Home Publisher's Note Getting the Payors Back in the Game
Publisher's Note
Getting the Payors Back in the Game
October 2007

Our Special Report: Medical Models this month examines the increasing use of more medically oriented modalities in the treatment industry, which up until relatively recently has employed spiritual and psychosocial models almost exclusively in the treatment of addiction.

One of the reasons we believe the adoption of more medically oriented models is so critical for the industry has to do with getting the commercial insurance players back into the game of paying for addiction treatment services.

Payors have been reluctant to pay for treatment under managed care over the past 15 years, after having backed 12-Step-based spiritual models big time during the boom years of the 1980s. Not seeing the outcomes they wanted from the then standard, and expensive, 28-day residential care, insurers shifted their support to outpatient, all the while cutting their contribution to the nation’s treatment bill by two-thirds. Treatment Magazine estimates that if commercial payors had kept their contribution to the treatment industry at the same levels prevailing prior to managed care, that addiction industry revenues would be over one-third higher than they are today. In other words, total annual industry revenues would today be in excess of $30 billion if commercial payor contributions had been kept at pre-managed care levels, instead of the $20 billion or so in annual revenues now registered by the industry.

We believe the increasing use of medical models will prompt the payors to start boosting their contribution, not the least because these models may lead to lower costs combined with better outcomes. And that the medical community is getting more involved in addiction treatment there can be no doubt. After rising slowly 2001 thru 2005, addiction treatment services delivered by doctors in their offices skyrocketed in 2006, with 460,000 people estimated to have received substance abuse care from a doctor. That’s a huge 32 percent jump from 2005, and a very welcome and long overdue development.

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