Adding more coverage of substance abuse disorders to Medicare will only slightly raise federal spending, according to a new study.
The study, released Wednesday (PDF) by the Legal Action Center, comes as Congress is eyeing legislation to expand access to coverage for mental health and substance abuse disorders. Researchers found that any increase in costs to Medicare would be offset by lower costs for related healthcare conditions.
“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, Ph.D., senior fellow of RTI International, the nonprofit research institute that conducted the study.
Medicare doesn’t cover all substance use disorder therapies, providers or settings.
If Medicare decided to extend such coverage, it would incur another $1.9 billion in costs that include 58,890 counselor visits and 116,029 intensive outpatient episodes.
However, Medicare would save $1.6 billion annually thanks to reduced spending on treatment conditions linked to substance abuse as well as fewer substance-abuse-related hospitalizations, according to a release on the study.
This would result in net spending of $362 million a year for Medicare, taking up 0.04% of the total Medicare budget.
“The lack of Medicare coverage for SUD treatment is penny wise and pound foolish,” said Ellen Weber, the Legal Action Center’s senior vice president for health initiatives, in a statement. “It leaves millions of beneficiaries without adequate treatment of their substance use disorder until their conditions become acute enough to require hospitalization.”
Researchers looked at the survey of residential treatment programs to explore the overall cost for treatments as well as federal data on utilization rates among Medicare beneficiaries.
The study comes as the Senate Finance Committee is exploring a legislative package that addresses mental health coverage in commercial plans and Medicare.
Lawmakers are working on legislation to expand the use of telehealth in mental health settings and to ensure pay parity between behavioral and physical health services.