Depatiment of Health and Human Sefices 
OFFICE  OF 
INSPECTOR  GENERAL 
MEASURING  DRUG  ABUSE 
TREATMENT  COSTS 
MANAGEMENT ADVISORY REPORT  OFFICE  OF  INSPECTOR  GENERAL 
The  mission of the  Office of Inspector  General  (OIG),  as mandated  by Public  Law 95-452, as 
amended,  is to protect  the  integrity  of the  Department  of Health  and Human  Services (HHS) 
programs  as well as the  health  and welfare  of beneficiaries  served  by those  programs.  This 
statutory  mission is carried  out  through  a nationwide  network  of audits,  investigations,  and 
inspections  conducted  by three  OIG  operating  components:  the  Office of Audit  Services, the 
Office of Investigations,  and the  Office of Evaluation  and Inspections.  The  OIG  also informs 
the  Secretary  of HHS  of program  and management  problems  and recommends  courses  to 
correct  them. 
OFFICE  OF AUDIT  SERVICES 
The  OIGS  Office of Audit  Services  (OAS)  provides  all auditing  setices  for HHS,  either  by 
conducting  audits with its own audit  resources  or by overseeing  audit work done  by others. 
Audits  examine  the  performance  of HHS  programs  and/or  its grantees  and contractors  in 
carrying out  their  respective  responsibilities  and are intended  to provide  independent 
assessments  of HHS  programs  and operations  in order  to reduce  waste,  abuse,  and 
mismanagement  and to promote  economy  and efficiency throughout  the  Department. 
OFFICE  OF  INVESTIGATIONS 
The  OIGS  Office of Investigations  (01)  conducts  criminal,  civil, and administrative 
investigations  of allegations  of wrongdoing  in HHS  programs  or to HHS  beneficiaries  and of 
unjust  enrichment  by providers.  The  investigative  efforts  of 01  lead to criminal  convictions, 
administrative  sanctions,  or civil money  penalties.  The  01  also oversees  State  Medicaid  fraud 
control  units which investigate  and prosecute  fraud  and patient  abuse  in the  Medicaid  program. 
OFFICE  OF EVALUATION  AND  INSPECTIONS 
The  OIGS  Office of Evaluation  and Inspections  (OEI)  conducts  short-term  management  and

program  evaluations  (called  inspections)  that  focus on issues of concern  to the  Department,

the  Congress,  and the  public.  The  findings and recommendations  contained  in these  inspection

reports  generate  rapid,  accurate,  and up-to-date  information  on the  efficiency, vulnerability,

and effectiveness  of departmental  programs.

OEIS Atlanta  Regional  Office staff prepared  this report  under  the direction  of Jesse  J.

Flowers,  Regional  Inspector  General,  and Chris Koehler,  Deputy  Regional  Inspector  General.

Principal  OEI  staff included:

ATLANTA  HEADQUARTERS

Jim Wilson  Ruth  Folchman

Jacqueline  Watkins

Betty  Apt

To obtain  a copy of this report,  call the Atlanta  Regional  Office at (404) 331-4108.
 Department  of Health  and Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
MEASURING  DRUG  ABUSE
TREATMENT  COSTS
MANAGEMENT  ADVISORY REPORT 
NOVEMBER  1992  0EI-04-91-00430
 EXECUTIVE  SUMMARY 
PURPOSE 
To  show how effectively  the  Alcohol,  Drug  Abuse  and  Mental  Health  Administration 
measures  costs for drug  abuse  treatment. 
BACKGROUND 
Public  funding  of drug  abuse  treatment  programs  is largely  the  responsibility  of 
individual  localities  and  States.  Most  Federal  funding  for drug  abuse  treatment  has 
been  provided  by the  Alcohol,  Drug  Abuse  and  Mental  Health  Administration 
(ADAMHA).  At  the  time  of our  review,  ADAMHA  was undergoing  an extensive 
reorganization,  and  effective  October  1, 1992, was replaced  by the  Substance  Abuse 
and  Mental  Health  Services  Administration  (SAMHSA).  ADAMHA  reorganized  to 
better  distinguish  its dual  service  and  research  missions  by focusing  on treatment  and 
services  through  SAMHSA  and  shifting  research  activities  to the  National  Institutes  of 
Health  (NIH).  Throughout  the  repo~  we will refer  to ADAMHA  instead  of 
SAMSHA  since  the  review was conducted  prior  to the  effective  date  of the 
reorganization. 
In  1981, ADAMHA  changed  its primary  funding  method  from  categorical  grants  to 
block  grants.  The  funds  were  provided  through  the  Alcohol,  Drug  Abuse  and  Mental 
Health  services  (ADMS)  block  grant  program.  Block grants  allowed  States  greater 
flexibility and  required  less reporting  than  categorical  grants.  Under  the  block  grant 
program,  States  were  not  required  to furnish  data  such  as costs of drug  abuse 
treatment.  With  the  recent  reorganization,  the  block  grant  will be  split  into  two 
separate  grants:  one  for mental  health  services  and  one  for substance  abuse  treatment 
and  prevention  services. 
Reliable  cost data  is needed  so that  decision-makers  can  plan  effective  treatment 
programs.  Accordingly,  Federal  legislation  was passed  in 1988 which increased 
ADAMHAs  data  ccjllection requirements  and  States  block  grant  reporting 
requirements  to correct  ADAMHAs  lack  of drug  abuse  treatment  cost  data. 
FINDINGS 
ALMMEL4  is required to collect drug abuse treatment  costs. 
The  Anti-Drug  Abuse  Act  of 1988 (P.L.  100-690) amended  title  V of the  Public 
Health  Service  Act  to require  ADAMHA  to collect  costs on different  drug  abuse 
treatment  modalities.  ADAMHAs  data  collection  system does not provide  reliable data for  measuring  drug 
abuse  treatment  costs. 
ADAMHAs  three  major  sources  of data  on drug  abuse  treatment  - the  State  Alcohol 
and  Drug  Abuse  Profile  (SADAP),  the  National  Drug  Abuse  and  Alcoholism 
Treatment  Unit  Survey  (NDATUS)  and  Drug  Abuse  Services  Research  Survey 
(DSRS)  - are  flawed  in their  cost reporting  and  limit the  completeness,  accuracy  and 
relevancy  of cost  data.  The  data  sources  do not  distinguish  between  reimbursement 
and  costs,  include  indirect  costs and  relate  cost data  to services  provided. 
RECOMMENDATIONS 
Ultimately,  ADAMHA  should  obtain  precise  costs  on the  various  drug  treatment 
programs  it supports,  Without  such cost data,  the  Departments  ability to  assess, plan 
and  budget  effective  treatment  programs  is limited.  However,  ADAMHA  has not 
required  States  and  localities  to furnish  drug  abuse  treatment  cost  data.  Accordingly, 
we recommend  that  ADAMI-IA 
1.	 Aggressively  continue  to incrementally  build  a system  for measuring  drug  abuse 
treatment  costs. 
Such  data  is essential  for planning  and  budgeting  effective  drug  abuse 
treatment  services.  To  assure  that  reliable,  useable  cost data  is available, 
ADAMHA  should,  as part  of its ongoing  efforts  to establish  and  clearly  define 
appropriate  drug  abuse  treatment  protocols: 
a)	 identify  in accordance  with commonly  accepted  accounting  principles,  all 
indirect  and  direct  cost components  of various  drug  abuse  treatment 
protocols; 
b)	 develop  cost  standards  for the  different  types  of drug  abuse  treatment 
protocols; 
c)	 identify  and  use  alternative  methods  for obtaining  reliable  drug  abuse 
treatment  costs; 
d)	 aggregate  and  summarize  provider  cost  data  to establish  ranges  and 
baselines;  and 
e)	 periodically  veri&  cost data  collected  to assure  its reliability  (the  cost of 
such validation  could  be  limited  through  use of sampling  techniques). 
ii  2.	 As a condition  of grant  award,  require  that  drug  abuse  treatment  research  and 
demonstration  grantees  who perform  clinical  effectiveness  studies  use Federal 
standards  for collecting  treatment  cost data. 
ADAMHAs  Office  for Treatment  Improvement,  the  National  Institute  on Drug

Abuse,  and  others  are  aware  of the  problems  created  by lack  of reliable  drug  abuse

treatment  costs and  they  have  remedial  initiatives  underway.

COMMENTS

We  did not  receive  written  comments  from  the  Public  Health  Service  (PHS).

However,  in commenting  orally, ADAMHA  staff agreed  with  the  findings,  but  stressed

that  grantees  lack  capacity  to capture  cost data.  We  did receive  written  comments

from  the  Assistant  Secretary  for Planning  and  Evaluation  and  the  Counsel  to the

Secretary  for Drug  Abuse  and  Policy.  They  agreed  that  ADAMHA  should  continue

efforts  to improve  measurement  of drug  abuse  treatment  costs.  However,  the  Counsel

to the  Secretary  did not  believe  that  all grantees  performing  clinical  effectiveness

studies  should  be  required  to collect  treatment  cost data.  We  have  clarified  that  we

are  not  recommending  this, but  rather  that  those  who do collect  cost data  should  use

Federal  standards,

... 
ul  TABLE  OF  CONTENTS

EXECUTIVE  SUMMARY 
~oDu~oN  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..s1 
00.=--5

mugs  . . . . . . . . . . . . . . . . . . .+ . . . . ..  .  .  .  oooo 
ADAMHAs  Requirements  for Data  Collection  . . . . . . . . . . . . . . . . . . . . . . . . 5

ADAMHAs  Data  Collection  System  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...5

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

E~NO~  . . . . . . . . . . . . . . . . . . . . . . . . . . . ..        .  O--$  9

APPENDIX  k~W~ONDH  REPORT  . . . . . . . . . . . . . . . . . . ..  A-l  INTRODUCTION

PURPOSE 
To  show how effectively  the  Alcohol,  Drug  Abuse  and  Mental  Health  Administration 
measures  costs for drug  abuse  treatment. 
BACKGROUND 
Evoiktion  of Dug  11-eatrnentBqpuns 
Drug  abuse  treatment  programs  have  evolved  with changes  in types  of drugs  used, 
composition  of drug  abuser  populations,  and  definitions  of drug  abuse  and  addiction. 
In the  early  1900s, drug  abuse  treatment  was directed  largely  at cocaine  and  opium 
abusers  with  most  treatment  provided  in medical  settings.  Between  1910 and  1920, 
public  perception  of drug  abuse  shifted  from  treatment  of drug  abuse  as an illness  to 
punishment  of drug  abuse  as a crime.  Enactment  of the  Harrison  Narcotic  Act  in 
1914 signalled  a change  in approach  to treatment  of addiction  by attempting  to control 
the  sale  of drugs  defined  as narcotic.  The  U.S. Supreme  Court  decisions  in 1914 and 
1916 restricted  physicians  authority  to prescribe  heroin  for addicts.  By 1923, the  last 
public  maintenance  clinics for heroin  addicts  had  closed.  Thereafter,  little  change 
occurred  until  the  1960s. 
Throughout  the  1950s and  1960s, drug  addiction  incidence  increased.  During  the 
1960s, treatment  practices  changed  and  medical  treatment  again  became  the 
predominant  method  of coping  with drug  abuse.  For  example,  the  Public  Health 
Service  opened  treatment  hospitals  for heroin  addicts  in Kentucky  and  Texas.  Most 
treatment  programs  that  began  in the  1960s focused  on abusers  who used  only heroin. 
In the  1970s, methadone  maintenance  and  therapeutic  treatment  communities  were 
used  successfully  for heroin  addicts.  However,  as drugs  such as cocaine  and 
amphetamines  were  recognized  to cause  dependency,  a new approach  to treatment 
was adopted  -- outpatient  drug-free  programs  with emphasis  on individual  counseling. 
As a result,  Federal,  State  and  local government  funding  increased.  Private  funding 
for drug  abuse  treatment  also increased  in the  late  1970s and  1980s as coverage 
became  available  by private  health  insurance  programsl. 
From  the  1980s to the  present,  Federal  funding  has increased  both  for treatment  and 
prevention  (enforcement  and  education).  Private  funding,  along  with State  and  local 
governments,  continued  to pay for most  drug  abuse  treatment.  In recent  years,  private 
coverage  has begun  to decline  as insurance  cost containment  programs  reduced 
coverage  allowances  for drug  abuse  treatment. 
1
 Generally  Accepted  Drug  Abuse  Treatment  Modalities 
Modalities  can be  defined  as treatment  setting  and/or  medical  protocol  used  in 
treating  drug  dependency.  Drug  abuse  treatment  is now classified  into  four  general 
modal~ies2: 
Methadone  Maintenance, 
b 
b  Outpatient  non-methadone  (drug-free)  treatment, 
b  Residential  therapeutic  communities  (TC),  and 
b  Chemical  Dependency  (CD)  units. 
In addition,  some  professionals  consider  drug  detoxification  to be  a modality  because  it 
is generally  the  first step  in the  treatment  process  and  it requires  resources. 
However,  some  controversy  exists over whether  detoxification  should  be  considered  a 
distinct  modality.  For  example,  a September  1990 Institute  of Medicine  study, 
Treatirw  Drug  Problems,  argued  that  detoxification  is not  a treatment  modality.  The 
study noted  that,  Detoxification  is seldom  effective  in itself  as a modality  for bringing 
about  recovery  from  dependence,  although  it can be  used  as a gateway  to other 
treatment  modalities.  Detoxification  episodes  are  often  hospital  based  and  may begin 
with  an  emergency  treatment  of an overdose.  However,  clinicians  generally  advocate 
that,  because  of the  narrow  and  short-term  focus  and very poor  outcomes  in terms  of 
relapse  to drug  dependence,  detoxification  not  be  considered  a modality  of treatment 
in the  same  sense  as methadone,  TCS, outpatient  nonmethadone,  and  CD  programs. 
Federal Agencies Ache  In Dug  Abuse  lleatment 
Within  the  Department  of Health  and  Human  Services,  at the  time  of our  review,  the

Alcohol,  Drug  Abuse  and  Mental  Health  Administration  (ADAMHA)  had

responsibility  for policy development  and  funding  of State  treatment  programs.

Effective  October  1, 1992, ADAMHA  was replaced  by the  Substance  Abuse  and

Mental  Health  Services  Administration  (SAMHSA).  The  creation  of SAMHSA  was

an  attempt  to address  concerns  that  the  institutes  within  ADAMHA  had  shifted  their

focus  over  the  years  from  services  development  to biomedical  research.  SAMHSA  will

focus  on treatment  and  services  for people  who are  mentally  ill or chemically

dependent  and  will comprise  three  agencies:  the  Center  for Substance  Abuse

Treatment--formerly  the  Office  of Treatment  Improvement  (OTI),  the  Center  for

Substance  Abuse--formerly  the  Office  of Substance  Abuse  Prevention  (OSAP),  and  a

newly created  Center  for Mental  Health  Services.  Research  activities  formerly

conducted  by ADAMHAs  three  research  institutes  were  transferred  to the  National

Institutes  of Health  (NIH).  Throughout  this report,  we have  referred  to ADAMHA

instead  of SAMSHA  since  the  review  was conducted  prior  to the  effective  date  of the

reorganization.

2  Also within  the  Department,  the  Drug  Abuse  Policy Office  is located  in the  Office  of 
the  Secretary,  increasing  the  visibility and  policy attention  given to drug  abuse.  The 
Assistant  Secretaries  for both  Planning  and  Evaluation,  and  Management  and  Budget 
work  closely together  in providing  oversight  and  policy direction  in program 
expenditures. 
One  other  Federal  agency  plays an important  policy role  for drug  abuse  treatment. 
The  White  House  Office  of National  Drug  Control  Policy (ONDCP)  was created  by 
the  1988 Anti-Drug  Abuse  Act  and  granted  statutory  authority  to develop  an annual 
National  Drug  Control  Strategy. 
Riblk  Funding for Drug Abuse  i?7eatrnenlI+ograrns 
Public  funding  of drug  abuse  treatment  programs  is largely  the  responsibility  of 
localities  and  individual  States.  In recent  years,  Federal  roles  in drug  abuse  treatment 
have  been  expanding.  Most  Federal  funds  for drug  abuse  treatment  have  been 
provided  by ADAMHA  through  the  Alcohol,  Drug  Abuse,  and  Mental  Health  Services 
(ADMS)  block  grant  program.  With  the  ADAMHA  reorganization,  the  ADMS  block 
grant  was split into  two grants:  one  for  mental  health  services  and  one  for substance 
abuse  treatment  and  prevention  services.  The  reorganization  also modified  the 
formula  under  which  each  states  block  grant  allotment  is determined  providing  that, 
through  Fiscal  Year  1994, no state  may receive  less than  its Fiscal  Year  1991 block 
grant  allocation.  Federal  funding  to States  has increased  significantly,  representing 
about  20 percent  of total  funding  for drug  abuse  treatment.  The  ADAMHA 
expenditures  for Fiscal  Year  1991 were  approximately  $638 million  for drug  abuse 
treatment. 
Until  1981, ADAMHAs  primary  mechanism  for funding  drug  abuse  treatment  was 
through  categorical  grants  for drug  abuse  treatment.  The  categorical  grant  program 
allowed  the  Federal  government  to influence  the  design,  implementation,  and  data 
collection  methodologies  for State  and  local  drug  abuse  treatment  programs.  With  the 
Omnibus  Budget  Reconciliation  Act of  1981, the  Congress  consolidated  all categorical 
treatment  grants  under  the  ADMS  block  grant  program.  The  intent  of the  block  grant 
program  was to enable  States  to design  their  own treatment  programs  and  allocate 
funds  accordingly.  Subsequent  to development  of the  block  grant  program,  a number 
of drug  abuse  treatment  discretionary  grant  programs  have  been  developed  and 
targeted  on special  populations  and  needs.  Conversion  from  categorical  grants  to 
block  grants  allowed  the  States  greater  flexibility, but  reduced  Federal  access  to drug 
abuse  treatment  data. 
3
 METHODOIJ3GY 
We  reviewed  principal  data  collection  surveys sponsored  by ADAMHA  to assess  how 
well they  satisfied  certain  criteria  including  cost, timeliness,  completeness  and 
verification.  Our  primary  concern  was to determine  whether  reliable  data  for 
establishing  estimates  on the  costs of drug  abuse  treatment  were  present  in the  current 
principal  surveys. 
Drug  abuse  treatment  costs, for purposes  of this report,  are  defined  as direct  and 
indirect  costs related  to clinical  treatment  of drug  abusers.  This  report  does  not 
consider  other  costs such  as those  related  to diminished  productivity  or social  impact 
of drug  abuse. 
In addition  to reviewing  existing  data  bases,  we interviewed  principal  staff  in 
ADAMHAs  Office  for Treatment  Improvement  and  the  National  Institute  on Drug 
Abuse. 
Our  review  was conducted  in accordance  with  the I!nterim Stmdarh  for Inspectkms 
issued  by the  Presidents  Council  on Integrity  and  Efficiency. 
4
 FINDINGS

ADAMHAis

Required  to Collect  Drug  Abuse  Treatment  Costs. 
The  Anti-Drug  Abuse  Act  of 1988 (P.L.  100-690) amended  title  V of the  Public 
Health  Service  Act to require  the  Administrator  of ADAMHA  to collect  costs  on 
different  treatment  modalities.  The  Act  requires: 
ADAMHA  to consult  with  States  and  appropriate  national  organizations  to 
develop  uniform  criteria  for collecting  drug  abuse  treatment  cost  datas; 
States  to provide  ADAMHA  cost data  required  as a condition  for receiving 
their  block  grantsG; 
ADAMHA  to support  research  on comparable  costs  and  efficacy  of different 
treatment  modalities;  and 
ADAMHA  to collect  data  each  year  on the  national  incidence  and  prevalence 
of the  various  forms  of substance  abuses. 
ADAMHAs  Data  Collection  System  Does  Not  Provide  Reliable  Data  for Measuring

Drug  Abuse  Treatment  Costs.

Presently,  ADAMHA  has three  major  sources  for data  collection  on drug  abuse

treatment.  We  reviewed  the  reports  from  each  source.  The  reports  provide

important  data,  but  each  is flawed  with regard  to cost reporting.  Specifically,  as shown

below,  the  reports  do not  include  costs  of drug  abuse  treatment.

State  Alcohol  and  Drug  Abuse  Profile:  Congressional  amendments  to the 
ADMS  block  grant  program  in 1984 required  the  Department,  in consultation 
with national  interest  groups,  to develop  model  data  collection  criteria  and 
formats  to obtain  national-level  data  on services  provided,  number  and  types  of 
clients  served,  and  total  funding9. 
To  develop  and  maintain  the  required  data,  the  National  Institute  on Drug 
Abuse  (NIDA)  provides  funds  to the  National  Association  of State  Alcohol  and 
Drug  Abuse  Directors,  Inc. (NASADAD)  for collecting  and  analyzing  drug 
abuse  treatment  data.  This  system  is widely known  by its acronym,  SADAP. 
States  submit  data  on a voluntary  basis.  The  data,  however,  is not verified  and 
costs  of drug  abuse  treatment  are  not  obtained. 
5
 National  Drug  Abuse  and  Alcoholism  Treatment  Unit  Snvey  In addition  to 
information  provided  by SADAP,  NIDA  collects  other  drug  abuse  treatment 
data  through  the  National  Drug  Abuse  and  Alcohol  Treatment  Survey 
(NDATUS).  NIDA  initiated  the  survey in 1974 and  has  repeated  it 
intermittently  since  then,  The  National  Drug  Abuse  Treatment  Survey  collects 
data  on both  private  and  public  drug  abuse  treatment  providers.  It represents 
the  most  comprehensive  collection  of data  from  the  census  of drug  abuse 
treatment  providers,  but  it does  not  collect  cost data  -- it collects  data  on 
program  funding.  Further,  NDATUS  does  not  include  all providers  and  does 
not  verify the  data. 
Drug  Abuse  SeMces  Research  Suxvey  As a condition  for continued  funding  of 
NDATUS  for Fiscal  Year  1990, the  Office  of Management  and  Budget  and 
Office  of National  Drug  Control  Policy directed  NIDA  to undertake  a separate 
and  additional  data  collection  effort  -- the  Drug  Abuse  Services  Research 
Survey  (DSRS)lO.  The  NIDAs  Financing  and  Services  Research  Branch 
gathered  a range  of data  on provider  services,  clients  in treatment,  type  of 
treatment  staff, revenue,  etc.  This  data  collection  effort  was completed  in April 
1991.  DSRS  surveyed  a substantial  number  of providers  of drug  abuse 
treatment  services,  but  captured  limited  aggregate  costs  and  revenue  data  by 
modality.  NIDA  staff told  us that  requested  information  was not  generally 
available  on costs of treatment  by modality  at the  provider  level.  NIDAs  data 
would  be  enhanced  substantially  by national  reporting  standards  for  collecting 
costs of treatment. 
In addition  to the  specific  limitations  of the  data  systems  discussed  above,  there  are 
two general  problems  with  existing cost data. 
Costs  Are  Understated.  In most  cases, when  financial  data  is collected,  it 
reflects  program  funding  or reimbursement,  rather  than  treatment  costs.  For 
example,  some  States  reimburse  local  programs  and  counties  at less than  100 
percent  of their  actual  costs  of treatment.  Furthermore,  States  do not  always 
include  indirect  costs in drug  abuse  treatment  allocation,  resulting  in further 
understating  actual  costs. 
Funding  Data  Do  Not  Relate  To  Services.  Most  cost information  collected  is 
not  specifically  related  to the  factors  that  affect  costs, including  the  setting,  type 
and  intensity  of services  provided.  Unless  cost  data  is directly  associated  with 
treatment  modality  and  level of services  provided,  it has limited  utility  to policy 
makers. 
6
 RECOMMENDA~ONS

Ultimately,  ADA.MHA  should  obtain  precise  costs  on the  various  drug  treatment 
programs  it supports.  Without  such cost data,  the  Departments  ability  to assess,  plan 
and  budget  effective  treatment  programs  is limited.  However,  ADAMHA  has not 
required  States  and  localities  to furnish  drug  abuse  treatment  cost  data.  Accordingly, 
we recommend  that  ADAMHA 
1.	 Aggressively  continue  to incrementally  build  a system  for measuring  drug  abuse 
treatment  costs. 
Such  data  is essential  for planning  and  budgeting  effective  drug  abuse 
treatment  services.  To  assure  that  reliable,  useable  cost  data  is available, 
ADAMHA  should,  as part  of its ongoing  efforts  to establish  and  clearly  define 
appropriate  drug  abuse  treatment  protocols: 
a)	 identify  in accordance  with commonly  accepted  accounting  principles,  all 
indirect  and  direct  cost components  of various  drug  abuse  treatment 
protocols; 
b)	 develop  cost standards  for the  different  types  of drug  abuse  treatment 
protocols; 
c)	 identify  and  use methods  for obtaining  reliable  drug  abuse  treatment 
costs, such  as: 
.- performing  case-studies  of providers  with focus on units  of service 
related  to types  of drug  abuse  and  related  costs; 
-- obtaining  actual  verified  costs on a significant  sample  of providers 
for treatment  of various  types  of drug  abuse  and  types  of services; 
-- identifying,  analyzing  and verifying  the  validity  of existing  drug 
treatment  data  collection  systems  to determine  if such  systems 
collect  cost  data  and  meet  standards  to be  developed  by 
AD/lMm, 
.- studying  possible  use of Medicaid  data  to measure  drug  abuse 
treatment  costs since  Medicaid  is an entitlement  program  and 
cost  data  is a program  requirement;  and 
-- identifying  private  insurers  and  Health  Maintenance 
Organizations  who have  drug  abuse  treatment  cost  data  which 
they  are  willing to share  with ADAMHA. 
7

__    d)	 aggregate  and  summarize  provider  cost data  to establish  ranges  and 
baselines;  and 
e)	 periodically  verify cost data  collected  to assure  its reliability  (the  cost of 
such validation  could  be limited  through  use  of sampling  techniques). 
2.	 As a condition  of grant  awar~  require  that  drug  abuse  treatment  research  and 
demonstration  grantees  who  perform  clinical  effectiveness  studies  use  Federal 
standards  for collecting  treatment  cost  data. 
ADAMHAs  Office  for Treatment  Improvement,  the  National  Institute  on Drug

Abuse,  and  others  are  aware  of the  problems  created  by lack  of reliable  drug

treatment  costs  and  they  have  remedial  initiatives  underway.

COMMENTS  TO  DR.AFP  MANAGEMENT  ADVISORY  REPORT

In meetings  with ADAMHA  staff, they generally  agreed  with the  management

advisory  report.  They  expressed  a desire  that  the  report  elaborate  on their  grantees

present  lack  of capacity  to capture  and  report  cost data.  Our  limited  review  did not

provide  sufficient  data  for us to comment  on grantees  capacity  to collect  data.  While

we understand  the  concern  about  capacity,  we believe  reliable  program  cost is

information  grantees  need  to plan  effective  operations.

The  Assistant  Secretary  for Planning  and  Evaluation  (ASPE),  and  the  Counsel  to the

Secretary  for Drug  Abuse  Policy commented  on the  draft  management  advisory

report.  Although  we have  not  received  written  comments  from  ADAMH~  we have

discussed  the  findings  and  recommendations  with them.

The  ASPE  agreed  with  our  recommendations,  and  asked  about  the  reasonableness  of

using NDATUS  data  for budgeting  purposes.  Since  the  NDATUS  does  not  collect

cost data,  we believe  its use in developing  budget  estimates  is limited.  However,  that

issue was not  included  in the  scope  of our  inspection.

The  Counsel  to the  Secretary  for Drug  Abuse  Policy concurred  with our

recommendation  to incrementally  build  a system  for measuring  drug  abuse  treatment

costs but  did not  agree  about  mandating  the  collection  of cost data  through  clinical

effectiveness  studies.  He  suggested  possible  options  for  collecting  treatment  cost data

which  ADAMHA  plans  to include  in future  demonstration  programs,  We  agree  there

are  many  other  appropriate  means  of collecting  data.  We  did not  mean  that  all

grantees  should  be  required  to collect  such  data  but  that  those  who  do should  use

Federal  standards.

8
 ENDNOTES

1. Jaffe and Musto, 1987 in Hubbard, R. 1989 DRUG ABUSE TREATMENT A National Study 
of lZ&etiveness.Chapel Hill, N.C. :  University of North Carolina Press, 3-5. 
2.	 Gerstein and Harwood, et al.  1990.  TREATING  DRUG  PROBLEMS.  Committee for the 
Substance Abuse Coverage Study, Division of Health Care Services, INSTITUTE OF 
MEDICINE.  Washington, D.C. : National Academy Press, 12. 
3.  Unpublished.  Fiscal Year  1991 Department  of Health  and Human  Services,  Anti-Dru~  Abuse 
m.	 ADAMHAs  Office  for Treatment  Improvement  (OTI)- includes  ADMS  Block 
Grants,  Waiting  List Grants,  Crisis Areas  Grants,  Treatment  Improvement,  OTI  Management, 
Homeless  Demonstration  Grants  and NIDA  Research  Demonstration  Grants.  Source  is the 
Office of The Assistant  Secretary  for Management  and Budget,  Department  of Health  and 
Human  Services. 
4.	 Section  2052 of the  Anti-Drug  Abuse  Act  (P.L.  100-690) amended  Part  A of title  V of the 
Public  Health  Act by adding  a new section-- Section  509D.  Section  509D  (c)(G)  refers  to 
costs of the different  types of treatment  modalities. 
5.	 Section  2052 of the Anti-Drug  Abuse  Act amended  Part  A of title  V of the Public  Health 
Service Act to add Section  509D(d)  which specifies  consultation  with the  States  and with 
appropriate  national  organizations,  the Administrator  shall develop  uniform  criteria  for the 
collection  of data... 
6.	 Section  2034 of the Anti-Drug  Abuse  Act amended  Section  1916(c) of the Public  Health 
Service Act by adding  sections  (16)-(21).  Section  1916(c)(2)  specifies  The State  agrees  that 
the State  will provide  to the Secretaty  any data  required  by the Secretary  pursuant  to section 
509D and will cooperate  with the Secretary  in the development  of uniform  criteria  for the 
collection  of data  pursuant  to such section. 
7.	 Section  2012 of the Anti-Drug  Abuse  Act describes  purposes  of this Act.  Section  2012(6) 
states  as one  of its purposes-- to increase  understanding  about  the extent  of alcohol  abuse  and 
other  forms  of drug  abuse by expanding  data  collection  activities  and supporting  research  on 
the comparative  cost and efficaq  of substance  abuse  prevention  and treatment  services. 
8.	 Section  2052 of the Anti-Drug  Abuse  Act added  Section  509D to the Public  Health  Service Act 
and specifies  Sec. 509D.  (c)(2)  Annual  surveys shall be carried  out  in the collection  of data 
under  this section.  Summaries  and analyses of the data  collected  shall be made  available  to the 
public. 
9.	 Kusserow,  Richard  P.  1989.  An Assessment of Data Collection for Alcohol, Drug Abuse, and 
Mental Health SeMces.  Washington, D.C. :  Office of the Inspector General, 1-2. 
10.	 Batten,  et al., Bigel Institute  for Health  Policy, Brandeis  University,  1991.  DRUG  SERVICES 
RESEARCH  SURVEY,  Phase I Final Report:  Non-Correctional Facilities, NIDA Contract 
Number 271-90-8319/1. 
9
 APPENDIX  A 
COMMENTS  ON  DRAFI  REPORT 
A-1  -.,.....,

42 
PEP.4RT.MENTOF HE.\LTH& HIJ,MANSERVICES 
Otfice  of the  Swemfy 
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To:  Richard  P. Kusserow	 DIG-01  ,/  e 
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F?.GK:  Assistant  Secretary  for 
~ATESENT<~

Fl~nning  and Evaluation

5~~7~~~  : GIG Mariagement Advisory  Report:  Measuring  Dmg  Abuse

rreat~ent costs,~~ OEI-04091-00430

Thank you for the opportunity  to review the above named draft

management  report.  I think that the report helps  to highlight

the limitations  of the existing  financial  data  on  drug abuse 
treatment  available  to the Alcohol,  Dng  Abuse  and Mental  Health

Administrations  (~~),  and provides  constructive  suggestions

for how to begin to improve our information.

It.will cakesome time,  however,  to imDrove the financial  data 
available  on drug treatment  costs.  Consequently,  it would  be 
helpful  from a pclicy  perspective  if the report could  include  a 
discussion  of how the existing  National  Drug and Alcohol 
Treatinent Utilization  Suney  (NDATUS) data available  on  funding 
sources  can be used to develop budget  estimates. 
As you are 
aware, we currently  use this data to develop the estimates  for 
the costs  of drug treatment  slots. 
It would be helpful  to 
understand  the reasonableness  of such use and the limitations  of 
the data  for budgeting  purposes.  In addition,  if you have 
suggestions  for ways  we  can  improve our estimating  process  using 
the existing  available  data sources this would  also be of 
assistance. 
If you have  any questions,  please  call Elise Smith at 245-1870. 
..

--
cc:  Emilie  Baebel 
..-

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J@  DEPARTMENT  OF IiE.4LT&H HUMAN  SERVICES  Ctooru nDsreul g Atob utset tSPeeoclirceyt ary 
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July  30,  1992 
.

MEMORNJfYJktTORUCHARDP.KUSSEROW

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INSF~TOR GENERAL

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FRCM: MARKBARNES 
CO-TO  THE
SUKECT:  OIG Management  A  isory  Report:  Measuring  Drug  Abuse 
-Treatment  Costs,! OE1-04-91-00430 
I have  reviewed  the  above-mentioned  draft  report  and  concur  in part  with  your

recommendations.  I do not,  however,  concur  with  your  second  recommendation  which 
seems  to indicate  that  all grantees  performing  ciinical  effectiveness  studies  must  collect

treatment  cost  data.  I suggest  that we  not mandate  the cohction  of treatment  cost data 
through  clinicai  effectiveness  studies.  There  are  many  more  appropriate  vehicies  for 
the collection  of treatment  cost data.

With  regard  to  the  section  on  findings,  I  suggest  that  you  inciude  a  short 
reference  to the Services Research  Outcome  Study  (SROS), a follow-up  component to the 
Drug Abuse SeMces  Research  Sumey.  It is my  understanding  that  SROS  will  collect 
cost  data on treatment  sefvices.  Additionally,  I recommend  that you cunsider  mentioning

the  ADMS  block  grant  forms  as  an  additional  possible  source  of  cost  information.

Although  the  Slates  are  not  currently  required  to  complete  the  more  detaiied  set  of 
forms,  some  States  have  agreed  to comply  on a voiuntary  basis.  For these  Slates.  the 
Office  of  Treatment  Improvement  has  been  able  to  collect  some  pertinent  cost 
information.

Thank  you for  the opportunity  to  review  this  report.  {fYOUhave any Westions! 
please  fxntact  either  Sarah  Vogeisberg or  myself  at  (202)  690-6641. 
1(3  ~ 
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