potential pitfalls related to the stop addiction fraud ethics act of 2023 (safe act)
Effective January 1, 2024, substance abuse recovery residences, treatment facilities, and treatment providers must comply with new requirements designed to curb unethical marketing practices and kickbacks for patient referrals. The Stop Addiction Fraud Ethics Act of 2023 (“SAFE Act”) provides general requirements for marketing, false or misleading information, and patient referral practices. SUD facilities should pay close attention to this new law and evaluate whether their marketing and referral practices are in compliance.
The first provision of the SAFE Act concerns a facility’s “marketing and advertising materials.” Such materials must convey “accurate and complete information, in plain language that is easy to understand.” Thus, any marketing and advertising materials must be accurate, complete, and easy to read.
Additionally, the following information must be placed on the marketing and advertising materials:
1. Name and brand of the residence, provider site, or facility.
2. Information about the types and methods of services, and information about where they are provided.
3. Categories of treatment and levels of care described in the American Society of Addiction Medicine, Patient Placement Criteria, Revised.
4. Average lengths of stay at the residence, provider site, or facility during the previous year for each level of care described above.
5. Brief summary of any financial relationships between the residence, provider site, or facility and any publisher of marketing or advertising materials.
A recovery residence or licensed residential treatment facility that also provides separately licensed outpatient SUD services has additional disclosure requirements.
The lack of statutory definitions and guiding regulations to these marketing provisions is concerning from a legal perspective. We recommend overcompliance with these requirements until more guidance is provided either by the State or the courts. In the meantime, treatment providers and facilities should review their marketing materials for compliance with these new requirements.
Failure to adhere to these marketing and advertising requirements does not appear to come with any penalty for non-compliance. Thus, while these provisions are important, a SUD facility should not be concerned with punitive measures for non-compliance, at least not at this time.
That is not the case for marketing and advertising materials that can be perceived as false or misleading. A SUD facility that publishes false and misleading marketing materials with the intent to deceive is guilty of a Class G felony and may be sued for unfair and deceptive trade practices, which subjects the facility to treble damages and payment of an aggrieved party’s attorney fees. These are very harsh penalties that should cause SUD facilities to take notice.
Potentially false and misleading information specifically includes 1) a treatment provider’s status as an in-network or out-of-network provider, 2) the credentials, qualifications, or experiences of service providers, and 3) the rate of recovery or success in providing services.
SUD facilities must pay very close attention to marketing materials that contain this information. Either consider removing the information entirely from all marketing and advertising or scrub the language to make sure there are no possible grounds for non-compliance.
PATIENT REFERRALS
Finally, the SAFE Act prohibits knowingly offering or receiving anything of value or engaging in a split-fee arrangement for the referral to or from a treatment provider. This provision is more clear cut and not as subject to interpretation. Nevertheless, SUD facilities should carefully review their referral practices to assure compliance as breach of this provision also constitutes a Class G felony.
We highly recommend that SUD facilities closely review their marketing and advertising materials and practices to ensure compliance with the SAFE Act. If you have any questions at all, please do not hesitate to contact Bo Carpenter at bcarpenter@asklawnc.com or Andrew Wright at awright@asklawnc.com.
