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Center on Addiietdo.ni and Substance Abusee at! Columbia Utfiversity 152 West 57th Street New York, NY 10019 phone 212 841 5200 fas,212 956 8020 Board qjDirectors Joseph A. Califano, Jr. C'hair9nan and Pm,sident'. James E. Burke Betty Ford Douglas A. Fraser Barbara C.Jordan Donald R. Keough LaSalle D. Leffall, Jr., M.D. Manuel T. Pacheco;,Ph.Dj . Linda Johnson Rice E. John Rosenwald, Jr. George Rupp, Ph.D. Frank G. Wells The Cost of Substance Abuse to Americai s Health Cialre System Report 2: Medicare Hospital Costs May 11994

Board of Directors Joseph A. Califano, Jr. Chairman and President of CASA James E. Burke Chairman of the Partnership for a, Drug-Free America Betty Ford Chief Executive Officer of the Betty Ford Center in Rancho Mirage, California Douglas A. Fraser Professor of Labor Studies at Wayne State University (former President of United Auto~ Workers), Barbara C. Jordan Professor at the LBJ Sehool of Public Affairs at the University of'Texas at Austin (former Congressvvoman from Texas) Donald R. Keough Chairman of the ! Board of Allen and Company Incorporated (former President of The Coca-Cola Company). LaSalle D. Leffall, Jr., M.D. Chairman of the Department of Surgery at Howard University College of Medicine Manuel T. Pacheco, Ph.D, President of the University of Arizona Linda Johnson Rice President and Chief Operating Officer of the Johnson Publishing Company, Inc. E. John Rosenwald, Jr. Vice Chairman of The Bear Stearns Companies Inc. George Rupp, Ph6D. President'of Columbia UniiversityFrank G. Wells (1932-1994) (former President and Chief Operating Officer of The Walt Disney Company) This, studyx+asconductedbyJeffrevMerrilT, VicePresidentforPnlicy anttResearch~atCASA;Kimberley Fox Senior Program Manager;, Han-hua Chang, Research Assistant; Gerald Pulver, Data Manager; and Dr. Andrew Schiff lU1'edical Associare. The studv was funded bv a grant f,rom the Henrv J. Kaiser Fnmidv Forutdatinn. Copyright ° 1994 bti= C'enter on Addiction and'Substance Abuse at Columbia University 4/94

FOREWORD S bsianee abuse and add'iction is an equal opportunity problem. Old and young, rich and poor are eq ually vuliserable to its effects on their healith. In order to improve the health and well-being, of our nation's cirtizens, we~ need to recognize the universality of the effects of' substance abuse and mount an all-fronts attack on all abuse of liegal an& illegal dh2gs, alcohol, and~ tobacco. The centrall missions of CASA--the Center on Addictiion, andl Substance Abuse at. Columbia University--are to i&ntil'iy the cost of substance abuse throughout Ameriean, society and inform the American people of those costs andl the impact of'substanceabuse on theirr lives: to findl out what works in prevention and treatment; and to encourage all individuals and institutions to take responsibility to: deal withi substance abuse. For almost two years, funded by the Henry J. Kaiser Family Foundation, CASA has been engaged ini the first analysis ever undertaken of the cost of substance abuse: to the nation's health care system. The initial phase: of this project, completed in July of 1993,, examined the effect of substance abuse on inpatient Medicaid hospital costs. In that study, CASA found that one in five hospital days and $7:4 biilliioni of Medicaid inpatient hospital costs in 1994, will be linked with the use or abuse of alcohol, tobacco or drugs. This second report docurnents the iQnpact on the Medicare hospital program. Nearly one out of every four dollars Medicare spends on inpatiient' hospital care, andi one out of every five Medicare hospital admissions, are attributable to substance abuse. From cancer to stroke andhea2-tdisease, from respiratory infections to injuries andl accidents, the use and" abuse ofcigarettes, alcohol, pills and drues is a major cause of many diseases that eventually result in

hospitalizations for which Medicare pays. In 1994 dollars, substance abuse will cost Medicare $20 billion in inpatient hospital costs alone. These numbers are low. Research documenting the health effects of alcoholl and drugs on: the elderly has not been a high priority and studies of the effects of' abuse of prescription drugs are nearly non-existent. Even for cigarettes, where there is a substantial body of research on~ health effects, much of it ignores the: elderly and the accumulated consequences of smolting, for decades, which affects the elderly disproportionately. Physicians underreport the inciidence of alcohol andl drug abuse in the elderly population~ more so than inn the younger population. Concern about patient confidentiality and embarrassment leads many doctors to fail to record alcohol and drrug, problems. Physicians often misperceiive disorientation or incoherence caused by alcohol or drugs as a symptom of the natural aging process or dementia. For Medicare, the biggest culprit, in causing poor health is tobaceo, accounting for nearly 80% of substance abuse-reldted Medicare hospitalizations. Again, this may be because we do not know enough about the health effects of alcohol and drugs. But it also reflects the high prevalence of long-term smoking, among the elderly. More than 36% of' Medicaree recipients are former smokers and nearly 20% currently smoke. Three out of five current smokers and'one third of the qpitters smoked more than 10 cigarettes a day for more than 35 years. Perhaps the most disturbing finding of this study is that substance abuse will cost the Medicare program one trillion dollars over the next 20 years. On April 21, the trustees of t'heM'edieare Trust Fund released areportprediethng tha2theFund would run out of money ihseven years. Inevirtably;thepolit6c~iansresponded with prop~osalsto~ raise taxes, increase ii

premiums, andYor cut benefits. In all the discussions about rising, Mediicare costs, little attention focused on how to prevent hospitalizations altogether. A ten percent reduction in the amount of substance abuse would save the Trust Fund $100 billion over the next 20! years. This study was condrueted by CASA under the direction of Jeffrey Merrill, Vice President for Policy and Research and a professor at Columbia University School! of Public Health, and Kimberley Fox,, senior program manager, with the assistance of Han~ hua Chang; 1' Gerald Pulver and Dr. Andrew Schiff. Their research could not have beeni accomplished without the valuable advice of a number of distingtaished physicians, epidemiologists, and economists. For their continuedl assistance and consultation on this entire project to identify the cost of substance abuse to, the ! health care system, I would especially like to thank Jeffrey Kelman, M~D: and Dorothy Rice, ScD. By the end' of the year, CASA will complete its assessment of the impact of substance abuse on the entire health care system and will release a report covering the entire system -- private sector hospirtalizat'ions as well as outpatient andl long term care. Joseph A. Callfano; Jr. Chairman and President, iii

THE' IMPACT OF SUBSTANCE' PiDUSE ON MEDICARE INPATIENT HOSPITAL COSTS INTRODUCTION The Annual Report of the Trustees of the Federal Hospital Insurance Trust Fund released ini April 1994 projected that the Medicare program willl run out of money in seven years. This projectiion: of future insolvency for the Fund--which pays the vast majority of hospital costs for the elderly and disabled--is due in large part to the fact that Medicare payments for hospital costs continue : to grow at an alarming rate, outstripping the revenues paid into the Fund. In responding to this crisis, invariably, the proposed solutions involve raising taxes or cutting benefits. In all these discussions, however, little time is spent in, thinking about how we can keep elderly people healthy and avert hospitalizations. The worst example of this is our failure to move aggressively on the pervasave impact of substance abuse, including tobacco, alcohol and drugs, on both ]II edicrrre and overald heqlth co5ts. Based on our findings, $20 billion 1994 inpatient Medicare hospital payments will be due to substance abuse and' addiction. If the problems of substance abuse did not exist, we would not now be concerned about, the solvency of the Hospital Trust Fund. Over the next seven years, substance abuse will cost the Trust Fund almost $170 billion. For future generations worried about the continued survival of this program, over the next 20 years, Medicare will pay out more than $1 trillion for hospirtall care related to substance abuse. Past studaes" have provided evidence of the impact of substance abuse on healtth care. Further. these studies have tended to underestimate the full magnitude of the problem because thev.either focus on only one substance or have not takenn fuff advantage oft'hef epiderniologic research that relates substance abuse to virtually even, major disease category.

Despite such limitations, these studies still provide a powerful' argument for the inclusion: of substance abuse in the cost containment debate. In addition, they demonstrate the need to understand more fully just how critical this issue is' if we are to address seriously not only the concerns over the sol vency of the Medicare Trust Fund, but health care reform in general. Th e CASA Study In 1992, CASA--The Center on Addiction an& Substance! Abuse at Columbia. University--initiated a comprehensive study documenting the full extent to which all substance abuse, including alcohol; drugs and tobacco, contributes to ~ the costs of the health care system. Combining a critical review of the medical andl epidemiologic literature linking substance abuse as a risk factor for a: wide variety of' medical condirtions,, with extensive consultation with physicians and researchers knowledgcablie in this area, CASA is in the process of estimating the magnitude of this problem and its associated costs. The first phase of this project, which examined the extent to which Medicaid hospital costs might be attributed directly or indirectly to substance abuse,, was completed in July of 1993.`' This study found~ that at least one in five hospital days under Medicaid, or $7.4 bildion of Medicaid hospital costs in 1994, could be 1'ink~edh wi'th theu5eor abuse ofalcohof~ tobacco or drugs. For diseases and health conditions as disparate as cancer, stroke, heart disease, AIDS, trauma, andl birth complications, substance abuse has been documented to be & major risk factor. When these health effects are considered, substance abuse takes a major toll on the Medicaid program. And these estimates are undoubtedly stilt low because of both the underreporting of the problem and the fact that the aNailable research, partiicularly forr alcohol and dhugs, is incomplete in documenting the full i~mpact of substance abuseonmorbidity.. 2

In add'ition, while many had argued that the effects of these substances on disease were long-term, and the results of efforts to control abuse and addiction would not be seen for many years, the CASA study found the opposite to be the case. In facty two-thirds of the costs of substanee abuse to Medicaid were related to short-term health problems including those associated with traunla; AIDS and birthi complications, where the impact on health can be seen almost immediately. Efforts to cont.rol' the use of these substances can lead to immediate savings to the health, care system. The eurrentphase of CASA's work deals with the impact of substance abuse on the use of inpatient hospital services under Medicare. As suggested ini a recent study reported' inn the Journal of the American Medical Assoeiation3 which examined alcohol4el'ated hospitalizations in the elderly, the costs of alcohol abuse to Medicare can be significant. But, when all substances--as well as all the heal th problems related to them--are considered, the costs to Medicare are astronomically higher: more than 50 times as much as was estimated in that earlier study. Using the methodology from the previous CASA study of Miedicand. (descrihedl in Appendix I); but accounting for the differential impact of these substances on the elderly, as wi th Medicaid, substance abuse proved to be a rnajor contributor both to morbidity and to the costs of health care for the elderly and disabled.

RESULTS The High Cost of Shbstance Abuse In 1991'; there were 2:2 million tobacco, alcohol, or drug-related! Medicare admissions which accounted for 20% a ~ of all Medicare hospitalizations. Biecause these substance abuse-related cases tend to ~ be more expensive to treat than the average hospital case, the amount actually paid out by Medicare for substance abuse-related care was even higher, accounting for 23% or nearly one-fourth of the total Medicare payments for hospital care.' Substance abuse-related cases cost more to treat because they required alcnost26% more hospital staff and'other resources than Medicare discharges that are unrelated to substance abuse. We estimatedi that Medicare discharges for co ditions where: substance abuse was a major risk factor had a Case Mix Index (CMI - a measure of resource use) of about 1.51, compared to a CMI of 1.21 for diagnoses not related to substance abuse. As displayed! in Graph 1, in dollars, Medicare spent over $13 billion of its $57' bi'lliion~ inpatient short-stay hospitali expendltures on substance abuse-related care. These amounts exceed the I out of 5 d'ollars spent in the Medicaid program for substance-abusee related conditions. Based upon these results, it is estimatedl that, for 1994, substance abuse-related Medicare hospital costs wiIll rise to $20 billiom These costs include substance abuse-related~ care for both elderly and disabled Medicare recipients, with the disabled comprising 12% of these costs. a 1991 is the most recent year that National Hospitall DischargeS'urve}° data is available. bSee Methods section for discussion of hov.^ payments were calculated. 4

Graph 1: Nearly 1 Out of 4 Medicare Dollars for Hospital Care Associated with Substance Abuse Medicare Payments Substance-related 23% Non-substance related 77% National Hospital Discharge Survey, 1991

As can be seen in Table 1, the largest share of Medicare inpatient substance anusee costs--$12.5 billion or 97% of the total--was for medical treatment of illnesses and conditions attributable to the abuse of alcohol; drugs and tobacco. These are condit2ons that do not mention substance abuse in the diagnosis, but are ones that have been repeatedly shown in epidemiologic research to be associated with the use of at least one of these substances. In contrast, treatment for conditions that explicitly mention alcohol or drug abuse account for only 4% of all substance abuse-related discharges, consuming 3'% of those costs. Thi's low percentage of ' alcohol and drug diagnoses is misleading, and is probably more reflective of'& reluctance by physicians to classify the elderly population as alcohol or drug, dependent, than an ~ indication of a low prevalence of alcohol or drug use among the elderly and disabled. Underreporting, of substance abuse as either a primary or secondary condition for this. population is clearly a problern~ as depiicted in Graph 2. While 5% off all Medicare benef ciaries are considered heavy drinkers and 3% report using drugs (see Table 2), only 3% of Medicare patients in the hospital had' a diagnosis that mentioned either alcohol or drug, use or both. Since alcohol and drug users tend to be at' greater risk for medical care, we would expect them! to make up a larger, not smalller, proportion of the hospitalized population. In fact, separate studies measuring, alcoholism alone among the hospitalized elderly indicate that 9-20% actually have a drinking problemL"b This wide range in estimates of alcohol. problems suggest that identification of alcoholism varies considerably across physicians. Thus, relying solely on diagnoses that explicitly mentioni alcohol or drugs on the medical record in order to measure the prevalence and' cost of drugs and/or alcohol problems in hospitals grossly underestimates the full impact of substance abuse on Medicare costs.

TABLE 1: Substance Abuse Costs to Medicare Total Hospital Care, 1991 Discharges Expenditures 1. Direct Treatment for Alcohol 90,659 $319 million and Drug Primary Diagnoses 2. Treatment for Diseases Where 2,076,840 $12.487 billion .~ Substance Abuse Is a Major Risk Factor 3. Additional Days Required for Patients with ~ N/A $112 million w Cr ~ ~ a Seconda -ry Diagnosis of Substance Abuse Substance Abuse Total 2,167,499 $12.9 billion Total Medicare 11.1 million $57 billion Substance Abuse as Percent of Total 20% 23% SOURCES: National Hospital Discharge Survey, 1991; 1992 HCFA Statistics; National Association of Psychiatric Hospitals Annual Survey 1992. SVEV89szo%

Graph 2: Underreporting of Substance Abuse on Hospital Records Alcohol and Drugs Recorded on Medicare Records Compared to Actual Prevalence of Alcohol Alone as Reported in Studies of Heavy Drinking in Hospitalized Elderly Populations Alcohol and Drugs Reported on Record Estimates of Actual Heavy Alcohol Use Alone ., 3% , . ~ i ~ 79% Q Identified Substance Abuse ~ No Identified Substance Abuse National Hospital Discharge Survey, 1991 9% ~E~ES9szo7 . .

Table 2: Consumption Rates for Medicare and General Population Consumption Rate Substance User category Medicar- e General Cigarettes Current Smokers 18.4% 29.6% Former Smokers 36.1 % 23.3 % Alcohol Heavy Drinkers 4.8% V %O Illicit Drugs . Drug Users 3.2% 5% SOURCES: National Afedical Expenditures Survey, 1987; National Health Interview Survey, 1991. iw G. Z. Z.3%4%'07.

Drug use among the elderly also accounted for a very small: percentage of the total dischargEs, even though more than 3% of this population admit to: using drugs in the last year. This lbw number is, in part, indicative of a lack of research co nnecting, illicit drugs wsthh disease, and does not imply that drugs present no probllem for the elderly: Further, since we were also unable to find sufficient data from, the epidem2ologic literature to quantify the health effects of the abuse of prescription drugs, we couldI not estimate the extent of that problem either. Thus, our estimate of the impact of drugs--both legal and illiiciR--on, Medicare is undoubtedly low. There ! is clearly a need for more research to understand and quantify the impact of all' drugs on morbidity and cost. Since: the elderly are: suchl large users of prescription drugs, this research is even more critical wi th respect to, that population. In total, we found more than 60 conditions that are associated~ with substance abuse covering virtually every major disease category (Appendix II)`'. In, the Medicare population, more than half of the substance abuse-related hospital admissions were for cardiovascular diseases, 15% for respiratory diseases, 12% for neoplasms; andi 7°Xa, for burns and trauma (Table 3). These results differ somewhat from the earlier Medicaid study where the adverse impact on birth outcomes represented the major contributor to~ the costs attributable to the substance abuse. Further, in comparing substance abuse problems in the Ivledicaid' and Mediicare populations, the impact oni Medicare was much more a result of the long-term effects of smoking. More than 80% of substance abuse-related Medicare: hospital costs was for treating smoking-related medical conditions -- from lung cancer to chronic pulmonary `This number is lower than the 7?' substance-abuse related conditions identified in the Medicaid becausefurtheranadysis led ustocombine some specific d'iag~nosesialrto broader diagnostic categories. Appendix III provides an even more detailed breakdown of the substancee abuse-related discharges in all the conditions iidentified.

Table 3: Medicare Discharges for Diseases Attributable to Substance Abuse as a Major Risk Factor U.S. General Hospitals, 1991 [)isease/ Condition Attributable Discharges % of Total Attributable Discharges Cardiovascular Diseases 1,156,057 53.3 Respiratory Diseases 328,453 15.2 Neoplasms 249,683 11.5 "I'raunta/I3urns 149,649 6.9 ~ ~ Cerebrovascular Diseases 112,799 5.2 ~ ~ Digestive Diseases 49,798 2.3 Other 30,402 1.4 Direct Alcohol and Drug Diagnoses 90,659 4.2 TOTAL 1991 ATTRIBUTABLE MEDICARE DISCHARGES 2,167,500 1991 ASSOCIATED MEDICARE COSTS ATTRIBUTABLE $12.8 billion TO SUBSTANCE ABUSE AS A RISK FACTOR SOURCES: National Hospital Discharge S«rvey, 1991; CA_ SA Substance Abuse Epidemiologic Database, 1993. GeEes9Sz0z

obstruction, disease (COPD) to coronary artery disease; as opposed! to only 40"/o for the predominantly younger, Medicaid, population. The Medicare populati+oni is at a much higher risk for getting smoking-related diseases because people over 65 who have smoked tend to have done so more heavily and for ]bnger time periods. Nearly 3 out of 5 of current Medicare smokers (58%) and almost one third of former smokers (32'.7%0) smoked an average of more than cigarettes per day for over 35 years (Graph, 3). Substance Abuse as a Complicating Factor in the Treatment of'other Diseases When substance abuse is recordedi as a secondary diagnosis to, an otherwise unrelated condition, it tends to complicate and prolong the treattnent for the underlying, problem. On average„ a secondary diagnosis: of alcohol and/or dhng, abuse increased the length of time patients stay in the hospital. Compared to, Medicare patients with the same primary diagnoses, those with a secondary diagnosis of substance abuse stayed an average of more than a half a day longer, 9:3) days compared wi th 8.6 days. Whnle this is not insignificant, the marginal effect of substance abuse as a secondary diagnosis ini the Medicare population is much smaller than what was found for Med'2caid„ where substance abusers stayed twice as long as non-substance abusers.. This smallll differential betweeni length of stay for Medicare patients with and without substance abuse problems is most likely at signifiicant underestimate of the full effect of aleohol and drugs as a complication. Many cases that actually involved alcohol or drug problems weree noti recorded as having tihis secondary diagnosis. Since, in our analysis. t'hese cases would be counted in the non-substance abuse group, they may be artificiall} inflating the length of stay for that group. If the secondary diagnosis of substance abuse had been correctly noted, the 7

. r Graph 3: Portion of Medicare Smokers Who Have Smoked Heavily (Those Who Ilave Smoked More Than 10 Cigarettes per Day for Over 35 Years) Current Hecz vy 58 Other 42 Former ZVCES9szoz

difference between the two. : groups would have been greater. Nevertheless; despite this problem, complications resulting from a secondary diagnosis of substance abuse accounted for: $108 million in added cost' to Mediicare: These figures represent average lengths of stay in~ Iwledicare but, for some diseases, the difference in length of stay was much higher. For example„ for patients with pancreatitis, those requiring major joint and limb reattachments, and those wirth pathol+ogicall fractures with a, secondary dlagnosis of substance abuse, patients stayed approximately twice as long as theirr non-substanee abusing, counterparts (pancreatitis 17 days vs. 8 days; major joint 24 vs. 10; pathological fractures 17 vs. 10) (Graph 4). However,, for other diseases, the AhAS was, in fact, shorter for some Medicare patients with a secondary diagnosis of substance abuse: For example, patients with respiratory infections and utflflammations„ cellulitis, and G,T obstructiion, who also had a secondary diagnosis of substance abuse, stayed less time in the hospital than non-substance abusers (e:g., respiratory infections 8.4 days vs. 11.7 days, cellulitis 7.4 vs. 816, and GI obstruction 3.7 vs. 7.4) This does nort rnean that patients with, substance abuse needed less care. There : are several possiblie explanations for why these substance abusers had shorter lengths of stay. It may result from an aberration in the data due to the small sample size of patients within these diagnoses, or because of the premature departure caused by some patients signing out against medical advice: However, it may also reflect the f nancial or social undesirability to hospitals of many of these patients which, in turn, may lead to their early discharge or transfer to another faciilit~?: In this context, it is worth noting, that, if this hypothesis is true, as the forces of competition in health~ careintensify., these resulkssugeest that such "undesirable"' pa2ientss maN, . be increasingly pushed out prematurely from some institutions. Further: the nature of the 8

Graph 4: Conditions Where Medicare Patients w/ Substance Abuse Stay Longer Average Length of Stay for Medicare Patients with and without Substance Abuse Pancreatitis Major Joint Procedures Fractures 5 10 15 20 25 Average Length of Stay (Days) SOURCE: National Hospital Discharge Survey, 1991. Ow/o Substance Abuse Ew/ Substance Abuse CVCeN9szoz

D11;C payment itself-- with an implicit! limit on the days of' covered care--also may work against patients with substance abuse : as a complicating factor to another health problem. Far more research is needed i in~this area. While this study focusedi on substance abuse in short stay general hospitals, Medicare also: pays a significant amount' ini psychiatric hospital costs. According to a survey of psychiatriic hospitals, 15.6 percent of total admissions were for aleohol' and drug abuse - related disorders. This does not include cases where another diagnosis may have beenirecorded' or the substance abuse was secondary to a mental health problem. But, applying this percentage to Medicare psychiatric costs, in 1991 Medicare spent an addit2onal $160 million on care for substance abuse : in psychiatric hospitals. CONCLUSION Substance abuse is a pervasive problem that is not limited to one segment of our society. Rather, old and young and rich and poor are all equally vulnerable to its effects on their health. Further, substance abuse cannot be viewed only as a singlle disease entity; but must be consideredl as a problem that permeates every aspect of our health system andl is a risk factor for all major disease~ categories. Not only must physicians concerned with addiction medicine address this issue, but, all physicians,, regardless of specialty, must be aware of 'thee fact that alcohol, tobacco and drugs are a! major factor in both causing and~ complicating the medicali problems of their pat'ients: Thus, physicians--as well as other health care prof'essionals--must'beboth capable of, and willing to identify substance abuse and take tihesteps necessary to address it'. This may raneefrom discussions with their patients about their substance abuse problems to referrall to, appropriate treatment. 9

But, the problem does not rest solely upon the shoulders of health care providers. What has been sorely neededl in the discussions of how to contain health care costs is a discussion~ of how we can improve our health and reduce the morbidity that leads to those costs. To do so, we need to acknowledge the importance of substance abuse as a major factor ini causing and~ complicating the health problems of our citizens. As a nation, we have not yet made the commitment to address the~problem of substance abuse. For exarnple, the U.S. is thee only industriali;zed! natiion! among al group surveyed whichi had al tobacco tax that amounted to: less than 50% of the cost of a pack of cigarettes. U.S. total taxes amounted to only an average of 30%. In addition, most other countries have considerably gzeater regulation on alt forms of tobacco advertising than does the U! S. Among 19 countries rated in terms of their control of advertising, the U.S. ranked 18th.' Nor have we invested sufficiently in the research necessary to identify and target effective interventions, or even to understand fully the relationship betweeni various substances and illness. As we found in our own work, while there has been extensive epidemiolbgic research linking cigarette smoking and a variety of diseases, fewer studies relate alcohol to disease, and eveni less is known about the full impact of illegal drugs. Whether, in the end, we discover that, substance abuse is responsible for 20 or 3& percent (or more) of health care, costs may be less the issue than the fact that we already know that literally hundreds of billions of dollars are spent eachi year on health care as a result, of substance abuse. As a result, the future solvency of the Medicare Trust Fund is inextricably intertwined withwha't we dbtndaY toredueesubstance abuse in alll'itsfonmls--among~ our ciRizens: Pre.°entirtg, diseases that result, from substance abuse and prolonging a healt'hy life for theelderlycan bea rnuch more potent weapon agaanst~ risingtilledicareexpenditurest'han 'Uhe 10

multitude of other, more frequently discussed cost-containment measures or benef t reductions. If there were no substance abuse, the Trust Fund's solvency would not be in doubt for almost twice the period thani the Trustees are now projecting. But this issue extends beyond the Medicare program. Debating the broader issues surrounding, health care reform without either acknowledging, the impact of'substance abuse, or including the prevention and treatment of this problem an integral part of that reform, will! be a costly mistake, making it impossible to provide universal access at all; or at a cost that as ai nation, we can afford. 11

APPENDIX I: 1VIETHODS The methodology for this study relie& primarily on the existing, epidemiologicc literature, as well as on consultations with physicians knowledgeable about substance abuse and relatedl disorders. Epidemiologic Literature Search We conducted a Medline search of epiderniologic or etiologic studies that identified substance abuse (tobacco; alcohol, or drugs) as a major risk factor for acquiring a given, disease/condition. In, this search, we selected! individual studies, reviews, or meta-analyses, that quantified either a relative risk or an attributable rislt„ and that generally met the criterion established by the Surgeon General for establislling, causal'nty. 8 Specif cally; we favored studies that 1) reported stratified relative risks by levels of' consumption or by age and sex, 2) demonstrated a dose-response relationship; 3) found diminishment of risk upon cessation of use, and 4) had findings that': were generally consistent with other studies. In addition, with a very few exceptions, we used studies that measured the abusers' increased risk of acquiring, a disease relat2ve to: a non-substance abuser (morbidity studies),, as opposed to their increased risk of dying of the disease (mortality studies),.-' Studies that were reviews or meta-analyses of other studies took priioritiy since they combined the results of multiple studies and often reported a composite attributable or relative risk. If these were not available, we selected' large prospective or case-control studies and calculated an average relative risk from these studies~ 1wIten possible, we selected studies that A complete bibliiography is available from CASA. 12

were targeted at the elderly population. However, we found that the elderly population~ is not ofbeni the focus of medical or epidiemiologic research: In lieu of elderly-specific relative risks; we used relative risks for the generall adult populationi Population Attributable Risk Relative risks in epidemiologic studies are calculatedl by d'ivid2ng, the incidence of disease in the exposed group by the incidence in the disease in the non-exposed group.9' Some researchers go one step further and caleulate the risk, not just for the individuaL but to the larger community, by measuring, the Population Attributable Risk (PAR). The PA h is the proportion of cases for a given disease that may be attributable to an etiologic factor (e.g. cigarette smoking) and is calculated using the following forrnula.9 PAR= b(r-I) X 100 b(r-1)+1 where b = prevalence of substance use in the population r = relative risk for a given disease For each disease or medical cond'ationi where a substance abuser's relative risk was: reported' in the epidemiologic literature, we calculated a Medicare-specific population attributable risk (PAIZ)l using relative risks reported in the studies andl the specific prevalence estimates for tobacco, alcohol~ and drugs in the Medicare population. Appendix IP1 provides a, listing of those conditions, the related substances and their PARs. The PAR was computed~ using the above formula or, where different relative risks were reported bti current' and former users or by lorel of consumption. the PAR ' formula was revised to reflect this specificity. 13

Where diseases had joint multiple PARs for different substances (smoking and alcohol), the al cohol' PAR was weighted by a factor of 0.5. For the Medicare population; we used & prevalence of 9% for heavy drinking basedd on studies of drinking in the hospitalized elderly population, The prevalence of drug use was, obtained from the 1991 NNational Household Drug Survey; and smoking from the 1987 National Medical Expenditures Survey. For most smoking-related diseases, we calculated PARs using prevalences for current and former smokers with, their respective relative risks (see TABLE 4 ini Results). However, for malignant neoplastic disease, some scientific evidence ! suggests that once smokers have reached a certain threshold of smoking (more than 10 cigarettes per day for more than 35 years), their relative risk is not diminished by cessation.10 Smoking over a long period of time may have ! an irreversible oncogenic effect which is not altered by qpittirig.1°.''-' For the Medicare population over 65 we found that' 32.7% of former smokers meet the criterioni of having smokedl' more than 101 cigarettes per day for more than 35 years. For this reason, we considered this subset'. of former smokers to be equivallent, to current smokers in the PAR caliculat2ons for cancer. Once PARs were computed for alli diseases andi conditions; ICD-9-CM codes were matchedl to the general diagnostic categori~esused in, much of the epidiemiologic 1'aterature: For example, the lung cancer category included~ ICD-9 codes 162.2-.9 (rnalignant, neoplasms of the bronchus and lung). However, if the ICD-9' codes, were not specif cally identified in the original study, with the assistance of ai medical eoder: and several physician consultants, we selected ICD, codest~hat fiell! intnt'he general diseaseclassifiicationand then matched the PARsfor that disease category with the associatedICD-9c!odes (iseeAppendix Illl),. 14

TABLE 5--ICD-9-CM DIAGNOSES WITH MENTION OF ALCOHOL OR DRUGS 291 ALCUIIOL Psychosis, alcoholic 292 DRUG Psychosis, drug 303 Alcohol Dependence Syndrome 304 Dependence, drug 357.5 Polyneuropathy, alcoholic 305 Nondependent Abuse of Drugs 425.5 Careiionryopathy, alcoholic 357.6 Polyneuropathy, due to drugs 535.3 Gastritis, alcoholic, w/o hemorrhage 648.3 Pregnancy, complicated by drug dependence 571 0 Cirrhosis alcoholic fatty 655 5 Pregnancy management affected by suspected damage to fetus from damage . , , . , - - _-- 571.1 Hepatitis, acute, alcoholic 760.7 Noxious influences affecting fetus via placenta or breast milk 571 2 Cirrhosis liver alcoholic 779 4 Reaction and intoxication drugs specific to newborn . , , . , , - - 571.3 Damage, liver, alcoholic, unspecified 779.5 Syndrome, drug withdrawal in newborn 760.71 Fetal alcohol syndrome - Alcohol 962 Poisoning by hormones and other synthetic substitutes affecting fetus via placenta or 965 Poisoning by Opiates and related narcotics breast milk 967 Poisoning by sedatives and hypnotics H w 790.3 Abnormal findings, alcohol in blood level 968 Poisoning by other central nervous system depressants and anesthetics ~ ~ 980 Poisoning by alcohol 969 Poisoning by psychotropic agents V 11.3 Personal history of alcoholism 970 Poisoning by central nervous system stimulants V61.41 Alcoholism in family 971 Poisoning by drugs primarily affecting the V70.4 Examination, for medicolegal reasons autonomic nervous system V79. I Special screening for alcoholism 977 Poisoning by other and unspecified drugs E860.0 Accidental poisoning by alcoholic beverage E850 Accidental poisoning by analgesics, antipyretics, and antirheumatics E860.1 Accidental poisoning by other and E851 Accidental poisoning by barbituates unspecified ethyl alcohol E852 Accidental poisoning by other sedatives and hypnotics E860.2 Accidental poisoning by methyl alcohol E853 Accidental poisoning by tranquilizers - - medicinal substances E854 Accidental poisoning by other psychotropic agents E860.8 Accidental poisoning by other specified alcohols E858.0 Accidental poisoning by hormones and synthetic substitutes E860.9 Acciclen(al poisoning by unspecified alcohol E858.8 Accidental poisoning by other specified drugs - central appetite depressants E950 Suicide and self-inflicted poisoning E858.9 Accidental poisoning by unspecified drug by solid or liquid substances Doc. 10020.2 4/ 14/94 02CM)SMOz

For those ICD-9 codes which explicitly mention alcohol or drug abuse ini their titles; we assigned a PAR of 1100%, since all of these hospital days are~ attributable to substance abuse. In addition, the NIAAA has identified a, l'ist of diagnoses that are completely aleohol- related (e.g. cirrhosis). These diagnoses were also assigned a PAR of 100% (Table 5). The costs to Medicare of substance abuse treatment in psychiatric hospitals: vvas also included in the sttrdy: This was derived ffom data collected by the Nati+onal Associatiioni of Psychiatric Health Systems oni both the use~ of drug and alcohol services and the prevalence of Medicare discharges.'B Database To determine the Medicare hospitaf costs for treating substance abuse-related illnesses,, we used Medicare data reported on the 1991 National Hospital Discharge Survey (NHDS). The NHDS is a nationwide sample survey of short-stay hospitals; Each NH'DS record includes the patfient's primary payer„ demographic inforrnation„ principal' diagnosis and up to four secondary diagnoses (reported by ICD-9 codes), DRG category, procedures; and length of stay. Extracting alll Medicare discharges that had a primary diagnosis that fell within a given ICD-9 code for which we had a PAR, we then applied each PAR (by age or sex, if appl'icable) to the discharges with corresponding diagnoses. For example, approximately 111,000 Medicare hospital discharges had hing cancer as their primary diagnosis: Of these,, 87%~ (the PAR) or 96.600 hospiQadizationswereattrib'uted tiosmoking~. S~inceMedicare pays: . onthe basis of DRG's (not diagnoses), iRwas necessary to analyze the data by DRGs to estimate the costs of these substance abuuse-relatedl adinissions to. 15

Medicare. For example, Medicare discharges that had a primary diagnosis of lung cancer fell into any one of 8 DRG's (depending on the procedure required or other complications) and, therefore, were ! paid a di'fferent amount depending on the DRG. By placing the discharges calculated above for each ICD-9 code into ~tlteir appropriate DRG, we were able to adjust for the! case mix index (CMI); or the relative~ payment lbvel for that discharge. In this way, we were able to obtain a case-mix adjusted total for substance abuse-attributable discharges. We then multiplied these weighted discharges by the standiirdized national average DRG payment for 1991 ($3,974) to; determine total Medicare substance abuse costs. While adjusting for CMQi allows us to capture the higher cost per discharge ~ for certain diagnoses, it dioes not measure the differential impact on length of stay when substancee abuse is recorded as & secondary diagnosis. To capture the incremental costs of substance abuse as a complicating factor in treating conditions unrelated to substance abuse,, we also~ analiyzed, the marginal irnpact of substance abuse as a secondary diagnosis on hospital lengthh of'stay. For this analysis, we defined substance abuse as only those diagnoses that explicitly mention drug, or alcohol use (e.g. alcohol poisoning) or that are the immediate reaction to substance use (e.g. delirium tremens). We caleulhted the difference in length of stay fbr patients with and without these substance abuse secondary diagnoses that had~ the: same primary diagnoses (by gender and for the under 65 and over 65 age groups) to determine the marginal days of care that were substance-abuse related. Estimating an average cost of $604 per day for these extra days, we thenad'ded t'hese incrermental costs to our tiatal'. ~ r~. cn ~ao w w ]6 ~ N

APPENDIX II PVIEDIiCARE' ICD-9 CODE/PAR LIST Disease Abused Category Substance ICD-9 Codes PAR. AIDS. IV D 042:0-044:9 32% > 13' IV D 55% <13' s la Ne sm op Bladder Cancer S'. 188.0-188.9, 233.7 49% M 39% F Breast Cancer 174.0-174.9, 233.0 15% Cervical Cancer S 1180.0-1'80.9, 233.1 28% F Cheek and Gum Cancer SLT 143L0-143L9; 145.0,234.8 86% Colorectall Cancer A,S 1153L0-1153.9; 154.0-1154.1 33% M 230.3-230.4 18% F Esophageal Cancer A,. S 150.1-150.9, 230.1 100% M 97% F Laryngeal Cancer A, S 161.0-161.9, 231.0 100% Leukerniai S 204.0-20'8'.9 20% Liver Cancer A 155.0-155L2„ 230.8 18% Lung Cancer S, PS 162:2-162:9, 231.2 93% M 83% F Oral/Pharyngeal Cancer A, S, SLT 140.0-141.9, 143.0-149.9, 100% o M 230:0 82% F Pancreatic Cancer S 157; 230.9 37% M 3'1 % F Prostate Cancer 185, 23'3: ,4 7% M Renal Cancer 189.0. 233.9' 43% M 17% F Il;'enal Pelvis Cancer S' 189:1 62% Salivary Gland Cancer SLT 142.0-142.9 10% Stbmach Cancer S. 151.0-131.9; 230.2' 35% M 28% F Ureter Cancer S 189.2 7'1 °/'o Vulvar Cancer S 1I84.0-1I84.9 24% Cancer,, General S V073, V66.2, 198'.89, 1991 54% M V58.1 22% F 17

Respiratory Disease COPD S' 491.0-4'92.9; 493.2, 494, 86% M 496 74% F Influenza S 4187:0-487:1 30% Other respiratory dis. S 5'10.9,511.0-511.9 37% M 512A-512:8,,513.0, 51I8.0; 35% F 518,3', 5 18.8'1, 518.82 Pneumonia S 480!1-480!8, 481.0, 482.1- 29% M 482.9, 483„ 485, 486 Cardiovascular Disease Cardiomyopathy A 425.11, 425.4, 425.9 37% M Cerebrovascular Disease S, D 4'3'L0-435'.9 70% M <65 73% F <65 33% M 65+ 16% F 65+ Coronary Artery Disease S 4'd 0:0-410.9, 411.1-411.9, 64% 413.0413.09, 413.2-414.09, 414.2-414:9, 427.41, 429.2-429.29,. 427.41, 429.71, 429.79 Coronary Heart Disease S 413.1, 414'.11, 427.1, 427.41, 18% M 427.5-427.69; 4 7.711„ 429.79, 31 °Jb F 42$.0-428.19; 428.9; 429:3'. Endocarditis IV D 4'21.0; 42.1.9 75% Hypertension A 4!01.01401.9; 402.0-402.9 18% 4I03'.0-403'.9, 4041.0-404.9 642.0, 642.2, 642.9 Peripheral Vascular Dis. & 415.1, 41619, 440.0-448.9~ 75% 451.0-451.9, 453:1-453.9, 4!54.0-4!54.9 Pregnancy Complications Placentae Previa S 641.0-641.1, 762.0 26% F Premature Rupture S 658.11, 658'.13;658.2; 761.1 32%F Spontaneous Abortion S, C 634 37% F Preterm! Del'nveryS 644.0-644.9, 656.3-656.6 18% F Newborns Congenital Anomalies S'~ 74!0~.0-759~~.9~ 20°io IV D= INTRAVEN'OUS DRUG USE; S = SiVIOKING';' A = ALCOHOL; SLT = S1VIOKELESS TOBACCO; PS = PASSIVE SMOKE. 18'

Low Birth Weight S 764:0-765.9' 36% Congenital Syphilis S 090.0-090.9 18% Digestive System~ Cirrhosis A 571.5 72% Crohn's Disease! S 555.0-555:9 32% Duodenal Ulcers A, S 532'.00-532.90i 46% M A 3% F Pancreatitis, Acute A 577.0. 44% Pancreatitis, Chronic A, S 577.1 90% M. S 33% F Peptic Ulcers S 533 25% M 14% F Stomach Ulcers A, S 531 29% a M A 8% F Endocrine and' Metabolic Diabetes S 250.0 4%, F Other Burns A, S,,, D 940:0-949.9 1 23% Cataract S 366.1,366.3,366.45,366.9 3!%o M 2% F Dernentiai A, D. 290.1,290 :2 ,29'0.3,290.4; 11% 294.1, 294.9 Epilepsy A 345.1',345'.3;345.9 27% Hepatitis A IV' D 70.1 6% Hepatitis B IV D 70.2. 70.3'. 12% Hepatitis C IV D 70.51, 70;59, 70.9 36% Low Back Pain S 724L2,724.5,724:8,724L9 5% Pelvic Inflammatory Dis. S 614-616 38%, F Peridonitis S' 522'.4,523.4 40% o Seizures A 780.3' 22% Traumai A, D 800.0-909:9; 921.0-939.9. 25% 950.0-959.9 Tuberculosis 011I-013; 017, 018 25% Diseases Entireh, Ptelatedl to Substance Abuse IV D = IINTAWVEPVOUS DRUG USE; S = SMOKING; A = ALCOHOL; SLT - SMOKELESS TOBACCO; PS = PASSIVE SMOKE. 19.

Alcohol Related A 291,303, 980, 950, 357.5, 425.5, 100% 535.3„ 571L0-571.3, 655.4, 760.71, 790.3, 11.3; 61.41, 70:4, 79:1, 860.1, 860.2, 860.8, 860.9 Drug Related D 292, 304, 962, 965, 967, 968; 969, 100% 970; 971, 977, 850-854, 357.6, 648.3, 655.5,760.7; 779,4-779.5, 858.0, 858! 8, 858.9 IV D = INTRAVENOUS' DRUG USE; S = SMOKING; A = ALCO'HOL; SLT = S11vIOKELESS TOBACCOy PS =' PASSIVE SMOKE. 20

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