Objective: We calculated expenditures for children with one of eight selected chronic health conditions who were enrolled in the Washington State Medicaid program and compared them with payments for all Medicaid-enrolled children. We examined variation in mean, median, and total expenditures and identified expenditure sources.
Methods: This study analyzed Medicaid claims data for 310 977 children aged 0 to 18 who were enrolled at any time in fiscal year 1993. Tracer conditions were used to examine expenditure variation within and between diagnostic groupings. A total of 18 233 children (5.9%) had at least one of the conditions. Expenditures were calculated based on payments made by the Medicaid program.
Results: Children with one of the eight selected conditions incurred mean expenditures of $3800, compared with $955 for all Medicaid-enrolled children. Mean payments associated with the selected conditions ranged from 2.5 times to 20 times more than payments to all children. 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 conditions. For most conditions, inpatient stays accounted for the greatest proportion of expenditures; for some conditions, durable equipment, home nursing, and medication-related services accounted for substantial proportions of total expenditures.
Conclusions: Medical care for children with selected chronic health conditions is 2.5 to 20 times more expensive than children in general, depending on the condition. A relatively few children account for the majority of expenditures. Extensive variation in mean, median, and total expenditures suggests that different conditions will need to be kept distinct for purposes of establishing 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 identify risk-adjustment strategies to support delivery of high-quality services to this population of children as they migrate into managed-care environments.