Academic journal article Health Care Financing Review

Effects of Managed Care on Southern Youths' Behavioral Services Use

Academic journal article Health Care Financing Review

Effects of Managed Care on Southern Youths' Behavioral Services Use

Article excerpt


Since the early 1990s, States have worked at varying speeds to incorporate the principles and practices of managed care for their Medicaid populations. The hope has been that by changing the patterns of service utilization to emphasize preventive care and reduce providers' financial incentives to extend treatment unnecessarily, States would achieve improvements in health at lower cost. The lingering concern in managed care systems is that firms or doctors accrue cost savings for any service withheld, regardless of its benefit to consumers.

Concurrently, the Nation witnessed a great expansion in the volume of health care data collected and a reduction in the cost of data storage and processing. This reduction in research costs has provided hope that statistical analysis of policy changes will protect patient safety and provide a means of evaluating the consequences of system changes like the shift to managed care. Thus, efforts like the Health Plan Employer Data and Information Set (HEDIS[R]) program by the National Committee on Quality Assurance (NCQA) have emerged as a means of using existing data to monitor health insurance systems.

This article evaluates the effects of a switch to managed behavioral health care in Tennessee's Medicaid Program, focusing on the experiences of children between 4-17 years of age, in contrast to a State which remained FFS, Mississippi. The analyses adjust for other demographic characteristics that might explain variation over time. Our work represents an important contribution for several reasons. First, few State-level data analyses have examined behavioral health services, and fewer still have focused on children and adolescents. Second, the length of the time series for this analysis is 8 years. Prior studies have tended to use at most 3 years, and typically only 1 or 2. This longer time perspective allows investigation of long-term trends in the Medicaid system. Third, our data cover the time period during which managed care started in earnest through Section 1115 waivers from the former Health Care Financing Administration.


Two decades of research on Medicaid have used claims, encounter, and enrollment data to examine the effects of changes in policy on service utilization and costs of treatment. A large portion of this work focused specifically on risk-adjustment and capitation ratesetting, a natural path because managed care was the dominant policy change of the past two decades and developing a budget-neutral yet profit-making set of capitation rates is the fundamental cost problem for States and managed care firms, respectively. Another focus of research with these data has been patterns of utilization among Medicaid enrollees. One branch has followed the economics literature and interest in demand for medical and mental health services (Manning et al., 1987), while another assessed so-called performance indicators or benchmarks for service utilization as a basis for assuring quality of care and contract enforcement. Groups like the NCQA, which produces the HEDIS[R] measures (National Committee for Quality Assurance, 2003), and the Children's Mental Health Benchmarking Project (Perlman et al., 1999) examine differences in the rates of common services and assess patterns of service use in relation to standards of care (e.g., use of outpatient services following a hospital discharge). Similar efforts are supported through Federal agencies (Mental Health Statistics Improvement Program, 1996; Garnick et al., 2002). While the ultimate research interests differ across these areas, common to them are fundamental questions about the probability of using services among different populations.

Hutchinson and Foster (2002) reviewed the Medicaid managed behavioral health care literature as it pertains to children and concluded, with respect to service use outcomes, that managed care raised overall access (probability of service use), reduced use of inpatient services, increased use of case management care, and had ambiguous effects on the use of outpatient services. …

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