The Development of Medications for the Treatment of Opiate and Cocaine Addictions Issues for the Government and Private Sector (1995) / Chapter Skim
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5 Treatment Financing and Trends in Health Insurance
5 Treatment Financing and Trends in Health Insurance
Pages 120-133
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From page 120... ...
From the perspective of pharmaceutical development, the markets for medications are distinct; for example, the size of the market for cocaine treatment is considered larger because there are more cocaine-dependent than opiate-dependent individuals (Chapter 1~; also there is the possibility that a cocaine medication will not be a narcotic and not subject to the panoply of federal and state regulations (Chapters 7 and 81. Narcotic medications for the treatment of narcotic addictions are regulated even more severely under the Controlled Substances Act and state statutes than are other narcotics prescribed for the treatment of pain (Figure 5.1; Chapter 7~.
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From page 121... ...
Insurance or publicly subsidized coverage increases demand because it improves patients' ability to pay for services. For example, research has shown that people with more generous health insurance buy more prescription drugs and visit doctors more frequently than do those with poorer coverage (Leibowitz et al., 1985; Manning et al., 1988~.
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From page 122... ...
The contribution from each of those sources can be estimated from two separate data bases -- NDATUS and SADAP, the State Alcohol and Drug Abuse Profile.' Financing for methadone treatment falls into 3 categories: public funding, out-ofpocket payments by patients, alla private insurance. Public sources together accounted for $384 million, or about 80 percent of the total payments for methadone treatment in 1993.
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From page 123... ...
The composition of the public payers for methadone treatment is quite unusual as most of the public outlays are in the form of direct payments from federal block grants and state alcohol and drug agencies. The only exception is Medicaid which contributes 12 percent of methadone treatment payments, a share similar to Medicaid's contribution of 15.5 percent to all national health expenditures (CBO, 19931.
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From page 124... ...
Health Care 4.0% | · Public funds O Private insurance [01 Patient fees [3 Other | FIGURE 5.2 Payments for methadone treatment, all types of drug abuse treatment, and all types of health care. NOTE: Methadone treatment: Total payments, 1993: $480 million.
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From page 125... ...
Federal block grant funds flow to state alcohol and drug agencies, which administer the funds directly to providers who make pharmaceutical purchases solely for their clinics. Given this funding chain, public agencies do not act the same way that private-sector pharmaceutical benefit managers do when they use collective purchasing strength to negotiate directly with pharmaceutical companies to acquire volume discounts.
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From page 126... ...
Treatment for cocaine addiction is financed by the same combination of sources as is methadone treatment, but in different proportions. Of the total payments of $1.2 billion for all drug abuse treatment, state and local agencies contributed 39.2 percent, federal block grants contributed 31.4 percent, private insurance contributed 1 1.8 percent, client and patient fees contributed 9.6 percent, and other sources including private donations and public welfare contributed 8 percent (U.S.
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From page 127... ...
State financing practices can be so rigid that they effectively block the introduction arid adoption of a new medication. The flow of funds to clinics is dictated by the policies and regulations of two separate state agencies: the state alcohol and drug 4This figure is the number of dispensing units rather than the number of clinics.
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From page 128... ...
Therefore, the committee strongly urges state and federal agencies to work together, in the interest of public health and to provide an incentive to pharmaceutical companies, to facilitate the availability of newly approved anti-addiction medications. Possible mechanisms that the states and federal government might consider include requiring all Substance Abuse Block Grant recipients to offer those medications to patients and assuring appropriate financing of new medications by state alcohol and drug agencies and their counterpart Medicaid agencies.
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From page 129... ...
the committee presents an analysis of possible legislative trends in health care reform. Trends in Drug Abuse Treatment Benefits There are three related trends in benefits offered under private insurance; an increase in the number of employer health plans that cover drug dependence treatment; a reduction in the coverage for inpatient treatment; and growth in the management of benefits.
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From page 130... ...
The cost of inpatient drug abuse treatment escalated dramatically during the 1980s, forcing insurers to impose limits on coverage. For example, before the imposition of limits, one study of private insurance claims for about 1 million enrollees (Frank et al., 1991)
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From page 131... ...
state that managed care can sharply reduce treatment expenditures under private and public health insurance. One of the studies they cite focused on the effect of managed care on 375,000 enrollees in the Massachusetts Medicaid program.
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From page 132... ...
Presentation at the Legislative Leaders Conference on Substance Abuse Benefits in State Health Care Reform, Denver, CO, May 2~21, 1994. Sponsored by Intergovernmental Health Policy Project.
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From page 133... ...
In: Pickens RW, Leukefeld CG, Schuster CR, eds. Improving Drug Abuse Treatment (NIDA Research Monograph 106: 63-92~.
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