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Utah Lawmakers to Tackle Fraud in Drug Treatment Industry

Andrea Smardon
Utah Representative Eric Hutchings (R-38) talks about the importance of mental health and drug treatment in criminal justice reform during the 2015 legislative session at the Utah Capitol.

Some Utah drug treatment centers have allegedly been collecting millions of dollars in insurance payments for services they never provided, but it’s not clear what can be done to stop the fraud.

Eric Schmidt is President of the Utah Association of Addiction Treatment Providers, and he outlined for Utah lawmakers the fraud that he has observed over the past year.

“It began when people in the industry, both employees of some of these fraudulent programs, insurers, began to come and tell me what I thought were very horrifying, horrifying things that were occurring in treatment centers,” Schmidt said.  

He heard that people running these centers were billing for services that were never provided. Some of the patients were imported from out of state and some were listed as living in the homes of employees. One former manager testified about cases where owners of facilities were having sex with patients or doing drugs with those in treatment. The insurance companies apparently targeted most were Regence Blue Cross Blue Shield and BridgeSpan Health, because they allow out-of-network providers. An investigator for the insurers estimated that it’s cost them tens of millions of dollars in the last year. But Schmidt says he’s hit a wall on how to stop these practices.

“We as an organization with Blue Cross Blue Shield and other concerned parties have gone to the office of licensing, gone to the insurance commission, and there actually doesn’t seem to be much any of these organizations can do,” Schmidt says.  

“That gravy train is over,” says Republican Eric Hutchings of Kearns, who is the House sponsor of major criminal justice reform legislation passed earlier this year. Hutchings says drug and mental health treatment is a core part of the reform effort.

“Unfortunately, if we have too many programs out there that are not functioning effectively, it’s going to skew the effectiveness of the entire program and bring into question the benefit of the entire program,” Hutchings says. “We can’t have that.” He did not provide details, but he promised a solution by the next legislative session.

Andrea Smardon is new at KUER, but she has worked in public broadcasting for more than a decade. Most recently, she worked as a reporter and news announcer for WGBH radio. While in Boston, she produced stories for Morning Edition, Marketplace Money, and The World. Her print work was published in The Boston Globe and Prior to that, she worked at Seattleââ
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