Fiscal Reform and Managed Care in Child Welfare Services

By Wulczyn, Fred; Orlebeke, Britany | Policy & Practice of Public Human Services, September 2000 | Go to article overview

Fiscal Reform and Managed Care in Child Welfare Services


Wulczyn, Fred, Orlebeke, Britany, Policy & Practice of Public Human Services


Within the past five years, efforts to reform child welfare systems around the country have focused on fiscal reform in general and managed care in particular. Today, the Government Accounting Office estimates that no fewer than 30 states are looking seriously at how fiscal reform can be used to orchestrate their child welfare reform agendas. Amid the initial burst of interest and activity around using the concept of managed care to improve child welfare programs, Chapin Hall Center for Children in Chicago, Illinois, initiated four case studies of fiscal reform based on managed care principles. The case studies, conducted in 1997, served two primary purposes. First, because no single managed care model exists in child welfare, a carefully designed case study can provide the data needed to describe the form that managed care is taking. By documenting these earliest attempts, we hoped to create an accessible record that would provide a policy and programmatic baseline for use in the future. Second, once this d ata has been assembled, it will be possible to consider systematically the larger set of evaluation issues that managed care raises for child welfare policymakers.

Design of the Study

Our research was guided by three primary questions: What definition of managed care is appropriate for child welfare systems? How does managed care fit with other, longer-standing efforts to improve the child welfare system? What are the major design features that characterize managed care systems as implemented in a selection of sites?

To answer these questions, we identified four sites that were engaged in system reform efforts that combined both programmatic and fiscal reform. The sites selected--Kansas, Hamilton County in Ohio, Tennessee, and District 13 in Florida--represent a variety of initiatives and service contexts.

Data about the selected sites were gathered by reading requests for proposals and contracts for language that defined the initiatives' programmatic and fiscal boundaries. In addition, we conducted telephone interviews and site visits that included face-to-face interviews with key actors in both the public and private sectors. Finally, we asked a sample of providers in each of the sites to complete a survey.

What Is "Managed Care"?

Managed care is a shorthanded way of describing a variety of state and local initiatives that combine programmatic reforms with changes in the way services are financed and "risk" is shared. A multiaxial grid helps illustrate the combination of care management (see Figure 1.) activities and fiscal structures needed to achieve a system of managed care. The grid provides a way to organize judgments about the direction of program reforms and changes to how services are financed. Specifically, reforms along the care management axis imply changes in how services are delivered that can include such innovations as the development of clinical protocols, the design of outcome-based standards, the deployment of information systems, and the reorganization of services. The finance axis illustrates the range of reimbursement methods, from fee-for-service systems that transfer relatively little financial risk onto providers to fixed funding for a bundle of services that shift considerably more risk from the payer to the pr ovider.

The grid also illustrates the dynamic tensions that appear to drive the evolution of child welfare services in that reform may involve changes in care management technology, finance models, or both. Historically, it might be said that child welfare reforms have sought improvements along the care management axis while remaining fixed within the fee-for-service model of financing service delivery. Reforms that fit this mold would fall into the lower left quadrant of the grid. The most recent period of reform blends innovations along both axes simultaneously, pushing program models to the upper right quadrant. The care management axis together with the finance axis also allows us to distinguish between simple block grants with weak program models and a weak actuarial basis, and more refined fixed financing methods that depend heavily on well-defined care management activities, accurate expectations about service use, and outcomes for their success. …

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