By including the precepts of primary care and the medical home in the delivery of services, managed care can be instrumental in increasing access to a full range of health care services and clinicians. If not designed and administered carefully, managed care plans result in underutilization of appropriate services and reduced quality of care. Therefore, the American Academy of Pediatrics urges the use of the key principles outlined in this statement in designing and implementing managed care for newborns, infants, children, adolescents, and young adults. This policy statement replaces the 2000 policy statement “Guiding Principles for Managed Care Arrangements for the Health Care of Infants, Children, Adolescents, and Young Adults.”
Faced with persistent growth in health care costs, employers, state Medicaid programs, the State Children's Health Insurance Program, and other purchasers of care continue to study and often reconfigure managed care plans to find the most efficient strategies that provide access to quality health care while controlling costs. As the delivery and financing of health care services continue to face profound challenges, diligent and focused efforts are needed to ensure that managed care plans serve the varied health care needs of neonates, infants, children, adolescents, and young adults (hereinafter referred to as children) and their families.
The effect of managed care on children's access to services and actual health outcomes remains poorly defined. Some studies suggest no statistically significant differences in self-reported outcomes for children enrolled in managed care plans versus traditional health plans.1 The effectiveness of managed care in linking more low-income children to a medical home is uncertain. Medicaid program shifts from fee-for-service to managed care plans have had little consistent effect on the pattern of children's health care use and satisfaction with care received.2 The American Academy of Pediatrics (AAP) urges the use of the principles outlined in this statement in designing and implementing managed care for children. Managed care plans typically use certain cost and utilization management features. (A glossary of managed care terms is available in the AAP publication A Pediatrician's Guide to Managed Care.3) It is important to monitor the effects of cost-containment measures on the quality and outcome of medical services for children. The financial arrangements often include discounted charges and fee schedules, performance incentives, and, with decreasing frequency, capitation. The features of utilization management generally include precertification, concurrent review and discharge planning, care coordination, case management, preauthorization, formulary management, and physician practice profiling. These financial and utilization incentives and disincentives should be structured to preserve and, when appropriate, extend access to comprehensive and coordinated preventive, acute, and chronic care for all children. Performance incentives must improve quality of care and actual clinical outcomes and not become barriers to access to care and receipt of services. Attention should be paid to physician reimbursement as a predictor of the quality of care that children and adolescents receive.4 By including the precepts of primary care in the delivery of services, managed care can be instrumental in increasing access to a full range of health care services and clinicians within a medical home. It is imperative that managed care plans fully support the intent and desired outcomes of a medical home. A medical home provides care that is accessible, family centered, continuous, comprehensive, coordinated, compassionate, and culturally effective.5
Medically necessary health interventions are intended to prevent, diagnose, detect, treat, ameliorate, or palliate the effects of a physical, mental, genetic, or congenital condition, injury, or disability that lies outside the range of normal variation. Managed care organizations frequently use medical management guidelines to make coverage determinations, many of which are not well supported by medical evidence, are not developed with a pediatric focus, are derived from best-case actuarial data, or are proprietary. The implementation of medical management guidelines that do not address the unique needs of children may adversely affect the health and well-being of pediatric patients, especially those with special health care needs. The development of medical management guidelines must include the active participation of pediatricians and pediatric specialists and address the essential principles established by the AAP.6 Managed care can result in underutilization of appropriate services and reduced quality of care. Such underutilization could result from patient and physician disincentives for appropriate utilization and restrictions on access to pediatric medical subspecialists, pediatric surgical specialists, and tertiary care centers. Other access restrictions could block the utilization of necessary related services such as mental health, reproductive health services, social work services, developmental evaluation, occupational and physical therapy, vision screening, hearing screening, and speech and language therapies, as well as services of school-linked clinics and other public health professionals. To guard against such undesirable outcomes, approaches to managed care must include a definition of medical necessity that addresses the unique needs of children and adolescents.7
When a state has mandated participation in Medicaid managed care plans, it must implement rigorous regulatory oversight to ensure that eligible children have access to high-quality health services in a medical home and that pediatricians are adequately paid to provide these services. In addition, in states where enrollment in managed care plans is mandatory, Medicaid beneficiaries should have the freedom to choose among 2 or more managed health care plans and participating public and private clinicians.8 In areas where only 1 managed care plan is available, particularly rural areas, families should be able to choose their individual physicians. Medicaid provisions in the Balanced Budget Act of 1997 (Pub L No. 105-33) require adequate safeguards in every state implementation plan to ensure access to and delivery of quality health care for children.9
The AAP seeks to work in partnership with families, other health and health-related professionals, federal and state governments, employers, and the managed care industry to implement the following principles of managed care for children. These principles of access to primary and specialty pediatric services, treatment authorization, quality of care, and financing and reimbursement are intended to maximize the positive potential of managed care and minimize negative effects on the health of children.
PRINCIPLES OF MANAGED CARE FOR CHILDREN
1. Access to Appropriate Primary Care Pediatricians
Choice of primary care clinicians for children must include pediatricians.
Primary care pediatricians (PCPs) should serve as the child's medical home and ensure the delivery of comprehensive preventive, acute, and chronic care services. They should be accessible 24 hours a day, 7 days a week, or have appropriate coverage arrangements.
The primary care medical home should assume the role of the care coordinator (ie, the physician who ensures that all referrals are medically necessary). The function of the PCP might be transferred to a pediatric medical subspecialist for certain children with complex physical and/or mental health problems (eg, those with special health care needs, such as children with cystic fibrosis, juvenile rheumatoid arthritis, or cancer) if the subspecialist assumes responsibility and financial risk for primary and specialty care. Children with special health care needs should be defined as those who “have or are at increased risk for a chronic physical, developmental, behavioral, or emotional condition and who require health and related services of a type or amount beyond that required by children generally.”10 For certain physical, developmental, mental health, and social problems, the PCP may seek the assistance of a multidisciplinary team with participation by appropriate public programs (eg, Title V Program for Children With Special Health Care Needs).
Families should receive education at the time of enrollment to help them understand fully how managed care plans work for their individual policies, which includes providing information on common medical conditions for which the managed care plan has a condition-specific exclusion (eg, eating disorders, substance abuse treatment, residential treatment). Health plan coverage policies (including limitations on the amount, duration, and scope of services; cost-sharing requirements; and participating health care professionals) should be clear, simply written, and easy for all families to understand.11
Adolescents, young adults, and other individuals from more vulnerable populations may need multiple sources of care available to ensure that adequate services are provided.
2. Access to Pediatric Specialty Services
When children need the services of pediatric specialists or other health care professionals, managed care plans should use clinicians with appropriate pediatric training and expertise. Pediatric-trained physician specialists, including pediatric medical subspecialists, pediatric surgical specialists, and behavioral mental health specialists, should have completed an appropriate fellowship in their area of expertise and be certified by specialty boards in a timely fashion if certification is available. These physicians and other health care professionals should be engaged actively in the ongoing practice of their pediatric specialty and should participate in continuing medical education in that area.
There should be no financial barriers to access to pediatric specialty care above and beyond customary health plan requirements for specialty care.
Managed care plans should contract with the appropriate number and mix of geographically accessible pediatric-trained physician specialists and tertiary care centers for children.
Referral criteria for pediatric specialty clinicians should be developed with the input of pediatric specialists. These criteria may include age of patient, specific diagnoses, severity of conditions, and logistic considerations (eg, geographic access and cultural competence).
Processes for approving referrals to pediatric medical subspecialists, pediatric surgical specialists, and pediatric behavioral mental health specialists should be developed by health plans working collaboratively with PCPs and relevant subspecialists.
Access to specialty services can be expedited by creating a “presumptive authorization” category (eg, no preauthorization needed for diagnoses such as hernia, strabismus, appendicitis, and diabetes).
Pediatric medical subspecialists, pediatric surgical specialists, and mental health professionals should routinely communicate with the pediatric patient's PCP.
3. Treatment Authorization
Families and pediatricians should be fully informed of the plan's participating clinicians. This should include an up-to-date listing of the plan's participating health care professionals whose practices are currently open to patients insured by the managed care plan. Identification of PCPs and required copayments should be listed on the patient's insurance card.
The treatment-authorization process, which is initiated by the PCP, should encourage and facilitate timely appropriate referral for specialty consultations, hospital inpatient and outpatient care, and other treatments.
Plans should provide timely responses to treatment-authorization requests (including 24-hour access and approvals in the case of emergencies) on the basis of the nature and urgency of the patient's needs. Pediatricians should challenge managed care contracts that require them to certify all emergency department visits. Managed care plans should allow access to emergency care consistent with the “prudent layperson” standard.12
Plans should provide a timely appeals process that includes direct discussions between the reviewing panel, the patient's pediatrician, and the relevant specialists and, if appropriate, an external review by an independent panel of pediatricians experienced in the treatment of the patient's illness.
To make any determination about the medical necessity of any item or service to be furnished to a person younger than 21 years, the managed care plan should consider whether an item or service (1) is appropriate for the age and health status of the person, (2) will prevent or ameliorate the effects of a condition, illness, injury, or disability, (3) will aid the overall physical and mental growth and development of the person, (4) will assist to achieve or maintain maximum functional capacity for performing daily activities, and (5) relies on medical practice guidelines developed for children's health care services that are endorsed or approved by the appropriate medical professional societies or governmental public health agencies.13 Managed care plans should describe the process by which physicians are to provide justification for medical necessity.
4. Quality Improvement and Management
Written standards should be established for access to primary care, referrals to specialty services, the referral process, and protocols for service.
Pediatricians, pediatric medical subspecialists, pediatric surgical specialists, and behavioral mental health specialists should have an active role in developing quality-assurance mechanisms and ensuring quality of care in any cost-containment process.
Managed care plans have developed a broad and diverse clinical database related to children's health care outcomes. As a result, managed care plans should participate in thoughtful quality-outcomes research. They are in a unique position to develop and implement changes that systematically advance children's health care. Managed care plans should actively engage pediatricians in both community and hospital settings in outcomes research and quality-improvement efforts. Quality management should include appropriate peer review, with pediatric cases reviewed by pediatricians.
Plans should create incentives to promote early identification of health problems in children.
Plans should report a uniform standard set of encounter data in compliance with the Health Insurance Portability and Accountability Act (Pub L No. 104-191 ).
States should publish uniform data that offer consumers and purchasers the opportunity to evaluate and compare performance, including relevant financial information, among competing plans. The measures reported by states on managed care plans' performance should assess access to care, patient satisfaction, and health outcomes.
Gag clauses should be excluded from all managed care plan contracts.
5. Financing and Payment
Reimbursement methods should be developed that cover all the health care needs of children as defined by the AAP policy statement “Scope of Health Care Benefits for Newborns, Infants, Children, Adolescents, and Young Adults Through Age 21 Years”14 and the periodicity of visits and procedures described in the AAP statement “Recommendations for Preventive Pediatric Health Care.”15 The methods used for pediatric health care reimbursement should consider age, chronicity, and severity of underlying health problems (case mix, risk, or severity adjustment) and geographic considerations. Reimbursement to the primary care medical home for chronic condition management should support the additional visits and time spent on care plan development and complex disease management as reflected in recent new Current Procedural Terminology (CPT)16 codes for care plan oversight.
Optimal payment for vaccines should be based on a percentage of the actual cost incurred by the practice, incorporating applicable taxes and shipping/handling charges plus an appropriate margin to cover vaccine storage and acquisition costs.
Reimbursement for physician services for newborn care should be separately identified as unique and distinct from maternal services and should ensure clearly identified reimbursement to physicians and continuous coverage not only for the neonatal period but also for subsequent pediatric care.
All capitated rates should be adjusted for case-mix differences on the basis of age, geographic location, modifiers for children with special health care needs, outlier risk-adjusted methods, more risk-adjusted rating groups, a pediatric diagnostic classification system, or a combination of these. Because pediatric risk-adjustment techniques are not well developed, contract provisions about carved-out services, outlier reimbursement, reinsurance or shared-risk arrangements for individual children, and aggregate plan loss or profits should be included.
When primary care is capitated, contracts should include fee-for-service carve-outs for unexpected or high-cost services including, but not limited to, neonatal and routine newborn hospital care, pregnancy and other reproductive health services, immunizations, hospitalization, and emergency services.17
Preventive services should not be subject to deductibles and/or copayments.
Health plans reimbursing pediatricians for pediatric care on a fee-for-service schedule should use the resource-based relative value scale as the basis for their fee schedule. The relative values approved by the Centers for Medicare and Medicaid Services are appropriate for PCPs, pediatric medical subspecialists, and pediatric surgical specialists. A single multispecialty conversion factor applied to the current year's relative value units (ie, at least 100% of the current year's Medicare resource-based relative value scale reimbursement rate) should be incorporated. Medicaid fees should be set at a rate that is at least 90% of the usual or customary or 100% equivalent to Medicare fees, whichever is higher.7,8,18 Health plans should use the most current CPT codes and adhere to CPT guidelines regarding use of the codes.
Financing arrangements for all pediatric services should be made to ensure that pediatric primary and specialty services are not undervalued in terms of practice expense, professional liability, and physician work values.
To ensure continuation of high-quality services for children, primary care physicians should be protected against undue financial risk. Risk levels for primary care office–based pediatricians should be on an aggregate, not individual, basis and should be adjusted on the basis of case-mix analysis.
Federal requirements for capitation should apply to all managed care plans. Federal and state governments should preapprove all contracts with managed care plans in which enrollees are primarily insured by the State Children's Health Insurance Program or Medicaid and require the federal and state governments to guarantee clinician reimbursements if plans become insolvent.
Plans should use quality-of-care measures for children, including assessments of structure, process, and health and functional outcomes (eg, compliance with pediatric preventive standards including, but not limited to, immunization rates and referrals for chronic physical and mental health problems).
Many of the responsibilities for managing the care of pediatric inpatients have been heavily shifted to hospitals through the use of case-rate methodologies. Pediatricians and pediatric specialists are encouraged to work closely with hospital quality-assurance managers, case managers, medical directors, and administrators to improve care management and resource utilization continuously and make process changes that are outcome driven.
To ensure timely and appropriate reimbursement, plans should make available electronically pertinent patient information including, but not limited to, patient eligibility status and current patient mailing address.
Managed care will continue to evolve until the approaches used to finance and deliver health care more consistently meet the needs of patients, providers, employers, and society overall. During this evolution in managing health care, specific and consistent attention must be given to the direct relationships between provider reimbursements, access to care, the quality of care provided, and health outcomes for children. To achieve the greatest value in health care for children, payors, employers, and providers must all consistently focus on ensuring both access to health care and desired health outcomes.
Committee on Child Health Financing, 2004–2005
Thomas K. McInerny, MD, Chairperson
Charles J. Barone, II, MD,
Anthony Dale Johnson, MD
Richard Lander, MD
Richard Y. Mitsunaga, MD
Mark S. Reuben, MD
Corrine A. Walentik, MD, MPH
Steven E. Wegner, MD, JD
*Mark J. Werner, MD, CPE
Margaret McManus, MHS
Jean Davis, MPP
Lou Terranova, MHA
All policy statements from the American Academy of Pediatrics automatically expire 5 years after publication unless reaffirmed, revised, or retired at or before that time.
↵* Lead author
- ↵American Academy of Pediatrics, Committee on Child Health Financing. McInerny TK, Minon M, eds. A Pediatrician's Guide to Managed Care. Elk Grove Village, IL: American Academy of Pediatrics; 2001
- ↵McInerny TK, Cull WL, Yudkowsky BK. Physician reimbursement levels and adherence to American Academy of Pediatrics well-visit and immunization recommendations. Pediatrics.2005;115 :833– 838
- ↵American Academy of Pediatrics, Medical Home Initiatives for Children With Special Health Care Needs Project Advisory Committee. The medical home. Pediatrics.2002;110 :184– 186
- ↵American Academy of Pediatrics, Task Force on Medical Management Guidelines. Guiding principles, attributes, and processes to review medical management guidelines. Pediatrics.2001;108 :1378– 1382
- ↵American Academy of Pediatrics, Committee on Child Health Financing. Model contractual language for medical necessity for children. Pediatrics.2005;116 :261– 262
- ↵American Academy of Pediatrics, Committee on Child Health Financing. Medicaid policy statement. Pediatrics.1999;104 :344– 347
- ↵American Academy of Pediatrics, Committee on Child Health Financing. Implementation principles and strategies for the State Children's Health Insurance Program. Pediatrics.2001;107 :1214– 1220
- ↵McPherson M, Arango P, Fox H, et al. A new definition of children with special health care needs. Pediatrics.1998;102 :137– 140
- ↵Kastner TA; American Academy of Pediatrics, Committee on Children With Disabilities. Managed care and children with special health care needs. Pediatrics.2004;114 :1693– 1698
- ↵Balanced Budget Act of 1997. Pub L No. 105-33, §4704 (b)(2)(C) (1997)
- ↵American Academy of Pediatrics, Committee on Child Health Financing. Scope of health care benefits for newborns, infants, children, adolescents, and young adults through age 21 years. Pediatrics.1997;100 :1040– 1041
- ↵American Academy of Pediatrics, Committee on Practice and Ambulatory Medicine. Recommendations for preventive pediatric health care. Pediatrics.1995;96 :373– 374
- ↵American Medical Association. Current Procedural Terminology. Chicago, IL: American Medical Association; 2006
- ↵Portman RM, Finitzo N, eds. Model Managed Care Agreement. Elk Grove Village, IL: American Academy of Pediatrics; 1998
- ↵American Academy of Pediatrics, Committee on Coding and Nomenclature. Application of the resource-based relative value scale system to pediatrics. Pediatrics.2004;113 :1437– 1440
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