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Forecasting the Cost of Chemical Dependency Treatment Under Managed Care

The Washington State Study

Technical Assistance Publication Series

15

Financing Subseries, Volume II

Chris Hansen

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Public Health Service
Substance Abuse and Mental Health Services Administration
Center for Substance Abuse Treatment

Rockwall II, 5600 Fishers Lane
Rockville, MD 20857

This publication is part of the Substance Abuse and Mental Health Services Block Grant technical assistance program. All material appearing in this volume except quoted passages from copyrighted sources is in the public domain and may be reproduced or copied without permission from the Center for Substance Abuse Treatment (CSAT) or the authors. Citation of the source is appreciated.

This publication was written under contract 270–93–0004 from the Substance Abuse and Mental Health Services Administration (SAMHSA). Richard Bast and Gayle Saunders of CSAT served as the Government project officers.

The opinions expressed herein are the views of the author and do not necessarily reflect the official position of CSAT or any other part of the U.S. Department of Health and Human Services (DHHS).

• DHHS Publication No. (SMA) 95–3045
• Printed 1995

Preface

This document was commissioned by the Center for Substance Abuse Treatment to provide State alcohol and other drug agencies with background information and advice in using actuarial studies to predict the costs of contracting with managed-care organizations to provide publicly funded chemical dependency treatment services.

Actuarial studies similar to the one described in this report should also be useful to States that are planning changes in funding chemical dependency treatment, including health care reform, expansion of medicaid benefits, and changing mandated insurance coverage for chemical dependency treatment. With a few adjustments, the approaches described herein could be useful for estimating the costs of mental health services as well.

This report relates the experience of one State, Washington, in conducting an actuarial estimate of the cost of chemical dependency treatment. It describes both the basic lessons that the State learned about actuaries and actuarial studies and the policy debates and analysis problems that the State encountered. The report includes a description of actuarial studies in general and Washington's in particular, including the data and calculations used to obtain actuarial estimates and how and when assumptions are employed. The final chapter discusses options and considerations for States that plan to procure such studies themselves.

Included as appendixes are two relevant documents from Washington's experience: the description of the benefit package that the State desired and the final report of the actuary.

Last Updated 11-7-02