Actuarial Analysis

The relative acuity of children enrolled in the CARE Award was up to three times higher as compared to a national population of children with medical complexity (CMC) in Medicaid, thus representing some of the most complex children across the country.

Children with complex medical conditions are a small portion of the Medicaid population, but the average claims per member per year (PMPY) can be volatile, which has implications for payment models. Actuaries for the CARE Award developed financial models for individual hospitals, explored the number of members required to take downside risk and analyzed the acuity selection effects. Ultimately, the minimum number of members needed for a risk based payment model depends on the risk tolerance of the entity taking the risk. However, for children with medical complexity, it’s important to “look before you leap”. The actuarial findings are summarized across three white papers.

3M Clinical Risk Group (CRG)

Non-Chronic (CRGs 1, 2) Episodic Chronic (CRGs 3, 4) Lifelong Chronic (CRG 5) Complex Chronic (CRGs 6, 7, 9) Malignancies (CRG 8)
Brief Description Acute conditions that will not last one year Chronic conditions that will last one year and are likely to be episodic in manifestation

Potentially curable with adequate treatment

Not likely to last into adulthood
More severe primary condition in one body system that is more likely to cause significant long-lasting health impairment Significant chronic condition in two or more body systems

or

Progressive or life limiting chronic conditions

or

Conditions requiring a dependency on technology
Malignancies requiring active treatment
Example Conditions Fracture, pneumonia, appendicitis, trauma Asthma, depression, conduct disorders Type 1 diabetes, congenital heart disease A child with diabetes, encephalopathy and chronic pulmonary disease.
Down syndrome, cerebral palsy, cystic fibrosis
Leukemia, bone tumors, brain tumors

*Category 5 is further broken into two subcategories by the Children’s Hospital Association - 5a and 5b. The definition of Medically Complex Children includes 5b - Single Dominant Chronic Disease, such as those with Sickle Cell Disease or Congenital Heart Disease


Related resources

White Paper

Alternate Payment Models: Key Actuarial Lessons

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White Paper

Patient Acuity and Selection Efforts

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White Paper

CMC Risk Thresholds

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White Paper

Considerations for Risk Based Payment Models

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