How Do HMOs Reduce Outpatient Mental Health Care Costs?

Published In: American Journal of Psychiatry, v. 148, no. 1, Jan 1991, p. 96-101

Posted on RAND.org on January 01, 1991

by G. S Norquist, Kenneth B. Wells

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OBJECTIVE: Because previous studies of differences in utilization of mental health care services have had important limitations, it is not clear if their findings that health maintenance organization (HMO) outpatient mental health care costs less than fee-for-service care are due to less access, less intensive care per user, or selective enrollment of healthier people by HMOs. Therefore, the authors used data from the National Institute of Mental Health Epidemiologic Catchment Area (ECA) study to examine differences in the prevalence of psychiatric disorder and differences in the use of outpatient mental health services for adults enrolled in HMO or fee-for-service health insurance plans.METHOD: The subjects were an ECA community sample obtained from East Los Angeles and West Los Angeles. This sample included a large number of Hispanic subjects. The subjects were categorized according to their responses to a 5-item battery on insurance as Medicare enrollees, members of private fee-for-service plans, Medicaid enrollees, members of an HMO, and uninsured. The presence or absence of psychiatric disorders was determined by using the NIMH Diagnostic Interview Schedule. Both users and nonusers of mental health services were studied.RESULTS: The HMO and fee-for-service plans had similar prevalence of psychiatric disorder and similar access to specialty mental health care. However, HMO enrollees had significantly fewer visits per user to providers of specialty care.CONCLUSIONS: The most likely explanation for lower mental health care costs in HMOs is a less intensive style of care for a comparably sick population.

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