How could alternative pediatric payment models help to address children’s broad health, social, and developmental needs? This post delves into funding and financing challenges and potential solutions.
I recently collaborated on a report on alternative payment models for child health with colleagues from the Duke Margolis Center for Health Policy and Mental Health America. 
The brief explored a trending topic in healthcare transformation — alternative payment models (APMs) — but with a special focus on child health. The report highlights key challenges in funding and financing, organizational commitment and capacity, and data and technology. It details strategies for moving forward and organizations that have overcome challenges in pursuit of child-focused APMs. However, a particular aspect key to the sustainability of such models is worth more discussion: financing and funding.
The Resource Challenge
When it comes to payment or system redesign, a common question is: how will we pay for it? Financing is also a frequent challenge when implementing an alternative payment model. This resource challenge can increase in complexity as the scope of services expands to address social determinants of health.
Another layer of complexity arises when we consider who the payers are. When it comes to child health in the US, the major payers are private insurance and Medicaid and CHIP, with Medicaid being the single largest payer of healthcare for children and young adults.
However, there are restrictions on how Medicaid dollars can be used for health services. Regulatory restrictions on Medicaid funds can prohibit the use of dollars on non-clinical services. As a result, organizations often have to figure out creative ways of paying for services. Restrictions on Medicaid funds can yield innovative approaches to combining various funding streams. The report describes how an APM can braid and blend supplemental funds from other sources to pay for Medicaid-ineligible services.
Collaborative Funding Approaches during COVID-19
Meeting interconnected needs during these times requires cross-sector collaboration. Childcare, practically the linchpin of a functioning workforce, is one manifestation of this interconnectedness. Partnerships between the education sector and community-based organizations that provide social services, childcare, and educational/learning supports are essential.
As part of COVID-19 response efforts, emergency provisions have been extended to states to provide payment for childcare providers using the Child Care and Development Block Grant (CCDBG) discretionary funds. The flexibility of such funding allows states to adjust payment policies and broaden definitions of eligibility to ensure supports for families, children, and childcare providers.
Beyond Current Emergency Response Efforts
The Community Services Block Grant (CSBG) [PDF] program also allows flexible use of funds to establish community hubs through Community Action Agencies (CAAs). These funds have an upstream goal of reducing poverty. In alignment with community need, CAAs [PDF] administer federal programs, receive assistance from states in areas of child care, early education, etc., and additional support from private resources. CAAs can serve as central points of contact or referral for direct services post-pandemic. CSBG funds have the potential to structure cross-agency efforts that can pool resources from various federal, state, and private donors. It is possible to use these funds to establish a network of CAAs across the nation [PDF].
Similarly, education and early childcare organizations that receive funds through the US Department of Education’s Promise Neighborhood Program have been braiding and blending funding from state and local sectors to expand program reach for several years. Head Start and the Child Care Development Fund (CCDF) also provide federal funds for childcare and early learning programs that often rely on additional sources of funding.
Facilitating Longer-Term Partnerships
Collaborative funding approaches open opportunities to facilitate longer-term partnerships across various sectors. During a time of crisis, such partnerships are essential. And it is important to have structures in place to advance concerted efforts in communities.
As described in the Duke-UCLA report, alternative pediatric payment models could potentially enable the infrastructure for investment and longer-term, cross-sector collaboration. Financial sustainability of APMs is crucial. While braiding and blending funding streams offers one approach to sustaining cross-sector collaboration, challenges remain. Specifically, the report discusses how accounting and financing mechanisms to keep track of a “braid” of funding can be further complicated by legal and regulatory stipulations that restrict the accessibility of those funds to the population. Similar stipulations can impose limitations on “blending” funds into one funding stream. While there is no comprehensive solution to these challenges, the report provides case studies of communities successfully engaged in cross-collaborative efforts.
Alternative Models for the Future of Child Health
Alternative pediatric payment models can structure investment in child health beyond programs that serve a fraction of eligible children. The urgency of this need is momentous. Concerns about food insecurity, learning needs, childcare, and child poverty have been exacerbated by the pandemic. Undervaluing investments in child health has differential effects along racial and socioeconomic lines. This is confirmed by the persistent disparities observed in the impact of COVID-19.
Right now, we have an opportunity to understand how attention to and investment in child health outcomes aligns with goals of other community sectors. Engagement with other sectors during a time of crisis can forge the type of coordination necessary for collective impact.
Nicole Pereira