Children with Special Health Care Needs: Looking Back; Looking Forward Gary L. Freed, MD, MPH

University of MichiganHealth System

Children withSpecial Health Care Needs:

Looking Back; Looking Forward

Gary L. Freed, MD, MPH

Director, Division of General PediatricsDirector, Child Health Evaluation

and Research (CHEAR) UnitUniversity of Michigan

April 16, 2008


Children’s Special Health Care Services

• Title V enrolled children

• Established by state legislature in 1927

• Eligibility based on residency, medical condition and age– 2,600 qualifying diagnoses– Families with incomes >250% of FPL share in

cost of treatment


Traditional Model

• Specialty care to treat qualifying condition

• Fee-for-service

• No gatekeepers

• Children should see specialists “as needed”

• Multi-specialty clinics

• “Crippled children should not be in HMOs”


Initial Thoughts about CSHCN and Managed Care

• HMOs were not configured to care for children with chronic conditions

• Focused on adults and well children

• Cost savings would reduce care quality

• CSHCN would suffer


Mid 1990s: Changing Economic/Political Environment

• Michigan received grant from RWJ Foundation

• Worked with Medicaid group in Boston

• Interviewed parents, advocates, primary and specialty providers

• In 1996 Michigan went into the HMO business


Two Systems for Managed Care

• Initiated in October 1998

1. Detroit Medical Center: Children’s Choice

2. University of Michigan and

Henry Ford Health System: Kid’s Care


Key Components

• Care coordination– Annual care plans for qualifying diagnosis– Dually enrolled CSHCN receive

comprehensive care

• Financing– Cost settling at end of year for plans– Physicians are paid FFS– Care coordinators paid


Actual and Perceived Issues

• Institutions were concerned– Deliver care well– Manage risk appropriately– Achieve positive margin– Caps won’t work

• CSHCN have established needs


Initial Effort

• No risk contracts

• Tried to determine risk rates

• Education of institutions by state– Expenditures were predictable– Capitation was a pooled, not individual risk


InstitutionalPerceptions and Goals

• Capitation was viewed as a spending ceiling for each child

• Institutions only wanted cost-based programs, not risk based; risk was “too risky”

• Medical expenditure would be greater than in FFS

• The State will change the rules later


Challenges for Institutions

• Contracting incentives outside of SE Michigan

• Communities and volumes were too small

• Children always had the choice of managed care vs. FFS

• Few data on which to make significant financial decisions


Challenges InvolvingPrimary Care Physicians

• Very few children for each practice– Worth the hassle to get involved?– Needed a critical mass of patients

• Pediatricians were already “stretched thin”– Additional time to work with care coordinators

• A few physicians already had most of the CSHCN patients


Challenges InvolvingPrimary Care Physicians

• Many not familiar with care coordination

• Increased expense of staff time to participate– Enhanced payment rates not enough– Longer visits for CSHCN patients

• Detroit was similar to rural Michigan– Very few pediatricians– Even fewer willing to participate

• Many did not feel comfortable caring for CSHCN patients


Challenges for Subspecialists

• No incentives

• Academic institutions did not provide ownership or engagement

• Difficult to recruit to Michigan

• Asked to provide primary care when primary care provider not available


Findings fromUniversity of Michigan Evaluation

• Emergency Department use

– 20% reduction in ED use in Managed Care vs. FFS

– Illness severity and complexity are most important determinants



• Expenditures

– CSHCN mean expenditures 600% higher than average patients

• Significant variation by diagnosis and age• Pharmaceutical costs significant

– Other variables minor in comparison

– Managed care enrollment had little, if any, effect on expenditures



• Enrollment in managed care

– Overall, parents of children with more severe disease chose to keep their children in FFS

– Infants more likely to enroll in managed care• Less potential to disrupt existing relationships• Lack of existing medical home

– The State program was more of a medical home model vs. managed care model

• No effort to push favorable selection• No effort to control costs



• Utilization of health care services

– 70% had IHCPs as expected– 30% had some aspect of care denied on IHCP

• Unclear impact on utilization• Families not pursuing care?• PCP no recommending or referring?

– 50% of children had a change of their LCC– Only 27% of children received well child care– Overall no difference between managed care and

FFS in utilization by diagnosis



• Satisfaction with service

– Similar for managed care vs. FFS– >80% rated their providers as excellent– <25% experienced problems obtaining

needed care– Lower satisfaction associated with having

children in fair or poor health, regardless of managed care or FFS



• Perceptions of LCCs and PCPs

– LCCs based in pediatric clinics are able to better coordinate care

– LCCs perceive parental input to IHCP as more important than PCP input

– Half of PCPs are not involved in IHCP development– Most PCPs did not discuss IHCPs with families– Many PCPs and LCCs (25%) received care

coordination payments for patients of whom they were unaware


Going Forward

• Care coordination vs. managed care?

• Institutions unlikely to accept risk

• Primary care involvement essential

• Capitation for CSHCN makes providers nervous

• Little financial incentive for managed care providers

Children with Special Health Care Needs: Looking Back; Looking Forward Gary L. Freed, MD, MPH

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