Medical costs, Medicaid, and managed mental health treatment: the Hawaii study

In a randomized, prospective design with Medicaid enrollees, managed mental health treatment reduced medical services costs and utilization by 23 to 40 percent relative to control groups. For enrollees with chronic medical diagnoses, managed treatment reduced medical costs by 28 to 47 percent, while medical costs for fee-for-service enrollees increased by 17 percent. For enrollees without chronic medical diagnoses, traditional fee-for-service also reduced medical costs by about 20% but used three times as many outpatient visits. Costs of managed treatment were recovered in 6 to 24 months, suggesting that managed mental health treatment should be incorporated in health reform initiatives.