CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 919

Author:(Petrie-Norris)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Enhances prohibitions on specified entities from giving or receiving remuneration or anything of value for the referral of a person who is seeking substance use disorder (SUD) recovery or treatment services in order to prevent those specified entities from inducing an individual to receive recovery or treatment services by providing free housing, transportation, and other related services. Requires the establishment of an enforcement program, as specified.

The Senate Amendments:

1. Require a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Require the contract to clearly state that payment for housing is the responsibility of the individual and does not depend on insurance benefits. Require the contract to include a repayment plan for any subsidized rent, and the laboratory or certified outpatient treatment program to make a good faith effort to collect debt.
2. Require an alcoholism or drug abuse recovery or treatment facility licensed by the Department of Health Care Services (DHCS) to offer an individual discounted housing following discharge from the facility only if specified conditions are met.
3. Require an alcoholism or drug abuse recovery or treatment facility licensed by DHCS to offer transportation services to an individual who is seeking recovery or treatment services only if specified conditions are met.
4. Specify that the provisions in 1) through 3) of this bill do not prohibit a person, program, or entity from providing individuals educational or informational materials about community resources, including, but not limited to, housing assistance.
5. Make other conforming, nonsubstantive changes.
6. Make the enactment of portions of this bill contingent upon enactment of AB 920 (Petri-Norris) of the current legislative session.

COMMENTS:

Reports about patient brokering. Several news articles ("How Some Southern California drug rehab centers exploit addiction," Orange County Register, May 21, 2017; "A Choice for Recovering Addicts: Relapse or Homelessness, New York Times, May 30, 2015; and "Special Report: Two states with an ocean view, and an ethical cloud," Addiction Professional, March 18, 2013) highlight the issue of "patient brokering," whereby unscrupulous individuals (sometimes called "interventionists") lure clients seeking SUD treatment services, buy insurance policies for the clients or offer to pay their deductibles, and "sell" them to facility operators that do not provide any type of treatment services or regular monitoring (typically unregulated recovery residences), all the while billing the insurance plan. Some individuals involved in this practice have been quoted in news articles as acknowledging that the practice may be wrong; however, they also claim that the practice is so ubiquitous in California that they would have no clients at all if they did not engage. As a result, some facility operators keep interventionists on retainer, often for $5,000 to $10,000 a month, regardless of how many clients an interventionist refers to them, in order to remain in business. After clients' insurance coverage is exhausted, unscrupulous facility operators have been allegedly dumping them in the streets where they continue their addictions.

California Patient Brokering Laws. The Legislature passed, and Governor Brown signed, a package of bills that aimed to address the emerging issues in the SUD treatment and recovery realm. SB 1228 (Lara, Chapter 792, Statutes of 2018) prohibits facilities that are licensed or certified by DHCS, and anyone associated with them, from gaining financially for referring a person to treatment, also known as "patient brokering." SB 992 (Hernandez, Chapter 784, Statutes of 2018) and AB 3162 (Friedman, Chapter 775, Statutes of 2018) made several changes to licensing statute for residential treatment facilities (RTFs), particularly requiring RTFs and other facilities under DHCS's purview to disclose certain business relationships, including with unlicensed recovery residences, and requiring all RTF licensed services to be provided within the structures notated on an RTF's license.

According to the Author:

Last year the Legislature and Congress adopted a number of policy changes to address the growing issue of patient brokering in the area of SUD treatment facilities. Patient brokering refers to the practice of unscrupulous treatment centers that will pay kickback money to recruit a patient with good insurance to come to their facility. Then, the center will run the patient's insurance for unnecessary testing eventually releasing the patient to the streets once the insurance dollars run out. Now that our regulatory bodies have tools for enforcement, this bill aims to bolster these efforts by ensuring that DHCS has an enforcement arm to protect patients from unscrupulous operations.

Arguments in Support:

The California Consortium of Addiction Programs and Professionals (CCAPP) states that without proper screening from a qualified professional, vulnerable families are being subjected to high pressure sales personnel offering to bring their loved ones to California at no cost. When the patient arrives and they subsequently do not pass medical necessity standards, thus losing insurance coverage, they are ejected from their outpatient program and dismissed from their housing, left to live on the streets. Worse yet, some patients arrive for outpatient treatment when they actually need a higher level of care, such as residential treatment. CCAPP states this bill is a thoughtful approach to singling out bad actors for civil fines, while requiring good actors to be transparent with housing contracts and responsible for providing return transportation to patients so that people are not left stranded far from home without resources.

Arguments in Opposition:

DHCS states that it already has sufficient existing authority to enforce anti-patient brokering laws, and the bill does not grant it or another entity additional authority to oversee the housing provisions required by the bill. DHCS argues that this bill does not identify an oversight authority responsible for monitoring compliance with the provisions in this bill, which may lead to the public misperception that DHCS would ensure compliance. DHCS does not have authority to ensure compliance for any activity that is outside of a certified outpatient program's purview.

FISCAL COMMENTS:

According to the Senate Appropriations Committee, $1.2 million General Fund (GF) in fiscal year (FY) 2020-21, $1.1 million GF in FY 2021-22, and ongoing, for 7.0 positions. Specifically:

1. Five Associate Governmental Program Analyst to promulgate regulations, conduct complaint investigations of recovery residences, and assess fines. These positions would require high travel.
2. One Staff Services Manager I to supervise the AGPAs.
3. One Attorney IV to be involved on each investigation and draft notices, guidance, and regulations.

VOTES:

ASM HEALTH: 15-0-0

YES: Wood, Mayes, Aguiar-Curry, Bigelow, Bonta, Burke, Carrillo, Flora, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

ASSEMBLY FLOOR: 78-0-2

YES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, O'Donnell, Obernolte, Patterson, Petrie- Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

ABS, ABST OR NV: Cooley, Eduardo Garcia

SENATE FLOOR: 40-0-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Judith Babcock / HEALTH / (916) 319-2097 FN: 0002315

 THIRD READING  

Bill No: AB 919

Author: Petrie-Norris (D), et al.

Amended: 9/6/19 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 8-0, 7/3/19

AYES: Pan, Stone, Lena Gonzalez, Hurtado, Leyva, Mitchell, Monning, Rubio

NO VOTE RECORDED: Grove

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/30/19

AYES: Portantino, Bates, Bradford, Durazo, Hill, Jones, Wieckowski

ASSEMBLY FLOOR: 78-0, 5/22/19 - See last page for vote

SUBJECT: Alcoholism and drug abuse recovery and treatment programs

SOURCE: Author

DIGEST:

This bill adds various provisions to existing law that prohibits specified entities from giving or receiving remuneration or anything of value for the referral of a person who is seeking recovery or treatment services in order to prevent those specified entities from inducing an individual to receive recovery or treatment services by providing free housing, transportation, and other related services. This bill requires the establishment of an enforcement program, as specified.

Senate Floor Amendments of 9/6/19 add chaptering out language to this bill with AB 920 (Petrie-Norris).

ANALYSIS:

Existing law:

1. Grants the Department of Health Care Services (DHCS) the sole authority in state government to administer, license, certify, and regulate all substance use disorder (SUD) functions and programs. [HSC §11750, et seq.]
2. Requires DHCS to license alcoholism or drug abuse recovery or treatment facilities (RTFs) that provide residential non-medical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services. [HSC §11834.01, et seq.]
3. Grants DHCS the authority to implement a program certification procedure for alcohol and other drug treatment recovery services and to develop standards and regulations for the alcohol and other drug treatment recovery services describing the minimal level of service quality required of the service providers to qualify for and obtain state certification. [HSC §11830.1]
4. Prohibits a DHCS licensed or certified program, and specified individuals associated with or employed by those programs, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified (referred to as “patient brokering”). Permits DHCS to investigate allegations of violations and take action, such as revocation of licensure or certification, or assessment of penalties and other enforcement actions. [HSC §11831.6, 11831.7]

This bill:

1. Requires a laboratory or outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires the contract to clearly state that payment for housing is the responsibility of the individual and does not depend on insurance benefits. Requires the contract to include a repayment plan for any subsidized rent, and the laboratory or outpatient treatment program to make a good faith effort to collect debt. Prohibits the offer for housing from being dependent on the individual’s agreement to receive services from either the laboratory or the outpatient treatment program.
2. Requires an alcoholism or drug abuse RTF licensed by DHCS to offer an individual discounted housing following discharge from the facility only if all the following conditions are met:
   1. The facility and the individual enter into a written contract for housing that is separate from the contract for treatment, if the individual also pursues outpatient treatment, and the contract includes a repayment plan for any subsidized rent, and the facility makes a good faith effort to collect the debt; and,
   2. The offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the facility.
3. Requires an alcoholism or drug abuse RTF licensed by DHCS to offer transportation services to an individual who is seeking recovery or treatment services only if the following conditions are met:
   1. Any ground transportation provided to an individual seeking services is for a distance of less than 125 miles; and,
   2. Any air transportation provided to an individual includes a return ticket that may be used by the individual upon discharge. Requires a return ticket not used by an individual upon discharge to be made available to the individual upon request for a period of one year following the individual’s discharge.
4. Specifies that the provisions in 1) through 3) of this bill do not prohibit a person, program, or entity from providing individuals educational or informational materials about community resources, including, but not limited to, housing assistance.
5. Requires DHCS to establish an enforcement program focused on the oversight duties for anti-patient brokering current law. Requires staff of the enforcement program to have responsibilities, including to:
   1. Provide DHCS with analytical support for the development and administration of the prohibition on patient brokering;
   2. Provide DHCS with general oversight and monitoring focused on investigations and enforcement of anti-patient brokering law and related penalties and related enforcement actions; and,
   3. Provide DHCS with legal guidance in the interpretation of anti-patient brokering law and related penalties and related enforcement actions.
6. Makes other conforming, nonsubstantive changes.

Comments

1. Author’s statement. According to the author, in 2017, opioid-related overdoses claimed 2,196 lives in California. As the opioid crisis continues to grow, the California State Legislature needs to take action against body brokers who exploit vulnerable people who are seeking addiction recovery. In its most insidious form, body brokers encourage patients in addiction recovery to start using drugs again in order to be eligible for recovery services and use free housing and transportation as a lure. Unscrupulous facilities are organized and designed to generate quick profits rather than assist patients with treatment and recovery from an SUD. After the facility burns out the patient’s insurance, the facility curbs the patient to the sidewalk, exacerbating the homelessness crisis. This bill requires the DHCS to establish an enforcement program to effectively prevent and stop body brokering schemes that prey on vulnerable patients seeking legitimate SUD treatment. Additionally, this bill limits SUD recovery and treatment facilities from offering housing and transportation free of charge as inducements to treatment. This bill aims to provide more tools, resources, and dedicated staff towards enforcement and ensures proper implementation of recent federal and state laws aimed to end body brokering.
2. Reports about patient brokering. Several news articles (“How Some Southern California drug rehab centers exploit addiction,” Orange County Register, May 21, 2017; “A Choice for Recovering Addicts: Relapse or Homelessness, New York Times, May 30, 2015; “California’s Rehab System is in Crisis … ” CityWatch Los Angeles, June 23, 2016; and “Special Report: Two states with an ocean view, and an ethical cloud,” Addiction Professional, March 18, 2013) highlight the issue of “patient brokering,” whereby unscrupulous individuals (sometimes called “interventionists”) lure clients seeking SUD treatment services, buy insurance policies for the clients or offer to pay their deductibles, and “sell” them to facility operators that do not provide any type of treatment services or regular monitoring (typically unregulated recovery residences), all the while billing the insurance plan. Some individuals involved in this practice have been quoted in news articles as acknowledging that the practice may be wrong; however, they also claim that the practice is so ubiquitous in California that they would have no clients at all if they did not engage. As a result, some facility operators keep interventionists on retainer, often for $5,000 to $10,000 a month, regardless of how many clients an interventionist refers to them, in order to remain in business. After clients’ insurance coverage is exhausted, unscrupulous facility operators have been allegedly dumping them in the streets where they continue their addictions. In many news articles, the issue is largely attributed to facilities that do not require state licensure or oversight, including what New York refers to as “three-quarter houses,” which are New York’s equivalent to California’s recovery residences.
3. Senate Health Committee informational hearing and subsequent legislation. On January 31, 2018, the Senate Health Committee held an informational hearing to examine the SUD treatment system with a focus on treatment and services provided in licensed alcoholism or drug abuse RTFs; insurance coverage; patient referrals; and the state’s regulation and oversight of the system, including the inability to impose restrictions on SLHs. The hearing provided an overview of recent issues that have affected the state regarding unscrupulous facility operators, and gave an opportunity for state regulators to highlight efforts they have undertaken to combat the exploitation of the SUD system, including enforcement of SLHs that have been unlawfully providing services. The goal of the hearing was to examine the issues and to seek strategies and policies that would prevent unscrupulous individuals from exploiting the various industries that are supposed to help treat those with SUDs; to recognize federal and state protections for those with disabilities, including their housing rights and options; and to ensure that policies are not enacted, either at the local or state level, that will limit the number of recovery or treatment options for those who need them.

The Legislature passed, and Governor Brown signed, a package of bills that aimed to address the emerging issues in the SUD treatment and recovery realm. SB 1228 (Lara, Chapter 792, Statutes of 2018) prohibited facilities that are licensed or certified by DHCS, and anyone associated with them, from gaining financially for referring a person to treatment, also known as “patient brokering.” SB 992 (Hernandez, Chapter 784, Statutes of 2018) and AB 3162 (Friedman, Chapter 775, Statutes of 2018) made several changes to licensing statute for RTFs, particularly requiring RTFs and other facilities under DHCS’s purview to disclose certain business relationships, including with unlicensed sober living homes, and requiring all RTF licensed services to be provided within the structures notated on an RTF’s license.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, $1.2 million General Fund in FY 2020-21, $1.1 million General Fund in FY 2021-22, and ongoing, for 7.0 positions. Specifically:

• 5.0 Associate Governmental Program Analyst to promulgate regulations, conduct complaint investigations of recovery residences, and assess fines. These positions would require high travel.
• 1.0 Staff Services Manager I to supervise the AGPAs.
• 1.0 Attorney IV to be involved on each investigation and draft notices, guidance, and regulations.

SUPPORT: (Verified 9/6/19)

Association of California Cities – Orange County

California Consortium of Addiction Programs and Professionals

California Medical Association

City of Huntington Beach

City of Laguna Beach

City of Mission Viejo

County Behavioral Health Directors Association

Orange County Board of Supervisors

OPPOSITION: (Verified 9/6/19)

Department of Health Care Services

ARGUMENTS IN SUPPORT: The California Consortium of Addiction Programs and Professionals (CCAPP) states that without proper screening from a qualified professional, vulnerable families are being subject to high pressure sales personnel who offer to bring their loved one to California with all expenses paid. When the patient arrives to the state and does not pass medical necessity standards, thus losing insurance coverage, they are ejected from their outpatient program and dismissed from their housing, left to live on the streets. Worse yet, some patients arrive for outpatient treatment when they actually need a higher level of care, such as residential treatment. They are provided outpatient treatment and housed in unregulated, often unsupervised, residences where no staff is trained to address emergency overdose, withdrawal, or side effects of medication assisted treatment for addiction. CCAPP states this bill is a thoughtful approach to singling out bad actors for civil fines, while requiring good actors to be transparent with housing contracts and responsible for providing return transportation to patients so that people are not left stranded far from home without resources. Other supporters, largely local government representatives, support the provisions of this bill that require DHCS to establish an enforcement program for existing anti-patient brokering law.

ARGUMENTS IN OPPOSITION: DHCS states that it already has sufficient existing authority to enforce anti-patient brokering laws, and this bill does not grant it or another entity additional authority to oversee the housing provisions required by this bill. DHCS argues that this bill does not identify an oversight authority responsible for monitoring compliance with the provisions in this bill, which may lead to the public misperception that DHCS would ensure compliance. DHCS does not have authority to ensure compliance for any activity that is outside of a certified outpatient program’s purview.

ASSEMBLY FLOOR: 78-0, 5/22/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Cooley, Eduardo Garcia

Prepared by: Reyes Diaz / HEALTH / (916) 651-4111

9/9/19 18:38:16

**** END ****

 THIRD READING  

Bill No: AB 919

Author: Petrie-Norris (D), et al.

Amended: 7/8/19 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 8-0, 7/3/19

AYES: Pan, Stone, Lena Gonzalez, Hurtado, Leyva, Mitchell, Monning, Rubio

NO VOTE RECORDED: Grove

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/30/19

AYES: Portantino, Bates, Bradford, Durazo, Hill, Jones, Wieckowski

ASSEMBLY FLOOR: 78-0, 5/22/19 - See last page for vote

SUBJECT: Alcoholism and drug abuse recovery and treatment programs

SOURCE: Author

DIGEST:

This bill adds various provisions to existing law that prohibits specified entities from giving or receiving remuneration or anything of value for the referral of a person who is seeking recovery or treatment services in order to prevent those specified entities from inducing an individual to receive recovery or treatment services by providing free housing, transportation, and other related services. This bill requires the establishment of an enforcement program, as specified.

ANALYSIS:

Existing law:

1. Grants the Department of Health Care Services (DHCS) the sole authority in state government to administer, license, certify, and regulate all substance use disorder (SUD) functions and programs. [HSC §11750, et seq.]
2. Requires DHCS to license alcoholism or drug abuse recovery or treatment facilities (RTFs) that provide residential non-medical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services. [HSC §11834.01, et seq.]
3. Grants DHCS the authority to implement a program certification procedure for alcohol and other drug treatment recovery services and to develop standards and regulations for the alcohol and other drug treatment recovery services describing the minimal level of service quality required of the service providers to qualify for and obtain state certification. [HSC §11830.1]
4. Prohibits a DHCS licensed or certified program, and specified individuals associated with or employed by those programs, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified (referred to as “patient brokering”). Permits DHCS to investigate allegations of violations and take action, such as revocation of licensure or certification, or assessment of penalties and other enforcement actions. [HSC §11831.6, 11831.7]

This bill:

1. Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for the housing. Requires the contract to clearly state that payment for housing is the responsibility of the individual and does not depend on insurance benefits. Requires the contract to include a repayment plan for any subsidized rent, and the laboratory or certified outpatient treatment program to make a good faith effort to collect debt. Prohibits the offer for housing from being dependent on the individual’s agreement to receive services from either the laboratory or the certified outpatient treatment program.
2. Requires an alcoholism or drug abuse recovery or treatment facility licensed by DHCS to offer an individual discounted housing following discharge from the facility only if all the following conditions are met:
   1. The facility and the individual enter into a written contract for housing that is separate from the contract for treatment, if the individual also pursues outpatient treatment, and the contract includes a repayment plan for any subsidized rent, and the facility makes a good faith effort to collect the debt; and,
   2. The offer for housing is not dependent upon the individual’s agreement to attend outpatient treatment at a program that is owned or operated by the facility.
3. Requires an alcoholism or drug abuse recovery or treatment facility licensed by DHCS to offer transportation services to an individual who is seeking recovery or treatment services only if the following conditions are met:
   1. Any ground transportation provided to an individual seeking services is for a distance of less than 125 miles; and,
   2. Any air transportation provided to an individual includes a return ticket that may be used by the individual upon discharge. Requires a return ticket not used by an individual upon discharge to be made available to the individual upon request for a period of one year following the individual’s discharge.
4. Specifies that the provisions in 1) through 3) of this bill do not prohibit a person, program, or entity from providing individuals educational or informational materials about community resources, including, but not limited to, housing assistance.
5. Requires DHCS to establish an enforcement program focused on the oversight duties for anti-patient brokering current law. Requires staff of the enforcement program to have responsibilities, including to:
   1. Provide DHCS with analytical support for the development and administration of the prohibition on patient brokering;
   2. Provide DHCS with general oversight and monitoring focused on investigations and enforcement of anti-patient brokering law and related penalties and related enforcement actions; and,
   3. Provide DHCS with legal guidance in the interpretation of anti-patient brokering law and related penalties and related enforcement actions.
6. Makes other conforming, nonsubstantive changes.

Comments

1. Author’s statement. According to the author, in 2017, opioid-related overdoses claimed 2,196 lives in California. As the opioid crisis continues to grow, the California State Legislature needs to take action against body brokers who exploit vulnerable people who are seeking addiction recovery. In its most insidious form, body brokers encourage patients in addiction recovery to start using drugs again in order to be eligible for recovery services and use free housing and transportation as a lure. Unscrupulous facilities are organized and designed to generate quick profits rather than assist patients with treatment and recovery from an SUD. After the facility burns out the patient’s insurance, the facility curbs the patient to the sidewalk, exacerbating the homelessness crisis. This bill requires the DHCS to establish an enforcement program to effectively prevent and stop body brokering schemes that prey on vulnerable patients seeking legitimate SUD treatment. Additionally, this bill limits SUD recovery and treatment facilities from offering housing and transportation free of charge as inducements to treatment. This bill aims to provide more tools, resources, and dedicated staff towards enforcement and ensures proper implementation of recent federal and state laws aimed to end body brokering.
2. Reports about patient brokering. Several news articles (“How Some Southern California drug rehab centers exploit addiction,” Orange County Register, May 21, 2017; “A Choice for Recovering Addicts: Relapse or Homelessness, New York Times, May 30, 2015; “California’s Rehab System is in Crisis … ” CityWatch Los Angeles, June 23, 2016; and “Special Report: Two states with an ocean view, and an ethical cloud,” Addiction Professional, March 18, 2013) highlight the issue of “patient brokering,” whereby unscrupulous individuals (sometimes called “interventionists”) lure clients seeking SUD treatment services, buy insurance policies for the clients or offer to pay their deductibles, and “sell” them to facility operators that do not provide any type of treatment services or regular monitoring (typically unregulated recovery residences), all the while billing the insurance plan. Some individuals involved in this practice have been quoted in news articles as acknowledging that the practice may be wrong; however, they also claim that the practice is so ubiquitous in California that they would have no clients at all if they did not engage. As a result, some facility operators keep interventionists on retainer, often for $5,000 to $10,000 a month, regardless of how many clients an interventionist refers to them, in order to remain in business. After clients’ insurance coverage is exhausted, unscrupulous facility operators have been allegedly dumping them in the streets where they continue their addictions. In many news articles, the issue is largely attributed to facilities that do not require state licensure or oversight, including what New York refers to as “three-quarter houses,” which are New York’s equivalent to California’s recovery residences.
3. Senate Health Committee informational hearing and subsequent legislation. On January 31, 2018, the Senate Health Committee held an informational hearing to examine the SUD treatment system with a focus on treatment and services provided in licensed alcoholism or drug abuse RTFs; insurance coverage; patient referrals; and the state’s regulation and oversight of the system, including the inability to impose restrictions on SLHs. The hearing provided an overview of recent issues that have affected the state regarding unscrupulous facility operators, and gave an opportunity for state regulators to highlight efforts they have undertaken to combat the exploitation of the SUD system, including enforcement of SLHs that have been unlawfully providing services. The goal of the hearing was to examine the issues and to seek strategies and policies that would prevent unscrupulous individuals from exploiting the various industries that are supposed to help treat those with SUDs; to recognize federal and state protections for those with disabilities, including their housing rights and options; and to ensure that policies are not enacted, either at the local or state level, that will limit the number of recovery or treatment options for those who need them.

The Legislature passed, and Governor Brown signed, a package of bills that aimed to address the emerging issues in the SUD treatment and recovery realm. SB 1228 (Lara, Chapter 792, Statutes of 2018) prohibits facilities that are licensed or certified by DHCS, and anyone associated with them, from gaining financially for referring a person to treatment, also known as “patient brokering.” SB 992 (Hernandez, Chapter 784, Statutes of 2018) and AB 3162 (Friedman, Chapter 775, Statutes of 2018) made several changes to licensing statute for RTFs, particularly requiring RTFs and other facilities under DHCS’s purview to disclose certain business relationships, including with unlicensed sober living homes, and requiring all RTF licensed services to be provided within the structures notated on an RTF’s license.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, $1.2 million General Fund in FY 2020-21, $1.1 million General Fund in FY 2021-22, and ongoing, for 7.0 positions. Specifically:

• 5.0 Associate Governmental Program Analyst to promulgate regulations, conduct complaint investigations of recovery residences, and assess fines. These positions would require high travel.
• 1.0 Staff Services Manager I to supervise the AGPAs.
• 1.0 Attorney IV to be involved on each investigation and draft notices, guidance, and regulations.

SUPPORT: (Verified 8/29/19)

Association of California Cities – Orange County

California Consortium of Addiction Programs and Professionals

California Medical Association

City of Huntington Beach

City of Laguna Beach

City of Mission Viejo

County Behavioral Health Directors Association

Orange County Board of Supervisors

OPPOSITION: (Verified 8/29/19)

Department of Health Care Services

ARGUMENTS IN SUPPORT: The California Consortium of Addiction Programs and Professionals (CCAPP) states that without proper screening from a qualified professional, vulnerable families are being subject to high pressure sales personnel who offer to bring their loved one to California with all expenses paid. When the patient arrives to the state and does not pass medical necessity standards, thus losing insurance coverage, they are ejected from their outpatient program and dismissed from their housing, left to live on the streets. Worse yet, some patients arrive for outpatient treatment when they actually need a higher level of care, such as residential treatment. They are provided outpatient treatment and housed in unregulated, often unsupervised, residences where no staff is trained to address emergency overdose, withdrawal, or side effects of medication assisted treatment for addiction. CCAPP states this bill is a thoughtful approach to singling out bad actors for civil fines, while requiring good actors to be transparent with housing contracts and responsible for providing return transportation to patients so that people are not left stranded far from home without resources. Other supporters, largely local government representatives, support the provisions of this bill that require DHCS to establish an enforcement program for existing anti-patient brokering law.

ARGUMENTS IN OPPOSITION: DHCS states that it already has sufficient existing authority to enforce anti-patient brokering laws, and the bill does not grant it or another entity additional authority to oversee the housing provisions required by the bill. DHCS argues that this bill does not identify an oversight authority responsible for monitoring compliance with the provisions in this bill, which may lead to the public misperception that DHCS would ensure compliance. DHCS does not have authority to ensure compliance for any activity that is outside of a certified outpatient program’s purview.

ASSEMBLY FLOOR: 78-0, 5/22/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Cooley, Eduardo Garcia

Prepared by: Reyes Diaz / HEALTH / (916) 651-4111

9/1/19 10:53:35

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 919 (Petrie-Norris) - Alcoholism and drug abuse recovery and treatment programs

Bill Summary:

This bill would require specified laboratories or certified outpatient treatment programs to maintain separate housing contracts, and would require alcoholism or drug abuse recovery or treatment facilities to offer discounted post-discharge housing and specified transportation services under certain conditions.

Would require the Department of Health Care Services (DHCS) to establish an enforcement program focused on the duties to enforce these provisions.

Fiscal Impact:

$1.2 million General Fund in FY 2020-21, $1.1 million General Fund in FY 2021-22, and ongoing, for 7.0 positions. Specifically:

• 5.0 Associate Governmental Program Analyst to promulgate regulations, conduct complaint investigations of recovery residences, and assess fines. These positions would require high travel.
• 1.0 Staff Services Manager I to supervise the AGPAs.
• 1.0 Attorney IV to be involved on each investigation and draft notices, guidance, and regulations.

Background:

The DHCS licenses recovery or treatment facilities (RTF) that provide 24-hour residential non-medical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services. The DHCS must determine the qualifications, including the appropriate skills, education, training, and experience of personnel working within licensed or certified alcoholism or drug abuse recovery and treatment programs.

RTFs licensed by the DHCS, based on what is commonly referred to as the social model, provide recovery, treatment, or detoxification services. Since the passage of AB 848 (Stone, Chapter 744, Statutes of 2015), RTFs can apply to the DHCS for an additional license to provide incidental medical services by a licensed physician and surgeon or other health care practitioner, as specified. SB 823 (Hill, Chapter 781, Statutes of 2018) also requires DHCS to adopt American Society of Addiction Medicine treatment criteria, as specified, as the minimum standard of care for licensed RTFs. The DHCS currently licenses about 1,020 RTFs. As part of their licensing functions, the DHCS conducts reviews of licensed RTFs at least once every two years, or as necessary; checks for compliance with statute and regulations to ensure the health and safety of clients; investigates all complaints; and has the authority to suspend or revoke an RTF’s license for a violation of statute or regulations.

Last year, Governor Brown signed, a package of bills that aimed to address the emerging issues in the SUD treatment and recovery realm, including: SB 1228 (Lara, Chapter 792, Statutes of 2018) prohibits facilities that are licensed or certified by DHCS, and anyone associated with them, from gaining financially for referring a person to treatment, also known as “patient brokering.” SB 992 (Hernandez, Chapter 784, Statutes of 2018) and AB 3162 (Friedman, Chapter 775, Statutes of 2018) made several changes to licensing statute for RTFs, particularly requiring RTFs and other facilities under DHCS’s purview to disclose certain business relationships, including with unlicensed sober living homes, and requiring all RTF licensed services to be provided within the structures notated on an RTF’s license.

Proposed Law:

AB 919 includes the following provisions, among others:

• Requires a laboratory or certified outpatient treatment program that leases, manages, or owns housing units that are offered to individuals who concurrently utilize laboratory or outpatient services to maintain separate contracts for housing. Requires the contract to clearly state that the individual is responsible for payment of housing and does not depend on insurance benefits. The contract must include a repayment plan for any subsidized rent, and the laboratory or certified outpatient treatment program shall make a good faith effort to collect the debt. Prohibits the offer for housing from an individual’s agreement to receive services from either the laboratory or the certified outpatient treatment program.
• Requires an alcohol or drug abuse recovery or treatment facility to only offer an individual discounted housing following discharge from the facility if specified conditions are met.
• Requires an alcoholism or drug abuse recovery or treatment facility to offer transportation services to an individual who is seeking recovery or treatment services if all of the specified conditions are met.
• Requires the DHCS to establish an enforcement program focused on the oversight duties and specifies activities the enforcement program staff must conduct.

Related Legislation:

SB 589 (Bates) would prohibit specified entities in the SUD treatment or recovery services industry from making false or misleading statements, as specified, and from engaging in conduct involving the unlawful giving or receiving remuneration or anything of value for referring a person to treatment or recovery services, as specified. The bill is on the Assembly Appropriations Committee suspense file.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Dr. Richard Pan, Chair

BILL NO: AB 919

SUBJECT: Alcoholism and drug abuse recovery and treatment programs

SUMMARY:

Adds various provisions to existing law that prohibits specified entities from giving or receiving remuneration or anything of value for the referral of a person who is seeking recovery or treatment services in order to prevent those specified entities from inducing an individual to receive recovery or treatment services by providing free housing, transportation, and other related services. Requires the establishment of an enforcement program, as specified.

Existing law:

1. Grants the Department of Health Care Services (DHCS) the sole authority in state government to administer, license, certify, and regulate all substance use disorder (SUD) functions and programs. [HSC §11750, et seq.]
2. Requires DHCS to license alcoholism or drug abuse recovery or treatment facilities (RTFs) that provide residential non-medical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services. [HSC §11834.01, et seq.]
3. Grants DHCS the authority to implement a program certification procedure for alcohol and other drug treatment recovery services and to develop standards and regulations for the alcohol and other drug treatment recovery services describing the minimal level of service quality required of the service providers to qualify for and obtain state certification. [HSC §11830.1]
4. Prohibits a DHCS licensed or certified program, and specified individuals associated with or employed by those programs, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified (referred to as “patient brokering”). Permits DHCS to investigate allegations of violations and take action, such as revocation of licensure or certification, or assessment of penalties and other enforcement actions. [HSC §11831.6, 11831.7]

This bill:

1. Specifies that the prohibition on patient brokering, as specified in 4) above of existing anti-patient brokering law, does not prohibit any of the following:
2. A reduced copayment made to a hospital for outpatient services;
3. Remuneration to a patient that promotes access to care and poses a low risk of harm as long as the care is medically necessary, removes obstacles or provides tools and resources that will help a beneficiary access care and is not solely a reward for patient adherence, is not likely to interfere with, or skew, clinical decision-making, is unlikely to increase costs to health care programs or beneficiaries through overutilization or inappropriate utilization, and does not raise patient safety or quality of care concerns;
4. Offers or services, excluding cash or cash equivalents including, but not limited to, checks or debit cards, for free or less than fair market value if there is a good faith determination of the individual’s financial need, if the items or services offered at reduced or no cost are not advertised, the offer is not tied to the provision of other items or services, and there is a reasonable connection between the services being offered and the medical needs of the individual.
5. Prohibits the entities listed in 4) above of existing anti-patient brokering law from offering free or subsidized housing for outpatient services or transportation services.
6. Requires a laboratory or outpatient treatment program that leases, manages, or owns housing facilities that are offered to patients who concurrently utilize laboratory or outpatient services to maintain separate contracts for the use of the housing facilities. Requires the contract to clearly state that payment for housing is the responsibility of the patient and does not depend on insurance benefits.
7. Permits a licensed inpatient facility to offer a patient discounted housing following discharge if the following conditions are met:
   1. The facility and the patient enter into a written contract for housing that is separate from the contract for treatment, and the contract includes a repayment plan for any subsidized rent, and the facility makes a good faith effort to collect the debt; and,
   2. The offer for housing is not dependent upon the patient’s agreement to attend outpatient treatment at a program that is owned or operated by the facility;
8. Permits a licensed inpatient facility to offer transportation services to a patient if the following conditions are met:
   1. Any ground transportation provided is for a distance of less than 125 miles; and,
   2. Any air transportation provided includes a return ticket that may be used by the patient upon discharge. Requires a return ticket not used by a patient upon discharge to be left open and available to the patient upon request for a period of one year following the patient’s discharge.
9. Specifies that the provisions in 2) through 5) of this bill do not prohibit a person, program, or entity from providing patients educational or informational materials about community resources, including, but not limited to, housing assistance.
10. Specifies that the provisions in 2) through 5) of this bill do not prohibit a person, program, or entity from providing patients with financing to defer the expense of housing, transportation, or other patient financial responsibilities, if that financing is offered strictly based on financial need, not marketed or otherwise promoted to induce patients to choose a particular program, and made with a repayment plan and good faith effort to collect the debt.
11. Requires DHCS to establish an enforcement program focused on the oversight duties for anti-patient brokering current law. Requires staff of the enforcement program to have responsibilities, including to:
    1. Provide DHCS with analytical support for the development and administration of the prohibition on patient brokering;
    2. Provide DHCS with general oversight and monitoring focused on investigations and enforcement of anti-patient brokering law and related penalties and related enforcement actions; and,
    3. Provide DHCS with legal guidance in the interpretation of anti-patient brokering law and related penalties and related enforcement actions.
12. Makes other conforming, nonsubstantive changes.

FISCAL EFFECT:

According to the Assembly Health Committee, based on the March 25, 2019, version of this bill, an enforcement program is estimated to cost about $1 million (General Fund (GF)/federal) to DHCS annually with unknown penalty revenues (GF).

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, in 2017, opioid-related overdoses claimed 2,196 lives in California. As the opioid crisis continues to grow, the California State Legislature needs to take action against body brokers who exploit vulnerable people who are seeking addiction recovery. In its most insidious form, body brokers encourage patients in addiction recovery to start using drugs again in order to be eligible for recovery services and use free housing and transportation as a lure. Unscrupulous facilities are organized and designed to generate quick profits rather than assist patients with treatment and recovery from an SUD. After the facility burns out the patient’s insurance, the facility curbs the patient to the sidewalk, exacerbating the homelessness crisis. This bill would require the DHCS to establish an enforcement program to effectively prevent and stop body brokering schemes that prey on vulnerable patients seeking legitimate SUD treatment. Additionally, this bill limits SUD recovery and treatment facilities from offering housing and transportation free of charge as inducements to treatment. This bill aims to provide more tools, resources, and dedicated staff towards enforcement and ensures proper implementation of recent federal and state laws aimed to end body brokering.
2. Reports about patient brokering. Several news articles (“How Some Southern California drug rehab centers exploit addiction,” Orange County Register, May 21, 2017; “A Choice for Recovering Addicts: Relapse or Homelessness, New York Times, May 30, 2015; “California’s Rehab System is in Crisis … ” CityWatch Los Angeles, June 23, 2016; and “Special Report: Two states with an ocean view, and an ethical cloud,” Addiction Professional, March 18, 2013) highlight the issue of “patient brokering,” whereby unscrupulous individuals (sometimes called “interventionists”) lure clients seeking SUD treatment services, buy insurance policies for the clients or offer to pay their deductibles, and “sell” them to facility operators that do not provide any type of treatment services or regular monitoring (typically unregulated recovery residences), all the while billing the insurance plan. Some individuals involved in this practice have been quoted in news articles as acknowledging that the practice may be wrong; however, they also claim that the practice is so ubiquitous in California that they would have no clients at all if they did not engage. As a result, some facility operators keep interventionists on retainer, often for $5000 to $10,000 a month, regardless of how many clients an interventionist refers to them, in order to remain in business. After clients’ insurance coverage is exhausted, unscrupulous facility operators have been allegedly dumping them in the streets where they continue their addictions. In many news articles, the issue is largely attributed to facilities that do not require state licensure or oversight, including what New York refers to as “three-quarter houses,” which are New York’s equivalent to California’s recovery residences.
3. Senate Health Committee informational hearing and subsequent legislation. On January 31, 2018, the Senate Health Committee held an informational hearing to examine the SUD treatment system with a focus on treatment and services provided in licensed alcoholism or drug abuse recovery or treatment facilities (RTFs); insurance coverage; patient referrals; and the state’s regulation and oversight of the system, including the inability to impose restrictions on SLHs. The hearing provided an overview of recent issues that have affected the state regarding unscrupulous facility operators, and gave an opportunity for state regulators to highlight efforts they have undertaken to combat the exploitation of the SUD system, including enforcement of SLHs that have been unlawfully providing services. The goal of the hearing was to examine the issues and to seek strategies and policies that would prevent unscrupulous individuals from exploiting the various industries that are supposed to help treat those with SUDs; to recognize federal and state protections for those with disabilities, including their housing rights and options; and to ensure that policies are not enacted, either at the local or state level, that will limit the number of recovery or treatment options for those who need them.

The Legislature passed, and Governor Brown signed, a package of bills that aimed to address the emerging issues in the SUD treatment and recovery realm. SB 1228 (Lara, Chapter 792, Statutes of 2018) prohibits facilities that are licensed or certified by DHCS, and anyone associated with them, from gaining financially for referring a person to treatment, also known as “patient brokering.” SB 992 (Hernandez, Chapter 784, Statutes of 2018) and AB 3162 (Friedman, Chapter 775, Statutes of 2018) made several changes to licensing statute for RTFs, particularly requiring RTFs and other facilities under DHCS’s purview to disclose certain business relationships, including with unlicensed sober living homes, and requiring all RTF licensed services to be provided within the structures notated on an RTF’s license.

1. Related legislation. AB 615 (Brough) makes a willful violation of the prohibition against referrals for remuneration, by facilities licensed or certified by DHCS, a crime punishable by a fine of not more than $10,000, imprisonment in a county jail for 16 months, or two or three years, or both fine and imprisonment. AB 615 was heard in the Assembly Public Safety Committee on April 23, 2019, and failed passage by a 2-6 vote.

AB 920 (Petrie-Norris) requires DHCS to convene a technical advisory workgroup comprised of relevant stakeholders to review and prepare recommendations regarding potential changes to current laws and regulations relevant to SUD services. AB 920 is set to be heard in this Committee on July 3, 2019.

AB 940 (Melendez) prohibits a recovery residence, as specified, from giving or receiving remuneration or anything of value for the referral of a person who is seeking recovery and treatment services, and requires DHCS to impose a minimum fine of $10,000 for each violation. AB 940 is pending in the Assembly Health Committee.

SB 589 (Bates) prohibits specified entities in the SUD treatment or recovery services industry from making false or misleading statements, as specified, and from engaging in conduct involving the unlawful giving or receiving remuneration or anything of value for referring a person to treatment or recovery services, as specified. SB 589 was heard in the Assembly Health Committee on June 18, 2019, and passed out by a vote of 14-0.

1. Prior legislation. AB 3162 (Friedman) makes various changes to current law regarding RTFs licensed by DHCS, including: making initial licenses provisional for one year; requiring services offered by the RTF to be specified on the license and provided within the licensed RTF, as specified; and, increasing civil penalties for the violation of licensing law.

SB 992 (Hernandez) requires programs licensed or certified by DHCS to disclose certain business relationships, as specified, including with recovery residences (SLHs), and makes changes to current law for licensed RTFs to improve client treatment and provide DHCS more oversight authority over RTFs.

SB 1228 (Lara) prohibits certain persons, programs, or entities, including a licensed RTF and persons employed by, or working for, that program, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified.

SB 1290 (Bates of 2018) would have made it unlawful for any licensee, operator, manager, consultant, employee, or patient of a licensed RTF, or any other person to, among other things, offer or pay a commission, benefit, bonus, rebate, kickback, or bribe, or engage in any split-fee arrangement to induce the referral of a patient or patronage to or from an RTF, or to solicit or receive a commission, benefit, bonus, rebate, kickback, or bribe in return for referring a patient or patronage to or from an RTF. Would have established the Commission on Substance Abuse and Recovery to provide comprehensive recommendations to the Legislature to create a coordinated and unified effort among state and local agencies to effectively confront the statewide addiction and substance abuse crisis. SB 1290 was held on the Senate Appropriations Committee suspense file.

SB 1268 (Bradford of 2018) and SB 636 (Bradford of 2017) were substantially similar to SB 1228. SB 1268 was held on the Assembly Appropriations suspense file. SB 636 was never heard in this Committee.

1. Support. The California Consortium of Addiction Programs and Professionals (CCAPP) states that without proper screening from a qualified professional, vulnerable families are being subject to high pressure sales personnel who offer to bring their loved one to California with all expenses paid. When the patient arrives to the state and does not pass medical necessity standards, thus losing insurance coverage, they are ejected from their outpatient program and dismissed from their housing, left to live on the streets. Worse yet, some patients arrive for outpatient treatment when they actually need a higher level of care, such as residential treatment. They are provided outpatient treatment and housed in unregulated, often unsupervised, residences where no staff is trained to address emergency overdose, withdrawal, or side effects of medication assisted treatment for addiction. CCAPP states this bill is a thoughtful approach to singling out bad actors for civil fines, while requiring good actors to be transparent with housing contracts and responsible for providing return transportation to patients so that people are not left stranded far from home without resources. Other supporters, largely local government representatives, support the provisions of this bill that require DHCS to establish an enforcement program for existing anti-patient brokering law.
2. Policy concern. This bill adds a provision to recently enacted legislation that specifies current anti-patient brokering law does not prohibit various actions that appear not to pertain to DHCS licensed or certified programs and that weaken the provisions in current law, which have been in effect for merely six months. Additionally, this bill uses various terms that are inconsistent with existing law.
3. Amendments. After discussions with Committee staff, the author has agreed to delete the provisions in law that are inappropriately placed in and weaken existing law pertaining to DHCS licensed and certified programs, and to amend incorrect terms to conform to existing law as follows:
   1. In SEC. 1 of the bill, delete subdivision (c) and its related paragraphs of section 11831.6;
   2. In SEC. 2 of the bill, delete subdivision (a) and its related paragraphs of section 11831.65 to avoid confusion with subsequent subdivisions of that section;
   3. Replace the term “patient” with “client” or “resident,” as appropriate; and,
   4. Replace the term “licensed inpatient facility” and other mentions of “inpatient” with the terms used in existing DHCS licensing law, and make other conforming changes.

SUPPORT AND OPPOSITION:

Support: California Consortium of Addiction Programs and Professionals

California Medical Association

City of Huntington Beach

City of Laguna Beach

City of Mission Viejo

County Behavioral Health Directors Association

Orange County Board of Supervisors

Oppose: None received

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ASSEMBLY THIRD READING

ATR Bill Id:AB 919

Author:(Petrie-Norris)

As Amended Ver:March 25, 2019

Majority vote

SUMMARY:

Requires the Department of Health Care Services (DHCS) to establish an enforcement program for violations of existing law’s prohibition on unlawful referrals for persons seeking alcoholism or drug abuse recovery and treatment services (RTF).

Major Provisions

COMMENTS:

California Patient Brokering Law. SB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits persons, programs, or entities from giving or receiving remuneration or anything of value for referral of a person who is seeking alcoholism or drug abuse recovery and treatment services. This prohibition applies to:

1. An RTF licensed by DHCS;
2. An owner, partner, officer, or director, or shareholder who holds an interest of at least 10% in an RTF;
3. A person employed by or working for an RTF, including but not limited to registered and certified counselors and licensed professionals providing counseling services;
4. An alcohol or other drug (AOD) program certified by DHCS;
5. An owner, partner, officer or director or shareholder who holds an interest of at least 10% in an AOD program certified by DHCS; and,
6. A person employed by or working for an AOD program certified by DHCS including but not limited to registered and certified counselors and licensed professionals providing counseling services.

SB 1228 authorizes DHCS to investigate allegations of violations and to assess a penalty upon an RFT or an AOD; to suspend or revoke the license of an RFT or certificate of an AOD; to deny an application for licensure, extension of the licensing period or modification to the license of an RTF; suspend or revoke the certification of an AOD; suspend or revoke the registration or certification of a counselor; and, investigate allegations against a licensed professional providing counseling services at an RTF, and recommend disciplinary action including but not limited to termination of employment at a program and suspension and revocation of licensure by the respective licensing boards within the Department of Consumer Affairs. This bill seeks to actively enforce the provisions of SB 1228 by establishing an enforcement program.

According to the Author:

Last year the Legislature and Congress adopted a number of policy changes to address the growing issue of patient brokering in the area of substance use disorder (SUD) treatment facilities. Patient brokering refers to the practice of unscrupulous treatment centers that will pay kickback money to recruit a patient with good insurance to come to their facility. Then, the center will run the patient’s insurance for unnecessary testing eventually releasing the patient to the streets once the insurance dollars run out. Now that our regulatory bodies have tools for enforcement, this bill aims to bolster these efforts by ensuring that DHCS has an enforcement arm to protect patients from unscrupulous operations.

Arguments in Support:

Advocates for Responsible Treatment (ART) state that this bill would ensure that DHCS actually developed a program to focus on its oversight duties in this area. Too often, an investigation of addiction treatment fraud by DHCS consists of a person dropping by a house and telling the operators they have had too many emergency visits. The operator takes this to mean they should start calling a private ambulance company rather than public services. DHCS needs to do more, and identifying and investigating patient brokering will require that the agency perform at a high level. ART concludes by stating this bill gives DHCS direction.

Arguments in Opposition:

There is no known opposition.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee the fiscal impact includes an enforcement program estimated to cost about $1 million (General Fund (GF)/federal) to DHCS annually with unknown penalty revenues (GF).

VOTES:

ASM HEALTH: 15-0-0

YES: Wood, Mayes, Aguiar-Curry, Bigelow, Bonta, Burke, Carrillo, Flora, Limón, McCarty, Nazarian, Ramos, Rodriguez, Santiago, Waldron

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: March 25, 2019

CONSULTANT: Judith Babcock / HEALTH / (916) 319-2097 FN: 0000594

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 919

Author:(Petrie-Norris) – As Amended Ver:March 25, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the Department of Health Care Services (DHCS) to establish an enforcement program for violations of existing law’s prohibition on unlawful referrals for persons seeking alcoholism or drug abuse recovery and treatment services.

FISCAL EFFECT:

1. An enforcement program is estimated to cost about $1 million (GF/federal) to DHCS annually.
2. Unknown penalty revenues (GF).

COMMENTS:

1. Purpose and Background. Existing law, AB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits persons, programs or entities from giving or receiving remuneration or anything of value for referral of a person who is seeking alcoholism or drug abuse recovery and treatment services. That bill was introduced to address the practice of “patient brokering,” whereby individuals (sometimes called “interventionists”) receive payment for referring clients seeking substance use disorder (SUD) treatment services to facility operators that fraudulently bill insurance plans for the services. This bill requires DHCS to establish an enforcement program to proactively crack down on patient brokering. This bill is supported by Advocates for Responsible Treatment, a grassroots volunteer organization comprised of concerned residents of Southern California, united to address quality of care and quality of life issues related to residential drug treatment facilities.
2. Related Budget Proposal. DHCS has requested resources in the budget for 16.0 staff and around $2.2 million ongoing ($2.04 million GF and $135,000 federal) to implement the provisions of three bills related to Drug Medi-Cal, including AB 1228. According to DHCS, within the last three years, DHCS has started to receive complaints with allegations specific to issues of the illegal practice of patient brokering. Complaints include individuals with or without an SUD being paid to enter certain SUD facilities, counselors or staff receiving kick-backs via money, gifts or services for making referrals to particular facilities, telling individuals they will enter one facility and placing them at a different facility in order to make money, facilities purchasing individual referrals from a referral service, and providing illicit drugs to individuals in order to refer them or retain them in the facility. This bill appears consistent with the administration’s proposed enforcement program.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 23, 2019

ASSEMBLY COMMITTEE ON HEALTH

Jim Wood, Chair

ABPCA Bill Id:AB 919

Author:(Petrie-Norris) – As Amended Ver:March 25, 2019

SUBJECT: Alcoholism and drug abuse recovery and treatment programs.

SUMMARY: Requires the Department of Health Care Services (DHCS) to establish an enforcement program for violations of existing law’s prohibition on unlawful referrals for persons seeking alcoholism or drug abuse recovery and treatment services. Specifically, this bill:

1. Requires DHCS to establish an enforcement program for the purpose of enforcing California’s law that prohibits the receiving or giving of remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery treatment services (unlawful referral).
2. Requires staff of the enforcement program to have responsibilities including, but not limited to:
   1. Provide DHCS with analytical support for the development and administration of the prohibitions against unlawful referral;
   2. Provide DHCS with general oversight and monitoring focused on investigations and enforcement of the prohibitions against unlawful referrals; and,
   3. Provide DHCS with legal guidance in the interpretation of the prohibitions against unlawful referrals.

EXISTING LAW:

1. Requires DHCS to license alcoholism or drug abuse recovery and treatment service facilities (RTFs) that provide 24-hour residential non-medical services to adults who are recovering from problems related to alcohol, drug, or alcohol and drug misuse or abuse, and who need alcohol, drug, or alcohol and drug recovery, treatment, or detoxification services.
2. Grants DHCS the authority to implement program certification procedures for alcohol or other drug (AOD) treatment recovery services including the minimal level of service quality required to qualify for and obtain state certification.
3. Prohibits the giving or receiving of remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery treatment services by: an RTF, an owner, partner, officer, or director, or shareholder who holds an interest of at least 10% in a RTF; a person employed by or working for an RTF, including but not limited to registered and certified counselors and licensed professionals providing counseling services; an AOD program certified by DHCS; an owner, partner, officer or director or shareholder who holds an interest of at least 10% in an AOD program certified by the DHCS; and, a person employed by or working for an AOD program certified by DHCS including but not limited to registered and certified counselors and licensed professionals providing counseling services
4. Grants DHCS the authority to assess a penalty upon a RTF and to suspend or revoke the license of a RTF, or deny an application for licensure, extension of the licensing period, or modification to a license for a violation of the patient brokering laws.
5. Grants DHCS the authority to assess a penalty upon an AOD program, and to suspend or revoke the certification of an AOD program for a violation of the patient brokering laws.
6. Grant DHCS the authority to suspend or revoke the registration or certification of a counselor for a violation of patient brokering laws.

FISCAL EFFECT: This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, last year the Legislature and Congress adopted a number of policy changes to address the growing issue of patient brokering in the area of substance use disorder (SUD) treatment facilities. Patient brokering refers to the practice of unscrupulous treatment centers that will pay kickback money to recruit a patient with good insurance to come to their facility. Then, the center will run the patient’s insurance for unnecessary testing eventually releasing the patient to the streets once the insurance dollars run out. Now that our regulatory bodies have tools for enforcement, this bill aims to bolster these efforts by ensuring that DHCS has an enforcement arm to protect patients from unscrupulous operations.
2. BACKGROUND.
   1. California Patient Brokering Law. AB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits persons, programs, or entities from giving or receiving remuneration or anything of value for referral of a person who is seeking alcoholism or drug abuse recovery and treatment services. This prohibition applies to:
      1. An RTF licensed by DHCS;
      2. An owner, partner, officer, or director, or shareholder who holds an interest of at least 10% in an RTF;
      3. A person employed by or working for an RTF, including but not limited to registered and certified counselors and licensed professionals providing counseling services;
      4. An AOD program certified by DHCS;
      5. An owner, partner, officer or director or shareholder who holds an interest of at least 10% in an AOD program certified by DHCS; and,
      6. A person employed by or working for an AOD program certified by DHCS including but not limited to registered and certified counselors and licensed professionals providing counseling services.

AB 1228 authorizes DHCS to investigate allegations of violations and to assess a penalty upon an RFT or an AOD; to suspend or revoke the license of an RFT or certificate of an AOD; to deny an application for licensure, extension of the licensing period or modification to the license of an RTF; suspend or revoke the certification of an AOD; suspend or revoke the registration or certification of a counselor; and, investigate allegations against a licensed professional providing counseling services at an RTF, and recommend disciplinary action including but not limited to termination of employment at a program and suspension and revocation of licensure by the respective licensing boards within the Department of Consumer Affairs.

• 1. Florida Patient Brokering Law. Florida’s patient brokering act was passed in 2018. The law has provisions for conviction of human trafficking and calls for a tiered approach to penalties in connection to patient brokering:
     1. A person convicted of violating the Florida law commits a felony of the third degree if fewer than 10 individuals are involved. A felony of the third degree is punishable by not more than five years imprisonment and a $50,000 fine;
     2. A person convicted of violating the Florida law commits a felony of the second degree if more than 10 but fewer than 20 individuals are involved. A felony of the second degree is punishable by not more than 15 years imprisonment and a $100,000 fine; and,
     3. A person convicted of violating the Florida law commits a felony of the first degree if more than 20 individuals are involved. A felony of the first degree is punishable by up to life imprisonment (in cases of death) and a $500,000 fine.

The first individual convicted under Florida’s law was found guilty on 10 counts of patient brokering on February 13, 2019 in Palm Beach. The 40-year old man faced a maximum of 50 years in prison but was sentenced to 36 months, three years.

• 1. Federal Patient Brokering Law. Passed by Congress as part of the Opioid Package (H.R. 6) and signed into law by President Trump in October of 2018, the “Eliminating Kickbacks in Recovery Act of 2018” makes it unlawful to knowingly and willfully solicit or receive any remuneration directly or covertly, in cash or in kind, in return for referring a patient to a recovery home or clinical facility. Further, it is unlawful for a recovery home or clinical treatment facility, or an officer or employee of a recovery home or clinical treatment facility acting in the course of their employment to pay or offer any remunerations in exchange for the person referring an individual to that recovery home or clinical facility or in exchange for that individual using the services of that recovery home or clinical treatment facility. A person who violates this law can be fined not more than $200,000 imprisoned for not more than 10 years, or both.
  2. Senate Health Committee informational hearing. On January 31, 2018, the Senate Health Committee held an informational hearing to examine the SUD treatment system with a focus on treatment and services provided in RTFs; insurance coverage; patient referrals; and, the state’s regulation and oversight of the system. The hearing provided an overview of recent issues that have affected the state regarding unscrupulous facility operators, and gave an opportunity for state regulators to highlight efforts they have undertaken to combat the exploitation of the SUD system. The goal of the hearing was to examine the issues and to seek strategies and policies that will prevent unscrupulous individuals from exploiting the various industries that are supposed to help treat those with SUDs, as well as to recognize federal and state protections for those with disabilities, and to ensure that policies are not enacted, either at the local or state level, that will limit the number of treatment options for those who need them.

1. SUPPORT. Advocates for Responsible Treatment state that this bill would ensure that DHCS actually developed a program to focus on its oversight duties in this area. Too often, an investigation of addiction treatment fraud by DHCS consists of a person dropping by a house and telling the operators they have had too many emergency visits. The operator takes this to mean they should start calling a private ambulance company rather than public services. DHCS needs to do more, and identifying and investigating patient brokering wll require that the agency perform at a high level. ART concludes by stating this bill gives DHCS direction.
2. RELATED LEGISLATION.
   1. AB 615 (Brough) imposes a fine of not more than $10,000 or imprisonment in a county jail for 16 months, or two or three years, or both for persons who willfully violate the prohibition against giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery treatment services. AB 615 is pending in the Assembly Public Safety Committee.
   2. AB 704 (Patterson) requires a person who has frequent contact with clients of an RTF to be subject to a criminal record review. AB 704 is pending in the Assembly Appropriations Committee.
   3. AB 940 (Melendez) expands the list of entities and individuals who are prohibited from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services to include a recovery residence, as specified, and an owner, partner, officer, director or shareholder of a recovery residence. Authorizes DHCS to assess a penalty upon a recovery residence or an owner, partner, officer, director or shareholder of a recovery residence of not more than $50,000 for each violation of the above referenced prohibition. AB 940 is pending in the Assembly Health Committee.
   4. SB 589 (Bates) prohibits an operator of a licensed RTF, a certified AOD, a recovery residence, or a third party that provides any form of advertising or marketing services to any of those entities, from engaging in various acts, including making a false or misleading statement about the entity’s products, goods, services, or geographical locations. Authorizes the department to investigate allegations of a violation of these provisions and to impose available sanctions, as specified. SB 589 is pending in the Senate Appropriations Committee.
3. PREVIOUS LEGISLATION.
   1. AB 3162 (Friedman), Chapter 775, Statutes of 2018, requires new single licenses to operate a treatment facility to be provisional for one year as specified, and increases the civil penalties for license suspensions, revocations, and violations, as specified.
   2. SB 902 (Bates) of 2018 would have required DHCS to conduct a state and federal level criminal history background check for an applicant before issuing a treatment facility license and, subsequent to initial licensure, for any manager, consultant, or employee of a facility, and other related provisions, as specified. SB 902 was held under submission in the Senate Appropriations Committee.
   3. SB 992 (Hernandez), Chapter 784, Statutes of 2018, requires DHCS’ licensed and certified programs to disclose business relationships, as specified, and makes changes to current licensing law to improve client treatment and provide DHCS more oversight authority over licensed treatment facilities. Requires DHCS to develop a program, after stakeholder input, for the voluntary registration of recovery residences, as specified.
   4. SB 1228 (Lara), Chapter 792, Statutes of 2018, prohibits a licensed AOD abuse recovery and treatment facility, an alcohol or other drug program certified and registered, and certified counselors and licensed professionals, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified.
   5. SB 1268 (Bradford) of 2018 would have prohibited certain persons, programs, or entities, including a licensed treatment facility and persons employed by, or working for, that program, from giving or receiving remuneration or anything of value for the referral of a person who is seeking alcoholism or drug abuse recovery and treatment services, as specified. SB 1268 was held under submission in the Senate Appropriations Committee.
   6. SB 1290 (Bates) of 2018 would have made it unlawful for any licensee, operator, manager, consultant, employee, or patient of a licensed treatment facility, or any other person to, among other things, offer or pay a commission, benefit, bonus, rebate, kickback, or bribe, or engage in any split-fee arrangement to induce the referral of a patient or patronage to or from an licensed treatment facility, or to solicit or receive a commission, benefit, bonus, rebate, kickback, or bribe in return for referring a patient or patronage to or from a licensed treatment facility, and other provisions as specified. SB 1290 was held under submission in the Senate Appropriations Committee.
   7. AB 2491 (Nestande) of 2014 would have exempted sober living homes from licensure as an AOD abuse recovery or treatment facility and required sober living homes to meet specified requirements, including the active participation of residents in legitimate recovery programs and the maintenance of records of meeting attendance. AB 2491 was held under submission in the Senate Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Advocates for Responsible Treatment

Opposition

None on file.

Analysis Prepared by: Judith Babcock / HEALTH / (916) 319-2097