• Issue Brief
  • August 7, 2015

National Framework for Medicaid Means Higher Quality and Lower Cost Health Care

Savings Summary for ACE Kids Act (S. 298/H.R. 546)

The Advancing Care for Exceptional Kids Act of 2015 (ACE Kids Act) delivers savings to Medicaid by using existing funds to align payments to achieve better outcomes for children with medical complexity.

  • Children with medical complexity comprise ~6 percent of children, while accounting for 40 percent of Medicaid costs for kids. The ACE Kids Act achieves savings through tailored provider networks that provide the most appropriate care closest to the child’s home and community decreasing the need for hospital stays and emergency room visits. 

An analysis by Dobson DaVanzo, which conducted a 10-year financial analysis using a similar model as the Congressional Budget Office, estimated that nationally designated pediatric networks for children with medical complexity could produce total Medicaid savings through increased efficiencies, reducing hospitalizations and emergency room visits. The analysis details:

  • Real-world experiences from 12 studies (see chart below) where children’s hospitals implemented medical home-type programs for children with medically complexity
  • Delivery reforms can reduce fragmentation in care delivery by improving communication between the hospital, primary care providers, specialists, and community organizations
  • Creating voluntary, nationally designated pediatric networks for children with medical complexity can reduce total Medicaid spending between $5 to $21 billion over 10 years
Since the 2013 Dobson DaVanzo analysis, new results from similar programs reinforce how coordinated care models for children with medical complexity can produce savings and improve quality:

  • UH Rainbow Babies and Children’s Hospital: Preliminary results on 224 children with complex medical conditions demonstrate a 40 percent reduction in ED visits, a 20 percent decrease in hospitalizations, and a 27 percent decrease in hospital average length of stay, with a 100 percent caregiver satisfaction score
  • Partners for Kids (PFK): In reviewing cost and quality between Ohio Medicaid fee-for-service (FFS), managed care (MC), and children served by PFK, PFK costs were significantly lower than both FFS and MC, while quality of care improved in five quality measures.
  • University of Pittsburgh Medical Center: The project included 263 high cost children in a care coordination program. Early results showed 9.1 percent reduction on overall expenditures. Final project results are expected soon, which, as reported by the project, will show a 14 percent reduction in overall expenditures.
  • University of Texas: Study found that an enhanced medical home decreased hospital/clinic costs ($16,523 vs. $26,781 per child) and hospital utilization (emergency room visits, hospitalizations, pediatric ICU admissions and days) compared to usual care models. 
  • Washington State Children’s Study: A coordinated care study, involving a healthier population than those targeted in the ACE Kids Act (with fewer opportunities for reductions in hospital care), demonstrated significant increases in parent reported quality of care, but no difference in cost between the control group and the study group.