1Self-insured companies can save up to 50 percent on mental health and substance abuse treatment costs by planning the way patients are treated.

Effectiveness and costs are rarely considered when planning a patient's treatment unless the payer gets involved, said Ted Meads, regional marketing director at MCC Cos., a Minneapolis-based provider of mental health and substance abuse services.Mr. Meads spoke at the annual Risk and Insurance Management Society's annual meeting this week. RIMS is a New York-based trade association for insurance buyers and risk managers.

Traditionally, mental health and substance abuse costs have accounted for up to 20 percent of the total premium in a typical fee-for-service arrangement while only 3 percent to 5 percent of those insured use the services, Mr. Meads said.

The disproportionately high costs result from differences in providers, regions, treatments and professional disciplines, Mr. Meads said.

But giving structure to the system with a type of fee-for-service arrangement can control costs significantly, he said.

The idea, Mr. Meads said, is to give providers an incentive to prescribe cost-effective treatments.

A utilization review allows the payer to monitor the type and cost of treatment.

With the utilization review, you aren't changing the system, but you are beginning to monitor it, Mr. Meads said.

The results could be that a patient is treated on an outpatient basis instead of being hospitalized. Group therapy could be used instead of individual therapy.

Psychiatric or substance abuse review is far more difficult than traditional medical or surgical review, he said.

Mr. Meads also suggested a preferred provider organization, in which the company recommends providers to their employees. The providers offer discounts in exchange for their preferred status.

Another option is an exclusive provider organization, in which insureds only can use certain providers that have a contract with the company to provide services.

Given the financial implications for inpatient facilities or practitioners who rely heavily on the use of inpatient care, the chance of change occurring on its own is slim, Mr. Meads said.