Case-mix classification and payment systems help assure that persons with similar needs receive similar amounts of care resources, which is a major equity concern for consumers, providers, and programs. Although health service programs for adults regularly use case-mix payment systems, programs providing health services to children and youth rarely use such models. This research utilized Medicaid home care expenditures and assessment data on 2,578 children receiving home care in one large state in the USA. Using classification and regression tree analyses, a case-mix model for long-term pediatric home care was developed. The Pediatric Home Care/Expenditure Classification Model (P/ECM) grouped children and youth in the study sample into 24 groups, explaining 41% of the variance in annual home care expenditures. The P/ECM creates the possibility of a more equitable, and potentially more effective, allocation of home care resources among children and youth facing serious health care challenges.

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Keywords: case mix, home care, pediatrics, interRAI, Medicaid, PEDS HC


Children and youth using long-term home care

Most people correctly think of the nuclear or extended family as the sole source of care for children living in the community. This assumption is largely correct for children who do not face special health care challenges. For children facing chronic health challenges, the circumstances differ. Care in their home comes from some combination of family (informal care) and health professionals (formal care).

In the USA, many children facing serious health care challenges receive home care through Medicaid, a program jointly funded by the federal and state governments to provide health services to lower-income families. Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program was specifically designed to provide all medically necessary services for Medicaid recipients younger than 21 years of age who face special health care challenges.1 EPSDT community-based services and supports include physician services, nursing services, therapies, medical supplies and equipment, assistance with instrumental activities of daily living (IADL), and activities of daily living (ADL), as well as a range of other services.2

Public expenditures for children who receive home care through EPSDT programs differ dramatically from expenditures for an “average” child receiving Medicaid services. The average annual expenditure for a child in Texas’s Medicaid program in 2009 was <$1,900; for a child or youth in Texas’s EPSDT program, it was more than 17 times greater, just >$35,600.3

Reasons for this difference become clear when the health challenges faced by clients in Texas’s EPSDT program are reviewed: almost half of these children and youth faced intellectual or developmental challenges; more than one-third were incontinent of bowel or bladder; and almost half were totally dependent in the more complex, multistep ADLs, such as dressing and personal hygiene.4

Case-mix adjustment for payment

Like other Medicaid programs, home care in the EPSDT program has historically been paid on a fee-for-service basis. Services were authorized, and providers were paid for the services provided.5 Fee-for-service in Medicaid is now, however, being steadily replaced with managed care programs. The future will see a continuing movement of more Medicaid services into managed care programs. As one element of this trend, the state of Texas recently mandated that many Medicaid children services become part of its managed care program by September 2016.6

When managed care supplants fee-for-service payment, prospective payment systems fall into place relatively quickly. With prospective payment comes a need for some type of case-mix system to adjust those prospective payments to recognize important differences among care recipients. These case-mix classification models place individuals into groups of similar persons who require similar amounts of care and generate similar payments to providers.7,8