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OCR for page 183
X Who Pays for Treatment?
One of the continuing concerns voiced by those active in the treatment of alcohol
problems is that financial barriers may prevent individuals who need help from receiving
appropriate treatment. In testimony at its public hearing and in written responses to its
request for delineation of issues, the committee heard clearly that the expressed goal of
many in the field is that persons who require treatment for alcohol problems have access
to the same set of financing options that are available for treatment of persons with
physical illnesses. Another concern that is often expressed is that only a small proportion
of those who need treatment have received it. It is not clear whether these concerns
reflect a failure to identify and refer such individuals (D. C. Lewis, 1987), inadequate
treatment capacity, or financial barriers to receiving needed care (rein, 1984; Davis, 1987;
Morrisey and Jensen, 1988~. A criticism often made by representatives of the field is that
inadequate benefits for treatment are provided through the health insurance mechanisms
that are available for other illnesses (e.g., T. Daugherty, Recovery Centers of America, Inc.,
personal communication, January 21, 1988; Ford, 1988; Shulman, 1988~.
These concerns raise the question of who is paying for treatment of persons with
alcohol problems and what is the relative contribution of each of the various funders to the
overall funding support for each of the specific treatment stages and settings.
Until the early 1970s the major sources of funding for treatment of persons with
alcohol problems were state and local governments that provided these services as part of
their mental health, public health, and criminal justice programs. Emergency care for
public inebriates in jails and in public hospital emergency rooms and medical wards and
custodial care for chronic alcoholics in state mental hospitals were the major resources
available (Glasscote et al., 1967; Plaut, 1967; Boche, 1975~. Health insurance was not
available, although many persons were treated for the physical complications of chronic,
excessive alcohol use under other diagnoses (Rosenberg, 1968; Hallan, 1972; USDHEW,
1974, 1978; Fein, 1984~.
Because of the evidence that funding was not available for the treatment of alcohol
problems in community hospitals and other health and social service settings, the voluntary
associations and governmental agencies involved in the alcohol field have concentrated on
shifting support to a broad range of funding sources and developing a stable financing base
through specific categorical funding and health insurance coverage (USDHEW, 1974;
Regan, 1981; USDHHS, 1981; J. S. Lewis, 1982; Butynski, 1986; USDHHS, 1986~.
Traditionally, financing for the treatment for alcohol problems was seen as belonging under
the rubric of mental health services and as such has suffered from the same negative,
stigmatizing perceptions of health insurers, employers, and the community at large that have
bedeviled mental health funding (Sharfstein et al., 1984~. It was not until the early 1960s
that a movement developed for separate funding mechanisms and organizations for
treatment of mental disorders, alcohol problems, and drug abuse problems (Plaut, 1967;
President's Commission on Mental Health, Task Panel on Alcohol Related Problems, 1978;
J. S. Lewis, 1982; Weisman, 1988~.
Since its establishment in 1971 NIAAA has sponsored studies of the impact of
treatment of alcohol problems on subsequent health care costs (e.g., Holder and Hallan,
1983; Holder, 1987) as well as studies on the effectiveness of treatment. These studies have
been used to encourage the expansion of both public and private sources of funds for
treating alcohol problems (Saxe et al., 1983; Fein, 1984; Luckey, 1987; USDHHS, 1987~.
The results of these studies have been used by the field to demonstrate to legislators,
employers, and insurers the benefits of such treatment. The research has focused on several
~3
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184 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
hypotheses: (1) that the treatment of alcohol problems has positive outcomes; (2) that the
addition of a specific benefit for treatment of alcohol problems will not increase insurers'
payouts because of the offsets to be achieved through reductions in the high medical costs
of untreated alcohol-dependent persons (Jones and Vischi, 1979; Fein, 1984; Davis, 1987;
Holder, 1987~; and (3) that early case finding and treatment of alcohol problems would
help to reduce other social costs (e.g., lost productivity, automobile and other accidents,
criminal justice processing and incarceration costs, and welfare transfer payments (rein,
1984~.
Attempts by leaders in the field to obtain consideration for treatment of alcohol
problems as a primary disorder, and not simply a symptom of mental illness, have included
efforts to develop separate model benefit packages that would encourage insurers to provide
coverage for state-of-the-art treatment. Such models have been presented by the voluntary
organizations involved in seeking expanded treatment resources (National Council on
Alcoholism Task Force on Health Insurance, 1974; Flavin, 1988) as well as by insurers like
the Blue Cross-Blue Shield Association (Berman and Klein, 1977; Leyland et al., 1983), and
the Group Health Association (Plotnick et al., 1982~. Although there are those who
question the wisdom of moving in the direction of depending primarily on health insurance
for a stable source of funding, given the sociocultural model of treatment which they
endorse (Borkman, 1988; Reynolds, 1988), the field's major emphasis continues to be on
efforts to move financing of treatment for alcohol problems into the mainstream of health
care financing. Active support of legislative efforts to obtain mandated private health
insurance benefits is seen as a major means to accomplish this goal (Butynski, 1986;
Luckey, 1987; F-lavin, 1988~.
The result of these efforts has been a steady increase in the number of public and
private sources of financing. Many third-party payers now have specific, discrete
reimbursement policies for the treatment of alcohol withdrawal, or detoxification, and
treatment of excessive alcohol consumption, or rehabilitation (Jacob, 1985; Davis, 1987;
USDHHS, 1987; Gordis, 1987; Morrisey and Jensen, 1988~. Yet the attempt to separate
funding and organizational structures to support specialty, high-quality treatment of alcohol
problems has been only partially and inconsistently successful. Treatment for alcohol
problems is still considered to belong in the Nervous and mental disorders" category by
most public and private health third-party payers, including Medicaid and Medicare, a policy
that creates difficulties in obtaining data on actual expenditures and in developing an
independent body of research on financing and its relation to practice (Burton, 1984;
Sharfstein et al., 1984; Muszynski, 1987~.
There is no single survey currently in use that captures data on the amount of
money being spent for the treatment of alcohol problems (Musynski, 1987; Robertson,
1988~. There is also no compendium of the recent trends in financing treatment services.
This is an area of health services research which has been severely neglected for the past
eight years (Wallen, 1988~. Recently, however, an initiative has been developed to expand
the study of the organization and financing of treatment for alcohol problems (NIAAA,
1989~. The studies to be carried out under this initiative may begin to generate some of
the information needed by poligymakers.
Shifts in the loci of treatment in recent years have contributed to the difficulties
in tracking expenditures. Treatment is now provided in a diverse network of traditional and
nontraditional settings including hospitals, freestanding residential facilities, private
practitioners' offices, and outpatient clinics (see Chapter 4~. The growth of the specialty
sector for treating alcohol problems has seen a concomitant increase in the number of
specialized hospital units that provide detoxification or rehabilitation or both; such growth
has also fostered the development of freestanding detoxification and primary care and
extended care rehabilitation facilities which are not licensed or registered as hospitals and
thus are not included in more traditional surveys of health facilities (e.g., those carried out
OCR for page 185
WHO PAYS FOR TREATMENT?
185
by the American Hospital Association and the National Center for Health Statistics).
There has also been a veritable explosion of organized specialty outpatient clinics that also
are not covered in the traditional health care facility surveys (Reed and Sanchez, 1986~.
Many of these nontraditional agencies receive federal and state categorical funds
(dedicated to the treatment of alcohol problems) through the state alcoholism authorities.
There is an increasing trend, however, to combine under the substance abuse/chemical
dependency rubric the funding and organization of services for persons experiencing
problems with alcohol with services for persons experiencing problems with other drugs
(Butynski and Record, 1983~. One of the difficulties created by this combination is the
failure to obtain reporting from the states on their distribution of both state funds and
federal alcohol, drug abuse, and mental health services block grant funds that are
specifically earmarked for the treatment of alcohol problems. The State Alcohol and Drug
Abuse Profile (SADAP), which serves as the key report on the use of state and federal
funds for the treatment of alcohol problems, does not disaggregate the funds being spent
specifically for treatment of alcohol problems. Rather, the SADAP reports total
expenditures, which include administrative oversight, planning and regulation, and primary
prevention as well as for treatment (Butynski and Record, 1983; Butynski and Canova,
1988~.
These considerations make it difficult to obtain current, precise data on the sources
of funding specific to the treatment of alcohol problems. Recognizing these limitations, the
committee has nonetheless attempted to identify the major funding sources and to present
what is known about who pays for the treatment of alcohol problems in both traditional
and nontraditional treatment settings.
Who Are the Payers?
There are a number of different sources of payment for the treatment of alcohol
problems, and these payers can be thought of as falling into three major categories: (1) the
individual seeking treatment and his or her family; (2) a health insurance company acting
on behalf of individuals or employers who purchase insurance; or (3) a government agency.
Health insurers and government agencies are generally referred to, respectively, as private
or public third-party payers. Through the years, the major source of financing for
treatment of alcohol problems has been third-party payers, as is the case for all health
services.
Public and private third-party payers differ primarily in the beneficiaries they serve
(defined by client eligibility criteria), the methods used to finance their payments (taxes or
premiums), and the type of oversight or regulation to which they are subject. Private
third-party payers may be insurance companies that are organized either as a special type
of nonprofit corporation (e.g., the Blue Cross Association plans and labor union trusts) or
as for-profit commercial carriers. Private third-party payers may also be prepaid group
health plans or health maintenance organizations (HMOs), either nonprofit or for-profit,
that provide insurance and deliver care (see Chapter 18~. Private third-party payers offer
coverage to subscribers or customers, either through group plans, which are purchased by
an employer on behalf of its employees or by an association on behalf of its members, or
through plans purchased directly by an individual. An increasing number of employers are
choosing to become self-insured; that is, employers bear the cost of the claims directly
rather than by purchasing insurance from an insurance carrier although they may purchase
"stop-loss" insurance for major illnesses to lessen their total exposure. Self-insured health
insurance plans are administered in the same manner as those purchased from an insurance
company. Benefit plans and premium levels are designed to meet the needs of the
individuals to be covered, and they use actuarial techniques which reflect the health status
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186 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
of the insured to project the levels of service that will be needed and the costs anticipated.
Such plans generally use professional or governmental accreditation or licensing standards
to identify eligible providers (organizations and practitioners), as well as procedures that
will be eligible for reimbursement. Alternatively, third-party payers may develop their own
standards (Gibson, 1988~.
Private third-party insurers are funded through the premiums paid by purchasers;
premiums are adjusted periodically based on the claims made by the subscriber group and
the benefit design of the specific insurance policy. The coverage minimums, benefit designs,
and premiums of private third-party payers are regulated by the states through their
insurance departments; the exception is self insured plans which come under the federal
Employment, Retirement, and Income Security Act of 1974 (ERISA). Currently, it is
estimated that self-insured plans cover approximately 42 percent of the work force.
Medicaid and Medicare are generally thought of as the public third-party payers for
health care services, although, any state or local government agency (as well as a federal
government agency) that purchases health care services for a defined group of eligible
beneficiaries can be a public third-party payer. Government agencies generally limit
coverage to a special population that has been identified through legislation: the
economically disadvantaged, the medically indigent, the mentally ill, the physically disabled,
the aged, the military, the drug abuser, the person with alcohol problems, veterans, the
public inebriate, high-risk pregnant women, families with dependent children, the blind, the
homeless, and so on. The benefits to be provided (i.e., the services to be purchased) are
also authorized through legislation and are refined through the regulations and
appropriations processes. Government agencies may provide reimbursement either through
a unit of service purchase system, or a program budget contract or grant system, or a
prospective payment system modeled after Medicare's, just as private insurers do. Eligible
providers are identified, either through legislation or regulation, using the same methods
adopted by private insurers.
The federal government as a third-party payer funds treatment for alcohol problems
through a variety of mechanisms including the direct operation of treatment programs in
federal facilities for various categories of federal beneficiaries, the purchase of services
provided in a variety of public and private facilities through its public health insurance
programs, and the provision of funds for the development and support of treatment
programs at other levels of government and in the private sector through categorical and
block grant programs (NIAAA, 1984~. Agencies that operate their own networks of
programs for treatment of alcohol problems are the Veterans Administration, the military
services within the Department of Defense, the Bureau of Prisons, and the Indian Health
Service (see Chapter 4~. Agencies that provide funding through insurance are the Health
Care Financing Administration (Medicare and Medicaid), the Department of Defense
(CHAMPUS), the Veterans Administration (CHAMP-VA), and the Office of Personnel
Management (Federal Employees Health Benefits Plan). Agencies that provide block grant
funding are the Alcohol, Drug Abuse, and Mental Health Administration and the Office
of Human Services. Other agencies administer programs that may provide funding used in
the treatment of persons with alcohol problems although such treatment is not their
primary focus (e.g., the Department of Agriculture's food stamp program).
State and local government agencies provide both categorical funds, targeted for
treatment of alcohol problems and administered by a specialty agency, or funds that are
part of a larger medical services or social services program for the disabled or for the
indigent. State and local governments may also operate treatment programs directly, either
through an agency specializing in the treatment of alcohol problems or as part of their
mental health or public health treatment agencies, or through all three mechanisms.
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WHO PAYS FOR TREATMENT?
187
Funding practices and program administration vary considerably among the states and
territories (skins and Williams, 1982; Butynski and Record, 1983; Butler and Littlefield,
1985; Butynski and Canova, 1988~. Although each state and territory has an agency that
is responsible for funding and monitoring treatment activities, this agency may not be the
only state entity to expend such funds. State Medicaid, vocational rehabilitation, and social
services agencies are also likely to be providing funds for treatment or supportive services
for persons with alcohol problems.
Individuals with no private or public health insurance or with insurance that does
not include a benefit for the treatment of alcohol problems make up the largest group of
persons being treated in programs supported by state and federal categorical funds, which
are administered by the states through their specialist state alcoholism agencies. Persons
treated in publicly operated or funded programs tend to be socioeconomically disadvantaged
(Costello, 1980, 1982; Costello and Hodde, 1981; Pattison, 1985; Weisner and Room, 1984;
Weisner, 1986; Weisman, 1988~. Socially disadvantaged persons seeking treatment for
alcohol problems report serious disruptions in many life areas; they also tend to have high
rates of unemployment, poor work histories, and few job skills so that treatment requires
a mix of medical and social support services. State and local alcoholism agencies have
recognized these needs in their funding policies and will often support the delivery of both
treatment and social services in nonhospital primary care and extended care facilities (see
Chapters 3 and 4~. The agencies typically serve a broker role in arranging for the necessary
social services to provided to persons in treatment (Akin and Williams, 1982~.
Typically, public payers are funded through general tax revenues. The federal
government's programs are primarily funded through in this manner; however, Medicare is
funded through a combination of a specific tax on earnings, general revenues, and
premiums. States and local governments typically finance their obligations through general
revenue taxes. Through the years, several states have adopted dedicated, or earmarked,
taxes or license fees (or both) that are used to pay for treatment for alcohol problems. In
several states (e.g., Minnesota, Colorado) persons arrested for driving while intoxicated are
legally required to pay fees for court-ordered diagnostic, treatment, education, and
· · .
supervision services.
Increasingly, public third-party payment plans have been redesigned to resemble
private insurance with deductibles, copayment requirements, and episode, benefit period,
annual, or lifetime limits on reimbursement. These changes have led most state and local
agencies to require that the community-based agencies with which they contract for services
have in place a sliding fee scale (generally based on income and necessary expenses) as a
copayment mechanism. Many public payers now have a procedure for the coordination of
benefits, with the government agency serving as a secondary payer after public or private
insurance has been exhausted. These same coordination of benefits requirements apply
when an individual is treated in a state or local government-operated detoxification or
rehabilitation program.
Third-party payers can also be differentiated in terms of which components of
treatment they will pay for. Public and private health insurers clearly confine their benefits
to services that are identified as medical and that meet specific standards of medical
necessity. An individual provider who is eligible to receive reimbursement under a health
insurance plan generally must be either a physician, a health care professional licensed for
independent practice, or a health care worker providing a service under the supervision
of a physician or other licensed health care professional. Facilities (e.g., hospitals, clinics)
must be licensed as health care institutions to receive reimbursement. Categorical programs
administered by state alcoholism agencies are more likely to cover supportive services (e.g.,
sheltered living) and treatment delivered by nontraditional personnel in nontraditional
facilities, (e.g., alcoholism counselors, halfway houses).
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88 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
Who Pays for Treatment in Specialty Programs?
As noted in the previous chapter, the National Drug and Alcohol Treatment
Utilization Survey (NDATUS) is periodically administered by NIAAA (in conjunction with
NIDA) to obtain data on a number of aspects of treatment for alcohol problems in this
country, including the sources of funding in specialty programs. As part of its data
collection activities NIAAA has conducted studies on the sources of funding available to
specialty programs, the barriers to be overcome in achieving stability in funding, and the
characteristics of the treatment delivery system. Despite certain limitations, this survey
remains the best source of data on the sources of funding for treatment of alcohol
problems in specialist programs.
The most recent NDATUS survey to provide data on the cost of alcohol problems
treatment was carried out in 1987 (NIDA~NIAAA, 1989), and it reported total expenditures
for treatment of alcohol problems $1.712 billion (Table 8-1~. Before the 1987 survey, the
last NDATUS to contain cost data was carried out in 1982 (NIAAA, 1983~; total spending
of $1.123 billion was reported in that study.
As shown in Table 8-1 the 1987 NDATUS gathered information on 11 broad
categories of funding sources; the data are not broken down according to the amounts
received from major sources such as commercial health insurance, Blue Cross/Blue Shield,
and HMOs in the private third-party category or Medicaid, CHAMPUS, and Medicare in
the public third-parb pay category. Seven of the categories are for governmental sources.
Four of the categories capture information on funds received from a state or local
governmental agency (33 percent of the total), and three are federal government sources
TABLE 8-1 Sources of Funding for Specialty Units Providing Treatment for Alcohol Problems in 1982 and 1987,
Based on Data from the National Drug and Alcoholism Treatment Unit Survey (in thousands of dollars)
Funding Sources
1982 1982 1987 1987
Amount Percentage Amount Percentage
State government program
funds 235,751 21.1345,023 20.2
Local government
program funds 108,254 9.6107,660 6.3
State/local government
fees for service 45,413 4.078,830 4.6
Public welfare 18,257 1.627,778 1.6
Public health insurance 77,922 6.9145,746 8.5
Alcohol, drug abuse, and
mental health block grant 50,910 4.5N/Aa
Social services block grant 13,959 1.2N/Ab
Other ADAMHA support 12,133 1.19,440 0.6
Other federal funds 112,456 10.076,957 4.5
Private health insurance 296,419 26.4592,470 34.6
Private donations 28,754 2.626,906 1.6
Client fees 110,272 9.8236,531 13.8
Other 12,677 1.164,752 3.8
Total 1,123,175C 100.01,712,069 100.0
SOURCE: NIAAA (1983); NIDAINIAAA (1989).
a Included in the state government program funds category.
b Included in the public welfare category.
c Totals may not add because of rounding.
OCR for page 189
WHO PAYS FOR TREATMENT?
(13 percent). The nongovernmental sources include private health
private donations (2 percent), and out-of-pocket payments (14
~9
insurance (33 percent),
percent). A residual
category (Hother") represents 4 percent of the total. The contribution of each major source
of funds for each state and territory included in the NDATUS is presented in Table 8-2.
TABLE 8-2 Major Sources of Funding for Specialty Units Providing Treatment for Alcohol Problems by State,
Including Puerto Rico and the District of Columbia, Based on Data from the 1987 National Alcoholism and Drug
Treatment Unit Survey (in percent)
Percentage of total
State Public Private Client Other
and Local Federal Third Third Fees and
State Govt. Govt. Party Party Donations
Alabama 28.2 1.4 8.0 44.0 9.0 9.4
Alaska 67.6 9.4 0.1 9.9 4.8 8.3
Arizona 30.2 7.4 2.4 42.4 11.9 5.6
Arkansas 47.2 1.4 5.4 19.4 4.1 22.5
California 12.9 4.2 4.7 57.9 18.9 1.4
Colorado 39.8 0.1 7.7 26.0 22.8 3.6
Connecticut 53.1 1.5 7.1 15.5 18.4 4.4
Delaware 57.0 0.1 0.0 0.0 38.1 4.8
Dist. of Col. 97.1 0.0 0.0 1.5 1.3 0.0
Florida 45.4 9.0 6.9 22.6 12.0 4.1
Georgia 41.9 2.7 4.3 14.8 36.3 0.1
Hawaii 42.7 10.0 0.1 1.8 16.6 28.8
Idaho 56.8 4.2 0.6 12.0 23.7 2.7
Illinois 52.8 3.9 3.5 25.3 9.9 4.6
Indiana 25.4 12.7 6.8 34.0 10.7 10.5
Iowa 47.9 15.8 8.2 21.2 3.3 3.6
Kansas 34.4 0.9 8.3 39.0 13.9 3.4
Kentucky 50.1 2.6 13.8 20.1 7.6 5.8
Louisiana 38.0 2.0 13.5 12.2 27.5 3.0
Maine 52.0 13.3 5.8 9.2 12.2 6.8
Maryland 49.4 4.7 19.1 8.2 15.4 3.1
Massachusetts 56.2 4.3 6.9 13.3 10.4 8.5
Michigan 35.1 4.0 7.8 33.2 9.7 10.2
Minnesota 38.0 8.9 7.7 28.7 12.6 4.2
Mississippi 54.7 15.5 4.2 11.4 10.4 3.8
Missouri 46.1 11.8 3.7 23.8 7.2 7.4
Montana 29.9 3.5 1.6 42.4 17.4 5.1
Nebraska 27.5 12.0 1.3 17.5 36.4 5.3
Nevada 65.0 11.0 0.3 2.5 13.5 7.8
New Hampshire 19.8 2.6 4.6 51.5 4.0 1.5
New Jersey 27.7 6.7 1.1 43.2 11.9 9.3
New Mexico 56.4 15.1 4.1 8.7 11.9 3.9
New York 41.8 1.2 22.5 19.7 9.2 5.5
North Carolina 59.6 3.5 2.9 9.8 15.1 9.1
North Dakota 44.4 0.3 9.3 30.0 13.3 2.7
Ohio 24.9 2.9 10.9 46.1 8.5 6.6
Oklahoma 39.3 17.8 8.4 16.3 11.5 6.8
Oregon 45.2 10.0 2.0 16.2 19.7 6.9
Pennsylvania 29.4 2.3 18.3 39.2 6.0 4.8
Puerto Rico 75.8 0.2 0.0 0.0 0.1 23.9
Rhode Island 18.2 0.8 6.2 67.5 6.5 0.8
TABLE 8-2 continues
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190 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
TABLE 8-2 (continued)
Percentage of total
State Federal Public Private Client Other
and Local Govt. Third Third Fee and
State Govt. Party Party Donations
. .
South Carolina 50.8 9.3 4.3 15.6 15.3 4.6
South Dakota 38.9 27.4 0.3 20.6 10.7 2.1
Tennessee 33.1 18.9 10.7 23.6 9.7 4.0
Texas 15.3 4.6 9.3 38.5 10.8 21.5
Utah 53.3 9.0 2.0 10.1 19.3 6.3
Vermont 61.9 0.9 8.2 13.4 11.4 4.1
Virginia 31.9 12.3 4.3 30.6 9.2 11.8
Washington 35.5 4.7 6.6 28.5 15.9 8.9
West Virginia 65.5 0.4 9.1 11.1 7.0 6.8
Wisconsin 38.6 6.7 12.4 30.5 6.3 5.6
Wyoming 62.1 4.2 2.3 17.4 10.4 3.5
National. 32.7 5.0 8.5 34.6 13.8 5.4
SOURCE: NIDA/NIAAA (1989).
a Row totals may not surp to 100 percent because of rounding.
The first category, state government program funds, are so-called categorical funds
that are appropriated specifically to provide treatment services on a program or unit level
and are not necessarily tied to reimbursement for specific services to a given individual.
In 1987 federal funds provided to a state through the alcohol, drug abuse, and mental
health services block grant were included in this cateRon.
~... .. . . ~ AN - . .
=, The Omnibus Budget
Reconciliation Act of lYS1 created a number of health and social services block grants to
states with the intention of simplifying federal funding requirements by combining and
replacing a number of categorical project and formula grant programs to states, local
governments, and community based agencies (U.S. General Accounting Office, 1985~. The
alcohol, drug abuse, and mental health services block grant consolidated the formula grant
and project grant and contract programs administered by the National Institute on Alcohol
Abuse and Alcoholism with similar programs administered by the National Institute on
Drug Abuse and the National Institute of Mental Health. At the same time, the
administration of these funds was transferred from the Institutes to their parent agency, the
Alcohol, Drug Abuse, and Mental Health Administration.
The block grant is administered consistent with congressional intent and
administration policy to provide the states with flexibility in setting and carrying out local
priorities and to avoid burdensome reporting requirements. The basic premise of block
grants is that states (and territories) should be free to target resources and to design admin-
istrative mechanisms to meet the needs of their citizens (ADAMHA, 1984; U.S. General
Accounting Office, 1984~.
The bulk of the block grant is passed through by the state alcoholism agency to
local governments or to nonprofit contract agencies that deliver direct services. States
allocate the funds according to whatever policies they use to contract for services. There
are several restrictions on the ways funds can be used. A limit is set on the amount of
money which can be used for state administrative activities. In addition 20 percent of the
funds are to be used for prevention. Two further restrictions are that block grant treatment
OCR for page 191
WHO PAYS FOR TREATMENT?
191
funds may not be spent for services in a hospital and a specific percentage must be spent
to increase services to women (U.S. General Accounting Office, 1984; National Council
on Alcoholism, 1987~.
Recently, additional funding was provided through the alcohol and drug abuse
treatment and rehabilitation (ADTR) block grant, authorized by the Anti-Drug Abuse Act
of 1986 as emergency two year funding to begin in federal fiscal year 1987. The ADTR
block grant was established to: (1) increase the availability and outreach of existing centers;
(2) expand the capacity of alcohol and drug abuse treatment and rehabilitation programs
to serve persons who have been refused treatment elsewhere because of a lack of facilities
and personnel; and (3) provide access to vocational training, job counseling, and educational
programs for persons receiving treatment for alcohol and drug problems (Alcohol, Drug
Abuse, and Mental Health Advisory Board, 1987~. Initially, the ADTR block grant was
seen as a short-term, emergency measure to counter the decline in treatment capacity that
occurred following the original 25 percent cut in alcohol, drug abuse, and mental health
services block grant funds (J. S. Lewis, 1988~. The ADTR block grant funds have now been
continued as part of the revised services block grant.
Local government program funds, the second funding source on Table 8-1, are
those revenues received by a reporting unit from a local government agency on a program
or unit level, under either a contract or a grant. A third category, state and local
government fees for service, represents funds received as reimbursement for services
provided to specific individuals. Public welfare is the fourth category in which a state or
local government agency is the funding source; it includes all medical or social services
payments received through general assistance or general relief funds. The public welfare
category also includes federal funds distributed to a state for its community and social
services and food stamp programs.
Another important source of funds for the treatment of low income and disabled
persons with alcohol problems was established through the Title XX social services
grant-in-aid program. The Title XX program, which was instituted with the passage of
Public Law 93-647, the Social Services Amendments of 1974, consolidated and controlled
the costs of funding social services, while increasing state flexibility in administering and
allocating funds (Booz-Allen and Hamilton, Inc., 1978; Morrison, 1978~. Under the 1981
Omnibus Budget Reconciliation Act the program was later changed into a block grant
determined by population with no matching requirement and is now known as the
community services block grant. The program gives the states broad authority, consistent
with federal guidelines, to define social services and who receives them. The state agency
administering the block grant can provide services to eligible persons with alcohol problems
either by transferring funds to the state alcoholism agency which then contracts with eligible
treatment providers; by contracting directly with treatment providers; or by including
persons with alcohol problems among those eligible to receive needed supportive services
in other agencies. Certain states (e.g., South Carolina, Minnesota, Massachusetts) have
used Title XX funds to cover alcohol problem treatment programs or services that do not
meet the federal or private health insurance definitions for medical services (e.g.,
quarterway houses, non-hospital social setting detoxification, alcohol problems counseling).
In these states, the community services block grant remains a relatively important source
of funds and is reported in the public welfare category.
The table shows that in 1982 and 1987 state government program funds, including
the alcohol, drug abuse, and mental health services block grant, were the second largest
single source of funds: 20 percent of the total revenues in 1987. It seems appropriate to
combine the four categories used for state and local funds because they are primarily
alternative methodologies for distributing funds (e.g., program budgets and fees for service;
matching funds) rather than different funding sources. Together, state and local
government funds represent 33 percent of the total revenues in 1987, down slightly from
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192 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
35 percent in 1982. The 1987 total includes the alcohol, drug abuse, and mental health
services block grant, while the 1982 total does not, suggesting a possible decline in either
state or local funding. The importance of state and local funds, including the alcohol, drug
abuse, and mental health services block grant, varies substantially among the states, ranging
from a high of 97 percent in the District of Columbia to a low of 12 percent in California.
Thirty nine of the states fell above the national level of 33 percent. The median is 44
percent.
A category that showed a substantial increase between 1982 and 1987 was the
amount of client fees received (Table 8-1~. This figure was up 114 percent in dollars and
increased from 10 percent to 14 percent of the total funding. Again substantial state
variation is seen, with a range from less than 1 percent of total funding in Puerto Rico to
over 36 percent in Nebraska. Thirty-four of the states fell below the national level of 14
percent. The median was 11 percent.
There are two categories in Table 8-1 that represent funds received directly from
the federal government. The ADAMHA Program Support category includes all funds
received directly from one of the component institutes (NIAAA, NIDA, or NIMH) of the
Alcohol, Drug Abuse, and Mental Health Administration through a project grant or
contract. The other federal funds category includes funds from any federal agency that
contracts with local treatment providers for services to its beneficiaries (e.g., the Indian
Health Service, Veterans Administration) or operates its own treatment programs (e.g.,
the Veterans Administration, Bureau of Prisons). In 1987 ADAMHA program support
funds make up less than 1 percent of the total funding for alcohol problems treatment; they
are primarily for research projects. Other federal funds made up approximately 5 percent
of national revenues and are directed primarily at programs operated by federal agencies.
The pattern of state, local, and federal government funding has changed somewhat
since the 1982 NDATUS survey, in part because of changes in the reporting format. As
noted on Table 8-1, the information previously reported separately for the alcohol, drug
abuse, and mental health services block grant has been combined with the state government
program funds category and the information on the social services block grant (formerly
Title XX) has been combined with the public welfare category. These changes led to a
substantial decrease in the percentage of total funds coming directly to a provider from any
federal agency-from 17 percent in 1982 to 5 percent in 1987. This decrease is not simply
a reporting artifact but a real change from the federally directed use of federal funds to
state-determined use of federal tax dollars with minimum federal requirements.
Additional federal funds are included in the public health insurance category.
These funds may originate directly from a federal agency to purchase specific services on
behalf of identified beneficiaries (e.g., Medicare, the U.S. military's CHAMPUS), or they
may be channeled through a joint federal-state program like Medicaid. Although Medicaid
is a federal-state program like the ADAMHA and social services block grants, it carries
more federal requirements on how the money is to be expended than do the block grants,
and there is much variation among the states in whether treatment for alcohol problems
is covered. Income from the Federal Employees Health Benefits Program is not considered
to be a specific source of funds but is included in the private health insurance category.
As shown in Table 8-1, public third-party payers accounted for 8 percent of the
total funding for programs surveyed by the 1987 NDATUS that provided specialty treatment
for alcohol problems. The public third-party funds category included Medicare, Medicaid,
CHAMPUS and CHAMP-VA, and Supplemental Security Income. Each is a distinct
financing program that has different eligibility criteria for beneficiaries and has its own
benefit plan for treatment of alcohol problems.
Medicare is a public health insurance program that covers most elderly Americans,
aged 65 and over, and certain disabled individuals under the age of 65 who meet specific
criteria or have chronic kidney disease. The Medicare program for the elderly retired was
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WHO PAYS FOR TREATMENT?
193
established in 1966 under Title XVIII of the Social Security Act; coverage for disabled
individuals began in 1974. Medicare was originally designed primarily to protect its aged
and disabled beneficiaries against the cost of health care for acute illnesses. Recently,
expanded coverage for chronic illnesses has been added.
Treatment for alcohol problems is available in accordance with general Medicare
coverage rules and the limitations that apply because alcohol intoxication and alcohol
dependence are classified as mental disorders (Noble et al., 1978~. Medicare does not
provide a specific benefit for the treatment of alcohol problems because its benefit package
is structured according to specific health care settings rather than on the basis of specific
diagnoses. There are two distinct programs, Part A, Hospital Insurance (HI) and Part B.
Supplementary Medical Insurance (SMI).
Part A, Hospital Insurance (HI), covers inpatient hospital services, posthospital care
in skilled nursing facilities when medically necessary, hospice care, and care provided in
patients' homes. HI is a compulsory program financed primarily by Social Security payroll
taxes. The hospital treatment of alcohol problems under Medicare is included in the
general category of psychiatric health services along with mental disorders and drug abuse;
in contrast to Medicare's more liberal benefit available for physical illnesses, coverage for
inpatient care within a psychiatric hospital is limited to 190 lifetime days. The 190-day
lifetime limit on inpatient psychiatric hospital services was originally included in the
Medicare benefit design to ensure that only active treatment under a physician's supervision
and evaluation and not Custodial caret- would be covered.
In federal fiscal year 1986, HI covered 31 million enrollees, and benefits amounted
to about $49 billion; the bulk of these expenditures ($46 billion, or 93 percent) went for
inpatient hospital services. In 1986 Medicare was billed for 62,672 episodes of in-hospital
treatment of persons with alcohol involved principal diagnoses. Billed charges were $274
million for 775,735 days of care (Cowell, 1988~. Because expenditures were less than billed
charges, however, the exact amount paid out for these episodes is not known. The majority
of the episodes were for persons with a diagnosis of alcohol dependence (59 percent);
another 6 percent had a principal diagnosis of alcohol abuse, and 13 percent had a
principal diagnosis of alcoholic psychosis. The remaining 22 percent of the episodes
involved treatment of an alcohol-involved physical disorder, with the largest group having
a principal diagnosis of chronic liver disease and cirrhosis (17 percent). (Similar data is
not available for expenditures under SMI.) These figures suggest that, although Medicare
is seen by the field as an important source of financing of services for the aged and
disabled, it is not a major contributor. Medicare's impact as the nation's largest single
insurer is seen by the field as a major policy influence on all insurers, who frequently
follow its lead in benefit restrictions.
Medicaid is a jointly financed federal-state welfare program. The federal
government contribution is considered to be a federal grant-in-aid to state governments to
provide medical assistance to low-income persons who meet certain additional eligibility
requirements. Medicaid is administered by the states within broad federal guidelines
establishing required and optional services. Grant funds are allocated to participating states
on an open-ended formula basis and provide a minimum of 50 percent share in the cost
of covered medical services and a varying share of certain administrative costs (Burton,
1984~. All states participate in Medicaid, although Arizona has developed an alternative
program and has received waivers of some federal requirements. Medicaid is financed by
general tax revenues.
Medicaid was established in 1965 as Title XIX of the Social Security Act to provide
access to health care for the categorically needy (those individuals who are receiving cash
assistance through a federal program such as Aid to Families with Dependent Children),
the medically needy (those whose income is below a certain level after deduction of medical
costs. but who still do not qualify for public assistance); and any other group of needy
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200 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
12 percent in South Carolina to highs of 60 percent in Alabama, 60 percent in Texas, and
59 percent in Minnesota.
Even though NASADAD qualifies the interpretation of these data as possibly
slightly underestimating the amount of funding from the other sources, the committee's
conclusion is that for all states combined and for most states and territories individually,
state revenues, including the alcohol, drug abuse, and mental health services block grant
provide the single largest source of funding for treatment of alcohol problems in the
publicly funded specialty sector. As described in the following section, a very different
picture of the sources of funding for treatment is seen for specialty programs in the private
sector.
Sources of Funding in Private Sector Specialty Programs
The National Association of Addiction Treatment Programs, or NAATP (until
1987, the National Association of Alcoholism Treatment Programs) is the trade association
to which many specialty programs belong (Ford, 1988~. In a 1986 survey of almost 11,000
patients discharged from 230 member inpatient treatment facilities, NAATP found that
more than 67 percent of the patients were covered by a private health insurance plan (ICE,
Inc., 1987~. NAATP members are for the most part private for-profit or not-for-profit
organizations. Few if any receive funds through state, local, or federal grants or contracts.
Treatment programs in both hospital-based and freestanding settings were included in the
survey, although freestanding facilities and some special hospitals are not eligible to
receive reimbursement from some commercial insurers and, under most circumstances, from
Medicare and Medicaid.
Like the majority of data available on the costs of alcohol problems treatment,
there are limitations to the data from this survey which need be noted. First, because
NAATP conducted the survey primarily to obtain information on the charges associated
with the substance abuse DRG categories used for reimbursement by the Health Care
Financing Administration, no distinction is made between alcohol- and drug-related diag
TABLE 8-4 Comparison by Primary Payer Category for a Sample of Member Facilities of the National
Association of Addiction Treatment Programs
Payer Percent Average Average
Charges Length
($) of Stay (Days)
Medicare 4.1 5,259 16.5
Medicaid 4.5 4,511 15.4
Commercial insurance 30.6 6,614 24.7
Blue Cross 24.9 6,140 24.0
Health maintenance 5.0 5,608 21.8
Preferred provider 0.5 6,857 25.5
Self-insured 6.1 7,022 24.9
Self-pay 11.3 4,803 20.0
Other 11.0 5,812 24.0
Unknown 2.0 N/A N/A
Total 100.0 6,030 23.0
SOURCE: ICE, Inc. (1987:Table 9~.
a Charges for all substance abuse diagnostic-related groups, all settings, and all ages.
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WHO PAYS FOR TREATMENT?
201
noses. Rather, it is assumed that given the history of NAATP and the predominantly
alcohol-focused programs of its members, the vast majority of the discharges constituted
alcohol-related diagnoses. Second, only 39 percent of NAATP's member facilities provided
data. Third, data were provided only on sources of funding for admissions to hospital or
freestanding residential inpatient settings; some of the facilities did report on independently
offered outpatient services, but the sample was considered too small for analysis.
In contrast to the SADAP findings for programs that receive some of their support
from the state alcoholism agency, the providers who belong to NAATP reported that 67
percent of their inpatient admissions have private insurance coverage. As can be seen in
Table 8-4, the primary payer for the largest percentage of patients was commercial
insurance, followed by Blue Cross. Public health insurance (CHAMPUS, Medicare, and
Medicaid) is identified as the primary payer for only 9 percent of the discharges. Other
sources of public funds (e.g., state and local government grants or contracts, etc.) were not
listed as separate categories; even if they are included in the other and unknown funding
categories, public funds would at most represent the primary payer for 22 percent of the
admissions. There is a relatively high proportion of self-pay admission. Hospital-based
programs reported receiving Medicare reimbursement for 11 percent of their discharges,
whereas freestanding facilities reported only 1 percent coverage by Medicare. The growth
of the managed care industry is given as the interpretation of the finding that for
approximately 6 percent of the NAATP admissions the primary payer was an HMO or a
preferred provider organization (PPO).
Similar findings emerge for two groups of patients in treatment centers that
participate in the Chemical Abuse/Addiction Treatment Outcome Register (CATOR). In
a sample of Minnesota programs the vast majority (more than 75 percent) of adults
admitted for treatment of alcohol problems had the cost of their treatment covered by
health insurance (Hoffmann and Harrison, 1987~. Private health insurance (either
commercial, Blue Cross, or an HMO) was available to 77 percent of these individuals and
public health insurance (Medicare, Medicaid) was available to 16 percent. Self payers
constituted almost 6 percent of the sample, leaving only ~ percent in the "others category
which presumably could include state, local, and federal government grants or contracts.
In a national sample of adolescent programs, more than 63 percent of those admitted for
treatment had private health insurance coverage; only 9 percent of the admissions were
reported to be covered through government assistance (Harrison and Hoffmann, 1988~.
Who Pays for Treatment of All Health Care?
As can be seen in Table 8-5 the pattern of funding sources for specialist treatment
of alcohol problems varies somewhat from that for all health care (Levis and Freeland,
1988~. Private insurance payments constitute the largest funding source for both alcohol
problems treatment and total health care costs (35 percent and 32 percent, respectively).
However, state/local government is the next largest funding source for specialist units (33
percent) in contrast to the 8 percent contribution of this source to all health care. Public
health insurance is a larger contributor in the greater health arena. Another category with
a major difference is direct patient or out-of-pocket expenditures. Direct patient payments
were 25 percent for all services and 14 percent for treatment of alcohol problems.
In the table the federal role is somewhat understated for the specialist treatment
of alcohol problems because the data come from the 1987 NDATUS in which federal block
grants were included as state contributions. (The specific contribution of the several block
grants is unknown because there is no other source that tracks block grant funds used for
the treatment of alcohol problems.) The major difference between federal government
expenditures in the specialist sector and in the general health services sector is in Medicare
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202 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
expenditures. Medicare provides 17 percent of expenditures for all health care services and,
perhaps 1 percent to 3 percent of expenditures for treatment of alcohol problems.
Medicaid provides another 11 percent of the expenditures for all health care services, 6
percent of which comes from the federal government and 5 percent from state governments.
At most Medicaid contributes 8 percent of the total costs of treatment of alcohol problems.
What Does Treatment of Alcohol Problems Cost?
Because the treatment of alcohol problems can be undertaken in a variety of
settings that range from walk-in facilities with minimum staffing (e.g., social model
nonresidential neighborhood recovery centers) to acute care general hospital units, there
is considerable variation in treatment costs among programs even when the same treatment
modalities are used (Holder and Hallan, 1983~. These variations in costs are an issue that
has been the subject of discussion in both the professional literature and the popular press
(e.g., Holden, 1987~.
Differences in costs are largely a function of the stage of treatment, the setting in
which treatment takes place, the intensity of treatment, the staffing pattern required to
accomplish treatment goals, and treatment duration (length of stay or number of sessions).
Setting refers both to the physical facility, in which the cost is largely determined by the
capital costs of the original construction of the facility and its debt service and to
organizational characteristics. Capital costs can vary as a function of fire, life, and safety
code standards included in licensure requirements. (For example, acute care hospitals
serving bedridden persons must meet more rigorous standards than residential facilities
serving ambulatory persons.) Because of these factors, detoxification and rehabilitation
programs in general hospitals have on the average the highest facility costs; psychiatric
hospitals and alcoholism hospitals will have slightly lower facility costs, residential
programs will have slightly lower costs yet, and freestanding outpatient clinics or offices will
have the lowest facility costs.
TABLE 8-5 Sources of Funding for Specialty Units Treating Alcohol Problems and for All Health Care
(percentage of total funds)
Source of Funds
Alcohol Problemsa
All Health Careb
State/local governments 33 8
Federal government 5 7
Private health insurance 35 32
Public health insuranced 8 27
Direct patient payments 14 25
Private donations/other 5 2
Total 100.0 lOl.Oe
aData taken from the IOM analysis of the 1987 NDATUS (NIDA/NIAAA, 1989).
bInformation taken from L`evit and Freeland (1988:Exhibit 3).
CThis category excludes the state share of Medicaid but includes block grant funds for alcohol problems.
dThis category includes Medicare and Medicaid but excludes CHAMPUS and CHAMP-VA for all health care.
eDoes not sum to 100 percent because of rounding.
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WHO PAYS FOR TREATMENT?
203
Staff costs are a function of the staff required to provide supervision and
observation and to carry out treatment. Staffing pattern is determined by the specific
modalities or procedures to be used as well as by licensure standards or payer eligibility
standards. Staff coverage requirements can be for 24 hours a day, 7 days a week, as in
inpatient hospital and residential programs; 4 to 8 hours a day, 5 days a week, as in daycare
or intermediate setting programs; or 1 hour a week for outpatient counseling. Treatment
models, licensure standards, or payer eligibility requirements can dictate the number and
type of staff required, as well as their disciplines and experience levels. Hospital and
residential facilities will have the highest staff costs per person served because of the need
for 24 hour staff coverage and prescribed levels of staff needed to meet licensure standards.
Hospitals that require specific professional nurse-to-patient ratios will have higher costs
than residential facilities that do not have such requirements.
Duration refers to the length of the treatment episode expressed as the number of
days for hospital and residential settings and the number of visits or sessions for
intermediate or outpatient settings. Many programs offer fed-length stays for
rehabilitation, leading to comparisons of costs for a "treatment episodes that can range from
$2,500 to $20,000, depending on the setting and length of stay.
Few recent studies have included the costs of treatment in comparisons of the
effectiveness of alternative settings and modalities. Moreover, there have been very few
Published scientific analyses or surveys of the differential costs that reflect the full range
~ .
Of existing settings. Many surveys nave Deen conuu`;~ By ~u~c;~ ~ ~l~pl~l~ "~"
published in the popular press; these surveys demonstrate the wide variance among
providers, but they contain little analysis and few efforts to develop general models of the
treatment episode and the treatment system, similar to those proposed in this report (see
Chapter 3~.
Holder and his team (1988) have attempted to place these costs in perspective,
bringing together the data reported in a number of studies to demonstrate the variation
among settings and payer sources. In the absence of representative data from a national
data base organized in terms of their proposed model, they have utilized data from several
studies and several years, standardized to a base year (1986) and drawn from a variety of
facilities and programs throughout the country. Costs ranged widely across settings in their
composite, from $8 per outpatient visit for California social model neighborhood recovery
centers to $457 per day for general acute care hospitals in the Midwest.
Costs also varied within a setting category. In the Holder team's composite,
hospital inpatient per-day costs ranged from a low of $148 in Minnesota hospitals receiving
Blue Cross reimbursement to $457 in Chicago hospitals providing services to a large,
self-insured manufacturer. Within this category the range of costs reflected regional as well
as institutional differences in facility capital, staffing, administrative, and other operating
costs. Because costs vary as well with the level of care within a hospital, different rates per
day can be expected for different alcohol problems.
This variation can be seen in the charges to Medicare for hospital inpatient
treatment of persons with alcohol-involved principal diagnoses (see the discussion earlier
in this chapter) (Cowell, 1988~. Overall, average charges were $4,373 per stay and $353 per
day. Average billed charges varied by-diagnosis. For alcohol dependence the average
charge per episode was $3,768 for an average length of stay of 11.9 days and an average per
diem charge of $317. For alcohol abuse the average charge per episode was $2,897 for an
average length of stay of 9.9 days and an average per diem charge of $292. For alcoholic
psychosis the average charge per episode was $4,411 for an average length of stay of 19.5
days and an average per diem charge of $226. For chronic liver disease and cirrhosis the
average charge per episode was $7,365 for an average length of stay of 11.5 days and an
average per diem charge of $662.
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204 BROADENING THE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
Similar variation among DRGs can be seen in the national survey of NAATP
members (ICE, Inc., 1987~. Overall, average charges were $6,046 per stay and $263 per day.
For DRG 435, detoxification with dependence, the average charge per episode was $2,052
for an average length of stay of 5 days and an average per diem charge of $410. For DRG
436, rehabilitation with dependence, the average charge per episode was $5,897 for an
average length of stay of 27 days and an average per diem charge of $216.
Differences in average cost per day are also seen between stages of treatment
among social model residential programs (Holder et al., 1988~. In a sample of San Diego
County programs, the average cost per day for detoxification facilities was projected to be
$86; for short-term recovery the cost per day was $54; and for recovery home services it was
$28. (Short-term recovery corresponds to primary care and recovery home to extended care
in the committee's proposed stages of treatment model [see Chapter 3~.
Overall, detoxification charges ranged from $86 per day in a social model program
to $410 per day in a hospital. However, systematically collected data on the cost of
detoxification are lacking. A recent study that compared the cost-effectiveness of inpatient
and outpatient medical model detoxification for persons with mild to moderate withdrawal
symptoms found that costs varied significantly (Hayashida et al., 1989~. For outpatient
detoxification lasting an average of 6.5 days, the cost per episode was estimated as ranging
between $175 to $388; for inpatient detoxification lasting an average of 9.2 days at the same
Veterans Administration hospital unit, costs were estimated as ranging from $3,319 to
$3,665 per episode. The range reported by these investigators is a function of the
assumptions and definitions used in calculating costs. The low estimate can be seen to
represent the cost of adding episodes to an existing program so that no new start-up costs
are incurred, whereas the high estimate can be seen as represent the cost if a new or
expanded unit is required. Similar cost comparisons in other systems would be needed;
generalization from a VA sample to other segments of the treatment system is difficult
because of the unique characteristics of the persons served and the method of financing.
Similarly, costs for the intermediate care programs reviewed by Holder and
colleagues (1988) ranged from $72 per day to $132 per day. In the national survey of
NAATP members, programs providing intensive treatment that corresponds to short-term
nonresidential primary care in the committee's model reported an average cost of $72 per
session for an average "stays of 21 visits (ICF, Inc., 1987~. Programs providing intermediate
care in a variety of settings in Iowa had costs ranging from $81 to $138 (Holder et al.,
1988~.
The 1989 directory of Minnesota chemical dependency programs yielded an average
cost of $146 per day for detoxification, $184 per day for primary rehabilitation, $97 per day
for extended care, and $24 for outpatient treatment (Minnesota Chemical Dependency
Program Division, 1989~.
Again, there is a lack of systematically collected data about the costs of treatment
on a national basis for use in policymaking. The committee suggests that NIAAA carry out
such a national survey of a representative sample of programs as a substudy within the
annual NDATUS data collection effort.
Summary and Conclusions
There is no single survey that collects data on the total amount of funds currently
being spent on the treatment of alcohol problems. Nevertheless, it is possible to utilize the
data that are available to reach some conclusions regarding the changes that have occurred
in the financing of such treatment and about the current funding situation.
There has been a steady increase in the number of public and private sources of
financing. Efforts to develop distinct funding sources and discrete reimbursement policies
OCR for page 205
WHO PAYS FOR TREATMEN17
205
have been moderately successful. Success in efforts to separate the funding of treatment
for alcohol problems from the stigma and uncertainty that still surrounds mental disorders
has been variable: such efforts have been more successful in the private insurance sector
than in the public insurance sector. Nationally, private health insurance is now the largest
single source of funding, having reached a level comparable to that for all health care (35
percent and 32 percent, respectively). Yet, the level of funding varies so greatly among the
states that it cannot be concluded that we have reached the goal of obtaining coverage that
is nondiscriminatory and equivalent to that provided for other illnesses. While some of the
desired improvements in obtaining coverage seem to have taken place, private health
insurance funding appears to be concentrated in hospital-based inpatient programs in the
private sector and to be less available for the outpatient and intermediate care programs.
Further study is required of the determinants of funding for the treatment of
alcohol problems in each state. There are significant differences in the sources of funding
available to specialty programs that are supported directly by state and federal grants and
contracts and to privately operated generalist and specialty programs. Targeted studies
could determine more precisely the sources of funding for each provider type (i.e., unit
location; ownership), settings (hospital, residential, outpatient) and types of care (medical
model, social model). These studies are particularly important because variations in
provider eligibility for reimbursement among both the public and private insurance benefit
plans may be a major determinant of the variation in treatment alternatives availability
among the states.
Although the proportion of funding provided by private health insurance has grown
substantially, the largest source of total funding for the treatment of alcohol problems
continues to be public funds (state, county, or local general fund revenues or dedicated
taxes and fees; federal block grants; federal health insurance mechanisms in the form of
Medicare, Medicaid, and CHAMPUS; or federal direct services through the Department of
Defense, Indian Health Services, Veterans Administration, and Bureau of Prisons). The
overall pattern of funding for specialist settings varies from that found for all health care
settings. For specialist alcohol treatment, state and local governments are the most
prominent source providing more than 33 percent of revenues as compared with 8 percent
provided by these bodies for all health care. There is a lower proportion of direct patient
payments and of federal public insurance (Medicare and Medicaid) available for the
treatment of alcohol problems.
Systematically collected data on the sources of funding and the costs of treatment
for alcohol problems that can be used for policymaking are lacking. There is no agency
or association that has assumed the responsibility for carrying out such surveillance. In
addition, there is no compendium of recent trends in financing alcohol problems treatment
services because this area of health services research which has been severely neglected.
Shifts in the locus of treatment and in the role of the federal and state
governments in providing and monitoring funding for treatment, as well as the increasing
trend of combining funding and the organization of treatment for both alcohol and drug
problems, have all contributed to the difficulties one experiences in tracking expenditures.
Treatment is now provided through a diverse network of traditional and nontraditional
facilities. Many of the nontraditional facilities are not included in more traditional surveys
and many of the traditional facilities are not covered in either NDATUS or SADAP.
There is an increasing trend to combine under the substance abuse/chemical dependency
rubric reports on funding for services to persons experiencing problems with both alcohol
and other drugs. This combination makes its difficult to obtain consistent and clear
reporting from treatment providers and the states on their expenditures for treatment
services to persons with alcohol problems through the two major national surveys
specifically developed to aid policymakers: the National Drug Alcohol Treatment Survey
(NDATUS) and the State Alcohol and Drug Abuse Profile (SADAP). These surveys should
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206 BROADENING ITIE BASE OF TREATMENT FOR ALCOHOL PROBLEMS
be nwdif`Rd to provide consistent more useful informafion both about the funding sources and
about the costs for treatment of alcoholproblems in the full range of traditional and nontraditional
treatment settings. Additional surveys and studies should be undertaken to provide more detailed
info~natior~ about funding sources arid costs within each state and among the various types of
care.
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Representative terms from entire chapter:
drug abuse
