Insurer-provider wrangling limits bundled maternity growth

New Jersey's Lifeline Medical Associates was one of the first obstetrics and gynecology providers to sign onto UnitedHealthcare's first bundled payment program for maternity care in 2019.

But not long after the partnership had taken off, it crash-landed.

Dr. Jack Feltz, Lifeline's president, said UnitedHealthcare added a fee to its commercial maternity bundle that absorbed the return that would otherwise have gone to his practice, which has 180 providers across New Jersey and Delaware.

"It didn't leave much meat on the bone for the providers," Feltz said, adding that he's hoping to resurrect the program.

UnitedHealthcare said it no longer offers that particular bundle program, but it does have others for maternity care.

Both insurers and providers insist they like the idea of lump sum payments for prenatal care, delivery and postpartum care, but it gets complicated in the real world. Unlike a hip or knee replacement, maternity care can span a year and involve many different types of providers. And then, there's the usual push and pull between the insurers and providers, who both expect to pocket the savings.

Today, several insurers offer maternity bundles both in their commercial and Medicaid programs, including Cigna, Humana, Blue Cross Blue Shield plans and Anthem. Even so, it's clear bundled maternity payments haven't taken off at the same rate as orthopedic or cardiac procedures.

The cost of childbirth is higher in the U.S. compared with other countries. Experts have for years debated how to fix the problem, but with little success. Childbirth admissions averaged $13,811 for people with employer-sponsored insurance in 2016 and 2017, ranging from $8,361 in Arkansas up to $20,000 in New York, according to the Health Care Cost Institute.

A common hang-up on the provider side is the bundles tend to base payment on a provider's historical costs instead of the typical rate in their market, said Dr. Mark Cone, president of Privia Medical Group-Gulf Coast in Texas, another early adopter of UnitedHealthcare's maternity bundle. The problem with this approach is if a provider is already delivering services significantly below the market rate, it cancels out their financial reward, he said.

"The construct of these is it's you against yourself," Cone said. "At the end of the year there's very little shared savings because it's hard to move the bar below 21% below the market."

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The rub lies in the fact that insurers are trying to hold down costs for their clients, mostly employers that buy coverage for their workers, said Joe O'Hara, senior director of healthcare marketplace innovations for Horizon Blue Cross Blue Shield of New Jersey. Providers, meanwhile, want to improve care for patients but also maximize revenue, he said.

"While you would love to pay those practices that do the best job more, if you're not able to pay the practices that have lesser outcomes less, you're just inflating your costs, which is not necessarily good for policyholders," O'Hara said.

Horizon was the first Blues plan to offer a maternity bundle in 2013, and it has since grown from partnering with two practices to 17. The program has covered more than 6,000 maternity episodes annually for the past five years, O'Hara said.

On the West Coast, 52-hospital Providence is placing its bets on a San Francisco women's health technology company called Wildflower Health, which recently closed a $26 million financing round. Until now, Wildflower has primarily consisted of an app that supports expecting mothers and helps coordinate their care.

With this new pot of money, Wildflower is rolling out its proprietary framework for structuring maternity bundles that can be applied to different payer-provider scenarios.

"It's a methodology and then we can take claims from a target payer or employer and run them through the methodology," said Leah Sparks, Wildflower's CEO and founder.

First in line will be providers across Providence's Southern California region. Renton, Washington-based Providence developed Wildflower's technology platform, Circle, and sold it to Wildflower in 2018. Providence is also an investor—although it won't say how much—and holds an ownership stake in the company.

Aaron Martin, Providence's chief digital officer and managing general partner at the health system's venture capital arm, Providence Ventures, said he thinks Wildflower is an early example of a market about to take off: companies that engage patients through a digital platform and then provide scalable, cost-effective ways of delivering care.

"You're going to see a lot of these emerge in the marketplace as they grow and mature," he said.

Lifeline is advanced when it comes to bundled payments and has them with a number of commercial and Medicaid insurers, including several Blues plans and Anthem. The practice just started a Medicaid maternity bundle with UnitedHealthcare.

Feltz estimates more than half of Lifeline's maternity patients, or up to 5,000 people, are in episodes of care. The first one was in 2015 with Horizon Blue Cross Blue Shield of New Jersey.

The downside of being in so many bundle programs is they all rely on different metrics to measure success. Oftentimes, Feltz said insurers provide "almost no data" or very general data.

"Just imagine trying to win an Olympic race without a stopwatch," he said, "It's impossible for us to have our doctors improve when we don't have the data."

Regardless, Lifeline's own data show its adherence to evidence-based guidelines has driven down its Cesarean section rate by almost 10% over the past four years, Feltz said. On top of being costlier, C-sections can be riskier for the mother and baby, potentially exposing the former to infection or hemorrhage and the latter to breathing problems or injuries.

Bundled payments can lower costs in a few ways. One is by adding guidelines aimed at preventing overutilization—limiting ultrasounds during pregnancy to four instead of 10, for example. Or using generic drugs instead of brand-name ones if the generics are shown to be just as effective.

Reducing overutilization is huge, but those guidelines can also encourage providers to refer patients to less expensive ancillary providers, Feltz said.

"There are very easy wins just by doing things we do in our normal life," he said. "If you had two car dealers selling the same care and one was twice as expensive, I don't think you would buy the car that's twice as expensive."

Feltz and others agree the most value is in lowering the chances of complications. That means following patients closely during their pregnancy and monitoring for risk factors.

Ideally, a patient's obstetrician or midwife should be the quarterback overseeing all her care, especially if the patient has diabetes or other conditions that put them at higher risk for complications, said Sparks, of Wildflower Health. Wildflower's technology is designed to keep the patient engaged and connected with their provider. The data from Wildflower's app flow to the patients' electronic medical records, so the provider will see whether she's checking her blood pressure and if she visited the emergency department.

"The way you create savings in pregnancy is not by doing less ultrasounds, it's by managing high risk," Sparks said. "Making sure you're monitoring at home and managing social needs."

It's not just private insurers who are interested in maternity bundles. Several Medicaid insurers have adopted maternity bundles as well. A 2021 Medicaid and CHIP Payment and Access Commission report studied the current value-based payment models for maternity care in Medicaid and concluded they don't fundamentally reform care delivery.

"In addition to not incentivizing high-value providers and facilities, national experts also noted that because payment is anchored to the delivering provider and is not shared with those delivering prenatal or postpartum care, the effect on maternal health outcomes is limited," the report said.

Sparks said not all of today's maternity bundles include the baby, and it's imperative they do. It's important that bundles prevent babies from going to the neonatal intensive care unit if they don't need to, she said.

Three quarters of U.S. maternal morbidity costs stem from child outcomes versus maternal outcomes, a 2021 Commonwealth Fund study found. Child outcomes with the highest costs are preterm births—$13.7 billion in 2019—developmental disorders and respiratory distress. The total projected cost of maternal morbidity for all births in 2019, from conception through age 5, was $32.3 billion.

Lifeline's Feltz said he believes the baby should always be included in maternity bundles. Insurers sometimes don't because the baby and mother aren't always covered under the same insurance policies. A less legitimate reason, Feltz said, is insurers wouldn't have to share the benefits of a healthier baby with the provider group.

"They take all the benefit of the good work we do with the baby," he said.

Despite all the complications surrounding maternity bundles, Sparks said it's clear something must change. She said the COVID-19 pandemic sparked a renewed appetite for bundled payments by exposing the failures of the current medical paradigm.

"As a healthcare industry, we cannot afford for value-based care to fail," she said.