Medicare Payment Methodologies and Pediatrics

Medicare is a federal health insurance program designed to serve older adults and certain individuals with disabilities. However, the Medicare program’s regulations and rules can extend far beyond the population that it directly serves because Medicare frequently sets the benchmarks for coverage decisions, payment models, quality measures, and clinical standards that private insurers and state Medicaid programs then adopt or mirror. One of the most broadly recognized benchmarks is the percentage of Medicare fee-for-service (FFS) rates, which is widely used to assess commercial reimbursement levels and negotiate health care contracts. In practice, this means that many non-Medicare payment rates are evaluated against Medicare FFS rates.

As a result, Medicare regulations can influence access to care, and treatment standards for non-eligible Medicare individuals. In these scenarios, Medicare functions not only as a payer for a specific group but also as a powerful policy driver whose regulations and rules can significantly impact the health outcomes of people who do not receive their medical insurance through Medicare. The adoption of Medicare policies, however, is inappropriate and potentially harmful in some situations—especially if it restricts children’s access to care.

Pediatric health care is vastly different than care for adults. Children have unique patterns of health, illness, and disability; experience continuous developmental changes; and rely significantly on parents and other adults for caregiving. Pediatric providers employ specialized pediatric treatments; spend additional time with patients and their family members; supply a greater range of patient care supplies and equipment required to serve the pediatric population throughout various developmental stages;  provide tailored education to the pediatric patient and their caregivers; and coordinate care with other providers and schools.

Medicare payment methodologies are primarily designed for adult and elderly care. They do not account for the unique resource intensity, complexity, and family-centered nature of pediatrics and are fundamentally not designed to support pediatric care. However, if Medicare payment methodologies are being used for pediatric care, meaningful adjustments need to be made to ensure they more accurately reflect the costs and resources required for pediatric services. Without such adjustments, care provided by children’s hospitals, pediatric specialists, and other essential providers could be undervalued and lead to significant financial strain, ultimately reducing access to care for families by scaling back or even discontinuing services.

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Children. . July 2025.

National Academies of Sciences, Engineering, and Medicine. . September 2023.