Comparison of alcohol treatment and costs after implementation of medicaid managed care

To examine the impact of a mandatory managed care behavioral health program on utilization and cost of alcohol treatment services for high-risk Medicaid patients.

Pre-post nonequivalent comparison group design to compare managed care clients with fee-for-service (FFS) clients in terms of behavioral treatment costs and use.

Study subjects were adult Medicaid enrollees diagnosed with alcohol abuse or alcohol dependence. Chi-square tests and analysis of variance were used to determine significant differences between managed care and FFS programs in characteristics of the subjects, service use rates, and intensity of care. A regression model was used to examine predisposing, enabling, and need factors that might explain cost differences between programs.

The managed care site had reduced behavioral healthcare costs compared with the FFS site. However, the regression analysis, which explained 35% of the variance in behavioral health service cost per user, showed that treatment cost was not significantly lowered by the managed care intervention once predisposing and need factors were controlled for. Nineteen percent of the variance in cost was explained by increased mental health comorbidity and 12% by drug comorbidity.

Consistent with other studies, the results show lower behavioral healthcare costs after the managed care intervention because of changes in management practices, service substitution, and negotiation of lower hospital fees. However, the managed care influence was insignificant in explaining cost variation between sites due to higher morbidity in the FSS site post managed care.