“We have developed an unparalleled opportunity to participate in a blended ownership business model with our toxicology labs. This allows treatment center owners to diversify their profits through the creation of additional streams of significant revenue not previously available to them through confirmatory testing…. I would like to speak with you in more detail about exactly what my company does, and how we can benefit you and your facility. Can we schedule a brief phone call for some time in the upcoming week?”
The above is from a recent sales pitch letter to a treatment center from Pivotal Point Toxicology Group; ADAW investigated last week to find out more about the offer.
We called the phone number on the Pivotal Point website, and the person who answered identified himself as Nicholas Boatman, the CEO. “We act as consultants to treatment centers,” Boatman told ADAW. In essence, Pivotal Point acts as a middleman, connecting the lab to the treatment center. Pivotal Point has been doing this for some time with physicians, particularly pain physicians who prescribe opioids, but in the last three months has added a focus on addiction treatment programs, said Boatman.
Using what he calls a “limited partnership model,” Boatman sells shares in Pivotal Point. “It’s illegal for us to tell treatment programs how many specimens to send,” he told ADAW. “We’re regulated by the SEC.” But one share costs $12,000, and that investment could yield about $3,500 a month, he said. One share is expected to equal about 200 specimens a month, he said, adding that outpatient programs should test each patient three times a week.
The urine specimens go to the Sky Toxicology lab, a confirmation lab that performs combined liquid chromatography and mass spectrometry confirmation testing.
“A lot of the bigger treatment centers are building their own labs, like CRC and Elements,” said Boatman, who is also affiliated with Florida-based rehabs. “But for the smaller guy, that’s a whole other beast.” It costs millions to set up a lab, according to the Pivotal Point website — although Pivotal Point can help programs “build” their own labs.
No federal money
Boatman stressed that no federal money — Medicaid or Medicare — is involved. “Our business is based off of private insurance,” said Boatman. Pivotal Point files the insurance claims for the tests. “We don’t deal with federal money as far as the partnership model goes,” said Boatman. (Restricting the partnership to private insurance avoids running afoul of federal anti-kickback regulations.)
Boatman acknowledged that this is an investment, and there is a risk. “We can’t make promises,” he said. Could centers lose the $12,000 per share they invest? “Theoretically, I guess you could lose it,” said Boatman. However, he said so far, “everybody is getting paid.” “Our lab has been open for a few months, and payouts are just starting to happen,” said Boatman. “Our goal is to have 10,000 specimens in the first year; we have 15,000 already.”
We asked Boatman whether he was concerned about being accused of fraudulent billing or running a kickback scheme. “We have law firms that look over everything,” he said.
Need for confirmation tests
There are some good reasons to do confirmation testing, said Boatman. First of all, it eliminates the risk of “false-positives.” The initial screening tests are very sensitive, so sometimes they incorrectly say a specimen contains evidence of drug use; the confirmation test is specific. Another reason is to measure not only whether someone is misusing drugs, but also whether they are taking therapeutic medications at the prescribed levels.
There is a need for “maintenance screening to determine if someone has relapsed,” agreed Jeffrey C. Lynne, a Delray Beach, Florida, attorney who specializes in zoning and sober homes. But the entire sober home–lab connection is rife with corruption, he said, noting that in the Florida model, people live in sober homes after treatment and the “housing provider” is responsible for drug testing.
There are some outright scams, said Lynne. They typically work this way: Housing operators test residents via a single screen for up to 15 substances. If that single screen comes up positive, the specimen then goes to confirmation testing to determine which of the 15 substances it was positive for. The lab would bill insurance, which paid about $100 for each confirmation test, for a total of $1,500 a test. A 10-bed sober home could bill insurance almost $4 million a year if it did five drug tests a week on each resident, said Lynne.
It didn’t take long for people in the treatment and housing industries to realize that there is a lot of money to be made in urinalysis, Lynne told ADAW. So people started opening their own labs, using creative arrangements by which they didn’t necessarily purchase the costly analyzers. In some cases the analyzers were loaned to them, with the agreement that they purchase the reagent, said Lynne. Some manufacturers of the analyzers leased them out to multiple entities, “like a time share,” he said.
When we described the limited partnership of the Pivotal Point group, Lynne said this sounded like a “way to get in the back door because you can’t get in through the front door.” Lynne said that in terms of kickbacks — even if federal money isn’t involved — there is little regulation, especially in Florida, of this kind of arrangement.
The best insurance for drug-testing schemes is the Preferred Provider Organization, which allows out-of-network payments, said David Lisonbee, president and CEO of Twin Town Treatment Centers in Los Alamitos, California, who recently received a sales letter from Pivotal Point. With an out-of-network payment, there’s no utilization review, no contract and no tracking, and the patient co-pay gets written off, said Lisonbee, who takes a dim view of Pivotal Point's business model.
A salesman for the Pivotal Point Toxicology Group said that Elements is a “big shareholder.” We contacted Elements to confirm this but did not get a response by press time.
“The people getting ripped off are the insurance companies, and the people paying premiums, whose rates are going up because of these scams,” said Lisonbee, whose center does conduct drug testing.
The gray zone
We asked Boatman how he got involved in the field; he responded that he has been in many fields, and that “one thing led to another.” According to his LinkedIn profile, he is the owner/founder of The Ambition House, described as halfway houses and a “rehab center” in South Florida. He is also chief operating officer and co-founder of APEX Physician Group, a health care provider specializing in addiction medicine, with a focus on people being discharged from residential treatment.
Boatman operates in the gray zone of the unregulated addiction world, which is attracting entrepreneurs of all sizes. People like Lisonbee aren’t interested, but the fear is that programs that do participate — and get the extra profit — will, like programs who pay for referrals, outlast the ethical ones.
“At the end of the day, you have to ask if there is any kind of fee splitting, any kind of kickback,” said Lynne. “But in reality, there is no one policing the industry.” The Department of Children and Families (DCF), which regulates substance abuse treatment in Florida, is “powerless,” he said. “They have no staff and no administrative authority.”
Meanwhile, outside his office window, Lynne can see the “generation of kids” who have been sent to rehabs and sober homes in Florida on their parents’ insurance, with parents paying rent. They’re no longer addicted to opioids, but “they have no life of purpose,” said Lynne. “We call it club rehab.” As long as housing operators can keep going propped up by drug-test money, testing may remain the only recovery-related activity that takes place in many sober homes.
Some treatment providers and sober home operators are being offered a chance to share the profits of their patients’ and residents’ drug tests.