A new Minnesota law designed to prevent fraud in addiction treatment programs has left many people in recovery struggling to find stable housing. The state anti-kickback statute, which took effect on August 1, 2025, prohibits treatment providers from offering financial incentives such as rent stipends, discounted housing, or free sober-living placements to clients enrolled in their programs. According to a report by MPR News, the change has already forced dozens of sober homes to close and left thousands of Minnesotans without access to stable housing.
While lawmakers aimed to protect patients and taxpayers from fraudulent billing, the sudden rollout has caused widespread disruption across the state’s recovery community. Treatment centers that once helped cover the cost of sober housing can no longer do so, and hundreds of residents who relied on that support are now at risk of homelessness or relapse.
The role of sober housing in recovery
For many individuals leaving inpatient treatment, a sober-living home serves as a critical bridge between structured care and independent living. These homes offer accountability, community, and a substance-free environment — all key elements in sustaining long-term recovery.
According to local recovery advocates, most residents in sober housing pay between $700 and $800 per month for a shared room. Before the law changed, treatment centers often subsidized that cost through partnerships or housing stipends. With those subsidies now prohibited, many residents simply cannot afford to stay.
Providers estimate that thousands of Minnesotans have already lost access to sober housing since the law took effect, and at least 30 homes have closed statewide. The impact has been immediate and severe for those still working to stabilize their lives after treatment.
A community caught in transition
Several recovery professionals have warned that the new law was implemented without a transition plan or sufficient funding alternatives. Many treatment programs had only days to notify residents that their rent assistance would end. Some clients were forced to move out with little notice, while others returned to unstable living environments.
Addiction treatment professionals emphasize that housing insecurity is one of the strongest predictors of relapse. Without stable housing, individuals often face additional barriers such as job loss, poor mental health, and disconnection from supportive communities.
As one treatment director put it, “There was a peace of mind in being able to help clients stay housed. Now, people are having to choose between recovery and survival.”
Why the law was passed
State leaders argue that the anti-kickback policy is necessary to curb potential fraud and unethical billing practices. Investigations into a handful of Minnesota treatment centers — including NUWAY Alliance and Evergreen Recovery — uncovered claims of improper billing and kickback arrangements that allegedly cost taxpayers millions of dollars.
Under the new rules, offering housing as a condition of treatment is considered an illegal incentive, as it may influence a person’s choice of provider or encourage overuse of services. While a federal version of the law has long existed, the state’s new measure allows Minnesota to enforce it more directly.
Unintended consequences for recovery
Despite the intent to increase accountability, the law has created unintended harm for those actively working toward sobriety. Many individuals in early recovery do not have the financial stability, credit history, or rental access needed to secure housing on their own.
Providers worry the change will overwhelm homeless shelters, hospitals, and inpatient facilities, many of which are already operating at capacity. Others note that people are being forced to prioritize employment and housing searches over ongoing treatment participation — a shift that undermines the recovery process itself.
What comes next
The Minnesota Department of Human Services plans to replace the current system with a new certified recovery residence model. This would allow sober-living facilities to receive legitimate state funding under a regulated framework. However, implementation could take years, leaving a gap in support during the transition period.
Until then, many people in recovery are relying on friends, family, or short-term arrangements to stay housed. Treatment providers are calling for temporary funding or emergency measures to prevent further housing loss and relapse risk.
Supporting recovery beyond treatment
At Red Ribbon Recovery, we recognize that stable housing is a cornerstone of sustained recovery. The structure, safety, and sense of belonging that come with supportive living environments often make the difference between relapse and long-term success.
As Minnesota and other states examine their regulatory systems, it remains important to balance oversight and access — protecting public funds without dismantling the housing and community supports that save lives every day.
For anyone affected by recent changes or struggling to maintain recovery, help is available. Reach out to a qualified treatment provider, mental health professional, or housing support resource to explore your options and continue your path toward healing and stability.
Source
- Gerezgiher, F. (October 2, 2025). “They wanted to get sober. A new state law is making it harder.” MPR News. https://www.mprnews.org/story/2025/10/02/sober-home-residents-lose-housing-new-state-law
