Housing and Travel Offers: California's Rule and the Federal Risk

For years, some addiction treatment marketing worked like this: a program or its marketer offered a plane ticket, a ride and a bed to anyone with good insurance, and the person's coverage paid for treatment. The offer was the inducement. Federal and state law now attack that model from several directions. California wrote the most specific rule, and federal statutes make the same arrangement risky everywhere. What follows is compliance readiness, not legal advice.

Which conditions does California's rule set?

California Health and Safety Code 11831.65 sets conditions on housing and transportation offered by programs licensed or certified under its alcohol and other drug programs law:

• Certified outpatient programs (and laboratories) that lease, manage or own housing offered to people who are also using their services must keep separate contracts for the housing. The contract must state that payment for housing is the individual's responsibility and does not depend on insurance benefits, must include a repayment plan for any subsidized rent with a good faith effort to collect, and the housing offer may not depend on the person agreeing to receive services from the program (11831.65(a)).
• Licensed residential AOD facilities may offer discounted housing after discharge only with a written housing contract separate from the treatment contract (if the person also pursues outpatient treatment), a repayment plan for subsidized rent with a good faith collection effort, and an offer that does not depend on attending outpatient treatment at a program the facility owns or operates (11831.65(b)).
• Transportation offered by a licensed facility to someone seeking recovery or treatment services is allowed only if ground transportation is for less than 125 miles, and air transportation includes a return ticket usable on discharge; an unused return ticket must be available to the person on request for one year after discharge (11831.65(c)).

The section does not stop anyone from giving educational or informational materials about community resources, including housing assistance (11831.65(d)).

Why do these offers raise federal problems too?

Three federal statutes apply in different ways:

1. The beneficiary inducement provision. Federal law authorizes civil money penalties against a person who offers or transfers remuneration to a Medicare or state health care program beneficiary that the person "knows or should know is likely to influence such individual to order or receive from a particular provider" any item or service payable by those programs (42 U.S.C. 1320a-7a(a)(5)). "Remuneration" includes "transfers of items or services for free or for other than fair market value" (1320a-7a(i)(6)).
2. The Anti-Kickback Statute. Paying or offering remuneration to induce someone to refer an individual for, or to arrange, services payable by a federal health care program is a felony (42 U.S.C. 1320a-7b(b)(2)). Housing or travel funneled through a marketer or a sober home that delivers people to a program can fit that description.
3. EKRA. 18 U.S.C. 220 reaches paying or offering remuneration "to induce a referral of an individual" to a recovery home or clinical treatment facility, or "in exchange for an individual using the services" of one, and it covers private insurance as well as public programs. See EKRA and treatment centers.

Each statute has exceptions and safe harbors, and each turns on facts, which is why counsel should review any offer of housing, travel or other value to prospective patients before it is made.

Does Florida add anything?

Florida's Patient Brokering Act makes it a felony to solicit or receive a benefit "in return for the acceptance or acknowledgment of treatment" from a provider, as well as to pay or receive anything for referrals (Fla. Stat. 817.505(1)). Its exception for consumer information services is lost if the service provides or arranges transportation to or from a provider (817.505(3)(i)3). And under the recovery residence referral rule, placing a patient into the housing component of a provider's day or night treatment program counts as a referral (397.4873(4)(b)). See Florida's Patient Brokering Act.

How should a program's housing and transportation policy read?

Write the policy before anyone makes an offer, and build it around the strictest rule that applies to you:

• No offer conditioned on choosing the program. Housing, travel or anything else of value is never tied to enrolling, staying or attending.
• Separate contracts and payment responsibility for any housing the program owns, leases or manages, with repayment terms and documented collection, following 11831.65 in California and as a sound practice elsewhere.
• Transportation limits stated in the policy: distance, return tickets and record-keeping in California; a documented clinical or access reason everywhere.
• No marketing of benefits. Advertising, call scripts and websites never describe housing, travel or other value as a reason to choose the program.
• Information, not inducement. Staff may share general information about community housing resources, as California expressly allows, but in Florida even naming a residence can be a regulated referral.
• Approval and records. Every offer is approved by a named compliance lead, recorded, and reviewed in the quality process.

What do we do, and what do we never do?

We never design, market or administer housing or travel offers, refer anyone to sober homes, or tie our fees to anything a program's patients do. Every fee is flat and published on our pricing page. What we do is the compliance paperwork: a Policy and Procedure Manual ($1,495) that can include a housing, transportation and inducement policy written to your state's rule and the federal statutes, for your counsel to review; California licensing and certification packages (see California's mandatory outpatient SUD certification and California's residential AOD license); and, for operators of recovery residences, certification readiness under NARR affiliate and state rules.