Children are not little adults” is an oft-heard phrase in pediatric health care circles. Children have distinct health needs, and this sentiment reflects the need to develop approaches to care that are fundamentally different from adults, given the contrasting needs and areas of focus at different stages in the life course.

As value-based payment (VBP) becomes widespread, including in state Medicaid programs, VBP programs increasingly include children. However, the majority of VBP programs serving children are very similar, if not identical, to models focused on adults ― essentially treating them like “little adults.” Since children and adults have fundamentally different health care needs, it is important for stakeholders to consider how to best leverage VBP models to improve quality of care for children, as models designed primarily with adult health needs in mind may miss critical opportunities to improve pediatric care and advance healthy child development trajectories.  

In collaboration with the Massachusetts Medicaid Policy Institute and Blue Cross Blue Shield Foundation of Massachusetts, CHCS recently authored Value-Based Payment to Support Children’s Health and Wellness: Shifting the Focus from Short-Term to Life Course Impact. This brief identifies key themes and policy considerations to help Massachusetts implement VBP models that better meet children’s needs. While the brief focuses on Massachusetts’ context, it also explores approaches from across the country and shares insights that could be applicable for VBP models serving children nationwide. Following are key insights to inform payers and providers interested in designing pediatric-focused VBP models:

Stop Thinking Short-Term

While many VBP models focus on improving care for adults with complex health and social needs to generate short-term cost savings and a return on investment (ROI), there are limited opportunities to reduce pediatric costs in the short-term. Children tend to be healthier and have lower health care costs than adults, which limits the amount of savings that could be achieved quickly through VBP interventions. However, properly addressing or preventing issues in childhood can potentially mitigate long-term negative health outcomes and provide a long-term ROI. This kind of long-term incentive is not generally captured by VBP programs, as many VBP programs typically feature a one-year performance period. Further, long-term financial benefits could suffer from the “wrong pockets problem” since any  cost savings achieved could be accrued by providers and health plans serving adult patients downstream or other sectors (such as education, child welfare, or criminal justice systems), rather than the plan and pediatric providers providing the preventive care that influenced those outcomes.

Start Focusing on Upstream Prevention

Health-related social needs such as nutrition, housing, and adverse childhood experiences (ACEs) impact wellbeing across the life course. This link between upstream factors and health create an imperative for preventive efforts to address these needs. Improving child health quality in a VBP arrangement may rely on upstream tactics for pediatric health providers such as: multigenerational approaches to care, which focus on the health and social needs of the whole family; coordination with sectors outside health care, such as social services; and determining how to address root causes of health inequities across race, ethnicity, and income. While the health care sector cannot tackle these issues on its own, pediatric providers can play an important role in adapting care to be more patient and family focused, addressing inequities within the health system itself, and coordinating with other sectors to help address health-related social needs.

Consider Prospective Payments and Cross-Sector Financing Mechanisms

Because pediatric providers cannot rely on short-term savings to offset the costs associated with investing in new care models or quality improvement initiatives, payment models with upfront, flexible financing mechanisms and/or new funding streams may be particularly beneficial. Prospective payment models offer predictable, upfront payments that are not dependent on specific services rendered, and thus may allow providers more flexibility in how they deliver care, provide additional opportunity to invest in quality improvement, and potentially support long-term improvements in outcomes and cost savings within and outside health care. Investing in upstream prevention may also require cross-sector collaborations that require additional funding and innovative financing mechanisms. States can use braiding and blending funding mechanisms, for example, to combine funding streams from different sources, such as different government agencies or a combination of public and private funds, to achieve common goals. Such financing mechanisms could potentially be leveraged by payers within or alongside VBP models.

Moving Forward

To effectively incentivize pediatric providers to address children’s needs, payers designing new and existing VBP models serving children should keep those needs in mind. While small tweaks such as adding quality metrics focused on children and setting realistic expectations for cost savings for the population would be beneficial, such tactics are still just adapting an adult VBP model to children. A more holistic approach using prospective payments that focuses on long-term ROI and upstream prevention holds great potential to improve outcomes not only for children, but also for the adults they become in the future.

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