Effects of a statewide carve out on spending and access to substance abuse treatment in Massachusetts, 1992 to 1996.

Objective: We studied the first four years of the statewide carve out for Medicaid enrollees in Massachusetts to assess its effect on access and spending.

Data Sources/study Design: Using administrative data, we compared the state's fiscal years 1992 (the last year before the carve out) through 1996 (the final year of the state's first carve-out vendor, MHMA). We evaluated the effect on spending by converting expenditures to constant (1996) prices using the medical services component of the Consumer Price Index for Boston and standardizing directly for the changing proportion of Medicaid enrollees who were disabled. We measured access through the penetration rate (proportion of enrollees using at least one substance abuse treatment service in a year .

Principal Findings: Overall this carve out reduced real adjusted spending per enrollee by 40 percent from 1992 to 1996. At the same time, access improved from 38 to 43 unduplicated users per 1,000 enrollees per year f rom 1992 to 1996, adjusted for changes in Medicaid eligibility. these savings were achieved by a shift in the type of 24-h our services (hospital, detox, and residential treatment ). In 1992, 87 percent of these services were provided in hospital compared to only 1 percent in 1996. the reductions were achieved within the first two years of the carve out and sustained, but not enhanced, in subsequent years.

Conclusions: By arranging Medicaid reimbursement for lower levels of care and limiting use of the most expensive settings, managed care achieved substantial cost reductions over the first four years in Massachusetts.