Pursuant to a congressional request, GAO discussed the progress made by states and localities as they develop new financing, service-delivery, and accountability strategies for child welfare programs, focusing on: (1) the financial and service-delivery changes states and localities have made in their managed care initiatives; (2) how they are measuring the initiatives' outcomes; and (3) what is known about the effect of these changes on children and families.

GAO noted that: (1) states and localities that are implementing child welfare managed care initiatives are moving away from a traditional fee-for-service reimbursement approach to one that funds a single provider in advance under a capitated payment; (2) this allows the single provider--now assuming greater responsibility for case planning and providing needed services--the flexibility to package and manage an array of child and family services; (3) under these new arrangements, states and localities are taking steps toward becoming more performance-based and results-oriented as they implement child welfare managed care initiatives; (4) GAO found that the state and local agencies operating these initiatives are beginning to identify measures associated with five child and family outcome categories--child safety, a permanent home for the child, child and family well-being, the stability of out-of-home placements, and clients' satisfaction with the services they received; (5) these agencies are using such strategies as setting performance standards and incorporating financial incentives in contracts with service providers to hold them accountable for their performance and ensure that desired results are achieved; (6) however, GAO found that many of the state and local agencies operating these initiatives do not have appropriate data systems in place to store, analyze, and retrieve information on client outcomes; (7) most state and local officials GAO talked with who were responsible for the initiatives are encouraged by the changes occurring in child and family outcomes; (8) while controlling costs was seen as a potential benefit of managed care, an equally if not more important goal was improved services for children and families; (9) in fact in some cases, overall spending has increased; (10) whether any outcome changes associated with these initiatives can be attributed to the new strategies is still largely unknown because they have not been rigorously evaluated; and (11) planned evaluations under the federal waiver demonstration program will--in the future--yield additional information about the effectiveness of child welfare managed care arrangements.

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