1993 Finalist
State of Minnesota
Innovations in American Government Awards
Innovations in American Government Awards

The State of Minnesota’s Consolidated Chemical Dependency Treatment Fund is an effort to ensure that public funds available for substance abuse treatment are used to serve the maximum number of clients in the most cost-effective program and level of care available. The Consolidated Fund combines all state and federal treatment monies into one fund available to all Minnesotans who meet financial eligibility criteria.

Every year, Minnesota's 87 counties and 11 Indian reservations receive an allocation from the Consolidated Fund that can be used to pay for primary inpatient, primary outpatient, halfway house, and extended care services. There is also a reserve fund (one for reservations, one for counties) that can be accessed if a county or reservation exhausts their allocation and has met a maintenance of effort requirement with local funds.

Each county and reservation is responsible for assessing and placing eligible clients using statewide criteria that match clients to the most appropriate level of care given the nature and extent of their chemical use problems. Counties and reservations are responsible for negotiating rates with vendors. All licensed treatment programs in the state (and in neighboring states that meet the same licensing standards) are eligible vendors and compete for publicly funded clients. The Consolidated Chemical Dependency Treatment Fund relies on competition between the public and private sector and independent assessment and placement of clients to control costs and ensure access to appropriate treatment services for public clients. It also ensures the quality and accountability of public treatment by requiring all vendors to meet the same licensing standards and to report data on their clients and costs, and the outcomes of treatment.

Prior to the initiation of the Consolidated Fund, client eligibility for services, treatment placement, and costs were subject to the idiosyncrasies of a variety of funding mechanisms and the potential bias of providers assessing prospective clients. With the adoption of this funding approach, Minnesota has eliminated its two-tiered system of treatment, with one set of programs for the poor and another for private-pay and insured clients. The Consolidated Fund ensures that poor clients have the same access to high quality, effective treatment programs as private-pay clients do. Now, approximately 20,000 Minnesotans receive treatment each year through the Consolidated Fund.

Cost containment is a major goal of the Consolidated Fund. From FY 1989 to FY 1992, the average cost per placement increased 6.6 percent, from $2,579 to $2,750. During the same period, the average cost of medical services rose 28.4 percent. Based on the distribution of placements in FY 1989, the state projected expenditures of $55,904,399 in FY 1992. Emphasis on outpatient placements, however, helped reduce actual FY 1992 expenditures to $48,192,650, a savings of $7,711,749. Access to treatment for the poor is another major goal. This is measured by the number of clients who receive services under the fund. Overall placements have increased from 17,427 in FY 1989 to 18,762 in FY 1992, despite the funding reductions for Tier 2 and Tier 3 clients. During this same period, the proportion of placements of minority clients increased from 26 percent to 32 percent. Maintaining positive client outcomes is another goal of the program. Six months after treatment, 55 percent of contacted Consolidated Fund clients report total abstinence from alcohol and other drugs. Comparing six months pretreatment with six months post-treatment reveals a 20 percent decline in days of medical hospitalization and a 75 percent decline in arrests—two key cost-benefit indicators. Only 20 percent of clients are readmitted to treatment within two years.