Grouping Recipients of MH Services for Risk-Adjusted Capitation

Grouping Recipients of Mental Health Services for Risk-Adjusted Capitation

Investigator: Judith Samuels, Ph.D.

PROJECT GOALS

The goals of this project are to:

describe the utilization patterns of persons using psychiatric services over a three-year period, and
develop risk adjustment groupings useful for adjusting capitation rates of managed care scenarios emerging under state Medicaid and national health care reform.

Utilization patterns will be described for the period 10/1/90 to 9/30/93, and risk adjustment groupings useful for adjusting capitation rates of managed care scenarios will be developed. The descriptive analysis will uniquely describe a multi-year experience across all payers and shed light on the relationship between service utilization and population characteristics such as demographics, type of insurance, diagnosis and chemical abuse co-morbidities across a broad population of recipients. Recursive partitioning, a nonparametric statistical methodology, is being employed to develop and test prediction rules for grouping recipients into service utilization risk categories.

RESEARCH ACTIVITIES AND RESULTS

Risk-adjustment grouping analysis, completed during the 1996-97 year, showed that severity of mental illness and disability were the best predictors of high mental health care costs over three years. Use of the 3-year model based risk groups formed from three years of utilization data resulted in an 18% reduction in variance of costs. Single year models did not perform as well. Analysis and conclusions provide strong evidence of the potential pitfalls associated with predicting "heavy users" incorrectly and the potential fiscal dangers of inaccurate rate setting particularly for this group.

SIGNIFICANCE OF FINDINGS/POLICY IMPLICATIONS

This study provides insight into the cycles and patterns of mental health services utilization and mental illness which will be valuable for calculating rate schedules differentiated by patient risk, whether reimbursement payments are made on fee-for-service, diagnosis-related group, capitation or any other basis.

PLANS

To be responsive to shifts in NYS policy for implementing managed care in the public mental health sector, the integrated risk payment methodology used a subset of the data limited to a Medicaid-eligible population; therefore, the comparison of risk adjustment by groupings with integrated risk payments could not be made. During the current project renewal year, risk groups will be developed using only the Medicaid subgroup. After this analysis is complete, results of applying the two rate-setting methods to the same population will be compared.

Publications and Presentations

Papers

Samuels, J., Siegel, C., and Jones K. "Managed care rate setting: New methods for mental health reimbursement", accepted for publication in Advances in Health Economics and Health Services Research, 1997.

Samuels, J., Risky Business: Classifying Mental Health Consumers for Capitation Reimbursement Under Managed Care, dissertation accepted at New York University. December 1996.

Presentations

Samuels, J., Siegel, C. and Jones, K. Managed Care Rate Setting: New Methods for Mental Health Reimbursement presented at:

National Institute of Mental Health Biennial Research Conference on the Economics of Mental Health in September 1996
124th Annual Conference of the American Public Health Association, New York City in November, 1996.

Updated: 4/12/1999

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