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  • Writer's pictureMuhammad Sair Khan

New (and Stricter) Regulations Affecting the Addiction Treatment Industry



The addiction treatment industry has expanded rapidly over the last 5 years. This quick growth led to increasing competition among treatment centers—and some less-than-scrupulous business strategies.


To help protect patients and improve their care, the government has worked with leaders in the addiction treatment industry to develop new regulations. These regulations have been put in place in order to help legitimate, quality addiction treatment centers, and get rid of those centers who participate in illegitimate practices.


New, stricter regulations of addiction treatment covers a range of areas including:


Problematic Marketing Practices & Patient Brokering


Treatment centers who participate in unethical practices not only harm their patients, but the experience of others throughout the country. Patients truly looking for help are misled by treatment centers who prioritize profit over quality treatment. This causes damage to the industry’s reputation and affects the patient’s trust in addiction care.

One common practice includes recruiting clients by offering bribes or payment for attending their program. Treatment center will either bribe the clients directly or pay others who refer clients to them. Insurance reimbursement used to be so high that facilities could pay thousands of dollars for a single client admission and were still able to make a large profit.

Another common practice includes treatment centers paying sober living facilities for a bed for their client to stay in so they can charge the client’s insurance company for residential treatment that they aren’t providing. Abuse also occurs through online advertising where corrupt centers spend high amounts on ads which overrides messages from legitimate centers. Patients who genuinely want help are often misled by the information they find online about these centers. In turn, law-abiding treatment centers are missing out on acquiring patients they need to remain financially stable.

In other instances, patients themselves help commit fraud to make a profit. Some insurance companies issue checks directly to the member. Patients are supposed to turn these checks over to treatment centers—but instead keep the money for themselves, sometimes causing treatment centers to lose out on hundreds of thousands of dollars.


In the most terrible instances of fraud, some treatment centers are found providing drugs to patients so they will test positively—and qualify for more treatment. It’s been reported that some centers keep their patient’s car keys or withhold food stamps and other valuables to ensure the patient stays with the center-- and they can continue billing their insurance.


Patient brokering of ANY kind is now strictly outlawed, and both Google and Facebook Ads use much more stringent certifications to ensure that only legitimate law-abiding centers can advertise on their platforms. These new regulations will help quality treatment centers reach more patients and help patients avoid predatory centers.

Bribing Patients


New regulations now clearly state that bribing patients with incentives such as steep discounts, cash or other gifts, is illegal. This practice (used to help boost patient counts in treatment centers) frequently led to poor outcomes for patients as well as overcharging of insurance companies, which increased rates for everyone.

Stricter Licensing Requirements


Both the federal government and many state's government's are imposing stricter licensing requirements on addiction treatment centers, sober living homes and outpatient clinics. Again, these requirements shouldn’t harm quality care centers, but will make it harder for illegitimate centers to practice business.

Expanded Regulation of Recovery Residences


The number of sober living homes is growing rapidly, however, most of these homes have very little/no regulation or oversight. While the idea of a place for those in recovery to stay and support one another is great, without proper regulation, these homes have the opportunity to take advantage of and prey on addicts who are sincerely looking to improve their lives and get clean.


Sober living homes may also be billing insurance for care they aren’t providing, committing fraud, and others want to keep people addicted to drugs by providing them. Better regulations can help eliminate these unscrupulous actors.

ASAM Criteria, Coverage Criteria and Telehealth


Coverage of addiction treatment has expanded rapidly for both in-person services and telehealth services. Much of this insurance coverage uses ASAM criteria to help determine what services patients can receive. ASAM criteria helps all patients receive evidence-based care that’s personalized to specifically meet their needs.

Expanded Access to Medication-Assisted Treatment


The SUPPORT for Patients and Communities Act of 2018 (which has led to many of these regulation changes) has expanded access to medication-assisted treatment (MAT) for addiction. MAT has been shown to be highly effective in treatment of addiction to alcohol, opioids, and other substances. Now, a physician can see up to 100 patients for MAT in more settings than were previously allowed or possible. This regulation also has the potential for patients in rural areas to more easily receive MAT, and the help they need, in their communities.

Expanded Coverage for Medicaid Beneficiaries


Medicaid now covers addiction treatment at higher rates than ever before. With Medicaid expanding in many states, more and more people have access to coverage. These changes have helped lead to the growth of the addiction treatment industry and may help your facility achieve its financial goals.


In our industry, regulations and coverage amounts are quickly and consistently changing. We know that keeping up with all of these changes can be challenging, especially while ensuring your patients are being properly cared for AND meeting your financial goals. At Datapro, we would be happy to help your facility in stay up-to-date with the latest insurance regulations and rules. If you'd like to learn more about our services, please feel free to schedule a complimentary 15-minute consultation with one of our medical billing experts by calling us at: 805-579-3537 or, by contacting us online. We look forward to hearing from you!

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