Comparing Medicaid Expenditures for Standard and Enhanced Therapeutic Foster Care

Therapeutic foster care (TFC) is a service for children with high behavioral health needs that has shown promise to prevent entry into more restrictive and expensive care settings. The purpose of this study was to compare Medicaid expenditures associated with TFC with Medicaid expenditures associated with an enhanced higher-rate service called Intensive Alternative Family Treatment (IAFT). We conducted a secondary analysis of Medicaid claims in North Carolina among children entering care in 2018–2019. Using propensity score analysis with difference-in-difference estimation, we compared monthly Medicaid expenditures before and after initiating TFC and IAFT (N = 5472 person-months). Youth entering IAFT had higher expenditures prior to treatment than those entering TFC. Both standard TFC and IAFT were associated with a downward trend in expenditures following treatment initiation. Both TFC and IAFT reverse a trend of increasing Medicaid costs prior to care among children with high behavioral health needs.