Medically Reviewed

Addiction Regulation and The Kidney Industry

- 2 sections

Medically Reviewed: September 25, 2019

Medical Reviewer

Chief Editor


All of the information on this page has been reviewed and verified by a certified addiction professional.

The addiction industry is a $40 billion industry with over 14,000 treatment facilities.
The addiction industry has been plagued with access to treatment issues, which vary by state, regulatory changes due to fraud, and is considered a new industry in comparison to many other medical industries.
It is an intense time of structuring regulations, lead by each state’s governing bodies and task forces.
Another chronic disease industry can teach the addiction industry a thing about regulations…. the kidney disease industry.
Kidney disease is also a chronic disease. Chronic is the key word here, meaning that you will most likely suffer from the condition for a long time, likely your entire life.
Kidney disease will likely lead to the need for dialysis treatment. And for the majority of those diagnosed, they will need dialysis for the rest of their life.
The commonalities of addiction and dialysis treatment are uncanny, and the causes have a lot more to do with your behaviors than anything else.
Treatment for both conditions are life-saving treatments. If someone neglects treatment for either disease, the risk of death can be very high and it can happen very quickly. If a patient misses dialysis, there is a risk of ending up in a hospital emergency room. In addiction at any level of care, there is also high acuity and rapidness of mortality due to overdoses.
I’ve worked in both chronic disease industries. I can tell you that I have seen many differences in the treatment, outcomes, and quality of life between the two.
The kidney industry is regulated (and reimbursed) completely different than the addiction industry, and although the addiction industry is raising the bar, it’s not where it needs to be.


A drug rehab is typically regulated by their state licensing department. The state licensing department issues the license and is responsible for overseeing the integrity of the facilities. Many facilities will also complete accreditation, which is typically granted by the Joint Commission or CARF. Also, in each state is the local National Association of Recovery Residences (NARR) chapter which governs the sober homes, although most states are still not required to mandate compliance with them.
We will most likely see something resembling a nationwide sober home task force that will be focused on criminal behaviors, looking for cases of patient brokering and illegal kickbacks. This started in Florida and I would imagine this would roll out to other states.
Now let’s move on to the dialysis industry. Here’s what they have that the addiction industry doesn’t:
  • CMS Regulation. The Centers for Medicare and Medicaid Services (CMS) certifies facilities for inclusion into Medicare payments. State by state licensing requirements will vary; in Florida the Agency for Healthcare Administration (AHCA) regulates licensure and quality of care. If, for example a patient complaint is filed, the facilities are very concerned about the consequences from a possible investigation from AHCA. They have the capacity to investigate complaints and shut you down if necessary.
  • Patient Monitoring. Most dialysis facilities participate with an outside entity called the Health Services Advisory Group (HSAG). Basically they are a third party organization responsible for quality improvement, grievance investigation, and education services. The facilities report information like outcome metrics and patient deaths at the end of each month. No organization currently monitors the addiction facilities quality.
  • Facility Comparison Program. Medicare has a rating system that assigns 1 to 5 stars to facilities based on the outcomes and health of the patients of the facilities, called the DFC Star Program. This is helpful for patients looking for facilities, since better outcomes equal a LONGER AND HEALTHIER LIFE. Current ratings programs in the addiction space are privately owned, with unclear ownership interests and bias towards facilities since their revenue may rely on advertising revenue, leaving room for facilities to manipulate.
  • Reimbursement Penalties For Low Quality Service. The ESRD QIP (Quality Improvement Plan) determines a facilities quality of care through performance metrics. If a facility fails to meet these scores, they are financially penalized by CMS, and they will receive a reduction in payments. The scoring includes outcomes and patient survey results. The addiction industry has no standards, no scores, and no outcome metrics, so you can imagine what kind of standard of care this creates across the whole industry.
  • Standard Patient Surveys. Several times a year all patients are surveyed by CAHPS. This is the same framework of what is conducted in hospital systems. The surveys ask questions like: How often did the staff show respect for what you had to say? How often did the staff spend enough time with you? How often did you feel the staff really cared about you as a person? These are the type of questions that establish truthful answers in terms of quality of care. These survey scores are part of the ESRD QIP scores that factor into reimbursement, and part of the dialysis facility compare program.
By the way, if you end up on dialysis, your treatments are 100% covered by medicare for the rest of your life. This has been happening since 1972. Even if you don’t comply with your treatment plan and end up costing more for hospital care, you are still granted dialysis indefinitely for your lifetime. Doesn’t matter your age, income or even your citizenship status.
We have socialized medicine for one organ in your body. And since the regulating body (CMS) is the organization mandating quality requirements of the providers, they submit proposals for increases or decreases to dialysis spending to allow for adequate treatment funding.

How Can We Improve Addiction Treatment Facilities?

We Will See Reductions in Fraud and Abuse, and Improvements to the Quality of Care Provided by Addiction Treatment Facilities.
Maybe getting addiction treatment covered financially is a long shot, but the standards set forth in the kidney industry are not. These standards are realistic and will improve the quality of care of addiction treatment. If you give the state licensing departments the funding and authority to oversee providers, create a third party monitoring system, create a facility scoring program, penalize poor performers through reimbursement, and create standard patient surveys, then we can make significant progress and create level playing fields.
The addiction industry is in the process of figuring it out and each state is kind of ‘winging it’. Each state is forming completely different laws and regulations, has completely different funding and access to care channels, no standards of care for outcomes and no universal surveys or independent quality monitoring. If the states can start following the dialysis roadmap, we’ll see improvements, but on the current trajectory we’ll see continued fragmentation of regulation which actually may increase costs and confusion.
We’ve Been Regulating Addiction Business Entities Similar to the Way We Have Been Treating Addicts: Law Enforcement
One of the other issues I see in the progress of regulation in the drug addiction market is the manner of enforcement. Ironically, it is more of a law enforcement mindset towards the regulation of the business entities rather than a focus on strengthening their local healthcare agency’s authority.
The positives of leaning on a law enforcement type of approach through task forces is that you can make change faster and ‘louder’ than what a government licensing agency can do, since it takes time to raise funding and make laws to help agencies do their job correctly.
The sober home task force in Florida is a great example of sweeping change and positive progress for an industry in a very short time. But funding also needs to be channeled to the organizations that oversee licensing and to create mechanisms that control ethics and quality of care.
The law enforcement approach and media portrayal of the addiction industry also discourages top talent healthcare executives, doctors, and practitioners from other industries to enter into the addiction market since the overall business is portrayed as bad actors. Many professionals work in the healthcare space to help patients and have dedicated their lives to service.
The turbulence in the addiction industry presents major risks to top talent, and in actuality, quality providers want regulation to provide level playing fields and emphasize on quality of care.
But, ultimately the negative portrayal of all treatment facilities has stigmatized the business side of the industry, repelling top talent, and this is hurting progress.
Working in addiction is extremely hard work, and we need our best minds working on this together.
As a healthcare management professional that has worked in chronic disease management in acute care and outpatient care for over 8 years for both industries, I can say that addiction is one of the most elusive, challenging, and dangerous diseases we will see in this lifetime.
Even with a clear vision and path to improvement, the industry may take 5-10 years to reach where general healthcare standards are today.
I support the progress that has been made, but we need to attract top talent in the industry and create an infrastructure that promotes safety, discourages fraud, and increases quality of care by establishing standards of care for addiction treatment
We have to get this right. Lives depend on it.
Freddy Moldt, CEO of PAX Memphis
Freddy has extensive experience in professional healthcare management for chronic disease patients. Freddy was previously a Healthcare Administrator for DaVita Healthcare Partners, a Fortune 500 healthcare company, responsible for leadership of outpatient centers managing care for over 140 dialysis patients in Ft Lauderdale, Florida. While at DaVita he also held management roles for the hospital departments of Mercy Hospital, Mount Sinai, Broward General and the Broward Health System. During his tenure at DaVita, Freddy has also successfully maintained some the highest clinical outcomes in his territory, while also completing numerous Joint Commission and ACHA regulatory compliance inspections and audits. Prior to healthcare, Freddy was an active member of the US military as part of a Coast Guard helicopter search and rescue aircrew for 6 years in Miami, Florida. Freddy also holds a Bachelors Degree and MBA from Florida Atlantic University.