Substance Use Disorder: Prevalence of Recovery Homes, and Selected States' Investigations and Oversight
Released: 2019-10-24T00:00:00

Letter

Background

SAMHSA and other organizations recognize recovery homes—peer-run and peer-managed supportive homes—as an important step in SUD treatment and recovery. Definitions of and terms for recovery homes can vary, and recovery homes may differ in the types of services offered and resident requirements. Alcohol- and drug-free homes for individuals recovering from SUD may be referred to as “recovery residences,” “sober homes,” or other terms. For the purposes of our March 2018 report, we used the term “recovery homes” to refer to peer-run, nonclinical living environments for individuals recovering from SUD in general.

Recovery homes generally are not considered to be residential treatment centers, are not eligible to be licensed providers for the purposes of billing private insurance or public programs—such as Medicaid—and residents typically have to pay rent and other home expenses themselves. Recovery home residents may separately undergo outpatient clinical SUD treatment, which is typically covered by health insurance. In addition, recovery homes may encourage residents to participate in mutual aid or self-help groups (e.g., 12-step programs such as Alcoholics Anonymous) and may require residents to submit to drug screening to verify their sobriety. Residents may be referred to recovery homes by treatment providers, the criminal justice system, or may voluntarily seek out such living environments.

Nationwide Prevalence of Recovery Homes Was Unknown

In our March 2018 report, we found that the prevalence of recovery homes nationwide was unknown, because complete data were not available. We found these data are not collected at the federal level to provide a nationwide picture, in part, because there was no federal agency responsible for overseeing them. However, as we reported in March 2018, two national organizations with missions dedicated to recovery homes collect data on the prevalence and characteristics for a sub-set of recovery homes and the number of homes that were not affiliated with these organizations was unknown.

NARR collected data on recovery homes that sought certification by one of its 15 state affiliates that actively certify homes. As we previously reported, as of January 2018, NARR told us that its affiliates had certified almost 2,000 recovery homes, which had the capacity to provide housing to over 25,000 individuals.

Oxford House, Inc. collected data on the prevalence and characteristics of its individual recovery homes (known as Oxford Houses). In its 2018 annual report, Oxford House, Inc. reported that there were 2,542 Oxford Houses in 45 states.

Most Selected States Had Investigated Potential Fraud Related to Recovery Homes and Taken Steps to Enhance Oversight

Four of Five Selected States Had Conducted Investigations of Recovery Homes

Officials from four of the five selected states we reviewed for our March 2018 report (Florida, Massachusetts, Ohio, and Utah) told us that since 2007, state agencies had conducted, or were in the process of conducting, law enforcement investigations of unscrupulous behavior and potential insurance fraud related to recovery homes. According to the state officials, the outcomes of some of these investigations included criminal charges and changes to health insurance policies.

Across the four states, officials told us that the potential insurance fraud may have relied on unscrupulous relationships between SUD treatment providers (including laboratories that perform tests to check for substance use) and recovery home operators. Officials explained that recovery home operators establish these relationships, because they cannot directly bill health insurance themselves due to the fact that recovery homes are not considered eligible providers for the purposes of billing health insurance. For example, treatment providers may form relationships with recovery home operators who then recruit individuals with SUD in order to refer or require residents to see the specific SUD treatment providers. This practice is known as patient brokering, for which recovery home operators receive kickbacks, such as cash or other remuneration from the treatment provider, in exchange for patient referrals. The extent of potential fraud differed across the four states, as discussed below.

Florida

Officials from several state agencies and related entities described investigations into fraud related to recovery homes in southeastern Florida as extensive, although the scope of the fraud within the industry is unknown. In 2016, the state attorney for the 15th judicial circuit (Palm Beach County) convened a task force composed of law enforcement officials tasked with investigating and prosecuting individuals engaged in fraud and abuse in the SUD treatment and recovery home industries. The task force found that unscrupulous recovery home operators or associated SUD treatment providers were luring individuals into recovery homes using deceptive marketing practices. These practices included online or other materials that willfully misdirected individuals or their family members to recruiters with the goal of sending these individuals to specific treatment providers so that the recruiters could receive payments from those treatment providers for each referral. According to officials from the Florida state attorney’s office, these individuals—often from out of state—were lured with promises of free airfare, rent, and other amenities to recover in southern Florida’s beach climate. Recruiters brokered these individuals to SUD treatment providers, who then billed their private insurance plans for extensive and medically unnecessary urine drug testing and other services. Officials from the Florida state attorney’s office told us that SUD treatment providers were paying $300 to $500 or more per week to recovery home operators or their staff members for every individual they referred for treatment. In addition, these officials cited one case in which a SUD treatment provider billed an individual’s insurance for close to $700,000 for urine drug testing over a 7-month period. Officials from the state attorney’s office noted that the recovery homes that the task force investigated were not shared homes in the traditional, supportive sense, but rather existed as “warehouses” intended to exploit vulnerable individuals.

As a result of these investigations, as of December 2017, law enforcement agencies had charged more than 40 individuals primarily with patient brokering, with at least 13 of those charged being convicted and fined or sentenced to jail time, according to the state attorney’s office. In addition, the state enacted a law that strengthened penalties under Florida’s patient brokering statute and gave the Florida Office of Statewide Prosecution, within the Florida Attorney General’s Office, authority to investigate and prosecute patient brokering.

Massachusetts

An official from the Massachusetts Medicaid Fraud Control Unit told us that the unit began investigating cases of Medicaid fraud in the state on the part of independent clinical laboratories associated with recovery homes in 2007. The unit found that, in some cases, the laboratories owned recovery homes and were self-referring residents for urine drug testing. In other cases, the laboratories were paying kickbacks to recovery homes for referrals for urine drug testing that was not medically necessary. According to the Medicaid Fraud Control Unit official, as a result of these investigations, the state settled with nine laboratories between 2007 and 2015 for more than $40 million in restitution. In addition, the state enacted a law in 2014 prohibiting clinical laboratory self-referrals and revised its Medicaid regulations in 2013 to prohibit coverage of urine drug testing for the purposes of residential monitoring.

Ohio

At the time of our March 2018 report, Ohio had begun to investigate an instance of potential insurance fraud related to recovery homes, including patient brokering and excessive billing for urine drug testing. Officials from the Ohio Medicaid Fraud Control Unit told us that the unit began investigating a Medicaid SUD treatment provider for paying kickbacks to recovery homes in exchange for patient referrals, excessive billing for urine drug testing, and billing for services not rendered, based on an allegation the unit received in September 2016. Officials from other state agencies and related state entities, such as the state’s substance abuse agency and NARR affiliate, were not aware of any investigations of potential fraud on the part of recovery home operators or associated treatment providers when we interviewed with them. According to these state officials, this type of fraud was not widespread across the state.

Utah

In our March 2018 report, we reported that officials from the Utah Insurance Department told us that the department was conducting ongoing investigations of private insurance fraud similar to the activities occurring in Florida, as a result of a large influx of complaints and referrals the department had received in 2015. These officials told us that the department had received complaints and allegations that SUD treatment providers were paying recruiters to bring individuals with SUD who were being released from jail to treatment facilities or recovery homes; billing private insurance for therapeutic services, such as group or equine therapy, that were not being provided, in addition to billing frequently for urine drug testing; and encouraging individuals to use drugs prior to admission to qualify them and bill their insurance for more intensive treatment.

In addition, insurance department officials told us that they believed providers were enrolling individuals in private insurance plans without telling them and paying their premiums and copays. According to these officials, when doing so, providers may lie about the individuals’ income status in order to qualify them for more generous insurance plans. Officials found that providers were billing individuals’ insurance $15,000 to $20,000 a month for urine drug testing and other services. Officials noted that they suspect that the alleged fraud was primarily being carried out by SUD treatment providers and treatment facilities that also own recovery homes. The officials said the department had not been able to file charges against any treatment providers, because it had been unable to collect the necessary evidence to do so. However, according to the officials, the state enacted legislation in 2016 that gave insurers and state regulatory agencies, such as the state’s insurance department and licensing office, the authority to review patient records and investigate providers that bill insurers. As we noted in our March 2018 report, this authority may help the insurance department and other Utah regulatory agencies better conduct investigations in the future.

Three Selected States Have Established Oversight Programs, and Two Selected States Are Taking Other Steps to Support Recovery Homes

In addition to actions taken in response to state investigations, our March 2018 report described steps taken by three of the five selected states (Florida, Massachusetts, and Utah) to formally increase oversight of recovery homes by establishing state certification or licensure programs. Florida enacted legislation in 2015 and Massachusetts enacted legislation in 2014 that established voluntary certification programs for recovery homes. Further, Florida established a two-part program for both recovery homes and recovery home administrators (i.e., individuals acting as recovery home managers or operators). According to officials from the Florida state attorney’s office and Massachusetts Medicaid Fraud Control Unit, their states established these programs, in part, as a result of state law enforcement investigations. Utah enacted legislation in 2014 to establish a mandatory licensure program for recovery homes. According to officials from the Utah substance abuse agency and the state licensing office, Utah established its licensure program, in part, to protect residents’ safety and prevent their exploitation and abuse.

In our March 2018 report, we found that although state recovery home programs in Florida and Massachusetts are voluntary, there are incentives for homes to become certified under these states’ programs, as well as incentives to become licensed under Utah’s programs. Specifically, all three states require that certain providers refer patients only to recovery homes certified or licensed by their state program; therefore, uncertified and unlicensed homes in the three states are ineligible to receive patient referrals from certain treatment providers. Further, state officials told us that state agencies are taking steps to ensure providers are making appropriate referrals. For example, according to officials from the Florida substance abuse agency, treatment providers may refer individuals to certified recovery homes managed by certified recovery home administrators only and must keep referral records.

To become state-certified or licensed, recovery homes in Florida, Massachusetts, and Utah must meet certain program requirements, including training staff, submitting documentation (such as housing policies and a code of ethics), and participating in onsite inspections to demonstrate compliance with program standards. However, specific requirements differ across the three states. For example, while all three state programs require recovery home operators or staff to complete training, the number of hours and training topics differ. In addition, for recovery homes to be considered certified in Florida, they must have a certified recovery home administrator. Similar to Florida’s certification program for the homes, individuals seeking administrator certification must meet certain program requirements, such as receiving training on recovery home operations and administration, as well as training on their legal, professional, and ethical responsibilities. Features of the state- established oversight programs also differ across the three states, including program type, type of home eligible for certification or licensure, certifying or licensing body, and initial fees.

As we noted in our March 2018 report, the state-established oversight programs in Florida, Massachusetts, and Utah also include processes to monitor certified or licensed recovery homes, and take action when homes do not comply with program standards. For example, an official from the Florida Association of Recovery Residences—the organization designated by the state to certify recovery homes—told us that the entity conducts random inspections to ensure that recovery homes maintain compliance with program standards. State-established oversight programs in the three states also have processes for investigating grievances filed against certified or licensed recovery homes. Further, officials from certifying or licensing bodies in all three states told us their organizations may take a range of actions when they receive complaints or identify homes that do not comply with program standards, from issuing recommendations for bringing homes into compliance to revoking certificates or licenses. According to officials from Florida’s certifying body, the entity has revoked certificates of recovery homes that have acted egregiously or have been nonresponsive to corrective action plans. Officials from the certifying and licensing bodies in Massachusetts and Utah told us that they had not revoked certificates or licenses, but had possibly assisted homes with coming into compliance with certification standards or licensure requirements.

Officials from Ohio and Texas told us that their states had not established state oversight programs like those in Florida, Massachusetts, and Utah, but said their states had provided technical assistance and other resources to recovery homes in an effort to increase consistency, accountability, and quality.

Officials from the Ohio substance abuse agency told us that since 2013 the state has revised its regulatory code to define recovery homes and minimum requirements for such homes. Officials also told us that the agency did not have authority to establish a state certification or licensure program for recovery homes. According to these officials, the state legislature wanted to ensure that Ohio’s recovery homes community maintained its grassroots efforts and did not want a certification or licensure program to serve as a roadblock to establishing additional homes. However, officials from the Ohio substance abuse agency told us that the agency encourages recovery homes to seek certification by the state’s NARR affiliate—Ohio Recovery Housing—to demonstrate quality. In addition, these officials told us that the state substance abuse agency also provided start-up funds for Ohio Recovery Housing, as well as continued funding for the affiliate to provide training and technical assistance, and to continue certifying recovery homes. According to officials from Ohio Recovery Housing, the NARR affiliate regularly provides the state’s substance abuse agency with a list of newly certified recovery homes, as well as updates on previously certified homes as part of ongoing efforts to develop a recovery home locator, under its contract with the agency.

Officials from the Texas substance abuse agency told us that establishing a voluntary certification program would be beneficial. However, the state legislature had not enacted legislation establishing such a program at the time of our review. At the time of our report, the agency was in the process of developing guidance for providers on where and how to refer their patients to recovery housing, which includes a recommendation to send patients to homes certified by the Texas NARR affiliate.

Chairman Grassley, Ranking Member Wyden, and Members of the Committee, this concludes my prepared statement. I would be pleased to respond to any questions that you may have at this time.

GAO Contact and Staff Acknowledgments

If you or your staff members have any questions concerning this testimony, please contact me at (202) 512-7114 or deniganmacauleym@gao.gov. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals who made key contributions to this testimony include Tom Conahan (Assistant Director), Kristin Ekelund (Analyst-in-Charge), Drew Long, Sarah Resavy, and Emily Wilson. Other staff who made key contributions to the report cited in the testimony are identified in the source product.

This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.