McLean Study Indicates Medicaid Patients with Subcontracted Treatment Less Likely to Receive Some Treatments

May 5th, 2004

Health insurers commonly hire subcontractors to manage their mental and behavioral health benefits for them, but a study headed by Alisa B. Busch, MD, a researcher in the Alcohol and Drug Abuse Treatment Program, has reported results in the Archives of General Psychiatry that suggests that Medicaid patients with schizophrenia whose treatment is managed under a so-called "carve-out" arrangement are less likely to receive some treatments associated with improved outcomes. These patients are much less likely to receive individual or group therapy compared to those in the state comparison regions.

In contrast, for both the carve-out and comparison groups, there was a large increase in the use of any antipsychotic medication: even the newest, most expensive drugs, and there was essentially no difference between the two groups in the likelihood of patients receiving these drugs. But significantly, the carve-out arrangement called for the Medicaid program to pay for the drugs, with the subcontractors taking no financial risk. These results indicate that high-powered financial incentives to contain costs of caring for disadvantaged and vulnerable patient populations may lead to substantial savings but may also result in important reductions in the quality of care, particularly if the contract does not include performance standards that measure the treatment services at greatest financial risk.

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