Child Welfare

Faced with escalating costs and a poorly integrated patchwork of services, state and local child welfare agencies are considering new strategies to meet the needs of the nearly 1 million abused and neglected children in the child welfare system. Managed care in child welfare, like its counterpart in health care, is seen as a way to improve access to care while controlling costs. By coordinating the delivery of only those services that are necessary and appropriate, managed care strives to reduce the inefficiencies of the traditional fee-for-service system while providing quality care. Nationwide, public child welfare agencies have implemented managed care projects in 13 states. with new initiatives planned in more than 20 others. Currently, only about four percent of the nation's child welfare cases are being served under managed care. In general, public agencies have contracted with experienced nonprofit, community-based providers to implement managed care initiatives. The majority of ongoing child welfare managed care initiatives have established a capitated payment system. As more public child welfare agencies move toward managed care, public officials and their private contractors face several challenges. First, as they develop and implement a capitated payment method, agencies need to find ways to maintain adequate cash flow. Second, agencies face the difficult task of developing sound management information systems, which are critical to establishing an appropriate capitated payment rate and a performance-based monitoring system. Third, both public and private agencies face new responsibilities as some traditionally public functions shift to the private sector and new roles emerge.

GAO noted that: (1) nationwide, public child welfare agencies have implemented managed care projects or initiatives in 13 states, with new initiatives being planned or considered in more than 20 other states; (2) most of the ongoing initiatives involve foster children with the most complex and costly service needs; (3) currently, only about 4 percent of the nation's child welfare population is being served under managed care arrangements; (4) public agencies have contracted with experienced nonprofit, community-based providers in their service systems to implement managed care initiatives; (5) for-profit managed care companies have not had a major role in implementing managed care in child welfare; only a few jurisdictions are using for-profit companies to administer and provide child welfare services; (6) the majority of the ongoing child welfare managed care initiatives have established a capitated payment system; (7) lacking experience and uncertain about the feasibility of new fixed payments, some initiatives also use mechanisms to limit the financial risk that has been shifted to providers; (8) managed care initiatives require service providers to organize and coordinate a full array of services to ensure that appropriate and necessary services are available to children and their families; (9) most of the public agencies responsible for the initiatives have transferred case management functions to private entities; (10) the public sector, however, continues to play an active role at strategic points throughout the service-delivery process; (11) to ensure that providers' cost-controlling strategies do not jeopardize service quality or access to care, public agencies use various quality assurance techniques to hold service providers accountable for outcomes; (12) as more public child welfare agencies move toward managed care, public officials and their private contractors face several challenges; (13) as they develop and implement a capitated payment method, agencies need to find ways to maintain adequate cash flow; (14) agencies face the difficult tasks of developing sound management information systems; (15) both public and private agencies face new responsibilities as some traditionally public functions shift to the private sector and new roles emerge; (16) these changes may require these agencies to develop new procedures for case management and program administration and to provide additional training for both public and private employees; and (17) despite these challenges, public officials are encouraged by some positive, though limited, early results from managed care initiatives.