Bundles of joy? How new payment models for maternal care could deliver lower costs

Last year, Community Health Choice, a Medicaid managed-care organization, paid for the births of 21,194 babies along the Texas Gulf Coast. For those deliveries, it spent $41.6 million on providers, such as doctors and hospitals; $11.9 million on physicians providing prenatal care; and more than $75 million on babies who ended up in the neonatal intensive-care unit.

With two providers, it also quietly began testing a program aimed at saving money while improving care for pregnant women and newborn babies.

“Houston is still a very fee-for-service kind of territory,” said Karen Love, executive vice president and chief operating officer. “We all know that the fee-for-service model really doesn't work. And so our thought was, where do we have the most ability to be an agent for change in our community?”

The model that Community Health Choice decided to test was a bundled-payment system, where providers receive a lump sum for all medical care in an episode instead of being paid per service. The model has gained popularity in Medicare in recent years as the CMS seeks to contain costs while maintaining or raising the quality of healthcare, two areas where maternity care is seen as holding perhaps the greatest potential for improvement. Yet obstetric bundled-payment programs are in their infancy, with only a handful of pilot programs across the U.S. Even advocates of bundled payment for maternity care warn that developing the best model is a complicated process that will require much more time before it can be implemented widely.

“It's absolutely a great potential direction to go in, but it's not easy,” said Jill Yegian, senior vice president of programs and policy at Integrated Healthcare Association, an Oakland, Calif.-based organization that works to improve affordability and transparency in healthcare. “The devil is in the details.”

Wrangling with those complexities is a task left to individual states, healthcare providers or payers that want to bundle payments for maternity care. They also must take the initiative to develop and implement models on their own, because no existing federal body has the regulatory authority to nudge them into doing so. As a joint federal-state program, Medicaid cannot broadly mandate maternal bundled payments across the country the way Medicare, which covers the elderly and disabled, has done for other medical procedures.

Design is one issue at the heart of the conundrum with bundled payments for maternity care. What should trigger the bundle? Does it begin with prenatal care? With delivery? When should it end, and whom should it include? How should providers—primarily hospitals, but sometimes birth centers—take on financial risk? Some models allow high-risk mothers, such as those who are obese or have AIDS, or high-risk babies; others include only low-risk pregnancies.

“You start with the decision of what you'd do in a perfect world,” said Dr. John Bulger, chief medical officer for population health at Danville, Pa.-based Geisinger Health System, whose bundled-payment program covers low-risk pregnancies and the mother only.

From a payment perspective, low-risk pregnancies are more predictable and homogenous than high-risk ones, Bulger said.

Convincing insurers to take part is another challenge—sometimes an insurmountable one.

When the Pacific Business Group on Health, a San Francisco-based coalition of large employers, was coordinating a pilot program for maternity care, it initially hoped to expand the model from a blended case rate, which covers solely the delivery of a baby, into a full bundle spanning pregnancy to postpartum care.

But it hit a roadblock when health plans and hospitals participating in the pilot were supposed to agree on reimbursement fees. Some of the negotiations broke down entirely, said Brynn Rubinstein, senior manager of the employer group's Transform Maternity Care program. Now, the blended case-rate pilot is in place at three hospitals, but the Pacific Business Group learned hard lessons along the way.

For bundled payments to succeed in maternal care, “it has to come from a larger regulatory push,” Rubinstein said, because one-off contracts between providers and payers proved tedious and unreliable.

Hints of broader government support can be detected. Maternity care featured prominently, as one of three clinical episodes, in a new white paper on designing and implementing episodic payment models, as bundled payments are also called. Voluntary and mandatory bundled payments for Medicare patients are already in place for the other clinical episodes mentioned in the paper.

The paper was produced by the Health Care Payment Learning and Action Network, a federally sponsored collaborative that consists of payers, providers, employers, states, consumer groups and individuals enlisted to help pursue CMS' goal of tying at least 50% of Medicare fee-for-service payments to value or quality by 2018 and broadly nurture the industry's transition to value-based payment models.

With maternity care, “episode payment can potentially have a significant impact on both the short- and long-term health of a woman and her baby and on the health of American society,” the paper noted.

Its maternal mortality rate of 1 in 1,800 put it at 33rd out of 179 countries, with the U.S. lagging behind all other countries that were top-ranked for education and economic status, according to a report by Save the Children last year. At the same time, U.S. women pay more to have a baby than women anywhere else in the world, according to the International Federation of Health Plans, a global network for health insurance companies.

Medicare coverage is needed by beneficiaries under 65 only when they qualify because of a disability, but maternal care is a huge cost for Medicaid and commercial payers.

Childbirth is the most common reason for hospitalization in the U.S. In 2009, mothers and newborns accounted for 23% of all hospital stays in the U.S. Medicaid paid for 45% of the nation's births in 2010, and that percentage has surely grown with the significant expansion of Medicaid eligibility under the Affordable Care Act.

The costs of giving birth are significant and vary depending on the payer. On average, in 2013, a cesarean section cost $27,866 with commercial insurance, while vaginal birth cost $18,329. Medicaid pays providers substantially less for births, reimbursing them $13,590 for C-sections and $9,131 for vaginal births, according to the Learning Action Network paper.

The higher price of C-sections, in addition to the convenience of being able to schedule them, creates an incentive for providers to encourage women to opt for C-sections over vaginal birth, said Harold Miller, president of the Center for Health Care Quality and Payment Reform, a policy center. Today, cesarean sections account for nearly one-third of all U.S. births, yet the procedure is generally riskier for mother and child alike.

Bundling payments may help recalibrate maternity care to focus on what's best for the mother and child, smooth out these imbalances in costs and make prices more predictable, according to the model's boosters. But they emphasize how much work needs to be done first.

“We don't know the best approaches,” said Carol Sakala, director of Childbirth Connection Programs at the not-for-profit National Partnership for Women & Families. “It's a time of great innovation and creativity.”

When the Providence Women's Clinic in Portland, Ore., began designing its Pregnancy Care Package about four years ago, it drew on elements from other bundled-payment models.

“We didn't feel like there was any bundle of best practices out there,” said Laurel Durham, regional director of perinatal services for Providence Health & Services in Oregon, which the women's clinic is part of.

The package pulled together two teams—one for each of its two locations—with a medical director, midwives, doulas and patient navigators. Dr. Maria Leiva, an OB-GYN, said the team has been able to see more complex patients, such as those with diabetes. Before, they would have had to transfer such patients to an outside obstetrician. And in addition to regular visits with midwives, patients also have group visits, with other mothers-to-be.

“There's a wealth of knowledge from women who've had babies before,” said Anna Spann, a certified nurse midwife with the clinic. “That really empowers women to go with their instincts and to learn from each other at the same time.” During one of the most momentous, stressful and anxious times of their lives, women gain “more confidence in their own selves and bodies in pregnancy,” Spann added.

Yet the clinic's pregnancy-care package technically is not a bundled-payment program because insurers have not gone along with it, according to Durham. “We are not paid any differently for this model today,” she said. “If our payer systems are not prepared for an alternative payment administration, it makes it challenging to truly impact the overall cost of care.”

Although most maternity bundled-care pilots have been developed within private health systems, a few are gaining traction at the state level.

Tennessee began designing its maternity care bundle in 2013. It covers all births paid for by Tenn-Care and CoverKids, the state's Medicaid program and its Children's Health Insurance Program, and although it currently includes only the mother, the state is talking with clinical advisers about adding newborns to the bundle, said Brooks Daverman, director of strategic planning and innovation at the Tennessee Division of Health Care Finance and Administration.

“It may be a few years before we're able to put them in place,” Daverman said, mainly because of challenges in determining how to link the costs of a mother and her child. “This is the only episode where you start with one person and end up with two at the end.”

CORRECTION:

This story has been updated to correctly spell Laurel Durham's name.