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Health Care Economics
Cost-Effectiveness Data Prove MH Care Won't Break Bank
Psychiatric News
Volume 40 Number 13 page 20-47

Members of APA's Council on Healthcare Systems and Financing took a new look at a long-standing problem at APA's 2005 annual meeting in Atlanta in the session "Funding for Psychiatry: From the Irrational to the Rational."

That intractable problem is what former APA President Paul Appelbaum, M.D., called the "systematic defunding of the mental health system."

Edward Maxwell, M.D., opened the session with an overview of the funding trends and issues that have resulted in a serious discrepancy between the costs to provide needed mental health and substance abuse (MH/SA) services and resources devoted to them. Maxwell is an APA/Bristol-Myers Squibb Fellow at Brown University.

Spending on MH/SA services declined between 1991 and 2001 in relation to spending on all health care (see page 3). The average annual growth rate for MH/SA services was 5.6 percent versus 6.5 percent for all health care. Expenditures on MH/SA services were 7.6 percent of total health care expenditures, a decline from 8.2 percent in 1991.

Along with that decline has come increased importance of public programs as a source of funds for MH/SA care.

According to 2001 data, Medicaid was the most important source of funding for those services, leaving them vulnerable in times of federal and state budget cuts.

Maxwell said that if the decline in spending were a result of greater efficiency in resource use, it might not represent a problem. However, he cited data showing that less than one-third of adults needing MH/SA treatment received it. Only two-fifths of adults with serious mental illness received treatment.

Selby Jacobs, M.D., described the disability adjusted life year (DALY), a concept that could promote rationality in the funding process by demonstrating the impact on an individual of untreated mental health and substance use disorders. Jacobs, who chaired the panel, is director of the Connecticut Mental Health Center and a professor of psychiatry at Yale University School of Medicine.

The DALY, which measures the burden of disease, is a composite indicator of years lived with a disability (YLD) and years of lost life (YLL) from a disease.

To apply the DALY, disabilities were ranked into six classes, each with a greater loss of welfare or increased severity than the previous class. The least disabling class, for example, requires 50 percent decrease in capability of one of four areas, such as occupation. Those in the most disabled class need assistance with activities such as eating.

Each class is assigned a severity weight. Years in each class are multiplied by that weight to produce YLD, while years of YLL, with some modifications, are added to that figure to produce the DALY.

The importance of the DALY for funding MH/SA treatment becomes clear upon examination of the rankings of various illnesses in terms of the burden of disease for an individual.

In 1990 unipolar depression ranked fourth worldwide in terms of burden of disease for all ages. Its rank remained the same in 2000. But, significantly, it is projected to become second by 2020.

Also of significance are the rankings for people between the ages of 15 and 44 in developed countries. Seven of the top eight ranked illnesses concerned MH/SA. The rankings, in order, are major depression (1), alcohol use (2), schizophrenia (4), self-inflicted injuries (5), bipolar disorder (6), drug use (7), and obsessive-compulsive disorder (8).

Jacobs said, "Psychiatric disorders emerge from these studies as a major public health problem."

They become particularly prominent when the burden of illness is viewed not only as a matter of years of lost life but of years of decreased functioning as a result of disability. In 1990 psychiatric disorders accounted for only 0.4 percent years of YLL, but 26 percent of YLD.

Mantosh Dewan, M.D., presented a method intended to determine the cost-effectiveness of various medical treatments and interventions as related to the impact on the quality of life or quality-adjusted life year (QALY) for an individual.

He called the methodology "promising" in terms of its capability to promote rational decisions about allocation of resources, but noted that it must be refined and developed.

Dewan offered examples of the application of the method with common medical interventions.

Using a colorectal fecal occult blood screen on 50-year-old women, for example, results in a cost per QALY of $2,500. To reach that figure, the direct costs of the tests and the costs of treatment for those found to have colon cancer are determined. Assumptions are made about years of lost life and diminished quality of life among the population if the screening did not occur to reach the cost figure of $2,500 per QALY.

By contrast, a screen for diabetes among 25-year-old men produces a cost per QALY of $67,000. That means it costs approximately $67,000 to gain each QALY.

Dewan said that the generally agreed upon benchmark for judging cost-effectiveness is $50,000 per QALY.

The significance of the methodology for mental health services is that psychiatric screening and treatment can be shown to be cost-effective in terms of the QALY and also cost-effective when compared with other kinds of medical treatment.

A one-time depression screening of 40-year-old primary care patients results in a QALY of $35,000, less than the benchmark of $50,000 and therefore cost-effective.

A screening every five years, however, results in a QALY of $55,000, which is above the benchmark. The five-year screening is not cost-effective because the additional screenings do not result in enough new cases of identified depression to warrant the additional cost.

Dewan presented data from studies of the use of psychotherapy and of medications that demonstrate cost-effectiveness that is at or below the benchmark of $50,000. He is chair of the Department of Psychiatry and Behavioral Sciences at Upstate Medical University in Syracuse, N.Y.

Anita Everett, M.D., a senior science advisor at the Substance Abuse and Mental Health Services Administration, said a key question for policymakers is, What screening and services for what cost are most likely to ameliorate the burden of disease? She presented information that policymakers could use in determining how to shift to a resource distribution that reflects concerns about disease burden.

Like Maxwell, she noted the shift to the public sector as the dominant source of funds for mental health and substance abuse services and the importance of Medicaid as a source of those funds.

She also pointed out that the number of federally funded community health centers is projected to double by 2006. Those centers are mandated to provide mental health and substance abuse services.

Everett commented that an ethical basis of government-funded programs is to promote fairness and justice. That ethic translates into efforts to" level the playing field" by helping people, such as those with disabilities, who are at a disadvantage. ▪

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