Avalere: Providing Behavioral Healthcare to Medicare Population Lowers Total Cost of Care

Providing behavioral health care to Medicare enrollees lowers the cost of care compared to individuals who were left untreated, according to results of a recently published analysis.

The study was done by health care management consulting company Avalere Health, which looked at the medical, hospital and emergency department (ED) costs incurred when treating geriatic patients for a major depressive disorder (MDD), versus expenses accrued when Medicare recipients receive no care at all.

For data, Avalere utilized a report from the University of Michigan Behavioral Health Workforce Research Center, which analyzed the nationwide prevalence of psychiatrists specializing in a number of areas, such as those tending to the geriatric population.


More than 61 million Americans are enrolled in Medicare, which covers a number of behavioral health services for individuals 65 and older. When Medicaid-eligible recipients receive care for MDD, the study posited that it results in a 4% reduction in total care costs compared to untreated patients for MDD. The care provided to patients was analyzed over a 12-month baseline period with a follow-up period lasting for 24 months.

Overall on a monthly basis, treating patients resulted in a 10% decline in costs compared to a 6% reduction of untreated individuals. The biggest discrepancy lies in costs for care provided at hospitals, where it declined by 5% for individuals being treated for MDD compared to a 10% jump in costs for those who were untreated.

Additionally, for those being treated for MDD, emergency department costs dipped by 8% compared to only 1% for those untreated. Also, medical costs for those being treated for MDD declined by 5%, whereas there was no change for those untreated.

From Avalere Health – “Treating Depression Reduces Medicare Costs; Provider Challenges Remain”

Avalere said that its results demonstrate the positive financial and health aspects of older adults seeking treatment for MDD. Avalere also called on Medicare to make compensation structures more attractive to psychiatrists, whereby they may be able to bill for additional services that provide care to seniors.

“Avalere’s analysis highlights the positive impact that mental health treatment can have on Medicare FFS patient costs for certain patient populations, and further illustrates the need for Medicare payment stability in attracting providers to serve the geriatric psychiatry market,” the firm said.

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