The Impact of Managed Care on the Psychiatric Offset Effect

Numerous studies have provided substantial evidence showing that the provision of psychiatric services offsets or reduces the subsequent provision of medical services. Yet, this evidence has not been conclusive, and in recent years it has been theorized that the offset effect may no longer be relevant because other cost-containment strategies, such as the implementation of managed care, may have reduced medical provision to a level such that there are no more savings to be obtained through assuring more equitable access to psychiatric care. This study aims to assess the continuing relevance of the psychiatric offset effect within the context of acute psychiatric inpatient care in the Commonwealth of Massachusetts. It utilizes a secondary analysis of a longitudinal cohort of 1.9 million individuals who were included in the Massachusetts case mix database of discharges from acute medical and psychiatric units between fiscal year (FY) 1994 and FY 2000. The analysis uses latent growth curve modeling and revealed a strong offset effect of -0.84 after the effects of managed care provision and other conditions are controlled for.