This competing continuation proposal capitalizes on a funded study (R01 MH46522-01A2) of the effect of the delivery of public mental health services in Massachusetts on Medicaid beneficiaries who are ages 18 to 64 and disabled by a major psychiatric illness. The services these individuals receive are funded by the Department of Mental Health or reimbursed by Medicaid. We hypothesized that regional differences in how care is delivered would result in different patterns of care and costs. Our findings support that hypothesis. After the study was well underway, the Massachusetts Department of Public Welfare, in response to budgetary pressure, introduced a managed care initiative for Medicaid beneficiaries. The goal of the new managed care program is not only to reduce expenditures but also to improve the care provided. The shift from conventional fee-for-service reimbursement to a risk-sharing contract providing mental health and substance abuse service is expected to affect the frequency and intensity of services provided to beneficiaries. The Massachusetts managed care program is unique among Medicaid waiver demonstration projects because it is implemented statewide and has strong economic incentives for change. Given this managed care intervention, we now have the opportunity to study the changes in patterns of care after the implementation of managed care, with special attention to the effect in the three regions already under study. This proposal focuses on three general research questions: 1. Does the use of services change for Medicaid clients after the introduction of managed care? We are particularly interested in how patterns of inpatient and ambulatory care change. 2. Do expenditures change for Medicaid clients after the introduction of managed care? We are interested in both the cause of change in expenditure (use of services, prices, and number of beneficiaries) and the shares of the three payers (Department of Public Welfare, Department of Mental Health, and the Health Care Finance Administration). 3. Do the differences in use of services and expenditures found in Questions 1 and 2 differ by region? We are interested in whether admissions to hospitals and the total annual beddays will be reduced proportionately across the three regions, or will the effect be specific to the rates of use we observe in FY91 and FY92, with much higher reductions in use in Boston than elsewhere? This proposed continuation will use data from the same three secondary sources as in the already funded study: (1) Medicaid paid claims for medical and mental health use, (2) DMH inpatient admissions files, and (3) DMH client tracking data that document the use, by client, of DMH services that are funded directly (not reimbursed by medicaid), such as residential care.
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