An evaluation of freestanding alcoholism treatment for Medicare recipients

The Health Care Financing Administration (HCFA) and the National Institute on Alcohol Abuse and Alcoholism (NIAAA) conducted a demonstration between 1982 and 1985 to test the feasibility of providing payments for alcoholism treatment services to Medicare and Medicaid recipients in specially selected freestanding facilities. This study of the Medicare part of the demonstration answers two questions: do freestanding facilities save money for Medicare and do their patients have lower health care utilization following initiation of treatment than patients treated in hospital-based facilities? The statistical methodology is a logit and cluster approach. The analysis begins with a logistic regression model to predict the probability of patients seeking alcoholism treatment in either the demonstration (freestanding facility) or hospital-based cohort. The statistically significant variables from logit analysis are then used to form clusters. The health expenditures of freestanding and hospital patients are compared within homogeneous clusters. This study shows that the number of admissions, the average length of stay, and the average monthly health expenditures following the start of treatment are lower for the group treated in the freestanding facilities. The conclusion is that for some persons with alcohol problems, treatment in freestanding facilities is less costly and leads to lower subsequent health care utilization than treatment in hospitals.