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COMMENTARY |
Department of Pediatrics
University of Colorado School of Medicine
Denver, CO 80218
Abbreviations: HEDIS, Health Plan Employer Data and Information Set • VZV, varicella-zoster virus • OR, odds ratio • CI, confidence interval
Two articles in this issue of Pediatrics1,2 provide additional evidence that our health care system is not functioning appropriately in the private or public sectors and needs to undergo a major transformation that focuses on value: enhancing quality while controlling expenditures. Most children in the United States have either private employer-based (commercial) health insurance or public health insurance through Medicaid or the State Children’s Health Insurance Program. In the private sector, payments for physician services (and other medical services) are determined by market forces with minimal or no government regulation. Payments usually are based on contracts between payers (the health plans) and physicians who deliver the services. Unfortunately, individual and small groups of pediatricians often lack the ability to negotiate with large for-profit health plans effectively. A central tenet of a private health care system is that quality per unit of cost will be maximized by having a competitive market determine the prices of medical services based on supply and demand. Demand should be based on quality per unit of cost, which is value. When the value of a service is high, demand should create a financial incentive to provide the service. How well is this private health care market system working to ensure that children are receiving recommended preventive care and immunization services? This is an important question, because our society benefits from wide-scale immunization; whole communities are protected, including individuals who are not vaccinated.
McInerny et al,1 from the American Academy of Pediatrics, published a study in this issue of Pediatrics that addresses this question by examining the relationship in the commercial market between state-level physician payments for primary care services including immunizations with visit rates and up-to-date immunization rates. State-level payments were determined by using the Reden and Anders’ national actuarial database. State-level preventive care visit rates and up-to-date immunization rates were determined from the Health Plan Employer Data and Information Set (HEDIS) for children in 32 states. It is unfortunate that these state-level HEDIS measures were simple averages of the health plans that reported results not weighted by relative enrollment; this means that the reported average may not reflect statewide measures accurately, because substantial variations exist among health plans in both HEDIS measures and enrollment. More accurate information would be obtained by analyzing plan-level reimbursement information with patient-level outcomes. However, the findings are noteworthy because they consistently show that states with better payment rates for primary care services are more likely to have higher rates for both immunizations and preventive care visits. A significant correlation was found between state-level commercial reimbursement levels and 5 immunization-related HEDIS measures (childhood immunizations with Haemophilus influenzae type b [r = 0.35], hepatitis B [r = 0.42], combined immunizations without varicella-zoster virus [VZV] [r = 0.42], adolescent immunizations with VZV [r = 0.53], and combined adolescent immunizations with VZV [r = 0.43]) and 3 preventive care visit HEDIS measures (having 
6 preventive care visits during the first 15 months of life [r = 0.44], an annual preventive care visit for children 3–6 years old [r = 0.46], and preventive care visits for adolescents [r = 0.42]).
These findings should not be surprising, because reimbursement below overhead costs for preventive care services and especially for immunizations results in a financial disincentive to provide these services. What is surprising and disturbing is that pediatricians now must bear the substantial up-front and inventory-maintenance costs of vaccine purchases when health plan payments are less than the costs of vaccine administration3 and barely cover the vaccine costs. This financial disincentive reduces the likelihood that physicians will invest in system enhancements such as personnel and information systems to improve the delivery of preventive services and immunizations, the most cost-effective form of preventive care.
Why is the market not functioning well with respect to immunizations and preventive care, and why is increased government regulation needed to promote well-functioning competitive markets in health care? Markets usually function poorly when there are unfair practices including fraud, inappropriate risk, or unfair/monopolistic practices. Regulation that addresses the current unfair market practices of health plans and promotes financial incentives to provide childhood preventive care and immunizations would be in the public good and should be considered by policy makers at the state and national levels. Another reason for increased regulation is to ensure adequate consideration of the public good and protect vulnerable populations from abuses. For example, sectors of the society that are too important to be left to market forces include the military, safety sector (police and fire departments), and public health.
However, public health programs, especially Medicaid, also have significant problems with quality and value. Another article published in this issue of Pediatrics by Smink et al2 addresses problems in public health care systems that may be related to the consequences of inadequate physician payments in Medicaid. This study, using a 1997 pediatric inpatient database form 22 states, presents the results of a multivariate analysis of perforated appendicitis among 33184 children with acute appendicitis. Perforated appendicitis rates can serve as a marker for access to primary care, because the risk of perforation increases when diagnosis and surgical treatment are delayed. The study seeks to help us better understand to what extent increased rates of perforated appendicitis are related to restricted access to primary and specialty care or lower quality of care versus differences in care-seeking behavior, sociodemographic characteristics, and other factors related to a genetic predisposition. Unlike 2 prior published studies of perforated appendicitis in children,4,5 this study was conducted on a nationally representative database from the Healthcare Cost and Utilization Project and used multivariate-regression techniques to adjust the outcome for insurance status, race, gender, age, and hospital characteristics including volume of appendectomies, location, and teaching status. Adjusting for these variables, perforation was still more likely in black (odds ratio [OR]: 1.24; 95% confidence interval [CI]: 1.10–1.39) and Hispanic (OR: 1.19; 95% CI: 1.10–1.29) children compared with white children, as well as in Medicaid-insured (OR: 1.30; 95% CI: 1.22–1.39) and uninsured (OR: 1.23; 95% CI: 1.12–1.35) children compared with privately insured children. Hospital characteristics (teaching status, location, and volume of appendectomies) were not significantly associated with perforation. It is important to understand why black and Hispanic children who develop appendicitis should have higher perforation rates. Many reasons related to race/ethnicity are possible, such as communication difficulties, discrimination, and care-seeking behaviors. It is unfortunate that this study, as the authors point out, could not determine reasons for this disparity. Several sites on the care continuum that could be affected include delays in seeking care as well as delays in diagnosis, referral, and surgical intervention. These findings suggest that having a Medicaid card does not ensure that the enrollee will receive high-quality care, have a primary care physician (medical home), and easily be able to see a specialist. It is likely that Medicaid enrollees as well as children without insurance have restricted access to primary and possibly specialty care, which contributes to higher perforation rates. A reduction of perforation rate within the Medicaid population to the rate observed in privately insured children would result in significant financial savings aside from a reduction in pain and suffering resulting from perforation in children. The mean total hospital charges in the children who perforated were $14122 compared with $6846 for children without a perforation. Based on a national estimate of 70000 children having appendicitis with a similar distribution of Medicaid and private insurance as reported in the study, the estimated hospital-charge savings associated with a reduction of the perforation rate of Medicaid-insured children to the rate of privately insured children would be $46130640.
The most influential reason that access to pediatric primary and specialty care is compromised for children with Medicaid is low payment for services, especially to physicians in private practice. Throughout much of the country, Medicaid patient visit payments fail to cover the overhead expenses per visit exclusive of physician compensation. As a result, the willingness of primary care and pediatricians and family physicians as well as pediatric medical subspecialists and surgical specialists to accept children with Medicaid into their practices is diminishing, and access to primary and specialty care is eroding.6 This lack of access has adverse consequences for the nation’s children with Medicaid. In addition to a higher rate of perforated appendicitis, children with Medicaid compared with children with private insurance have been shown to have a 3.5 times greater likelihood of being hospitalized with a vaccine-preventable disease7 and higher rates of severe diabetic ketoacidosis at initial presentation.8 Studies also suggest that failure to provide Medicaid-insured children with primary care results in increased emergency department use9 and higher physician-related Medicaid expenditures.10 Also, when preventive care processes are well designed, immunization status is not associated with any family or child sociodemographic characteristics.11 Taken together, these data support the contention that differences in outcomes reflect the effectiveness of the care processes of the delivery systems rather than just the characteristics of the Medicaid population.
These studies provide additional evidence that low physician payments restrict access to needed care by Medicaid-insured patients, resulting in increased expenditures instead of cost saving. When Medicaid payments fail to cover physician and hospital costs, everyone loses; children and their families insured by Medicaid and the State Children’s Health Insurance Program (who experience excessive mortality and morbidity), community-based pediatricians and hospitals (who must find a way to cover their costs or reduce services), the business community (who will have to pay more to providers to subsidize at least part of the shortfall), and the taxpayers (who are not getting the best value for their dollars). The findings of this excellent study by Smink et al2 should remind state policy makers to give a higher priority to improving access to primary and specialty care for children with Medicaid. The findings also demonstrate a failure at both the state and federal levels to enforce the federal legal requirement called the "equal-access" statute, which states that children with Medicaid should have access to pediatric services to the same extent as children insured in the private sector living in the same geographic area. Transforming our private and public pediatric health care systems to emphasize value is a formidable challenge, and the articles by McInerny et al and Smink et al demonstrate how essential it is to make progress in this task.
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FOOTNOTES |
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Address correspondence to Stephen Berman, MD, FAAP, Children’s Hospital, 1056 E 19th Ave, B032, Denver, CO 80218. E-mail: berman.stephen{at}tchden.org
No conflict of interest declared.
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REFERENCES |
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 TOP REFERENCES |
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This article has been cited by other articles:
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  T. M. Selden Compliance With Well-Child Visit Recommendations: Evidence From the Medical Expenditure Panel Survey, 2000-2002 Pediatrics, December 1, 2006; 118(6): e1766 - e1778. [Abstract] [Full Text] [PDF]
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J. R. Meurer and T. K. McInerny Medicaid Policy Statement: In Reply Pediatrics, December 1, 2005; 116(6): 1599 - 1599. [Full Text] [PDF]
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