Pediatric carve outs. The use of disease-specific conditions as risk adjusters in capitated payment systems
J. S. Andrews, G. F. Anderson, C. Han and J. M. Neff
Department of Pediatrics, Johns Hopkins Medical Institutions, Baltimore, Md, USA.
OBJECTIVE: To address the issue of adverse selection in capitated payment
systems by developing a list of disease-specific pediatric conditions
(i.e., "carve outs") to be considered for separate reimbursement. DESIGN: A
descriptive study using a large Medicaid database. INTERVENTION: With the
use of fiscal year 1993 Washington State Medicaid cost data for 302,240
pediatric patients, a list of disease-specific carve outs was developed to
meet the following criteria: high cost, low variability in cost, and
association with a large proportion of medical spending. RESULTS:
Six-hundred seventy-three patients (0.2%) in the database had annual costs
totaling $25,000 or more. Ten percent of the cases accounted for
approximately two thirds of spending, while the least expensive 70% of
cases made up only 15% of the expenditures. Prematurity and complications
of prematurity, neoplasms, congenital heart disease, organ
transplantations, congenital anomalies, and respiratory problems were
general categories of disease that met our criteria for a carve out. The
association of a major surgical procedure with a diagnosis increased the
predictive accuracy for high cost. CONCLUSION: Lists of disease-specific
carve outs such as this one can be used by Medicaid plans and other
insurers who are concerned about risk selection to identify conditions for
separate reimbursement in capitated payment systems.
