BACKGROUND: In 1995 in an effort to control costs, the State of Colorado implemented a pilot capitated payment system for individuals eligible for public financing of their mental health services. Contracts were with both Not-For-Profit (NFP) firms and For-Profit (FP) firms; the remainder were in the fee-for-service system (FFS). Pharmaceuticals were not included in the capitation rate. However, antipsychotic medications were included in the formularies for consumers who received their medical care through a Health Maintenance Organization (HMO). AIMS: This paper examines the use of antipsychotic medication compared to the use of atypical antipsychotics among consumers who are (i) enrolled in a medical HMO or not enrolled in a medical HMO and (ii) whose mental health services are reimbursed on a fee-for-service basis (FFS) or through a capitated system. METHODS: Data for this study were collected between 1995 and 1997 as part of the Colorado's Medicaid Mental Health Capitation Pilot Program. Atypical antipsychotics included in the study are: clozapine, risperidone, and olanzapine. The sample of this study consisted of 282 individuals diagnosed with schizophrenia. RESULTS: The utilization of antipsychotics was lower among consumers in HMOs. Compared to consumers in FFS areas of the state, the utilization of atypical antipsychotics was higher in capitated areas of the state. DISCUSSION: There was a strong incentive for the utilization of atypical antipsychotics to increase in capitated systems, unless consumers received their medication prescriptions through an HMO. Limitations include differences in observable and unobservable characteristics among the FFS, DC and MBHO areas, unavoidable selection bias and the small number of HMO enrollees. CONCLUSIONS: Capitation of mental health services provides incentives for more cost-effective treatments. HMO enrollment was not a crucial factor to determine access to atypical antipsychotic prescriptions. IMPLICATIONS FOR POLICY: These data suggest that capitation can affect the use of substitute services not in the capitation rate. Before recommending policy changes, we need to better understand whether the increased utilization leads to better outcomes. IMPLICATION FOR FURTHER RESEARCH: The next step is to determine whether the increased use of atypical antipsychotics leads to better outcomes for consumers.
BACKGROUND: In 1995 in an effort to control costs, the State of Colorado implemented a pilot capitated payment system for individuals eligible for public financing of their mental health services. Contracts were with both Not-For-Profit (NFP) firms and For-Profit (FP) firms; the remainder were in the fee-for-service system (FFS). Pharmaceuticals were not included in the capitation rate. However, antipsychotic medications were included in the formularies for consumers who received their medical care through a Health Maintenance Organization (HMO). AIMS: This paper examines the use of antipsychotic medication compared to the use of atypical antipsychotics among consumers who are (i) enrolled in a medical HMO or not enrolled in a medical HMO and (ii) whose mental health services are reimbursed on a fee-for-service basis (FFS) or through a capitated system. METHODS: Data for this study were collected between 1995 and 1997 as part of the Colorado's Medicaid Mental Health Capitation Pilot Program. Atypical antipsychotics included in the study are: clozapine, risperidone, and olanzapine. The sample of this study consisted of 282 individuals diagnosed with schizophrenia. RESULTS: The utilization of antipsychotics was lower among consumers in HMOs. Compared to consumers in FFS areas of the state, the utilization of atypical antipsychotics was higher in capitated areas of the state. DISCUSSION: There was a strong incentive for the utilization of atypical antipsychotics to increase in capitated systems, unless consumers received their medication prescriptions through an HMO. Limitations include differences in observable and unobservable characteristics among the FFS, DC and MBHO areas, unavoidable selection bias and the small number of HMO enrollees. CONCLUSIONS: Capitation of mental health services provides incentives for more cost-effective treatments. HMO enrollment was not a crucial factor to determine access to atypical antipsychotic prescriptions. IMPLICATIONS FOR POLICY: These data suggest that capitation can affect the use of substitute services not in the capitation rate. Before recommending policy changes, we need to better understand whether the increased utilization leads to better outcomes. IMPLICATION FOR FURTHER RESEARCH: The next step is to determine whether the increased use of atypical antipsychotics leads to better outcomes for consumers.