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Some of the basic elements of an effective and equitable model of needs assessment and resource allocation remain in their infancy in home care for children. The development of the interRAI PEDS HC assessment tool and the P/ECM are preliminary efforts to redress this imbalance. The goal of these efforts was to assist in moving the level of standardization and sophistication in programs providing home care services to children or youth to something approximating that found in home care services provided to adults and frail older persons.

Within that broader policy context, the research results presented here seem worthy of note. The P/ECM explained considerable variation (41%) in annual Medicaid home care expenditures for children or youth facing special health care challenges. The results provided by the analyses of random sub-samples indicate that the model may lay claim to some good measure of external validity.

The P/ECM exhibited a similar level of explanatory power in analyses performed with important sub-populations. The model worked almost equally well with children whose conditions were purely medical, purely psychological or developmental, or some combination of those two categories. It is especially noteworthy that model worked well when tested on only those children with developmental or intellectual challenges.

As the exercise using logistic regression demonstrated, the P/ECM model’s usefulness was greatest when identifying those with the highest utilization. In essence, the major categories used in the model, in conjunction with the ADL scale, may allow a provider or payor to create a successful screener that identifies those children and youth who will make the greatest demands on home care resources.

The model’s predictive power declined as testing moved away from identifying those with the highest utilization. However, even when predicting membership in the lowest decile of utilization, the model’s usefulness “bottomed-out” at a level of predictive success (0.70) generally considered at least adequate.31 Thus, confidence in the modeling results may diminish as one moves to those groups including children and youth who receive the least services. The variation in resource use in these groups is often limited, and this makes for less clear differentiation among clients.

This research has obvious limitations. It focused on children in one Medicaid program in one state. In addition, the model rests on a combination of statistical results and researcher judgment. Future research is required in order to determine how robust these results may be when tested in different settings.

It is also important to remember that case-mix models tell one about differences in the care received, not necessarily differences in the care needed.7 Finally, the development of a case-mix model is only a step, albeit an important one, in an extended process of implementing an operational case-mix-based prospective payment model. The P/ECM is, in essence, a foundational framework that programs can implement and modify as evidence on system equity and effectiveness accumulates.

Despite these limitations, this research presents what promises to be a useful model for identifying and grouping children with similar service needs in programs such as the Medicaid EPSDT program. The model does so based on an assessment tool (PEDS HC) specifically tailored to meet the needs of those seeking to provide appropriate home care services to children and youth in the community facing special health care challenges.