Improving Substance Abuse Treatment in New Jersey:
A Report of the New Jersey Substance Abuse Prevention &
Treatment Advisory Task Force
The Department of Health and Senior Services, August 2001

Summary of Managed Care Findings

>>>>Those persons with insurance and severe substance abuse problems (such as heroin addiction) have problems accessing covered treatment services promptly. If services are authorized by their managed care organization, care is frequently of insufficient intensity or duration to lead to recovery (p. 3).

One direct result of the “managed care revolution” has been a significant reduction in the delivery of substance abuse treatment by hospitals in New Jersey. In the late 1980’s there were 17 specialized inpatient units for alcohol, drug abuse or dependency that operated a total of 587 beds (1987 data) in this State. By 1998, only 11 hospital units existed operating a total of only 337 beds. By 1993, 52 hospitals had established outpatient services for substance abuse. As of 1998, there were only 33 hospital outpatient units in New Jersey (p. 16).

Experiences of New Jersey Parents and Families

Families report severe difficulty accessing substance abuse treatment for family members, including persons addicted to heroin. These problems, not unique to New Jersey, existed whether or not the family had private insurance (p. 17).

When the family had insurance, the problems included:

• Insurance companies and managed care organizations that approved only outpatient care would not approve detoxification or residential treatment (p. 17);
• Inability to find a treatment provider with treatment available immediately, and waiting lists when the need for services was critical (p. 17);
• Some insurers do not recognize and so do not pay for levels of care that are common in New Jersey, such as sub-acute detoxification services (p. 18);
• Approval by some managed care organizations (MCOs) of only very brief residential stays for stabilization, followed by approval of extremely brief outpatient services, when the professional recommendations as well as family experience led to a conclusion that extended treatment would be necessary (p.18).

Cost Shifting – From Private to Public Sector

These experiences with MCOs led many families with insurance to immediately seek access to publicly funded services as their only alternative. A national report confirmed this pattern by noting that privately insured individuals end up turning to the public sector for treatment (p. 18).

This increased costs to federal, state and local governments by as much as 20%. (Lewin-VHI, “Healthcare Reform and Substance Abuse Treatment: The Cost of Financing Under Alternative Approaches (p. 18).

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