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Population-Based Payment Models Can Streamline Care And Reduce Inequities For Children With Medical Complexity

Children with medical complexity (CMC) represent a small but growing population and a disproportionate amount of pediatric health care costs. While exact definitions of CMC continue to evolve, prior studies estimate CMC to represent fewer than 1 percent of children and more than 30 percent of pediatric health care costs. Broadly, CMC have at least one complex chronic condition; severe functional limitations, often requiring technology dependence; increased health care service needs; and increased health care costs. The prevalence of CMC continues to grow as life-saving advances in medical technology have enabled the survival of many with childhood-onset diseases.

Unfortunately, the health care system and supporting policy infrastructure have not kept pace with the needs of CMC and their families. CMC experience fragmented, uncoordinated, or unavailable outpatient health care; inadequate home health services; high admission and readmission rates; and large health care costs. As a result, families experience high out-of-pocket expenses, higher rates of employment instability, financial issues, dissatisfaction, and stress. Prior work has suggested that the presence of pediatric medical complexity itself is a primary determinant of health care inequity.

What Can Be Done?

Population-Based Payment Models As A Proven Model For Complex Adult Populations

Since the passage of the Affordable Care Act in 2010 and the Medicare Access and Children’s Health Insurance Program Reauthorization Act in 2015, there has been a transformation to move health care reimbursement from fee-for-service to alternative payment models (APMs) that attempt to align payments with health care quality and outcomes. While varied in structure, APMs serve as a mechanism to coordinate care across clinicians and provide flexibility in the way care is delivered; they have also proven successful in advancing the Triple Aim for adult populations.

Football Highlights

The most advanced APM, population-based payment or capitated payment, consists of a single payment for a person’s overall care and provides the highest level of accountability and flexibility for clinicians to manage care for individuals or specific patient populations. Experiments with population-based payments have primarily taken place through the Centers for Medicare and Medicaid Services (CMS) contracts with Medicare Advantage health insurance plans and through traditional Medicare within the CMS Innovation Center’s Medicare Direct Contracting Program. Many organizations have successfully operationalized population-based payment models within the adult world, resulting in benefits across multiple dimensions—including reducing emergency department (ED) and inpatient use, increasing primary care use, and reducing overall mortality.

Opportunities For Comprehensive Care For Children With Medical Complexity

The implementation of APMs, particularly the implementation of advanced APMs, within pediatrics has trailed behind adult medicine. However, CMC serve as a promising population that could greatly benefit from the advantages of capitated payments. Such models would effectively shift dollars from unnecessary inpatient use to upfront preventative care, while simultaneously enabling children to spend more time out of the hospital, thereby improving their quality of life.

During this initial experimentation period of population-based payment models in adult medicine, there have been several pediatric demonstration projects within academic medical centers trialing coordinated care programs aimed at filling health care gaps for CMC. For example, at the University of Texas, Houston, a randomized clinical trial found that a comprehensive coordinated care program for CMC can reduce ED visits, hospitalizations, and mortality rates, and consequently reduce health care costs. While the program is grant-funded, the analysis predicted the net impact of the program would produce cost savings or at least be cost neutral. Multiple other comprehensive care pilot programs—at the Hospital for Sick Children, Arkansas Children’s Hospital, Children’s Hospital of Wisconsin, and the University of California Los Angeles—have shown similar opportunities.

These programs were built to fill the previously described health care gaps that CMC experience. However, given their predicted cost savings, population-based payments may enable these programs to scale and expand their reach to more children in need, and potentially reduce health inequities for this population. As we consider expanding coordinated care models for CMC through population-based payment models, there are multiple lessons that can be applied from the adult world and considerations specific to the pediatric population.

Lessons To Apply From Adult Population-Based Payment Models

Incorporation Of Social Risk And Focus On Equity

Social determinants of health (SDOH) account for roughly half of patient health outcomes. Addressing SDOH should be the cornerstone of any APM, and successful population-based payment models within Medicare have had a large focus on patients’ social needs. CMC experience higher rates of financial hardship and are more susceptible to health care inequities. Additionally, CMC currently have poorer health care access compared to complex adults because they require care at pediatric tertiary care centers, highly specialized treatment centers that are few in number and tend to be centered around urban areas. Roughly one-quarter of all children live more than one hour away from pediatric resources; living longer distances from providers has been associated with poorer health outcomes. Therefore, providers within population-based payment models should focus on CMC’s SDOH, particularly access to care, as a primary lever to influence their health status and resource use.

Outpatient And Home-Based Focus

As population-based payment models provide clinicians flexibility in the modality and location of care provided, capitated payments have enabled clinicians to focus on providing care in outpatient and home-based settings for complex adults. Transitioning care to outpatient settings is not only patient-centered but also serves as the basis of the economics of population-based payment models. CMC still receive a significant amount of their care in inpatient settings due to an inadequate outpatient infrastructure currently in existence. Lack of pediatric home care nursing availability is one of the most common reasons for delay in discharge for CMC. We recommend building out successful capitated comprehensive care programs for CMC; this will require improved outpatient and home-based infrastructure to be successful. For example, developing mechanisms to leverage existing caregivers, such as enabling compensation for their family caregivers’ time and services, may improve our ability to keep children healthy at home.

Standardized Quality Measures

Quality measures serve as guardrails for population-based payment models. Medicare Advantage plans that engage in capitated risk contracts with providers track and rate providers on their patients’ health outcomes and consumer experience using Healthcare Effectiveness Data and Information Set and Consumer Assessment of Healthcare Providers and Systems measures, respectively. While such measures are well established within Medicare, there is less consensus within pediatrics. With the passage of the Advancing Care for Exceptional Kids Act in 2019, states now have the option to establish health homes (for example, a team-based care delivery model that provides comprehensive and continuous medical care) tailored to CMC and are required to report associated quality measures. The Children’s Hospital Association has proposed a set of measures to the CMS; however, they are not mandated to be used. There needs to be further research on identifying and validating standardized quality measures for the CMC to evaluate and ensure quality of care for CMC who are participating in population-based payment models.

Appropriate Documentation

Complex patients, whether adult or pediatric, cost more than non-complex patients, regardless of the clinical model. Medicare accounts for this variation through a complex algorithm that calculates reimbursement rates for individual Medicare patients based on their comorbidities and anticipated medical expenditures. Recent discussions have included recommendations to incorporate a measure of SDOH, such as the Area Deprivation Index, to appropriately resource those caring for patients who have socioeconomic vulnerabilities. Unfortunately, no such standardized methodology exists in pediatrics. Considering that families of CMC have a higher number of unmet needs, we believe that developing methods to appropriately document patients’ medical and social complexities is critical to operationalizing capitated comprehensive care. If done accurately, population-based payment models can serve as a mechanism to alleviate inequities by giving providers the capacity, resources, and flexibility to address their patients’ individual needs.

Pediatric-Specific Considerations

In addition to applying the lessons learned from successful population-based payment models within adult medicine, there are multiple considerations that are unique to pediatric care.

State-Based Insurance

Most complex elderly patients receive insurance coverage that is governed by a single entity, Medicare. This reality makes it easier to build out multistate population-based payment models because there is a standard set of regulations to comply with. However, CMC are often on Medicaid, which are administered on a state-by-state or individual basis. Thus, comprehensive care programs will need to adapt to individual state policies when building out their programs, which makes them more complicated to implement. Additionally, this variability may necessitate some level of advocacy to ensure that services available are equitable amongst patients living in differing states.

Focus On Care Coordination

While complex pediatric and complex adult patients may seem similar at the surface, their health care use patterns are different. CMC often receive the bulk of their care at tertiary pediatric care centers, often within disease-specific programs that are not widely available. Thus, while the focus for pediatric comprehensive care programs is to transition care to outpatient and home-based settings, there will inevitably be a heavy reliance on tertiary academic centers to provide individualized care for each child. Population-based payment models focused on CMC will need to ensure close coordination and communication with tertiary care centers, if not directly embedded within them.

Need For Family-Centered Care

The health status of CMC has wide-ranging implications for their entire family, from economic to social to mental health. Caregivers provide an immense amount of value in caring for CMC by navigating and advocating for their children within the health system and providing hours of unpaid care in the home on a day-to-day basis. Comprehensive care programs within population-based payment models should focus on supporting not only patients and their needs, but also entire families. Providing services such as mental health support, respite care, and economic support for patients’ caregivers is critical in influencing the health of CMC.

Focus On Long-Term Population Health

There is scientific consensus that many adult chronic diseases are due to developmental and biological disruptions early in life, and that persistent health disparities associated with poverty may be reduced by alleviating toxic stress in childhood. Investing in comprehensive care for children, particularly if altering the disease trajectory of a child with medical complexity, may be one of the largest returns on investment within health care. Interventions that promote the health and development of children can produce health care cost savings across an entire lifespan. Additionally, investing in children produces cross-sector benefits such as increased labor productivity and reduced need for social services overall. Ideally, population-based payment mechanisms will ultimately evolve and advance to the point that such benefits are captured within the payment structure.

Digital-First Approach

Children born in the past two decades and their parents are digital natives. While it may be difficult to engage elderly adults digitally, newer generations expect to consume health care in a technologically relevant way. The use of synchronous and asynchronous virtual care has the potential to transform the way care is delivered and may improve access to care. Population-based payment models should enable providers the flexibility to evolve the way they engage with patients at a quicker rate than technology is currently being adopted. However, it will be critical to ensure the use of technology does not inadvertently exacerbate current inequities.

Current Pediatric Mental Health Crisis

In fall 2021, a coalition of experts in pediatric health declared pediatric and adolescent mental health a national emergency. Suicide rates and ED visits related to mental health emergencies have steadily climbed since 2010 and have drastically worsened since the onset of the COVID-19 pandemic. Children with special health care needs are more likely to have behavioral health issues, pointing to the complex interplay of physical and mental health. Thus, population-based payment models will need to ensure comprehensive care, including behavioral and mental health needs, is accessible to all CMC.

An Opportunity To Improve The Lives Of CMC And Their Families

Children with medical complexity suffer a disproportionate amount of unmet medical and social needs. Population-based payment models have enabled adult providers to simultaneously lower health care costs by decreasing unnecessary inpatient use, shift dollars to upstream preventative and coordinated outpatient care, and improve patients’ quality of life by allowing them to spend more time at home. There is a large opportunity to use these advanced APMs to evolve the way we deliver care for CMC, reduce inequities, and improve the lives of patients and their families.

Authors’ Note

Adam Boehler is the CEO of Rubicon Founders, a health care investment firm. He is chairman of the board and owns equity in Imagine Pediatrics. Alison Curfman is the co-founder and chief medical officer and owns equity in Imagine Pediatrics. Paige Bhansali is a consultant for Rubicon Founders. Boehler was the director of the Center for Medicare and Medicaid Innovation from April 2018 through October 2019.