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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

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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.

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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

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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

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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. REFERENCES Akins, C., and D. Williams. 1982. State and local programs on alcoholism. Pp. 325-352 in Prevention, Intervention, and Treatment: Concerns and Models, J. de Luca, ed. Washington, D.C.: U.S. Government Printing Office. Alcohol, Drug Abuse, and Mental Health Adminstration. 1984. Alcohol and Drug Abuse and Mental Health Services Data: Report to Congress, January, 1984. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. Alcohol, Drug Abuse, and Mental Health Advisory Board. 1987. First Report to Congress, April 1987. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. Berman, H., and D. Klein. 1977. Project to Develop a Comprehensive Alcoholism Benefit through Blue Cross: Final Report of Phase I. Prepared for the National Institute on Alcohol Abuse and Alcoholism. Chicago: Blue Cross Association. Boche, H. L., ed. 1975. Funding of Alcohol and Drug Programs: A Report of the Funding Task Force. Washington, D.C.: Alcohol and Drug Problems Association of North America. Booz-Allen and Hamilton, Inc. 1978. The Alcoholism Funding Study: Evaluations of the Sources of Funds and Barriers to Funding Alcoholism Treatment Programs. Prepared for the U.S. Department of Health Education and Welfare. Washington, D. C.: Booz-Allen and Hamilton, Inc. Borkman, T. 1988. Executive summary: Social model recovery programs. Prepared for the IOM Committee for the Study of Treatment and Rehabilitation Services for Alcoholism and Alcohol Abuse, May. Burton, J. L. 1984. Coverage Policies for Alcohol, Drug Abuse, and Mental Health Care under Major Health Care Financing Programs. Prepared for the ADAMHA Reimbursement Task Force. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. Butler, P., and C. Littlefield. 1985. Health Care Cost Containment in the Alcohol and Drug Abuse Division. Prepared for the Alcohol and Drug Abuse Division. Colorado Department of Health, Denver, Col., December. Butynski, W. 1986. Private health insurance coverage for alcoholism and drug dependency treatment services-- state legislation that mandates benefits or requires insurers to offer such benefits for purchase. NASADAD Alcohol and Drug Abuse Report Special Report Janualy/February:1-28. Butynski, W., and D. Canova. 1988. Alcohol problem resources and services in state supported programs, FY 1987. Public Health Reports 103:611~20. Butynski, W., and N. Record. 1983. State Resources and Needs Related to Alcohol and Drug Services. Prepared for the National Institute on Alcohol Abuse and Alcoholism and the National Institute on Drug Abuse. Washington, D.C.: National Association of State Alcohol and Drug Abuse Directors. Butynski, W., N. Record, P. Bruhn, and D. Canova. 1987. State Resources and Services for Alcohol and Drug Abuse Problems: Fiscal Year 198~An Analysis of State Alcohol and Drug Abuse Profile Data. Prepared for the National Institute on Alcohol Abuse and Alcoholism and the National Institute on Drug Abuse. Washington, D.C.: National Association of State Alcohol and Drug Abuse Directors. Cooper, M. L. 1979. Private Health Insurance Benefits for Alcoholism, Drug Abuse, and Mental Illness. Washington, D.C.: Intergovernmental Health Policy Project, George Washington University. Costello, R.M. 1980. Alcoholism aftercare and outcome: Cross-legged panel and path analysis. British Journal of Addictions 75:49-53.

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WHO PAYS FOR TREATMENT? 207 Costello, R. M. 1982. Evaluation of alcoholism treatment programs. Pp. 1197-1210 in Encyclopedic Handbook of Alcoholism, E. M. Pattison and E. Kaufman, eds. New York: Gardner Press. Costello, R. M., and J. E. Hodde. 1981. Costs of comprehensive alcoholism care for 100 patients over 4 years. Journal of Studies on Alcohol 42:87-93. Cowell, C. 1988. Treatment of alcohol disorders: The Medicare exerience--analysis of unpublished data from the Medpar Hles (memorandum). Financing and Coverage Policy Branch, National Institute On Drug Abuse, Rockville, Md., September. Creative Socio-Medics Corporation. 1981. An Analysis of Third Party Funding in the Alcoholism Treatment Delivery System in the United States. Prepared for the National Institute on Alcohol Abuse and Alcoholism. Vienna, Va.: Creative Socio-Medics Corporation. Davis, K 1987. The organization and financing of alcohol and drug abuse services. Presented at the annual meeting of the Institute of Medicine, Washington, D.C., October 21. Fein, R. 1984. Alcohol in America: The Price We Pay. Newport Beach, Cal.: CareInstitute. Flavin, D. 1988. Health insurance coverage for alcoholism and other drug dependencies. Testimony presented before the House of Representatives Committee on Energy and Commerce, Subcommittee on Commerce, Consumer Protection, and Competitiveness hearing on insurance coverage of drug and alcohol abuse treatment, Washington, D. C., September 8. Ford, M. 1988. Statement presented to the open meeting of the IOM Committee for the Study of Treatment and Rehabilitation Services for Alcoholism and Alcohol Abuse. Washington, D.C., January 25. Gibson, R. W. 1988. The influence of external forces on the quality assurance process. Pp. 247-264 in Handbook of Quality Assurance in Mental Health, G. Stricker and A. Rodriquez, eds. New York: Plenum Press. Glasscote, R. M., T. F. A. Plaut, D. W. Hammersley, F. J. O'Neil, M. E. Chaefetz, and E. Cumming. 1967. The Treatment of Alcohol Problems: A Study of Programs and Problems. Washington, D.C.: Joint Information Service of the American Psychiatric Association and the National Association of Mental Health. Gordis, E. 1987. Accessible and affordable health care for alcoholism and related problems: Strategy for cost containment. Journal of Studies on Alcohol 48:579-585. Hallan, J. B. 1972. Health Insurance Coverage for Alcoholism. Prepared for the National Institute on Alcohol Abuse and Alcoholism. Rockville, Md: National Institute on Alcohol Abuse and Alcoholism. Harrison, P. A., and N. G. Hoffmann. 1988. CATOR 1987 Report: Adolescent Residential Treatment: Intake and Follow-Up Findings. Saint Paul, Minn.: Chemical Abuse/Addiction Treatment Outcome Registry, Ramsey Clinic. Hayashida, M., A. I. Alterman, A. T. McLellan, C. P. O'Brien, J. J. Purtill, J. R. Volpicelli, A. H. Raphaelson, and C. P. Hall. 1989. Comparative effectiveness and costs of inpatient and outpatient detoxification of patients with mild-to-moderate alcohol withdrawal syndrome. New England Journal of Medicine 320:358-365. Hoffmann, N. G., and P. A. Harrison. 1987. CATOR 1986 Report: Findings Two Years After Treatment. Saint Paul, Minn.: Chemical Abuse/Addiction Treatment Outcome Registry, Ramsey Clinic. Holder, H. H. 1987. Alcoholism treatment and potential health care cost saving. Medical Care 25:52-71. Holder, H. D., and J. B. Hallan. 1983. Development of Cost Simulation Study of Alcoholism Insurance Benefit Packages. Prepared for the National Institute on Alcohol Abuse and Alcoholism. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. Holder, H. D., R. Longabaugh, and W. R. Miller. 1988. Cost and effectiveness of alcoholism treatment using best available information. Prepared for the IOM Committee for the Study of Treatment and Rehabilitation Services for Alcoholism and Alcohol Abuse. Howell, E. M., M. Rymer, D. K Baugh, M. Ruther, and W. Buczko. 1988. Medicaid tape-to-tape findings: California, New York, and Michigan, 1981. Health Care Financing Review 9~4~:1-29.

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208 BROADENING THE BASE OF TREATMENT POR ALCOHOL PROBLEMS ICE, Inc. 1987. Analysis of Treatment for Alcoholism and Chemical Dependency. Prepared for the National Assoication of Addiction Treatment Providers. Irvine, Calif.: National Association of Addiction Treatment Providers. Jacob, O. 1985. Public and Private Sector Issues on Alcohol and Other Drug Abuse: A Special Report with Recommendations. Prepared for the National Institute on Alcohol Abuse and Alcoholism. Rockville, Md.: Alcohol, Drug Abuse, and Mental Health Administration. Lawrence Johnson ~ Associates, Inc. 1986. Evaluation of the HCFA Alcoholism Services Demonstration: Final Second Analytic Report. Prepared for the Health Care Financing Administration. Washington, D.C. Jones, K R., and T. R. Vischi. 1979. Impact of alcohol, drug abuse and mental health treatment on medical care utilization: A review of the research literature. Medical Care 17~12, Suppl.~:1-82. Levit, K, and M. Freeland. 1988. National medical care spending. Health Affairs 7~5~:124-136. Lewis, D. C. 1987. Education and training of health professionals to intervene in drug and alcohol problems. Presented at the Institute of Medicine annual meeting, Washington, D.C., October 21. Lewis, J. S. 1982. The federal role in alcoholism research, treatment and prevention. Pp. 385401 in Alcohol, Science and Society Revisited, E. Gomberg, H. White, and J. Carpenter, eds. Ann Arbor, Mich. and New Brunswick, NJ.: University of Michigan Press and Center of Alcohol Studies, Rutgers University. Lewis, J. S. 1988. Congressional rites of pasage for the rights of alcoholics. Alcohol Health and Research World 12:241-251. Leyland, A. Jr., V. Paukstys, and T. Raichel. 1983. Substance Abuse Treatment Benefits: A Guide for Plans. Chicago: Blue Cross and Blue Shield Association. Luckey, J. W. 1987. Justifying alcohol treatment on the basis of cost savings: The offset literature. Alcohol Health and Research World 12~1~:8-15. Minnesota Chemical Dependency Program Division. 1989. Directory of Chemical Dependency Programs in Minnesota. St. Paul: Minnesota Department of Human Services. Morrisey, M. A., and G. A. Jensen. 1988. Employer-sponsored insurance coverage for alcoholism and drug abuse treatments. Journal of Studies on Alcohol 49: 456461. Morrison, L. 1978. Title XX Handbook for Alcohol, Drug Abuse, and Mental Health Treatment Programs. Prepared for the Alcohol, Drug Abuse, and Mental Health Administration. Washington, D.C.: U. S. Government Printing Office. Muszynski, I. L. 1987. Trends and issues in the reimbursement of chemical dependency treatment programs. Paper presented at the National Association of Addiction Treatment Providers Conference, Houston, Texas, September 15. National Council on Alcoholism (NCA). 1987. A Federal Response to a Hidden Epidemic: Alcohol and Other Drug Problems Among Women. New York: NCA. National Council on Alcoholism, Task Force on Health Insurance. 1974. Recommendations for Health Insurance Coverage for Alcoholism (memorandum). National Council on Alcoholism, Washington, D.C., January 11. National Institute on Alcohol Abuse and Alcoholism (NLAAA). 1983. National Drug and Alcoholism Treatment Utilization Survey: Executive Report. Rockville, Md: NLAAA National Institute on Alcohol Abuse and Alcoholism (NLAAA). 1984. Report to the U.S. Congress on Federal Activities on Alcohol Abuse and Alcoholism: FY 1981 and FY 1982. Rockville, Md.: NIAAA. National Institute on Drug Abuse/National Institute on Alcohol Abuse and Alcoholism (NIDA/NIAAA). 1989. Highlights from the 1987 National Drug and Alcoholism Treatment Unit Survey (NDATUS). Rockville, Md: NIDAINIAAA.

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WHO PAYS FOR TREATMENT? 209 Noble, J. A., P. Widem, H. Malin, and J. R. Coakley. 1978. Medicare Coverage for the Treatment of Alcoholism: Excerpts from DHEW's 1978 Report to Congress on the Advantages and Disadvantages of Extending Medicare Coverage to Mental Health, Alcohol, and Drug Abuse Centers. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. Pattison, E. M. 1985. The selection of treatment modalities for the alcoholic patient. Pp. 189-294 in J. H. Mendelson and N. K Mello, eds. The Diagnosis and Treatment of Alcoholism, 2nd ed. New York: McGraw-Hill. Plaut, T.F.A., ed. 1967. Alcohol Problems: A Report to the Nation. New York: Oxford University Press. Plotnick, D. E., K M. Adams, H. R. Hunter, and J. C. Rowe. 1982. Alcoholism Treatment Programs within Prepaid Group Practices: A Final Report. Rockville Md.: National Institute on Alcohol Abuse and Alcoholism. President's Commision on Mental Health, Task Panel on Alcohol Related Problems. 1978. Report of the Liaison Panel on Alcohol Related Problems. Pp. 2078-2092 in Appendix: Task Panel Reports. Vol. 4 of the Report to the President from the President's Commission on Mental Health. Washington, D.C.: U.S. Government Printing Office. Reed, P. G., and D. S. Sanchez. 1986. Characteristics of Alcoholism Services in the United States--1984. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. Regan, R. 1981. The role of federal, state, local, and voluntary sectors in expanding health insurance coverage for alcoholism. Alcohol Health and Research World 5(4):22-26. Reynolds, R. I. 1988. Executive Summary: Social model services as an alternative to medical/clinical model services in San Diego county. Prepared for the IOM Committee for the Study of Treatment and Rehabilitation Services for Alcoholism and Alcohol Abuse, February. Robertson, A. D. 1988. Federal and state support for alcohol and drug abuse services. Testimony on behalf of the National Association of State Alcohol and Drug Abuse Directors presented to the U. S. Senate Committee on Governmental Affairs hearing regarding an overview of federal activities on alcohol abuse and alcoholism, National Association of State Alcohol and Drug Abuse Directors, Washington, D.C., May 25. Rosenberg, N. 1968. Survey of Health Insurance for Alcoholism. Prepared for the National Center for Prevention and Control of Alcoholism. Bethesda, Md.: National Institute of Mental Health. Saxe, L., D. Dougherty, K Esty, and M. Fine. 1983. The Effectiveness and Costs of Alcoholism Treatment. Washington, D.C.: U.S. Congress, Office of Technology Assessment. Sharfstein, S. S., S. Muszynski, and E. Meyers. 1984. Health Insurance and Psychiatric Care: Update and Appraisal. Washington, D.C.: American Psychiatric Association Press. Shulman, G. D. 1988. Statement presented to the Open Meeting of the IOM Committee for the Study of Treatment and Rehabilitation Services for Alcoholism and Alcohol Abuse. Washington, D.C., January 25. U.S. Department of Health and Human Services (USDHHS). 1981. Fourth Special Report to the U.S. Congress on Alcohol and Health. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. U. S. Department of Health and Human Services (USDHHS). 1986. Toward a National Plan to Combat Alcohol Abuse and Alcoholism. Report submitted to the United States Congress. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. U. S. Department of Health and Human Services (USDHHS). 1987. Sixth Special Report to the U.S. Congress on Alcohol and Health. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. U.S. Department of Health, Education, and Welfare (USDHEW). 1971. First Special Report to the U.S. Congress on Alcohol and Health. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. U.S. Department of Health, Education, and Welfare (USDHEW). 1974. Second Special Report to the U.S. Congress on Alcohol and Health. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism. U.S. Department of Health, Education, and Welfare (USDHEW). 1978. Gird Special Report to the U.S. Congress on Alcohol and Health. Rockville, Md.: National Institute on Alcohol Abuse and Alcoholism.

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210 BROADENING ITIE BASE OF TREATMENT FOR ALCOHOL PROBLEMS U.S. General Accounting Office (USGAO). 1984. States Have Made Few Changes in Implementing the Alcohol, Drug Abuse, and Mental Health Services Block Grant. Washington, D.C.: U.S. General Accounting Office. U.S. General Accounting Office (USGAO). 1985. Block Grants: Overview of Experiences to Date and Emerging Issues. Report to Congress. Washington D.C.: U.S. General Accounting Office. Wallen, J. 1988. Alcoholism treatment services systems: A health research perspective. Public Health Reports: 103:605-611. Weisner, C. 1986. The social ecology of alcohol treatment in the United States. Pp. 203-243 in Recent developments in Alcoholism, vol. 5, M. Galanter, ed. New York: Plenum Press. Weisner, C., and R. Room. 1984. Financing and ideology in alcohol treatment. Social Problems 32:167-184. Weisman, M. N. 1988. Musings on the art of treatment. Alcohol Health and Research World 12:282-87.