When it comes to treating substance use disorders (SUD), Medicare has significant gaps in coverage.
Specifically, Medicare, which is the nation’s largest payer, does not cover intensive residential or outpatient SUD services.
That could change, as the Biden administration continues to prioritize SUD treatment and behavioral health parity — and as public support for more SUD treatment grows. Additionally, new research has shown that adding more SUD services for Medicare beneficiaries could make financial sense.
While Medicare covers inpatient services, advocates have noted that there is a lack of graduated care options for beneficiaries.
“I would bet you dollars on donuts that would actually save the government money, if they allowed treatment at a lower level of care,” Landmark Recovery CEO Matt Boyle told Behavioral Health Business. . “Because it’s more profitable.”
Landmark Recovery was founded in 2016. It offers a number of SUD programs.
The organization offers programs for medical detox, inpatient and outpatient rehabilitation, partial hospitalization, drug treatment, and therapy. The company is currently executing an expansion plan and plans to have 40 facilities by the end of 2023.
This story of SOUTHERN Medicare coverage
In 1996, the Mental Health Parity Act excluded SUD reimbursement and treatment. That changed in 2008, with a new parity law, which required commercial insurance and Medicaid — but not Medicare — to cover SUD treatment.
“Pay-for-health insurance has never been under [a] parity plan similar to commercial, Medicaid managed care or Medicare Advantage plans,” Jenna Grady, health care attorney at Nixon Peabody LLP, told BHB. “So basically Medicare can make its own rules.”
Support for SUD coverage is changing both federally and in public opinion.
In fact, 75% of Americans support spending $10 billion to fund SUD treatment for everyone who would want care but can’t access it, according to new research from the Public Consultation Program.
“Now people are saying, ‘Okay, well, we’re increasing the enforcement of parody for trademarks. Let’s start focusing on Medicare,'” Grady said. reduced access to services that are usually…being screened rather than being hospitalized?And why don’t we cover Medicare for these residential and intensive outpatient services.
Cost may be a non-factor
The net cost associated with expanding coverage may be marginal.
New research shows that the cost of expanding Medicare SUD coverage to include more services such as residential and intensive outpatient programs would almost offset the additional medical expenses associated with SUD.
Expanding the scope of Medicare SUD coverage would cost about $1.9 billion per year, according to the Legal Action Center (LAC). Still, Medicare would save about $1.6 billion a year due to lower medical costs and hospitalizations associated with SUD.
“The lack of Medicare coverage for SUD treatment is a reasonable sum and an insane pound,” said Ellen Weber, LAC’s senior vice president for health initiatives, in a statement. “This leaves millions of recipients without adequate treatment for their substance use disorder until their condition becomes acute enough to require hospitalization. Both Medicaid and the VA cover comprehensive SUD treatment. Why are the elderly in our country deprived of the opportunity to receive [life-saving health care]?”
If services were expanded, the net impact on Medicare spending would be $362 million per year, which is about 0.04% of Medicare’s budget.
“I’d bet you dollars on donuts that would actually save the government money, if they allowed treatment at a lower level of care.”
– Matt Boyle, CEO of Landmark Recovery
The need for services
About 1.7 million Medicare beneficiaries have SUD, according to LAC research. Only 11% of beneficiaries with SUD receive treatment.
About 1 million adults over the age of 65 live with SUD, according to the American Addiction Centers. But health insurance isn’t just for the elderly. In fact, 14% of Medicare beneficiaries are under the age of 65.
“Most people don’t realize this, but between 10% and 15% of Medicare beneficiaries aren’t seniors,” Boyle said. “So they are people with disabilities. People with disabilities are very, very likely to abuse substances in one way or another.
Although Medicare beneficiaries have access to inpatient psychiatric services, it may not be the best place to receive care.
“A psychiatric hospital is a generalist facility for really, really sick people who are actively suicidal or have uncontrollable schizophrenia. …. That’s what the license exists for, and that’s kind of how they’re staffed,” Boyle said. “And the vast majority of people with substance use disorders don’t really need to be in such a restrictive setting.”
Medicare beneficiaries can access outpatient treatment; however, it must be provided in a “primary care setting, hospital outpatient program, Medicare-enrolled treatment program, or community mental health center,” according to Medicare Resources.
Legislation could support more SUD services
The push for parity in the health insurance market has been widely anticipated in the industry for some time.
“When Biden first took office, he had his statement of drug policy priorities for the first year. I think a lot of stakeholders were shocked that parity for substance use disorder treatment wasn’t included in it,” Grady said. “Then we had the proposed fiscal year budget plan for HHS in 2022 that has no parity metrics for treating substance use disorders. Then all of a sudden the 2023 budget proposal specifically [says] one of the goals of the Biden-Harris administration is to … push for the Mental Health and Substance Abuse Parity Act of 2008 to apply to Medicare.
In the president’s 2023 fiscal budget, the Department of Health and Human Services (HHS) proposed $3.5 billion to improve Medicare mental health coverage. If passed, it would eliminate the 190-day lifetime limit on psychiatric hospital services and enforce the Mental Health Parity Act and Medicare Dependency Fairness.
“Medicare is allowed not to cover residential treatments. … If you’re Blue Cross Blue Shield, you can’t not cover residential treatment,” Boyle said. “It’s been the law, ever since the Affordable Care Act and the Mental Health Parity Act. And so yeah, I don’t think I’m looking for something that radical.