Abstract
In FY 2001, the Massachusetts Bureau of Substance Abuse Services contracted with 64 adult-only residential rehabilitation facilities. All were paid on an undifferentiated class rate basis at $55 per resident-day. This study uses cost and other information from program-submitted Uniform Financial Reports to measure the facility-specific costs of providing residential rehabilitation services, distinguish the program and site-specific factors responsible for the facility cost differences, and then use this information to suggest alternative, more equitable, and more efficient approaches to rate setting. This analysis finds that a uniform rate structure is substantially inefficient and inequitable.