Medicaid reimbursement often falls below health care costs (Medicaid shortfall). Therefore, hospitals face financial losses from caring for both uninsured and Medicaid-insured patients. The US government provides disproportionate share hospital (DSH) payments to institutions with large uninsured and Medicaid populations. Anticipating decreased numbers of uninsured patients, the Patient Protection and Affordable Care Act (ACA) reduces DSH payments.1 The ACA also penalizes hospitals for readmissions.2 There will not be large decreases in the number of uninsured children since only a small percentage of children are uninsured. In contrast, a high percentage of children have Medicaid insurance, and institutions will continue to face Medicaid shortfalls. The loss of DSH payments may not be matched by reductions in financial losses from decreases in the number of uninsured patients. In addition, the readmission penalties of the ACA may not adequately adjust for low-income patients or patients with severe health conditions, thereby adversely affecting hospitals with high proportions of these patients.3 We sought to determine which hospitals with pediatric patients may be at highest financial risk from decreases in DSH payments and readmission penalties by identifying hospitals with a disproportionate per-hospital number of discharges of pediatric patients receiving Medicaid and those with a disproportionate per-hospital number of discharges of low-income patients or those who have severe health conditions, respectively.
We analyzed 1 174 540 discharges of patients younger than 18 years from 2207 hospitals in the 26 states providing hospital identifiers to the 2009 Kids Inpatient Database (Agency for Healthcare Research and Quality)4 from March 5, 2013, through February 27, 2015. The main outcome was hospital type categorized by teaching status (as defined by the Agency for Healthcare Research and Quality)4 and children’s hospital status (as defined by the Children’s Hospital Association). Children’s hospital status was subcategorized as freestanding and within a general hospital or specialty children’s hospital. The main exposures were patient household income (HI) (quartile of median HI by zip code), insurance type, severity (quartile of charge weight),5 and complexity (complex chronic condition).6 We excluded pregnancy-related (All Patient Refined Diagnosis Related Group [APR-DRG] codes 540-566) and normal newborn discharges (DRG code 391 or newborn discharges with a length of stay <5 days unless death occurred). This study was deemed exempt from institutional board review by Children’s Mercy Hospital and Clinics.
We used χ2 tests to compare patients’ HI, insurance type, illness severity, and disease complexity levels by hospital type. To determine the relative per-hospital burden of patients with these characteristics, we created ratios of observed-to-expected number of discharges by dividing the percentage of discharges by the percentage of hospitals for each hospital type.
Most discharges (range, 232 605 of 404 835 [57.5%] to 212 147 of 313 649 [67.6%]) of pediatric patients with Medicaid insurance, lowest HI, and highest severity of illness were from non-children’s hospitals (Table 1). Although children’s hospitals represented 3.4% (n = 75) of all hospitals, they accounted for 32.4% (n = 101 502) of the lowest HI, 33.8% (n = 185 905) of Medicaid recipients, and 42.5% (n = 172 230) of patients with the highest severity of health conditions. Children’s hospitals cared for most patients with complex chronic conditions (152 872 [52.8%]).
For patient mix within hospital types, there were similar distributions of payor type (range, 46%-47% for Medicaid recipients and 2%-4% for the uninsured) and HI (range, 24%-29% for the lowest HI) (Table 2). In contrast, 172 230 (43.0%) children’s hospital discharges were children in the highest illness severity category compared with 94 119 (24.5%) discharges of such children from nonteaching hospitals. Similarly, 78 408 (41.0%) children discharged from a freestanding children’s hospital had a complex chronic condition compared with 46 520 (12.1%) children discharged from nonteaching hospitals.
Analysis of more than 1 million pediatric hospitalizations in 26 states demonstrated that, although non-children’s teaching hospitals were the most common hospital type for patients with Medicaid, those with the lowest HI, and those with the highest severity of health conditions, the per-hospital burden of those discharges was much greater for children’s hospitals. Moreover, children’s hospitals cared for most of the chronically ill patients and had the greatest proportion of discharges of patients with complex chronic conditions.
Our study has several limitations, including the use of community-level HI as a proxy for patient-level socioeconomic status and the exclusion of “observation status” discharges in the Kids Inpatient Database.
Children’s hospitals may face disproportionate financial risk from the ACA. Reductions in DSH payments may disproportionately affect children’s hospitals because of their high per-hospital number of Medicaid discharges. In addition, readmission penalties may disproportionately affect children’s hospitals because of their elevated percentage of high-illness-severity and complex disease discharges.
Corresponding Author: Jeffrey D. Colvin, MD, JD, Department of Pediatrics, Children’s Mercy Hospitals and Clinics, University of Missouri–Kansas City School of Medicine, 3101 Broadway Blvd, Tenth Floor, Kansas City, MO 64111 (email@example.com).
Published Online: December 28, 2015. doi:10.1001/jamapediatrics.2015.3366.
Author Contributions: Dr Colvin had full access to all the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.
Study concept and design: All authors.
Acquisition, analysis, or interpretation of data: Colvin, Hall, Gottlieb, Bettenhausen, Shah, Chung.
Drafting of the manuscript: Colvin, Hall, Bettenhausen, Berry.
Critical revision of the manuscript for important intellectual content: All authors.
Statistical analysis: Colvin, Hall, Bettenhausen.
Study supervision: Gottlieb, Shah, Berry, and Chung.
Conflict of Interest Disclosures: This research was completed as a part of the Academic Pediatrics Association Research Scholars Program (Drs Colvin and Bettenhausen). No other disclosures were reported.
Funding/Support: This research was supported by internal funds from Children’s Mercy Hospitals and Clinics.
Role of the Funder/Sponsor: Children’s Mercy Hospital and Clinics had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.
Additional Contributions: Data were obtained from the 2009 Kids Inpatient Database, Healthcare Utilization Project, Agency for Healthcare Research and Quality.
Colvin JD, Hall M, Gottlieb L, Bettenhausen JL, Shah SS, Berry JG, Chung PJ. Hospitalizations of Low-Income Children and Children With Severe Health ConditionsImplications of the Patient Protection and Affordable Care Act. JAMA Pediatr. 2016;170(2):176-178. doi:10.1001/jamapediatrics.2015.3366