Will parity in coverage result in better mental health care?
Explore the source record for details and available documents.
Humans↗
Biomedical subjects
T G McGuire
Publications and source records attributed to T G McGuire.
Statistical discrimination in health care.
This paper considers the role of statistical discrimination as a potential explanation for racial and ethnic disparities in health care. The underlying problem is that a physician may have a harder time understanding a symptom report from minority patients. If so, even if there are no objective differences between Whites and minorities, and even if the physician has no discriminatory motives, minority patients will benefit less from treatment, and may rationally demand less care. After comparing these and other predictions to the published literature, we conclude that statistical discrimination is a potential source of racial/ethnic disparities, and worthy of research.
Communication↗
Why don't private employers use risk adjustment? Conference overview.
Explore the source record for details and available documents.
Fees and Charges↗
The prevalence of formal risk adjustment in health plan purchasing.
This paper describes the prevalence of formal risk adjustment of payments made to health plans by Medicare, Medicaid, state governments, and private payers. In this paper, 'formal risk adjustment" is defined as the adjustment of premiums paid to health plans based on individual-level diagnostic or demographic information. We find that formal risk adjustment is used for about one-fifth of all enrollees in capitated health plans. While the Medicare and Medicaid programs rely on formal risk adjustment for virtually all their health plan enrollees, the practice is used for only about 1% of privately insured health plan enrollees. Ourfindings raise the question of why regulators have adopted formal risk adjustment, but private purchasers for the most part have not.
Diffusion of Innovation↗
Private employers don't need formal risk adjustment.
This paper lays down a set of hypotheses to explain why private employers do not use formal risk adjustment. The theme running through these hypotheses is simple: private employers don't need formal adjustment because they have better tools for dealing with adverse selection than formal risk adjustment provides. Open enrollment provisions, premium negotiations, and restricting employees' choices of health plans are mechanisms superior to formal risk adjustment for dealing with problems caused by adverse selection.
Community Participation↗
Risk adjustment alternatives in paying for behavioral health care under Medicaid.
OBJECTIVE: To compare the performance of various risk adjustment models in behavioral health applications such as setting mental health and substance abuse (MH/SA) capitation payments or overall capitation payments for populations including MH/SA users. DATA SOURCES/STUDY DESIGN: The 1991-93 administrative data from the Michigan Medicaid program were used. We compared mean absolute prediction error for several risk adjustment models and simulated the profits and losses that behavioral health care carve outs and integrated health plans would experience under risk adjustment if they enrolled beneficiaries with a history of MH/SA problems. Models included basic demographic adjustment, Adjusted Diagnostic Groups, Hierarchical Condition Categories, and specifications designed for behavioral health. PRINCIPAL FINDINGS: Differences in predictive ability among risk adjustment models were small and generally insignificant. Specifications based on relatively few MH/SA diagnostic categories did as well as or better than models controlling for additional variables such as medical diagnoses at predicting MH/SA expenditures among adults. Simulation analyses revealed that among both adults and minors considerable scope remained for behavioral health care carve outs to make profits or losses after risk adjustment based on differential enrollment of severely ill patients. Similarly, integrated health plans have strong financial incentives to avoid MH/SA users even after adjustment. CONCLUSIONS: Current risk adjustment methodologies do not eliminate the financial incentives for integrated health plans and behavioral health care carve-out plans to avoid high-utilizing patients with psychiatric disorders.
Adult↗
Measuring adverse selection in managed health care.
Health plans paid by capitation have an incentive to distort the quality of services they offer to attract profitable and to deter unprofitable enrollees. We characterize plans' rationing as a "shadow price" on access to various areas of care and show how the profit maximizing shadow price depends on the dispersion in health costs, individuals' forecasts of their health costs, the correlation between use in different illness categories, and the risk adjustment system used for payment. These factors are combined in an empirically implementable index that can be used to identify the services that will be most distorted by selection incentives.
Capitation Fee↗
Behavioral health expenditures and state organizational structure.
The authors present a study on expenditures by state mental health, substance abuse, and developmental disability agencies in the United States for the period between 1981 and 1993. The relationship between agency spending and organizational structure of state bureaucracy was examined. Results indicate that organizational structure is a determinant of agency spending. The more independent an agency, the higher its spending; conversely, the more independent its competitor, the lower the agency's spending. The number of levels between an agency and the governor's office was not significant in explaining agency expenditures.
Data Collection↗
The economic functions of carve outs in managed care.
This paper considers the economic functions of contracting separately for a portion of the insurance risk, offering both the payer's (i.e., employer's) and the health plan's perspective. Four major forms of carve outs are discussed: (1) payer specialty carve outs from all health plans; (2) payer specialty carve outs from only indemnity and preferred provider organization arrangements; (3) individual health plan carve outs to specialty vendors; and (4) group practice carve outs to specialty organizations. The paper examines whether carving out care fosters the payer's goal of delivering reasonable healthcare efficiently, how adverse selection affects the provision of healthcare, and the costs of providing this specialized care.
Capitation Fee↗
The economics of behavioral health carve-outs.
Explore the source record for details and available documents.
Behavior Therapy↗
Risk adjustment of mental health and substance abuse payments.
This study used 1992 and 1993 data from private employers to compare the performance of various risk adjustment methods in predicting the mental health and substance abuse expenditures of a nonelderly insured population. The methods considered included a basic demographic model, Ambulatory Care Groups, modified Ambulatory Diagnostic Groups and Hierarchical Coexisting Conditions (a modification of Diagnostic Cost Groups), as well as a model developed in this paper to tailor risk adjustment to the unique characteristics of psychiatric disorders (the "comorbidity" model). Our primary concern was the amount of unexplained systematic risk and its relationship to the likelihood of a health plan experiencing extraordinary profits or losses stemming from enrollee selection. We used a two-part model to estimate mental health and substance abuse spending. We examined the R2 and mean absolute prediction error associated with each risk adjustment system. We also examined the profits and losses that would be incurred by the health plans serving two of the employers in our database, based on the naturally occurring selection of enrollees into these plans. The modified Ambulatory Diagnostic Groups and comorbidity model performed somewhat better than the others, but none of the models achieved R2 values above .10. Furthermore, simulations based on actual plan choices suggested that none of the risk adjustment methods reallocated payments across plans sufficiently to compensate for systematic selection.
Actuarial Analysis↗
Cost-effectiveness of assertive community treatment versus standard case management for persons with co-occurring severe mental illness and substance use disorders.
OBJECTIVE: To determine the cost-effectiveness of Assertive Community Treatment (ACT) in comparison to Standard Case Management (SCM) for persons with severe mental illness and substance use disorders. DATA SOURCES AND STUDY SETTING: Original data on the effectiveness and social costs of ACT and SCM that were collected between 1989 and 1995. Seven community mental health centers in New Hampshire provided both types of treatment. STUDY DESIGN: Persons with schizophrenia, schizoaffective disorder, or bipolar disorder and a concurrent substance use disorder were randomly assigned to ACT or SCM and followed for three years. The primary variables assessed were substance use, psychiatric symptoms, functioning, quality of life, and social costs. DATA COLLECTION METHODS: Effectiveness data were obtained from interviews at six-month intervals with persons enrolled in treatment and with their service providers. Social cost and service utilization data came from client reports; interviews with informal caregivers; provider information systems and Medicaid claims; law enforcement agencies; courts; and community service providers. PRINCIPAL FINDINGS: Participants in both groups showed significant reductions in substance use over time. Focusing on quality of life and substance use outcomes, ACT and SCM were not significantly different in cost-effectiveness over the entire three-year study period. Longitudinal analyses showed that SCM tended to be more efficient during the first two years but that ACT was significantly more efficient than SCM during the final year of the study. CONCLUSIONS: In an adequately funded system, ACT is not more cost-effective than SCM. However, ACT efficiency appears to improve over time.
Adolescent↗
Savings from a Medicaid carve-out for mental health and substance abuse services in Massachusetts.
OBJECTIVE: The study examined the financial performance of a managed behavioral health care organization responsible for mental health and substance abuse services under the Massachusetts Medicaid program. Financial performance is considered in light of incentives in the contract between the managed care firm and Medicaid. METHODS: Data on the financial performance of the managed care organization were obtained from documents related to a recent rebidding of the contract and other publicly available documents. Financial incentives associated with claims costs and administrative services are also reported. RESULTS: Spending by the managed care organization was about 25 percent lower than projected expenditures adjusted for inflation. Explicit financial incentives associated with cost reduction did not give the managed care organization strong inducements to attain these savings. The profit and loss features based on cost targets were quite limited. The organization had a much greater incentive and opportunity to make profits by conserving its administrative costs rather than by controlling Medicaid claims costs. CONCLUSIONS: In light of the contract's weak cost-saving incentives, it may be surprising that so much was saved. One explanation is that it was easy to achieve such savings in a state with high expenditures. However, in examining the particular amounts saved, it is clear that the organization came close to contract targets even when incentives to achieve them were weak. The authors label this behavior "managing to the contract" and discuss some reasons why a managed care organization might behave in this way and the implications this behavior has for contract design.
Contract Services↗
Alternative insurance arrangements and the treatment of depression: what are the facts?
Using insurance claims data from nine large self-insured employers offering 26 alternative health benefit plans, we examine empirically how the composition and utilization for the treatment of depression vary under alternative organizational forms of insurance (indemnity, preferred provider organization networks, and mental health carve-outs), and variations in patient cost-sharing (copayments for psychotherapy and for prescription drugs). Although total outpatient mental health and substance abuse expenditures per treated individual do not vary significantly across insurance forms, the depressed outpatient is more likely to receive anti-depressant drug medications is preferred provider organizations and carve-outs than when covered by indemnity insurance. Those individuals facing higher copayments for psychotherapy are more likely to receive anti-depressant drug medications. For those receiving treatment, increases in prescription drug copayments tend to increase the share of anti-depressant drug medication costs accounted for by the newest (and more costly) generation of drugs, the selective serotonin reuptake inhibitors.
Antidepressive Agents↗
Solutions for adverse selection in behavioral health care.
Health plans have incentives to discourage high-cost enrollees (such as persons with mental illness) from joining. Public policy to counter incentives created by adverse selection is difficult when managed care controls cost through methods that are largely beyond the grasp of direct regulation. In this article, the authors evaluate three approaches to dealing with selection incentives: risk adjustment, the carving out of benefits, and cost- or risk-sharing between the payer and the plan. Adverse selection is a serious problem in the context of managed care. Risk adjustment is not likely to help much, but carving out the benefit and cost-sharing are promising directions for policy.
Economic Competition↗
Performance contracting for substance abuse treatment.
OBJECTIVE: To describe an innovation in performance contracting for substance abuse services in the State of Maine and examine data on measured performance by providers before and after the innovation. DATA SOURCES AND COLLECTION: From the Maine Addiction Treatment System (MATS), an admission and discharge data set collected by the Maine Office of Substance Abuse (OSA). The MATS data for this study include information on clients of programs receiving public funding from October 1, 1989 through June 30, 1994. Additional data are drawn from the contracts between the state and providers, and from service delivery reports submitted to OSA. STUDY DESIGN: Client-level performance measures were calculated directly from MATS using OSA's formulas and standards, and then aggregated to the treatment program level. Multivariate regression analysis was done for each performance indicator as a dependent variable with performance contracting, time, extent of state funding, and provider characteristics as independent variables. PRINCIPAL FINDINGS: Performance contracting is positively related to better performance for effectiveness indicators overall. Individual effectiveness indicators that showed improvement include drug use indicators (abstinence and reduction in use) and social functioning indicators. In addition, performance contracting is associated with an increase in efficiency performance, defined as delivery of the contracted amount of service, for agencies that depend heavily on OSA for funding. Finally, performance contracting appears unrelated to the special populations indicators that measure services to target populations that OSA considers harder to treat. CONCLUSIONS: There is tentative evidence of a relationship between provider performance and the introduction of performance contracting. More definite conclusions await more detailed analyses of client-level data.
Adult↗
Some economics of mental health 'carve-outs'.
We discuss the rationale for benefit carve-out contracts in general and for mental health and substance abuse in particular. We focus on the control of adverse selection as a principal explanation and find that this is consistent with the wide-spread use of sole-source contracting with periodic rebidding. We also find that some degree of risk sharing is common; we interpret this as a method of balancing cost-containment incentives with incentives to maintain access and quality on unmeasured dimensions.
Capitation Fee↗
Hospital response to prospective payment: moral hazard, selection, and practice-style effects.
In response to a change in reimbursement incentives, hospitals may change the intensity of services provided to a given set of patients, change the type (or severity) of patients they see, or change their market share. Each of these three responses, which we define as a moral hazard effect, a selection effect, and a practice-style effect, can influence average resource use in a population. We develop and implement a methodology for disentangling these effects using a panel data set of Medicaid psychiatric discharges in New Hampshire. We also find evidence for the form of quality competition hypothesized by Dranove (1987).
Adolescent↗