Interconnected pathways leading to a healthy child, symbolizing care coordination.

Cracking the Code: How Incentives Can Revolutionize Care Coordination

Reese Marlowe in Health & Wellness November 2025 • 4 min read.

"Unlocking better health outcomes and cost savings in managed care for children."

Care coordination, though vital, is often a neglected area in pediatric healthcare. A recent study by Gilchrist-Scott and colleagues sheds light on how different Medicaid managed care structures impact care coordination. Their research, focusing on the penetrance of Health Maintenance Organizations (HMOs) versus Primary Care Case Management (PCCM), reveals intriguing patterns about how states manage healthcare incentives.

The study indicates that states with lower HMO and higher PCCM adoption show better care coordination, based on metrics like access to care coordination and receipt of necessary care. This suggests that the structure of healthcare incentives significantly influences the effectiveness of care coordination. The cross-sectional nature of the data calls for careful interpretation, yet the implications are hard to ignore.

This commentary delves into the nuances of these findings, exploring how different incentive models affect care coordination, especially for children with special health needs. By understanding these dynamics, healthcare providers and policymakers can better design systems that promote comprehensive and cost-effective care.

Why HMOs May Not Always Prioritize Care Coordination

Interconnected pathways leading to a healthy child, symbolizing care coordination.

Unlike PCCM models, HMOs typically incentivize care coordination indirectly. The financial motivation for HMOs to invest in care coordination arises only if they believe it will lead to downstream cost savings. However, for many children, especially those without complex health issues, these savings may not be immediately apparent.

In fact, short-term financial gains are often elusive for this demographic. In these cases, the primary justification for care coordination shifts to the qualitative—adhering to best practices and improving the overall quality of life. Additionally, some HMO strategies aimed at reducing healthcare usage, such as advising physicians on managing frequent emergency department visitors, might not be visible to patients and thus aren't captured in patient-centered care coordination metrics.

Here’s a breakdown of the key challenges:

Lack of immediate financial return: For healthy children, the cost savings from care coordination are not always evident.
Invisible interventions: Some cost-saving efforts are behind the scenes and not patient-facing.
Quality vs. cost: The focus shifts to care quality, which is harder to measure in terms of direct savings.

Given these factors, it’s logical that states with higher HMO penetration might show lower rates of reported care coordination. The financial incentives just aren't as direct as in PCCM models, where specific coordination activities are often directly reimbursed.

The Big Picture: Shaping the Future of Care Coordination

Saying that states with high PCCM penetration offer more access to care coordination is just the beginning. The real challenge is ensuring that every child receives the right type of care coordination, tailored to their specific needs, delivered effectively, to improve overall population health. Incentivizing the right behaviors is crucial to achieving this goal.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1542/peds.2017-2090, Alternate LINK

Title: Incentivizing Care Coordination In Managed Care

Subject: Pediatrics, Perinatology and Child Health

Journal: Pediatrics

Publisher: American Academy of Pediatrics (AAP)

Authors: Paul J. Chung, Carlos F. Lerner

Published: 2017-09-01

Everything You Need To Know

How do different Medicaid managed care structures, such as Health Maintenance Organizations (HMOs) versus Primary Care Case Management (PCCM), impact care coordination for children?

A study by Gilchrist-Scott and colleagues suggests that states with lower Health Maintenance Organization (HMO) adoption and higher Primary Care Case Management (PCCM) adoption demonstrate better care coordination. This is based on metrics such as access to care coordination and the receipt of necessary care. This implies that the structure of healthcare incentives, specifically the balance between HMO and PCCM models, significantly influences the effectiveness of care coordination, especially when focusing on pediatric healthcare.

Why might Health Maintenance Organizations (HMOs) not always prioritize care coordination for children, particularly those without complex health issues?

Health Maintenance Organizations (HMOs) often do not directly prioritize care coordination because the financial incentives are indirect. The financial motivation for HMOs to invest in care coordination exists if it leads to downstream cost savings. However, for many children, especially those without complex health issues, these savings may not be immediately obvious, making the return on investment less apparent. This contrasts with Primary Care Case Management (PCCM) models, where specific coordination activities are often directly reimbursed, creating a more direct incentive.

Are there Health Maintenance Organization (HMO) strategies that reduce healthcare usage but are not visible to patients in patient-centered care coordination metrics?

Some Health Maintenance Organization (HMO) strategies aimed at reducing healthcare usage, such as advising physicians on managing frequent emergency department visitors, might not be visible to patients. Therefore, these interventions are not always captured in patient-centered care coordination metrics, which often rely on direct patient interaction and feedback. While these strategies may reduce costs, they are not always reflected in measures of care coordination that focus on the patient experience.

What is the most important factor in order for Primary Care Case Management (PCCM) models to be effective?

The effectiveness of Primary Care Case Management (PCCM) models relies on ensuring that every child receives the right type of care coordination, tailored to their specific needs. This is achieved by incentivizing appropriate behaviors among healthcare providers and ensuring that care coordination is delivered effectively. The challenge lies in tailoring interventions to meet individual needs and accurately measuring the impact of these interventions on overall population health outcomes. This is more complex than simply offering access to care coordination services.

How does the potential lack of immediate financial return for healthy children impact care coordination within Health Maintenance Organizations (HMOs)?

The lack of immediate financial return for healthy children can reduce the priority given to care coordination within Health Maintenance Organizations (HMOs). Since cost savings from care coordination are not always immediately evident for this demographic, the justification for investing in care coordination shifts to qualitative factors such as adhering to best practices and improving the overall quality of life. This can make it difficult to secure resources and support for care coordination initiatives, as the financial incentives are less direct compared to Primary Care Case Management (PCCM) models.