The Future Pediatric Subspecialty Physician Workforce Meeting the Needs of Infants, Children, and Adolescents (2023) / Chapter Skim
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8 Financing Children's Health Care
8 Financing Children's Health Care
Pages 313-346
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In this way, financing of child health care affects access to pediatric subspecialty physician care. Financing and payment for specific services, providers, or practice models 313
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FINANCING AND COVERAGE OF CHILDREN'S SUBSPECIALTY CARE Specialty health care services for children in the United States are financed through a combination of private and public funds. Private funds include commercial health insurance that is primarily obtained through the parents' employers and usually paid as an employment benefit.
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. Children with special health care needs represent a distinct subgroup that includes many children who require specialty care; 44 percent of this subgroup is covered by Medicaid, including 8 percent who have both Medicaid and private coverage (Williams and Musumeci, 2021)
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are for 2019 and include children aged 0–17. "In this analysis, individuals are sorted into only one category of insurance coverage using the following hierarchy: Medicaid: Includes those covered by Medicaid, Medical Assistance, Children's Health Insurance Plan (CHIP)
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. Medicaid managed care plans include private for-profit, private non-profit, and public plans, but a small number of private for-profit firms (United Health Group, Centene, Molina, Aetna/CVS, and Elevance Health)
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Medicaid managed care plans and private insurance plans contract with a network of providers to serve enrollees in their plans. Network adequacy -- or whether health insurance networks include a sufficient number and distribution of providers to ensure access for enrollees -- has been a longstanding policy issue across health care and for children's health care access (MACPAC, 2015)
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Overall, states have substantial flexibility to determine fee schedules that govern fee-for-service Medicaid payment rates (and in some cases, as described below, Medicaid managed care rates) , with federal requirements stipulating that payment levels be "consistent with efficiency, economy, and quality of care and sufficient to enlist enough providers so that services under the plan are available to beneficiaries at least to the extent that those services are available to the general population" (42 CFR § 447.204)
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. Multiple legal cases have attempted to use the judicial system as a mechanism to require states to increase Medicaid payment rates, holding that low state payment levels were a failure to adhere to the equal access provision (Berman, 2018; Perkins, 2015; Staman, 2011)
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Payments through Medicaid managed care plans may be bound by state contracting requirements or payment floors. A 2017 survey of Medicaid managed care plans found that 51 percent of plans set physician rates based on state Medicaid fee schedule, 5 percent based on Medicare fee schedule, and the rest negotiated (38 percent)
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Many private fee schedules are proprietary (including those used by Medicaid managed care plans) and are not currently publicly available.
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Comparisons of Medicaid and Medicare fee schedules similarly find Medicaid rates generally to be below Medicare, with some variation across states, specialties, or services. Few studies specifically examine services common in pediatric specialty care.
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COMPENSATION FOR PEDIATRIC MEDICAL SUBSPECIALTY PHYSICIANS The following sections address the factors that contribute to physician compensation, including payment to physicians, payments to pediatric departments and hospitals, and administrative costs. Payments to Physicians and the Resource-Based Relative Value Scale Physician compensation is a factor of the financing system that structures the flow of funds within the health care system, payment rates, and structure of salary or compensation.
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Faculty clinical productivity, which goes into both base salary as well as bonus payments, is often measured by work relative value units (RVUs)
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. The multispecialty Relative Value Scale Update Committee, which includes members from 26 specialties, provides input to CMS for determining the
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. Current challenges with existing fee schedules are particularly problematic for pediatric subspecialty care.
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BOX 8-2 Fellow and Clinician Perspectives -- RVUs "Barrier: Inadequate RVU [relative value unit] credit for highly skilled services with shrinking representation.
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and state directed payments (SDPs) , under which a state directs a Medicaid managed care organization to pay providers certain rates or payment methodologies (MACPAC, 2022c)
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. Supplemental payments also typically flow to the institution and, depending on that institution's policies, may or may not flow to pediatric subspecialty departments or providers.
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. Other work has looked more generally at associations between Medicaid primary care payment rates and provider participation and found that states with higher average Medicaid payment rates have higher rates of appointment availability for new patients (Sharma et al., 2018)
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(See Chapter 5 for more on the influence of earning potential on career choices.) While there is not a robust evidence base regarding the implications of a lack of parity between Medicare and Medicaid payments, the committee's collective judgment is that the lack of parity is a major driver for the financial disincentives to pursuing a career in a pediatric subspecialty, which, in turn, contributes to access challenges for children.
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(NASEM, 2021) During the committee's public webinars, Sara Rosenbaum, Harold and Jane Hirsh Professor of Health Law and Policy and founding chair of the Department of Health Policy at George Washington University's Milken Institute School of Public Health, testified about the significance of Medicaid rates for pediatric subspecialty care: Even though there are all these complex reasons for access problems, you cannot get anywhere in my view until you have leveled the playing field on rates…it means a reasonably competitive rate…in the case of pediatrics, it is a much deeper issue than just what any individual provider gets paid because it obviously affects the entire structural soundness of pediatric subspecialties….It makes it that much harder to attract people into subspe cialties where the financial stability of the subspecialty is open to question because so many children are publicly insured, and public payers just pay much lower rates….It is a foundational issue where the subspecialties are concerned.
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. These mechanisms are not the only ones that could be successful in addressing inequities in payment for pediatric subspecialty services through supplemental federal funding but are listed only as examples.
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We are an independent children's hospital here, but when we looked at the clinical margin across the entire health system at Stanford, the Department of Pediatrics was less than 5 percent of that clinical margin -- despite the fact that…we're the second biggest department. So, the front wheel is not very big and it's not very big because Medicaid and children's health insurance programs reim burse physician services in pediatrics at much lower rates than Medicare… this has really important implications for physician compensation…it has huge implications for funding the education programs…if my front wheel of my tricycle was bigger, if we had Medicaid equity, funding the research and education mission would just be much more possible.13 – Mary Leonard, Arline and Pete Harman Professor and Chair of the Department of Pediatrics at Stanford University; director of the Stanford Maternal and Child Health Research Institute; and physician-in-chief of Lucile Packard Children's Hospital [Pediatrics is the]
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Finding #8-5: Existing productivity-based fee schedules (i.e., RVUs) generally reward procedure-based subspecialties and undervalue the increased time needs per clinical interaction, increased pre- and post service time, and higher practice expenses for most subspecialty care, especially pediatric subspecialty care.
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Conclusion #8-3: Payment rates are one of many inputs that influence access to pediatric subspecialists. RECOMMENDATIONS Expansions in insurance coverage over the past decades, including via CHIP, expanded Medicaid eligibility for children, and the Affordable Care Act, have successfully removed financial barriers to health care for most children.
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However, many states have not done so on their own, which is why the committee believes these mandatory, federal funds are needed. RECOMMENDATION 8-2 The Centers for Medicare & Medicaid Services should prioritize attention to pediatric services in assigning relative value units that accurately reflect the time and resource use for pediatric subspecialty care.
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2018. State Medicaid payment levels and the federal "equal access" statute.
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2018. The Kaiser Family Foundation 2017 Survey of Medicaid Managed Care Plans.
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2023. Medicaid managed care financial results for 2022: Another big year for the big five.
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2022c. Directed payments in Medicaid managed care.
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2015. Appointment availability after increases in Medicaid payments for primary care.
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2018. Increased Medicaid payment and participation by office-based primary care pediatricians.
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2015. Development of a model for the validation of work relative value units for the Medicare physician fee schedule.
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