Optimizing Health Care for Children with Medical Complexity

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October 2013

Children with medical complexity are a growing population. Approximately 3 million of the nation’s 76 million children have medical complexity, and children with medical complexity are increasing at a rate of about 5 percent annually, outpacing the growth rate of children as a whole.

Children with medical complexity:

  • Have diagnoses that are multiple and varied, from cerebral palsy to cystic fibrosis to congenital heart defects and childhood cancers
  • Are under the continuous care of multiple pediatric specialists, often seeing a dozen or more physicians
  • Require access to specialized care in pediatric centers of excellence
  • Require additional services from within and outside of the health care system
  • Travel regionally or even nationally for diagnostic and treatment services

The current health care system has the medical training, knowledge and facilities to care for these children, but the processes around obtaining care and coordinating treatment are inefficient. Much of the time, discontinuity in these processes hurts quality and drives higher costs for everyone involved—patients, caregivers and payers. The variations in how each state supports this unique population also poses a significant barrier in sharing data and quality standards that can improve the care and outcomes for this small but high-cost population.

Medicaid and the Medically Complex

Children with medical complexity are concentrated in Medicaid and generate the highest expenses in the program:

  • Approximately two-thirds of all children with medical complexity are covered by Medicaid
  • These 2 million children (approximately 6 percent of the total number of children on Medicaid) represent nearly 40 percent of costs
  • Medicaid is the largest payer for these children because the medical services they require often far exceed the traditional benefits and coverage levels commercial plans provide

Children’s hospitals are the focal point of care for many of these patients, as pediatric specialists are often needed to provide expertise in treating their rare and complex clinical conditions. The expertise concentrated in children’s hospitals serves children at local, regional and national levels to meet their complex needs.

Children with medical complexity have the highest needs and can be helped the most. They are also the population children’s hospitals know the most about. It’s vital to do what is best for these children. Long term, improving systems of care for children with medical complexity on Medicaid, taking care of them in a more efficient and effective way while reducing expenditures, is an important step in improving systems of care for broader populations of children.

Need for a National Solution

Changing the system to provide and improve care, reduce costs and ensure adequate coverage for children with medical complexity who rely on Medicaid requires a national solution.

In addition to other challenges:

  • Inconsistency across state Medicaid programs hinders care coordination, communication, provider access and continuity of care
  • State-based Medicaid programs do not anticipate or adequately support care across state plans
  • Rare diseases require large data sets to improve care, yet there is no national database for Medicaid claims data (like there is with Medicare)
  • Current care models and today’s fee-for-service payment systems are focused on payment volumes rather than on positive outcomes

Through medical home pilots and other initiatives, children’s hospitals have advanced efforts to develop models for providing improved care coordination to these children. Although limited in number and size, small-scale medical home-type programs demonstrate it’s possible to improve coordination of care, enhance the quality of life for families, reduce hospital utilization, and ultimately reduce costs.

This evidence suggests that broad-based implementation of similar care coordination programs across the U.S. would improve care quality and reduce the need for inpatient hospital care for this population as a whole, all while providing greater budget certainty and savings.

Proposal to Improve Care

Children’s hospitals propose a realignment of optimal care models and Medicaid payment to create a national framework for children with medical complexity and their families supporting care coordination that is financially viable, that states can opt-into, and that will result in better care for these children.

Specifically, the proposal calls for the designation of national networks as the means by which children with medical complexity will receive all of the care they need in the most appropriate settings. These networks will:

  • Improve care management, coordination and delivery
  • Decrease unnecessary utilization and associated costs
  • Improve quality of life for the patients and their families
  • Reduce 10-year Medicaid spending by $10 billion – $15 billion

This estimated cost savings for both federal and state Medicaid spending (2014-2023) is produced by decreasing the costs related to hospitalizations and emergency room visits while paying for the coordination of care for children with medical complexity.

The proposal calls for a national database (comparable to Medicare) to capture the care and costs of children with medical complexity. The health care system will benefit from a single resource of information (state-level databases on this relatively small subset of patients are insufficient to drive meaningful, evidence-based results) helping enable network care providers to continuously monitor and improve quality of care, advance best practices and set national standards for the care of these children.

Our research confirms these improved systems of care for children with medical complexity will be far superior for families compared to today’s fragmented system. We encourage legislators, children’s hospitals and related organizations to take an active interest in improving the care, delivery and cost of care for children with medical complexity. This proposal represents an important step to change care for these children and for all children.

Contact: Aimee Ossman, 703-797-6023.