How States Can Drive Pay for Health Models in Pediatrics

August 2026

By: Joshua Traylor, MPH, Executive Director, Center for Health and Research Transformation and Suzanne Bierman, JD, MPH, Managing Director, Sellers Dorsey

 

In the United States, many health care payment models still reward volume and complexity of care. This Leadership Series post explores what it would take to shift to a pay for health model in pediatrics — one that rewards providers for keeping patients as healthy as possible in the first place. Below, the authors examine the critical role state leaders play in driving this transition and highlight innovative examples from across the country.

What role does state leadership play in advancing pediatric pay for health models? What advantages does a state-led approach offer?

Josh: As the authors described in the second post in this series, states have authority to design and administer the single largest source of health care coverage for children in America: Medicaid.
Medicaid and the Children’s Health Insurance Program (CHIP) covers roughly 40% of all U.S. children. Consequently, state leaders — whether in the governor’s office, the state health department, or the state Medicaid agency — are uniquely positioned to impact the way we pay for and deliver care for kids.

States have the power to break down administrative silos, and state leaders understand the unique local demographics, existing community health assets, and specific regional challenges. Many of the drivers of health occur outside of clinical settings. This is especially true for children. So much of what impacts children’s health is administered or regulated at the state level. States can coordinate Medicaid with other child-serving state sectors, like education, foster care, nutrition assistance, and housing support. When state leadership aligns these distinct moving parts, they can build a true ecosystem around the child, moving away from a fragmented medical model and closer to a genuine, whole-child approach to care.

Walk us through what a state needs to do to implement a pediatric pay for health model in Medicaid. What levers do they have? What would the design, federal approval, and implementation process look like?

Suzanne: Before adopting a specific payment model, a state should first define its broader policy goals. It can then assess which tools and levers are available — and which are needed — to advance those goals. Broad stakeholder collaboration, participant engagement, robust outreach and education, and data-driven policymaking are the foundation for any successful Medicaid initiative. 

Once that foundation is in place, the technical implementation details will vary by state, depending on the model’s design and the programmatic requirements involved. States routinely work with their federal partners at the Centers for Medicare and Medicaid Services (CMS) to identify the appropriate authorities, such as a State Plan Amendment or Section 1115 waiver, needed for approval and implementation. For example, New Jersey is using both authorities to implement its Integrated Care for Kids (InCK) model, which I’ll discuss more below. However, the specific authorities and implementation process will depend on each state’s goals and program requirements.

What are one or two state pediatric pay for health models that stand out to you right now? What lessons can other states take from their success?

Suzanne: New Jersey is often cited as a leading state in designing initiatives to improve maternal and child health. As part of its broader efforts to improve outcomes for these populations, the state was selected to participate in CMS’s Center for Medicare and Medicaid Innovation (CMMI) InCK model. Through this initiative, the New Jersey Division of Medical Assistance and Health Services (DMAHS) partnered with Hackensack Meridian Health, the Visiting Nurse Association of Central Jersey, and the New Jersey Health Care Quality Institute to implement an integrated payment model in Monmouth and Ocean counties.

The alternative payment model has two parts: It pays primary care providers to conduct a comprehensive health and social needs screening during a child’s well-child visit, and it provides a separate monthly per-member payment to fund care coordination from a multidisciplinary Advanced Case Management Team. These teams include community health workers, social workers, and family support specialists for children identified as having significant medical, behavioral, or social complexity. Together, these two payment streams support preventive care and targeted case management for children and families with social and medical complexities.

New Jersey’s experience highlights the importance of partnering with trusted community organizations to operationalize initiatives in ways that address payment realities for both providers and payers. New Jersey's InCK model does this by embedding the needs assessment and care planning activities described above directly into provider workflows so that screening and follow-up care become a paid, routine part of a well-child visit rather than an added administrative burden. New Jersey Medicaid implemented the model through amendments to its Medicaid State Plan and its Comprehensive Demonstration Waiver. Another lesson for states is to start small: piloting a new initiative in a defined geographic area can generate early outcome data, inform policy decisions, and support thoughtful decisions about broader adoption or expansion.

Josh: A model that really stands out to me is Oregon’s Coordinated Care Organizations (CCOs). Back in 2012, Oregon used federal funding from CMMI’s State Innovation Model to reimagine its Medicaid program by establishing CCOs. CCOs are regional networks that receive a fixed, flexible budget (a "global budget") to manage physical, mental, and dental health along with flexibility to address social needs.

Instead of paying doctors for the volume of tests and visits they run, Oregon holds these regional networks financially accountable using quality targets. 

CCOs are not a pediatric-specific model. They care for children and adults, but they do include features focused specifically on kids. Oregon is a pioneer in guaranteeing continuous coverage until age 6, meaning that once a baby is enrolled in Medicaid, they stay enrolled until their sixth birthday. This eliminates the bureaucratic paperwork loops that frequently cause low-income families to temporarily lose coverage during critical early developmental years.

Oregon also incorporates specific financial incentive metrics that support a comprehensive focus on the needs of kids. These metrics include:

• Multidomain Foster Care Assessments: Ensuring youth entering foster care receive timely, coordinated physical, mental, and dental health screenings.
• Social-Emotional Interventions: Incentivizing issue-focused treatment services for children ages 1 to 5 to address early behavioral health needs and bolster kindergarten readiness.
• Preventive Oral Health: Focusing on children ages 1 to 14 to combat untreated oral health issues that hinder early learning and drive school absences.
• Routine Preventive Milestones: Tracking standard wellness benchmarks, including annual well-care visits for children ages 3 to 6 alongside immunization targets.
• Adolescent Behavioral Screenings: Incentivizing universal depression screenings and documented follow-up plans for patients starting at age 12.
• Trauma-Informed Social Needs Screenings: Requiring CCOs to screen and refer families to services addressing foundational social needs (food, housing, and transportation).

The big lesson for other states is that financial incentives must be paired with child-specific performance metrics, and children must have stable insurance coverage. By pairing predictable global budgets with guaranteed eligibility through early childhood, Oregon allows CCOs to invest in long-term, preventive care that sets kids up for success in kindergarten and beyond.

What are one or two policy changes you would recommend the federal government implement that would help states implement pediatric pay for health models?

Josh: First, CMMI needs to build a dedicated, streamlined framework for pediatric-focused payment models that values the long-term life cycle return on investment (ROI). In the second post in this series, the authors dive into what CMMI has done so far to advance pediatric pay for health models, including the new Accelerating State Pediatric Innovation Readiness and Effectiveness (ASPIRE) model, and I am very curious to see how CMMI structures that. We need federal pathways that specifically value a long-term life cycle ROI, allowing states to test pediatric models without being forced to meet short-term adult spending benchmarks.

Second, the federal government should simplify how states use Medicaid funds to address Health-Related Social Needs (HRSN) like food insecurity and unsafe housing. While the federal government has opened doors for states like Oregon to address these issues through 1115 waivers (special regulatory permissions), the application process is daunting for states with tight budgets and busy Medicaid teams. Streamlining federal approvals or creating a standard, preapproved state plan option for early childhood social needs would allow states to scale up Whole Child Health initiatives much faster and with significantly less red tape. The federal government has an important opportunity to help make states’ work of designing and implementing pay for health models easier.