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Cost Effectiveness

There is vast evidence of the cost-effectiveness of integrated care.

  • CMSP found that reimbursing primary care clinics for up to 10 mental health visits and 20 substance abuse visits per year resulted in a dramatic 57% drop in psychiatric days by the treated group (vs. a 71% increase in the business-as-usual controls).  However, this cost-savings was neutralized by an increase in outpatient expenses. Nonetheless, CMSP has elected to continue the program with the expectation that there will be savings once the program is further underway.
  • Depression management for depressed primary care clients resulted in a $980 cost decrease for those who complained of psychological symptoms, but there was a $1,378 cost increase for those who complained of physical symptoms only.
    • Miriam Dickinson et al., “RCT of a Care Manager Intervention for Major Depression in Primary Care: 2-Year Costs for Patients With Physical vs Psychological Complaints” Annals of Family Medicine, 2005, 3:15-22.
  • “The impact of psychological interventions on the use of medical services was evaluated by examining the outcome of 91 studies published between 1967 and 1997 using meta-analytic techniques and percentage estimates. Results provided evidence for a medical cost-offset effect, specifically in the domain of behavioral medicine. Average savings resulting from implementing psychological interventions was estimated to be about 20%. About one third of the articles demonstrated that dollar savings continued to be substantial even when the cost of providing the psychological intervention was subtracted from the savings.”
    • Jeremy A. Chiles et al. The Impact of Psychological Interventions on Medical Cost Offset: A Meta-analytic Review Clinical Psychology: Science and Practice, June 1999, Vol. 6.
  • Collaborative care, implemented through brief cognitive-behavioral therapy and enhanced patient education in primary care, increased depression treatment costs, but improved the cost-effectiveness of treatment for patients with major depression. A cost offset in specialty mental health costs, but not medical care costs, was observed.
    • Von Korff, “Treatment cost offsets and cost-effectiveness of collaborative management of depression”, Psychosomatic Medicine, 1998, 60.
  • When clients with diabetes and depression received depression collaborative care (a depression care manager offered education, behavioral activation, and a choice of problem-solving treatment or support of antidepressant management by the primary care physician), an incremental net benefit of $1,129 was found over two years. The study concluded that this intervention is “a high-value investment for older adults with diabetes; it is associated with high clinical benefits at no greater cost than usual care.”
    • Wayne Katon et al. “Cost-Effectiveness and Net Benefit of Enhanced Treatment of Depression for Older Adults with Diabetes and Depression.” Diabetes Care 29:265-270, 2006.
  • When family physicians worked collaboratively with mental health professionals to treat persons on short-term mental health disability leave, their patients returned to work at
    higher rates than those treated by physicians alone. The average cost savings to employers was $503 per patient.

    • Carolyn Dewa et al. “Cost, Effectiveness and Cost-Effectiveness of a Collaborative Mental Health Care Program for People Receiving Short-Term Disability Benefits for Psychiatric Disorders”, Canadian Journal of Psychiatry, 54(6), 2009.
  • Over 24 months, clients having both diabetes and depression who were assigned to a stepped-care depression treatment program had outpatient health services costs that averaged $314 less compared to those who received care as usual. The authors conclude that “for adults with diabetes, systematic depression treatment appears to have significant economic benefits from the health plan perspective.”
    • Gregory Simon et al., “Cost-effectiveness of Systematic Depression Treatment Among People With Diabetes Mellitus”, Archives of General Psychiatry, January, 2007, Vol. 64, No. 1.
  • A study of Medicaid recipients diagnosed as chemically dependent found that those not using mental health services increased their medical costs by 91% during the study period, compared to decreased costs for recipients of mental health treatment. In the first twelve months after treatment, some interventions produced net decreases of approximately $514 per person.
    • N.,Cummings, et al. “The impact of psychological intervention on healthcare utilization and costs”. Biodyne Institute, 1990.
  • A collaborative care intervention for primary care clients with panic disorder, including systematic patient education and approximately two visits with an on-site consulting psychiatrist, resulted in no significant differences in total outpatient costs, and an analysis suggests a 70% probability that the intervention led to lower costs and greater effectiveness compared with usual care.
    • Wayne J. Katon, “Cost-effectiveness and Cost Offset of a Collaborative Care Intervention for Primary Care Patients with Panic Disorder”, Arch Gen Psychiatry. 2002; 59.
  • Comprehensive collaborative and structured mental health services provided to high utilizers of mental health services resulted in a 65% reduction in community hospital days.
    • Nancy Anderson, “Medical Cost Offsets Associated with Mental Health Care” A Brief Review, Washington State Dept. of Social and Health Services, December, 2002.
  • Use of managed mental health care (structured, targeted, focused and brief treatment) for Medicaid enrollees reduced medical services costs and utilization by 23 to 40 percent relative to control groups. For enrollees with chronic medical diagnoses, managed treatment reduced medical costs by 28 to 47 percent. For enrollees without chronic medical diagnoses, traditional fee-for-service also reduced medical costs by about 20% but used three times as many outpatient visits. Costs of managed treatment were recovered in 6 to 24 months. The managed mental health group spent fewer days in the hospital and used the emergency room less.
    • MS Pallak et al., “Medical costs, Medicaid, and managed mental health treatment: the Hawaii study”, Managed Care Q, 1994 Spring; 2 (2).
  • An eight-session mind/body education program for people prone to somatization and an eight session chronic pain management program “decreased medical office visits by about 35%”.
    • Daniel Bruns et al., “The Implementation of Integrated Primary Care at Kaiser Permanente”:An Interview with Roger Johnson, Dec., 1998.
  • Primary care clients assigned to enhanced care for depression not only experienced significantly more depression-free days compared with usual care clients, but cost the health plan significantly less ($568 vs -$12 in incremental costs; P <.001).
    • Katherine Rost, “Cost-Effectiveness of Enhancing Primary Care Depression Management on an Ongoing Basis”, 2005, Annals of Family Medicine 3: 2005.
  • “Johns Hopkins HealthCare examined the first 12 months of claims histories of 603 adult Medicaid enrollees who frequently used medical services and had a recent history of substance abuse. An intervention group of 400 was targeted for management by substance abuse coordinators and nurse care managers who received training in the integration of medical case management and substance abuse services. The training included mock interviews, lectures, and case conferences on substance abuse topics. A comparison group of 203 members received routine care in the form of separate outreach from substance abuse coordinators and care managers.  Early results indicate that the intervention group reduced medical costs by $122 per member per month as compared to an increase in the comparison group. The intervention group’s cost reductions were realized through a decrease of 288 admissions per 1,000 members as well as a decrease in 92 days admitted per 1,000 members. Moreover, the intervention group experienced increased enrollment in substance abuse treatment and case management, which appropriately offset some of the savings from hospital utilization. In all, the PMPM cost reductions among intervention group members totaled $503,616 through the first year of the program, relative to baseline.”
  • Though the a primary care depression management intervention added to the total care costs the first year of operation, these costs were largely off-set by general health care savings during the second year. The intervention produced health and mental health improvements without a significant increase in costs.
    • Wayne Katon et al., “Cost-effectiveness of Improving Primary Care Treatment of Late-Life Depression”, Archives of General Psychiatry, 2005, 62.
  • Patients participating in the IMPACT program for treating depression in primary care had lower mean total healthcare costs than usual care patients during a four year period.
    • Jurgen Unutzer et al., “Long-term Cost Effects of Collaborative Care for Late-life Depression”, American Journal of Managed Care, Vol. 14, No. 2, 2008
  • Patients who receive care for depression in primary care clinics with routine mental health integration teams and care processes were 54% less likely to use higher-order emergency department services.”
    • Brenda Reiss-Brennan et al., “Cost and Quality Impact of Intermountain’s Mental Health Integration Program”, Journal of Healthcare Management, 55:2, 2010.
  • Primary care patients with diabetes and major depression assigned to an intervention program including education about depression, behavioral activation and and a choice between anti-depressant medication or problem-solving therapy had improved depression outcomes compared to the usual care group with no evidence of greater long-term costs.
    • Wayne Katon et al., “Long-Term Effects on Medical Costs of Improving Depression Outcomes in Patients with Depression and Diabetes:, Diabetes Care, Vol. 31, 2008
  • When comparing clients with the highest risk scores enrolled in patient-centered health homes (PCHM) vs. those not enrolled, the PCMH model was show to have a significant reduction in total costs in the first two years and significantly lower client admissions in the three years studied.
    • Susannah Higgins et al., March, 2014.  Published on-line

Impact Of Depression On Medical Costs

 Condition Annual Medical Costs per Patient Without
Depression ($)
Annual Medical Costs per Patient
Depression ($)
 Heart failure  2.56  6.74
 Allergic rhinitis  3.27  8.46
 Asthma  3.73  10.56
 Migraine  3.82  15.47
 Back pain  11.61  33.25
 Diabetes  13.06
 Hypertension  13.38  27.16
 Ischemic heart disease  62.40  110.94

Actual annual medical costs per patient based on claims data for 229,776 patients, 1995-1998. SOURCE: OCI 2001, as presented by Dr. David Shern, 2008.

Another graphic, prepared by the Center for Integrated Health Solutions, visually brings home the point that integrated care reduces healthcare costs .

Business Case For Integrated Care

As part of its Integration Policy Initiative, IBHP and the California Institute of Mental Health (CiMH) commissioned Barbara Mauer and Dale Jarvis to develop a financial rationale  for integrated care.  The resulting paper, “The Business Case for Bidirectional Integrated Care” was released in June, 2010.  The paper explores how integrated care can improve quality outcomes and healthcare costs, citing findings from programs across the country.  A one page summary is also available.