Investing in Child Health Through Alternative Payment Models: Lessons From North Carolina Integrated Care for Kids

Abstract

Pediatric value-based payment reform has been hindered by limited return on investment (ROI) for child-focused measures and the accrual of financial benefits to non-health care sectors. States participating in the federally-funded Integrated Care for Kids (InCK) models are required to design child-centered alternative payment models (APMs) for Medicaid-enrolled children. The North Carolina InCK pediatric APM launched in January 2023 and includes innovative measures focused on school readiness and social needs. We interviewed experts at NC Medicaid managed care organizations, NC Medicaid, and actuaries with pediatric value-based payment experience to assess the NC InCK APM design process and develop strategies for future child-focused value-based payment reform. Key principles emerging from conversations included: accounting for payer priorities and readiness to implement measures; impact of data uncertainty on investment in novel measures; misalignment of a short-term ROI framework with whole child health measures; and state levers like mandates and financial incentives to promote implementation.