Incentives in a Medicaid carve-out: impact on children with special health care needs

Objective. To evaluate whether a specialty care payment "carve-out" from Medicaid managed care affects caseloads and expenditures for children with chronic conditions.
Data Source. Paid Medicaid claims in California with service dates between 1994 and 1997 that were authorized by the Title V Children with Special Health Needs program for children under age 21.
Study Design. A natural experiment design evaluated the impact of California's Medicaid managed care expansion during the 1990s, which preserved fee-for-service payment for certain complex medical diagnoses. Outcomes in time series regression include Title V program participation and expenditures. Multiple comparison groups include children in managed care counties who were not mandated to enroll, and children in nonmanaged care counties.
Data Collection/Extraction Methods. Data on the study population were obtained from the state health department claims files and from administrative files on enrollment and managed care participation.
Principal Findings. The carve-out policy increased the number of children receiving Title V-authorized services. Recipients and expenditures for some ambulatory services increased, although overall expenditures (driven by inpatient services) did not increase significantly. Cost intensity per Title V recipient generally declined.
Conclusions. The carve-out policy increased identification of children with special health care needs. The policy may have improved children's access to prevailing standards of care by motivating health plans and providers to identify and refer children to an important national program.     

Ethnicity, gender, and utilization of mental health services in a Medicaid population

This study examines gender and ethnic differences in mental health utilization and expenditures in a fee-for-service Medicaid eligible population in Monroe County, New York. The analyses demonstrate that Medicaid poor are not a homogeneous population in terms of mental health utilization, and that their patterns of care use are quite unlike those generally attributed to the middle class patients. For example, Medicaid eligible males are more likely to be mental health users than females, although they are less likely to use medical services. Ethnicity appears to be a strong determinant of ambulatory mental health utilization, but not of inpatient care. Whites experience significantly higher levels of psychiatric ambulatory use than do the nonwhites. Nonwhites, on the other hand experience greater utilization of alcohol ambulatory services than do the whites. The data indicate that although mental health care cost represents at least 20% of total expenditures in this population, this cost is predictable and stable from year to year. Other analyses dealing with the cost of medical care for mental health users, and with the impact of a 'gate keeper' on mental health utilization patterns, are presented. Both clinical and public policy implications are discussed.     

National estimates of mental health utilization and expenditures for children in 1998

No recent national data on expenditures and utilization are available to provide a benchmark for reform of mental health systems for children and adolescents. The most recent estimates, from 1986, predate the dramatic growth of managed care. This study provides updated national estimates. Treatment expenditures are estimated to be $11.68 billion ($172 per child). Adolescents have the highest expenditures at $293 per child followed by $163 per child aged 6 to 11 and $35 per preschoolaged child. Outpatient services account for 57%, inpatient for 33%, and psychotropic medications for 9% of the total. Unlike earlier reports, outpatient care now accounts for the majority of expenditures. This finding replicates the differences between recent managed care data and earlier actuarial databases for privately insured adults and confirms the trend from inpatient toward outpatient care.     

Medicaid managed care for mental health services in a rural state

State governments throughout the country increasingly have turned to managed care for their Medicaid programs, including mental health services. We used ethnographic methods and a review of legal documents and state monitoring data to examine the impact of Medicaid reform on mental health services in New Mexico, a rural state. New Mexico implemented Medicaid managed care for both physical and mental health services in 1997. The reform led to administrative burdens, payment problems, and stress and high turnover among providers. Restrictions on inpatient and residential treatment exacerbated access problems for Medicaid recipients. These facts indicate that in rural, medically underserved states, the advantages of managed care for cost control, access, and quality assurance may be diminished. Responding to the crisis in mental health services, the federal government terminated New Mexico's program but later reversed its decision after political changes at the national level. This contradictory response suggests that the federal government's oversight role warrants careful scrutiny by advocacy groups at the local and state levels.     

Cost shifting to jails after a change to managed mental health care

OBJECTIVE: To determine whether managed mental health care for Medicaid enrollees in King County, Washington, has led to indirect cost-shifting to substitute treatments, such as jails and state mental hospitals that are free goods to providers. DATA SOURCES: Complete service records for 47,300 adults who used at least one of the following systems from 1993 to 1998: King County jail system, Medicaid, or the King County mental health system. Data were also obtained from the Washington State Hospital System. STUDY DESIGN: A quasi-experimental analysis that compares the difference in outcomes between the pre- and post-managed care periods for Medicaid enrollees compared to non-Medicaid enrollees. The outcomes-jail costs, state hospital costs, and county outpatient mental health costs-were estimated with two-part difference-in-differences models. The regressions control for person-level fixed effects on up to 66 months of data per person. DATA COLLECTION METHODS: Administrative data were collected from the jail, Medicaid, and mental health systems, then merged and cleaned. Additional data on costs were obtained in interviews. PRINCIPAL FINDINGS: There is a striking increase in the probability of jail use for persons on Medicaid following the introduction of managed care. There was a significant decrease in expenditures in the county mental health system for outpatient care. CONCLUSIONS: Managed care led to indirect cost-shifting, probably through poor access to services, which may have led to an increased probability of jail detention.     

Effects of health care cost-containment programs on patterns of care and readmissions among children and adolescents.

OBJECTIVES: This study examined the effects of a utilization management program on patterns of medical care among children and adolescents. METHODS: From 1989 through 1993, the program conducted 8568 reviews of pediatric patients, ranging in age from birth to 18 years. The program used preadmission and concurrent review procedures to review and certify patients' need for care. This study used multivariate analyses to assess changes in the number of days of inpatient care approved by the program and to determine whether limitations imposed on length of stay affected the risk of 60-day readmission. RESULTS: Concurrent review reduced the number of requested days of inpatient care by 3.2 days per patient. Low-birthweight infants and adolescent patients with depression or alcohol or drug dependence accounted for a disproportionate share of the reduction. Patients classified as admitted for medical or mental health care and whose stay was restricted by concurrent review were more likely (P < .05) to be readmitted within 60 days after discharge. CONCLUSIONS: By limiting care through its review procedures, the utilization management program decreased inpatient resource consumption but also increased the risk of readmission for some patients. Continued investigation should be conducted of the effects of cost-containment programs on the quality of care given to children and adolescents, especially in the area of mental health.     

Managed behavioral health care: a Medicaid carve-out for youth.

This DataWatch assesses the impact of a public sector-managed Medicaid mental health carve-out pilot for North Carolina youth. Access to, volume of, and costs of mental health/substance abuse services are reported. We compared a pilot managed care program, with an incentive to shift hospital use and costs to community-based services, with usual fee-for-service Medicaid. Aggregate data from Medicaid claims for youth (from birth to age seventeen) statewide are reported for five years. We found dramatic reductions in use of inpatient care, with a shift to intensive outpatient services, and less growth in mental health costs. These findings demonstrate that public sector-managed care can be viable and more efficient than a fee-for-service model.     

Managed care and mental health: personal realities

A review of the literature revealed mixed reviews on the impact of managed care on mental health service delivery. Research supports that managed care contributes to a reduction in inpatient costs and an increase in outpatient service use. Other studies suggest that there are problems with access and quality of care. An additional issue is whether or not, and to what extent, mental health services are "carved out" from physical health for patients. This study discusses the findings of a qualitative analysis of Medicaid managed care recipients on the barriers and enabling factors to obtaining mental health services in a full carve-out managed care model. Results indicate that reduced access, quality of care problems, and a lack of integration of care exist. Additionally, recipients' interactions with managed care, service providers, and caseworkers affect their mental health care. The results also report on the tactics used by recipients to cope with service problems. Implications for social work practice and research are discussed and recommendations for service delivery and evidence-based education are delineated.     

Medicaid managed care and the unmet need for mental health care among children with special health care needs

OBJECTIVE: To determine the association between Medicaid managed care pediatric behavioral health programs and unmet need for mental health care among children with special health care needs (CSHCN). DATA SOURCE: The National Survey of CSHCN (2000-2002), using subsets of 4,400 CSHCN with Medicaid and 1,856 CSHCN with Medicaid and emotional problems. Additional state-level sources were used. STUDY DESIGN: Multilevel models investigated the association between managed care program type (carve-out, integrated) or fee-for-service (FFS) and reported unmet mental health care need. DATA COLLECTION/EXTRACTION METHODS: The National Survey of CSHCN conducted telephone interviews with a sample representative at both the national and state levels. PRINCIPAL FINDINGS: In multivariable models, among CSHCN with only Medicaid, living in states with Medicaid managed care (odds ratio [OR]=1.81; 95 percent confidence interval: 1.04-3.15) or carve-out programs (OR=1.93; 1.01-3.69) were associated with greater reported unmet mental health care need compared with FFS programs. Among CSHCN on Medicaid with emotional problems, the association between managed care and unmet need was stronger (OR=2.48; 1.38-4.45). CONCLUSIONS: State Medicaid pediatric behavioral health managed care programs were associated with greater reported unmet mental health care need than FFS programs among CSHCN insured by Medicaid, particularly for those with emotional problems.     

Implementation of medicaid managed mental health care in Iowa: Problems and solutions

Under the terms of a 1915(b) waiver, Iowa implemented a statewide carve-out program in 1995 for the management of mental health services for Medicaid recipients by contracting with a private for-profit corporation. In this commentary, the strategy used to develop the Medicaid managed care contract in Iowa is briefly summarized. Problems that were encountered in program implementation and regulatory attempts to address those issues are described. Suggestions for other states regarding the development, implementation, and oversight of contracts for managed care so that they might be able to deliver comprehensive mental health care services with acceptable standards of care quality are offered. By including appropriate contract specifications, providing mechanisms for oversight, and enforcing standards of care in Medicaid managed care contracts, many problems that occurred in Iowa may have been minimized or avoided. This experience can provide a valuable lesson for similar program initiatives in other states.     

Expenditures for mental health services in the Utah Prepaid Mental Health Plan

This article examines the effect of a mental health carve-out, the Utah Prepaid Mental Health Plan (UPMHP), on expenditures for mental health treatment and utilization of mental health services for Medicaid beneficiaries from July 1991 through December 1994. Three Community Mental Health Centers (CMHCs) provided mental health services to Medicaid beneficiaries in their catchment areas in return for capitated payments. The analysis uses data from Medicaid claims as well as "shadow claims" for UPMHP contracting sites. The analysis is a pre/post comparison of expenditures and utilization rates, with a contemporaneous control group in the Utah catchment areas not in the UPMHP. The results indicate that the UPMHP reduced acute inpatient mental health expenditures and admissions for Medicaid beneficiaries during the first 2 1/2 years of the UPMHP. In contrast, the UPMHP had no statistically significant effect on outpatient mental health expenditures or visits. There was no significant effect of the UPMHP on overall mental health expenditures.     

What is the marginal benefit of payment‐induced family care? Impact on Medicaid spending and health of care recipients

Research on home‐based long‐term care has centered almost solely on the costs; there has been very little, if any, attention paid to the relative benefits. This study exploits the randomization built into the Cash and Counseling Demonstration and Evaluation program that directly impacted the likelihood of having family involved in home care delivery. Randomization in the trial is used as an instrumental variable for family involvement in care, resulting in a causal estimate of the effect of changing the combination of home health‐care providers on health‐care utilization and health outcomes of the beneficiary. We find that some family involvement in home‐based care significantly decreases health‐care utilization: lower likelihood of emergency room use, Medicaid‐financed inpatient days, any Medicaid hospital expenditures, and fewer months with Medicaid‐paid inpatient use. We find that individuals who have some family involved in home‐based care are less likely to have several adverse health outcomes within the first 9 months of the trial, including lower prevalence of infections, bedsores, or shortness of breath, suggesting that the lower utilization may be due to better health outcomes.     

Cost shifting in a mental health carve-out for the AFDC population

This study tests whether the managed care vendor shifted costs to Medicaid-reimbursed medical care after the start of the mental health carve-out for the Aid to Families with Dependent Children (AFDC) population in Massachusetts. We used claims data over a 4-year period to estimate expenditures for four types of health services, two of which were paid for by the managed care vendor and two by Medicaid. Total per person public expenditures declined by only about 3 percent. Inpatient psychiatric services were replaced by outpatient psychiatric services and some pharmaceuticals, but overall there was little or no evidence of cost shifting to the medical sector. These results are in contrast to what was found in a sample of Medicaid beneficiaries eligible due to a mental health disability.     

Long-term impact of Johnson & Johnson's Health & Wellness Program on health care utilization and expenditures.

The long-term impact of corporate health and wellness programs is largely unknown, because most evaluations focus on impact in just 1 or 2 years after program initiation. This project estimated the longer-term impact of the Johnson & Johnson Health & Wellness Program on medical care utilization and expenditures. Employees were followed for up to 5 years before and 4 years after Program implementation. Fixed-effects regression models were used to control for measurable and unmeasurable factors that may influence utilization and expenditures. Results indicated a large reduction in medical care expenditures (approximately $224.66 per employee per year) over the 4-year Program period. These benefits came from reduced inpatient use, fewer mental health visits, and fewer outpatient visits compared with the baseline period. Most benefits occurred in years 3 and 4 after Program initiation. We conclude that programs designed to better integrate occupational health, disability, wellness, and medical benefits may have substantial health and economic benefits in later years.     

Children's health services in a "system of care": patterns of mental health, primary and specialty use

OBJECTIVES: This study was designed to investigate demonstrable impacts of the Mental Health Services Program for Youth (MHSPY), a highly coordinated, intentionally integrated "system of care," on patterns of health service utilization for youth with multiple needs. METHODS: The MHSPY intervention is available to a target population of urban youth who face barriers to health care and are at risk for out-of-home placement. These youth are enrolled in a non-profit managed care organization (MCO). Patterns of medical, pharmacy, and mental health and substance abuse service use were compared for children aged 3 to 19 across insurance categories. RESULTS: Despite risks for access and engagement barriers to care, and for greater medical expense due to greater morbidity, MHSPY enrollees received significantly more ambulatory care per person-year than either the privately insured population or the Medicaid Standard population, and medical expense for MHSPY members was significantly lower than expected. During the four years studied, individuals in the privately insured and Medicaid Standard populations were less likely than MHSPY enrollees to have had an ambulatory pediatric visit (odds ratio [OR] 0.833, 95% confidence interval [CI] 0.765, 0.908 and OR 0.823, 95% CI 0.775, 0.897, respectively). Medical expenses per member per month for MHSPY enrollees were significantly less than that for the similarly impaired Medicaid Disabled population with any medical claim (p < 0.001) or with any outpatient mental health claim (p < 0.01). CONCLUSIONS: Patterns of health care for subpopulations with known risk are important to identify to evaluate system-of-care effectiveness. The service utilization patterns for youth enrolled in the MHSYP system of care vs. those for similar MCO youth suggest health care access for individuals can be affected by delivery system design variables.     

Medicaid support of alcohol, drug abuse, and mental health services

Medicaid expenditures for alcohol, drug abuse, and mental health (ADM) services in 1984 were examined for the States of California and Michigan. Persons receiving such services constituted 9 to 10 percent of the total Medicaid population in the two States and accounted for 22 to 23 percent of total Medicaid expenditures. ADM expenditures were 11 to 12 percent of the total. Although the two States had similar proportions of overall expenditures for these services, Michigan appeared to emphasize inpatient psychiatric care, while California emphasized ambulatory and nursing home care. Based on the experience of the two States, national Medicaid expenditures for ADM services exclusive of long-term care were estimated to be $3.5 to $4.9 billion in 1984, two to three times the level suggested by earlier estimates.     

Economic impact of a Medicaid population health management program

A population health management program was implemented to assess growth in health care expenditures for the disabled segment of Georgia's Medicaid population before and during the first year of a population health outcomes management program, and to compare those expenditures with projected costs based on various cost inflation trend assumptions. A retrospective, nonexperimental approach was used to analyze claims data from Georgia Medicaid claims files for all program-eligible persons for each relevant time period (intent-to-treat basis). These included all non-Medicare, noninstitutionalized Medicaid aged-blind-disabled adults older than 18 years of age. Comparisons of health care expenditures and utilization were made between base year (2003-2004) and performance year one (2006-2007), and of the difference between actual expenditures incurred in the performance year vs. projected expenditures based on various cost inflation assumptions. Demographic characteristics and clinical complexity of the population (as measured by the Chronic Illness and Disability Payment System risk score) actually increased from baseline to implementation. Actual expenditures were less than projected expenditures using any relevant medical inflation assumption. Actual expenditures were less than projected expenditures by $9.82 million when using a conservative US general medical inflation rate, by $43.6 million using national Medicaid cost trends, and by $106 million using Georgia Medicaid's own cost projections for the non-dually eligible disabled segment of Medicaid enrollees. Quadratic growth curve modeling also demonstrated a lower rate of increase in total expenditures. The rate of increase in expenditures was lower over the first year of program implementation compared with baseline. Weighted utilization rates were also lower in high-cost categories, such as inpatient days, despite increases in the risk profile of the population. Varying levels of cost avoidance could be inferred from differences between actual and projected expenditures using each of the health-related inflation assumptions.     

Psychiatric service utilization and cost for persons with schizophrenia in a medicaid managed care program

A pre-post study design was used to look at changes in behavioral health care services and costs for Medicaid-eligible individuals with schizophrenia in a managed care (MC) carve-out compared to a fee-for-service (FFS) program in Pennsylvania between 1995 and 1998. Statistically significant reductions of 59% were found in hospital expenditures in the MC program compared to 18.3% in the FFS program. The decline in hospital costs was due to dramatic fee reductions in the MC site. No significant differences in overall ambulatory utilization were found in either program; however, ambulatory expenditures rose 57% in the MC program versus a decline of 11% in fee for service. The ambulatory cost increase resulted from a cost shift between county block grant funds, and Medicaid funds, with no additional revenues provided to outpatient providers. Study implications are that cost reductions from MC are mainly due to reducing utilization and payments to hospitals, similar to the findings for private sector programs.