Price of including substance use dysfunction protection to Medicare can be slim, report finds

The price of expanding Medicare coverage for substance use disorder would mostly be offset by the savings, a new study discovered. Currently, Medicare doesn’t cover all substance use disorder (SUD) therapies, provider types or settings, per the report. It excludes coverage for SUD treatment in intensive outpatient, partial hospitalization, specialty addiction outpatient clinics and residential addiction programs, as well as treatment by licensed professional counselors, certified addiction counselors and peers.

But the report from RTI International and the Legal Action Center estimated the cost of adding SUD coverage for residential programs, intensive outpatient programs and licensed and certified counselors. If Medicare expanded coverage of SUD treatment, it would incur an additional $1.9 billion annually to cover 75,637 residential treatment episodes, 116,029 intensive outpatient episodes and 58,890 visits with counselors. 

However, Medicare would save as much as $1.6 billion annually from reduced costs of treating medical conditions caused by SUD and fewer SUD-related hospitalizations and emergency department visits. Therefore, the net cost of adding this coverage would be $362 million per year, or 0.04% of the total Medicare budget, the report found. For context, total Medicare spending in 2020 was $825.9 billion.

Expanding coverage would greatly benefit Medicare beneficiaries, the report said. Currently, about 1.7 million people on Medicare have a diagnosed SUD, but only 11% receive treatment in any given year. This is mostly because of a lack of SUD insurance coverage and high out-of-pocket costs.

“Among Medicare beneficiaries, alcohol and drug use disorders can lead to falls and other injuries, dementias, cardiac conditions, infectious diseases, depression, and anxiety,” said Tami Mark, a senior fellow at RTI and lead author of the study, in a news release. “Treatment can be lifesaving and restore social, emotional, and physical health. However, to be most effective, individuals need access to a full continuum of care that is tailored to their needs.”

Medicare’s lack of coverage for SUD treatments is unacceptable, especially when Medicaid and Veterans Affairs cover these services more effectively, said Ellen Weber, senior vice president for health initiatives at Legal Action Center. In comparison, most private health plans also cover a portion of substance abuse treatment, but some cover it entirely, according to the Addiction Center. Coverage varies based on the insurer and location of the member.

“The lack of Medicare coverage for SUD treatment is penny wise and pound foolish,” she stated. “It leaves millions of beneficiaries without adequate treatment of their substance use disorder until their conditions become acute enough to require hospitalization. Medicaid and the VA both cover comprehensive SUD treatment. Why are our nation’s older adults denied the opportunity to receive lifesaving healthcare? It’s time for Medicare to cover the full range of SUD treatment services and providers — it just makes sense, both financially and in terms of promoting equitable access to quality care.”

Photo: cagkansayin, Getty Images

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