Comparing Medicaid Expenditures for Standard and Enhanced Therapeutic Foster Care

Area of Science:

• Health Services Research
• Child and Adolescent Psychiatry
• Health Economics

Background:

• Therapeutic foster care (TFC) is a vital service for children with significant behavioral health needs.
• TFC shows potential in preventing transitions to more restrictive and costly care environments.
• Intensive Alternative Family Treatment (IAFT) is an enhanced, higher-rate service offering similar benefits.

Purpose of the Study:

• To compare Medicaid expenditures between TFC and IAFT for children with high behavioral health needs.
• To evaluate the cost-effectiveness of TFC versus IAFT in managing child behavioral health.
• To analyze the impact of these services on healthcare spending.

Main Methods:

• Secondary analysis of Medicaid claims data from North Carolina (2018-2019).
• Utilized propensity score analysis with difference-in-difference estimation.
• Compared monthly Medicaid expenditures before and after TFC and IAFT initiation for 5472 person-months.

Main Results:

• Children entering IAFT exhibited higher pre-treatment Medicaid expenditures compared to those entering TFC.
• Both TFC and IAFT demonstrated a significant downward trend in Medicaid expenditures post-treatment initiation.
• These services effectively reversed prior increasing cost trends.

Conclusions:

• Both TFC and IAFT are associated with reduced Medicaid expenditures for children with high behavioral health needs.
• These foster care models offer a cost-effective alternative to more intensive interventions.
• Evidence supports the use of TFC and IAFT in managing healthcare costs for this population.