The American Academy of Pediatrics is pleased to announce the 2006 Pediatric Medical Cost Model, an actuarial analysis of the Academy’s recommended children’s health benefit package. Reden & Anders, Ltd, conducted the study as an update to two similar studies completed in 1998 and 2002.

Using a national health care database, the study estimated the per-member per-month medical and drug cost (PMPM) to provide a child with a comprehensive benefit package. The PMPM values reflect the estimated amount insurers paid for an array of benefits and coverage policies. In other words, they are the net medical costs paid by the insurer.

The model enables state and locale-specific estimation of medical cost for each medical service recommended in the newly updated AAP Scope of Benefit Policy Statement. While simple to use, the model allows for a wide range of applications. It can, for example, be used to estimate national or state average PMPM for either Medicaid/SCHIP or commercial plans covering all AAP-recommended benefits. Alternatively, users can customize a number of model parameters to estimate benefit-specific PMPM at any level of co-payment or coinsurance, and for any patient age/gender mix in either or both rural and urban areas in any state.

Nationally, PMPM to cover each child with the Academy’s recommended comprehensive benefit package in commercial plans averaged $108.67 in 2004. PMPM for Medicaid/SCHIP children enrolled in predominantly managed care plans was estimated at $92.77 for the same period. Drug cost accounted for 26% and 23% of PMPM in commercial and Medicaid/SCHIP plans, respectively.

IMPORTANT NOTICE AND DISCLAIMER

The study reflects aggregated historical information. It is designed to assist both providers and purchasers of health care services in making independent decisions regarding practice management and the provision and purchase of health care services. The study is being offered for informational purposes and does not reflect the official position of the American Academy of Pediatrics on issues relating to costs or other fee-related information. Study data may not be used for the purpose of fixing prices, fees or other charges or to limit competition or restrain trade in any manner. Improper use of this information is prohibited by federal and state antitrust laws and is subject to severe penalties. The Academy recommends that the user consult with competent legal counsel about any questions the user has regarding the use of the study data.

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