Risk sharing and the supply of mental health services

This paper examines the effects of risk sharing with mental health providers in a managed care context. The results show that providers that received a fixed payment per case reduced the number of outpatient visits by 20-25%, compared with providers who continued to be paid for each visit. This effect was stronger for integrated group practices and providers with more intensive utilization review protocols. In addition, evidence was found that in a setting where providers serve multiple payers, the share of their total revenue derived from risk-sharing contracts is an important determinant of the magnitude of the supply response.