Refining the Costs Analyses of the Fort Bragg Evaluation: The Impact of Cost Offset and Cost Shifting

A key aim of the evaluation of the Fort Bragg Demonstration was to determine whether delivering services through a continuum of care lowered expenditures on mental health services. The evaluation clearly showed that expenditures were actually higher in the Demonstration. Critics of the evaluation claimed that the evaluation's perspective on costs was too narrow—in particular, that the Demonstration produced cost shifting and cost offset that were not captured by the evaluation. New data allow us to include a broader array of costs: mental health services received outside the catchment areas, general medical services for the children themselves, and mental health services used by family members. Results showed that reductions in other costs do partially offset higher expenditures on mental health services for children at the Fort Bragg Demonstration. However, even when broader costs are included, total family expenditures are still substantially higher at the Demonstration.     

Public costs of better mental health services for children and adolescents

OBJECTIVE: This study evaluated how improved community mental health services for youths affect public expenditures in other sectors, including inpatient hospitalization, the juvenile justice system, the child welfare system, and the special education system. METHODS: Participants were youths aged six to 17 years who received services through a mental health agency in one of a matched pair of communities. One community delivered mental health services according to the principles of systems of care (N=220). The comparison community delivered mental health services but did not provide for the interagency integration of services (N=211). The analyses are based on administrative and interview data. RESULTS: Preliminary analyses revealed that mental health services delivered as part of a system-of-care approach are more expensive. However, incorporating expenditures in other sectors reduced the between-site gap in expenditures from 81 to 18 percent. This estimate is robust to changes in analytical methods as well as adjustments for differences between the two sites in the baseline characteristics of participants. CONCLUSIONS: These findings suggest that reduced expenditures in other sectors that serve youths substantially, but only partially, offset the costs of improved mental health services. The full fiscal impact of improved mental health services can be assessed only in the context of their impact on other sectors.     

Cost-effectiveness and cost offset of a collaborative care intervention for primary care patients with panic disorder

BACKGROUND: A collaborative care (CC) intervention for patients with panic disorder that provided increased patient education and integrated a psychiatrist into primary care was associated with improved symptomatic and functional outcomes. This report evaluates the incremental cost-effectiveness and potential cost offset of a CC treatment program for primary care patients with panic disorder from the perspective of the payer. METHODS: We randomly assigned 115 primary care patients with panic disorder to a CC intervention that included systematic patient education and approximately 2 visits with an on-site consulting psychiatrist, compared with usual primary care. Telephone assessments of clinical outcomes were performed at 3, 6, 9, and 12 months. Use of health care services and costs were assessed using administrative data from the primary care clinics and self-report data. RESULTS: Patients receiving CC experienced a mean of 74.2 more anxiety-free days during the 12-month intervention (95% confidence interval [CI], 15.8-122.0). The incremental mental health cost of the CC intervention was $205 (95% CI, -$135 to $501), with the additional mental health costs of the intervention explained by expenditures for antidepressant medication and outpatient mental health visits. Total outpatient cost was $325 (95% CI, -$1460 to $448) less for the CC than for the usual care group. The incremental cost-effectiveness ratio for total ambulatory cost was -$4 (95% CI, -$23 to $14) per anxiety-free day. Results of a bootstrap analysis suggested a 0.70 probability that the CC intervention was dominant (eg, lower costs and greater effectiveness). CONCLUSION: A CC intervention for patients with panic disorder was associated with significantly more anxiety-free days, no significant differences in total outpatient costs, and a distribution of the cost-effectiveness ratio based on total outpatient costs that suggests a 70% probability that the intervention was dominant, compared with usual care.     

Medicaid managed care and the distribution of societal costs for persons with severe mental illness

OBJECTIVE: Managed care financing strategies that involve financial risk to insurers can reduce budgeted health expenditures. However, resource substitution may occur and negate apparent savings in budgeted expenditures. These substitutions may be important for individuals with disabling illnesses. The distribution of societal costs for adults with mental illnesses enrolled in plans that differ in their financial risk is examined to evaluate the degree to which risk-based financing strategies result in net savings or in the differential distribution of costs across public or private payers. METHOD: Six hundred twenty-eight adults with severe mental illnesses enrolled in three Medicaid plans that differ in financial risk arrangements were followed for 1 year to determine the distribution of resource use across Medicaid and other payers. Self-reported service use was obtained through interviews. Cost data were derived from self-reported expenditure, administrative, or agency data. Statistical procedures were used to control for preexisting group differences. RESULTS: Managed care was associated with a tendency toward reduced overall costs to Medicaid. However, private expenditures for managed care enrollees offset decreased Medicaid expenditures, resulting in no net difference in societal costs associated with managed care. CONCLUSIONS: Understanding the distribution of societal costs is essential in evaluating health care financing strategies. For adults with mental illnesses, efforts to manage Medicaid expenditures may result in substituting individual and family resources for Medicaid services. Government must focus on the distribution of societal costs since risk-based financing strategies may redistribute costs across the fragmented human services sector and result in unintended system inefficiencies.     

The Effect of Medicaid Managed Care on Mental Health Care for Children: A Review of the Literature

Despite its widespread adoption, little is known about the effect of Medicaid managed care (MMC) on children using mental health services. To assess the state of current research, we reviewed the literature on MMC and synthesized findings regarding access to care, expenditures, utilization, cost-shifting, and quality of care. A literature search was conducted and updated in November 2001. Studies were included if they involved evaluations of MMC, included children with mental health or substance abuse disorders, and had a non-MMC comparison group. Eight studies were included in the review. Most involved carve-outs and capitation. All of the studies that measured cost and service use showed decreases in total costs, inpatient care costs, and inpatient service use. These changes were frequently accompanied by increases in outpatient care. Some evidence suggests that MMC increased access to care for those with less serious conditions. There was no convincing evidence of cost-shifting from mental to physical health or other public agencies. Finally, no study directly measured health outcomes or quality of care. By reducing service use in inpatient settings, MMC has the potential to reduce children's mental health expenditures. The available research provides virtually no evidence on quality of care.     

Issues in estimating the cost of innovative mental health programs

This paper reviews problems encountered in estimating the unit cost of services provided by innovative mental health programs and illustrates methods for addressing these problems. Generally, the cost of a health care service is determined by identifying all resources used in its production and the cost of those resources. These costs are divided by appropriate workload measures to determine the cost per unit of service or per client. Issues that must be addressed include: 1) direct program costs; 2) indirect costs (including administration and capital costs); 3) program resources used to support research and othernonprogram activities; and 4) identification of typical workloads as the program is implemented. Application of these methods is illustrated with data from a multi-site study of intensive psychiatric community care conducted at nine Department of Veterans Affairs Medical Centers in the Northeast. A sensitivity analysis revealed that estimates of program costs vary by 59% over the entire program, and from 17%–168% at individual sites, depending on which cost estimation methods were included. The average cost of case management in this program varied considerably across sites, primarily reflecting differences in caseload size and staffing levels. Adjusting for inflation, the cost of this program falls below the cost of other published intensive community programs.     

Cost measurement and cost data in mental health settings

Costs play a major role in determining the types of mental health services that are delivered and thus are a key factor in any discussion of the future of mental health services. The author presents some of the available cost data for care provided in three kinds of settings: hospitals; nonhospital settings such as halfway houses, health maintenance organizations, and community mental health centers; and comprehensive community programs. He discussed the methodological and measurement problems in the estimation of costs and the difficulties in comparing costs across settings. He emphasizes the need for cost data that permit accurate an comparable predictions of costs that will assist policymakers in making intelligent choices between types of services.     

Psychiatric services for people with severe mental illness across western Europe: what can be generalized from current knowledge about differences in provision, costs and outcomes of mental health care?

OBJECTIVE: To report recent findings regarding differences in the provision, cost and outcomes of mental health care in Europe, and to examine to what extent these studies can provide a basis for improvement of mental health services and use of findings across countries. METHOD: Findings from a number of studies describing mental health care in different European countries and comparing provision of care across countries are reported. RESULTS: The development of systems of mental health care in western Europe is characterized by a common trend towards deinstitutionalization, less in-patient treatment and improvement of community services. Variability between national mental healthcare systems is still substantial. At the individual patient level the variability of psychiatric service systems results in different patterns of service use and service costs. However, these differences are not reflected in outcome differences in a coherent way. CONCLUSION: It is conceivable that the principal targets of mental healthcare reform can be achieved along several pathways taking into account economic, political and sociocultural variation between countries. Differences between mental healthcare systems appear to affect service provision and costs. However, the impact of such differences on patient outcomes may be less marked. The empirical evidence is limited and further studies are required.     

Measuring trends in mental health care disparities, 2000 2004

OBJECTIVE: This study measured trends in disparities in mental health care by use of an improved method that applies the Institute of Medicine (IOM) definition of racial-ethnic disparities. METHODS: Data from the 2000-2001 and 2003-2004 Medical Expenditure Panel Surveys were used to estimate trends in two global measures of racial-ethnic disparities in mental health care: having any mental health visit and total mental health care expenditure in the past year. Disparities between African Americans, Hispanics, and white Americans were examined by applying a new methodology based on the IOM definition of racial disparity that adjusts for health status and allows for mediation of racial-ethnic disparities through socioeconomic factors. Results found by use of this measure are contrasted with unadjusted means. RESULTS: African-American-white and Hispanic-white disparities in any use of mental health care worsened from 2000-2001 to 2003-2004 when the IOM definition was used; however, these trends were not evident in the unadjusted comparison. No significant African-American-white disparities were found in total mental health expenditures. Hispanic-white disparities in total mental health expenditures were significant within each time period and increased between 2000-2001 and 2003-2004. CONCLUSIONS: The mental health care system continues to provide less care to persons in African-American and Hispanic minority groups than to whites, suggesting the need for policy initiatives to improve services for these minority groups. Future efforts at identifying trends in disparities in mental health services should use methodologies that adjust for health status and allow socioeconomic factors to mediate differences.     

The effect of financial risk arrangements on service access and satisfaction among medicaid beneficiaries

OBJECTIVE: The relationship between financial risk arrangements, access to services, and consumer satisfaction with services was assessed in a sample of Medicaid beneficiaries who were enrolled under three different financial risk arrangements for health care and mental health care. METHODS: A survey was mailed to a stratified random sample of 9,449 recipients of Supplemental Security Income. Respondents reported their health and mental health service needs, service use, and satisfaction with services. Access was measured in terms of service needs that were met. RESULTS: Access to services was related to the type of risk arrangement. Respondents who were enrolled in plans that assumed the risk for the cost of services had poorer access to services than respondents who were enrolled in plans that did not assume the risk for the cost of these services. Satisfaction with medical services was negatively related to the plan's assuming the risk for medical expenditures. CONCLUSIONS: Financial risk arrangements may have important implications for service use patterns among persons who have disabilities. Health and mental health policy makers should carefully consider risk arrangements when designing health plans for vulnerable populations.     

The quality of services in a children's mental health managed care demonstration

The Fort Bragg Demonstration and evaluation was designed to test the cost-effectiveness of a continuum of care model of service delivery for children and adolescents. A crucial aspect of the evaluation was the measurement of the quality of services provided in the Demonstration. Two key service components were examined: intake assessment and case management. It was concluded that these key components of the continuum of care were implemented with sufficient quality to have the theoretically predicted effects on mental health.     

An Economic Comparison of Risperidone and Olanzapine Use within an Integrated Managed Mental Health Program

This study assessed differences in total mental health care costs for 1 year following initiation of risperidone or olanzapine in individuals within NorthSTAR, an integrated managed mental health pilot project. A retrospective database analysis of individuals with schizophrenia or schizoaffective disorder and newly started on either agent was conducted. Antipsychotic medication costs were significantly lower for individuals prescribed risperidone than olanzapine ($1763 versus $2582; p<0.001). Individuals prescribed risperidone had lower (but not significant) expenditures for mental health services ($4714 versus $5077; p=0.792), as well as total mental health care costs ($7407 versus $9011; p=0.255).     

The cost of schizophrenia treatment in Taiwan

The costs associated with mental illness in Taiwan have been the subject of discussion and concern in Taiwan's Bureau of National Health Insurance. The authors report the first estimates of these costs on the basis of national data for 52,432 patients treated in 1999. Total schizophrenia-related health care expenditure was estimated at 112.4 million dollars, which constituted 1.2 percent of national health care expenditures that year. The cost per outpatient visit was 57 dollars, the cost per admission was 1,123 dollars, and the annual average direct cost of treating a person with schizophrenia was 2,144 dollars.     

The Ventura Planning Model: a proposal for mental health reform

The Ventura Planning Model is a proposal for public mental health reform. It addresses the decline in mental health funding. It offers a rationale for increased support--and funding--for public mental health services. The Planning Model grew out of the experience of implementing and operating the Ventura Children's Demonstration Project. The model has five characteristics, or planning steps: 1) multi-problem target population; 2) systems goals; 3) interagency coalitions; 4) services and standards; and 5) systems monitoring and evaluation. The Ventura Children's Demonstration Project implemented these planning steps, with an infusion of $1.54 million in funds from the state legislature. The project offset at least 66 percent of its cost by reducing other public agency costs and improved a variety of client-oriented outcomes. The success of the project in offsetting its costs has led the legislature to provide additional funds for three more California counties to implement the model for children and youth, and $4 million a year for four years for Ventura County to test the model for adults and seniors. Emphasizing cost offsets in addition to client-oriented outcomes provides a practical rationale for proposing increases in public mental health funds. This rationale also implies substantial changes in the operations of many public mental health agencies.     

Initial treatment decisions by level of care for youth in the CHAMPUS Tidewater Demonstration

Over a three-year span, the level of care initially provided to children and adolescents receiving mental health services under a CHAMPUS Demonstration in the Tidewater area of Virginia shifted dramatically to less restrictive and less expensive settings, consistent with national policy. Issues about the quality of care under this cost containment model (which includes fiscal incentives for the contractor) are explored; criteria for placement decisions require further attention.This paper was prepared under contract for Abt Associates, Boston, and the Department of Defense, May 1990. The views of the authors do not necessarily reflect those of the Department of Defense.     

State Variation in Out-of-Home Medicaid Mental Health Services for Children and Youth: An Examination of Residential Treatment and Inpatient Hospital Services

This research investigated state variation in the use of out-of-home mental health services among children and youth enrolled in Medicaid during 2003. Medicaid claims from three states were used to describe the demographic and diagnostic characteristics of children and youth under age 22 who received mental health services in general hospitals, psychiatric hospitals, psychiatric residential treatment facilities, and other residential treatment settings and to examine their lengths of stay, repeat stays, and expenditures. Depending on the state, 6–13% of children and youth with a mental health diagnosis received out-of-home services during the year; 37–58% of these children and youth had more than one out-of-home stay. Out-of-home mental health services accounted for 21–75% of Medicaid mental health expenditures for children and youth, depending on the state. States varied considerably in lengths of stay and per beneficiary expenditures for out-of-home care. Although some similarities in out-of-home care were found across states, substantial state variation in out-of-home care warrants further research in the context of state service systems and Medicaid policies.     

Clinical outcomes of a children's mental health managed care demonstration

The Fort Bragg Evaluation Project hypothesized that the mental health of children treated in the Demonstration's continuum of care would improve more than that of children receiving traditional mental health services at a comparison site. Program theory further predicted site differences in outcome for certain subgroups of children, such as those with severe mental health problems. These hypotheses were tested at 6-month and 1-year follow-ups in several ways, but results showed only slightly more site differences than expected by chance. For the evaluation sample of N = 984 treated children aged 5-17, site differences favored the Comparison about as often as the Demonstration. Children at both sites improved, but there was no overall superiority in mental health outcomes at the Demonstration.     

Cost of care for Medicaid recipients with serious mental illness and HIV infection or AIDS

OBJECTIVE: To assist in developing public policy about the feasibility of HIV prevention in community mental health settings, the cost of care was estimated for four groups of adults who were eligible to receive Medicaid: persons with serious mental illness and HIV infection or AIDS, persons with serious mental illness only, persons with HIV infection or AIDS only, and a control group without serious mental illness, HIV infection, or AIDS. METHODS: Claims records for adult participants in Medicaid fee-for-service systems in Philadelphia during 1996 (N=60,503) were used to identify diagnostic groups and to construct estimates of reimbursement costs by type of service for the year. The estimates included all outpatient and inpatient treatment costs per year per person and excluded pharmacy costs and the cost of nursing home care. Persons with severe mental illness, HIV infection, or AIDS had received those diagnoses between 1985 and 1996. RESULTS: Persons with comorbid serious mental illness and HIV infection or AIDS had the highest annual medical and behavioral health treatment expenditures (about $13,800 per person), followed by persons with HIV infection or AIDS only (annual expenditures of about $7,400 per person). Annual expenditures for persons with serious mental illness only were about $5,800 per person. The control group without serious mental illness, HIV infection, or AIDS had annual expenditures of about $1,800 per person. CONCLUSIONS: Given the high cost of treating persons with comorbid serious mental illness and HIV infection or AIDS, the integration of HIV prevention into ongoing case management for persons with serious mental illness who are at risk of infection may prove to be a cost-effective intervention strategy.