District of Columbia Demand Reduction Effectiveness Demonstration Act of 1989

District of Columbia Demand Reduction Effectiveness Demonstration Act of 1989 - Directs the Secretary of Health and Human Services to make a grant providing payments over five years to an organization for the establishment and operation of a comprehensive drug and alcohol addiction treatment (CDAAT) program for District of Columbia residents. Requires that no less than 50 percent of the individuals receiving CDAAT services be individuals whose family income does not exceed 200 percent of the Federal poverty level and that any charges imposed on a service recipient for addiction treatment be based on his or her ability to pay for such treatment.

Directs the CDAAT organization to enter into an agreement with an assessment and case management organization, treatment providers, and a treatment evaluation unit for the conduct of the program in accordance with specified requirements, including the requirement that evaluation units compile information on program participants and the treatment they receive for transmittal to the CDAAT organization and the Secretary.

Sets the Federal share of the CDAAT organization's unrecovered CDAAT program costs at two-thirds of such costs, with the District of Columbia covering the remainder of such costs. Authorizes appropriations to the Secretary and the District of Columbia for the program. Determines the allowable costs of the CDAAT program pursuant to a prospective payment system in the program's final three years.

Makes the provisions of the Public Health Service Act relating to patient confidentiality and disclosure of records applicable to the CDAAT program.

Directs the CDAAT organization to annually compile and submit information to the Secretary on CDAAT program effectiveness.

Directs the Secretary to contract with an institution of higher education in the District of Columbia for the conduct of a study of the clinical and cost effectiveness of the CDAAT program's various drug and alcohol addiction treatment methods and services. Requires such institution to report to the Secretary within one year after this Act's enactment on study results and annually update such report using information submitted to the Secretary by the CDAAT organization on program effectiveness.