Children's Bureau Website - Michigan - Managed Care Payment System

Michigan

Demonstration Type:	Managed Care Payment System¹
Approval Date:	December 19, 1997
Implementation Date:	October 1, 1999
Completion Date:	September 30, 2003
Final Evaluation Report Date:	January 4, 2005

Target Population

Michigan's demonstration initially targeted title IV-E-eligible children ages 0 to 18 who were in out-of-home care or who were determined to be at "imminent risk" of placement. A child was considered to be at imminent risk of placement if s/he had previously been placed out of the home, was determined to be at risk of placement on the basis of a standardized risk assessment instrument, and/or a court had ordered out-of-home placement for the child. In October 2001, the State formally excluded children at risk of out-of-home placement from the demonstration and focused on serving only children in out-of-home care.

Jurisdiction

Michigan's waiver authorized the State to implement its managed care demonstration in up to 15 counties; however, it only implemented the demonstration in six counties. The evaluation's random assignment requirement later led one of these six counties to withdraw from the demonstration project. In another county, enrollment into the demonstration was so limited (only six families over four years) that its data were not included in the State's final evaluation report.

Intervention

Michigan's title IV-E Child Welfare Demonstration Project, known as Michigan's Families, was designed and implemented by the Michigan Family Independence Agency (FIA)² in collaboration with the Michigan Department of Community Health. Michigan's Families operated from October 1, 1999 to September 30, 2003 and included two major policy innovations: (1) the use of community-based "wraparound" services for IV-E-eligible families; and (2) a managed care model that replaced targeted fee-for-service funding for out-of-home placements and other services with case rate, or capitated, payments. The demonstration was, first and foremost, a mechanism to test the effectiveness of more flexible funding for foster care services. In each of the demonstration sites, the county child welfare agency contracted with a Community Mental Health (CMH) agency to receive the case rate payments and manage title IV-E cases.

Wraparound services provided through the demonstration included counseling, in-home family services, parenting education and training, respite care, household management training, incidental parent support services, shelter care, foster family care, and residential group care.

Under the original terms of the waiver, contracted CMH agencies received a fixed monthly rate of $1,500 (adjusted for increases in foster care rates) per child for service and administrative costs for as long as the child needed services. In October 2001, the State replaced the capitated monthly rate with a fixed case rate of $14,274 payable in nine monthly installments. Because the local CMH agencies were not legally sanctioned placement agencies and therefore could not make placement decisions for enrolled children, they had less discretion in controlling placement-related costs within the capitated rate financing model.

Evaluation Design

Michigan's evaluation included process and outcome components, as well as a cost-effectiveness analysis. Using an experimental research design, eligible families were randomly assigned to an experimental group (provided waiver services through Michigan's Families) or to a control group (provided services normally received under Michigan's traditional IV-E program). A family underwent random assignment once it was deemed eligible and had agreed to participate in the demonstration.

Random assignment to experimental and control groups occurred at a 4:3 ratio and was performed centrally in Lansing, Michigan, using a computer program specially designed for the demonstration. The State initially projected a sample size of between 600 and 1,000 families for the experimental group and between 750 and 450 families for the control group. In the four active demonstration counties, a total of 148 families and 272 children entered the demonstration, with 83 families (171 children) assigned to the experimental group and 65 families (101 children) assigned to the control group. Enrollment ceased in December 2002 in order to provide at least nine months of service to all experimental group children prior to the project's September 2003 completion date.

The evaluation focused on the following outcome measures:

Rates of out-of-home placement;
Average length of time in out-of-home placement;
Average number of placement episodes (i.e., placement stability);
Rates of substantiated maltreatment; and
Permanency rates (defined as exits to reunification, adoption, guardianship, or independent living).

Study Limitations

The State's evaluators noted that the lack of a clear distinction in the treatment model used for experimental versus control group families may have compromised the validity of evaluation findings. Specifically, the provision of wraparound services was already the prevailing service model in many Michigan counties at the time the demonstration was implemented. Because no clear differences may have existed in the case management service model to which experimental and control group families were exposed, the likelihood of observing different child welfare outcomes was reduced.

Evaluation Findings

Process Evaluation

Case Management and Service Planning: A CMH wraparound staff person generally provided case management and service planning for families in the experimental group. Wraparound facilitators reported averaging one weekly face-to-face meeting with each family. The assigned wraparound staff person was responsible for identifying and arranging services to meet the specified needs of the child and family. In contrast, a traditional child welfare agency worker oversaw case management and service planning for families in the control group. Caseloads were generally higher for control group workers (up to 30 families) than for experimental group workers (generally less than 10 families).
Services Provided to Children and Families: Wraparound staff reported a tendency to focus on the concrete needs of experimental group families (e.g., assistance with utilities, rent, and transportation) rather than trying to build community supports and helping families become self-sufficient. Several counties reported spending more than expected on concrete needs at the beginning of the demonstration and made a conscious effort mid-way to cut back on these kinds of services. Almost all of the services available to experimental group families were also available to control group families, with the requirement that they not be provided directly by wraparound program staff. In addition, experimental group workers had more flexibility than control group workers in the types of services they could provide (particularly in meeting concrete needs such as shelter, clothing, etc.).

Although control group families did not receive the same level of case manager attention or service flexibility given to experimental group families, wraparound care was the preferred service model for both groups. In fact, child welfare staff initially made available the wraparound process or similar services to both experimental and control group cases, referring control cases to the wraparound program and paying for their services with non-title IV-E funds. The State child welfare agency asked demonstration county agencies to discontinue this practice mid-way through the demonstration, although it was unclear from informant interviews or other available data to what extent this change occurred.
Staff Attitudes about the Demonstration: Local child welfare and CMH staff expressed both positive and negative attitudes about the demonstration. Staff were consistently positive about the philosophy behind Michigan's Families, but were negative about various aspects of its design and implementation. Many informants considered the demonstration design to be flawed in the following ways:
- Random assignment: Staff expressed dissatisfaction with random assignment because they wanted to use the funds to provide wraparound services to all appropriate cases.
- Eligibility: Staff did not like the narrowing of eligibility to families with children already placed outside of the home mid-way through the demonstration.
- Case rate: Some staff felt that the case rate formula was defective, although there was some disagreement over whether it was too high or too low.
- Mixing wraparound and managed care: Since a wraparound services model was already strongly in place in participating counties, tying managed care to wraparound service delivery was perceived as a serious flaw in the design of the demonstration by some staff.
Staff also reported frustration with certain aspects of the demonstration's implementation, including the following:
- Reporting requirements: Child welfare staff felt overburdened by the additional reporting and paperwork required for the demonstration.
- Attitudes about wraparound services: Although many workers were supportive of the wraparound process, some staff thought the demonstration fostered families' dependence on the additional financial assistance available through the title IV-E waiver.

Outcome Evaluation

Michigan completed its demonstration in September 2003. Outcome findings were limited. Findings summarized in its final evaluation report included the following:

Overall, Michigan's Families delivered more services and cost more to operate than the normal title IV-E program. Specifically, families in the experimental group received support services (e.g., respite care, job training), concrete in-kind assistance (e.g., help with food, clothing, or housing), child education, and medical services at statistically higher levels than control group families. Experimental group families also received more funding to pay for non-traditional expenses—such as entertainment, clubs, sports, summer camp, and other extracurricular activities—than control group families.
The availability of more services did not produce observable positive effects on targeted child welfare outcomes. Over the course of the demonstration, no statistically significant differences emerged between experimental and control group families in the likelihood of out-of-home placement, the average length of time in out-of-home placement, the average number of placement episodes (i.e., placement stability), rates of substantiated maltreatment, and exits to permanency.
Children in the experimental group were statistically no more likely to enter placement in less restrictive settings, with similar proportions of experimental and control group children placed in non-relative foster care, kinship care, or residential facilities.

Cost Effectiveness Findings

Although Michigan's Families cost Federal, State, and local governments about $2,000 per month per family more to operate than the standard title IV-E program, it produced few positive effects on child and family outcomes.

¹ Based on information submitted by Michigan in its January 2004 final evaluation report. Back

² The name of this agency was changed to the Michigan Department of Human Services effective March 2005. Back

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