Service use and health status of persons with severe mental illness in full-risk and no-risk Medicaid programs

Objective: The service use patterns and health status outcomes of Medicaid recipients with severe mental illness in a system that assigned full financial risk to managed care organizations through capitation and a system that paid for mental health care on a no-risk fee-for-service basis were compared. Methods: With use of a quasi-experimental design, initial interviews (time 1) and follow-up interviews six months later (time 2) were conducted among 92 clients in the full-risk group and 112 clients in the no-risk group. Regression models were used to compare self-reported service use and health status between the two groups. Results: Service use patterns differed between the two groups. When symptom severity at time I was controlled for, clients in the full-risk group were more likely to have received case management but less likely to report contact with a psychiatrist or to have received counseling than clients in the no-risk group. When health status at time 1 was controlled for, clients in the full-risk group reported poorer mental health at time 2 than clients in the no-risk group. When physical health status at time I was controlled for, clients in the full-risk group reported poorer physical health at time 2 than clients in the no-risk group. Conclusions; Capitation was associated with lower use of costly services. Clients with serious mental illness in the full-risk managed care system had poorer mental and physical health outcomes than those in the no-risk system.