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Center for Substance Abuse Treatment. Matching Treatment to Patient Needs in Opioid Substitution Therapy. Rockville (MD): Substance Abuse and Mental Health Services Administration (US); 1995. (Treatment Improvement Protocol (TIP) Series, No. 20.)

  • This publication is provided for historical reference only and the information may be out of date.

This publication is provided for historical reference only and the information may be out of date.

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Matching Treatment to Patient Needs in Opioid Substitution Therapy.

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Chapter 6 -- Cost-Effectiveness of Opioid Substitution Therapy 1

Alcohol and other drug (AOD) abuse is the Nation's number one health problem, accounting for assignificant portion of the increase in healthcare expenditures. The total economic cost of substance abuse to the U.S. economy each year is staggering, with estimates ranging in excess of $238 billion (Institute for Health Policy, 1993). This total includes the direct cost of treatment as well as the opportunity costs or societal costs associated with substance abuse (for example, costs due to lost productivity, illness, and criminal activities).

In 1994, expenditures by Medicaid and Medicare on hospital claims due to AOD abuse and dependence are estimated to reach $27.4 billion. Substance abuse treatment can greatly reduce healthcare costs. It can also greatly reduce costs associated with crime.

This chapter provides a brief discussion of recent studies showing the effectiveness of AOD abuse treatment. An overview of studies measuring the cost-effectiveness of treatment is presented, and the difficulty of designing and conducting research on costs of treatment is discussed. Four methods that have been used to estimate treatment costs are presented, and estimates of the costs of methadone treatment are given. Cost elements that should be collected routinely in order to do a comprehensive and accurate cost analysis are listed. The chapter also includes a brief discussion of the various ways that benefits have been measured. The methods used by New York and Massachusetts to determine costs of their opioid substitution therapy services are presented, and the advantages and disadvantages of these methods are discussed.

The phased model of treatment presented in Chapter 3 can be helpful in making decisions about resource allocations, and the chapter includes a discussion of the types and levels of resources needed during each phase.

For readers who are interested in cost research, Appendix C presents several methodological approaches to consider in designing research that might enhance the AOD treatment field's knowledge base.

One factor that must be emphasized when evaluating the cost-effectiveness of opioid substitution therapy is that the target population is chronically and persistently ill. Chronic illness usually is associated with increased costs per patient. Outcomes in this population are defined differently; other treatment modalities may define positive outcome as the successful completion of treatment and the ability of the patient to remain clean and sober. When evaluating overall effectiveness, a sophisticated approach must be used that addresses the actual delivery of services per patient rather than a narrowly defined outcome.

One factor that must be emphasized when evaluating the cost-effectiveness of opioid substitution therapy is that this population is chronically and persistently ill. Chronic illness is usually associated with increased costs per patient.

In addition, interprogram cost comparisons are rarely true indicators of quality or effectiveness, mainly because there is so much variability among programs and because appropriate psychiatric and medical services are often unavailable onsite. Comparisons are sometimes used by insurers to force providers into lower levels of service delivery, whereas providers should be encouraged to augment and enhance their services. The cost benefit has to be aligned with the long-term improvement of the chronic patient and his or her needs for a range of services. In this sense, it may be effective to compare costs to treat a patient in opioid substitution therapy with the costs of treating the same patient in a different modality, or to refer patients out to several systems (medical, psychiatric, and AOD treatment systems) simultaneously. It may be appropriate for a cost-per-patient rate in a specific region to be used to prevent providers from being discouraged from delivering comprehensive services.

The Effectiveness of Treatment: Recent Reports

Although controversy exists about the methodologies and measures used in outcomes research, there is general agreement that treatment is effective in reducing drug use, decreasing criminal activity, and improving health outcomes (Apsler and Harding, 1991; Institute of Medicine, 1990b; Keeler et al., 1986; McLellan et al., 1983).

The CALDATA Study and the NASADAD Report

As this Treatment Improvement Protocol (TIP) was being prepared for publication, results of an important long-term study on the effectiveness of AOD abuse treatment were published (California Department of Alcohol and Drug Programs, 1994). The 2-year California Drug and Alcohol Treatment Assessment (CALDATA) study followed a rigorous probability sample of the nearly 150,000 persons who received AOD abuse treatment in California in 1992. The sample included patients in a spectrum of treatment modalities, including patients in continuing methadone treatment. The cost of treating the approximately 150,000 participants in 1992 was $209 million, while the benefits received during treatment and in the first year afterwards were worth approximately $1.5 billion.

Thus, for every dollar spent on treatment, more than $7 in future costs were saved. These savings were largely in relation to reductions in criminal activity and in the number of hospitalizations for health problems. For a smaller sample followed through the second year, results have indicated that projected cumulative lifetime benefits of treatment will be substantially higher than the shorter term benefits.

The CALDATA study found that, from before to after treatment, criminal activity declined by two thirds and hospitalizations by one third. Declines of about two fifths also occurred in the use of alcohol and other drugs from before to after treatment was received. Treatment for problems caused by the use of major stimulant drugs (crack cocaine, powdered cocaine, and methamphetamine), which were all in widespread use, was found to be just as effective as treatment for alcohol problems and somewhat more effective than treatment for heroin problems. No differences in treatment effectiveness were found by gender, age, or ethnic group.

In addition to the recent data from California, a substantial body of evidence has been accumulated on the effectiveness of alcohol and other drug treatment programs (Anglin and Hser, 1990; Young, 1994). The National Association of State Alcohol and Drug Abuse Directors (NASADAD) has recently compiled a report that summarizes studies performed in 15 States on the effectiveness of AOD treatment (Young, 1994). Studies examined the effects of treatment on health status, workers' productivity, and criminal behavior. These studies found decreases in hospitalizations ranging from 36 percent in California to 66 percent in Ohio. States averaged an increase of more than 70 percent in the number of persons who were employed after treatment. The proportion of persons who were arrested after treatment dropped dramatically; Iowa showed a 50 percent decrease, and Ohio a 90 percent decrease.

Variation in Costs and Treatment Outcomes

Tremendous variability exists in the types, duration, and costs of treatment. For example, the CALDATA study reported costs per day of treatment in various modalities. The average treatment lasted 95 days (excluding continuing methadone clients). The treatment costs per day were residential, $61.47; social model, $34.41; outpatient drug free, $7.87; methadone continuing, $6.37; and methadone noncontinuing (primarily opiate detoxification), $6.79.

Treatment outcomes vary widely among programs, even among programs that deliver the same types of services. However, studies such as the CALDATA study that have examined a wide range of treatment alternatives, including methadone treatment, have shown that opioid substitution therapy programs have outcomes similar to those of other types of treatment programs. The exception is programs offering detoxification alone, which typically show no long-term benefits.

The CALDATA study showed that for every dollar spent on treatment, more than $7.00 in future costs were saved. These savings were largely in relation to reductions in criminal activity and in the number of hospitalizations for health problems.

However, because the positive effects of treatment often dissipate quickly after the patient leaves the treatment setting, substance abuse treatment may be cost effective only for those who remain in treatment for a substantial time (Anglin and Hser, 1990). Because substance abuse is a chronic condition associated with high recidivism or relapse rates, the findings of cost-effectiveness studies of particular programs are difficult for policymakers to evaluate.

Review of Cost-Effectiveness Studies

Recent Studies

In the last several years, demands for greater treatment capacity for persons with alcohol and drug disorders have increased at the same time that State governments and private insurers have implemented cost constraints. This situation has led to a proliferation of studies on the cost-effectiveness of treatment programs.

In 1991, the National Institute on Drug Abuse published its first technical review on substance abuse financing and services research (National Institute on Drug Abuse, 1991). Included in that publication was a review of the current status of cost-effectiveness analyses (Apsler and Harding, 1991), which cited the difficulties of analyzing cost-effectiveness data. The review pointed out the absence of consensus regarding a definition of substance abuse and dependence, the lack of clarity concerning the goals of treatment, and the differences in interventions used by various programs that employ the same treatment modality. For example, different outpatient methadone programs use different interventions; interventions also differ among outpatient drug-free settings, therapeutic communities, and detoxification programs.

In a review of studies on cost and cost-effectiveness, French and associates (in press) found that most studies used different cost accounting methods, making the results difficult to compare.

The most frequently mentioned studies on the cost-effectiveness of substance abuse programs are those of Harwood and colleagues (1984), Hubbard and associates (1989), and McGlothlin and Anglin (1981b). The findings from these studies support the premise that substance abuse programs have been both cost beneficial to the client in treatment and cost effective in terms of AOD treatment service delivery. In all of these studies, the monetary value of "benefits" to individuals who receive substance abuse treatment has been based on aggregate data, which are then used to estimate individual costs. For example, the cost of crime for each subject is estimated based on national figures developed from the U.S. Department of Justice and the Bureau of Justice Statistics Reports.

Harwood and colleagues (1988) used data from the Treatment Outcome Prospective Study (TOPS) to examine the monetary consequences of substance abuse with respect to crime. TOPS is a longitudinal survey of 11,000 drug abusers in 10 cities, a survey which used a cost methodology developed by Harwood and others (1984). Using national statistics, the methodology estimated dollar costs for three kinds of drug-related crime -- victim costs, criminal justice system costs, and crime career or productivity costs. Using a pre-post study design, criminal activity in the year before and the year after treatment was assessed for patients in residential, outpatient methadone, and outpatient drug-free programs. The results showed that the average benefit per day for all treatment modalities exceeded the average cost of treatment per day.

Because substance abuse is a chronic condition associated with high recidivism or relapse rates, the findings of cost-effectiveness studies of particular programs are difficult for policymakers to evaluate.

The benefit of reduction in criminal activity of those who are opioid addicted is directly tied to length of stay in a treatment program. In a study of six methadone maintenance clinics by Ball and Ross (1991), the average length of patient stay was 4.5 years. When patients dropped out of treatment, most relapsed to drug abuse within 1 year, often returning to previous criminal patterns to support the addiction.

Hubbard and associates (1989) analyzed the costs of 41 substance abuse treatment programs for 11,000 individuals who entered selected programs between 1979 and 1981. Clients in three major treatment modalities were assessed: 1) outpatient methadone maintenance, 2) therapeutic community, and 3) outpatient drug-free programs. Study participants were interviewed at admission, 3 months, 1 year, 2 years, and 3 to 5 years after leaving treatment. The authors concluded, based on self-reports of the clients, that treatment resulted in substantial decreases in the abuse of both opioid and nonopioid drugs. However, very few patients achieved the goal of abstinence. Based on participant interviews, Hubbard and colleagues also found a substantial reduction in crime-related costs. Investigators concluded that these reductions were "at least as large as the cost of providing treatment, with much of the expenditure recovered during the time the drug abuser was in treatment."

The benefit of reduction in criminal activity of those who are opioid addicted is directly tied to length of stay in a treatment program. In one study, when patients dropped out of treatment, most relapsed to drug abuse within 1 year, often returning to previous criminal patterns to support the addiction.

In McGlothlin's and Anglin's study (1981b) of the effects of closing a methadone maintenance program, the social costs incurred in a community where a program was closed were compared with the costs in a comparison community where a drug treatment program continued to operate. Rough estimates were obtained for the costs of treatment, arrest and court processing, jail, probation, forgery, robbery, and welfare. The overall results showed that for males, mean annual costs per subject in the community with the closed program were approximately 17 percent higher than those in the comparison community.

Methods of Estimating Treatment Costs

The majority of cost-effectiveness studies of substance abuse treatment have used one of the following methods, described by French (in press), to estimate the cost of drug treatment programs:

  • Method 1. Identification and summation of all funding sources as an estimate of program costs (National Drug and Alcoholism Treatment Unit Survey [NDATUS], 1993). Although, in a perfect world, revenues should equal expenditures, many resources in these programs may be donated or shared, resulting in an underestimation of real operating costs.
  • Method 2. Calculation of expenditures minus avoided costs or benefits. This is a cost-benefit approach that estimates program treatment costs (including the costs to patients, such as transportation, day care, and so forth) and subtracts the monetary benefits associated with treatment, such as reduced welfare payments, increased wages, and reduced incarceration. Estimates of social benefits such as criminal activity are frequently based on self-reports from participant interviews.
  • Method 3. Calculation of program operating costs with no adjustments for economic costs, such as costs of volunteers, donations, start-up capital costs, opportunity costs, and so forth.
  • Method 4. Financial accounting models using fixed costs, such as capital and depreciation costs, and variable costs, such as those for personnel, supplies, and operating costs. Average cost per client and incremental or marginal costs can be estimated from these data.

In a recent study comparing the cost-effectiveness of standard versus enhanced methadone programs (Bradley et al., 1994; French, in press), a costing methodology developed at Research Triangle Institute (1993) and based on standard accounting procedures was implemented. Using the approach described in method 4, cost data were collected using an instrument known as DATCAP (Research Triangle Institute, 1993), a lengthy cost worksheet that is personally administered by researchers at the program site. The cost methodology focuses on "program cost," as opposed to client or reimburser's cost. Cost information is gathered from budgets, audit reports, expense reports, and other documents, with the costs of shared or donated resources based on market value estimates. Costs are subsequently grouped into categories, such as buildings and equipment, rent and maintenance, labor, contracted services, and other variable costs.

These program cost estimates, based on 1990 dollar figures, resulted in an average annual treatment cost per client for standard methadone treatment of $12 per day or $4,002 annually, which is double the amount Harwood and associates (1988) estimated based on 1979 figures. Labor, as expected, was the most costly component, ranging between 43 percent and 59 percent of total costs. The estimates by French (in press) are similar to figures derived from the National Drug Services Research Survey (1990); a median cost per slot for "all" types of drug programs was estimated to be $4,600 per year (Horgan, 1991). Opioid substitution therapy is generally thought to be the least expensive treatment modality, although people generally remain in opioid substitution therapy programs longer than in outpatient drug-free treatment. However, it should be kept in mind that costs differ for different treatment modalities and cost comparisons across modalities should be viewed with caution.

Toward Standardized Methodologies

One of the major obstacles in drawing valid conclusions about the cost effectiveness or cost benefit of substance abuse treatment programs is the failure of investigators to use standard protocols such as DATCAP for identifying cost elements, collecting data, and constructing program cost estimates. Even when cost elements are standardized, the methods for estimating items such as capital and depreciation costs differ considerably across programs, resulting in great variability in estimates. Additionally, programs within a large organization that share resources or use donated or volunteer services often fail to accurately account for these expenditures. Even after items are standardized, collected, and categorized, controls or adjustments must be made for differences across locales in wages, variable demand, program case mix, and so forth.

Based on 1990 dollar figures, the average annual treatment cost per client for standard methadone treatment was estimated to be $12 per day or $4,002 annually, which is double the amount Harwood and associates estimated based on 1979 figures.

The following is a list of cost elements that should be collected routinely in order to do a comprehensive and accurate cost analysis:

  1. Program Revenue:
    • Revenues should be categorized by source, for example, Medicaid, Medicare, Department of Veterans Affairs, self-pay, Federal block grant, State revenues, commercial insurers.
  2. Program Expenditures:
    • Full-time equivalent (FTE) staff average salary and fringe benefits, including volunteer hours
    • Consultant and or contracted service costs
    • Building costs (square footage), percentage of building used by program, estimated rent if donated or shared
    • Program supply costs
    • Equipment costs (such as furniture, machinery, and computers)
    • Pharmacy and laboratory costs
    • Other costs.
  3. Program Outputs:
    • Average client caseload, including some measure of case mix
    • Percentage of staff hours in direct treatment
    • Program capacity
    • Types of problems treated (substance abuse, psychiatric, medical, and so forth).

Effectiveness Measures

Although a major focus of cost-effectiveness studies is monetary issues, attention must also be paid to identifying and defining the effectiveness or benefit measures that result from substance abuse treatment. The least expensive method of treatment is not always the most cost effective. Since clinical outcomes research has been a primary focus of the substance abuse research community for decades, this area is better defined and measured than research in the area of program costs. Instruments for assessment and patient evaluation have been used extensively for many years and are found to be reliable.

As long as the outcome indices are measured in the same way and interrater reliability is ensured, a number of effectiveness indices are appropriate for cost-effectiveness analyses. The indices most often used in prior studies are level of reduction in substance use, increase in employment and number of days worked, reduction in criminal activity and incarceration, and more appropriate use of the healthcare system. Although no single measure can encompass the total impact of a program intervention, multiple indices can be examined and used to identify cost-effective programs. More will be said about the multidimensional nature of the outcomes measures in the next section.

Directions for Future Research

Despite all of the difficulties associated with cost-effectiveness analyses, there is no reason why comparable cost and outcomes information on a program level cannot be collected and used to develop comparable cost-effectiveness ratios. However, since substantial variability is known to exist among substance abuse treatment programs with respect to organizational structure, financial funding streams, manpower mix, cost of care, and efficacy of treatment (Wheeler et al., 1992), the characteristics of cost-effective programs will have to be examined to determine whether findings can be generalized.

More work must be done on the characteristics of programs and the features or best practices that foster cost-efficient and cost-effective treatment outcomes. Studies that investigate the characteristics of programs that provide clients with adequate care in the least costly manner while controlling for differences in services and populations treated are at the core of the next research frontier area. Another TIP in this series, Developing State Outcomes Monitoring Systems for Alcohol and Other Drug Abuse Treatment, examines issues involved in determining what characteristics of programs contribute to better treatment outcomes.

Appendix C presents a discussion of several methodological approaches for readers who are interested in designing and conducting research on costs of treatment.

More work must be done on the characteristics of programs and the features or best practices that foster cost-efficient and cost-effective treatment outcomes.

Allocation of Resources

Chapter 3 of this TIP describes a phased model of treatment in opioid substitution therapy. When treatment is conceptualized as occurring in phases, resources can be identified and allocated according to the type and intensity of services needed during each phase. Knowledge of the distribution of the patient population in the various treatment phases within an opioid substitution therapy program is also helpful in making resource allocation decisions. However, knowledge of the complexity of the patients' associated psychiatric, medical, social, and family problems is crucial to this decisionmaking. For example, one opioid substitution therapy program may treat fewer patients than another program but may need more resources because patients in the program have multiple associated problems, such as human immunodeficiency virus (HIV) disease or severe psychiatric problems. Many of the decisions that are made about program resources depend upon the type and severity of problems presented by the patient population in treatment.

Resource Allocation During the Acute Phase

The acute phase of treatment requires a concentration of resources to achieve stabilization of the range of problems related to drug use, as well as psychiatric, medical, family-social, and other problems. Resources needed in these areas during the acute phase include

  1. Comprehensive medical services:
    • Laboratory, including urine testing
    • Increased visits with medical staff (physicians, nurses)
    • Inpatient hospitalization for medical or surgical procedures
    • Increased use of pharmacy services.
  2. Increased psychiatric services:
    • Assessment and diagnosis
    • Pharmacotherapy
    • Psychotherapy
    • Case management.
  3. Increased substance abuse counseling services:
    • Increased individual time with therapist or counselor
    • More frequent walk-in or unscheduled appointments
    • Orientation of patients to the opioid substitution therapy treatment program.
  4. Administrative costs:
    • Increased recordkeeping by program staff
    • Increased attention to patient's adjustment to clinic setting and clinic rules.
  5. Other program resources:
    • Assessment and treatment planning by counselor
    • An increase in the amount of time spent referring patients to other human service agencies
    • Multidisciplinary involvement of program staff, for example, by social workers and psychologists in preparing referrals and following up on patient's contacts.

When treatment is conceptualized as occurring in phases, resources can be identified and allocated according to the type and intensity of services needed during each phase.

The mix and level of medical and psychiatric services needed by patients in the acute phase varies as a function of the population served. Some patients are sicker than others and may have a proportionally greater need for ancillary services, such as assessment and treatment for HIV or tuberculosis (TB). These medical and psychiatric services frequently include laboratory work and more frequent visits with physicians and nurses. For the first few days in the acute phase, patients may require as many as two visits daily with medical staff until the acute phase or crisis has passed. In addition, the patient is more likely to need surgical, inpatient hospital, and other acute medical or psychiatric care services and ancillary medication. Increased counseling services in the acute phase include more frequent unscheduled appointments.

More time is spent by counseling staff in getting to know patients, orienting them to the clinic's policies and procedures, reinforcing specific rules, and managing acute problems and referrals. Developing a sense of trust and working with the patient to define treatment goals requires spending increased amounts of time with patients. Increased recordkeeping is also needed in the acute phase because of the significant amount of documentation required in terms of methadone dosage adjustments and stabilization of medical and psychiatric conditions.

During the acute phase, a high level of consultation time is sometimes required with other agencies that provide medical, psychiatric, social, or other services that may not be available onsite to patients in opioid substitution therapy programs. Some examples of offsite services are referrals to primary health clinics that treat patients with HIV or TB, and referrals to housing agencies or mental health services. Psychosocial assessments may require multidisciplinary involvement by members of the treatment team, including social workers and psychologists. Patients with legal or financial problems also may need help managing their problems in these areas. Time spent on treatment planning and coordinating responses to a variety of treatment needs during a patient's admission to the program may be extensive and require input from counseling, social work, legal, and medical staff, who are not always onsite.

Resource Allocation During the Rehabilitation Phase

In the rehabilitation phase, efforts should be directed toward continuing the interventions started during the acute phase at appropriate levels, fine tuning, and offering an array of adjunctive resources such as education and vocational training. During this phase, it may periodically be necessary to return to providing services associated with the acute phase.

More resources must be put into case management in the early part of the rehabilitation phase to ensure that patients' needs are being addressed in each domain. Weekly counseling sessions at the beginning of this phase may gradually decrease to twice a month and eventually to monthly when indicated by the patient's progress and changing needs. A reduced level of resources in the later stages of the rehabilitation phase is appropriate, with some services referred out and others provided onsite as appropriate. However, some patients need ongoing medical, psychiatric, or other services in all phases of treatment.

More resources must be put into case management in the early part of the rehabilitation phase to ensure that patients' needs are being addressed in each area of their lives.

Resource Allocation During Supportive Care and Medical Maintenance

Patients in these later phases of opioid substitution therapy treatment, by definition, do not need intensive contact with treatment staff, although periodic checks on progress and counseling aimed at sustaining earlier treatment gains are important. Attention to stable but ongoing medical, psychiatric, family-social, and other problems should be continued. Exacerbations of the addiction or of one or more associated problems usually require a return to a more intensive (i. e., acute or rehabilitation) treatment phase. When intensive treatment is resumed, patients often respond quickly and are able to return to a less intensive phase of treatment.

Resource Allocation During the Tapering And Readjustment Phase

Treatment services typically intensify during tapering, but they vary according to individual patients' needs. More frequent counseling and supervision such as once or twice weekly sessions and daily check-ins with a counselor or nurse may be indicated. In general, however, counseling services are not as intensive as in the acute phase. Decisions concerning the frequency and intensity of services must be made according to the treatment providers' clinical judgment.

Ideally, readjustment following completion of detoxification requires an increase or change in the type of resources to help the patient deal with the many issues often involved in remaining successfully drug free over an extended period of time. As stated earlier, patients may choose to enter an inpatient rehabilitation program at the start of this phase, followed by a more prolonged period of outpatient followup therapy.

In practice, the use of associated program resources is sometimes minimal during the readjustment phase. Many patients discontinue clinic visits or contact with any formal treatment program after they complete tapering. If the patient remains in contact with the opioid substitution therapy program, the readjustment phase mainly involves counseling visits, depending on the patient's needs. If a patient is on continuing adjunctive medication such as naltrexone, weekly visits (at a minimum) will most likely be needed. If the patient elects to follow methadone detoxification with a period of intensive rehabilitation, treatment intensity is likely to be increased for the first 2 to 12 weeks, followed by a less intense period of treatment and relapse prevention. In such cases, the rehabilitation treatment is similar to that for persons seeking recovery from addiction to cocaine or alcohol and, in fact, therapy could be provided in a setting where patients with all these problems are being treated, rather than in an opioid substitution therapy program.


The use of a phased model of opioid substitution therapy allows treatment programs to plan for and cost efficiently allocate resources and to tailor resources to the needs of specific patient populations. With the full implementation of the phased model of treatment, it becomes possible to estimate the proportion of patients within the various phases and allocate resources accordingly. Each patient's needs, however, rather than the phases themselves, should dictate the specific course of treatment. The phases should simply facilitate the natural course of the recovery process.

The use of a phased model of opioid substitution therapy allows treatment programs to plan for and allocate resources and to tailor resources cost-efficiently to the needs of specific patient populations.

The full implementation of this phased model within a treatment system may permit cost sharing of resources during the various phases so that resources are used in the most efficient manner. For instance, a 24-hour medical facility may serve as a resource to patients from several opioid substitution therapy programs that have patients in the acute phase, and a vocational training and education center may serve as a resource for patients from several programs who are in the rehabilitation phase. As this model evolves, each component must undergo critical evaluation from the perspective of patient outcome, cost-effectiveness, and quality improvement so that its advantages and shortcomings can be clearly documented.

Program Cost Issues for Administrators and Program Planners

Staffing Patterns

The largest cost component of opioid substitution therapy programs is personnel. The staffing patterns of methadone maintenance programs may be regulated either by the State or by contract. These standards are usually expressed in the number of full-time-equivalent staff members per number of patients in the program. For example, the number of physicians, registered nurses, pharmacists, LPNs, and substance abuse counselors may be specified. In addition, overhead costs of administrative and support service staff, as well as the cost of laboratory, pharmacy services, and facility maintenance staff are figured into the cost per patient.

Services Other Than Substitution Therapy

Opioid substitution therapy programs have expanded their scope in order to address the crises of ill health and poverty that often accompany opioid addiction. Because of the high incidence of poor health and infectious disease in injecting-drug-using populations, basic healthcare services are now often provided onsite. The provision of onsite healthcare services in opioid substitution therapy clinics has been shown to be a more effective public health intervention than referral for primary care outside of the clinic (Umbricht-Schneiter et al., 1994).

Federal Block Grant regulations require opioid substitution therapy programs to give priority in providing services to certain populations of injecting drug users (for example, pregnant women) or those at risk of transmitting HIV or TB. Additional staff for HIV counseling, referral, and treatment are sometimes hired by substitution therapy programs. Often, these ancillary staff members are paid through special Federal or State grant funds, which are not figured into the reimbursement rate for opioid substitution therapy. In addition, opioid substitution therapy programs are increasingly providing onsite case management of medical and social services for clients.

Calculating Treatment Costs: Two Examples

New York and Massachusetts provide examples of how costs for opioid substitution therapy programs are calculated. Each State has a commission or State authority in charge of rate setting; in New York, the authority is tied to a statewide healthcare financing mechanism. In Massachusetts, the authority is the Massachusetts Rate Setting Commission (RSC). Included in RSC's authority is the setting of rates for substance abuse treatment services that are not acute inpatient services.

New York has enacted Medicaid managed care and employs a Certificate of Need process that determines rates using a Diagnostic-Related Group (DRG) methodology in which costs are tied to treatment for a particular diagnosis. New York's Medicaid rate for opioid substitution therapy services is aggregated. This aggregation means that the unit cost per patient per week reflects the cost for all services available to the patient in the program, including the various costs for providing the methadone dose and the additional costs for providing counseling and other services.

On the other hand, Massachusetts has an unaggregated rate for opioid substitution therapy. Under this arrangement, there is one set charge for all services that are considered to be medical, or connected to methadone dosing, and a second, separate charge for counseling services.

Opioid substitution therapy programs have expanded their scope in order to address the crises of ill health and poverty that often accompany opioid addiction. The provision of onsite healthcare services in opioid substitution therapy clinics has been shown to be a more effective public health intervention than referral for primary care outside of the clinic.

Cost Elements

Currently, the State of New York reimburses methadone treatment providers at $100 per week per Medicaid patient. This rate is based on the following cost elements

  • Urine drug testing
  • Dispensing of methadone
  • Medical supervision of dosing process and ordering laboratory tests
  • Annual physical examinations
  • Preparation and monitoring of treatment plans
  • Maintenance of patients' medical histories
  • Prescribing methadone dosage
  • Counseling as prescribed in the treatment plan
  • Maintenance of records
  • Physician services, nursing services, therapist services, and technician services
  • Nutrition services
  • Health education services
  • Psychosocial services
  • Care coordination services (case management).

The Massachusetts Rate Setting Commission currently sets the cost per day per patient at $9.61 ($67.27 per week). The amount includes costs for all of the medical service units listed below in calculating a cost per day for providing a dose of methadone:

  • Medical assessment, including limited physical examination
  • Laboratory tests
  • HIV risk assessment
  • Medication (dosing)
  • Medication dispensing
  • Drug screening
  • Medical case management
  • Assessment of client status, treatment planning, and periodic reassessment of treatment plans
  • Arranging for primary care, home care, hospitalization, and consultation with other medical care providers
  • Interventions for health maintenance and risk reduction, including treatment compliance counseling and nutrition maintenance, HIV risk reduction, and counseling about other chronic illnesses.

As described above, Massachusetts has an unaggregated rate, and the cost per patient for providing outpatient counseling services is calculated separately. The RSC has set the following rates for various types of counseling service units. These services are the same as those provided for all other substance abuse counseling programs:

  • Individual counseling, $51.08 per hour
  • Group counseling, $19.88 per hour
  • Couples/family counseling, $61.32 per hour.

It should be noted that ongoing treatment for psychiatric and medical conditions by appropriately trained personnel is not part of either reimbursement system. Were these services to be charged to the programs with onsite delivery or by close affiliations and networks, the overall costs of the programs would increase. However, patient compliance increases when these services are readily available, and overall healthcare costs may decrease because of reductions in emergency room visits and unscheduled inpatient care.

Advantages and Disadvantages of the Two Approaches

There are some benefits and drawbacks to the methods used by each State in establishing the reimbursable rate for opioid substitution therapy services. The aggregate rate permits smooth functioning of opioid substitution therapy programs, with no peaks and valleys in funding, while making time services (mainly AOD treatment services) available to all patients based on need. Including costs for all elements of treatment in one rate, however, may make it difficult for programs to know their costs based on a phased treatment model or to cost out the elements of treatment for patients with particular needs.

An unaggregated reimbursement rate offers much more control for the program and the State in cost containment. Since budgeting in Massachusetts is based on capitation, with Federal and State funds folded in, patient mix is the key to program costs. Programs are able to design a service package for each client based on budget and contract allocations. With an unaggregated rate, programs have more flexibility in developing a budget based on a phased approach. Not every patient will need $4,000 a year, for example, for opioid substitution therapy treatment. The costs will vary by program and will be based on the patient's needs. Some patients will need more counseling than others, and therefore one program may budget for more billing in counseling services than another program. If a program has more patients in the supportive care phase of treatment, then counseling costs will probably be less.


Resources for providing effective opioid substitution therapy are limited. In the national arena, recent debates about healthcare reform have drawn attention to improving the delivery of all types of healthcare services, including substance abuse treatment, and to making these services more accessible and more effective while holding down costs. Increasingly, under managed care, service providers will compete for resources. Programs must pay detailed attention to costs and to refinement of the provision of services so that the most appropriate interventions are provided for each patient. Creating cost-effective programs and matching patients to treatment services share these goals. An important factor in estimating costs is determining the costs to the overall healthcare system that can be saved by delivering readily available psychiatric and medical services. This strategy is consistent with patient-treatment matching and efficient service delivery.



1. Parts of this chapter were written for the consensus panel by Aileen B. Rothbard, Sc.D., and Arie P. Schinnar, Ph.D., of the University of Pennsylvania. The chapter focuses on cost issues in methadone programs only, since cost-effectiveness research on levo-alpha-acetyl methadol (LAAM) is still being conducted.


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