Evaluating the Impact of Assisted Outpatient Treatment on Healthcare Utilization and Medicaid Expenditures in Kentucky.

Abstract

Purpose: Assisted Outpatient Treatment (AOT) is a court-ordered intervention for individuals with serious mental illness (SMI) who are unlikely to adhere to voluntary treatment and are at high risk of repeated hospitalizations or crisis service use. In 2017, Kentucky enacted Tim's Law, enabling AOT for individuals with a history of multiple involuntary hospitalizations and treatment nonadherence. This study evaluates the impact of Kentucky's AOT program on healthcare utilization and Medicaid expenditures and discusses implications for ethical social work practice.

Materials and methods: Using Medicaid claims data from 2018 to 2024 for 67 AOT participants, we calculated monthly rates of encounters, hospitalizations, and Medicaid spending across three periods: before, during, and after AOT participation.

Results: AOT participation was associated with significant reductions across all outcomes. Monthly encounters declined by 39% during AOT and 48% after AOT. Hospitalizations decreased by 53% during AOT and 67% post-AOT. Medicaid expenditures dropped by an average of $1,326.22 per participant per month during AOT and $1,105.45 post-AOT. No significant moderation effects were found based on demographic characteristics, diagnosis, or service agency.

Conclusions: Findings suggest that Kentucky's AOT program is associated with sustained reductions in costly healthcare services and improved system efficiency. Beyond cost outcomes, results underscore the importance of implementing AOT with safeguards that protect self-determination while promoting recovery. This analysis contributes new evidence from a program and region not previously represented in the literature and highlights implications for social workers engaged in balancing client rights, community safety, and recovery-oriented care.