Table of Contents
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The Short Answer: An Advisory Board Catches What Your Attorney and Board of Directors Will Not
Every behavioral health operator running a multi-site or single-site treatment business should build a five-seat advisory board of operators, former surveyors, and revenue-integrity veterans. That group catches the operational drift that becomes a federal enforcement action eighteen months later.
A board of directors handles fiduciary duty. An advisory board tells you the things your friends will not, and catches the regulatory drift your attorney is too far from operations to see.
I started saying this out loud after a phone call. An operator reached us at a conference. DOJ had served his facility. The allegations involved false claims tied to psychoeducation billing and upcoding, the same pattern federal prosecutors highlighted when the Justice Department announced its 2024 National Health Care Fraud Enforcement Action against 193 defendants across 32 federal districts, with approximately $2.75 billion in intended losses and $1.6 billion in actual losses.
He had a board of directors. Three of his closest friends and his attorney. Not one of them had ever run a treatment center. His legal fees passed $4M before any settlement number got drawn up. An advisory board with one operator, one former state surveyor, and one revenue-integrity lead would have flagged the billing pattern long before the subpoena landed.
What an Advisory Board Actually Does That Your Healthcare Attorney Cannot
Your healthcare attorney answers the question you asked. They are not sitting in your EOC tour. They are not reading your utilization management denials. They are not looking at how your marketing team books admissions or how your billers code a 90853 versus a 90837.
An advisory board lives at the operational layer. A former Florida AHCA reviewer knows what a deficiency pattern looks like before it becomes a Statement of Deficiencies. A revenue-integrity veteran knows when your average length of stay at a partial hospitalization level has drifted in a way that will trigger an SIU audit at Aetna or Cigna. A multi-site operator knows when your census growth is outpacing your clinical leadership bench.
None of that is legal advice. All of it is pattern recognition that prevents the legal bill in the first place.
DOJ made the point directly in its 2024 announcement. Attorney General Merrick Garland said that whether the defendant is a drug trafficker or a corporate executive, “if you profit from the unlawful distribution of controlled substances, you will be held accountable.” Operators who wait for a target letter to take that seriously are already too late. In the same action, federal and state partners seized over $231 million in cash, luxury vehicles, gold, and other assets.
Composition: Who Actually Belongs on the Board (and Who Does Not)
I tell founders to build a five-seat advisory board. Not seven. Not three. Five.
- A current or recent multi-site operator who has lived through a CMS or state survey at a residential or residential withdrawal management level of care.
- A former state surveyor or accreditation reviewer from The Joint Commission or CARF. They know the surveyor focus before you do.
- A revenue-integrity or payer-side leader who has run utilization management or SIU work. They will read your denials differently than your billing company will.
- A behavioral health finance or M&A professional who understands EBITDA quality of earnings and how PE diligence will tear your AR apart.
- A clinical leader, ideally a medical director or licensed clinical executive, who can pressure-test ASAM Criteria, 4th Edition application across your levels of care.
Notice what is missing. Your best friend. Your college roommate. Your largest referral source. Anyone whose loyalty to you would prevent them from telling you the marketing contract you signed last quarter looks like a kickback under the federal Anti-Kickback Statute or under EKRA.
EKRA is codified at 18 U.S.C. § 220 and carries fines of up to $200,000 and up to 10 years in prison per occurrence. Unlike the Anti-Kickback Statute, EKRA applies to any healthcare benefit program, including private insurance and cash-pay patients. In United States v. Schena (9th Cir. July 11, 2025), the Ninth Circuit issued the first appellate interpretation of EKRA, holding that § 220(a)(2)(A) “covers those who interface with those who do the referrals.” Schena was sentenced to 96 months in prison and ordered to pay more than $24 million in restitution. A board member who has lived through that analysis flags the marketing contract before counsel ever sees it.
How the Board Actually Operates: Cadence, Pay, and Friction
Quarterly meetings. Two hours. A standing agenda that covers survey readiness, payer trends, clinical documentation findings, financial covenants, and one open topic the founder brings. That is it. You are not running a Fortune 500 governance committee. You are running an operator’s checkpoint.
Pay the board. I tell founders to budget $2,500 to $5,000 per meeting per member, plus travel, depending on seniority. Equity advisory grants if the entity supports it. Advisors who get paid show up prepared. Advisors doing you a favor show up tired and tell you what you want to hear.
The most useful thing my own advisors have ever done for AHS is disagree with me in writing before I made an expensive decision. That is what founders pay for. Not validation. Friction.
The Enforcement Environment Is Not Slowing Down
The numbers keep moving in one direction. The DOJ’s 2024 takedown resulted in criminal charges against 193 defendants, including 76 doctors, nurse practitioners, and other licensed medical professionals, across 32 federal districts, with intended losses exceeding $2.75 billion and $1.6 billion in actual losses.
Addiction treatment featured directly. Four defendants in two district courts were charged with a $146 million scheme that used kickbacks and other methods to recruit vulnerable individuals, such as the homeless, into drug and alcohol treatment programs, even though those services may never have been provided.
OIG keeps adding behavioral health items to its Work Plan. In an audit announced July 15, 2025, OIG stated it will determine the extent to which children enrolled in Medicaid received EPSDT medical screenings and, if diagnosed with a behavioral health condition, whether behavioral health treatment services were provided. Florida operators should also watch AHCA’s rulemaking activity on the licensure of psychiatric and substance abuse programs.
The treatment gap keeps regulators focused on the providers who do bill for care. SAMHSA’s 2024 NSDUH reported that 80% of people who needed treatment for a substance use disorder in 2024 did not get treatment. When the government sees that gap alongside the billions the industry does bill, it looks harder at the outliers.
If you are operating a treatment center in 2026 without an advisory board, you are not saving money. You are deferring a legal bill. The operators I see thriving have built the operational backbone before the survey, before the SIU letter, before the subpoena.
If you want to talk about how to actually stand one of these up, find Allison, Benjamin, Leah, or me. We do not bring a pitch deck. We bring a notebook.
Frequently asked questions
What is the difference between a board of directors and a behavioral health advisory board?
A board of directors handles fiduciary duty, governance, and entity-level decisions. An advisory board does not vote on corporate matters. It exists to give the founder operator-level pattern recognition on survey risk, payer behavior, clinical documentation drift, and compliance exposure. Most founders conflate the two and pay for it later.
How much should a behavioral health operator pay advisory board members?
AHS guides founders to budget $2,500 to $5,000 per meeting per member, plus travel, depending on seniority. Equity advisory grants are appropriate where the entity supports them. Paid advisors show up prepared. Unpaid friends tell you what you want to hear.
Does an advisory board actually reduce regulatory risk?
It reduces the risk that operational drift becomes an enforcement action. In 2024, DOJ charged 193 defendants across 32 federal districts in a coordinated action involving approximately $2.75 billion in intended losses and $1.6 billion in actual losses, with addiction treatment featured directly, including a $146 million kickback scheme tied to drug and alcohol treatment programs (HHS-OIG, June 27, 2024). Operators with experienced advisors catch the billing patterns, marketing arrangements, and length-of-stay trends that draw that scrutiny long before subpoenas arrive.
What is EKRA and why does it matter for advisory board composition?
EKRA, the Eliminating Kickbacks in Recovery Act, is codified at 18 U.S.C. § 220 and carries fines of up to $200,000 and up to 10 years in prison per occurrence. Unlike the federal Anti-Kickback Statute, EKRA applies to any healthcare benefit program, including private insurance and cash-pay patients, and it reaches recovery homes, clinical treatment facilities, and laboratories. In United States v. Schena (9th Cir. July 11, 2025), the Ninth Circuit issued the first appellate interpretation of EKRA and held that the statute covers marketing intermediaries who interface with those who do the referrals; Schena was sentenced to 96 months and ordered to pay more than $24 million in restitution. A board member who understands EKRA flags risky marketing contracts before counsel ever sees them.
References
- HHS-OIG, National Health Care Fraud Enforcement Action Results in 193 Defendants Charged and Over $2.75 Billion in False Claims (June 27, 2024)
- HHS-OIG, 2024 Nationwide Health Care Fraud Enforcement Action
- Epstein Becker Green, Ninth Circuit Applies EKRA to Marketing Intermediaries in United States v. Schena (July 11, 2025)
- Morgan Lewis, Ninth Circuit Ruling Confirms Strength of the Eliminating Kickbacks in Recovery Act
- HHS-OIG Work Plan, Medicaid Managed Care EPSDT Behavioral Health Services (announced July 15, 2025)
- SAMHSA, Release of the 2024 National Survey on Drug Use and Health (July 2025)
- The Hill, DOJ charges 193 people in $2.75 billion health care fraud operation (June 27, 2024)
- Epstein Becker Green, DOJ Criminal Fraud Section’s Annual Health Care Fraud Enforcement Action