S Chen, Health Economics Resource Center; TH Wagner, Health Economics Resource Center; PG Barnett, Health Economics Resource Center

Objectives: The VA substance abuse treatment programs have experienced a dramatic policy shift from inpatient to outpatient treatment in the last decade. Changes in utilization and activities of specialized substance abuse services have been reported previously, but its effect on total VA spending has not been considered. This study determined total VA expenditures for substance abuse treatment and estimated the over-time cost per VA user for substance abuse treatment between 1993 and 1999.

Methods: Substance abuse treatment was divided into three categories: inpatient, residential, and outpatient. Utilization information was drawn from the Patient Treatment File (PTF) and the Outpatient Patient Clinic (OPC) file. Data on expenditures were obtained from the VA Cost Distribution Report (CDR). We used the days of stays and the number of stays as our measures of volume of inpatient and residential service, while we used a "stop" (visit) as our measure of volume of outpatient services. To estimate the annual average cost for substance abuse treatment, we matched the costs recorded in the CDR to the utilization reported in PTF and OPC for each fiscal year (1993-1999). Furthermore, we estimated the over-time cost per VA use for substance abuse treatment by integrating the information on total amount of cost, total number of unique patients treated, and total volume of services for substance abuse treatment in each fiscal year.

Results: The amount spent on substance abuse treatment in 1999 dollars declined by 41% from $597 million in 1993 to $351 million in 1999. Measured as a percentage of VA health expenditures, expenditures for specialized substance abuse care declined sharply from 4.2% in 1993 to 2.3% in 1999. Concurrent with this declining trend, specialized inpatient substance abuse treatment expenditures declined 80.5% between 1993 and 1999, while residential care and outpatient care increased 133% and 52% respectively. During the study period, estimated inpatient cost per VA user for substance abuse treatment declined from $220 to $33. In contrast, estimated residential cost per user increased from $19 to $30. Estimated outpatient cost per individual remained approximately $50.

Conclusions: There was a substantial decline in inpatient substance abuse treatment and in the proportion of resources devoted to substance abuse care between 1993 and 1999. The annual rate of growth of substance abuse treatment expenditures has lagged behind that of other health care services within VA.

Impact: Further research is needed to find the effect of declining resources for substance abuse treatment in VA on veterans' access to care, outcome, and utilization for VA mental health and medical care programs.