The impact of managed care on Massachusetts mental health and substance abuse providers

Medicaid managed care programs are becoming more widespread. To investigate the clinical, organizational, and financial impacts on service providers, a stratified, random sample of providers in the Massachusetts Managed Mental Health/Substance Abuse Program were surveyed by phone in Years 3 and 4 of the initiative. Providers reported that they were making widespread clinical changes such as more use of group, brief, and episodic therapies. They were increasing utilization review, Total Quality Management, and outcomes measurement. They were increasing in size, affiliating with other agencies, and providing a greater range of services. They were preparing for capitation. Compared to before the program and a year earlier, about 40 percent of providers were doing better financially and a quarter were doing worse. The study documents the hypothesis that a widespread and continuing transformation is taking place in response to managed care.