Written by Mark La Palme Sr., who achieved sobriety in 1999 after 27 years of addiction. Today, he leads Sober Life Consulting, LLC and serves as Senior Consultant for All Together Recovery
Kentucky used to stand out in addiction recovery. We expanded Medicaid to cover treatment, invested in community programs, and showed that we were willing to put resources into helping people get better.
Today, profit-driven providers and loopholes are crowding out quality care. What started as a system to help people has turned into a business model built on cheap labor and low-value services. Even now, the largest behavioral health provider in the state is under federal investigation, showing how deep the problems run.
The first problem is the use of interns as cheap labor. Some providers still rely on what amounts to indentured servitude. Job ads have openly offered “reduced rent and a small stipend” for house managers who handle admissions, drug testing, and transportation. These are duties that should be performed by trained staff. In some programs, more than a hundred interns at a time were paid as little as $75 a week, kept on food stamps and Medicaid while the companies billed Medicaid for their work. In one year alone, this model generated more than $100,000 a week in peer support billing, much of it tied to this underpaid and untrained workforce.
The second problem is the weakening of peer support. Peer support is supposed to mean people in long-term recovery walking alongside those just starting out. Done right, it is one of the most powerful tools in recovery. But in Kentucky it has often been weakened into something far less effective. Sometimes Medicaid was even billed for people simply attending free AA meetings, as if that alone counted as treatment.
Recent changes in state law made matters worse. Lawmakers created “temporary” peer support specialists who can bill Medicaid with almost no qualifications. They also allowed non-clinicians to be reimbursed at the same rate as licensed clinicians. Imagine applying that logic to medicine, where someone without a license could bill the same as a doctor. The result is predictable. The system now values quantity over quality. Data show patients who receive more of these non-clinical services actually do worse, with higher ER visits, more hospital stays, and more relapses. Instead of fostering independence, these business models create dependence and keep patients cycling through the system.
The third problem is the abuse of psychoeducation. Psychoeducation sounds technical, but in practice it means basic information sessions about addiction and recovery. It is the kind of guidance that should already be part of counseling, not billed on its own. Kentucky pays for psychoeducation even though most other states do not. In recent years it was expanded so it no longer had to be billed only as one-on-one sessions, making it even more lucrative for providers. Spending then exploded from $40 million to $168 million in a single year, while dollars for higher-value services like therapy and residential treatment declined.
The pattern is clear: low-value services are rewarded while real clinical care shrinks. And it is not just a policy problem. It has become a law enforcement issue. In recent years, Kentucky has seen an almost endless stream of federal takedowns, including FBI raids, indictments, and prosecutions of providers caught exploiting Medicaid and addiction services. Even with these prosecutions, state investigations are understaffed, with backlogs that can take years. That allows bad providers to keep operating and draining taxpayer dollars in the meantime.
It does not have to be this way. Kentucky can change course. That means requiring fraud-prevention training for all staff at hiring and every six months. It means paying fairly for actual therapy delivered by licensed professionals. And it means ending the reliance on interns and under-trained peers as the backbone of a cheap business model.
Kentucky once set the pace for recovery innovation. We can do it again, but only if we value people above profit and stop rewarding practices that exploit patients and taxpayers alike.
Mark La Palme Sr. achieved sobriety in 1999 after 27 years of addiction. He is the retired founder of Isaiah House, Inc., where he served as CEO for 23 years. Today, he leads Sober Life Consulting, LLC and serves as Senior Consultant for All Together Recovery in Danville, Kentucky.