Managed care for the Medicaid disabled: effect on utilization and costs

The objective of this study was to describe the effect on health care utilization and costs of a program of managed care for the Medicaid disabled. The study was designed as a pre/post enrollment cohort comparison and was carried out in three Ohio counties. The subjects were disabled Medicaid-insured patients who voluntarily enrolled in a managed care program for at least 6 months between July 1, 1995 and December 31, 1997, and who had (1) at least one Medicaid claim in the 24-months pre-enrollment period and (2) overall satisfactory postenrollment encounter-level data. Ohio Medicaid provided claims and reimbursements (costs) for the pre-enrollment period and encounter-level data for the postenrollment period. Postenrollment costs were estimated by applying category-specific average pre-enrollment costs to postenrollment utilization data. We measured the following per patient-month: (1) trends in category-specific utilization and costs for up to 24 months before and after enrollment, (2) differences in overall and category-specific costs 1 year before and after enrollment, and (3) changes in the distribution of services 1 year before and after enrollment. Utilization categories included inpatient care, outpatient hospital (including emergency department) care, physician services, prescription medications, durable medical equipment and supplies, and home health care. We found that satisfactory encounter data were available in two of three counties. Of 1,179 enrollees, 592 met all inclusion criteria. Before enrollment, utilization and costs were increasing significantly in four of six categories and were unchanging in two. Postenrollment, decreasing utilization was observed for three categories, one remained unchanged, and two were increasing, but from a lower "baseline." Except for physician services and home health care, there were lower utilization and estimated costs in all categories in the year after enrollment. Estimated inpatient and total costs declined by $155/patient-month (44.9%) and $210/patient-month (37.1%), respectively. Findings were similar across sites. Inpatient care, outpatient hospital care, and prescription medications accounted for 97% of the reductions in estimated costs in the postenrollment period. Among patients voluntarily enrolled for at least 6 months, managed care for the Medicaid disabled was associated with striking decreases in health care utilization and estimated costs. The effect of managed care on these patients' satisfaction, access to specialized services, quality of care, and health outcomes are understood incompletely.