Coverage for substance use disorders would only marginally increase Medicare spending

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Adding substance use disorder coverage for intensive residential and outpatient programs would have only a nominal net impact on Medicare spending, at about $362 million per year, new analysis finds. of the Legal Action Center. In contrast, total Medicare spending in 2020 was $825.9 billion.

Medicare would incur an additional $1.9 billion annually to cover 75,637 residential treatment episodes, 116,029 intensive outpatient episodes, and 58,890 visits with counselors, according to the data. But these costs would be partially offset by reduced costs associated with treating medical conditions caused by SUD and fewer hospitalizations and emergency room visits related to SUD.

Collectively, the Legal Action Center estimated that these savings would amount to $1.6 billion per year.

Because Medicare beneficiaries who are dual-eligible for Medicaid often already have coverage for these services under Medicaid, part of this estimated cost increase represents a shift from Medicaid spending to Medicare spending. About 12% of Medicare beneficiaries also have Medicaid coverage.

Medicare covers a wide range of treatment services for people with mental disorders and addictions, but special rules limit coverage and reimbursement. Medicare’s coverage of services for mental health, behavioral health, and substance use disorders is not as extensive as its coverage for other services.

Medicare will pay for treatment of alcoholism and substance use disorders in inpatient and outpatient settings. Medicare Part A pays for inpatient drug treatment; people will pay the same co-payment as for any other type of hospitalization. Similarly, Medicare Part B will pay for outpatient addiction treatment services from a clinic or hospital outpatient department.


In 2020, there were 61.5 million Medicare beneficiaries, and an analysis of National Survey of Drug Use and Health data found that about 3% of Medicare beneficiaries (1.7 million) had a substance use disorder in the past year.

Yet only 11% of Medicare beneficiaries with SUD received treatment in any given year. Among Medicare beneficiaries who wanted SUD treatment, the top reasons they did not receive it were lack of SUD insurance coverage and the fact that they could not afford treatment.

Despite the need for effective treatments to treat SUD, Medicare does not cover all SUD treatments, settings, or provider types. Medicare effectively excludes coverage for SUD treatment in intensive outpatient, partial hospitalization, outpatient addiction clinics, and residential addiction programs, as well as by licensed professional counselors, certified addiction counselors, and peers. Medicare only began covering opioid treatment programs, which provide methadone and other drug treatments, in 2020 due to the 2018 Patient and Community SUPPORT Act.

And unlike most private insurance and Medicaid managed care plans, Medicare is not subject to the Mental Health Parity and Dependency Equity Act of 2008, which requires coverage and access to SUD and mental health services at the same level as medical and surgical services.

The study estimated the annual change in Medicare spending by adding coverage for residential SUD ($935 million), intensive outpatient care ($928 million), and counseling ($66 million). The total is about $1.9 billion per year. The cost offsets resulting from reduced incidence of comorbid conditions and reduced hospitalizations and emergency room visits related to the SOUTH are approximately $1.5 billion per year, bringing the net impact to approximately $362 million per year.


Substance use disorder is a pervasive problem. In June, the Department of Health and Human Services announced that it was investing nearly $15 million in 29 organizations in rural communities to combat psychostimulant abuse and related overdose deaths.

Psychostimulants include methamphetamine and other illegal drugs, such as cocaine and ecstasy, as well as prescription stimulants for conditions such as attention deficit hyperactivity disorder or depression. The overdose crisis has evolved over time and is now largely characterized by deaths involving illicitly manufactured synthetic opioids, including fentanyl, and increasingly psychostimulants, according to the HHS Overdose Prevention Strategy.

With the $15 million investment, HHS has provided a total of more than $400 million to the Rural Communities Opioid Response Program Initiative, a multi-year initiative to reduce morbidity and mortality related to substance use, including opioid use, in high-risk rural areas. communities.

Through the Substance Abuse and Mental Health Services Administration, HHS also recently announced $55 million in funding for its Tribal Opioid Response grant program that addresses the overdose crisis in tribal communities.

Twitter: @JELagasse
Email the author: [email protected]

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