MANAGE THE DISEASE (NOT COST) OF ADDICTION | Behavioral Healthcare Executive Skip to content Skip to navigation


February 1, 2006
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Addiction is a chronic disorder like any other—and managed care needs to treat it as such

It's hard to argue with numbers! At the very least, numbers need to be taken seriously. For example, the 2002 National Survey on Drug Use and Health (NSDUH) estimated that 22 million Americans more than 12 years old were classified as having substance dependence or abuse. This number has not significantly changed as it has been tracked over the subsequent years. Approximately 9.5% of the total U.S. population meets the criteria for having an addictive disorder. Few other diseases that have a nearly 10% penetration of the population receive as little attention as addiction. The way in which treatment for this disease is reimbursed by private-sector health insurance receives even less attention.

In a fascinating, rarely quoted, and often overlooked article, Tami L. Mark and Rosanna M. Coffey take an in-depth look at how the number of people with private insurance receiving substance abuse treatment declined from 1992 to 2001:

Considering Mark and Coffey's numbers along with the NSDUH data, we are left with the monumental task of trying to understand how expenditures for addiction treatment in the privately insured sector have fallen while the disease's prevalence has remained the same. One conclusion is that the phenomenon of managed care, which is firmly entrenched as an integral part of private health insurance, is not managing addictive disorders.

An even more disturbing finding is in the numbers. During Mark and Coffey's examination period (1992-2001), the total number of dollars spent by the federal government on addiction treatment rose substantially. It is now clear that the major purchaser of addiction treatment is the federal government and not private insurance, which was the case just 15 years ago. Could it be that people eligible for federal health assistance have a higher prevalence of addictive disorders, or might it be that people are being shifted out of the private insurance system into federal assistance programs?

The National Association of Addiction Treatment Providers (NAATP) has an active task force examining a number of issues related to reimbursement for addiction treatment within privately insured mechanisms. NAATP has discovered that the issues affecting reimbursement include benefit language, admission barriers, a misunderstanding of addiction, and a silo mentality that tends to see addictive disorders in isolation from other health issues. If we want to make the next ten years different from the past ten, we will need a fresh and economic-driven approach to addiction treatment. An economic-driven approach involves taking into consideration the total economic impact of healthcare, including cost-offset issues, rising healthcare premiums for employers and employees, and the cost to taxpayers by not offering treatment in the private sector.

We believe two structural changes are needed to address addiction treatment from an economic perspective. The first is to carve back the treatment of addictive disorders into mainstream healthcare. By creating carve-out behavioral health managed care organizations, we inadvertently set up a system that poses a disincentive to treat addictive disorders.

MBHOs' current system separates their dollars, and thus their invested interest, in other healthcare issues. We know that by treating addictions we save on other healthcare costs, but structurally MBHOs are not set up to have access to the savings. Thus they have no incentive to effectively treat addiction and save on ER visits, since the ER savings do not result in greater profitability for MBHOs. The current system does, however, result in lower healthcare costs for the employer who ultimately is carrying the majority of the cost for healthcare for employees. Yet by creating this silo and not allowing saved dollars to flow freely, we undertreat addictive disorders to manage costs as opposed to managing the disease!

The second structural change involves a basic change in our approach to addictive disorders. Currently, the privately insured receive treatment for a chronic disease as if it were an acute disease with an identified onset and a predictable and realized conclusion. Chronic diseases such as addictive disorders do not lend themselves to that methodology. It is time we begin to demand that insurance organizations and managed care entities manage the disease of addiction. From an economic/business perspective, it is more likely in both the short term and the long term that managing this disease—as opposed to managing the cost of episodic treatment—will result in real savings throughout the healthcare delivery system, ultimately addressing the astronomically rising costs to provide health insurance (for example, through fewer addiction-related ER visits, a lower incidence of addiction-connected acid reflux, and a lower incidence of a host of other diagnoses now seen related to untreated or undertreated addictions).

Moving from managing cost to managing the disease will not be automatic, and it will not occur without effort and commitment. Nevertheless, we believe that by committing to this course, we can address rising healthcare costs and the overutilization of federal dollars to treat a disease that can and should be treated as part of comprehensive private health insurance coverage.