EXPENDITURES FOR CARE OF CHILDREN WITH CHRONIC ILLNESSES ENROLLED IN THE WASHINGTON-STATE MEDICAID PROGRAM, FISCAL YEAR 1993

Objective. We calculated expenditures for children with one of eight s elected chronic health conditions who were enrolled in the Washington State Medicaid program and compared them with payments for all Medicai d-enrolled children. We examined variation in mean, median, and total expenditures and identified expenditure sources. Methods. This study a nalyzed Medicaid claims data for 310 977 children aged 0 to 18 who wer e enrolled at any time in fiscal year 1993. Tracer conditions were use d to examine expenditure variation within and between diagnostic group ings. A total of 18 233 children (5.9%) had at least one of the condit ions. Expenditures were calculated based on payments made by the Medic aid program. Results. Children with one of the eight selected conditio ns incurred mean expenditures of $3800, compared with $955 for all Med icaid-enrolled children. Mean payments associated with the selected co nditions ranged from 2.5 times to 20 times more than payments to all c hildren. Approximately 10% of children accounted for approximately 70% of the payments in general and in each diagnostic grouping. Variation in mean, median, and total expenditures was extensive among the condi tions. For most conditions, inpatient stays accounted for the greatest proportion of expenditures; for some conditions, durable equipment, h ome nursing, and medication-related services accounted for substantial proportions of total expenditures. Conclusions. Medical care for chil dren with selected chronic health conditions is 2.5 to 20 times more e xpensive than children in general, depending on the condition. A relat ively few children account for the majority of expenditures. Extensive variation in mean, median, and total expenditures suggests that diffe rent conditions will need to be kept distinct for purposes of establis hing payment rates. Children with certain conditions are vulnerable to restrictions in specific services, depending on what restrictions are imposed by a financing program. Further analyses are needed to identi fy risk-adjustment strategies to support delivery of high-quality serv ices to this population of children as they migrate into managed-care environments.