Market-based disparities in foster care outcomes

Managed care and performance-based contracting in state child welfare systems have appeared as a consequence of the increased attention that federal and state policymakers are paying to system performance and service costs. This study reports findings from a longitudinal natural experiment that examined the effects of a performance-based, managed care contracting mechanism on foster care outcomes. Multivariate analyses identified market-based disparities in some of the outcomes experienced by foster children: controlling for child, family, and caseworker characteristics, children served by agencies with performance-based, managed care contracts were less likely to be reunified and more likely to enter kinship foster homes, when compared to children served by agencies reimbursed through fee-for-service contracts. Analyses also suggested that there were few other variables consistently associated with foster care outcomes. These results call into question the evidentiary basis for the diffusion of managed care and performance-based contracting in the child welfare sector, and suggest that state child welfare systems ensure that foster care placement decisions are influenced more by child and family needs than by financial considerations. In addition, they suggest that managed care and performance-based contracts should include specific financial incentives for family reunification.