The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

The innovations in payment under Medicare are likely models for payment for children's services as long as the payment system remains fee for service or as long as managed care organizations pay their providers under such arrangements. Indeed, there is already some movement toward these mechanisms in Medicaid, a program that is very important for children's health care. Even without financing reform or special programs for children, hospital PPS programs or resource-based relative value fee schedules for physicians are likely to become more common over time.

But although the general Medicare methodology is valid for children, the specifics of the program may need considerable revision to adequately reflect the special needs of children. Wholesale transfer of a payment structure that has been designed to meet the needs of the elderly and disabled would require a number of practical adjustments for children. There are important parallels between the hospital PPS system and the new Medicare Fee Schedule for physicians and other providers. For example, in both instances, the rates and weights that have been developed would need to be examined to determine whether they reflect the special needs of children and apply to the services offered to them.

If reforms that expand coverage for children seek more dramatic payment innovations, such as through managed care systems that place physicians on salaries or use capitated arrangements, then the lessons from Medicare are less relevant.