New study shows nominal cost of adding substance use disorder services to Medicare

Expanding Medicare coverage would ensure millions of beneficiaries can access lifesaving treatment

RESEARCH TRIANGLE PARK, N.C. — The cost to Medicare of adding substance use disorder (SUD) coverage for residential programs, intensive outpatient programs and licensed and certified counselors would be nearly offset by the savings of expanded treatment, according to a new study conducted by RTI International, a nonprofit research institute, in partnership with the Legal Action Center.

Specifically, according to the study, expanding Medicare coverage of SUD treatment 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;  
• Provide savings of $1.6 billion annually through reduced spending on treating medical conditions caused by untreated SUD and fewer SUD-related hospitalizations and emergency department visits; and
• Result in a net impact on Medicare spending of $362 million per year, or approximately 0.04% of the total Medicare budget. (Total Medicare spending in 2020 was $825.9 billion.)

“Our results are consistent with research in non-Medicare populations demonstrating that SUD treatment results in significant savings,” said Tami L. Mark, Ph.D., a Senior Fellow at RTI and lead author of the study. “Among Medicare beneficiaries, alcohol and drug use disorders can lead to falls and other injuries, dementias, cardiac conditions, infectious diseases, depression and anxiety. Treatment can be lifesaving and restore social, emotional and physical health. However, to be most effective, individuals need access to a full continuum of care that is tailored to their needs.”

Currently, Medicare does not cover all SUD therapies, settings or provider types despite there being an estimated 1.7 million Medicare beneficiaries living with a diagnosed SUD, as concluded by recent, additional RTI research. The same research also found that only 11% of Medicare beneficiaries with SUD received treatment in any given year, citing a lack of SUD insurance coverage and high out-of-pocket costs as key reasons.

“The lack of Medicare coverage for SUD treatment is penny wise and pound foolish. It leaves millions of beneficiaries without adequate treatment of their substance use disorder until their conditions become acute enough to require hospitalization. Medicaid and the VA both cover comprehensive SUD treatment. Why are our nation’s older adults denied the opportunity to receive lifesaving healthcare? 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,” said Ellen Weber, LAC’s Senior Vice President for Health Initiatives.

Read the full study

About the Legal Action Center
The Legal Action Center (LAC) uses legal and policy strategies to fight discrimination, build health equity, and restore opportunity for people with arrest and conviction records, substance use disorders, and HIV or AIDS. LAC seeks to end punitive responses to health conditions like addiction, mental illness, and HIV or AIDS, and to create equitable access to affordable, quality treatment. You can learn more about our Medicare Addiction Parity Project (MAPP), which works specifically to improve and expand access to substance use disorder treatment in Medicare by visiting www.lac.org/major-project/mapp.

About RTI International
RTI International is an independent, nonprofit research institute dedicated to improving the human condition. Clients rely on us to answer questions that demand an objective and multidisciplinary approach — one that integrates expertise across the social and laboratory sciences, engineering and international development. We believe in the promise of science, and we are inspired every day to deliver on that promise for the good of people, communities and businesses around the world. For more information, visit www.rti.org.