Medicaid Managed Care Plans Place More Burden On Patients And Families With Severe Mental Illness, AJP Study Shows

Main Category: Mental Health
Also Included In: Psychology / Psychiatry;  Medicare / Medicaid / SCHIP
Article Date: 15 Jan 2008 - 13:00 PDT

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Managed care health plans for Medicaid patients with schizophrenia and other severe mental illnesses may result in lower costs to the Medicaid system, but lead to greater personal expenditures and higher caregiver burden for patients and their families, new research indicates. This cost pattern was revealed in an analysis of total societal costs for 628 patients in the Tampa Bay area, to be published online Jan. 15 by The American Journal of Psychiatry (AJP) (http://ajp.psychiatryonline.org/pap.dtl), the official journal of the American Psychiatric Association.

The study, "Medicaid Managed Care and the Distribution of Societal Costs for Persons With Severe Mental Illness" by David L. Shern, Ph.D., president and CEO of Mental Health America, and colleagues at the Louis de la Parte Florida Mental Health Institute at the University of South Florida in Tampa, will also appear in the February 2008 print issue of AJP.

"We have long known that the burden to families of patients with severe persistent mental illness is considerable and includes situations for which families are not prepared, such as violence and drug abuse," said AJP editor-in-chief Robert Freedman, M.D. "We published this study because it documents the magnitude of this burden."

The comparison was based on a natural experiment in 1997-1999 that resulted from the state of Florida's inaugural attempts to manage community mental health care through a Medicaid waiver for the Tampa Bay area. Two types of managed care plans were introduced: a health maintenance organization (HMO) and a plan with a behavioral health "carve-out," which provided mental health care and general health care through separate systems. The patients enrolled in the HMO and those in the carve-out actually received services from the same community mental health center providers. Therefore, Shern and his colleagues say, any differences between the managed care plans reflect the plans themselves, not the care providers.

The analysis compared costs for patients in the two managed care plans and those who remained in the standard fee-for-service Medicaid plan. Total societal costs were calculated by adding separate estimates for Medicaid, other government programs, and private sources. The other government programs included non-Medicaid health care, criminal justice, public housing, supplemental security income, and food stamps. The private sources were earned government transfer income (such as veterans' benefits), private income, and money and time contributed by family and friends. The financial value of this time was based on the minimum wage, and this informal care accounted for the majority of the private costs reported.

The managed care strategies employed by plans led to savings within the Medicaid budget, but these savings were offset by personal expenditures and the contributions of family and friends of the enrollees in the managed care plans. Managed care was not associated with increased overall costs to non-Medicaid government programs.

Despite the Medicaid-specific savings, society's total costs were not reduced by managed care. This wider public health perspective is especially important when considering patients with long-term disabling illnesses, who have multiple needs that cross different types of services and payers. Although an earlier report by the same authors indicated similar clinical outcomes for the patients in the three plans studied, the outcomes may have depended in part on substantial contributions from families and friends. Cost substitution may further impoverish already destitute individuals and result in inefficient treatment.

"It is critically important to understand all costs when evaluating the impact of these financing strategies," said lead author David Shern, Ph.D. "Without this information, we can make very bad policy choices."

The study was funded in part under a contract with the Florida Agency for Health Care Administration and a grant from the U.S. Substance Abuse and Mental Health Services Administration.

Reference:

Shern DL, Jones K, Chen HJ: Medicaid Managed Care and the Distribution of Societal Costs for Persons With Severe Mental Illness. Am J Psychiatry (published online January 15, 2008; doi:10.1176/appi.ajp. 2007.06122089)

About the American Journal of Psychiatry

The American Journal of Psychiatry, the official journal of the American Psychiatric Association, publishes a monthly issue with scientific articles submitted by psychiatrists and other scientists worldwide. The peer review and editing process is conducted independently of any other American Psychiatric Association component. Therefore, statements in this press release or the articles in the Journal are not official policy statements of the American Psychiatric Association. The Journal's editorial policies conform to the Uniform Requirements of the International Committee of Medical Journal Editors, of which it is a member.

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About the American Psychiatric Association

The American Psychiatric Association is a national medical specialty society whose more than 38,000 physician members specialize in diagnosis, treatment, prevention and research of mental illnesses including substance use disorders. Visit the APA at http://www.psych.org and http://www.HealthyMinds.org.