Substance abuse treatment may be cost-savings prescription
By Leigh E. Rich
Colorado may soon be joining the 47 other states that offer outpatient substance abuse treatment to Medicaid recipients. Currently, Colorado, Nevada and Arkansas are the only three states that do not provide such coverage.
With an estimated 4,500 Medicaid enrollees in Colorado who would seek substance abuse help each year, supporters of House Bill 1015 that would add outpatient treatment as an optional service say this is a needed benefit.
What’s more, they also call it a win-win for the state’s bottom line.
According to Mick Kirby, CEO of the Arapahoe House, a substance abuse treatment component is expected to generate savings by year two and net savings by year four.
But just in case, HB 1015 has a built-in safeguard.
The bill, sponsored by House Speaker Andrew Romanoff, D-Denver, and Sen. Steve Johnson, R-Fort Collins, requires the state auditor to submit a report on or before Jan. 1, 2011 “to the legislative audit committee analyzing the costs and savings to the medical assistance program of providing outpatient substance abuse treatment.”
If the legislative audit committee finds that such services increase the overall costs of Colorado’s medical assistance program, the provision is repealed.
That’s unlikely to happen, says Kirby, who has a doctorate in psychology and who’s been with the nonprofit organization that was founded by the Arapahoe County League of Women Voters for 21 years. Based on numerous studies from other states, Kirby and the bill’s other supporters believe all of the initial dollars invested into outpatient treatment will be recouped and that the state will see savings in its Medicaid health plan as well as in other areas.
Beginning Jan. 1, 2006, HB 1015 would provide about $1,500 worth of outpatient services for approximately 4,500 enrollees per year. In the second half of fiscal year 2005-06, the substance abuse provision would pull $1.6 million out of the state’s general fund, according to HB 1015’s fiscal note, though it would be matched with $1.6 million in federal money.
In its second fiscal year, the fiscal note predicts Colorado would need about $7.1 million, but the provision would generate about $2.4 million in savings. Thus, the general fund would need to foot $2.3 million, again matched by federal dollars.
By fiscal year 2008-09, however, the fiscal note foresees a net savings of more than $1 million—and that’s just in terms of the state’s Medicaid program. According to the note, “numerous studies have shown the cost effectiveness of substance abuse treatment in several areas of state government.”
For instance, the California Drug and Alcohol Treatment Assessment found that “every $1 invested in substance abuse treatment,” the National Conference of State Legislatures notes on its Web site, “has a return of $7 in cost savings from reduced health costs, crime, lost productivity, etc.”
“It’s a win-win for the clients and the state,” Kirby says.
Much of the anticipated savings of HB 1015’s substance abuse provision has been based on a 1997 report published by the Washington State Department of Social and Health Services, which, Kirby explains, demonstrated an average savings in medical costs of $4,500 per Medicaid client over a five-year period after implementing a comparable program.
Other studies sing a similar tune.
According to a 1999 study by University of Washington researchers Charles Maynard, Gary Cox, Antoinette Krupski and Kenneth Stark, the “total reimbursement for all Medicaid services decreased by 44% from $5 million in the year prior to discharge to $2.8 million in the year after discharge. Also, individuals (32%) who completed the program were less likely to use costly, acute care services.”
The researchers warn, however, that the study—which compared service utilization for 534 patients prior to and following their participation in a residential treatment program—“was limited by the absence of a control group and post-treatment alcohol and drug use data.”
Colorado’s HB 1015 would provide outpatient, rather than residential, care, but Kirby notes that this can include a vast array of efficacious services. The Arapahoe House, for example, provides a range of treatment options at its seven outpatient clinics throughout the metro area, including everything from multiple, one-on-one visits to case management.
Under HB 1015, Medicaid patients would be able to choose from about 80 different providers.
Kirby says that Coloradans who are in need of help struggle with many different substances, such as alcohol, marijuana, cocaine or methamphetamine.
It’s a “smattering of everything,” he says, though adding that “methamphetamine is really rampant in Colorado”—doubling in incidence each year with more than half of users women.
As for why Colorado is one of the last states to consider such legislation, Kirby speculates that the substance abuse treatment field may not have had “sufficient leverage with the Legislature.”
“It’s been difficult in the past to make any headway,” he says, even with support over the years from legislators such as Romanoff and Sens. Norma Anderson, R-Lakewood, and Bob Hagedorn, D-Aurora.
But Kirby notes a change of tide in recent years and predicts the current General Assembly may be more receptive. Late last month, the House Health and Human Services Committee passed the bill unamended on a vote of 10 to 1, and yesterday the House Appropriations Committee sent it to the Committee of the Whole.
Kirby remains hopeful. “I think it’s going to be successful this year.” 
Rich, L. E. (2005, April 8). Medicaid patients: Drug abuse help may be on its way. Substance abuse treatment may be cost-savings prescription for state. The Colorado Statesman, pp. 1, 9.
