Substantial costs saddle SMI beneficiaries

According to a new series of data briefs prepared by Avalere Health and released by the SCAN Foundation, seniors enrolled in traditional Medicare who suffer from severe mental illness (SMI) and substance abuse disorder (SUD) cost the program an average of five times more than those without SMI in 2010.

Average cost per beneficiary $43,792 for beneficiaries aged 65 and older with SMI and SUD compared to $8,649 for the average beneficiary aged older than 65. Fee-for-service Medicare fully covers inpatient stays for SMI and SUD, but only provides partial coverage for outpatient behavioral care and psychotherapy.

The research, based on 2010 Medicare claims data, showed that seniors with SMI had more complex care needs, as more than half (53 percent) of patients with SMI had three or more chronic conditions, compared with only 28 percent of seniors without SMI.

“Medicare beneficiaries with SMI, and especially those with both SMI and SUD, require high utilization of medical services, and the costs of care for beneficiaries with SMI/SUD increase with the number of chronic conditions,” the brief noted. “Given the high prevalence of chronic conditions among beneficiaries with SMI, this high spending population may provide a promising opportunity to reduce costs through more cost-effective and better coordinated physical and behavioral healthcare.”

The reasons for the significantly higher costs of care for this population are apparent when examining the data. Those with SMI use more inpatient services than those without SMI and are hospitalized nearly three times as often. In addition, more than 80 percent of seniors with SMI had a hospital stay during the year.

In 2010, senior Medicare beneficiaries with SMI were nearly 1.7 times more likely to be readmitted after a hospital stay than those without SMI. Both dual eligibility and the presence of SUDs increased the readmission rate – 37 percent of dually eligible seniors with SMI and SUD were readmitted for any cause in 2010, compared to 13 percent of Medicare-only seniors without SMI and SUD.

According to the Avalere brief, the data paints a picture of the complexities of caring for seniors with SMI and SUD, while also suggesting ways the care of this population can be better managed to improve the care and significantly reduce their costs.

“Policymakers looking toward managed care as a way to control costs should acknowledge the complexities of caring for beneficiaries with SMI and ensure that providers and payers have incentives to coordinate and integrate all necessary care services,” the report noted. “These goals could potentially be achieved through specialized case management services, residential treatment programs, and/or the co-location of physical and behavioral health providers.”