Across-the-board cuts in mental health services to control spiraling costs are inappropriate because most of the increase comes from substance abuse treatment, a study prepared by Johns Hopkins University economists for the American Psychiatric Association concludes.

Officials of the Washington-based APA, which represents about 37,000 psychiatrists nationwide, have long been concerned that sharp cuts or the elimination of mental health services by insurance companies have occurred at a time when studies show that many Americans with treatable mental disorders are not getting appropriate care.

The new unpublished study concludes that the cost of treating mental illness among adults has been exaggerated and that the demand for psychiatric services has been moderate compared with increases for other kinds of medical care. But the study showed that the cost of treating children and adolescents has risen, as has the cost of substance abuse treatment.

The study, conducted by Richard Frank and David Salkever of the Hopkins School of Hygiene and Public Health, surveyed information from MEDSTAT Systems, Inc. a processor of health insurance claims data for major industries, as well as from hospital discharge records from the states of Maryland and Washington.

They also found that the use of inpatient care for adult psychiatric disorders has grown at a slower rate than inpatient care for all medical conditions. But the use of inpatient treatment for substance abuse "has grown at exceptional rates," as has the cost of such treatment.

According to the study, the average charge per insured person for treating an adult substance abuse patient rose 31 percent between 1986 and 1988, from $29 to $38. The charge for treating other mental disorders increased 20 percent, from $85 to $102. Charges for treating children and adolescents with mental disorders rose 68.7 percent, from $16 to $27.

Steven S. Sharfstein, chairman of the APA's Committee on Managed Care and medical director of Sheppard and Enoch Pratt Hospital in Towson, said that "financing psychiatric care has been a saga of cost shifting, of trying to get someone else to pay the bill."

When insurance companies cut the benefits, then somebody else has to pay -- either families, the criminal justice system, or taxpayers, he said.

"We need more flexibility to provide the most cost-effective programs," Sharfstein said. For example, he said, there is good evidence from scientific studies that intensive outpatient or day programs are as effective in treating drug or alcohol problems as are 28-day inpatient programs tailored to match the standard requirements of many insurance programs. Extending benefits to cover less expensive outpatient programs would "make a big economic difference," he said.