Protect Your Mission: Stark Law, Anti-Kickback, EKRA & Patient Brokering Risks in Behavioral Health

Compliance is more than a regulatory requirement—it is a reflection of an organization's commitment to ethical care, integrity, and the people it serves. In behavioral health and substance use disorder (SUD) treatment, a handful of federal laws shape nearly every referral, marketing relationship, and business arrangement a provider enters into.

Understanding Stark Law, the Anti-Kickback Statute (AKS), the Eliminating Kickbacks in Recovery Act (EKRA), and state patient brokering laws is essential to protecting your mission, your organization, and the clients in your care.

Understand the laws

**Stark Law** prohibits physicians from referring Medicare or Medicaid patients for certain designated health services to an entity with which the physician (or an immediate family member) has a financial relationship, unless an exception applies. Stark is a strict liability statute—intent does not matter.

**The Anti-Kickback Statute (AKS)** is a criminal law that prohibits knowingly and willfully offering, paying, soliciting, or receiving any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program.

**EKRA**, enacted in 2018, extends similar prohibitions to recovery homes, clinical treatment facilities, and laboratories—and importantly, EKRA applies regardless of payer. That means private pay, commercial insurance, and federal program clients are all covered.

**State patient brokering laws** add another layer. Many states have enacted their own statutes specifically targeting referral schemes in SUD treatment and recovery housing, often with significant criminal and civil penalties.

Recognize the risks

The red flags regulators look for tend to be consistent across investigations:

🚩 Paying marketers, call centers, or "outreach" staff per admission

🚩 Commission-based compensation tied to client volume

🚩 Free or below-fair-market-value rent, services, or staffing exchanged between referring entities

🚩 Lab, toxicology, or medication arrangements where compensation tracks volume of referrals

🚩 Marketing agreements that compensate based on conversions or admissions

🚩 Undisclosed financial relationships between treatment providers and referral sources

The central question regulators ask is simple: *Was this referral made because it was in the client's best interest, or because someone was financially benefiting from it?*

Transitional housing, recovery residences, and patient brokering risks

As the SUD treatment industry continues to evolve, one area that has received significant attention from regulators is the relationship between treatment providers and transitional housing, sober living homes, recovery residences, and supportive housing programs.

Let me be clear: **transitional housing itself is not illegal, nor is referring a client to a housing program that meets their clinical and recovery needs.** In fact, quality transitional housing can play a critical role in helping individuals maintain recovery, develop life skills, secure employment, and successfully reintegrate into their communities.

The compliance concern arises when financial incentives become connected to those referrals. When treatment centers, housing providers, marketers, or referral sources exchange money or other forms of compensation for client placements, regulators may view those arrangements as patient brokering.

Examples of high-risk arrangements may include:

🚩 Paying for referrals into a transitional housing program

🚩 Receiving compensation for placing clients into housing

🚩 Revenue-sharing agreements tied to client admissions

🚩 Commissions based on occupancy rates or referral volume

🚩 Incentive payments tied to treatment admissions originating from a housing provider

🚩 Financial relationships where compensation increases based on the number of clients referred

Under EKRA and other healthcare fraud and abuse laws, these arrangements can create significant legal and compliance risks because they may influence placement decisions based on financial gain rather than clinical necessity.

Some of the largest enforcement actions within the behavioral health and addiction treatment industry have involved allegations of patient brokering between treatment facilities, marketers, laboratories, and recovery housing operators.

Behavioral health organizations should ensure that all housing referrals are based on documented clinical need, recovery support requirements, and the best interests of the individual being served. Organizations should also carefully review contracts, marketing agreements, referral relationships, and compensation structures involving transitional housing providers, sober living operators, and recovery residences.

Build a strong compliance program

A strong compliance program is the most reliable defense against fraud and abuse risk. Core elements include:

✔ Written policies and procedures addressing Stark, AKS, EKRA, and state patient brokering laws

✔ A designated compliance officer and compliance committee with real authority

✔ Legal review of marketing, referral, housing, lab, and vendor agreements before they are signed

✔ Fair market value (FMV) analyses supporting any compensation arrangement with a referral source

✔ Documented clinical justification for every referral, including housing placements

✔ Ongoing training for clinical, admissions, marketing, and leadership staff

✔ Confidential reporting channels and a non-retaliation policy

✔ Routine auditing and monitoring of referral patterns, marketing spend, and contractual relationships

✔ Prompt investigation and corrective action when issues are identified

Lead with integrity

Ultimately, the goal should always be the same:

✔ Protect the client

✔ Protect the recovery process

✔ Protect the organization

✔ Maintain ethical and compliant business practices

When referrals are driven by clinical need rather than financial incentives, everyone benefits—especially the individuals and families seeking recovery. Compliance protects care. Integrity builds trust. And organizations that lead with both create better outcomes for their clients, their communities, and themselves.

*This article is for educational purposes only and does not constitute legal advice. Consult qualified healthcare counsel regarding your specific arrangements.*