Do High Fidelity Wraparound Services for Youth with Serious Emotional Disturbances Save Money in the Long-Term?

Treating youth with serious emotional disturbances (SED) is expensive often requiring institutional care. A significant amount of recent federal and state funding has been dedicated to expanding home and community-based services for these youth as an alternative to institutional care. High Fidelity Wraparound (Wrap) is an evolving, evidence-informed practice to help sustain community-based placements for youth with an SED through the use of intensive, customized care coordination among parents, multiple child-serving agencies, and providers. While there is growing evidence on the benefits of Wrap, few studies have examined health care spending associated with Wrap participation and none have examined spending patterns after the completion of Wrap. Merging health care spending data from multiple agencies and programs allows for a more complete picture of the health care costs of treating these youth in a system-of-care framework.

(i) To compare overall health care spending for youth who transitioned from institutional care into Wrap (the treatment group) versus youth not receiving Wrap (the control group) and (ii) to compare changes in health care spending, overall and by category, for both groups before (the pre-period) and after (the post-period) Wrap participation.

The treatment group (N=161) is matched to the control group (N=324) temporally based on the month the youth entered institutional care. Both total health care spending and spending by category are compared for each group pre- and post-Wrap participation. The post-period includes the time in which the youth was receiving Wrap services and one year afterwards to capture long-term cost impacts.

In the year before Wrap participation, the treatment group averaged USD 8,433 in monthly health care spending versus USD 4,599 for the control group. Wrap participation led to an additional reduction of USD 1,130 in monthly health care spending as compared to the control group in the post-period. For youth participating in Wrap, these spending reductions were the result of decreases in mental health inpatient spending and general outpatient spending.

Youth participating in Wrap had much higher average monthly costs than youth in the control group for the year prior to entering Wrap, suggesting that the intervention targeted youth with the highest mental health utilization and likely more complex needs. While both groups experienced reductions in spending, the treatment group experienced larger absolute reductions, but smaller relative reductions associated with participation. These differences were driven mainly by reductions in mental health inpatient spending. Larger reductions in general outpatient spending for the treatment group suggest spillover benefits in terms of physical health care spending. Further analysis is needed to assess how these spending changes impacted health outcomes.

Wrap or similar programs may lead to reductions in health care spending. This is the first study to find evidence of longer-term spending reductions for up to a year after Wrap participation.

Randomized trials or some other source of plausibly exogenous variation in Wrap participation is needed to further assess the causal impact of Wrap on health care spending, outcomes, or broader system-of-care spending.