There is probably no part of the healthcare sector other than the drug and alcohol treatment industry that faces as much scrutiny and challenge today. The key change and challenge invited by the change in the industry boils down to one thing:  the provision of medical services.     

            Facilities have traditionally been a platform of psychotherapeutic services alone.  Codes for services provided are limited and emanate from time spent with a patient. The coding and documentation is limited and pretty simple.  That is not at all true when facilities provide medical services to their patients.

            The “medical model” followed by physicians in providing services of all kinds (from knee replacements to cardiovascular services) is well established and unique to the medical industry.  There is a physician patient encounter, a plan of care and physician orders.  It’s documented in a particular way. A claim form is submitted. The CPT code(s) specified on the claim form is generated with supporting medical documentation that contains all elements required by the particular code(s).  Get it right and the provider gets to be paid by the insurance payor.  Get it wrong and the insurer will deny payment or seek recoupment.  The treating physician is legally responsible for the process, including the appropriate diagnostic and CPT coding submitted on the claim form. 

            After the initial physician patient encounter, there may be certain diagnostic procedures (e.g. clinical lab, diagnostic imaging) ordered, which themselves require specific written documentation in order to be compensated by a payer.  Upon receiving the diagnostic test results, the physician or his/her “midlevel practitioner” (e.g. ARNP, PA) meets with the patient to discuss the findings.  A specific medical record documents the encounter and another bill is submitted to a payer.  Depending on the results of that encounter, further care may be prescribed (e.g. referral to a specialist, performance of a procedure).  And the beat goes on. 

            The point is that the provision of medical services requires providers to enter into a pattern and process of behavior that is very specific and thoroughly regulated.  Medical service providers know (at least to some extent) the rules and regulations that apply to their legal responsibility for billing for copays and deductibles (there are plenty!), the different payor requirements, the regulations related to “balance billing” patients (especially those insured by HMOs), and patient authorization requirements (e.g. ABN type forms and notification) for providing a noncovered service.  These things are routine in the provision of medical services.  There are hardly any such routines in the area of behavioral health services.  And, for that reason alone, behavioral health providers like drug and alcohol treatment facilities that step into the provision of medical services expose themselves to a “new world,” one they must be properly prepared for and guided in traversing.      

            The biggest single development in the treatment industry is its expansion into the provision of medical services, most specifically clinical lab services (e.g. analyzer and LCMS) and also “full spectrum” healthcare services (e.g. diabetes care, cardiovascular care, pain care services).  To a great extent, this make sense, since service providers want the ability to have better control over the well-being of their patients.  Though it is true that there can be a positive financial result in providing more services to facility patients, it is grossly over simplistic to ignore the positive and well established medical value in taking greater responsibility for the continuum of care. 

            It is well known and well established in the medical community, for instance, that it can be in patients’ best interest for their internist, for example, to also provide certain clinical lab and diagnostic services right in that physician’s office.  While true that the physician should financially benefit more from providing those services, rather than sending them out to be provided by an independent entity, physicians have long held that there is medical value for those services to be provided on site.  Drug and alcohol treatment facilities are adopting the same thought process and are obtaining proper licensure and medical oversight in order to enable them to expand their services.  It could be argued, for instance, that it would be foolish and irresponsible for a physician working with a facility to ignore the impact that depression associated with diabetes might have on addiction.  And as such, facilities are increasingly expanding the scope of their services into medical services that have not traditionally been provided by them.

            As they traverse the medical space, drug and alcohol treatment facilities must ensure best practices and standards of care are being followed by the healthcare providers treating their patients.  Perhaps the biggest area of concern for them is, and should be, that of medical necessity.  Is the treatment medically necessary?  That’s a decision made by a physician, the documentation and support of which must be properly performed (as with any medical decision) in order to be eligible for payment by an insurer.  To the extent a facility or “medical director” or treatment physician affiliated with a facility departs from the usual “medical protocol,” which is by design driven by the independent medical decision making of a licensed physician, all parties are exposed to risk.  “Risk,” does not just mean the risk of not being paid, but also the risk of regulatory investigation and even prosecution.  Facilities that interfere with the independent medical decision making of a physician in ordering and providing medical services can expect to be investigated, denied payment, subject to payer recoupment and even prosecuted.  Physicians that allow facilities to interfere with their independent and properly documented medical judgment will have no excuse under applicable law.     

            As far as the “applicable law” goes, it is vast, complex and often unclear.  Laws like the federal Anti-Kickback Statute, state kickback laws, fee splitting prohibitions, self-referral laws (both the general ones like the Florida Patient Self-Referral Act and the specific ones directed at lab ownership and referral), and the Stark law (to a lesser degree) are overwhelming to professionals and businesses that have not traditionally had to be mindful of them.  The many laws that pertain to compensating for marketing, or to financial hardship fee waivers/reductions and the like are intricate and require the ability to thoroughly and intricately analyze facts, look at certain precedent (e.g. OIG Advisory Opinions) and then cast the proposed conduct against the backdrop of these evolving laws and interpretations.  This is made even more difficult by the fact that payers for medical services often offer no direct guidance and are concerned themselves with interfering with the medical judgment of treating physicians. 

            These laws, the analysis of them, and the ability to construct proposed business arrangements with varying degrees of risk for consideration by clients is no easy thing.  Which is one reason for concern regarding statements like that of Mr. John Lehman’s regarding his not for profits organization’s (FARR) intent to “launch a series of Advisory Bulletins addressing issues we believe are vital to the health and wellness of our industry.  These bulletins focus on subjects of rent assistance, patient brokering, as well as the utilization of urinalysis and good practices for developing and sustaining peer-supportive communities.”  Sober World, January 2014, Volume 4, Issue 1.  While, in comparison, the American Medical Association does provide certain ethical guidance to physicians via its Council on Ethical and Judicial Affairs. The AMA’s substantial full time legal staff and consultant attorneys guide the organization’s activity.  And, in 28 years of watching the organization support its members, it does not appear that the AMA attorneys have issued any edicts or interpretation of law that could arguably be used to hurt its members or conflict with the legal advice its members independently obtain.     

            Drug and alcohol treatment facilities need not shy away from providing medical services they think are in the best interests of their patients.  But doing so without qualified and independent minded physicians dedicated to quality care and substantive guidance and internal controls designed to respect and ensure that the thread of documented medical necessity is woven through every aspect of care is dangerous, not only to the facility and physicians, but more importantly to the patients themselves.


With nearly 30 years of healthcare law experience, including his experience as legal counsel for the Florida Medical Association, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law.  Mr. Cohens practice immerses him in regulatory, contract, corporate, and compliance (and payer) related matters, which he routinely applies to the many drug and alcohol abuse clients he and his firm represent in matters involving the development of proper marketing arrangements, ancillary services, compliance procedures and resolution of issues with payers.  As Founder of The Florida Healthcare Law Firm, he has distinguished himself and his firm for providing legal services with the right pricing, responsiveness and ethics. jcohen@floridahealthcarelawfirm.com or toll free 888-455-7702

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