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Truven Health Analytics Study Finds Surge in the Share of Medicaid Spending on Hospital-Based Treatment of Mental Health and Substance Abuse

Ann Arbor, MI, Mar. 13, 2013 — Medicaid spending accounted for almost one-quarter of treatment spending for mental health and substance abuse conditions in specialty hospitals or in specialty behavioral health units of community hospitals in 2005, according to a new study from Truven Health Analytics™, formerly the Healthcare business of Thomson Reuters.

The study, Current and Future Funding Sources for Specialty Mental Health and Substance Abuse Treatment Providers, which appears online in Psychiatric Services in Advance this month and in the June 2013 issue of Psychiatric Services, evaluates government and private sources of spending for patients receiving psychiatric and substance abuse treatment from specialty providers. It found that in 2005, almost one quarter of the $29 billion in spending on mental health and substance abuse treatment in specialty hospitals or in specialty behavioral health units of community hospitals came from Medicaid; proportionally, this spending doubled from 11 percent in 1986 to 23 percent in 2005. Over the same period, private insurance spending on mental health and substance abuse treatment in the same specialty hospital settings decreased from 25 percent to 12 percent.

The large Medicaid share comes in spite of federal regulations that generally prohibit Medicaid payments for inpatient treatment of patients ages 22–64 in psychiatric hospitals with more than 16 beds. The research cites an overall increase in Medicaid enrollment, Medicaid managed care waivers, and an increased number of Medicaid eligible children and adolescents treated as the primary reasons for the rising Medicaid share. As a result, both psychiatric hospitals and psychiatric units in community hospitals saw an upswing in financing for behavioral health treatment from Medicaid.

“With the impending implementation of the Affordable Care Act (ACA), understanding how specialty providers are funded will help healthcare policy makers anticipate financing challenges, ” said Katharine R. Levit, director, behavioral health and quality research at Truven Health Analytics. “With the ACA slated to increase Medicaid enrollment, the federal rules governing Medicaid will assume an increased importance for many behavioral health treatment providers.”

This study is the first to report financing of mental health and substance abuse treatment for specific mental health and substance abuse specialty providers. Earlier studies using the same underlying data sets addressed the individual components, but none have provided the intersection of providers and financing. Data for the study came from numerous public data sets and actuarial methods used to estimate spending for treatment by specialty behavioral health providers, including general hospital specialty units; specialty hospitals; psychiatrists; other behavioral health professionals; and specialty mental health and substance abuse treatment centers. These databases are updated in 3-4 year intervals, making the 2005 data set the latest that is currently available to researchers.

To read the complete study in Psychiatric Services, follow this link: http://bit.ly/YnKIDM.

About Truven Health Analytics, part of the IBM Watson Health Business

Truven Health Analytics®, part of the IBM Watson Health™ business, provides market-leading performance improvement solutions built on data integrity, advanced analytics and domain expertise. For more than 40 years, our insights and solutions have been providing hospitals and clinicians, employers and health plans, state and federal government agencies, life sciences companies and policymakers, the facts they need to make confident decisions that directly affect the health and well-being of people and organizations in the US and around the world. The company was acquired by IBM in 2016 to help form a new business, Watson Health. Watson Health aspires to improve lives and give hope by delivering innovation to address the world’s most pressing health challenges through data and cognitive insights.

Truven Health Analytics owns some of the most trusted brands in healthcare, such as MarketScan®, 100 Top Hospitals®, Advantage Suite®, Micromedex®, Simpler® and ActionOI®. Truven Health has its principal offices in Ann Arbor, MI, Chicago, IL, and Denver, CO.


Brian Erni
For Truven Health Analytics
J. Roderick, Inc. Public Relations