Unlicensed Substance Abuse Treatment Programs Scramble to Comply with Regulations

Aug 18, 2015

Gov. Maggie Hassan has launched a review of state licensing requirements for inpatient substance abuse treatment programs.

Southeastern New Hampshire Services in Dover offers inpatient substance abuse treatment along the same stretch of County Farm Road as a nursing home and a day care center.

State law mandates that all three businesses be licensed and undergo annual health and safety inspections. But for as long as Heidi Moran can remember, state regulators have allowed Southeastern New Hampshire Services to operate without any oversight.

“For years, and I mean 20-plus years, we have been receiving grant money from the state,” says Moran, the agency’s clinical administrator, “and we have never had to have a license.”

That’s set to change July 1, 2016, when the state will cut funding to Southeastern New Hampshire Services and two other unlicensed residential programs, Serenity Place in Manchester and Headrest in Lebanon.

To keep their programs going, the three centers will need to bill Medicaid and private insurers, who are now required to cover substance abuse treatment under the Affordable Care Act. To bill the insurers, the centers need a health care facility license – and that requires compliance with hundreds of regulations on everything from fire protection to door handles.

Moran estimates it will cost $500,000 to upgrade her building to meet the licensing requirements. That includes installing an elevator and refitting bathrooms to meet the guidelines of the Americans with Disabilities Act.

“It’s crazy-making,” she says.

Serenity Place in Manchester, NH
Credit File photo

Sharon Drake, executive director of Serenity Place, says most of her bedrooms are too small under the licensing standards. She’s looking at $1 million in renovations or reducing the number of beds at a time when every inpatient treatment program in the state has a waiting list.  

Both organizations have also had to hire additional staff to help clients get insurance coverage, as well as experts to bill the insurers and document, record and track every claim.

Drake says treatment providers waited a long time for the day when insurers would have to cover substance abuse like any other medical condition. But with less than a year to go, she says the state has not done enough to help the unlicensed programs prepare.

“There was no ramp-up time,” she says. “There was no, ‘This is where we’re going and here are some resources to help you,’ no conversation on the licensing end of it.”

Officials with the state Bureau of Drug and Alcohol Services, or BDAS, dispute that, maintaining that the unlicensed programs have known for at least two years that they would need to be licensed.

About a dozen inpatient programs, including Keystone Hall in Nashua and Phoenix House in Dublin and Keene, are already in compliance.

Cheryl Wilkie, who oversees substance abuse treatment programs at the Farnum Center, a licensed, 18-bed inpatient facility in Manchester, says she was surprised to learn there were unlicensed inpatient programs in operation.

While she would “hate” to see any residential program shut down over the issue, she says, licensed programs like hers have gone without state funding since Medicaid and private insurers began paying for treatment.

“Hearing they didn’t have licenses, that means BDAS has been carrying them for two years,” Wilkie says. “That money could be used for prevention. We could do so much with it.”

A spokesperson for the Department of Health and Human Services acknowledges that state regulators didn’t learn about the unlicensed programs until early 2011, when the facility standards were updated.

“These handful of facilities did operate for the longtime without a license,” says Jake Leon, director of communications for the Department of Health and Human  Services. “I think when the licensing folks realized that, they moved to change it.”

Leon says the department is working with the unlicensed programs to help bring them into compliance. In some cases, he says, that means making sure renovations meet the standards for a residential facility. In others, it could mean helping them find a new location.

Elected officials at the state and federal levels have gotten involved as well.

Citing the “overwhelming demand” for treatment services, especially inpatient care, Gov. Maggie Hassan has ordered a review of the state’s licensing requirements.

Headrest in Lebanon, NH
Credit Courtesy photo

In a letter to Sylvia Burwell, the secretary Health and Human Services, Sen. Kelly Ayotte has asked federal officials to work with the state. “At a time when access to treatment is already lacking,” she wrote, “burdensome and costly regulations should not further hinder the ability of individuals struggling with addiction to get the help they need.”

Moran, of Southeastern New Hampshire Services, says she briefly considered closing the inpatient program and continue operating as an outpatient center. But, with so many people needing the more intensive treatment, she’s decided against it. 

Instead, she hired an architect to start drawing up plans for a renovation. That was two years ago, and she's still waiting for Strafford County, which owns the building, the city of Dover, and the state sign off on the plans.

"All I know is I want to stay open and they have given us until next June and I haven't had a hammer swing in this place yet," Moran says. 

Serenity Place has decided its best option is to find a building that complies with the state’s facility standards, says Sharon Drake. That's proven difficult. A plan to move to a former school for troubled teenagers was shut down by city officials when neighbors objected. More recently, an offer on a second location fell through.

In the meantime, like Moran, Drake is watching the clock.

“We all have to move towards [licensing] and we’re all willing to move toward it,” she says. “But they need to give us more time and they need to have some flexibility so that we don’t lose beds.”