The cost of expanding Medicare coverage for substance use disorder will be mostly offset by savings, a new study discovered. Currently, Medicare does not cover all substance use disorder (SUD) therapies, types of providers or settings, according to the report. It excludes coverage for SUD treatment in intensive outpatient settings, partial hospitalization, outpatient specialty addiction clinics, and in-home addiction programs, as well as treatment by licensed professional counselors, certified addiction counselors, and peers.
But the report by RTI International and the Legal Action Center estimated the costs of adding SUD coverage for residential programs, intensive outpatient programs and licensed and certified counselors. If Medicare expanded coverage of SUD treatment, it would generate an additional $1.9 billion annually to cover 75,637 episodes of home treatment, 116,029 episodes of intensive outpatient treatment, and 58,890 visits with counselors.
However, Medicare will save up to $1.6 billion annually from reduced costs for treating medical conditions caused by SUDs and fewer SUD-related hospitalizations and emergency department visits. Therefore, the net cost of adding this coverage would be $362 million annually, or 0.04 percent of the total Medicare budget, the report said. 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 due to the 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, dementia, heart disease, infectious diseases, depression and anxiety,” said Tammy Mark, senior fellow at RTI and lead author of the study , in news release. “Treatment can be life-saving and restore social, emotional and physical health. However, to be most effective, people need access to a full continuum of care that is tailored to their needs.
Medicare’s lack of coverage for SUD treatment is unacceptable, especially when Medicaid and Veterans Affairs cover these services more effectively, said Ellen Weber, senior vice president of health initiatives at the Legal Action Center. By comparison, most private health plans also cover some substance abuse treatment, but some cover it entirely, according to Drug addiction center. Coverage varies by insurer and the location of the member.
“Medicare’s lack of coverage for SUD treatment is wise and foolish,” she said. “This leaves millions of beneficiaries without adequate treatment for their substance use disorder until their condition becomes severe enough to require hospitalization. Medicaid and VA cover comprehensive SUD treatment. Why are our nation’s seniors being denied access to life-saving health care? 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.”
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