Impact of Medicaid Managed Care Program on the State Cost and Medical Care Expenditures: Evidence from a Pilot Program in Illinois

Background:

In an effort to control costs and improve service quality, the Illinois’ Integrated Care Program (ICP) has been transferring Medicaid members with disabilities from the fee-for-service (FFS) model to a managed care model operated by private insurers.  We evaluated the effect of the ICP on health care costs and utilization.

Methods:

We obtained pre and post-ICP claims, encounters, and capitated payment data from ICP eligible Medicaid enrollees in the suburbs of Chicago, where ICP was pilot tested. The city of Chicago was the comparison site. We used inverse propensity score weights to construct a comparison group of Chicago Medicaid enrollees who matched the suburban group in demographics, health characteristics, and past health care utilization and expenditures, but who continued with standard FFS Medicaid. Then we estimated the impact of the program by estimating difference in difference (DID) and comparative interrupted time series (CITS) regression models on the matched samples.

Results:

Preliminary analysis of the matched samples suggests that overall costs to the state decreased by $44/member/month under the ICP program. Month to month volatility in the state’s costs also declined under the new program.  Findings on emergency room, inpatient, and outpatient medical care expenditure will also be presented.

Conclusion:

Our findings indicate that the level of care received by low income people with disabilities, and the costs incurred by state governments attempting to provide that care may depend on the health service delivery model.