Children with medical complexity and Medicaid: spending and cost savings

Abstract

A small but growing population of children with medical complexity, many of whom are covered by Medicaid, accounts for a high proportion of pediatric health care spending. We first describe the expenditures for children with medical complexity insured by Medicaid across the care continuum. We report the increasingly large amount of spending on hospital care for these children, relative to the small amount of primary care and home care spending. We then present a business case that estimates how cost savings might be achieved for children with medical complexity from potential reductions in hospital and emergency department use and shows how the savings could underwrite investments in outpatient and community care. We conclude by discussing the importance of these findings in the context of Medicaid's quality of care and health care reform.

Keywords: Children’s Health; Chronic Care; Health Spending; Medicaid; Organization and Delivery of Care.

Exhibit 1

Healthcare Utilization and Spending for Children with Medical Complexity Who Use Medicaid. (Figure) Source: Truven Marketscan Medicaid Data 2011 Caption: This exhibit describes the allocation of healthcare spending across the care continuum, from hospital to outpatient to home care, for children with medical complexity. Physician fees are included in emergency, hospital, primary, and specialty care. [Table: see text]

Exhibit 2

Funds Available for Investment from Spending Reductions in Hospital and Emergency Department Expenditures for Children with Medical Complexity. (Figure) Source: Truven Marketscan Medicaid Database, 2011. Caption: Annual investments per each child with medical complexity are shown relative to spending reductions in hospital and emergency department care.

Exhibit 3

Variation in Number of Days Spent in the Hospital Across Distinct Types of Children with Medical Complexity. (Figure) Source: Truven Marketscan Medicaid Database, 2011. Caption: Shapes indicate a distinct type of CMC based on their complex chronic conditions. The list of complex chronic conditions is cardiovascular, gastrointestinal, hematologic or immunologic, malignancy, metabolic, neurologic and neuromuscular, other congenital or genetic defect, premature and neonatal, renal and urologic, respiratory, technology dependence, and transplantation. Shown on the x axis is the covariance (i.e., variability) of days spent in the hospital for each distinct type of CMC. Shown on the y axis is the percent of total hospital bed days attributable to each distinct type of CMC.

Exhibit 4

Budget Neutral Investments in Care Management Underwritten by a 10% Reduction in Hospital Days for Children with Medical Complexity. (Figure) Source: Truven Marketscan Medicaid Database, 2011. Caption: Shown are the percentages of children with medical complexity who could receive the care management approach with funds available from the spending reduction in hospital days.