The impact of Medicaid peer support utilization on cost

Peer support programs have proliferated over the past decade, building on recovery oriented programming, yet relationships between peer support services and the costs to public programs have not been well described in literature. The purpose of this study is to fill gaps in the literature related to peer support programs and cost: lack of comparison groups, small sample sizes, and the availability of research examining utilization of Medicaid mental health services.

The study employed a retrospective design with treatment and comparison groups created from three administrative databases. Three ordinary least squares regression models were constructed to predict crisis stabilization cost, psychiatric hospitalization cost, and total Medicaid cost while controlling for other factors. The Chronic Illness and Disability Payment System + Rx was used to control for illness severity.

Peer support was associated with $5,991 higher total Medicaid cost (p < .01). Peer support was also associated with higher crisis stabilization cost and lower psychiatric hospitalization cost, but the relationships were not statistically significant. Peer support was associated with $2,100 higher prescription drug cost (p < .01), $5,116 higher professional services cost (p < .01), and $1,225 lower facility cost (p < .01).

While the implementation of Medicaid financed peer support programs may not result in savings from reductions of costly crisis stabilizations and psychiatric hospitalizations, it does support the principles of self-direction and recovery from severe mental illness. State policy makers must weigh the potential higher cost associated with peer support programs with efforts to redesign the delivery of mental health services.