Out-of-Pocket Spending for Pediatric Hospitalizations Reached $3,000

The average out-of-pocket spending per non-birth-related pediatric hospitalization was $1,313 for privately insured children, but spending varied depending on the time of the year, chronic condition prevalence, and plan generosity, a study published in JAMA Pediatrics found.

Non-birth-related pediatric hospitalizations occur 2.5 million times per year and can lead to high medical costs for privately insured families.

Researchers used claims data from 2017 to 2019 from the IBM MarketScan Commercial Database to assess out-of-pocket spending for these hospitalizations and which factors influence this spending.

The final study sample included 183,780 hospitalizations with an admission date between January 1, 2017, and December 31, 2019, among 130,826 children 18 years and younger.

A third of the hospitalizations were for children with a noncomplex chronic condition, 45.7 percent were for children with a complex chronic condition, and 24.1 percent of hospitalizations were covered by a high-deductible health plan (HDHP). The median length of stay was three days, and the top three diagnosis-related groups were psychoses, bronchitis/asthma, and depressive neuroses.

The mean out-of-pocket spending per hospitalization was $1,313, while the median was $656. The mean spending included $385 in deductibles, $861 in coinsurance, and $67 in copayments. Out-of-pocket spending was $0 for over 51,000 hospitalizations but exceeded $3,000 for 25,700 hospitalizations.

The mean total spending per hospitalization was $27,925 and the median was $13,262, the study noted.

Mean out-of-pocket spending was highest during the first quarter of the year, at $1,704. Spending increased between December and January, especially in HDHPs. This likely reflects the fact that deductibles reset on January 1 for most private plans, researchers said.

Intensive care use, out-of-network care, and additional hospitalization days were associated with higher out-of-pocket spending. Hospitalizations for children without chronic conditions had higher out-of-pocket expenditures than hospitalizations for children with noncomplex and complex chronic conditions.

This may be because families of children with chronic conditions have more generous health plans, researchers theorized. Conversely, it could be because these families were more likely to have met their deductibles before hospitalization.

A similar share of children without chronic conditions (22.8 percent) and children with chronic conditions (24.7 percent) were covered by HDHPs. However, mean prior deductible spending was higher for children with noncomplex ($523) and complex chronic conditions ($914) compared to those without chronic conditions ($312).

The mean out-of-pocket spending per hospitalization was higher for those covered by HDHPs compared to other plans ($1,757 versus $1,170). Furthermore, hospitalization during quarter one, out-of-network care, and the absence of chronic conditions were associated with greater out-of-pocket spending in HDHPs than in other plans.

Researchers conducted a secondary analysis to determine the association between insurance benefit design and out-of-pocket spending. After excluding hospitalization that could not be linked to the IBM MarketScan Benefit Plan Design Database and those without out-of-network care, the sample included 72,165 hospitalizations.

They found that 27 percent of the hospitalizations were covered by plans requiring inpatient coinsurance of 1 percent to 19 percent, while 73.1 percent were covered by plans requiring inpatient coinsurance of 20 percent or greater.

Between 19.3 percent and 30.6 percent of hospitalizations were covered by plans requiring family deductibles ranging from $1 to $3,001. The median inpatient coinsurance rate was 20 percent and the median family deductible was $1,500. Most hospitalizations (91 percent) were covered by plans that also required an individual deductible.

The mean out-of-pocket spending per hospitalization in the secondary analysis was $1,486. This figure rose to $1,974 for hospitalizations covered by the least generous health plans—plans with a family deductible of $3,001 or more and inpatient coinsurance of 20 percent or more.

In contrast, the mean out-of-pocket spending was $826 for hospitalizations covered by the most generous plans, which had a family deductible of less than $1,000 and coinsurance between 1 percent and 19 percent.

“Rather than require cost sharing for hospitalizations, private plans could consider alternative approaches to limit expenditures that would not potentially jeopardize health, such as refusing to cover low-value services,” researchers wrote. “Additionally, policymakers could help limit private plan expenditures by addressing drivers of high prices for inpatient care in the commercial market, including the lack of competition between hospitals in many areas.”