Objective: The authors investigated changes in treatment patterns and costs of care for children after the implementation of the Massachusetts Medicaid carve-out managed care plan.
Methods: The authors hypothesized that after the introduction of managed care, per-child expenditures would be reduced, continuity of care would not improve, and per-child mental health expenditures would undergo larger reductions for disabled children, compared with children enrolled in the Aid to Families With Dependent Children program. Using data from Medicaid and the Massachusetts Department of Mental Health, the authors studied 16,664 Massachusetts Medicaid beneficiaries aged one to 17 years for whom reimbursement claims were submitted for psychiatric or substance use disorder treatment at least once during the two years before the introduction of managed care (1991 to 1992) or during the two years afterward (1994 to 1995). Multivariate analysis was used to estimate changes in probability of admission, and, among patients admitted, to identify factors accounting for variation in length of stay. To assess the variation in expenditures, we regressed the same variables, using the natural logarithm function to transform total mental health expenditures data and inpatient expenditures data to reduce skewness.
Results: After the introduction of managed care, per-child expenditures were lower, especially for disabled children, and the Department of Mental Health was used as a safety net for the most seriously ill children without increasing state expenditures. Continuity of care appeared to decline for disabled children.
Conclusions: It is likely that a combination of factors related to the reported changes in patterns of care and expenditures were responsible for the overall per-child expenditures.