Article Abstract Online ISSN: 1099-176X    Print ISSN: 1091-4358 The Journal of Mental Health Policy and Economics Volume 8, Issue 1, 2005. Pages: 3-14 Published Online: 30 March 2005 Copyright © 2005 ICMPE.

* Correspondence to: Ann F. Chou, PhD, MPH, Assistant Professor, Health Services & Research Development, Richard L. Roudebush VA Medical Center, and Indiana University-Purdue University, 801 W. Michigan St., Indianapolis, IN 46202, USA
Tel.: +1-317-274 5417
Fax: +1-317-374 7860
E-mail: achou@iupui.edu

Source of Funding: This study was funded by the Capitating Medicaid Mental Health Services in Colorado, NIMH R01 #54136.

Abstract

To improve Colorado’s public mental health system, the state designed and implemented a pilot program in 1995, resulting in two distinct administrative models providing services under capitation. The two capitated models involved contracts with: (i) service providers (direct capitation), or (ii) joint ventures between a for-profit managed behavioral health organization and service providers. This study assessed outpatient service delivery to a sample of Medicaid-eligible consumers with severe mental illness under the capitated models compared to that in fee-for-service (FFS) areas. Claim and encounter data (1994-1997) were used to identify utilization and treatment costs for specific outpatient services from periods spanning the year prior to and two years post-capitation. Differences in utilization between FFS areas and the two capitated models were examined using a two-part model across the three time periods.  Results demonstrated differences in service delivery among financing models over time. Capitated providers had higher initial utilization in most outpatient service categories than their FFS counterparts and as a result of capitation, outpatient services delivered under these providers decreased to converge to the FFS pattern. Findings also suggest substitution between group therapy and individual psychotherapy. Overall, more service integration was observed and less complex service packages were provided post capitation.

Background: To improve the financing of Colorado's public mental health system, the state designed, implemented, and evaluated a pilot program that consisted of three reimbursement models for the provision of outpatient services. Community mental health centers (CMHCs), the primary providers of comprehensive mental health services to Medicaid recipients in Colorado, had to search for innovative ways to provide cost-effective services. Study Aims: This study assessed outpatient service delivery to Medicaid-eligible consumers under this program. This paper is among the first to study variations in the delivery of specific types of outpatient mental health services under capitated financing systems. Methods: This study uses claims data (1994-1997) from Colorado's Medicaid and Mental Health Services Agency. The fee-for-service (FFS) model served as the comparison model. Two capitated models under evaluation are: (i) direct capitation (DC), where the state contracts with a non-profit entity to provide both the services and administers the capitated financing, and (ii) managed behavioral health organization (MBHO), which is a joint venture between a for-profit company who manages the capitated financing and a number of non-profit entities who deliver the services. A sample of severely mentally ill patients who reported at least one inpatient visit was included in the analysis. Types of outpatient services of interest are: day-treatment visits, group therapy, individual therapy, medication monitoring, case management, testing, and all other services. Comparisons were set up to examine differences in service utilization and cost between FFS and each of the two capitated models, using a two-part model across three time periods. Results: Results showed differences in service delivery among reimbursement models over time. Capitated providers had higher initial utilization in most outpatient service categories than their FFS counterparts and as a result of capitation, outpatient services delivered under these providers decreased to converge to the FFS pattern. Findings also suggest substitution between group therapy and individual psychotherapy. Overall, more service integration was observed and less complex service packages were provided post capitation. Implication for Health Care Provision and Policies: Financing models and organizational arrangements have an impact on mental health service delivery. Changes in utilization and costs of specific types of outpatient services reflect the effects of capitation. Understanding the mechanism for these changes may lead to more streamlined service delivery allowing extra funding for expanding the range of cost-effective treatment alternatives. These changes pose implications for improving the financing of public mental health systems, coordination of mental health services with other healthcare and human services, and provision of services through a more efficient financing system.

Received 10 August 2004; accepted 8 March 2005

Copyright © 2005 ICMPE