the terms of the various plans, irrespective of what a plan patient/Cigna member
paid or was capable of paying. Cigna's interpretation of its own plan Language was rejected by the Court
On the fee-forgiving allegations,the Court found that Humble Surgical informed some patients/members that
pursuant to its Charge master and prompt pay programs it would not bill them further. Humble did not waive any
fees that fell below the negotiated "allowables". The Court found that to the extent Humble forgave fees based
on sums charged that exceed the alLowable,that practice was not considered fee-forgiving.
Cigna's own SIU investigatar testified that if a provider"attempts"to collect the co-payment,co-insurance and/or
deductible the fact that portion was nat collected does not constitute fee-forgiveness.
This is a very strong opinion against Cigna's practice to absolve itself of its responsibility to pay the benefits owed
to providers(as an assignee of the benefit)which denied the patient/Cigna member the benefit of the bargain
under their plan.An out-of-network provider does not have plan documents and relies on Cigna to provide
accurate information and to pay benefits pursuant ta the various plans.
The Court ruled that Cigna did not have the discretion under ERISA to"absolve itself of its responsibility to process
and pay Humble Surgical claims because it assumed that it could demand upfront payments of co-pays"and then
pay some claims based on a proportionate share anaLysis. Cigna's conduct lacked good faith and prejudiced the
provider under these circumstances.
Cigna recovered nothing and was required to pay approximately$16,000,000 in damages,penalties,attorney's
fees in addition pre-judgment and post-judgment interest and court costs.
This ruling is very helpful in giving guidance to some of the problems South Florida providers have been having
with Cigna's denial of payments based on collection of patient responsibility and other practices for nonpayment
based on a host of theories that seem to lack good faith and have definitely
Source:The Florida Healthcare �aw Firm
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11/8/2017 Cigna Sued By Clinic Over Out-Of-Network Coverage-Law360
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Cigna Sued By Clinic Over Out-Of-Network
Coverage
By Linda Chiem
Law360, New York(April 12,2013, 2:26 PM EDT)-- New Jersey outpatient surgery provider NJSR Surgical
Center LLC launched a federal suit Wednesday alleging a Cigna Cora. subsidiary wrongfully refused to cover
out-of-network services it provided to patients covered by the insurer's plans.
NJSR claims it called Connecticut General Life Insurance Co. representatives to confirm that the patients had
out-of-network benefits for facility outpatient services under their respective insurance plans and each time were
told that the patients had such coverage, only for the insurer to subsequently deny the claims NJSR later
submitted for services rendered, according to the complaint.
NJSR claims it is a Medicare-certified single-operating-room outpatient surgical center that is exetnpt from
licensure by the New Jersey Department of Health and Senior Services, but Connecticut General denied its
claims on"arbitrary and capricious" grounds that it does not cover services provided by unlicensed faciliries or
providers, according to the complaint.
"Specifically, in each instance, the defendants' denials were based solely on their false and en-oneous assertion
that the `services rendered by unlicensed providers or entities are not covered under the benefit plans
administered by and or underwritten by' the defendants, or on grounds substantially identical,"the complaint
said.
NJSR says such denial of coverage violates state law that exempts entirely physician-owned single-operating-
room surgical centers such as NJSR's from having to be licensed,according to the complaint.
NJSR said it provided services such as spine procedures or pain management injections on five unnamed
patients insured by Connecticut General. After purportedly getting confirmation that each of those patients were
covered for out-of-network services,NJSR claims it also was told it would not have to obtain or provide proof of
preauthorization and precertification,according to the complaint.
"Plaintiff reasonably expected and relied upon what it believed to be the defendant's honest representations
when it preauthorized, precertified or otherwise advised the plaintiff it had approval to render the subject
services and/or that coverage was afforded,"the coinplaint says. "Plaintiff's reliance on these representations
htlps:Uwww.law360.comlarticles1432326Jcigna-sued-by-clinic-0ver-out-0f-network-coverage 2/6
11/8/2017 Cigna Sued By Clinic Over Out-Of-Network Coverage-Law360
was to its substantial detriment and as a result plaintiff suffered significant money damages."
NJSR asserts claims of breach of the insurance plans under the Employment Retirement Income Security Act,
promissory estoppel and negligent misrepresentation on the non-ERISA plans, compensatory damages,
reimbursement and compensation for any and all benefits it should have received as a result of the insurer's
failure to provide coverage,accordin�to the complaint.
Representatives for Cigna and Connecticut General were not immediately available for comment Friday.
NJSR Surgical Center is represented by Eric D. Katz of Ma�ie Slatei- Kat� & Freeman LLC.
Counsel information for defendant was not immediately available.
The case is NJSR Surgical Center LLC v. Connecticut General Life Insurance Co. et al., case number 2:I 3-cv-
02264, in the U.S. District Court for the District of New Jersey.
--Editing by Lindsay Naylor.
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https:!lwww.law360.comlarticles/432326/cigna-sued-by-clinic-0ver-out-of-network-coverage 3/6
11/8/2017 Addiction TreaVnent Attack by Payers Grows-Florida Heatthcare Law Firm
�. (561) 455-7700
B�Og
Addiction Treatment Attack by Payers Grows
by admrn (http.//www.floridahealthcarelawfirm.com/author/admin/) on Apnl 13, 2016 1 comment
(h ttp.//www.fl orrdahealthcarelawfirm.com/addretron-treatment-attack-by-payers-grows/#comments)
�- , By: Jeff Cohen
:�
Addiction treatment providers continue to react to an assault by payers to
� ` run them "out of town." The first round of attacks (in the Fall of 2014)
`�:� focused on the practice of copay and deductible write offs
(http://floridahealthcarelawfirmblog.com/2014/06/18/collect-now-or-pay-
later/). The phrase cooked up by lawyers for Cigna, "fee forgiveness,"
wound its way into the courts system in Texas in a case (Cigna v. Humble Surgical Hospital, Civ.
Action No. 4:13-CV-3291, U.S. Dist. Ct., S.D. Tex., Houston Division) against a surgery center,
where C�gna argued that the practice of a physician owned hospital in waiving "patient
responsibility" relieved the insurer from paying ANYTHING for services needed by patients and
provided to them. Though the case did not involve addiction treatment providers, it gave
addiction treatment lawyers a look into what was going to come. The same argument made in
the Texas case was the initial attack by Cigna in a broad attack of the addiction treatment
industry, especially in Florida (http://floridahealthcarelawfirmblog.com/2�15/10/27/cigna-points-
to-tox-costs-and-fraud-in-quitting-florida-obamacare/).
As addiction treatment providers fielded Cigna's "fee forgiveness" attack in the context of
"audits," providers held firm to the belief that justice would prevail and that they would soon
restore a growing need for cash flow. "If we �ust show them that we're doing the right thing,"
providers thought, "surely they will loosen up the purse strings." After all, this was a patient
population in terrific need of help, with certain [untested] protection by federal law (the Mental
Health Parity Act).
After, in many cases, more than a year, the basis of the audit expanded to include claims that
addiction treatment providers and tox labs lack the medical necessity
(http://floridahealthcarelawfirmblog.com/2015/07/15/medical-necessity-and-payment-who-
decides/} to provide the care at all (AFTER care was authorized and prov�ded). To illustrate the
bizarreness of the payer attack, a couple payers required the tox labs to provide medical
records justifying the treatment provided. Now, mind you, labs have no legal basis to obtain
htlp:Hwww.floridahealthcarela�rm.comladdiction-treatment-attack-by-payers�rows! 1!9
11l8/2017 Addiction Treatment Attack by Payers Grows-Florida Healthcare Law Firm
those records. Moreover, patient privacy laws forbid them obtaining those records. Still, the
payers developed expanding bases for their audits
(http://floridahealthcarelawfirmblog.com/2016/Ol/04/audit-decisions-leading-to-absurd-
outcomes/), while treatment providers' resolve to respond to the audit on their own (or with
counsel, but instructed not to file suit) persisted, to the point that cash reserves dried up and
their leverage to withstand even the time required by litigation (now an inevitability) weakened.
So where are providers now? Some have sold (presumably at drastically reduced prices from
when the buying spree started in early 2014). Some have closed. There is now a trend to fewer,
larger options for patients. And the payers? Their "deal of the day is typically a "wash"
proposal. "If you release us [insurance company] from claims for payment for services you
[treatment provider] rendered, we'll release you from claims that you basically stole money from
us for years." This sort of unbelievable approach can only occur when the "audit attack" has
succeeded in substantially weakening provider and also in cases where the treatment provider is
unsure of its ability to withstand a countersuit for wrongdoing (e.g. improperly paying for
patient health insurance premiums).
But it's worse than all this. In fact, behind the scenes lay scads of unfiled lawsuits against
addiction treatment provider billing and collection companies that sometimes made the
situation far worse by misbilling, altering records and, in some instances, not billing at all. The
next wave of lawsuits should be by providers against BOTH payers and billing and collection
companies whose misdeeds causes many in the industry to flop.
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Related
Houston Court Brings the Cigna Loses Texas Case Tough Trend for Payers =
Heat in Payer Provider Case Against Humble Surgical Fairness for Providers
(http://www.floridahealthcar... Hosp�tal, Hit with $16 Mil (http://www.flaridaheaithcar...
court-brings-the-heat-in- Judgment trend-for-payers-fairness-for-
payer-provider-case/) (http://www.floridahealthcar... providers/)
M.��� I �'>. >U �: loses-texas-case-aga�nst- P�1�u c � I.. ,�;)I',
In "Jctt-c�y I . C.�hcn ' humble-surgical-hospital-hit- n "Cc� rp ��3��;:c �'I<�ns"
with-l6-mil-judgment/)
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http:/lwww.floridahealthcarelawfirm.com/addiction-treatment-attack-by-payers-grows/ 2/9
11l8/2017 Cost of Out-of-Nelwork Doctors 8�Hospitals�Aetna
�etna
(/index.html)
Cost oFOut- oF- Network Doctors &
Hos itals
p
Aetna Individuals& Families Using Your Aetna Benefits Network&Out-of-
Network Care Cost of Out-of-Network Doctors& Hospitals
People are paying more of their health costs these days. It's no
wonder there is a lot of interest in keeping these costs down.
A smart way to do this is to stay in network. We negotiate rates
with providers to help you save money. We refer to these
providers {such as doctors, hospitals, and surgical centers) as
being"in our network."
There may be times when you decide to visit a doctor or
hospital not in the Aetna network.Some plans cover out-of-
network care only in an emergency — otherwise, you are
responsible for the full cost. For plans that do cover out-of-
network care,you'll usually pay more than if you stayed in the
network.
See how much less it
ca n cos t to s tay i n
networl<
hrips:!lwww.aetna.comfind ividuals-fami6es/u si�g-you r-aetna-ben efits/nelwo�k-out-of-nelwork-care/cost-of-out-of-network-doctors-hospitals.hUn I 1!7
11/8/2017 Cost of Out-of-Network Doctors 8�Hospitals�Aetna
Some of our health plans pay for out-of-network services. Other
plans do not{except in an emergency). The example below is
for insurance plans that pay for out-of-network services.
These plans pay for out-of-network services based on an
"allowed" amount. Most Aetna health insurance plans
dete�mine the allowed amount based on what Medicare would
pay, or on a "reasonable" amount.Your plan documents will tell
you how your plan determines the allowed amount.
This example shows you how out-of-pocket costs are calculated
if you stay in network versus going out of network for the same
ca re.
Let's look at an $825 charge from a doctor's visit.
In network, your cost for this visit is $140. Out of network, it's
$b45 — so you pay an extra $505. Here's why:
Cast In network Out of netwark
breakdown
The doctor bill is The doctor bill is $825.The
$825. For doctors in out-of-network"allowed"
our network, we've amount for this type of
contracted a price of visit is$400.The doctor
Your $S00 for this type of can look to you to pay the
visit. This is all the rest—in this case $425.
docto�'s
doctor can collect. So That amount is your
bill
you get a $325 responsibility and is called
discount at the start. balance billing.
Your cost so far: $0 Your cost so far: $425
https:/Iwww.aelna.comfindividuals-famiNeslu sing-your-aetna-benefits/network-out-of-network-care/cost-of-out-of-netwo�lc-doctors-hospitals.html 2J7
11/8/2017 Cost of Out-of-Network Doctors 8�Hospitals�Aetna
You pay your You pay your deductible for
deductible for out-of-network care, which
network care, which is$100.
is $5Q.
Deductibles for out-of-
$500-$50 leaves network care are usually
Paying
$450. higher than for network
your
care.
deductible
Your cost so far: $50
($0+$50} $400- $100 leaves$300.
Your cost so far: $525
($425 +$100)
Now that you've met Now that you've met your
yaur deductible, your deducfible,your plan pays
plan pays 80%of the 60�'0 of the remaining
rest. In this case, allowed amount. In this
that's $450.Your plan case,that's $300.Your plan
pays $360(80%of pays$180(60�of$300}.
$450).
You pay the other 40%, or
You pay the other $1�0. We call this your
What yaur
20°�, or$90. We cal) coinsurance.
plan pays
this your coinsurance.
We pay a smaller
percentage for out-of-
network care than for
network care. That means
your coinsurance (the
percentage you pay) is
higher.
Your total $140{$0+$SO+$90) $645 ($425 +$100+ $120}
cost
https:/lwww.aetna.comfindivid ua Is-famiNeslusing-you r-aetna-benefitslnetworlc-out-of-network-care/cost-of-out-0f-network�octors-hospitals.hUnl 3/7
1118/2017 Cost of Out-of-Network Doctors 8 Hospitals�Aetna
Howdoes oin out
g g
oFnetvvorl< aFFect
out- oF- ocl<et
p
limits?
An out-of-network doctor can charge any amount he or she
wants. He or she has nat agreed to a contract price for the
covered service. In this case,the doctor is charging$825. Not all
of that money counts toward your out-of-pocket limit.
• Your out-of-network deductible �$100� counts toward your
out-of-pocket limit.
• Your coinsurance ($120) counts toward your out-of-pocket
limit.
� The extra amount the doctor can bill ($425)does not count
toward your out-of-pocket limit.
H ow to lowe r o u r
Y
health costs
Stay in the netwark.Ask your doctor to refer you to a specialist,
hospital or surgical center that accepts your plan. Or log in to
your secure member account to search our provider directory.
Log in to search the directory(/individuals-families/find-a-
doctor.html)
Find out what it will cost before you go.Ask your out-of-
network providers what the charge will be. For network care,
your secure member account may be able to provide cost
estimates. Or talk with the network provider's office about what
you may be asked to pay.
htlps://www.aelna.cornfind ividual s-families/us ing-your-aetna-ben efitslnetwork-outof-network-care/cost-of-out-of-nelwork-doctors-hospita Is.html 4/7
11l8/2017 Cost of Out-of-Network Doctors 8�Hospitals�Aetna
Does your member ID card have "NAP"on the front?That
stands for National Advantage'"' Program. And it has benefits
for you:
• You can get discounts for out-of-netwark care from NAP
providers. Your out-of-pocket costs may be less than your
costs for seeing other providers who are out of network.
• If you get care from an NAP provider,you won't get a
balance bill_You will pay your usual cost sharing for out-of-
network care.
Check your most recent ID card to see whether your plan has
the p�ogram. Some plans that used to have NAP no(onger
have it.
Do ou have lar e
Y g
out- oF- networl<
medical bills?
Did you go to an out-of-network doctor or hospital, and then
get surprised with a very large bill?Sometimes a provider will
allow you to pay a reduced fee. Sometimes they will work out a
payment plan for you. You may be able to work this out with
the provider by yourself. You also can get professional support.
You can get support if you:
• Used your out-of-network benefits
• Did not receive a discount through NAP
• Have more than$1,000 in out-of-pocket costs for a single
health care event, aRer paying your deductible, copay or
coinsurance
A claims negotiating company,the Karis Group, helps people
with outstanding medical bills.
htlps:/1www.aetna.comfindividual s-famiies/u sing-you r-aetna-benefitslnetwork-oulof-network-care/cost-of-out-of-network�octors-hospitals.html 5/7
11l812017 Cost of Out-of-Network Doctors 8�Hospitals�Aetna
For an affordable fee,the Karis Group will negotiate with the
provider for you.They may be able to �educe the amount you
owe or arrange a payment plan. They also may be able to
qualify you for programs to resolve your outstanding balance_
As an Aetna member, you will receive a large discount for these
services.The Karis Group can't guarantee that it will be
successful. But they will refund your fee if they don't get any
results.
Learn more about the Karis Group
(http://medicalbillmediation.com/index-2}
We have arranged for discounted services from the Karis Group,
but are not part of any agreements between Aetna members
and the Karis Group. We honor your privacy. We do not share
our member information with the Karis Group.
Health benefits and health insurance plans are offered and/or underwritten by Aetna
Health Inc.,Aetna Health of California lnc.,Aetna Health Insurance Company of New
York,Aetna Health Insurance Company and/or Aetna Life Insurance Company
(Aetna�. In Florida,by Aetna Health Inc.and/or Aetna Life Insurence Company. In
Maryland,by Aetna Health Inc.,151 Farmington Avenue,Hartford,CT 06156. Each
insurer has sole financial responsibility for its own products.
IN CT,THIS PLAN IS ISSUED ON AN INDIVIDUAL BASIS AND IS REGULATED AS AN
INDIVIDUAL HEALTH INSURANCE PLAN.
This material is for information o�ly and is not an ofFer or invitation to contract.
Plans may be subject to medical underwriting or other restrictions. Rates and
benefits vary by location. Health benefits and health insurance plans contain
exclusions and limitations. Providers are independent contractors and are not agents
of Aetna. Provider participation may change without notice. Aetna does not provide
care or guarantee access to health services. Information is believed to be accurate as
of the production date;however,it is subject to change.
Policy forms issued in OK include: HMO OK COC-5 09/07,HMO/OK GA-3 11/Ol,HMO
OK POS RIDER O8/07,GR-23 and/or GR-29/GR-29N.
News Bertolini at Techonomy 17: future of health care is hyper-local
(http:��r1eWS.ae ��r��etna.com/2017/11/bertolini-at-techonomy-l7-future-
f-health-ca re-is-hyper-loca I/)
https://www.aetna.cornfind ivid ua Is-FamiNes/using-your-aetna-benefits/networlc-out-0f-network-care/cost-of-out-0f-network<loctors-hospitals.hUn I 6/7
11/8/2017 Local UnitedHealthcare insurance members could have to pay more to see doctor�WDTN
��
Local UnitedHealthcare insurance mernbers could have to pay more
to see doctor
By staffreoorts fhttp://wdtn.com/author/staffreports/�
Published:April 3,2017, 5:40 pm � Updated:April 3,2017, 5:42 pm
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United Healthcare Center grand opening Wednesday,Sept. 14,2011 on Fulton Street in Hempstead,N.Y.(Bill Kostroun/AP Images
for UnitedHealthcare)
DAYTON, Ohio(WQTN}-Thousands of people in the Miami Valley could soon have to pay more to see their doctor at a
Premier Health facility.
One of the largest group health insurance companies, UnitedHealthcare{UHC)and Premier Health network have weeks
to reach an agreement before UnitedHealthcare insurance holders will have to pay out-of-network fees.
Their current contrad is set to expire April 29th.
UHC has been notifying its members of whaYs at stake while negotiations are in the works.
The problem between the two companies is transparency,according to UHC Executive Director Caitlin Clipp.
Clipp says UHC's insurance plan design showcases price transparency by ranking area hospitals and comparing costs
for services.
http:/Iwdtn.com/2017/04/03/local-unitedhealthcare-insurance-members-could-have-to-pay-more-to-see�octor/ 1/3
11/8/2017 Local UnitedHeatthcare insurance members could have to pay more to see doctor�WDTN
"Premier Health Network wants its hospitals to be considered Tier 1, but won't commit to meeting the cost efficiency
requirements to be Tier 1. Listing Premier Health facilities as Tier 1 when they do not meet the cost efficiency
requirements would be inappropriate and unfair to our employers and members,"said Clipp.
2 NEWS reached out to Premier Health for comment and received the following statement via e-mail:
"Premier Health is reimbursed for approximately 500 kinds of diagnosis-related groups. For some kinds of procedures,
we receive more reimbursement than other health systems and hospitals do;for other procedures,we are reimbursed
considerably less. For UnitedHealthcare to call attention to any one partitular example is a gross distortion of the facts.
In addition to distorting the pricing issue, UHC has also grassly distorted the issue of"tiering."The issue is not about
transparency. Indeed, UHC has provided for transparency through their web site for many years and continues to do
so. Premier does not object to such transparency tools.
The issue is about only one of UHC's many products. The praduct provides incentives for enrollees to utilize non-
Premier facilities and providers. Premier is not willing to offer UHC the significant discount5 currently in place for a
product which intentionally directs patient away from Premier facilities and providers. UHC has indicated iha[the
number of eniollees in ihis vroduct are very few in the Dayton market.
Premier's position is that we do not wish to participate in such a product. Premier is more than willing to continue to
participate in other UHC products which constitute the vast majority of UHC's 70,000 clients.
It is regrettable that UHC has taken the position to deprive access to Premier providers for the vast majority of their
70,d00 enrollees to attempt to force our participation in this very small product"
Dayton-area employers are also in jeopardy of seeing an increase in health insurance costs, according to Scott
McGohan, CEO of McGohan Brabender,an insurance broker company.
"It's really not Premiers money to negotiate and iYs not UnitedHealthcare's, iYs employers money. It's the resources in
our community,they are the ones paying the true cost of healthcare.and they care about it.Their employees are
impacted by those costs,whether it be out of pocket cost,what they pay in contributions.The employers wants to
mitigate costs and be concerned about the cost of healthcare then they want to know what healthcare costs.As we
unpack that and look at one system to the next system,from one carrier to another ca�rier,they make really good
decisions.When transparency is allowed to enter the market"said McGohan.
Keep checking WDTN.com(http://wdtn.com/}for the latest news,weather and sports.To get alerts for breaking
news,grab the FREE WDTN News App for iPhone(htt�s://itunes.aR,�le.com/aRp/id488539385)or An r i
(https://plaKgoogle.com/store/apps/details?id=com.linmedia.newstouch.wdtnl.You can also sign up for email
alerts here(htto://wdtn.com/about-us/email-alerts-the-latest-news-and-weather-delivered-to-your-inbox/1.
Don't miss another post on Facebook(https://facebook.com/wdtn2)or Twitter fhttps://twitter.com/wdtn)for all the
latest breaking news
http://wdtn.com/2Q17/04/03/local-unitedhealthcare-insurance-members-could-have-to-pay-more-to-see-doctor/ 2/3
11/8/2017 Out of Network VOB Process Hits a Speedbump-Florida Healthcare Law Firtn
�. (561) 455-7700
Blog
Out of Network VOB Process Hits a Speedbump
by admm (http.//www.floridahea/thcarelawfrrm.com/author/admin/) on June 15, 2016 No comments
(h ttp.//www.floridaheal thcarelawfirm.com/out-of-network-vob-process-hits-a-speedbump/#respond)
��� � � By: Urgent Med�cal Billing, Guest Contributor
J .�� ' '1�
, .�► � .
� The verification process is an important step
. `
� 9 g• / P-g g- /)
(http://www.ur entmedicalbillin com first-ste eneratin revenue �n the
� billing cycle. When done correctly the patient's "VOB" will allow a healthcare
— provider to quickly determine if they can accept the patient for treatment or
not. A good verification will tell a provider the general information about a
pat�ent's insurance policy such as the deductible, the co-insurance and the out of pocket
maximum. A very good verification will also include accreditatian requirements, information on
who would receive the payment for services, correct claims addresses for professional and
facility charges and more. The quicker a verification is done, the sooner a patient can be
brought into treatment. Speed and accuracy is the name of the game when it comes to
insurance verification and United Healthcare, until very recently, was one of the quickest policies
for an Insurance Verification Specialist to work with.
They were quick and easy to verify and typically very solid policies. On May 9th, 2016 UHC's
subsidiary UBH/Optum implemented a new requirement for out of network providers to obtain
benefits. Regardless of ineeting the HIPAA requirements to obtain patient benefit coverage they
now require the patient to call in and give verbal approval for an out of network provider to
obtain coverage information.
This has slowed the process down tremendously. UBH/Optum maintains that the change
protects patient privacy but simply using a web tool (i.e., Availity) you can get a snapshot of a
patient's policy information that they refuse to provide. The problem with this is the information
on Availity is not complete. The extra important information such as accreditation requirements,
payment information and claims addresses mentioned above are not available through a web
vendor, thus forcing a patient to have to call in and provide benefit information to get the rest of
the verification complete. Hopefully, other insurance carriers don't follow suit by requiring this
extra layer of patient security since these new delays in the verification process ultimately
prevent patients from receiving treatment as fast as possible,
http:/lwww.floridahealthcarela�rm.comlout-of-network-vob-process-hits-a-speedbump! 1/7
11/8/2017 Out of Network VOB Process Hits a Speedburnp-Florida Healthcare Law Firm
Urgent Medical Brlling (http.//www.urgentmedrealbillrng.com) rs a premrer billing & collectron
servrce headquartered rn Boca Raton, FL and provrdes highly skilled servrces exclusively for
drug & alcohol treatment centers. Contact Drr. of Business Developmenr Anthony Galgano vra
email agalgano@urgentmedicalbilling.com (mailto:agalgano�a�urgentmedrealbillrng.com) or by
callrng 954-292-7952 wrth questions. Download FREE Sample Interview Gurde
(http.//www.urgentmedrealbrlling.com/billing-collection-overcome-fear-transition/).
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(http://www.floridahealthcar... billing-revisited/) (http://www.floridahealthcar...
necessity-�ts-a-necess�ty/) 1�� ����.�� I ; �c�I > treatment-attack-by-payers-
Sc:;-c:r�;�r.r 1 1 ��lE:� S �r Ir;� �:,:�st grows/)
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htip:l/www.floridahealthcarela�rtn.com/out-0f-network-vob-process-hits-a-speedbump! 2/7
11/8/2017 Out-of-network coverage tightens-Times Union
timesunion
http://www.timesunion.com/local/article/�ut-of-netw�rk-coverage-tig htens-4986878.php
Out-of-network coverage tightens
Expected, non�mergency care for some New Yorkers will be affected
nDVERTI5E�.IENT
Fewer New Yorkers will be able to enroll
in health insurance plans that cove�
doctors outside the insurers' network,
beginning with coverage going into
effect in January.
People no longer able to choose out-
of-network coverage include
individuals in 54 out of New York
state's 62 counties who must buy
insurance an their own,whether
directly from insurance carriers or through the new state-run Obamacare website, NY
State of Health. Others rnay find health plans offered by their employers are eliminating
out-of-network coverage, as businesses and insurance carriers take advantage of the
health law's implementation to put into effect cost-saving measures the law does not
mandate.
Insurance companies must still cover emergency services for people who become
seriously ill ar are in an accident aut of town. And patients can generally see a
specialist outside their insurers' network — which is often outside the region where
they live — if they can prove there is no in-network provider qualified to treat them.
WhaYs no longer available to some New Yorkers is coverage that lets patients chaose
doctors or hospitals outside their plan's established network for expected, non-
http://www.timesunion.com/IocaUa�ticle/Out-of-network-coverage-tightens-4986878.php 1/4
11/812017 Out-of-network coverage tightens-Times Union
eme�gency ca�e.
That concerns people like Gail, a 56-year-old Columbia County resident who did not
want her full name used. She must buy insurance as an individual for the first time this
year.
Following a successful bout with breast cancer, she recently had symptoms
suggesting development of another cancer.
She wo��ies her insurance will not allow her to seek treatment if she wants it, say, at
the renowned Memorial Sloan-Kettering Cancer Center in Manhattan. "Wow, talk about
taking choice away," she said.
Until 1996,the state required insurers to offer an out-of-network option, said Mark
Scherzer, legislative counsel for New Yarkers for Accessible Health Coverage, an
advocacy group. That guaranteed people with serious illnesses could consult with the
mast knowledgeable experts about their condition, �egardless of whether their
insurance company had a standing contract with them. The coverage typically came
with significant added cost.
tiD�.�CRTISCh1ENT
"If you have a rare cance�,you want to be able to go to the doctor who's expert in that
cancer," Scherzer said. "Yau don't want to go to a general oncologist who may have
seen this cancer once or twice."
More Information With establishment of the state-run
online market this year, state regulators
imposed one condition on insurers
htip:l/www.timesunion.comllocaUarticlelOut-of-networkcoverage-tightens�986876.php 2/4
11/8/2017 Qut-of-network coverage tightens-Times Union
�egarding out-of-netwo�k coverage: If they offered it to individuals buying insurance
directly from the company,then they also had to offer it through NY State of Health.
In most of the state, insurers chose to eliminate the out-of-network option in all their
plans marketed to individuals. The cove�age remains available in just eight counties, all
in western New York.
About 4,800 New Yorkers wha previously had out-of-network coverage through the
individual market a�e allowed to keep it through riders on their plans, Scherzer said.
Others are not eligible to purchase the riders.
Insurers' decisions to eliminate out-of-network coverage came after assessing that
competitors were not likely to offer it, industry insiders said. No company wanted to be
alone in including it, far fear of attracting the sickest, costliest patients.
"A plan didn't want to be the only one offering the out-of-network coverage, because
then you're looking for adverse selection," said Leslie Moran, vice president of the New
York Health Plan Association, a trade group.
State officials did not require insurers to offer out-of-network coverage on NY State of
Health because they were concerned about keeping plan costs affordable and
predictable, said Donna Frescatore, executive director of the online market_ Premium
rates and unexpected out-of-pocket expenses rise with out-of-network coverage.
Three-quarters of the 615,000 individuals expected to sign up through the health
exchange will be eligible for financial assistance, the state estimates.
In addition,the in-network coverage offered by health plans through the website is
monitored for adequacy in services including primary care, specialty ca�e, hospitals,
laboratories and others.
"We felt that affordability was really key and needed to be coupled with robust provider
networks," Frescatore said.
Calling Frescatore's argument "unpersuasive," Scherzer said making sure one group
has coverage does not justify a decision that takes away choice from another group
http:J/www.timesunion.comflocaVarticle/Out-of-network�overege-tightens�98fi878.php 3/4
11/8/2017 Out-0f-network coverage tightens-Times Union
willing to pay extra.
Health plans sold to individuals are not the only ones that will see out-of-network
coverage limited in the future, experts said. Insurance carriers are increasingly
restricting such reimbursements fo� plans offered through employers,too, as
businesses seek to rein in benefit costs.
It's a trend based on market realities, Moran said. Out-of-network coverage raises the
price of health insurance too much for most consumers. And insurers' experience
shows that even those who purchase the option rarely use it, she said.
It's also a convenient time for insurers to make changes likely to be unpopular, industry
experts said. The health exchanges establish a new benchmark to compete against
and can serve as an excuse for decisions.
"The actions of health care reform are going to create a new normal, or open up a
conversation to do new things," said Thomas Flynn, a principal in the Rachester office
of the benefits company Mercer.
chughes@timesunion.com � 578-454-54T 7• �a hughesclaire
O 2017 Hearst Communications, Inc.
http://www.timesunion.com/local/a�ticlelOut-of-networkcoverege-tightens�986878.php 4/4
11/8/2017 Out-0f-Network Payrnent Squeeze:4 ASC Trends and Challenges
Uut-of-Network Payment Squeeze: 4 ASC Trends
and Challenges
Written by Lindsey Dunn � July 15, 2009 � F'rint � �mail
Recent moves in some states by insurers to restrict the use of out-ot=network facilities by their members have
created a headache for many ASCs around the country. Although out-of-network facilities continue to be
successful,a�rowing resistance from insurers against paying billed charges and, in many cases, reasonable and
customary rates to out-of-network providers signals a growing challenge for ASCs.
In the early days of ASCs, many insurers were willing to pay billed charges in full or at a slight discount to non-
participating ASCs who treated patients with out-of-network benefits,often paying more to out-of-network
providers for services than they did to participating providers who were performing services at contracted rates.
Although this continues to be true in some areas of the country and for some insurers, in the past few years,
other insurers have begun to find ways to reduce these payments drastically.
As private insurers look for ways to reduce costs,they have increased their efforts to target out-of-network
providers in a number of ways. Some large health plans are taking steps in many markets to curtail the ability of
ASCs to treat patients out of network. Some insurers are trying to substantially reduce, withhold or, in some
cases, even recoup reimbursements paid to out-of-network providers. In many situations, the insurers also
oppose efforts by providers to reduce patient copayment or coinsurance responsibility and increasingly take the
position that if the patient is not required to pay,then the payor is not required to pay either.
ASCs need to be aware of four of these pracrices and be proactive in resisting them,when possible.
1. Pressuring physicians to refer in-network
ASCs that have avoided contracting with insurance networks are at risk for losing out-of-network volume.
"We are beginning to see efforts by some insurers to pressure physicians to refer to in-network facilities," says
Thomas Michaud, chairman and CEO of Foundation Surgery Affiliates. "In several states, insurers, such as Blue
Cross, have sent letters to physicians who have a pattern of referring to out-of-network facilities and basically
threatening to revoke the physician's contract if the pattern continues."
Jeffrey Shanton, director of billing for American Surgical Centers, says that Horizon Blue Cross Blue Shield of
New Jersey recently terminated 17 physicians from one out-of-network ASC in the state for referring to the out-
ot=network facility.
"1"he physician contracts almost certainly contain non-cause termination language,which is how the insurer is
able to tenninate the contracts," says Mr. Shanton. "However, in this case, Blue Cross did not seem to have
another reason for the termination other than referral patterns. As a result, there are some ef�orts here in New
Jersey to take this issue to court."
Some physicians have already begun to fight back against these practices with some success. In Texas, the state
Attorney General investigated BCBS's practice of rating physicians based on claims data, which resulted in
lower ranking for physicians who referred out of network. BCBS recently settled the investigation by agreeing to
cease using claims data to determine affordability.
ln Georgia, a group of ASCs recently filed a class-action lawsuit against BCBS of Georgia, alleging that the
insurer reimbursed out-of-network providers at only a fraction of usual and customary charges despite the fact
that members paid increased premiums for coverage at these facilities. A decision on the case has yet to be
hrips:/hxww.beckersasc.com/news-an alysis/out-of-network-paymen t-squeeze-4-asc-trends-and�hallenges.html?tmpl=component8�print=181ayout=def... 1/4
11/8l2017 Out-0f-Network Payment Squeeze:4 ASC Trends and Challenges
rendered.
Other physicians, however, have yielded to the insurers threats.
"Some physicians will just finally say, `enough,' and refer the patients to in-network providers, which can
sometimes end up costing the insurers more,"says Linda McKinney, owner of LMc Solutions, Inc., a California
healthcare consulting firm specializing in payor contracting. "A good example is a patient who has outpatient
surgery at an in-network hospital versus an out-of-network ASC—it's likely that the cost of care in this
example is actually greater to the insurer."
According to Ms. McKinney,pressuring physicians is one of many "strong-arm"strategies used by insurers to
"get everyone contracted and pay everyone at contracted rates."
Since individuals with out-of-network benefits pay for the abiliry to use providers outside their network, leaders
within the ASC industry object to efforts by insurers to restrict patient choice.
"At the end of the day, these policies are more expensive than an HMO," says Mr. Michaud. "Someone pays
more for the option to have choice. Insurers who try to direct patients to a specific facility or threaten physicians
based upon referrals are blatantly acting against the law. The patient has the right to select where he or she wants
to go."
Some insurers also use fee schedules to incentivize physicians to refer to in-network facilities. For example,
Blue Cross of Califomia's PPO fee schedule is a two-tier fee schedule: Physicians who routinely refer patients to
out-of-network providers without proper prior authorization are penalized with a lower fee schedule for their
services, says Ms. McKinney.
Some ASC industry sources also report that representatives from certain insurers have called patients directly to
inform them about the additional costs associated with using an out-of-network facility. Such actions may be, in
ef�'ect, an attempt to persuade the patient to use an in-network provider.
2. Bifurcated deductibles
ASC leaders also repoct an increasing number of patients with separate in-network and out-of-network
deductibles,which may discourage members from using out-of-network providers.
"Four to five years ago, most of the patients we treated had a single deductible of, say, $2,000,"says Mr.
Michaud. "Today, we see some patients who have separate in-network and out-of-network deductibles, both at
the same amount we were seeing for one deductible in years past. This can be especially frustrating for patients,
especially if they are looking at scheduling a surgery toward the end of the year and therefore face `starting-
over' again in using down the other deductible."
Mr. Michaud recommends that physicians take a professional approach in discussing surgery facility options
with patients who have these split deductibles. "Our physicians present each patient with a form that Lists where
they are credentialed and then discuss options,"he says. "A physician can say `here is where I prefer you go'
and then work with the patient in perhaps scheduling the procedure after the new year or explaining why the
increased fee may be worth it for a better patient experience."
3. Capped out-of-network benefits
Another way that some insurers have successfully reduced payments to out-of-network providers is by capping
members' out-of-network benefits. Although reimbursement rates vary greatly by state and are subject to state
laws and regulations regarding reimbursement, insurers in several states have already begun to set maximum
reimbursements for out-of-network providers.
Blue Cross of California recently capped out-of-network benefits for all out-of-network ASCs at $381 per
procedure, according to David Thoene,vice president of business developinent at Titan Health.
htlps:!/www.beckersasc.com(news-analysis/out-of-network-payment-squeeze-4-asc-Vends-and-challenges.htrnl?tmpl=component8�print=181ayout=def... ?14
11/8/2017 Out-of-Network Payment Squeeze:4 ASC Trends and Challenges
In New Jersey, Mr. Shanton says Horizon BCBS of New Jersey began implementing an out-of-network fee
schedule for ASCs in 2004 that caps reimbursement rates at l30 percent of Medicare.
Mr. Shanton says that although these percentages may seem adequate to the average consumer because they are
ahove Medicare's rates, it is important to remember that Medicare fees are usually much lower than commercial
payor rates and even payments double or triple Medicare may not recoup the facilities' costs to perform some
procedures.
Insurers can add (anguage to their policies that caps the out-of-network benefit offered by their plans as well,
says Ms. McKinney.
Reduced or capped out-of-network payments benefit insurers and hurt out-of-network providers,but it is
important to keep in mind that the reason inswers with plans designed to cap these benefits remain active is
because they are attractive to employers looking to reduce insurance premiums and healthcare benefits overall.
"I think that providers often lose sight of the impact of the employers' contractual relationship with the
insurance company,"says I.Naya Kehayes, founder and managing member of EVEIA HEALTH Consulting&
Management. "The contract between the employer and the insurance company and the premiums that are paid
are typically based upon the in-network and out-of-network benefits that are included in the benefit design of the
plan that the employer purchases. By reducing out-of-network benefits, employers can reduce premiums,
thereby saving themselves and their employees money."
CIGNA recently released a statement to providers stating, "most plan sponsors have elected to incorporate in
their plan a Maximum Reimbursable Charge provision that caps reimbursement for covered services received
from non-participating providers." CIGNA plans to cap these benefits in one of two ways: As a customer-elected
percentile applied to a range of charges for a procedure in the applicable geographic area using a third party
database of billing records or as a percent of schedule amount, ranging from 110-204 percent,using a Medicare-
type methodology.
As more employers select to reduce these benefits,out-of-network ASCs may need to rethink their strategy.
"These reduced benefits create a disincentive for the providers to remain out of network," says Ms. Kehayes.
"The benefit of out-of-network reimbursements may decline quickly and not be beneticial anymore.
"While an individual is entitled to use their out-of-network benefits to select an ASC that may offer a better
environment for a procedure, I think we will begin to see more reductions in this benefit as insurers and
employers look for ways to reduce premiums," she says.
4.Leasing of insurance networks
A final way the insurers have begun to reduce payments to out-of-network providers is to lease insurance
networks. Insurance networks, such as Interplan, Concentra or Cofinity, give providers access to a payor and its
members in return for discounted services. For example, an insurance network's contract might state that a
provider will perform services at 75 percent of billed charges. However, they limit a providers' ability to seek
out-of-network charges for services.
Second-tier networks have grown in popularity, but providers that sign with them should be clear about the
benefits as well as the risks before signing a contract, according to Ms. McKinney.
"Second-tier networks operate like this: If a provider decides not to contract with a patient's insurance plan, but
that insurer has leased a second-tier network to which the provider does have an agreement with, the insurer will
pay the second-tier network's rate,not an out-of-network rate," says Ms. McKinney. "Second-tier networks can
be beneficial in that they can give a provider access to a greater number of patients and the potential for
increased case volume. On the flipside,this additional caseload comes at a price that the provider may not
necessarily be aware of until after the patient is served."
https://www.beckersasc.com/news-an alysislout-of-network-payment-sq ueeze-4-asc-Vends-and�h allenges.html?tmpl=componeni8print=l8�layout=def... 3!4
11/8/2017 Out-of-Network Payrnent Squeeze:4 ASC Trends and Challenges
How ASCs can respond
ASCs that opt to continue treating out-of-network patients can help ensure that they draw out-of-network patient
volume and are reimbursed for these procedures by offering discounts, verifying benefits and requesting
payment upfront.
Mr. Michaud says that his centers may reduce the overall rate, rather than waiving deductibles or co-insurance
fees, because they want to uphold the cainsurance ratios set forth by the patient's insurance plan.
The waiving of out-of-pocket costs for out-of-network commercially insured patients is practiced by ASCs;
however, any ASC considering this should analyze its own state laws, says Andrew Wachler, Esq., of Wachler&
Associates. ASCs should examine their states' false claims laws, anti-inducement laws, anti-kickback laws and
unfair competition laws in addirion to their state Attorney General's opinions and state case law in order to
determine if there are rules that could that create legal entanglements for the centers.
It is also very important that ASCs verify insurance benetits for out-of-network patients,whenever possible.
"We pre-certify every patient and check for inpatient and outpatient deductibles, including how much of the
deductible is used and then determine what their bill will be before the day of surgery," says Mr. Michaud.
However, insurers in some states have restricted access by out-of-network providers to benefit information,
according to Mr. Shanton. "ln New Jersey, out-of-network ASCs cannot verify benefits or find out the
deductibles of Blue Cross patients, which makes it very di�cult for us to determine what type of payment we're
working with."
Some insurers' plans actually require preauthorization for payment. "ln California, some Blue Cross plans will
not pay for a procedure performed at an out-of-network facility without preauthorization,"says Ms. McKinney.
"However, Blue Cross typically does not require prior authorization for outpatient surgeries. lt's very confusing
for providers. If it's not required for outpatient surgeries, the facility may not think it needs to get the
authorization and then later finds out it won't get paid at all."
ASCs that have patients with capped or inadequate out-of-network benefits should consider requiring patients to
pay upfront for their out-of-pocket expenses or work with patients to develop payment plans before the
procedure takes place.
This is especially important in some states, such as California, where out-of-network reimbursements often go
directly to members, and the member is responsible to pay the facility, says Ms. McKinney.
ASCs that want to rely heavily on out-of-network patients and even those that enjoy continued access to the
occasional out-of-network patient must be tiorward thinking in their continued response to shrinking out-of-
network reimbursement rates and the reduced access to out-of-network patients.
"Here in New Jersey, where the majority of ASCs remain out of network, we are literally fighting for our lives,"
says Mr. Shanton. "ASCs need to have a united front. If one or two centers jump ship and contract, the
remaining centers could be boxed out from signing with that carrier in the future. We have to band together and
fight for the continued success of our centers."
Contact Lindsey Dunn at lindsey@beckersasc.com.
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11/8/2017 War Against Out-of-Network Continues as Aetna Dissuades Members From Using OON Surgery Centers
War Against Out-of-Network Continues as Aetna
Dissuades Members From Using OUN Surgery
Centers
Written by Rachel Fields � May 10, 2012 � I'rint ( �mail
insurance company Aetna recently reached out to members and their physicians to alert policyholders when a
referral for an outpatient surgical procedure takes them out of the Aetna network, creating another obstacle for
out-of-network surgery centers.
According to an Aetna release, an analysis by the insurance company showed that half of inembers who received
a referral to a surgery center did not know the referral would take them out-of-network. When those inembers
were informed by Aetna and chose to stay in-network, the average medical bill was reduced by$5,000 per
incident.
The Aetna program is based on a pre-certification process that requires physicians to alert Aetna when they refer
to an out-of-network, free-standing ambulatory surgery center for care. Aetna will follow up with the physician
and member to confirm the member understands the refemal will take them out-of-network.
This move by Aetna creates another challenge for already-struggling out-of-network providers, says Jeff
Shanton of the New Jersey Association of Ambulatory Surgery Centers. "Aetna states that`people always have a
choice in where they seek care,"' he says. "That is a very broad statement and, indeed, not quite true. Aetna—
along with other commercial carriers —has, for the past several years, embarked on a campaign to effectively
eliminate out-of-network as an option where ASCs are concerned."
He says while the NJAASC supports transparency and disclosure in the healthcare delivery system, the openness
must work both ways. "Too often, out-of-network providers find roadblocks thrown in their path when
attempting to ascertain patient benefits, in order to inform the patient of their potential liability," he says.
He says through restrictions, caps,policy language and provisions, the abiliry to utilize out-of-network benefits
has been severely curtailed. Aetna and other carriers routinely contact patients scheduled for out-of-network
surgery to persuade them to choose an in-network provider,he says.
Aetna does not refute this claim, but presents it in a different light. Since August 2010, the insurer has found
38,000 occasions nationwide where an in-network physician referred an Aetna member to an out-of-network
ambulatory surgery center. In nearly 60 percent of these cases,Aetna told the member and their physician about
a less expensive, in-network facility or hospital at which the member's refercing physician had privileges.
Mr. Shanton responds that the number of incidents reported by Aetna(38,000) is very low when one takes into
account the total number of procedures performed by ASCs nationwide every year. "There are ASCs that,by
themselves,perform over 10,000 cases per year," he says. He also questions Aetna's claim that patients choosing
out-of-network benefits can be redirected to a less-expensive in-network facility where their refemng physician
has privileges. Because physicians do not usually perform procedures at multiple ASCs, the alternative would
most likely be a hospital outpatient department,which receive higher reimbursement rates and therefore cost
more than freestanding surgery centers.
Mr. Shanton adds that Aema offers a significant number of plans that restrict out-of-network benefits to $2,000
per calendar year for procedures performed in an out-of-network ASC. "In addition, there is no reduction in the
premium the policyholder is still paying for the privilege of being able to go out-of-network," he says. "The
policyholder has the illusion of out-of-network benefits, but the reality is quite different."
https://www.beckersasc.com/asc-codin g-biiling-and-coll ection s/war-against-0ut-of-network-contin ues-as-aetna-d i ssuades-members-from-using-0on-sur... 1/2
11/8/2017 War Against Out-of-Network Continues as Aetna Dissuades Members From Using OON Surgery Centers
He adds that the New Jersey division of Aetna has stopped negotiating with new and existing facilities that want
to participate in their network, inevitably increasing the number of out-of-network claims.
Mr. Shanton that Aetna is trying similar tactics with in-network providers. In recent months,the New Jersey
division of Aetna has sent letters to physicians and patients, attemptin�to steer them to cheaper in-network
providers—meaning those that have less favorable contracts with the insurer. "By directing patients in this
manner, Aema literally holds the fate of in-network centers in its hands as well," he says. "If an in-network
center has negotiated a favorable deal for the center with Aema, they can now look forward to patient volume
decreasing, as it is re-directed to a cheaper alternative."
"Out-of-network needs to remain a viable option for all healthcare providers," Mr. Shanton says. "This is not just
ahout out-of-network providers. By allowing carriers to eliminate out-of-network through pricing, caps or
restrictions, [the healthcare industry] reduces the ability of all providers to negotiate in-network contracts." He
says eliminating options other than negotiating in-network contracts often at unfavorable rates for the surgery
center—is"akin to having a monopoly" for the insurance company.
Related Articles on Out-of-Network:
Maryland Health Insurance Plan Makes Cost Benefit C'hanges
OB/GYN. Aetna Disr�ute Could Afi�ect �0.0O0 Ari�ona Patients
VVhen 5{)10 Implenientation Delays Surger`� C'enter Payment: 4 Wa��s to Respond
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11/8/2017 The Out-0f-Network Battle Heats Up
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Home>Publications>ABA Health eSource>�014-2015>Ser�tember>The Out-of-Network Battle Heats
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Health eSource
The Out-of-Network Battle Heats Up
V01. 11 NO. 1 Ef(ectively Counseling Clients with Breast
Emma Mata, Seyfarth Shaw LLP, Houston, TX and, ]onathan Ishee, Vorys, Sater, cancer
Seymour and Pease, LLP, Houston, TX
CMS Applies the Brakes to Mandatory
� Background Bundled Payment Models
The provision of healthcare
`° services by providers who are not Pa9ing Dr_BoY'-7he Emergence of AI and
\ � Machine Learning in Healihcare
participating in a health benefit
plan's network continues to
expand as providers are either Learn About Emerging Litigation in Payment
unable to become participating over uryent[are
providers in a payor's network or purposefully adopt an out-of-
In Search of Certainty:An Update o�the
network strategy due to actual or perceived low reimbursement
rates. This move to provide healthcare services outside of a Exchanges
payor's network and the resulting waiver of the patient's portion of �ie`�"'°�e es°��`�d�:"'es
financial responsibility associated with receiving out-of-network
services by the provider has heightened payment disputes between
payors and providers. This article examines recent legal action
related to this dispute between providers and commercial payors.l
The underlying issue in cases such as the ones discussed below
center around coinsurance payments or the percentage of charges
for the "covered expenses"that an insured person is required to
pay under the plan. The payors' position is that patients should
not be enticed to seek t�eatment from out-of-network providers
with a promise that their coinsurance will be waived or reduced,
also known as a "discount program." The providers' position is that
offering discounts to the patients is not an unlawful practice and
that nothing in the patients' insurance plans allows the payors to
pay less than the amount billed by the out-of-network provider.
These providers insist that such discount programs are appropriate
and that payors should pay the full amounts charged. In response,
payors have begun to take internal steps to avoid the "phantom
charges" they claim are being billed by out-of-network providers.
htlps:/(www.americanbar.org/publications/aba_health_esource/20142015/september/out_of_network.html 1/5
11l8/2017 The Out-of-Network Battle Heats Up
North Cypress Medica/Center v. CIGNA
North Cypress Medical CenCer Operating Company, Ltd, et. al. v.
CIGNA Healthcare, et al. illustrates this point. North Cypress
Medical Center ("NCMC"}, an out-of-network provider, implemented
a "prompt pay discount program" whereby qualified patients who
paid for and maintained out-of-network benefits in their health
plans and agreed to promptly pay were only required to pay a
discounted amount of cainsurance.� NCMC would then bill CIGNA
the full amount of the service provided and would receive payment
in full.3
CIGNA's response to NCMC's prompt pay discount program was to
implement a "fee forgiving protocol," which paid providers based
upon what the provider actually billed the patient as opposed to
the charges billed to CIGNA.4 Under the fee forgiving protocol,
CIGNA would not pay far aut-of-network services in which a
patient's portion of financial responsibility had been waived or
reduced. CIGNA asserted that the "fee forgiving policy" is allowed
by the plain language of the plans, which states that no payment
will be made for charges which the insured is not obligated to pay
or for which the insured is not billed.5 Thus, CIGNA based the
amount that was paid to the provider on the amount that was
charged to the patient by the provider. For example, if a patient
had a 60/40 plan where the patient is responsible for a coinsurance
payment of 40 percent of the charges for out-of-network services
and CIGNA responsible for the other 60 percent and the patient
was only charged $100 (as coinsurance) by the provider, CIGNA
would pay $150 to the provider (or 60 percent of $250).6
NCMC filed a lawsuit against CIGNA to recoup in excess of $40
million.� NCMC alleged that it was not paid as a result of CIGNA's
fee-forgiving policy.8 Like other similar cases, NCMC's atlegations
included federal law claims under the Employee Retirement Income
Security Act ("ERISA") and state law claims for breaches of the
Texas Insurance Code.9 In response, CIGNA filed counterclaims for
fraud, negligent misrepresentation, and unjust enrichment in an
attempt to recover fees that had been previously paid to NCMC.lo
The federal district court dismissed both NCMC claims and CIGNA's
counterclaimsll and both parties have pending appeals in the
United States Court of Appeals for the Fifth Circuit.iZ
The district court made two significant rulings:
{1) NCMC did not have standing to bring its ERISA claims because
the claims were brought as assignee of the patients and since
NCMC has excused the patients from paying the amounts charged
to CIGNA, the patients did not have an "injury in fact" or a threat
for actual or imminent injury and NCMC did not have standing for
the underlying suit;13 and
https:!lwww.americanbar.org/publications/aba_health_esourcel2014-2015/september/out_of_network.html 215
11/8/2017 The Out-of-Network Battle Heats Up
(2) CIGNA's interpretation of the plan language was correct and
the�efore CIGNA was entitled to pay the providers amounts based
upon what the patients were paying (the "fee forgiving policy"�,14
Similar cases have filed in other jurisdictions reached the same
conclusion.15 In these cases, civil causes of action commonly
raised by payors include: fraud, unjust enrichment, money had and
receivedl� and healthcare fraud.l� For example, in Kennedy v.
Connecticut18 the Seventh Circuit upheld the non-payment of
claims to an out-of-network provider who routinely waived the
patient's out-of-network responsibility. Cases such as NCMC
continue this line of thinking as well as signal a more aggressive
stance of payors involving out-of-network arrangements.
Conclusion
As the healthcare reimbursement landscape changes due to the
shrinking of traditional fee-for-service reimbursement rates or the
inability (or unwillingness) of providers to participate in a payor's
network, these types of disputes will only continue to grow. Due to
the lack of case law and administrative rulings on this subject,
since the majority of these cases are settled out of court, only time
will tell if payars or providers will prevail.
***
1 For a discussion of the effect of out-of-network billing
and routine waiver of co-insurance related to
governmental payors, see Out-Of-Network Referrals
and Waiver of Patient Copayments and Deductibles:
The Battle Between Payors and Providers Endures and
Intensifies, 25 The Health Lawyer 5, 18 (June 2013).
2 Brief af Appellants North Cypress Medical Center
Operating Company, Ltd. and North Cypress Medical
Center Operating Company GP, LLC at 4, North
Cypress Medica! Center Operating Company, Ltd, et.
al. v. CIGNA Healthcare, et al. (12-20695), In the
United States Court of Appeals for the Fifth Circuit.
3 Id. at 5.
4 Appellees-Cross Appellants' Principal Brief and
Response in Opposition to Appellants' Principal Brief
at 1Z-13, North Cypress Medical Center Operating
Company, Ltd, et. al. v. CIGNA Healthcare, er al. (No.
12-20695), In the United States Court of Appeals for
the Fifth Circuit.
5 Id. at 19 - 24.
https://www.americanbar.org/publications/aba_health_esourcel2014-2015/september/out_of_network.html 3/5
11/8/2017 The Out-of-Network Battle Heats Up
6 Id.
� Brief of A ellants North C
pp ypress Medical Center
Operating Company, Ltd. and Narth Cypress Medical
Center Operating Company GP, LLC at 1, North
Cypress Medica! Cenrer Operating Company, Lrd, et.
al. v. CIGNA Healthcare, et al. (12-20695) In the
United States Court of Appeals for the Fifth Circuit.
8
Id.
9
Id.
10 Appellees-Cross A
ppellants' Principal Brief and
Response in Opposition to Appellants' Principal Brief
at 4, North Cypress Medical Center Operating
Company, Ltd, et. al. v. CIGNAHealthcare, etal. (12-
20695), In the United States Court of Appeals for the
Fifth Circuit.
li The Court dismissed CIGNA's claims because they
were untimely pursuant to the applicable statute of
limitations and did not make a determination that the
claims were not otherwise viable.
12 The Fifth Circuit Court of Appeals heard aral
arguments on this case on April 28, 2014. A decision
by the Court has not been issued as of the date of
this article.
13 jd. ar 5.
14
Id.
15 See, e.g., Connecticut General Life Insurance Co. and
CIGNA Hea/th and Life Insurance Co. v. Humble
Surgical Hospiral, LLC, No. 13-3Z91 {D. Hou. filed
Nov. 7, 2013}; see also, e.g., Kenneth R. Koenrg, et.
al. v. Aetna Life Insurance Co., No. 13-00359 (D.
Hou. filed Feb. 12, 2013).
16 ,qe[na Health Inc. v. Ifeolumipo Sofola M.D. and
Humble Surgica! Hospiral, LLC, Cause No. 2011-
73949 {152nd, Judicial District, Harris County Texas).
17 See generally U.S. v. Javan, 383 Fed.Appx. 596 (9th
Cir 2Q10}.
https:Nwww.americanbar.orglpublicationslaba_health_esource12014-2015/september/out_of_network.html 4/5
11/8/2017 Texas hospital files for bankruptcy due to out-of-network payment challenges
Texas hospital files for bankruptcy due to out-of-
network payment challenges
Written by Ayla Ellison(T�vitter � Goo�le+) � September 23, 2015 � Print � Lmail
Forest Park Medical Center at Frisco(Texas) has filed for chapter 11 bankruptcy protection, according to a
Dcrllus 6tt,��irle.s.s Joiu•►rcrl report.
The hospital, which is part of the Dallas-based Forest Park Medical Center network of physician-owned
facilities, is showing signs of financial distress. Todd Furniss, chairman of The Management Company at Forest
Park Medical Center, told the Dallas Business Journal the physician-controlled board at the Frisco faciliry felt
bankruptcy protection was necessary due to financing challenges and a reduction in out-of-network payments
from insurance companies that the hospital relies on.
"It's a sad day,but the board felt this is the best action to move forward," said Mr. Furniss. "They want to do the
best they can for the physicians to continue serving patients."
The case is pending in U.S. Bankruptcy Court for the Eastern District of Texas.
More articles on healthcare finance:
Ohio hospital at risk ot�losing Medicare limdin�
� rcccnt hospital outlook and crcdit ratin�=actions
Legislators reach com�romise to Privati�e North Carolina's �I SB Medicaid �ro�ram
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11/8/2017 Schneiderman settles mental health parity case-Capitol ConfidenGal
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LATEST NEWS FROM THE TIMES UNION CAPiTOL BUREAU
Schneiderman settles mental health parity case
By Rick Karlin, Capitol 6ureau on March 19, 2014 at 9 15 PM
T
r -r•n:rrir -
Attorney General Eric Schneiderman has settled a case with a major health insurer, MVP Health Care which he said had been
denying an inordinate amount of inental health claims. Here are the details:
After an investigation uncovered widespread violations of inental health parity laws, Attorney General Eric T.
Schneiderman today announced a settlement with Schenectady-based MVP Health Care, requiring the health insurer to
reform its behavioral health claims review process, cover residential treatment and charge the lower primary care co-
payment for outpatient visits to most rnental health and substance abuse treatment providers. The settlement, the
second against a health insurer so far this year on the parity laws, also requires the health insurance plan — which has
more than 500,000 members in the Albany region.Central New York and the Hudson valley — to submit previously
denied mental health and substance abuse treatment claims for independent �eview,which could result in more than S6
million being returned to its members.
An investigation by the Attorney General's Health Care Bureau found that since at least 2011, MVP Health Care, through
its behavioral health subcontracto�, Value Options, issued 40� more denials of coverage in behavioral health cases than
in medical cases. The agreement with MVP is the second reached by the Attorney General's office so far this year and
stems from a broader, ongoing investigation into health insurance companies' compliance with mental health parity
laws. For details on the earlier settlement with Cigna Corporation, please click here.
"Ensuring that New Yorkers have adequate access to mental health and substance abuse treatment should be a priority
for our state," Attorney General Schneiderman said. "Insurers must comply with the law to ensure that individuals with
mental health conditions are treated no differently than those with physical ailments — and that they are getting what
they pay for from insurers. With this settlement, MVP Health Care commits to greatly improving treatment services
available to thousands of New Yorkers."
New York's mental health parity law, known as Timothy's Law,was enacted in New York in 2006, and requires that
insurers provide mental health coverage at least equal to coverage provided for other health conditions.
Mental and emotional well-being is esseniial to overall health. Every year, almost one in four New Yorkers has
htip://blog.timesunion.com/capitoUarchives/248695lschneidertnan-settles-mental-health-parity-case/ 1!9
i1/8/2017 Schneiderman settles mental health parity case-Capitol Confidential
Lack of access to treatment for the vulnerable individuals, which can be caused by health plans' coverage denials, can
disrupt work, family, and school life, and lead to more serious illness.
In one case,the investigation found that MVP repeatedly denied coverage far the treatment of a young woman with a
very serious history of substance abuse disorder, even though her providers had prescribed inpatient rehabilitation,
residential and intensive outpatient treatment. As a result,the woman's family was forced to spend a great deal of time
on a long series of appeals, and paid more than S150,000 out of pocket for her treatment.
In another case, an MVP Health Care member with a long history of addiction to heroin and prescription painkillers
requested cove�age for inpatient substance abuse rehabilitation treatment. The plan rejected the claim, citing to the
wrong criteria.
The OAG's investigation further revealed that before 2014, MVP Health Care did not cover residential treatment for
behavioral health conditions, even though it is a standard,recommended, evidence-based form of treatment. MVP
excluded this type of treatment while covering similar treatment — skilled nursing, for example — for medical conditions.
In one case. MVP Health Care denied coverage of residential treatment for a young woman with a severe case of
anorexia nervosa, a potentially life-threatening condition. As a result, her family had to pay thousands of dollars out of
pocket so that she could receive necessary treatment in a residential treatment facility.
The Attomey General's investigation into MVP revealed that since 2009, when it outsourced administration of behavioral
health benefits to ValueOptions, a managed behavioral health organization, MVP Health Care has scrutinized behavioral
health care claims more rigorously than it has medical and surgical claims, and that has resulted in thousands of its
members not receiving coverage for care requested by their doctors and therapists. The disparity is especially
pronounced in more intensive levels of care. The plan denied 39� of its members' claims for inpatient psychiatric
treatment and 47� of its members' claims for inpatient substance abuse treatment, rates that are more than double the
plan's denial rate for inpatient medical claims.
MVP Health Care has agreed to overhaul its claims review process by�
Removing visit limits for almost all behavioral health services.
Classifying claims correctly so that reviews are done expeditiously and members are afforded full appeal rights.
Removing the requirement that members "fail" outpatient substance abuse treatment before receiving inpatient
rehabilitation treatment.
Basing the number of treatment days or visits approved on members' needs rather than arbitrary limits.
Co-locating medical and behavioral health claims review staff, which will facilitate the coordination of inembers' care.
Ensuring that letters denying behavioral health claims are accurate and specific, so that members can exercise their
appeal rights.
Continuing coverage of treatment pending the completion of internal appeals, so that treatment is not interrupted.
The plan also charges the higher, specialist co-payment for psychotherapy, which can deter members from seeking
treatment. Under the agreement, MVP will charge the lower, primary care co-payment for members' outpatient visits to
most behavioral health professionals.
To assist members in accessing their behavioral health benefits, MVP Health Care will appoint full-time behavioral
health advocates to help members cut through red tape, and will provide information regarding claims review and
treatment options.
MVP Health Care has also agreed to provide members with an independent review of claims or requests that were
denied as not medically necessary from 2011 through present,which could result in more than $6 million in
reimbursement to members. The plan will also allow members to submit claims for reimbursement for residential
treatment services received since 2011, which could result in up to $1.5 million being refunded to members.
Under the settlement, MVP Health Care will also submit to monitoring and will pay $300,000 to the OAG as a civil
penalty.
http://blog.timesunion.com/capitoUarchives/208695/schneidertnan-settles-mental-health-parity-case/ 2/9
i1/8/2017 Schneiderman settles mental health parity case-Capitol Confidential
The investigation of this matter was conducted by Assistant Attorney General Michael D. Reisman, of the Attorney
General's Health Care Bureau, which is led by Bureau Chief Lisa La�dau. The Health Care Bureau is a part of the
Division for Social Justice, which is led by Alvin Bragg.
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. The Best Bedsheets Mo�ey Can Buy. Period.n cuu or�o . Federal lawmakers push for weekend elections
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RecommenticC Lv
http:l/blog.timesunion.com/capitoUarchives/208695/schneiderman-settles-mental-health-parity-case/ 3/9
11/8/2017 Reimbursement Trends and Unintended Consequences:Shrinking Out-0f-Network Benefits�Frenkel Benefits
I IF�I TI I:_=F.F F:=F_'<r t Fr�"I _'�"=F ';TG'-T=_;'( _
Subscribe to the Blog
emad address
by Croig Ho�doy on May l,2014 — Leove o Comrrient '`
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Out-of-network reimb�rsemenis have been a mess and o source of disconfenr since networks were �
�'.�.�_�--
creoted. If a provider controcts with on insurance compony�t's easy;the insurer is bound to ihe
coniroct rules. B�t if ihere is no controctual relotionship between the provider ond the insurer,carriers Reference-Based Pricing-Nof
hove relied on policy reimbursement n.iles to confrol costs. It hod become common praciice to limit Just for Large Groups anymore
reimbursement for oui-of-netwo�k care to ihe"usual and customary"charge in ihe region
where care is dispensed.
B�t defining'�usual and c�stomary"has token on a life of its own. Until recently,carciers referenced a
datobase maintained by ingenix and ofTen blended ihis with iheir own ddta.The allowable amo�nt
started at ihe maximum charged by 90%of doctors performing ihe procedure and gradually
reduced to 80%and then 70%and lower.Then Eliot Spitzer as New York Attorney General entered the
scene claiming foul:Ingenix was owned by a conflicted parfy,United Healthcare.
A new nonprofit,FAIR Healih,was created to replace Ingenix and carriers started using a
percentoge of FAIR Health's charge,or an even less favorable index:a percentage of
Medicare charges.Reimbursement rafes were even lower ond in an effort to control
rates.caniers began to eliminate out-of-network coveroge options.
So enter the legislators.Under fhe govemor's most recent budgei bill,New York State caniers with
products on The SHOP exchpnge offering out-of-network coverage in any market size musi now offer
ot leasT one plan on the exchonge ond the reimbursement m�st be aT 80%of fAIR Health. I hear at
leasl one caRier will be withdrowing oll out-of-network coveroge from oll insured products in NYS af all
morket sizes.If ouf•of-network coveroge is included,prices will go ihrough the roof. Beca�se of
odverse seiection,even with a$10.000 deducfible.one top insuronce executive said that they will
get slaughtered. Your Narne
Your Emoii
So the effect of ihis well-intentioned law will be to reduce(not increose)availoble out-of-
nefwork benefiis,and it moy make other not�onal carriers�sim�ar to whot CIGNA did in NYJ choose to Company
opt out of the NYS small gro�p market.Best inTentions with unintentled consequences. Messnge
,
Type the characters you see
SHARE THIS! O � ' 0 A _ ` ' here:
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Filed Under:Nearthcrne News,Imiqhfs cna S7afegy lagged With:benefils,canier,coveraqe, Send
leg�;loiion,oul-of-neiwoii:,Re�rnbursemenf
About Craig Hasday
http:!lftenkelbenefits.com/blog/2Q14/05/01/reimbursement-trends-and-unintended-consequences/ 1/3
11lSl2017 Reimbursement Trends and Unintended Consequences:Shrinking Out-of-Network Benefits�Frenkel Benefrts
Craig Hosdoy is PresiCent of Frenkel Benefiis cnd Senior Execulive vice President of
Frenkel and Company.Frenkel Benefits is one of tne largest privately held independent
employee benefits biokers in ihe United States.
�
Hc is a naTionally rccognizcd hcalthcarc Icadcr,who hcs sat an thc national advisory boards of Acina.
UnitedHealihcare and WeIlPoint,as well as the regional advisory boards af most major carrieis.He has
been appointed ta the MetLife Nntional Broker&Consultant Summit and sits on the Global and
Domesric Benefit Advisory 8oards of Assurex Global.Fienkel Benefits is olso a member of IBN and GBN
worldwide.
Craig�s an appointee to Govemor Cuomo's Regional Siekehoider Exchange Boord and the chair of
the Nationai Association of Healih Underwnters{NAHU� Principals Council,a liaison to ihe White House
HHS,thc U.S.Treasury and Congress to cdvisc on ihc practical issucs associaicd wiih ACA
implementation.He Is on ihe board of the NAHU Education FoundaTion and a member of ihe
UnitedHealthcare Children's Foundation Regional Board of Directors.
Croig was selecled os a 2015 Power 8roker by Risk&Insuronce Maga�ine.He a o frequenl speaker on
a broad orroy of issues affecting the insuronce industry and is an adjunct professor in the New York
Universlty Masters of Human Capital Management Program.
Craig has appcarcd on CBS and othcr N news programs as a hcalthcarc commcntator and is widcly
published and interviewed by media as a benefits expert.As c judge for ihe 2014 and 2015 Business
Insurance Benefit Manager oF the Year awards,he contributes his benefits expertise toward selecting
thls prestigious oward's winne�.Craig cc7n be heard on WCBS Newsrodio 880 during the evening
business reporl speok�ng obout heolihcore reform ond employer strotegy in a segmenl litled,
FrenkelySpeoking,which�s based on the Frenkel Benefts'blog.
Craig�o�ned Frenkel in I 992.as the mcnager of what was then The Life&Employee Benefiis
depaitmcnt.Under his Icadership.Frcnkcl Bcncfits has cxpandcd almost twclvefold in revenuc.now
serving almost 800 clients across ihe U.S.cnd globally.
He is a New York Stote CPA,formerly working in ihe New York office of a big-four acco�nting f�rm.
Croig hos experience os on audil and lox professional,chie�flnoncial of(icer and e small business
owner.This diverse bockgro�nd brings an in depth appreciotion for the chellenges facing clients.
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11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
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She tumed to Google far help getting sober. Then she had to escape a nrghtmare.
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easha Ali had been drunk for the last two days, but she didn't want to be
anymore. The 39-year-old math teacher and mother of two was in a spiral
familiar to anyone who's struggled with addiction.A difficult event—a
hospitalization, thanks to lingering symptoms from a birth defect—had stressed her
to the breaking point, and then she'd gotten home and found herself alone in her
house, depressed and unable to sleep.After a few days without drinking, she gave in,
and spent the next 48 hours on a bender.
On the second night, January 8th of this year, she got an email from the hospital. Her liver
enzymes had been dangerously high—even before the days of abuse. The birth defect
that put her in the hospital had already left her with several damaged organs.Afraid of
hurting another, she searched the test results in Google. Right there at the top was an ad
for rehab.
"I thought to myself, 'Oh my God,even Google knows I need rehab,"'Ali told me.
IYs hard to say exactly who was on the other end,when,just before 11 PM,Ali called the
number in the ad. The 800 number was ephemeral. IYs missing from Yellow Pages listings,
social media, and even sites for complaints about telemarketers and spam, and it was
disconnected by the time I called it.The untraceability is frustrating, but not surprising_
Google offers advertisers unique "tracking" phone numbers that forward to a company's
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11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
phones, so they can understand which ads are bringing in the most clients.The phone
numbers only stay up as long as the ad does.
"ON MYGOD, fVfN GQOGfE KNOWS I NffD RENAB."
Ali's call to the hotline lasted almost an hour.The woman asked for Ali's insurance details
and other personal information,which Ali gave her, but mostly,they talked.Ali told the
woman what was going on with her, why she wanted treatment, and what kind of rehab she
hoped to end up at. "Somewhere with palm trees,"she remembers requesting.
The woman told Ali she'd call back with a referral.Ali fell asleep while waiting.
KEY POINiS
• Google resul[s for phrases like"rehabs near me,"along with the resulting ads are often peppered with
80Q numbers for lead generators,third-party call centers sellmg potential clients to rehabs
• Some rehabs run hotlmes that seem like unbiased referral services,but refer most patients to treatment
centers they awn
• The worst operations overbill msurance for tens of thousands of dollars,pay referrers a portion of the bill.
and in extreme cases,can look a lot like human trafficking
• Deceptive pract�ces are common in onl�ne rehab rnarket�ng,including Google and SEO scams that
redirect callers away from legitimate treatment centers
• At some call centers,reps are paid bonuses for°perfortnance'(�.e.,how many admissions they sign up).
and many use high-pressure sales tactics on desperate callers
• A new law in Florida.where many of the call centers are based,bans deceptive sales tactics for rehabs
• It remains unclear how much legislation and other pressures will affect these marketing practices
At 8:30AM the next day, her phone rang. It was a placement service called Aid in Recovery,
and it'd found a good place for her, a Florida ou�t called Wellness Counseling and
Residential Detox.
"Our mission is to make sure you have the best possible chance to break free from alcohol
and drug addiction. We do this by matching your specific needs with the best rehabs across
the nation,"Aid in Recovery's website promised when Ali looked it up. Spending January in
Florida was an easy sell.At 12:30PM,Aid in Recovery sent Ali flight information. Four hours
later, she was on a plane.
"I had a lot of guilt and shame about my drinking, and so I really wanted to stop. I'd been
trying to cut back, and I realized I wasn't going to stop on my own,"Ali told me over the
phone a few months after she got out of Weliness. Had she been clearheaded, she thinks
she might have noticed the warning signs, like the salespeople telling her that treatment
wouldn't cost her anything.
What Ali found in Florida was a far cry from the tailored retreat she was expecting. The
facility was in a recently converted ex-motel; she told me her room was crammed with three
twin beds and a small chair. Most of her treatment at the understaffed facility consisted of
large therapy groups, and personnel were unprepared to deal with her serious medical
issues. Having started out looking for help with her alcoholism, she ended up getting a
lesson on the complex, opaque web of treatment centers and marketing operations that use
https:/lwww.theverge.coml2Q17/9l7116257412lrehabs-near-me-google-search-scam-florida-Veatment-centers 2l22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
the internet and high-pressure telemarketing techniques to profit off a booming market:
addicts in America.
In the shadow of America's opioid crisis, an array of business models have sprung up to
generate"leads," marketer-speak for addicts with money—or good insurance. Some are
third-party marketers operating referral hotlines, while others are entities owned by and
referring to a single rehab company. Some serve both purposes, referring to their own
treatment centers and selling the callers they can't use. While quite a few treatment centers
and marketers are honest and upfront, many others use deception and call-center scam
tactics to get clients.
SOMf SPEND HUGf SUMS Td SHOW UP!N TNf SEaRCHfS Of OESYfRATf FfOFtf W1TN TNf RJGNT
1NSURANCf
The companies are united by their dependence on Google, some of them spending huge
sums on ads to show up in the searches of desperate people with the right insurance.Aid in
Recovery, the company that sent Ali to Florida,spends over a million dollars a month on
Google search ads for websites they own, according to an estimate by web ad analytics
company SpyFu.
Florida has taken notice of the industry's marketing tactics. On June 26th, Governor Rick
Scott signecl a long-ativaited ban on deceptive treatment center advertising that outlines
specific disclosure requirements and cracks down on other questionable practices that
have become common in the rehab industry.The bill,which explicitly covers misleading
statements online, passed unanimously in both the Florida House and Senate.
� FROM OUR SPONSOR �. I ' i i � � . I I i
As of June 24th,Aid in Recovery's website continued to imply it was an independent
company, as it had when Ali went to Florida: ''We have the most accurate and latest
information on treatment programs available,"Aid in Recovery said on the front page. "We
do not promote any particular approach to addiction treatment,just high success rates_"
NAD SNf BffN C[fARHfADEU, SNf IHINKS SHf MlGHT NQVE NDTlCf� 1HE WARNING S1GNS
htlps://www.theverge.com/201719/7/16257412lrehabs-near-me-google-search-scam-florida-Veatment-centers 3l22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
By July 9th,Aid in Recovery had changed its web copy, deleting all of the language
suggesting they were independent, and adding a disclaimer that the company"is
associated with affiliated treatment centers located in AZ, CA, and FL and Aid in Recovery
may refer a person to one of these entities if the person's treatment needs and payment
abilities match the treatment offerings at these facilities."(Aid in Recovery also removed
some aggressive and misleading statements about going to rehab far from home, including
that"it has been proven that the success rate is higher"when addicts go out of state for
treatment.)
Some of their affiliates are now named on the website, including Wellness, where Ali went.
But those aren't the only businesses in Aid in Recovery's network. Company filings and
court records reveal a tangled web of holding companies within blandly named holding
companies, adding up to a multimillion-dollar rehab business, all tied together by an LLC
called Treatment A•1anagernent Company. It spans four states, and includes phone rooms,
urinalysis labs, detoxes, and rehabs.All of them are connected to one man, Bryan Deering,
a millionaire who made his money in concrete.
Many are concerned about the way profits in the industry have been prioritized over patient
outcomes. In 2015, Michael Lukens, a former business partner of Deering's, made a
YouTube video denouncing unethical behavior in the rehab industry.
"I actually have perspective from behind the scenes," Lukens says on the video. "By and
large, the mentality of the owner-operator is continuously putting profits ahead of people."
"We completely reject any suggestion that we have been deceptive in our operations or in
dealing with clients or prospective patients,"Treatment Management Company said in an
emailed statement. "Our marketing efforts are in line with other health care companies in
the United States."
htlps://vuww.theverge.com/2617l9/7116257412/rehabs-near-me-google-search-scam-florida-Veatment-centers 4l22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
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pen another tab, and Google "alcohol rehab near me."Take a look at the ads up
top. (If you have an ad blocker, you'll have to turn it off.)
If you're in Arizona, and you click on the top ad, you'll cost that advertiser around $221. If
you're in Colorado, that click costs the site$230. Sorry, New Yorkers, your click is only
worth $43—but if you searched "drug treatment centers,"you'd go for around $121.
(These are estimated averages from April this year, provided to The Verge by advertising
analytics company SEMrush.)
ThaYs assuming you don't live in a city with a high percentage of Medicaid recipients. In
New Jersey, the statewide cost for ads on "best alcohol rehab centers"searches is$190
per click, but that's an average. Smart marketers tell Google they don't want their ads
showing up in any searches from Trenton, Camden, or other low-income cities. It's also
good practice, if you're hoping to attract well-heeled (or at least well-insured}clients, to
keep your ads away from searches with words like"free"and "Medicaid."
https:/lwww.theverge.coml201719/7/16257412lrehabs-near-m�google-search-scam-florida-treatment-centers 5122
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
Of course, there are other ways to preveni poor people from calling your hotline. One of Aid
in Recovery's AdWords listings, which I saw on Google in the middle of August when
searching for"treatment center South Florida," is titled "Addiction Treatment Center-No
Medicaid. No Medicare."When I repeated the search, their listing was titled "Addiction
Treatment Center-(Private Insurance Only)."A few days later, I tried "texas rehab"and got
an Aid in Recovery listing titled "Luxury Drug/Alc Rehab Centers. -(Private Insurance
Only}."All three list different 800 numbers.
Some methods of targeting patients are more deceptive. My editor in New York City
Googled "rehab" in February; one of the top AdWords results was for The Watershed.
"Rehab in NY-Choose The Watershed Rehab," it read, listing an address in Brooklyn. "No
Medicaid/Medicare."Searching the Brooklyn address brings up their"locations"page,
which clarifies the rehab"provides treatment services only in our Florida and Texas facility
locations," before listing addresses in 32 other states, including nine in New York and eight
in New Jersey. (The other three ads in my editor's results were for rehabs in Florida.)
TNAT C[ICl(CDSTS THE SlTf 5230
A friend Googling "rehab near me" in the Bay Area in August got ads for a third-party lead
generator; a local rehab with a hotline that rang to the parent company's New Jersey call
center; and a site operated by Aid in Recovery(its closest facility is 400 miles away).
Once a potential client is on the phone, iYs up to the phone room salesperson to convince
them that they should travel to the treatment center the call center is repping, whether or
not going away from home was the person's intention.
"Google 'drug treatment Dayton Ohio,'"Alan Johnson, chief assistant state attomey of
Florida, suggested to me. "Call a couple of those numbers that pop up, right up front, and
see what you get." He laughed a little. "See if you actually get somebody in Dayton."
Johnson is head of the Palm Beach County Sober Homes Task Force, which has been
helping draft legislation about fraud and other illegal activity in the treatment industry since
July 2016.
Google declined to comment on the record when I asked them about issues around
geographic targeting of ads.
https:/lwww.theverge.com12U17/9/7l162574121rehabs-near-me-google-search-scam-florida-treatment-centers 6l22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
Drug Detox Centers Las Vegas .
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Screens.hot irom Tom Waddinqton
The search giant actively courts treatment centers, both online and off. In May,a Google
"digital ambassador"was a featured speaker at the T��eatment Center Executive&
��larketing Retreat, a networking getaway for C-suiters and financiers of addiction treatment
businesses. In July, two Google executives talked about AdWords at a marketing
conference for mental health professionals.And in February, Addretion Professional,the
rehab industry's main trade rag, ran a webinar called "Attracting Patients Online in Their
Time of Need." One of the speakers was Danielle Bulger, a senior account executive with
Google's health care division and a featured speaker at the aforementioned retreat.
In a study using what Bulger called their"humongous dataset," Google found 61 percent of
people who went to rehab used the internet to find treatment—a bigger number by far than
those who relied on their family, friends, or doctors.
"While the gravity of the situation is not lost on us here at [Google], we do know that if we
do ourjobs well as marketers, as digital evangelists, as content producers that answer
these very important questions, we can help lives,"Bulger told her listeners.
"Sff If YOU ACTUAIIY Gf T SQMf8D0Y IN QA VFDN."
But the search engine's ubiquity gives scammers easy access to the same customers, and
their business-friendly tools work equally well for black-and white-hat marketing.
One of the most common scams is so easy you could try it yourself(but please don't).
Google's business listings—the snippets that pop up in Google searches or on Maps—all
have a little link in them: "Suggest an edit." If a business hasn't claimed its listing, iYs easy
to change the phone number to anything you want. Scam marketers do it constantly,
rerouting a treatment center's calls to their own hotline, trusting their sales reps to convince
the caller they've come to the right place, as Alfred Lubrano of the Phrlaclel��l�ra Er�qurrer
reported in June.
Even if a company has claimed the listing for their center,which usually involves Google
mailing a postcard with a security code to the business address, sometimes Google's
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11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
algorithm lets spammers'suggested edits through anyway. Business owners aren't notified
of such changes by email, instead seeing them only if they log into their"Google My
Business"account page, according to Tom Waddington, a Google Top Contributor, which
means he volunteers to answer user questions in the Google help forums. (In exchange,
Google gives him easy ways to escalate reports about scams and other complaints to
Google employees, and flies him to Mountain View every year for a special conference_)
"Overall, allowing users to suggest and moderate edits provides comprehensive and up-to-
date info, but we recognize there may be occasional inaccuracies or bad edits suggested
by users,"a Google spokesperson told me via email. "When this happens, we do our best
to address the issue as quickly as possible."
But experts told me it's a lot more common than Google suggests.
"If you're a facility and you don't check your map on a regular basis, you will be hijacked,"
cautioned Johnson.And patients need to be careful, too. Once the rep has you on the line,
he says, they'll tell you whatever they need to to reel you in. If a patient is looking for a
specific rehab, Johnson told me the reps might respond, "`Well they're full, but we have the
same program in Delray Beach.' Like as not, they hook somebody in, thinking they're
getting something that they're not getting."
"IF YOU'RE fl f�C1l1TY QND YOU DQN'T CHfCK YOUR MAP ON A RfGUlAR BASIS, YQU W([I 8E NtJ�CKfD."
Sam Bierman, executive director of Maryland Addiction Recovery Center, a strong critic of
shady marketing tactics, has a couple of quick and dirty rules for families and doctors on
the hunt for a rehab. One is to pay attention to the website's staff page. If they don't list their
top brass, at the very least,then you have no idea who you're talking to, and should
consider looking elsewhere. He also suggests asking the person who answers the phone if
they're actually at the treatment center. If they tell you they're based somewhere else,tread
carefully.
A few weeks before we talked, a fake number showed up on the Google listing for a
treatment center owned by a friend of his. Bierman gave it a call. "I said, 'Are you guys a
treatment center?''No, we're a national hotline.' I said, 'Okay, well are you guys for-profit or
not-for-profit?'And she said, `No,we're a national hotline."'Then the woman hung up on
him.
"A lot of it is just taking advantage of consumers who may not know any better," Bierman
told me with anger in his voice.
Google has made efforts to block such hijacking, but it's a game of cat and mouse. When
lead generators aren't hijacking real rehab listings, they're submitting dozens or hundreds
of fake ones, spamming Google Maps in an effort to get their 800 number in searches for,
say, "rehab Los Angeles.'�In the early days, a treatment center in Florida could give
legitimacy to a fake listing just by renting a post office box to receive the security code.
Google eventually got wise to that, so scammers switched to private mailbox rentals,
people's houses, and "virtual office"services.
Scammers in other industries try to game AdWords and Google business listings, too.
Googie has to contend with lead generators for locksmiths and other businesses pretending
htips:!/www.theverge.com/2017/9/71162574121rehabs-near-me-google-search-scam-florida-Veatment-centers 8�22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
to be a specific company near the searcher's location, and fraudsters have used AdWords
for phishiny attempts. keylogging malware, and tech support scams.
Some security experts complain that the company's response to scams, especially those
using Google Maps business listings, is glacially slow. For instance, in 2014, security expert
Bryan Seely hijacked the phone numbers on Google Maps business listings for FBI and
Secret Service offices.A year later, when Google still hadn't fixed the security flaw, he used
the same technique to create a verified Maps listing for Edward Snowden's office... inside
the White House.
"A[DT Of IT 1S JUST T�XING dDVaNTAGf Df CONSUMfRS !MflO MAY NDT KNDW ANY 6fTlfR."
Waddington told me he hasn't seen any complaints from rehabs in the Google help forums
recently, but said complaints tend to come in waves. "Hopefully this cu�rent downtime is a
sign that Google has improved their ability to combat the issue," he said, "but it could also
just mean that drug rehab spammers have improved their abiliry to avoid detection. I feel
Google has a long way to go in identifying and removing spam listings overall." He first saw
complaints about business listing hijackings back in Fehruary 2016.
Last year, Google trialled a more proactive approach, according to Mike Blumenthal, a
Google top contributor and co-founder of Local U, a conference series on internet
marketing. Google often gives him early information on news about the search platform.
Businesses in a few select demographics had to verify their location, or be hidden from
search results. It was evidently too clunky. In July, a Google representative told Blumenthal
they would instead be`leveraging a behind-the-scenes approach to combaY'fraud,
requiring less work from the business owner.
"We use automated systems to detect for spam and fraud, but we tend not to share details
behind our processes so as not to tip off spammers or others with bad intent,"the Google
spokesperson told me by email. `We've significantly reduced fraud with treatment center
listings on Google and are committed to continuing to eradicate this type of fraud on our
platforms."
hese kinds of rehab marketing techniques may seem like a uniquely modern
phenomenon, but 16 years ago, the Miarni Ne�a� Trn�es published a story that,
anachronisms aside, could have been published today. Michelle, desperate to get
sober, dialed the first rehab number in the phonebook.The salesperson quickly vetted her
insurance, oversold the amenities, and bought her a plane ticket. When she landed,
"Michelle discovered a few minor surprises: there was no fitness center, the pool was
actually an algae-clogged hazard, and her insurance company was billed $1,000 per day
instead of$400."
Like Ali, Michelle was searching at the height of desperation and latched onto whatever she
saw first. In Michelle's case, the number popped up first in the Yellow Pages because the
treatment center owner had filed the rehab under an alphabetically optimized name,Aaron
Alcohol Abuse Addiction Assessment Counseling. (Business name paperwork took a pretty
surreal turn during this analogue SEO war. In 2004,a former Sea Winds exec named his
new company AALCOHAAAAAL A+AABUSE 24 HOUR AAAAABLE HEPLINE AND
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COUNSELING CENTER, INC; in 2011,The Watershed, the same treatment center
juggernaut from my editor's Google search, registered to do business as the letter A.)
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The internet opened the floodgates of opportunity for sketchy ad tactics. Since the mid-
2000s, a hodgepodge of in-house and third-party marketers have been generating
enormous call volumes via N spots, radio ads,and thousands of carefully targeted
websites.
Third-party lead generators often send out"raw"calls in a kind of roulette, ringing a few
times at each contracted treatment center until someone picks up. Much more valuable is a
"verification of benefits"call, forwarded from a phone room that pre-vets addicts' insurance
policies.
Some companies are startlingly blunt in describing their services. Take Treatment Link, a
shop out of Pompano Beach, Florida, which doesn't hide any details from prospective
marketing clients.
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"All of our leads are exclusive,filtered, 8� HOTt,"they exclaim on a page titled "Wf�y We're
#1."They tout calls, generally the most expensive in the industry, that are"qualified by our
treatment specialists for cash payment or payment through an approved P.P.O network with
their insurance provider."
Things are a little different over on Treatment Center Finder, the website Treatment Link
uses to reel in addicts. "We provide treatment centers that guarantee your success,"they
promise—a pretty wild claim, considering the National Institute on Drug Abuse, part of the
National Institutes of Health, estiir�ates that 40-60 percent of addicts will relapse after
rehab. "We will connect you with the drug rehab that will set you free from addiction, and
lead you to a wonderful life beyond your dreams!"
Some call center practices, in particular paying per-head bonuses for each admission, risk
turning into patient brokering, essentially buying and selling patients. Common brokering
practices include paying "junkie hunters"for clients; bribing patients with cash, drugs, and
other incentives; and kicking back a portion of insurance reimbursements for blood, urine,
or genetic testing.At its worst, patient brokering looks a lot like human trafficking, as addicts
are passed aro�md between brokers kept high. and even forced into prostituUon. In Florida.
�t c�n be a first-degree felony carrying a $500,0�0 fine.
After a few years of buildup, Obamacare kicked the scams into high gear. Suddenly,
anyone could get insurance covering addiction treatment—including drug tests that, with
the help of a friendly medical professional,could turn one cup of urine into thousands of
insurance dollars for rigorous chemical analyses. Professional groups generally
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recommend those tests only for confirming the results of suspicious or especially
consequential pee-in-a-cup tests.
With exchange plans largely locked into paying for medically required tests, patients (and
their urine) became gold mines. Some labs started offering kickbacks to treatment centers,
who in turn began splitting the profits with halfway houses that would tempt clients with free
rent and other services.
PAT�FNTS 1AND TNf1R URlNfJ�fCAMf GOlD MfNfS
More and more halfway houses and treatment centers opened,flooding the market with
businesses relying in large part on trickle-down pee money. Street-level patient brokers and
phone room lead generators stepped up to fill the beds with strategies across the ethical
spectrum, including signing addicts up for Obamacare and paying their premiums. Some
treatment center operators cut out the middleman by opening their own labs, which only
increased the demand for new patients.
Almost every arrest by the Sober Homes Task Force has involved urinalysis overbilling in
one way or another. "Laboratory testing as a complement to clinical care may be routinely
billed for without legitimate proof of inedical necessity,"the task force wrote in a January
report. "This is one of the engines that currently run the industry."
In 2007, web marketer Phil Cory started TreatmentUSA as a kind of Yellow Pages for
addiction recovery businesses. When he added an 800 number eight months later, more
than one provider offered him thousands of dollars if he would vet patients'insurance
coverage ahead of time. He says he turned them down, sticking to selling raw calls off his
175 sites, and requiring centers to provide three appropriate phone numbers to people who
didn't have good insurance or the money to pay. He later sold the company to rehab chain
American Addiction Centers.
"1HIS IS ONf Of TNf fNGlNES TNA�CUAREld1[Y RUN TNE 1ND8STRY."
"I could have made millions—multimillions—off the calls I generated for the treatment
industry playing the same game as anyone else, but I made pennies on the dollar sticking
to raw calls," he told me wryly. "I went so far as to sell my company because the industry
was getting horrific.There were bad actors coming into play and profiting ridiculously off of
families, and thaYs just not right."
Cory and Johnson both say unethical marketers have made it incredibly hard for good
providers to compete in the South Florida market. When your competitors are cheating,
how do you stay honest and keep the door open? But now, they say, a reckoning has
begun, and many treatment businesses are closing or fleeing the state.
"WHfRf TNfRf'S NlGN fCQNOMIC MOTlVATlQN, PfDPtf FlGURf DUT HOW TO SCAM 6QDGLf."
Insurance companies have stopped paying out for urine tests the way they used to,
stepped up audits, and delayed some claims to treatment providers. There have been over
two dozen anests of patient brokers in the I�st ye�r or so, based on investigations by a
broad alliance of government agencies.The Sober Homes Task Force, where government
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officials are joined by industry stakeholders, has been helping push legislative change,
such as this year's law banning deceptive rehab marketing,which will eventually require
marketers to register with the Florida government.
"It really boils down to—tell the truth. Disclose who you are, what services you provide,
where yau are.And if people do that, they won't run afoul of the new law,"Johnson told me.
But addicts and scammers are both renewable resources, and even a combination of state
laws, high-profile arrests, and algorithmic tweaks can only go so far when there's money on
the table and inventive cheaters to rake it in.
"The hackers have gotten better, Google's gotten better,"Google blogger Blumenthal told
me. "Where there's high economic motivation, people figure out how to scam Google."
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hen Ali clicked on Aid in Recovery's website, she found reassurance that their
"knowledgeable and skilled admissions coordinators"would walk her through everything,
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and "create a customized treatment plan"just for her. "We do this by matching
your specific needs with the best rehabs across the nation,"the page said until
the marketing bill was passed.
"The only thing they could say they did to match my needs was make sure the insurance
would cover it,"Ali told me.
Aid in Recovery employs clinicians, but the people who answer the phone generally aren't
licensed medical professionals. One of their primary qualifications is often having lived with
addiction themselves. Hiring addicts in recovery to sell rehabs (not to mention antiques,
pr�nter ink, gold co�r,s, and fake timeshares)makes a lot of sense for both parties. Heavy
drug users tend to accumulate points against them in the job market, like tattoos, track
marks, criminal records, and long gaps in their resumes. But the desperation of long-term
addiction can hone a certain genius for persuasion, too—a valuable skillset in the sales
world.
When Ali called, the woman who answered knew just what to say to get her onto a plane.
"She talked about how I needed to do this for my family, and that waiting would only make it
more likely that things would get worse,"Ali told me. "I got scared."
"I GDTSCARED."
To get the hard sell myself, I tried Aid in Recovery's live chat a handful of times before the
new marketing law, mostly asking about treatment for a heroin-addicted daughter.Asking
for a list of treatment centers was a nonstarter, as was getting information about what kind
of financial deals they have with the treatment centers.The more questions I asked, the
more aggressive the salespeople got. On one chat, the marketer told me her own mother
had just overdosed on IV heroin and died, so she knew what I was going through. When
that didn't sell me on giving her my personal information, she pulled out all the stops.
"I don't know what would stop you from wanting to speak with a specialist to get further
information,"she wrote. "The more paranoid you are the longer iYs going to take to get your
daughter the help she needs."
In their letter responding to my detailed questions, Treatment Management Company said,
"At the time we started Aid in Recovery, we marketed it as an independent company since
we often had to refer clients out for detoxification."
"Over time,we have developed a full service offering of inedical detoxification services,
residential treatment,outpatient services, after care services and limited toxicology
services. Because we currently offer full treatment offerings and as state laws and
regulations have evolved, we now disclose on our AIR website, and in our calls with
patients, that AIR is affiliated with our treatment facilities."
The site does now say that they are affiliated with centers in Florida,Arizona, and
California, and they'll say it on the phone, although they're much more cagey in the live
chat.According to public records, Deering, the owner ofAid in Recovery, has started or
purchased the following rehab brands:Treasure Coast Recovery, Wellness Counseling and
Residential Detox, and Executive Recovery Center, also known as The Lukens Institute, in
Florida; Mountainside Recovery Center, also known as West Coast Wellness Center, in
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California; and Serenity Care Centers, Red Rock Wellness Care Centers, and Red Rock
Addiction 8�Treatment Company in Arizona.
9ffOREJUlY, fVfRYTHfN6 ABOUTAlfl 1N RfCOVfRf'S FRfSfN1ATlON SUGGESiED 1T WAS AN UNBlASfD
RfffRRAt SFRYlCE
He is also the owner of National Laboratories,which specializes in drug tests for rehabs.
IYs a legal arrangement—as long as they don't bill Medicare or Medicaid, both of which
ban practitioners from referring to labs with the same owner, or to labs owned by a family
member.
Treatment Management Company, according to a statement, provides administrative
support, but does not control any of the companies.
Since the marketing bill passed,Aid in Recovery has toned down the aggressiveness of
their website copy some, changing their'in-state versus out of st�te� p�ge to remove both a
statement about how a local treatment center can't prevent gossip or"people seeing who
enters and leaves the facility,"and the incorrect claim that"it has been proven that the
success rate is higher when one receives their treatment from rehab out of state." (It may
actually be worse, since family participation improves the likelihood you'll finish a given
program_)
Before July, though, everything about Aid in Recovery's presentation suggested it was an
unbiased referral service. Its employee email signatures, for example, had this disclaimer:
"Aid in Recovery, LLC is a placement service...our advice does not constitute medical
advice or diagnosis...substance abuse treatment services recommended by us are
provided by independent treatment centers who are solely responsible for their content and
for conformance with applicable [laws]."
I've reviewed a January copy of Weliness Counseling's guidelines for how employees
should handle patient discharges.Although the email disclaimers stated that Aid in
Recovery wasn't responsible for the services provided to Ali, and that no one from the
company was giving her medical advice, the policy tells a different story. (Emphasis theirs.)
"All adm�ts�level of care and length of stay�s[sic]predeterm�ned by AIR and the[utilization
review staff]...If a client leaves facility grounds(AWOL}and �s gone for 2 hours or more,than the
client shall be discharged.The cl�ent will need to call AIR and interview w�th the clinical d�rector to
be readmitted...lf the client states he'was promised'a shorter length of stay or alternate
discharge plan, the case manager should call Aid in Recovery{AIR)WITHOUT THE CLIENT
PRESENT and confirm the program commitment. If the patient cornmitted to detox only or
discharge to another facility outside of our system,then AIR will set up discharge plans with the
client and coordinate transport. If the patient comrnitted to a"full continuum of care",then the
case manager will ask the AIR counselor that worked with the client to assist with convincing
client to follow through on commitment."
I spoke with a second former patient of Wellness,who left after insisting he had been
promised a shorter stay.The staff more or less followed the guidelines, he told me. The
techs listened to his Aid in Recovery recording (although he was around to hear it),and
once they heard him say he only wanted detox, they let him go.
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"Physicians at Wellness Counseling and other treatment facilities make their own
independent determinations regarding the appropriate treatment plan and length flf stay,"
Treatment Management Company wrote in a statement. "Any statements to the contrary
are false and deiamatory."
reatment Management Company has done a lot of growing up in the months since
Ali called Aid in Recovery. Earlier this year, it expanded into Georgia, snagging a
17,000-square-foot office space, and this summer it finally got its own website, two
years after getting a Florida business license. The site says the company has 31 treatment
center locations across seven brands, and a "24l7 addiction hotline." No brand names are
given.
When I asked a Treatment Management Company spokesperson how business practices
have changed in response to legislation and the company's growth, he responded by email,
saying, "A detailed timeline isn't possible. Internal policies, laws and regulations in three
states have continually changed over the years. We have always been compliant with laws
and regulations."
Deering got into rehabs in 2Q12, when he bought Treasure Coast Recovery,a rehab in
Stuart, Florida.A year later, he bought a controlling interest in The Lukens Institute, a luxury
rehab run by clinical psychologist Michael Lukens, and started Aid in Recovery to market
them both. Multiple former employees who worked with Aid in Recovery independently told
me Deering called clients"gold bars."
MUIflPLf fDRMfR fMPlOYffS SQID DffRING CAlIfD CiffNTS "GOI�9ARS"
Asked about the"gold bars" comments,Treatment Management Company offered the
following explanation: "The term 'gold bars'was invented by managers so that our phone
reps understand that each person calling in is suffering from the ravages of addiction and
needs to quickly get to treatment. Sadly,we sometimes spent hours getting approvals and
we weren't always moving fast enough to get back to people who had their bags packed so
they could start their journey to recovery. Managers urged our phone reps to think of each
client as a `gold bar'that we wouldn't let out of our sight until safe and sound—whether to
one of our facilities or another facility where they could get the help they need."
Deering brought on Lindsay Lohan's press-hungry father, Michael Lohan, to market his new
companies. "Inspired by his faith, Michael Lohan has decided to open the nation's first faith
based clinical treatment center,"a Lukens Institute press release said at the time. It was the
second time God called to Lohan; in 2010, he claimed he was moving to Los Angeles to
start a faith-based rehab, as well.
Lohan's press strategy for Aid in Recovery seems to have been centered around trashy
headlines, including telling tabloids he wished h�s d�ughter would go to the Lukens
Institute. Tee��Ma�7 star Farrah Abraha�7� also went to the rehab, as did the"Tan Mom"
Patr�cia Krentc�l.All three D-listers were reportedly repped by PR agent Gina Rodriguez,
who didn't respond to a request for comment. Treatment Management Company told me no
patients have ever been paid to go to one of their rehabs.
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In late 2014, Lohan, who has also worked with several t��eatinent centers in South Florida
unaffiliated with Deering or Treatment Management Company,told Radar he was fed up
with crime in the South Florida recovery scene. "Such treatment centers turn a person's
dream into a nightmare," he reportedly told the gossip rag.
Lukens left the company right around when Radar published that story, because of what he
calis "philosophical, moral, and ethical differences between us." He told me that patients
would regularly come to the Lukens Institute and say someone in the phone room had lied
to them about the program and its offerings. "Nobody said, `Bryan told us to lie,' but I went
to him about it and complained, and it didn't stop. So, he was either unable or unwilling to
stop it," Lukens said.
"Nf WAS flTNfR UNaBIf OR UNW!!LlNG 1Q STOP I1."
According to Lukens, he made a deal that Deering would buy out his stake over the course
of two years and then stop using The Lukens Institute name, which Lukens has
trademarked.The psychologist maintains the deal has not been honored. "I took my toys
and tried to go home, and he kept sorne of my toys," Lukens told me.
When I called the number on The Lukens Institute website, the answering service still said
"Welcome to the Lukens Institute."When I pressed three for the clinical director, I got the
voicemail for Executive Recovery's director, and when I pressed one for more information, I
got Aid in Recovery, who told me their programs were"similar to �ukens, of course, but he
has his own thing, mostly self-pay."The Lukens Institute logo appears on at least one Aid in
Recovery website, as well.Treatment Management Company maintains the parting was
"amicabls" and that the purchase agreement allows for the use of the name.
About a year after leaving, Lukens made a video echoing Lohan s sentiment, criticizing the
industry at large, including the"unscrupulous and sometimes criminal activity"of some
treatment center owners.
"I actually have perspective from behind the scenes—by and large, the mentaliry of the
owner-operator is continuously putting profits ahead of people, so very little attention is paid
to improving the quality of care over time. IYs as if they realize there's no money in it," he
deadpans, with a college professor's resigned irony.
"The FBI is quite interested in this industry, and they're looking to crack down on some of
these practices, and I support that wholeheartedly— I hope they clean up some of the
mess here."
" told her my life story,"Ali said of the woman who answered her first phone call. "She
listened, and confirmed all my feelings, you know?She val�dated me."Ali says the
rep told her it wouldn't cost anything out of pocket. She has yet to receive a bil► from
the company.
The salesperson took down Ali's insurance, and prornised to call back. The next morning,
an Aid in Recovery rep called to book her a flight to Wellness, a treatment center that
matched her needs. Shortly after, she got an email asking her to confirm she could fly with
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her health conditions; once she'd sent that, she got an email with her flight information,
which put her in Florida by dinner. She barely had time to pack.
SNf BARfIIHAD TlMf TD PACK
IYs common for treatment centers in Florida to offer prospective leads inducements like
plane tickets and waiver of co-pays and coinsurance, generally having patients sign a
promissory note to pay them back. The notes theoretically prevent the plane tickets from
being a violation of Florida's anti patient-brokering laws.
Although Ali's credit card was charged for her plane ticket, the other patient I spoke with
had Aid in Recovery buy his ticket. He signed a promissory note, though he told me he
didn't feel pressure to pay it back.According to former employees who worked with Aid in
Recovery in its first two years, phone room salespeople were paid monthly performance
bonuses. One told me they were paid based both on how many patients they brought in,
and on other metrics, such as convincing patients to pay for their own flights.
(A recent job listing for Aid in Recovery lists the following responsibilities: "Sell a certain
program based on the insurance, available resources, age, gender, and medical needs...Be
prepared to ask client if they're able to contribute any money for either their flight, money on
top of an insurance policy or to pay an out of pocket expense...Transfer the client to a client
care coordinator to book a flight.")
Both patients feel Aid in Recovery over-promised what Weliness offered.They both spent
about a week in detox and then moved to the rehab, a motel that had been converted a
month or two before. The patients were co-ed, ranging from teenagers to the elderly.Ali and
the other patient told me they were at Wellness with an old man with diabetes and a walker.
They also told me people with widely divergent needs were mostly treated through group
therapy sessions.
THFY DESCRfBfU TNF ATMOSPHfRf AT Wf[INFSS AS OlSORGANIIED AND IIRDfRSTAfffp
The two patients I spoke with described the atmosphere at Wellness as disorganized and
understaffed, having just opened a few weeks before. Shortly before the man left, the
treatment center sent a large group of people to the Executive Recovery Center, which
does intensive outpatient while putting clients up in sober living houses.The patient, who
told me his only drug use was alcohol, stayed behind,eager to get out of there.
"I learned about more drugs than I'd ever learned about in my life," he told me. "The people
that were doing drugs were chain smoking. They said they were smoking about five times
what they normally smoked, because there was nothing to do."While he told me he wants
the company to be held accountable for their deception, he wasn't comfortable publicly
discussing his stint in rehab, so I agreed not to use his name.
Individual therapy wasn't much better.Ali wasn't sure the center assigned therapists at all;
the man thought he had an assigned therapist, he just wasn't sure who it was. Several
therapists talked to him during his time there, he recalls, mostly finding him on the outside
patio and joining him for a chat.
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"!lfARNfQ ABOUT MdRE DRUGS THAN!'D f VfR IEARNfd A�UUT 1N MY[lFF."
"They'd just did it nonchalantly, it wasn't like they called us into a room and talked to us," he
told me. Walking up to someone in a public area and asking how they're doing is not a
standard therapeutic technique.
"The center meets and exceeds all staff to patient ratios set by the state of Florida,"
Treatment Management Company said in their statement. "Counseling sessions—
individual and group—are provided [in detox] but the focus in these critical early days of
recovery is on treating the physical symptoms of withdrawal."
Ali's insurance was charged significant amounts for urinalysis throughout her stay.Three
times—Ali's first and last days in detox, and her second day in the rehab facility—
Wellness Counseling and Detox billed her insurance $3,615 for a urine test, while National
Laboratories, owned by Deering, billed her insurance$6,800 for so-called definitive testing
of at least eight drugs. Medicare rates for the tests are$79.81 and $155.42, respectively.
�[1'S lNS11RANL'E WAS 8![�fQ S14,185 fdR 11 DAYS
In total, between Wellness, National Laboratories, and the medical providers who billed
separately,Ali's insurance was billed $74,785 for 11 days: $40,605 for four days in detox,
and $34,180 for a week in the residential treatment center. Her insurance company
reimbursed them $22,046.37,about a third of what the providers requested, according to
Ali's explanations of benefits.
"The[drug]test done at Wellness upon admission provides limited information to begin
treatment, and comes back within a couple of hours. If the doctor needs more detailed
information on the exact drugs and levels in the patienYs system, he orders a confirmation
test at National Laboratories,"Treatment Management Company said, referring to their
general practices, which are not illegal.
li had been at Wellness Counseling for about a week when she got sick.
Ali has gastroschisis, a rare birth defect involving the intestines and, often, other
organs. She has to be careful about what she eats, has an implanted defibrillator, and
regularly spends time in the ER for painful, even life-threatening abdominal problems.
Wellness Counseling doesn't have an on-site doctor, and Florida doesn't require them to,
although the Sober Homes Task Force bill instructs the Department of Children and
Families(DCF)to draft stiffer regulations by the beginning of 2018. Wellness' medical
director, Jeffrey Bishop, is an osteopathic physician who uses his internet presence to shill
for a multi-level marketing company that sells"Natural Weight Management Coffee...Also a
very effective Immune Drink."Medical care was provided by a nurse practitioner who came
to Wellness once a day.
On January 2�th,Ali told staff that she was having stomach pain. One staff member
suggested a painkiller that would have made the situation more dangerous, according to
Ali. Upset by the interaction, she went back to her room. Then she realized she was having
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a medical emergency and went back to the front office for help, but was told she would
have to wait.
SNE 9fGQN UfMANDIN6 A PNdNf TD C�[!911
Increasingly anxious about her pain, she began demanding a phone to call 911, she recalls,
but no one would let her use one. Several hours after her symptoms began, the staff finally
called her an ambulance.
When she finally got to the hospital on Saturday night, she was determined not to end up
back at Wellness. Thankfully, she didn't require major medical intervention, and convinced
her discharge nurse to refer her to another treatment center, but their admissions office was
closed until Monday. Exhausted, miserable, angry, and alone, not sure where she was, and
with all her money and clothes back at the rehab, she picked a random direction and
started walking.
She happened to walk by the sheriffs station, where a deputy agreed to help her retrieve
her belongings.After several hours of chaos and frustration at Wellness, she got some of
her stuff, including her cellph�ne and enough money to buy a plane ticket, and called a car
to take her to the airport, she recalls. But the staff gave her something else by accident: the
guidelines for staff members discharging patients_That was the first time she found out Aid
in Recovery was more than just a referral company.
sNf P1CKFp d RANDOM dIRfCTlON AND STARTEU WA[H1NG
"When I saw the name Aid in Recovery on that paperwark, it shocked me,"she said. Back
home in Texas,Ali began looking into the company.
She contacted every local, state, and federal agency she could think of, but it didn't do
much good. She filed three reports with the Department of Children and Farnilies, which
polices treatment centers in Florida, but each time, they would immediately close the case,
she recalls. It wasn't until she complained to the Office of the Inspector General that DCF
undertook a formal investigation.
An inspector visited the site, spoke to one patient, several Treatment Management
Company executives, and reviewed a variety of documents, including Ali's medical records.
She determined there was no wrongdoing by Wellness in a report that referred to the
treatment center as"Wellington Counseling 8� Residential Detoxification Services"
throughout.
DCF is, according to both people in the industry and in law enforcement, underfunded and
othenNise ill-equipped to police thousands of treatment centers and halfway houses_A
December grand jury report found the agency had 25 I�cens�ng special�sts for 931 licensed
rehabs.And until the last legislative session, which ended in May, they barely had the ability
to punish treatment centers operating without a license, let alone those that break some
rules and stick to others.
As of July 1 st,the agency is getting more cash from licensing fees, and has the power to
immediately suspend a treatment center's license. Operating without a license is now a
htips:l/www.theverge.com/2Q17l91711 62 5741 2lrehatrs-near-me-google-search-scam-florida-treatment-centers 19/22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
third-degree felony, and background checks are now required for owners, directors, and
clinical supervisors.
"WNfN!SQW TflE NAMf A!D 1N RfCDVfRY DN TN�1 FAPfRWORX, !T SNUCXfD Mf."
These changes come after years of inedia and community pressure to clean up the
industry.The Sober Homes Task Force finally broke legal ground late last year, with the first
arrests of treatment center owners and operators who were allegedly involved in patient
brokering schemes. Dozens more have since been arrested, around a quarte��of whom
have pled gu�lty.
The Task Force also wrote most of the language in the deceptive marketing bill, which
requires marketers to register with the state and creates penalties for lying about treatment
programs. Johnson, state attorney and head of the task force, said the deadline and many
of the details are still up in the air, but the application gives a sense of the scope. Marketing
companies will have to give a full accounting of parent and holding companies,
subsidiaries, and associated corporations, as well as a complete list of owners, business
partners, trustees,shareholders, officers, and office managers, so the state can run
background checks looking for fraud, embeulement, and other relevant felonies.
Both of the bill's sponsors believe explicitfy banning many of the tricks marketers use to lure
addicts to Florida will result in fewer patients coming in from out of state.ThaYs a big deal,
considering approximately 75 percent of the current patient population in South Florida is
from elsewhere.
Although this is movement in the right direction, Johnson had a word of caution about the
law's reach. "These are guidelines," he told me. "It's up to the state and the industry to
police ... The goal is to get back to an equilibrium where there's good treatment, as
oppased to these rogue operators."
Ali, at least,found the treatment she needed, back home in Texas. She got a reierral to a
local treatment center from her psychiatrist—she's learned her lesson about calling
numbers on the internet—and completed two back-to-back recovery programs. She's still
sober, and now has to learn to navigate the world as an addict in recovery, with all the
stigma that entails.
"I now belong to a different community of people, who don't have the same protection—
that nobody fights for,"Ali told me.
Laws may be changing, and a market correction may be underway, but that means more
pressure and less money in an already oversaturated industry. "The next 18 months is
gonna be the telltale sign," Cory, who started TreatmentUSA, told me. "You're going to see
a lot of these [rehabs], especially in South Florida and California, shut their doors because
they're not profitable."
Sllf DOfSN'T M�Kf� COMPQNY lMMUNf TO TNE 1NDUSTRr'S TARNfSH
At the same time, treatment center conglomerates are growmg more and more common,
taking advantage of the fiscal benefits of efficient, centralized decision-making and
resource-sharing. But size doesn t make a company immune to the mdustry s tarnish. Two
https://www.theverge.coml201719l7/16257412lrehabs-near-me-google-search-scam-florida-Veatment-centers 20l22
11/8/2017 How disreputable rehabs game Google to profit off patients-The Verge
of the largest rehab groups in the country—Elements Behavioral Health and American
Addiction Centers—have been accused of unethical behavior, including hiring scammy
marketing companies to steal Google business listings, though both disavowed the
marketers'actions.
Subsidiaries of both Elements and AAC have been accused of participating in urine test
kickback schemes,while facilities owned by AAC and two other chains, CRC Health Group
and Recoveiy Centers of Ame��ica, have been accused of maintaining lax standards of care
that contributed to patient deaths. Former call center employees at the AAC facility tald the
LA Times the sales environment was high-pressure, and all about getting heads in beds.
Several staff members, including the former president ofAAC, were indicted on murder
charges, later dismissed.
All four companies denied or failed to respond to journalists'questions about the above
allegations.
At the moment,conglomerates control just a small part of the US market, but industry
observers predict a steady increase in consolidation.All that money seems to be bringing
with it a new kind of smooth-talking salesman: pharmaceutical reps.
''A lot of these venture capital firms are coming in and buying percentages, or whole
treatment centers,and changing the salesforce from the marketing call centers into a
pharmaceutical salesforce," Bierman, executive director of Maryland Addiction Recovery
Center,told me. "We had a guy in our office a month ago, and I asked him what he did
before this. He said he sold Viagra." ■
https://www.theverge.com/2017l9l7/162574121rehabs-near-me-google-search-scam-florida-treatment-centers 21/22
� B h vi r
e a o al
� Healthcare
�� EXECUTIVE
COPYRIGHTED MATERIAL, DO NOT REPRODUCE
South Florida multi-service organization will close next week
By Gary A. Enos
A West Palm Beach, Fla., addiction treatment and sober living program is the latest casuafty of tumuftuous financial conditions in the
industry.
Grace's Way announced via an e-mail blast on Tuesday that it will cbse its doors on Sept. 29. "Despite our best efforts,we were not
able to maintain the financial ability to fulfill our company's mission and commitment to the quality of care that we believe our
patients and their families need to find lasting recovery,"the e-mail stated.
The organization's CEO, Bernie(Bemadette)Schultz, has committed to fumishing professional and personal references for every
Grace's Way staff member"in the hopes that every member of the Grace's Way family lands at one of the many quality programs
we know exist in Florida,"the e-mail stated. Schultr established Grace's Way,which offered a continuum of treatment and recovery
support services, in the aftermath of her son Dave's battle with addiction and subsequent recovery.The mother and son became
business partners in the venture.
Schultr could not be reached on Tuesday to comment on the factors that led to the decision to close.A staff member who answered
the phone at the facility said she was not in the office on the day of the public announcement.
There also was no additional information posted early Tuesday on the facility's website,which features the header"The Cycle of
Relapse Stops Here"on the homepage.
Times of upheaval
A variety of factors have complicated business prospects for South Florida addiction treatment centers and recovery residences in
recent months.These include a saturated market in the region,a growing resistance in other parts of the country to refer patients to
Florida because of professional ethics concems, and an atmosphere of stricter regulation that has had some treatment
organi2ations eyeing a relocation out of state.
"We have worked so hard and tried our very best ... But sometimes even your best is not enough,"read the announcement. "Our
whole Grace's Way family is sad, but we are soldiers and each of us will continue our personal and professional joumey and remain
steadfast in our commitment to serving this population for as long as possible."
COPYRIGHT 2017 BY VEND4ME GROUP. UNAUTHORIZED REPRODUCTION OR DISTRIBUTION
STRICTLY PROHIBITED
11l812017 SHOOT,READY,AIM:Palm Beach County's Blind 5hot at the Addiction Treatment Industry-Florida Healthcare Law Firm
�. (561) 455-7700
Blog
SHOOT, READY, AIM: Palm Beach County's Blind Shot at the
Addiction Treatment Industry
by admin (http.//www.floridahealthcarelawfirm.com/author/admin/) on January 6, 2017 3 comments
(http.//www.florrdahealnc�arelawfrrm.com/shoot-ready-arm-palm-beach-countys-blrnd-shot-at-the-
addretron-treatment-industry/#comments)
By: Jeff Cohen
(http://floridahealthcarelawfirmblog.com/about/)
�_ - `\
� S .
We should all be afraid when there is a "war" declared on
_ anything in our culture because it usually means the complex
. will be simplified, the innocent will be presumed guilty, details
will be ignored and the baby will be thrown out with the
bathwater Nowhere is that more apparent than the current War on Sober Homes in Palm
Beach County.
When we read the stories published (http://www.mypalmbeachpost.com/news/county-billion-
gold-rush-addiction-treatment-draws-fbi/JT3MyQwWckFyEZaSfQnoTN/) by the Palm Beach
Post, we learn things like-
• It is illegal for a sober home to receive payment from an addiction treatment facility for
providing so called "case management" services;
• Addiction treatment providers unethically bill thousands of dollars for urine tests that
could be provided for pennies via a cup for sale at Walgreens; and
• The Patient Brokering Act (http://floridahealthcarelawfirmblog.com/2016/10/28/the-
patient-brokering-act-and-addiction-treatment/), a state criminal law, is being broken left
and right by sober homes and addiction treatment providers.
Hooey! It's completely misleading. Here's why:
Case Manaaement Issue. The arrangement reported In the Post and described in charging
documents describes a business arrangement where sober homes are paid by state licensed
addiction treatment providers for helping addicts along their path of recovery. Addiction
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11l8/2017 SHOOT,READY,AIM:Palm Beach County's Blind Shot at the Addiction Treatrnent Industry-Florida Healthcare Law Firm
treatment sees these patients maybe 20 hours a week. Where are they the rest of the time?
What are they doing? Addicts seeking treatment often have soft life skills from being off the
grid, are often receiving assistance frorn supportive staff at sober homes who help them get on
their feet. They often come into treatment with no clothes, no money, no food, no job skills and
a whole host of inedical and psycho soclal needs. And addiction treatment facilities want (and
sometimes pay for) sober home staff to serve a function in the continuum of care, sometimes
want to give them food cards, clothing, cigarettes and whatever they need to accept treatment.
And our sole focus is to do what, focus our regulatory attention on a business relationship that
may exist in the treatment industry?
Moreover, it's never pointed out that there is clear federal regulatory guidance (e.g. safe
harbors) that described lawful ways of setting and implementing the very services
arrangements Palm Beach County law enforcement is targeting. None of the Postarticles
mention that there is clear federal regulatory precedent for arrangements that are done right.
Finally, while state licensed addiction treatment is compensated by insurance, sober home care
is not. And rightly done, sober home isn't a hotel. It's a supportive and quasi clinical
environment. Where is a sober home that relies entirely on addict rentai income supposed to
get the financial resources to be more than a flop house? Is that being addressed? Of course
not. They're just being targeted as being dens of patient abuse, illicit contracts and money
grubbing owners. Where is the committed effort to meet the real needs of addicts in recovery?
Unethical Billinq Issue. Have you ever seen a news article explain the difference between a $20
urine cup at Walgreens that delivers questionable and often clinically inadequate test results
and a toxicology screen that is produced by an $800,000 piece of equipment operated by a
Ph.D. scientist? Of course not. That little bit of info is just inconvenient to the story. And have
you ever read that the price paid by insurers is determined by the insurance companies
themselves, not by the provider? Of course not. That fact is never revealed in any story. And
yet it's 100%a true.
Patient Brokering Act Issue. How could these criminals just blatantly violate state law like they
are? It's not like that at all. In fact, the state law has NEVER even been used the way Palm
Beach County prosecutors are trying to use it. Never! The law has been around for years; and it
has never been used the way Palm Beach authorities are attempting to use it. Have you ever
seen written anywhere that there actually is an exception to the law for arrangements that
comply with certain federal laws? Have you ever read that the prosecution efforts are new and
novel applications of the law? Of course not. But there are such exceptions. And that's why
many addiction treatment providers and sober home providers seek legal counsel (albeit not
always from healthcare lawyers}, get written advice and agreements that are designed to
comply with federal law. And yet none of that is explained. Law enforcement is kicking doors in
and dragging people off in handcuffs for a possibly misapplied BUSINESS arrangement
(http://theinsider.blog.mypalmbeachpost.com/2016/12/03/first-woman-arrested-in-sober-home-
crackdown/}, free hausing, clothes and food? It's nearly unbelievable.
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11l8/2017 SHOOT,READY,AIM:Palm Beach County's Blind Shot at the Addiction Treatment Industry-Florida Heakhcare Law Firm
Why are issues I�ke these being oversimplified? Why are all providers being painted with the
same brush? Is there such a crisis in Palm Beach County alone? Are personal and political
agendas at play here and part of the driving force behind any of this? Doesn't it make sense to
ask more questions? Is our focus off or at least incomplete?
The vulnerability of addicts seeking treatment, by itself, compels strict governmental scrutiny
and responsibility, just like aged and disabled citizens. And yet that's in short supply. DCF is
grossly understaffed. And the state's solution for regulating sober homes was to pass a law
proposed in part by FARR that would allow an unnamed non-profit organization (ummm...
FARR?) to get paid to certify sober homes, at the very same time that FARR was defending a
lawsuit (https�//www.documentcloud.org/documents/2190181-cid-v-farr_html) alieging, among
other things, that the organization's head was engaged in improper business relationships with
the very homes it would have responsibility for certifying! A not for profit organization (not
even a tax exempt one) that is subject to all sorts of federal laws and is accountable. So...the
legislature's thoughtfui response to their responsibility to protect vulnerable citizens was to...
side step it altogether. "Yeah addicts need protection, but we're gonna spend not one penny on
that." Any word on that in the Post? Nope. It's pure window dressing.
The tides faced by the addiction treatment industry all flow just one way-against it. There are
no stories about effective treatment provlders. There Is no light shined on success storfes. They
are under a full out attack by the insurance industry. They are not represented in the legislature
at all! They do not even respond to BS news articles (http://www.sun-sentinel.com/local/palm-
beach/fl-sober-home-prosecutors-palm-20161025-story.html). And the industry is largely to
blame. Prav�ders refuse to work together in the legislature, the media or even to ensure lawful
and fair treatment by insurance companies. They don't work together to establish agreed on
clinical approaches to care of people in recovery. They have no effective method to distinguish
the good providers from the bad. They don't take the lead in any coordinated way. It is a
completely fractured industry that is vulnerable and on shaky ground. And the people who pay
the ultimate price for this instability is patients! With all these pressures, there will be fewer and
larger providers that will reduce patient choice and will necessarily push addiction treatment to
become corporatized.
Even so, the uniquely harsh and unfair treatment received by the addiction treatment industry is
hard to ignore. We don't see leukemia or cancer treatment providers alleged to all be crooks or
barnstormed like sober homes. We don't see dialysis centers routinely picked apart with
insurance company denials like addiction treatment. When law enfarcement enters a suspect
situation, they often do so with subpoenas, not with cameras, media, and police with tactical
gear Guns drawn to shoot down a possibly illegal business arrangement? Really? Law
enforcement normally investigates possible wrongdoing; and we're all glad they do. Anyone
who victimizes addicts in recovery deserves a prison cell. As a society, we have to assume there
are some idiots abusing vulnerable people in every industry. And we have to demand real
protection, not just politically easy and empty words and politics.
htip:!lwww.floridaheaithcarela�rm.comishoot-ready-aim-palm-beach-countys-blind-shot-at-the-addiction-treatment-industry/ 3l15
11/8/2017 SHOOT,READY,AIM:Palm Beach County's Blind Shot at the Addiction Trea6nent Industry-Florida Heafthcare Law Firm
But there is perhaps a deeper issue here that's important to see. Is the current overkill because
treatment success is so low (compared to other disease states)? It is because overkill is just a
good financial move by insurance companies and a good political move by supposed industry,
government and law enforcement leaders? Is it because it's true that the industry is full af bad
guys?
I suspect not. The darkest side of the issue lies in the fact that someone who horses around and
breaks his or her ankle gets care, not a comment like "When are you gonna get it and stop
breaking your ankle? You know what.,.l'm not gonna treat you cause you'll just break it again."
It's reflected in the fact that when someone with leukemia has a recurrence after remission,
insurance companies don't look for the most creative and ludicrous ways to deny payment, for
instance saying the treatment isn't medically necessary. It's reflected in the fact that the Florida
legislature can pass laws that SAY they're designed to protect citizens, but then do nothing
about it at the governmental level. It's reflected in the fact that the greatest expenditure of
resources is found in a mixture of obviously politically driven enforcement, but little in the way
of ineaningful support for effective treatment. Plenty of providers are barely paying their bilis
and still do it because they themselves found their way out of addiction.
Why then is the addiction treatment industry being subject to this kind of overkill? Because it
can! Addicts and the entire industry are the perfect victims and the perfect platforms for
skewed political and financial agendas. No one other than addiction treatment providers or
other addicts really cares about addicts. We think they caused their situation and don't really
wanna hear from them or about them. They're annoying to us. Why don't they just grow up
and stop us�ng drugs? And why don't they just get well, like from a healed broken ankle. We
don't wanna see them or hear about them. They're just making excuses, right? It's not cool in
our culture to kick an old person or a disabled kid, but we don't require humane treatment by
the government, the press, insurers or ourselves for addicts or their providers.
We refuse to step up and deal with the fact that people have serious addiction issues (whether
we agree it's an illness or not) that require the same commitment, compassion and protection
that we require on �ssues like cancer, heart disease or any other human problern. And we allow
government, the press, law enforcement and insurers to blame addicts and the treatment
industry and to further their own political and financial agendas. Ask any ASAM certified
psychiatrist, and they will adamantly explam that addictlon is a real medical issue that deserves
the same thought and care given to any affliction that human beings contend with.
Even more, the truth seems to be that our bias extends (to a lesser degree) to all brain based
illness/disorder.._whatever you wanna call it. People who contend with clinical depression,
bipolar disorder or anything else experience similar disparate treatment and judgment, with one
big difference: there is greater medical and societal support for the notion that perhaps these
people have REAL illnesses, are doing the best they can and deserve all the help we can
provide. But we seem to reserve the worst of ourselves and our culture and society for addicts
and their caregivers. Until we're honest about our own ridiculousness and commit to doing
whatever we can F�R addicts and their providers, we're just selling newspapers, giving people a
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11/8/2017 SHOOT,READY,AIM:Palm Beach County's Blind Shot at the Addiction Treatrnent Industry-Florida Heatthcare Law Firm
platform of self-promotion
(http://theinsider.blog.mypalmbeachpost.cam/2017/Ol/04/lawmakers-site-posts-investigation-
as-rnotive-for-change/) and skirting the real issues. Instead of a war on a supposedly illicit
industry, we ought to commit to finaliy making addiction treatment a priority.
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Related
Florida Lawmakers on the Proposed Flor�da Laws Target The Patient Brokering Act and
Attack with Addiction Addiction Treatment Providers Addiction Treatment
Treatment Law and Many Other Types of (http://www.flaridahealthcar...
(http://www.flor�dahealthcar... Professionals patient-brokering-act-and-
treatment-law/) (http://www.floridahealthcar... addiction-treatment/)
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http:l/www.floridahealthcarelawfirm.comishoot-ready-aim-palm-beach�ountys-blind-shot-at-the-addiction-Veatment-industry/ 5/15
11/8/2017 Google Cracks Down on Drug Rehab Online Ads�Inc.com
Qi
TODAY'S MUST READS �
�nvamsw�(Hr�s:awww.inc.cowwrmnsiMc�
Google Blocks Predatory Drug Rehabs from Buying Anymore Ads
The tech company is restricting ad sales to drug treatment centers because of recent problems in the unregulated$35 billion
industry
'�"! By Will Yakowicz y @Willvakowicz(http:/lwww.twitter.com/Wi1lYakowicz)
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A billboard for drug treatment facility in Youngstown,Ohio.CREDR Gettylmages
The opioid addiction epidemic(https:l/www.inc.com/will-yakowiczlbraebum-pharmaceuticals-probuphine.html)in America,which killed more than 53,000
people(https:l/www.cdc.govinchsldata/heaNh�olicylmonthly-drug-overdose-death-estimates.pd�in 2016,has fueled the drug treatment
(https:/lwww.inc.com/will-yakowi�nc-uncensored-podcast�pisode-76.html)industrys growth,with rehabs and drug treatment facilities popping up all
over the country.But the$35 billion treatrnent industry is plagued with untrushnro�thy facilities that have leamed how to game Google search results.
Many drug Ueatrnent centers have mastered SEO practices and buy ad words on Google to make sure their business appears first when an addict,or
desperate family member,types"drug treatmeni center"or"rehab"into the search bar,doctors and public health experts say.
According to the New York Times(htlps://www.nytimes.com/2017/09l14/business/google-addictio�-ireatment-ads.html?
moduls=Watchi ngPo RalBregion=trcolumn-middle-s pan-
region&pgType=Home page8action=click&media ld=thum b_sq uare&state=standard8contentPlacemenY-48vers ion=intemal�contentCollection=www.nytime
addiction-treatment-ads.html&eventName=Watching-article�lick8_r-0),Google formally acknowledged how pooriy-run rehabs buying ads on Google
are hurting patients in a time of need.In response,Google temporarily restricted ads that target people who search for drug treatment centers on its
search engine.Google says k might start selling ads to treatment centers again once it figures out a way to block misleading ads from untrustworthy
companies.
"We found a number of misleading experiences among rehabilitation treatment centers that led to our decision"Elisa Greene,Google spokeswoman.
told the Times.
https://vuww.inc.com/will-yakowiczfgoogle-restricts-ad-sales-to-drug-ueatment-rehab.html 113
11/8/2017 Google Cracks Down on Drug Rehab Online Ads�Inc.com
Greg Williams,co-founder of nonprofit group Facing Addiction,tells the Trmes that many of these untrustworthy drug treatment centers attract most of
their patients through aggressive online ad-word buying and online marketing campaigns.Williams and his nonprofit discovered that addiction treatment
companies were creating ad-buying bidding wars on Google,making the prices balloon for an ad that appears as the top search result.
Williams'research found that the treatment centers that were buying up the majority of the ad words related to addiction and drug treaVnent were
organizations that have been accused of crimes—from sexual assautt of patienls to insurance fraud.Research and court cases show that many of the
worst offenders are located in Florida.Last December,the Times reports,a Florida grand jury released a damning report that documented how pooriy
run facilities use online marketing tricks to target patients searching for treaVnent centers close to their homes but they would be served ads ihat push
sketchy treatment centers in other states.
The field of addiction Veatrnent is a"wild west."says Dr.Michael Frost,a state licensed addiction specialist in Pennsylvania.Frost wams that using
Google to find drug treatment facilities can be dangerous.He says if a rehab has good reviews on Google it doesn't always mean iYs acWally a
trustworthy facility.
"ft just means the facility is good at SEO and Google search results,"says Frost.
Frost suggests that people with substance abuse disorder go to their primary care doctor and talk with their insurance provider to find a trustworthy
treatment center.
Dr.Thomas McLellan,who is the former Science Adviser and Deputy Director of the White House Office of National Drug Control Policy under President
Obama,wams that only one-third of America's 13,000 addiction treatment facilities are staffed by doctors and the majoriry of rehabs do not follow FDA-
approved treatment protocols.McLellan says the industry is wcetully unregulated and needs to change.
PUBLISHED ON:SEP 15,2017
https:l/www.inc.comlwill-yakowicz/google-restricts-ad-sales-to-drug-treatment-rehab.html 2/3
11l8f2017 nbcnews.com
NBC INVESTIGATION MEGYN KELLY JUN 25 2017, 11:46 PM ET
Florida's Billion-Dollar Drug Treatment Industry Is
Plagued by Overdoses, Fraud
by LISA RIORDAN SEVILLE, ANNA R. SCHECTER and HANNAH RAPPLEYE
PALM BEACH COUNTY, Florida — For the first responders who found her lifeless body one October
moming, 24-year-old Alison Flory was yet another casualty of addiction here on the front line of
Florida's opioid crisis.
To her family, she was a daughter, a beloved sister, a goofy bookworm who made them laugh and a
young woman they desperately hoped wauld get help. She had arrived in South Florida from Illinois
just more than a year before she died, seeking treatment for her addiction. Her parents believe it is
that treatment, paid for by her family's excellent insurance, that ultimately got her killed.
"It haunts me," said Scott Weber, Alison's stepfather. "She trusted in people that she shouldn't have
trusted in."
"And we told her to trust those people," said her mother, Jennifer Flory.
The Rehab Capital of America
Palm Beach County can feel like paradise. The ocean laps on soft-sand beaches and the wind rustles
through tall palms. Maseratis cruise the roads and mansions rise behind gilded gates. On the
wealthiest stretch of waterfront sits Mar-a-Lago, President Trump's winter White House. In its
backyard is one of the rehab capitals of America.
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Related: How to Find a Good Drug Treatment Program and Avoid the Bad Ones
Thousands of addicts arrive here each year from Ohio and West Virginia, New Jersey and
Pennsylvania, hoping that at one of South Florida's many drug treatment centers, they'll find recovery.
And some do.
But an investigation by NBC News has found that many of these vulnerable patients have become
grist in an insurance fraud mill. Crooked treatment centers partner with "body brokers" and operators
of so-called "sober homes" to find patients with good health insurance. Brokers and saber home
owners offer those trying to get clean free rent and grocery store gift cards, cigarettes and manicures
in exchange for going to a specific treatment center, which pays kickbacks for every client.
Related: Death Race: Florida's First Responders Race To Save A Steady Stream of Overdose
Victims
Once they've reeled patients in, these treatment centers bill their insurance tens of thousands of
dollars for often questionable counseling, costly and potentially unnecessary drug screens, and exotic
laboratory tests. Some treatment centers not only overlook drug use —they encourage it. To Florida's
worst operators, relapse doesn't mean failure. It means profit.
https://www.nbcnews.comffeaturelmegyn-kelly/florida-s-billion-dollar-drug-trealment-indusVy-plagued-overdoses-fraud-n773376 2/28
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"This is an entire industry that's been corrupted by easy money," said Palm Beach County's top
prosecutor, State Attorney Dave Aronberg. "Unsc�upulous actors have taken advantage of well-
intended federal law, and a lack of any good law at the state level, to prafit off people at the lowest
stages of their lives."
That law is the Affordable Care Act, which along with the federal Mental Health Parity Act passed in
2008, was meant to ensure people suffering from addiction could get the care they needed. Together
they required insurers to cover substance abuse treatment, barred companies from rejecting those
with preexisting conditions, and allowed young people to stay on their parents' insurance until age 26.
But this broader coverage met with fittle oversight.
Those looking to make cash found the country's opioid epidemic had provided them with a trove of
desperate people, many young and hooked on pills or heroin, and access to a deep pool of insurance
dollars. Everyone got in on the business. Substance abuse treatment in Palm Beach County used to
consist largely of a scrappy network of treatment centers and sober homes that just scraped by. In the
past few years it's become a $1 billion business, according to the Palm Beach Post's calculations.
https:/lwww.nbcnews.comJfeature/megyn-kellylflorida-s-billion-dollar-drugtrealment-industry-plagued-overdoses-fraud-n773376 3128
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A street in Delray Beach, Florida. NBC News
"It's a total scam," said Aronberg. "Not only are taxpayers footing the bill, but people are dying
unnecessarily because of this."
The scammers have made it difficult fo�the ethical, and sorely needed, treatment centers and sober
homes to survive, said John Lehman, the director of the Florida Association of Recovery Residences,
an industry group that oversees sober homes.
"The broad brush of bad actions and illegal activity is painting across everybody," said Lehman. "So
the good guys are having trouble keeping their beds full. And the bad guys are saying you want to
shoot dope in the bathroom, go ahead."
Three Moms Send Their Daughters to Florida
Alison Flory was a teenager who loved to be in love. She loved trips to the bookstore in Sugar Grove,
a Chicago suburb, Star Wars, ice cream, and when she was 17, she fell for a boy. He was artsy, and
moody, and loved her back, so much that when she said she wanted to break up, he threatened to kill
himself. Her mother thought it was teenage stuff. "I said, 'That's ridiculous,"' Jennifer Flory said.
https:/lwww.nbcnews.com/featurelmegyn-kellylflorida-s-billion-dollar-drug-treaUnent-indusVy-plagued-0verdoses-fraud-n773376 4/28
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Alison Flory with her siblings at the beach. Courtesy of Jennifer Flory
He called Alison one night after they split. She didn't answer. On the voicemail, she could hear as he
jumped in front of a train. Alison was beside him at the hospital when he died.
"She felt like it was her fault," said Flory. "I felt like it was my fault. We all felt like it was our fault."
Alison started with prescription pills to dull the pain. Her parents read the signs — moodiness,
languishing in bed — as grief. And they were. But she was also sinking into substance abuse. Flory's
smart, ambitious daughter made it less than a year through college, dropped out, and sank deeper.
She did a month of rehab in Illinois, and Flory thought she'd get her smiling daughter back. But when
Alison got out, her parents said a boy Alison met in rehab introduced her to heroin. Jennifer didn't
know exactly what was wrong with her daughter. In 2015, when Alison was 23, Floty knew she
needed help.
Related: Moms Unleash Anger on Corrupt Rehab Owner
That was the same year that Michelle Curran decided that rehab was going to be the difference
between life and death for her daughter, Mikaya Feucht. Mikaya first used pills after a surgery while
she was still in high school outside of Columbus, Ohio, a state that routinely leads the nation in deadly
overdoses. By the time Feucht was 23, she had two little boys she loved fiercely, but the pull of heroin
threatened to tear them apart.
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Mikaya Feucht died of an overdose in 2016. Michelle Curran
Across the state in Troy, Sandra Hinkle was at work as a 911 dispatcher the day in April 2015 when
the call came in that her 22-year-old daughter Kaitlyn Cruea had overdosed on heroin. Cruea had a
little boy, too. Hinkle wanted Cruea to live to see her son Karter grow up. To get her well, Hinkle felt
she had to get her daughter out of town.
These mothers discovered that Florida was happy to help. They found the state's flourishing recovery
industry through an intemet search, word of mouth, and the help of an Illinois man working as a
marketer for a Florida treatment center. Their daughters each started at a different treatment cente�,
but the pattern is the same.
Someone checked their insurance, asked a few questions, bought their daughters a plane ticket to
South Florida —a potentially illegal marketing practice. The mothers were told their insurance would
cover the care and that everything was going to be okay.
"I felt like it was my fault. We all felt like it was our
fault."
"I felt hopeful, more than I had ever felt," said Jennifer Flory. "I didn't know. I thought going to this
treatment program was going somewhere special."
Within a few months, each mother began to suspect something was wrong. Their daughters would call
every few weeks to tell them they had moved to a new sober home. And when they did, the names of
the treatment centers on the bills that kept arriving changed too.
Envelopes from their insurance company ar�ived almost daily, detailing thousands of dollars in
treatment and thousands more in laboratory tests. There were bills from chiropractors and bills from
counselors and bills for DNA testing.
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Kaitlyn Cruea at Christmas with her son Karter. Courtesy of Sandra Hinkle
Dizzied, the mothers tried to track from afar where their daughters were and who was helping them
get sober. Sometimes, when they called, a counselor on the other end of the line would offer updates,
or explain charges. 4thers never even picked up.
As their girls hopped from house to house, the envelopes from the insurance companies mounted. But
the mothers didn't realize the scope of the problem, because no one ever came to collect. Treatment
centers routinely, and illegally, waive co-pays and deductibles, according to prosecutors, telling
patients and parents insurance covers everything.
Treatment centers and labs rack up sky-high bills, sometimes collecting only a fraction of the money
charged for a $5,000 urine test or a $1,800 counseling session. What they don't get paid, they write
off, said Aronberg. Flory, Curran and Hinkle said they never got calls from debt collectors, so it took
time to realize what was unfolding.
Curran's insurance would be charged more than $600,400 by the seven treatment centers Mikaya
attended between January and June of 2016. Flory's was charged about $1.2 million during the 15
months Alison bounced between nine different facilities in South Florida. At least three of the facilities
the girls attended have been raided by law enforcement and shuttered. All of the facilities declined
requests for comment by NBC News.
htips://www.nbcnews.com/featurelmegyn-kellylFlorida-s-billion-dollar�rug-trealment-industry-plagued-0verdoses-fraud-n773376 10l28
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Sober Homes in Delra Beach OneSober
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Sam Petulla
Hinkle hasn't tallied up everything yet, but she keeps coming back to that one month when she said
she got billed for more than 172 different charges.
"How did I not see this? I should have known," said Hinkle. "You just want to believe they're in the
right place, that they're getting the help that you sent them for."
How the Florida Model Was Bom
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11/8/2017 nbcnews.com
In 2015, the year these mothers first sought help, nearly 52,500 people lost their lives to an overdose
in the U_S, up nearly 40 percent from 2010. About 33,000 of those deaths were due to opioids, more
than any year on record. Overdoses now kill more people than car accidents, more than guns.
Treatment is not always within reach. Waitlists for beds at state-run facilities ac�oss the country can
run weeks o� months. Many private rehabs don't take insurance, and their fees can run $10,000 or
more a month.
For these problems, the Sunshine State had an answer.
The "Florida model" was born with good intentions. In a traditional, 28-day inpatient prograrn, patients
are cloiste�ed, then return to the community.
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Alison Flory overdosed and died at this sober home in 2016 NBC News
In many South Florida programs, clients first attend inpatient detox, then do more intensive rehab and
outpatient treatment while living in the community. The idea was that this would better develop their
ability to live on their own. It also kept costs lower, so some insurance companies would cover
treatment longer.
"Sober homes" became key to this model. Patients would pay rent to live in the group homes, sleeping
and eating there, then report to nearby drug treatment centers staffed with counselors and doctors. At
their best, these homes provide structure, rules and a community to lean on in the early stages of
recovery. But unscrupulous operators began to realize these homes could be a way to reel in
vulnerable addicts.
https:l/www.nbcnews.com/featurelmegyn-kellylFlorida-s-billion-dollar�rug-treatment-indusUy-plagued-overdoses-fraud-n773376 12l28
11/8/2017 nbcnews.com
Some sober homes offered addicts free or discounted rent, cash, and other perks in exchange for
attending a specific treatment center, which law enforcement officials said violates Florida laws barring
kickbacks and insurance fraud. Those in the shuffle are more blunt.
"It's like hustling humans," said Drew, a 21-year-old from West Virginia who was living in a sobe�
home in Delray Beach last February. "They'll take extra insurance money and pay you to live there
and just let you get high because the owner's making bank."
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Colin (R)and Drew on the street in Delray Beach, Florida. Both came south for drug treatment. NBC News
Delray Beach Mayor Cary Glickstein estimates that his city of 6fi,000 has about 700 sober homes that
house up to 7,000 people in recovery. Nearby Lake Worth, Boynton Beach and West Palm Beach
likely hold hundreds more. Exactly how many is hard to know, because sober homes operate without
any kind of oversight— and the bad homes, he said, are crowding out the good.
"These kids are just cycled through different houses," said Glickstein. "There's no supervision. Many
times they're supervised by convicted felons, people that are trafficking drugs while they're supposed
to be supervising kids in recovery."
This is an unintended consequence of federal disability and housing laws that bar municipalities from
discriminating against those with physical or mental disabilities, including addiction. Cities that have
tried to limit sober homes have been successfully sued for discrimination. But because the treatment
isn't technically being provided within the homes, they can't regulate them as they would drug
treatment centers either.
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11/8/2017 nbcnews.com
Within these homes, people are dying. Palm Beach County's overdose deaths have quadrupled in the
past four years, hitting almost 600 in 2016, as the number of treatment centers and sober homes has
grown. The rise of the synthetic opioid fentanyl is exacerbating the problem, making batches of heroin
stronger, and more deadly.
"IYs a tragedy on so many levels," said Glickstein. "The desperate parents in Ohio and Kentucky and
Michigan that are being lured through deceptive websites with palm t�ees have no idea what their kids
are getting into when they get down here."
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Mlkaya Feucht and her children. Michelle Curran
Palm Beach County has started to crack down. Last year it launched a task force, headed up by State
Attorney Aronberg, which has made 30 arrests for so-called "patient brokering" since last July.
In May, Gov. Rick Scott officially declared Florida's opioid crisis a state af emergency. Legislators
recently passed a bill that would increase penalties for brokering. It will give prosecutors sharper tools
to crack down on what a grand jury last December found was rampant brokering and fraud across the
industry.
htlps:/lwww.nbcnews.comffeaturelmegyn-kellylflorida-s-billion-dollar�rug-treaVnent-industry-plagued-overdoses-fraud-n77337fi 14l28
11/8/2017 nbcnews.com
"The legitimate players, the good guys, are far outweighed by the corrupt," said Aronberg. "This is not
a case where a few bad apples spoil the whole bunch. This is a case where most of the apples are
spoiled."
Among those to see gold in addiction was a man who became one of South Florida's most notorious
treatment center owners. All three of the girls from the Midwest, Alison, Mikaya and Kaitlyn, would get
wrapped up in his network. His name was Kenneth Chatman.
'He Sees A Dollar Sign'
Rehab was not the first way Chatman tried to make a buck in Florida. In 2008, Chatman, a transplant
from New York, pleaded guilty to federal charges for running a credit card fraud scheme. After that, he
faunded a car dealership that didn't go far. Then he had a gym, where, according to an account he
posted online, he got interested in the journey to recovery.
In 2012, while he was still on federal probation, he became whaYs known in South Florida as a "body
broker." He rented houses in the area and began to operate them as sober homes under the name
Stay'n Alive. He stepped into a game al�eady hot throughout South Florida. He partnered with local
drug treatment centers, offering to send them his residents in exchange for kickbacks.
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11/8/2017 nbcnews.com
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Kenneth Chatman walks to the Reflections Treatment Center on December 10,2015 in Margate, Florida. Richard Graulich/The
Palm Beach Post via ZUMA Press
More than 100 pages of police reports obtained by NBC News through an open records request show
that his homes were chaotic from their earliest days. One address was visited by the police 15 times
in a year.
Sometimes Chatman called the cops to deal with an unruly resident. Sometimes the residents called
to complain about Chatman —for kicking them out, refusing to give them back a phone, or in one
woman's case, trying to block her from leaving.
There were also rumors of Chatman trafficking his female clients. In 2013, a woman reported that her
god-daughter was living in one of Chatman's houses. She told police he had called her to demand
money, and that she had heard Chatman was prostituting women under his care.
In 2017, he would plead guilty to a multi-million dollar conspiracy to commit healthcare fraud, and to
sex trafficking, for prostituting his female clients.
But at the time, those rumors didn't hinder him. In fact, Chatman worked his way up from brokering
patients out of his sober homes to running the drug treatment centers themselves.
In Florida, nearly anyone can open a treatment center, as long as they have a little cash, find a doctor
to write prescriptions, and a clinical di�ector to oversee treatment. The exceptions are those, like
Chatman, with felony convictions. To dodge that, his wife, Laura, became the official owner.
Reflections Treatment Center launched in late 2013.
The empire rose quickly. One arm of it oversaw the sober homes, some of which Chatman continued
to run himself. He atso recruited a network of other homes to funnel bodies to his treatment center. He
has since admitted to giving $5Q0-a-week kickbacks to sober home operators who brought him
insured clients. All told, court papers show Chatman paid out at least $640,000 to three sober home
operators who sent people his way_
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Reflections Treatment Center in Margate, Florida. NBC News
In exchange for free rent, addicts boarded vans — "druggie buggies" as locals call them — three to
six momings a week, bound for Reflections. Chatman, fit and nattily dressed, put up a good front. He
posted videos of success stories, and made a brand of t-shirts his clients wore that read DOPELESS
HOPE FIEND.
But behind the blackened windows of the treatment center in a Margate, Florida strip mall, former
clients and employees said treatment wasn't the priority.
"I walked right into the group room and I could easily spot that at least 90 percent were getting high,"
said Jack, who attended Reflections in 2415. He said Chatman made it clear clients could use as long
as he could bill their insurance. "When he looks at a client, he doesn't see a hurnan being," said Jack.
"He sees a dollar sign."
But the real dollars didn't come from sitting kids down fo�treatment. It was in getting them to pee in a
cup.
A$10,600 Bill for a Drug Test
In the spring of 2016, the incessant bills Michelle Curran received in the mail began to make her
wonder. She called her insurance company, Cigna, but she said no one ever called her back. (Cigna
said it could not comment directly on Curran's case for privacy reasons, but said it has since
contacted Curran and is addressing fraud issues in Florida).
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One day on the phone with her daughter Mikaya Feucht, Curran started to try to get to the bottom of
things.
Breaking Down the Bill
Total bill cost for C'ost of drug test cumpared to typical cost
six months of treatment "Most people know that a urine test
is between $25 and $50," said
�O g 5 7 g . 7 g Joseph Mondy, director of
�
communications at Cigna. But in
2015, Cigna began to see charges
Number of charges for for drug tests " wi Idly in excess of
six months of treatment that ," said Mondy, with several tests
run on a single day.
Tcsts run multiple timcs a day
"To be billed multiple occasions
for the same tests doesn't make a
lot of scnsc ," said Michael J Ben -
nett, president of the American
Total billed for three days Association for Clinical Chemistry,
at Reflections Treatment a laboratory industry group. "Typi -
Center from March 24 to 26
cally you wouldn't ordcr five sep -
2 � 6 rate screens, because the first
07 .
06
� screen should give you the right
Mikaya Feucht died of an overdose after six months in at least seven rehabs in South Florida, including Reflections,a faciliry whose
owner has pleaded guilty to health care fraud and sex trafficking. Her mother, Michelle Curran,provided NBC News with a copy of a
bill showing the total charges submitted to Mikaya's insurer, Cigna.
"I'm like, 'I didn't know you saw your therapist every single day,'" Curran remembered. Feucht said she
most certainly did not. "So I said, 'Are they doing drug tests every day too? I have a bill here for
$10,60Q." And she goes, 'Mom, I've' — and these were her words — 'I've peed in a cup twice this
week.'"
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Random drug screens have long been a key piece of recovery. Treatment centers and sober homes
used to depend on dipstick tests, the kind anyone can do, which can run as low as $5 apiece. If
staffers got what they thought was a false result, they'd send it over to a lab for "confirmatory" tests to
make sure the results were right.
Chatman was among a group of treatment center operators who realized laboratories could become
the financial fuel of the rehab industry.
They made deals with labs, or started up their own, so they could take a slice of every test billed.
Particularly lucrative were young people from out of state like Feucht, Flory and Cruea, because their
insurance could be charged at sky-high out-of-network rates. One tally by an industry group found 75
percent of the young people in treatment in Florida are from out of state.
Doctors at treatment centers would put in "standing orders" for near-daily drug screens, along with
genetic and allergy tests that could run thousands of dollars.
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Mikaya FeuchYs mother, Michelle Curran NBC News
To maximize profits, some treatment centers �etest samples or double-test patients. When Chatman
didn't have enough clients in treatment to hit his lab numbers, he had employees submit their own
saliva and urine to keep the money flowing, according to court documents.
Chatman teamed up with at least five different labs, according to the federal indictment filed against
him in 2016. Kickbacks were so common that he allegedly complained to one laboratory rep when he
wasn't offered money or wined and dined.
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One unnamed lab wrote Chatman at least $160,000 in kickback checks between December 2014 and
May 2015, court papers show. Another allegedly had a driver go to the Florida Keys to cash checks
and deliver thousands of dollars to Chatman each week.
"I've peed in a cup twice this week."
Chatman went to great lengths to keep a hold on people. Former clients and court documents
describe how he nailed the windows of houses shut, and locked them in from the outside. He
confiscated and never returned their cell phones. He took their money and then plied them with drugs
so they would relapse, trigging another round of insurance-funded treatment.
Curran said that in May 2016, she learned a man named Kenny had allegedly provided her daughter
drugs so she would relapse. When Feucht overdosed, he allegedly left her on a sober home lawn for
the first responders to find.
When some parents called Reflections to ask about stories they were hearing from their kids,
Chatman convinced the parents their kids were lying, according to one former employee, because
that's what addicts do. But his most effective tool may have been that he always provided a home of
last resort.
"Even though he mistreated a lot of them, he had this hold ove� them," said a woman who worked at
Reflections in 2014. "A lot of people had been cut off by their parents. He always took you back in."
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Kenneth Chatman walks to the Reflections Treatment Center�n December 10,2015 in Margate, Florida. Richard Graulich/The
Palm Beach Post via ZUMA Press
Former employees said they tried to raise flags. Three said they asked the state's Department of
Children and Families, which regulates treatment centers, to do a surprise inspection. In an email sent
to DCF in February 2015 and provided to NBC News, one person who had worked there told the
agency that despite the fact that Chatman's wife Laura was on the paperuvork, Chatman was actually
in charge. The email also said patient applications had been forged, and that there were rumors
Chatman was prostituting his clients.
DCF told NBC News that the agency did not have authority to screen personnel or spouses not listed
in certain leadership roles on licensure applications. The agency did not respond specifically to NBC
News' questions about warnings employees said they submitted about Chatman.
Two months later, in April 2015, a woman contacted the Palm Beach County Sheriff's Office. She told
police that Chatman ran flophouses, using one as a "staging home for women who are addicts,"
according to her account in a police report obtained by NBC News. She charged that he kept her and
other women "in a state of impairment in order to pimp them out," placing ads for them on a local
escort site.
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Local police tumed the investigation over to the FBI_ Police reports show the agency already had an
active investigation going on Chatman.
But that didn't hinder Chatman f�om growing his business. In September 2015, DCF gave Reflections
a permanent license to run both intensive rehab and outpatient treatment. A year later, Laura
Chatman applied to apen a second treatment center, Journey to Recovery. The application, obtained
by NBC News, shows that while the center was opened under Laura's name, Kenny Chatman is listed
as a signatory to its bank account. It was approved.
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Sam Petulla
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The same month, he and Laura bought a $1.1 million home in Reflections' name. Chatman posed for
photos at charity events, where he gave away large checks to support kids' football games and unwed
mothers.
Chatman relied on this image as a pillar of the community in December, when the Palm Beach Post
published a scathing expose, which included details from the report of the woman who said she had
been prostituted. Chatman denied everything, telling the paper in a statement, "I would never,
knowingly put any of the clients of Reflections Treatment Center or any other vulnerable young person
in harm's way."
In the wake of Chatman's arrest, DCF said it has accepted the surrender of both licenses for his
treatment centers. The agency said it refers complaints that are beyond its authority to law
enforcement, and coordinates with those groups to hold individuals accountable. It has also supported
recent legislation to beef up standards for substance abuse in the state.
"The alleged p�actices of those who have been accused of taking advantage of vulnerable individuals
are shameful and sickening and DCF has no tolerance for this type of behavior," the agency said in a
statement.
Chatman's attorney Saam Zanganeh said that his client was a small fish in an industry where fraud
and kickbacks run rampant. "Everybody's looking for a scapegoat," Zanganeh said in May, when a
judge sentenced Chatman to spend the next 27 years in federal prison. Zanganeh said his client had
fully cooperated with federal authorities, and criticized the judge for overruling the "miraculous" plea
deal of 14 years Zanganeh had negotiated.
Laura Chatman pleaded guilty to two felony counts for letting her husband use her name on the
papervvork fo�the treatment centers they opened. Her attomey, Christopher Lyons of the Miami-based
firm Mase Tinelli, said that she had been kept in the dark about her husband's business. "She is
sincerely remorseful for her role in the offense and causing so much pain to the victims and their
families," he said.
Two sober home operators, a mental health counselor and a doctor have also pleaded to fraud
charges. A third doctor has pleaded not guilty, and is taking his case to trial.
The Fi�st To Die
Katie Cruea was the first of the three Midwestern girls to move into Chatman's houses, and she was
the first to die.
She'd been living in sober homes linked to Chatman for about finro months when her mother, Sandra
Hinkle, bought her a ticket to come back to �hio for the holidays. She arrived at noon on Christmas
Day 2015, and left a few days before New Year's. At the airport, Cruea begged Hinkle not to make her
go back. Hinkle thought her daughter was just getting cold feet, doing that addict thing.
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"She said, 'Mom please don't make me go, I'm afraid I'm never going to see you again,'" Hinkle
remembered. "I gave her a hug, and said 'You will absolutely see me again, I'll never let anything
happen to you. I'm your mom.'"
But Hinkle never did see her daughter again. Cruea overdosed on February 24, 2016. She was found
in a local motel, dead of an overdose of cocaine mixed with the synthetic opioid carfentanil. "It was
almost like she was giving me a warning, like she knew," Hinkle said.
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Sandra Hinkle holds a picture of her daughter, Kaitlyn Cruea,who died of an overdose. Courtesy of Sandra Hinkle
Five months later, Mikaya Feucht, who had been shuffling through the same network of Chatman-
linked houses since March, got kicked out of her sober home after her boyfriend got in a fight with the
manager. In the middle of the night, Feucht, her boyfriend and bags holding all of their belongings
were dumped at a motel in Boynton Beach.
Curran was in touch with Feucht that night and most of the following two days, trying to figure out a
plan to get her daughter stabilized. Then the phone went quiet. At 3:07 on the morning of July 31, two
sheriffs o�cers knocked at the door of Curran's house in Ohio, where Feucht's two boys slept tight.
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Curran sat on the couch, tired and confused. It wasn't until an officer knelt on the floor next to her that
it clicked. Curran said he told her, "'We had a detective from Florida get ahold of us_' And I knew. I
said, 'What happened to my daughter?' They told me she was found in that hotel."
"I'll never let anything happen to you. I'm your mom."
Local police have responded to 17 overdoses at that motel since 2010, at least five of them deadly.
For many addicts caught in the South Florida shuffle, motels are the last stop.
Alison Flory was still living in her sober home the day she died. Things seemed to be going well.
Alison would call back to Illinois to talk to her younger siblings for long stretches, chatting about
movies or counseling her brother on how to navigate the bullies at school. "She was their idol, just the
fact that she was in Florida was breaking their heart," Flory said. "She was really feeling a bond with
family, she was trying ta make things right."
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11/8/2017 nbcnews.com
T �� • -
Jennifer Flory(left)and her daughter Alison Flory. Courtesy of Jennifer Flory
October 13, the last day of Alison's life, was like many before it. She got up, she went to treatment at
Reflections, she sat in group therapy, she peed in a cup. Then she went back to her sober home, a
yellow bungalow where she and her boyfriend were living with at least three other couples. Shamar
Brooks, the 24-year-old "manager" who rented and operated the home, lived in the green house next
door.
The 911 call came from Brooks at 8:35 the next morning_ When he entered the house ta wake
everyone up to go to Reflections, he told responders, he found Alison wasn't breathing. He couldn't
feel a pulse. She was declared dead at 9:09 a.m.
Flory said she never got a call from Brooks, or from Chatman at Reflections. "No condolences," said
Flory. "There was nothing." It was a roommate of Alison's who called to tell Flory her daughter had
died. Brooks told NBC News he considered Alison a friend, and declined further comment.
On May 17, Hinkle, Curran and Flory traveled to Florida for Chatman's sentencing_ Each took a turn,
along with nine other people, standing before a federal judge in Palm Beach County to tell him what
Chatman and the South Florida shuffle had done to their families.
"He had such influence —why didn't he use that influence to help people?" Flory told the judge as
Chatman sat, shackled at the waist and nearly motionless at the tabls behind her.
Like the other mothers, Flory wanted justice. But above all, she wanted Alison's death to bring
change, to save someone else's life.
"There's no sentence that will bring my daughter back," Flory added. "She didn't deserve to die."
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POLlT1C5 06/17/201604:19 am ET
Addi�tion Treatment Industry Worried Lax Ethics
Could Spell Its Doom
Even as the opioid epidemic means business is booming.
� By Ryan Grim
FORT LAUDERDALE, Fla.—The premier organization representing drug treatment providers met in South Florida
recently for its annual convention.The theme of this year's gathering—"The Addiction Industry at a Crossroads"—only
hinted at the internal tensions and external pressures reshaping a troubled industry.
The opioid epidemic,which just added Prince to its list of victims,has shoved the addiction industry into the spotlight,
and many here at the National Association of Addiction Treatment Providers conference worried aloud how the
industry's lax ethical standards would look in the new glare.
Nor is greater attention to ethics the providers'only threat. Drug treatment is now big business,and a wave af
consol(dation is sweeping the industry,as private equity firms and publicly traded companies look to cash in on the
surging rates of addiction. Federal regulators,meanwhile,are pushing to reform the very nature of the services offered
by treatment centers.
How the addiction industry faces up to all these changes will help set the course of drug treatment for years to come.
«
It's insane, the amount of money that's sloshing around. If you can land
a Lindsay Lohan, you're set for life.
—Marketing consuitant Jeremiah Calvino
This year's NAATP conference,held in mid-May,was repeatedly proclaimed the largest in the history of the organization,
drawing operators of treatment centers,financial advisers who handle mergers and acquisitions, representatives of
urinalysis providers,and marketing consultants,among others.The industry's prosperity was refleded in the choice of
venue:the Marriott Harbor Beach Resort& Spa,an oceanfront luxury hotel.
While the opioid epidemic creates new clients at a rapid clip,changes to federal law have sought to ensure they can
afford treatment.A 2008 law signed by President George W. Bush required insurers to treat mental health services the
same as other areas of inedicine.The Affordable Care Act required everyone to have insurance and mandated that
mental health coverage be included as an essential benefit. It also allowed individuals to remain on their parents' health
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care plan until the age of 26,covering many of the young adults caught up in the epidemic. (In a striking coincidence, 26
has become the cutoff age for many"adolescent"treatment programs.)
It all fits with an industry in the midst of what conference attendees variously described as "a gold rush"or"a bubble"
Either way,addiction treatment is not a business well suited to the profit motive. Free market theory assumes rational
adors making decisions about how to spend money. By definition,those with substance abuse disorders are not always
rational—addiction is defined as continuing certain behavior despite its negative consequences—and their treatment
is normally paid for with public or private insurance.That has created fertile ground for fraud.
For the first time,the industry's leading trade group has rolled out an ethics policy that comes with an enforcement
mechanism.
"We were nudged to do it by the fact that we look around and see ethical violations all over the place" NAATP Executive
Director Marvin Ventrell told the gathering.
South Florida is a notorious hub for fraudulent treatment centers,which is not surprising given the Sunshine State's
ability to find the fraud anqle on virtually any enterprise. But the problem now extends far beyond Florida, executives at
the conference said, citing California,Texas, Nevada and Arizona as particularly egregious spots—iYs easier to attract
clients to warm climes—but emphasizing that no region is immune.
Of course,a new ethics policy does not mean everyone has embraced new ethics. In the meantime,the specter of the
Federal Trade Commission,which has authority to regulate drug treatment centers from a consumer protection
standpoint, hung over the conference.
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Among the more abusive practices the NAATP is trying to root out is"patient brokering,"which several conference
attendees told The Huffington Post should be more accurately thought of as"human trafficking"Art VanDivier,chair of
the NAATP's Ethics Committee,said the going rate to steer a patient with Affordable Care Act coverage to a particular
facility is now$7,000.That sounds like a lot of money, but the clinic can bill the insurer$15,000 to$30,000 for a month
of treatment,charge for lucrative drug tests along the way,and then bill for eight or so weeks of intensive outpatient
treatment.
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And if the patient relapses and fails a drug test,that process can start all over again,still covered by insurance. Not
surprisingly,storfes of patient brokers bribing people to relapse were rampant at the convention.The fee for that ran
between $500 and $1,000,occasionally accompanied by exotic dancers.
"It takes on various levels of sophistication"said Jeremiah Calvino, head of Blend Integ�ated Marketing,which consults
with a number of treatment centers. He added that brokers will even say, "We're not selling patients,we're selling
leads"
What's most stunned Calvino,he said,are"the bidding wars for celebrity rehab places. IYs insane,the amount of money
thaYs sloshing around_If you can land a Lindsay Lohan,you're set for life"
Another area of concern is the twist that online marketing has taken.Try it for yourself—hop over to Google and search
for addiction treatment options in your area. Chances are good that most of the results you'll get will have gamed their
way onto the list,and none of them will actually be in your area.Third-party sites that present themselves as
independent aggregators of information are often run by a single treatment center,and every phone number routes to it
rather than to the various clinics the site purports to link to."Closers"on the other end of the line are charged with
persuading the family in crisis to send their loved one to that single center—even if they may be located far away.
{Indeed,the distance can be sold as a positive,since removing the patient from negative influences can be beneficial.)
Gina Thorne of Lakeview Health said her Jacksonville, Florida,clinic employed this strategy for years.When shejoined
the firm,she said, Lakeview employed 13 online marketing staffers overseeing "hundreds and hundreds of microsites"
that promised treatment in whatever state the person was searching.
"You would call that number and it would take you into our intake department.And our intake department would spend
several minutes saying, `No,you're actually calling Jacksonville,Florida. You're not calling Charlotte,North Carolina:
They had to do a lot of work"she recalled.
"Did it work?Oh yeah, it worked. It was successful and very lucrative, but the flip side to that is that it compromised the
integrity and the reputation of the organization"Thorne said.
«
As we have seen countless times in other frenzied health care sectors,
when the money flows in, so do the ne'er-do-wells.
—A Braff Group analysis
Private equity investors purchased Lakeview Health in 2013 and decided to clean up its act,which Thorne said has
happened.Straightening out the marketing side has also forced the center to improve its treatment program,so that it
could begin to rely on patient referrals and a positive reputation.
The truest sign of Lakeview's successful rehabilitation,she said,is that shady treatment centers now steal its name and
branding in an effort to lure patients.While she reaches out to each one of those centers to stop the practice,Thorne
said later,she gets a sense of satisfaction knowing that Lakeview's reputation is worth stealing.
"Nobody would've ever thought to use our name before,"she said.
Perhaps,then,the influx of corporate money could paradoxically boost the industry's ethics.Though largefy unreported
in the national press,consolidation has moved rapidly. Publicly traded companies Acadia and American Addiction
Centers(AAC}have swallowed up significant portions of the industry,with private equity firms gobbling up still more.
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Kevin Taggart and Cory Mertz came to the conference to represent their company,Mertz Taggart,which assists
treatment centers that are selling out to large conglomerates. Mertz sa(d he has high hopes that Wall Street money can
clean up the addiction business.
"With such a fragmented industry,with so many cowboys out there,consolidation will help standardize the care these
folks are receiving," he said.
But the way the new owners are going about it raises the question whether standardization is their goal.One consultant
for several centers purchased recently said that Acadia,for instance,insists that its clinics not advertise their new
ownership.
"There's a ton of them now that are private equity-backed, but iYs not necessarily public knowledge,"said Taggart,who
puts the number of treatment centers and groups of centers quietly owned by private equity at 30."IYs not something
that's real public.We know it because we've been in this space"
The Braff Group,which does financial analysis of the treatment industry, is largely bullish on the future. But the same
themes that ran through the NAATP conference give its expe�ts cause for concern. In one Braff analysis following the
successful initial public offering of AAC,the note added:
It's not all kittens and raintrows.As we have seen count/ess times in other frenzied hea/th care sectors, when the
money flows in,so do the ne'e�-do-wells, which can bring the sector the kind of attention it doesn't want. Markets
in hyper-drive are extremely fragile.And sometimes al!it takes to bring a high-flying sector crashing to the ground
are a few, high profile cases of chicanery that paints the entire industry with a broad brush of suspicion(and in a
sector sorely lacking definrtive dafa to quantify fhe good work you do, the industry is particularly vulnerab/e).
A collapse,the analyst added,isn't imminent, but worth thinking about: "Something to consider in planning an exit
strategy."
Both Taggart and Mertz indicated the industry is in the midst of a bubble,and Mertz said the big money doesn't plan to
stick around.
address�demail.com
"They'll buy a good-sized company,"said Mertz."They'll pay a nice multiple for it,for the infrastructure,for the
management team,all ready to go out and expand,and then they'll go out and buy a bunch of new ones,smaller ones,
put it all together,and in five years turn around and sell them to another private equity group or a strategic buyer like
Acadia or UHS[Universal Health Services]or the other public companies doing these°
Worse,the publicly traded companies have been busted engaging in the same kind of behavior you'd expect from fly-
by-night operations.AAC,for instance,was accused last year of charging insurance companies for many more drug
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tests than necessary. In a widespread practice,treatment centers are known to charge$1,200 or more for a $5 test,
whtch they run several times a week for each patient. Industry investors now look at the portion of revenue that comes
from drug tests in gauging the ethics of a potential acquisition target.
Indicative of how little coverage the addidion industry gets,AAC's alleged billing practice was revealed in a colleqe
student's bloq post,using basic math.The student's post whacked the value of AAC's stock,and it has yet to fully
reCover. (AAC has said it did nothing imprOper.}
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Heavy reliance on insurance payments makes the addiction industry vulnerable to insurers'counter-attacks,which was
another subject of panel discussions and hallway conversations at the NAATP conference.
Last month,the blllfng middleman Infinity Behavioral Health Services emailed its treatment center clients with some bad
news about the country's largest health insurance carriec "Infinity was shocked to hear this morning that United Health
Care and its various affiliates, including Optum,will not release any benefits information to an out-of-network provider
without receiving permission from the patient or the policyholder first. Infinity has been told this is a payer-wide policy,
effective today,and we have already seen this affecting a number of different facilities across the country.As a result,
Infinity's verification of benefits for United Healthcare policies are delayed,"reads the email,which an industry source
provided to HuffPost on the condition of anonymity so as not to anger the payer.
"We know that this policy will have the ultimate effect of preventing many United/Optum subscribers and beneficiaries
from utilizing their benefits and getti�g the care they desperately need,"the email added.
The policy is the kind of consequence of shoddy ethical behavior the industry fears.Tracey Lempner,a
UnitedHealthcare spokespersan,confirmed the new policy is real,but said that it is not intended to deny care,but rather
to make sure patients are not gravitating toward ineffective treatment with incomplete information, and instead learn
about programs that evidence shows have a real chance of working.
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"With the rise in direct-to-consumer marketing by programs that do not offer proven,evidence-based services, iYs
important that our members understand how their treatment decisions could impact both the quality of their care and
their out-of-pocket expenses;'she said."Optum/UHC does not provide our members' benefit information to out-of-
network programs without a member's verbal consent in order to protect their privacy and ensure they are well-
informed"
VanDivier,the NAATP's ethics chair,told those at the conference that he has seen this movie before. He recalled sitting
through an FBI and Justice Department interview in 1996.Though VanDivier was not the target of that probe, it was an
unforgettable experience, and he wanted to drive home the seriousness of the current situation.
"The new generation seems to be able to rationalize things that are clearty wrong: `IYs OK to steal from the rich
insurance industries,because we're helping people get sober,'" he said.
VanDivier,a relative graybeard at the convention,warned that the addidion industry was repeating mistakes it made the
last time the same pressures converged. His talk echoed a sentime�t he shared concisely in an industry newsletter that
was handed out at the conference:
The 1980s cycle began with the appearance ofa dozen/arge corporations buying up small treaiment centers and
building dozens of new centers nationwide. There were widespread media campaigns and/ots of television talk
show exposure, and for the first fime, famous indrvidua/s openly shared their struggles with addiction. The
treatment business was off and running on a scale never seen before.
!n those days, many insurance p/ans par'd qenerously, and r"t didn't take long fo�some treatmeni provide�s to over
utilize and over charge for medica!and clinical servrces.As the insurance industry caught on, its response was to
imp/ement managed care through case management in an attempt to conirol runaway costs.As competition for
the treatment do!!ar became more intense,patient brokenng and referra!fees(to name a coup/e of indiscretionsJ
appeared, and next came invesiigafions at bofh ihe federa!and state levels, followed by indictments,convictions,
and prison ferms for some. Many states passed laws restricting how treatment cenfers could conducf business.
The end result was the collapse of a number of large corporations, closing hundreds of treatment centers
nationwide. Sound familiar?
"Wall Street's pretty young—they weren't around then"he told the convention, referencing the finance industry's
tendency to burn through employees."We're headed toward that same precipice today."
«
We need to ... be willing to credit all options that have merit, and,
perhaps hardest of all, criticize and repair our own favored method
where limited or flawed.
—Marvin Vemrell,ezecutive diredor of NAATP
Americans shouldn't assume the continued availability of widespread inpatient drug treatment programs paid for by
insurance,whether government or private. In the U.K.,for instance,that approach has largely disappeared,as the heafth
care system moves toward medical maintenance and outpatient behavioral therapy. At the end of the day,you don't
need a spot to get sober;'said one attendee,asking for anonymity so as not to get blowback for calling the treatment
industry's purpose into question.
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Speaker aRer speaker at the conference sounded the alarm that if the industry didn't straighten itself out,it wouldn't
last.Beyond the ethics issues,they did some painful soul-searching around thetr core fafth in abstinence-based
treatment,which often flows from a 12-step program and which forswears the use of inedications such as methadone or
Suboxone.
While medication-assisted treatment is considered the gold standard for treating opioid addicts by doctors and scientific
experts,America's network of treatment centers has been much slower to adapt.The soul-searching in Fort Lauderdale
happened because new federal policy finally seeks to shift the industry away from its favored abstinence approach.
Ventrell,the NAATP head,identified and criticized one key culprit for that shift:a IHuffPost investiqation into opioid
addiction treatment, published in January 2015 and named a finalist for a Pulitzer Prize.
"The media effort that launched the[federal]guideline in 2015 included anecdotal information from a grieving parent
about how the 12-step program had failed his son who tragically died, but no one spoke about how 12-step programs
worked well or how pharmacotherapy alone had,in fad,failed some," he wrote in the newsletter passed around at the
convention.
But, he added,it was time to stop�ghting change.
"We are quick to point out the limitations of an approach other than our own,and to minimize or ignore our program's
deficiencies,"Ventrell wrote.�Instead,we need to... be willing to credit all options that have merit,and, perhaps hardest
of all,criticize and repair our own favored method where limited or flawed. Fundamentalist adherence to our own
practices,whether spiritual or scientific, is antithetical to progress:'
That tension quickly came to the surface in Fort Lauderdale,with the first panel on "The Neu�oscience of
Spirituality."The choice of speakers for that panel suggested the industry has a ways to go.
The discussion was led by Jim "Wolf"Yoxall of the treatment provider Pavillon,who readily acknowledged,"I am not a
doctor. I am not a neuroscientist" But he said he had researched brain chemistry in an effort to understand biologically
why the 12 steps worked for him.
"I've learned a lot about how to speak like a doctor,"Yoxall said.
Jack Abel of Caron Treatment Centers—which was a sponsor of the conference—followed by taking aim at the calls
for evidence-based rather than anecdote-driven approaches to treatment. "I'm evidence.And you're evidence" he said.
Abel,like many leaders in the treatment industry, is himseff successfully in recovery.
"This is crap,that'ev(dence-based' means you can evaluate behavioral health care programs"said Abel."I want to be
one of the guys who stands up here and says let's not forget about that. LeYs not sell out whole hog to measuring who
doesn't die and saying because of that,we like a treatment that keeps people intoxicated"
This notion,that it is not necessarily worth being alive if it requires medications like methadone or Suboxone,was widely
shared at the convention, but rarely voiced so publicly.Abel appeared aware that he'd said out loud what so many were
thinking."Sorry!" he said.
. . . . .
!f you or someone you know works inside the treatment industry or has had an experience as a client, 1et us know at
treafinenistorlesCc�hu�ngtonposLcom. Please indude a phone number where you can be reached. To read more
reportrng like this,Lign uA for reporter Rvan Grim's email list here.
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No Text
11/8/2017 Insurers Pushing For Changes In Substance Abuse Battle-Hartford Courant
Insurers Pushing For Changes In Substance
Abuse Battle
. �
Insurance companies are pushing reforms that include encouraging suboxone-assisted recovery rather than abstinence, limiting pain-pill
prescriptions and evaluating treating programs. (VladimirSorokin/Getty Images/iStockphoto)
�� 1>� Mara l,ee
JULY 11 2016 5.57 A�9 � HARTFORD
HARTFORD—Facing a surge in substance abuse claims —partly because more 19-to 26-year-olds have
insurance—major insurers are trying to use their leverage to make dramadc changes in the nation's
substance abuse treatment system.
Insurance companies are pushing reforms that include encouraging suboxone-assisted recovery rather than
abstinence,limiting pain-pill prescriptions and evaluating treatment programs based on their own outcomes.
While alcohol remains the biggest substance-abuse problem, the proportion of claims that include opioids is
climbing steadily,particularly among young adults and teenagers.
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Cigna reports that opioid claims went from 2o percent of substance-abuse cases five years ago to 2�to 30
percent today.At Aema over the last four years,the share of claims for treating drug and alcohol abuse has gone
from i�percent of inental health spending(outside of prescriptions)to 3o percent.
The jump in claims has led,in part,to closer scrutiny by insurers of treatment methods and outcomes.
"The current approach to substance-use disorder treatment is based largely on the Alcoholics Anonymous i2-
step model,which doesn't take into account that 4o percent to 6o percent of substance abuse is attributable to a
person's genedc makeup,"Cigna CEO David Cordani wrote recendy in an online essay when he called for
comprehensive treatment,including medication,therapy and family support.
The insurers point to evidence that shows the benefits of combining medication with more traditional
treatments. For example,the federal government's Office of Drug Policy says that starting treatment with a
detox period is dangerous,because those programs"are closely associated with relapse," and with lower
tolerance,the next dose of narcotics can result in a deadly overdose.
Instead,research shows,suboxone,methadone and vivitrol—which reduces cravings for alcohol —have all
been proven to do more to curb substance abuse than aiming for abstinence through counseling,though
relapses do still happen with all three.
Suboxone is a medication that blocks the euphoric effects of heroin or narcotic painkillers while preventing
withdrawal symptoms. It is similar to methadone,but can be taken at home, rather than in a clinic.
"The scientific literature is very clear on this —that medication-assisted treatment is much more successful
short term and long term than not using medication,"said Dr. Mark Friedlander,Aetna's Chief Medical Officer
for Behavioral Health for commercial plans.
Medication Assisted Treatment
About eight years ago, Cigna began to question why so few addicts were being treated with methadone,
suboxone or vivitrol.
"Even within Cigna,those patients who had been maintained on suboxone had a very significant decrease in the
number of hospitalizations and having to re-enter treatment,"said Dr. Doug Nemecek,Cigna's Chief Medical
Officer for Behavioral Health.The company found"a negligible rate of re-admissions for people had been
treated with suboxone over six months,versus those who had no medicine."
that convinced the federal government to lift a cap
owed to write. Doctors who have been subscribing
recovering opioid addicts.The government
announced Wednesday that the cap will be raised to 2��.
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At Aetna,Friedlander,said the cap was one factor making it hard to get patients into treatment. But,he said,
"part of it is these guys [psychiatrists treating addicts]prefer not to join the network." He said many
psychiatrists"establish a cash practice on the side"for the drug.
Cigna has the same problem with suboxone prescribers refusing to submit claims. Reimbursement from
insurers typically is lower than what the prescribers can charge. "To some degree it's getting better,but still is a
major problem in some markets,"Nemecek said.
Friedlander said suboxone is popular because "you're going to your doctor's office. It's not a methadone clinic,
which,unfortunately,tend not to be in the best part of town."
The insurers also found that some counselors are opposed to medication-assisted rehabilitation,which is one of
the reasons methadone and suboxone aren't used in the majority of cases, despite evidence of their
effectiveness.
Nemecek said some addiction counselors are former substance abusers who quit without medication, and so
they think their clients can do it,too. He described this attitude as urging addicts"to just take control and just
beat this condition,rather than looking it as truly a medical condition."
Friedlander agreed. "One of the frustrations for me, as a health plan medical director, is seeing facilities that
have great reputations that have a philosophical barrier to evidence-based medicine— almost a faith-based
approach."
But Aetna will pay the bills at a�eatment center that does not incorporate vivitrol, methadone or suboxone.
Friedlander said the company's goal is to create "Institutes of Quality"in this area so that Aetna policy holders
will have lower ca-pays if they go to a place that incorporates maintenance medicine.
"The difficulty for us, unlike like say some of the medical procedures,is that very few of these facilities
accurately track outcomes," Friedlander said,such as how many people stay clean far a year.
Prevention
According to the federal Opioid Initiative,8o percent of new heroin users started out by misusing opioid pills.
Both the government and insurers have begun discouraging doctors from prescribing so many pain pills,
especially at longer durations.
Connecticut just passed a law that requires doctors to document why there needs to be a refill after an initial
seven-day prescription,unless the patient has chronic care,cancer, or is at the end of life.
The federal Centers for Disease Control and Prevention noted that one in Sso patients died from opioid-related
overdose,with half dying within z.6 years of their first opioid prescription.The CDC says that a combination of
exercise and cognitive behavioral therapy is more effective for chronic pain than taking opioids for a year or
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more. But,the agency noted, "Multimodal therapies are not always available or reimbursed by insurance and
can be time-consuming and costly for patients."
The CDC told doctors they should"be explicit and realistic [with patients] about expected benefits of opioids,
explaining that while opioids can reduce pain during short-term use,there is no good evidence that opioids
improve pain or function with long-term use, and that complete relief of pain is unlikely."
Aetna's Friedlander said that,in 2oi2,the insurer started talking to dentists about overprescrihing pain pills,
and now it has an initiative where it identifies doctors whose pain-pill prescribing patterns "are way above
average." He said doctors are defensive when Aetna calls to tell them this. "They argue our data,they say'your
data's wrong.You don't understand."' But months later,when analysts run the numbers again,they see those
doctors are prescribing less.
Nemecek said Cigna is trying to work with primary care doctors to encourage them to steer patients that
complain of pain into physical therapy,or cognitive behavioral therapy if appropriate.
"There's also a culture in our society we believe there are pills that will take care of everything that's wrong with
us,"he said.
Inpatient Denials
The insurers'desire to shift substance-abuse treatment spending to evidence-based programs also affects
inpatient programs that typically have followed the detox route.
"Long-term,intensive recovery facilities have become the norm,even though there is very little evidence of their
comparative effectiveness,"Cigna's CEO Cordani wrote in his recent online essay. "Thirty-day inpatient
programs can cost anywhere from$i�,000 to $26,000,with some charging more than $ioo,000."
Connecticut Healthcare Advocate Dernian Fontanella said last year there were 32 complaints about insurers
denying longer stays for substance abuse,with the majority of the cases including opioid addiction. He said he
thinks that doesn't capture the scope of the problem,because every time he does a talk,two or three people in
the audience say they or a relative was denied longer inpatient treatment for opioid addiction.
Fontanella said that while the Office of the Healthcare Advocate tries to make sure that mental health treatment
is treated the same as physical health,there's no direct parallel to make the case of what the right amount of
inpatient or outpatient treatment is.
"I sincerely empathize with the folks at the carriers," Fontanella said. "I think they're doing what they can to
help people stay in the right setting for the right amount of time."
Fontanella said about 8o percent of people who abuse alcohol or drugs have an underlying mental health
condition like anxiety or depression,which makes treating the addiction more complex. Unless the person
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figures out a better way to deal with his feelings,it is very hard for him to avoid the numbing they sought in the
first place through alcohol or drugs.
In the future,Cordani says insurers will make decisions based on what works and not merely past practice.
"Treatment for substance-use disorders will include only what is proved to be effective and efficient—such as
shorter-term outpatient programs,personalized care and education for individuals and their families,"he
wrote.
Copyright C>2017, HartFord Courant
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