ESTIMATING the COST of PREVENTIVE SERVICES
in Mental Health and Substance Abuse Under Managed Care
Model One: Prenatal and Infancy Home Visits for High-Risk Mothers
This intervention was designed based on an amalgamation of two publications-Olds, Henderson, Phelps, Kitzman, and Hanks (1993) and Ramey and Ramey (1992)-and reviewed by Dorfman (2000) in references respectively numbered 2 and 5. Because no study was a strict replication of another, it was necessary to build each intervention model based on major variables that would clearly drive costs, rather than building a separate model for each study. A third study, reviewed by Dorfman and that supported the final recommendations, was not included in this cost model. It used an additional classroom-based intervention and thus would have required a separate cost model (Field, T., Widmayer, S., Greenberg, R., & Stoller, S., 1982).
Further differences between these two studies were in the target population of mothers and infants. Olds et al. (1993) focused on un-married women under age 19. Ramey and Ramey (1992) selected their subjects because of the infants' low birthweight or premature delivery. While these differences in the types of participants may have had some impact on the relative effectiveness of the interventions, they were not considered to have a major impact on the cost (i.e., "a participant is a participant").
It is important to design the intervention models as generically as reasonably possible in order to allow any given managed care plan to assess the likely cost of the intervention under a variety of circumstances. For example, one plan may wish to target its intervention to a narrow category of enrolled members (e.g., teenage mothers only), while another may wish to target multiple categories (e.g., teenage mothers, older women at prenatal risk due to age, and all mothers at risk for an adverse birth outcome).
In order to get an estimate of the number of potential participants, the model was designed to support three different subcategories of participants from among the eligible members:
1. Teenage mothers
2. Nonteenage mothers of potentially low-birthweight babies
3. Nonteenage mothers with other high-risk pregnancies
The PMPM costs reported for this model are based on the total cost for all three subcategories of participants.
Design and Input Values Used in the Model
This model incorporated a wide range of variables and their assumed values in order to estimate a PMPM cost. The following is a description of the model's general structure. Details on the input variables and the values used to populate these variables are provided in the Technical Appendix.
Assumptions
Number of Lives Covered by the Managed Care Plan
All the models assumed 100,000 enrolled lives (members) in the MCO.
Number of Intervention Cohorts Served Within a 12-Month Operational Cycle
The model assumes that the intervention would last no more than 26 weeks, so that two independent cohorts would be served in 1 year.
Size of the Cohort That Participates in Each Intervention Cycle
Based on the enrolled members, the model used an estimate of the average number of high-risk pregnant females who would be likely to participate in the intervention. In determining what values to use to populate these variables, 1998 U.S. Census Bureau data on the percentages of the general population represented by females of each age group who were potentially able to bear children (i.e., teens = ages 14 to 19, adults = ages 20 to 44) were used, as were separate tables on the birth rates of these age groups. The rate of low-birthweight babies was estimated from the managed care plan "HEDIS Report Card" developed from 1995 to 1996 for the NCQA.
Attrition
Estimates were included for the number of participants who would begin and the number who would complete the intervention, the difference being due to attrition.
Time and Services
This particular model assumed that all participants would undergo an initial private, one-on-one assessment and orientation visit with a social worker, lasting an average of 1 hour. The model assumed that participants would receive one visit every other week and that some home visits would be attempted but not completed ("no shows").
Required Staff Hours and Number of Staff Employed
Using the average number of participants, their average weeks of participation, and the average time spent driving to and from the home, calculations were made of the number of staff hours (total visit time and drive time) that would be required to do the home visits. The total necessary staff hours allows for the calculation of the number of full-time equivalent (FTE) staff that would have to be employed. The calculation of required staff hours assumes these hours are "productive" time. Therefore, the model adjusted upward the number of FTE staff that would need to be hired by a factor representing the percentage of time that the average FTE staff member is not productive (e.g., because of sick leave, vacation, or internal meetings). The model also calls for the types of staff to be hired so average salaries and fringe-benefit rates can be entered.
Other Direct Costs: Startup, Fixed, and Variable
The model also includes estimates of the one-time startup costs directly attributable to the intervention program and the annual fixed and variable expenses on a "per home visit" basis. Startup and fixed expenses would be such items as cost of rent, furniture, computer equipment, and software. Examples of variable costs per visit are any supplies or other items that are consumed at each visit (e.g., sensory stimulation toys for the mother to use with the child, cost of staff transportation for both completed and noncompleted visits).
Administrative Overhead and Profit
The final variable to be valued is the percentage of total expenses that are required to cover G&A expenses plus any profit margin.
Results
PMPM Cost
As noted in Chapter I, the cost simulation of this intervention was done for each of four scenarios, producing four distributions of possible values of the output variable, PMPM cost. The single PMPM cost reported represents the midpoint value between the median cost of the Least Expensive Scenario and the median cost of the Most Expensive Scenario. Details on the cost results for all four scenarios are presented in the Technical Appendix.
The median PMPM cost for the Least Expensive Scenario was only $0.40, and the median cost for the Most Expensive Scenario was $1.12. The midpoint between these two median values is $0.76.
Discussion
This intervention has been shown to reduce adverse birth outcomes and produce overall medical cost savings (Olds et al., 1993; Ramey and Ramey, 1992). The annual investment of $1.03 PMPM for 100,000 members comes to an aggregate cost of $1,236,000. Although this is a large sum of money, the MCO could be expected to save a larger amount through the cost savings realized by the prevention of adverse births and their high medical costs. Although most of the medical savings would accrue in the first 5 years of the child's life, additional savings are likely during adolescence. Longitudinal econometric research on early childhood interventions has documented significant net savings in the cost per child (Karoly, Greenwood, Everingham, Hoube, Kilburn, Rydell, Sanders, and Chiesa, 1998). Much of these savings involve reduced costs to the criminal justice system as well as child and adolescent health and welfare costs.
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