Medicaid Managed Care - U.S. Senate Special Committee on Aging

C. Recommended Adivities
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With the exception of the NACHRI approach, none of the existing risk adjustment
approaches were developed specifically for children with special health needs. Consequently,
managed care plans and pediatric providers face significant uncertainty and financial
disincentives in caring for children with special health needs. The expert work group
identified several recommendations for the development of improved pediatric risk adjustment
models, risk-sharing mechanisms, and regulatory oversight.
1. More research is urgently needed to develop risk adjustment models appropriate
for children with special health needs. An inclusive group of <strong>Medicaid</strong>
officials, actuaries, researchers, plans, providers, public program directors, and
families should participate in the design, review, and selection of new pediatric
capitation and risk-sharing arrangements.
2. A new comparative analysis of the strengths and limits of the existing capitation
risk adjustment approaches for children with chronic conditions should be
performed using several <strong>Medicaid</strong> and commercial data sets.
3. A combination of risk adjustment, reinsurance, and carve-out strategies is
needed to prevent serious financial difficulties while rewarding high quality care
among plans and providers serving high-cost children.
4. Regulatory strategies, contract requirements, and oversight must accompany risk
adjustment strategies, given the nature of the competitive market and the less
than perfect science of pediatric risk adjustment.
5. Previous patterns of underutilization, particularly among children with
developmental, behavioral, and emotional problems, must be taken into
consideration when developing appropriate capitation rates.
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