October 2, 2019

More insurers are piloting bundled payments for maternity care. Will they work?

Daily Briefing

    Payers are testing bundled payments in maternity care as a way to reduce costs and improve outcomes, and while some obstetricians say the accountability is overdue, others are worried that the payment mechanism unfairly exposes them to financial risk, Carmen Rodriguez reports for Kaiser Health News

    Resource series: Prepare for success in the world of bundled payments

    Under bundled payment models, insurers or state Medicaid programs give providers a lump sum for the cost of the total episode of care. The specifics of the payment arrangement varies from program to program, but generally, if the episode costs less than the budgeted amount, providers get to keep the savings. In some cases, providers may be responsible for the extra cost if the total cost of care exceeds the provider payment.

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    Maternity care in the US

    Some private insurers and state Medicaid programs have viewed bundles as an effective way to address rising concern about the quality if U.S. maternity care, Rodriguez reports.

    CDC estimates that 700 women in the United States die each year because of pregnancy complications, and a ProPublica investigation in 2017 showcased how the United States has a higher maternal death rate than other affluent countries.

    Further, about one-third of births in the United States are via caesarean section, and according to the World Health Organization, the figure should be closer to 10% to 15%. C-sections carry additional risks of infection and complications and are more costly than vaginal deliveries.

    Enter: Bundled payments

    With these issues in mind, payers and providers are testing bundled payments as a way to improve quality and reduce cost.

    For instance, UnitedHealthcare (UHC) this May announced a bundled payment model for maternity care. (The Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group. UnitedHealth Group separately owns UnitedHealthcare.)

    UHC is piloting the model with a practice in New Jersey and one in Texas and wants to expand to up to 20 practices by year's end, Rodriguez reports.

    Under UHC's bundle, the insurer establishes a budget for physician practices for prenatal services, delivery, and 60 days of post-delivery care. The medical group gets to keep the savings if the total cost of the episode is under budget. Julianne Pantaleone, national director of bundled payments and strategy at UHC, said that as the insurer pilots the program, it will not penalize physicians for exceeding the initial budget, Rodriguez reports.

    The arrangement does not include hospitals, which the insurer pays separately. Private payers Humana and Cigna also are piloting maternity care bundles, and Medicaid programs in Arkansas, Ohio, and Tennessee have tested them as well, Rodriguez reports. According to Rodriguez, widespread adoption of bundles in maternity care "could represent a major shift in health care finance," as births were the most common reason for hospitalization among discharged patients in 2016.

    David Lansky, a senior adviser at the Pacific Business Group on Health, a coalition of private and public organizations that collectively purchase health care for 10 million Americans, said, "The way we've been doing things is just not justifiable." He continued, "The shift we're talking about is to say someone is accountable for all the care that needs to be provided to support a family through this experience."

    Do bundles work?

    Some bundles have shown signs of promise, Rodriguez reports. In Southern California, Lansky's group found the rate of c-sections among first-time mothers with low-risk pregnancies fell about 20% within one year of adoption at three participating hospitals.

    But other bundles haven't shown as much success, according to Rodriguez. For instance, an advisory group found that Ohio's experiment with bundles came in over budget.

    And while some providers support bundles, Lisa Hollier, the immediate past president of the American College of Obstetricians and Gynecologists, raised concerns about the model. For instance, she noted that a provider delivering the baby might face financial consequences for a problem that started earlier in pregnancy and was overlooked by another physician. 

    Hollier also raised concern about how the models define low-risk pregnancy, noting that doctors could be penalized if the model is not risk adjusted for conditions such as gestational diabetes, which affects up to 10% of pregnancies, according to CDC.

    Another challenge with adopting bundled payments is the lack of robust data, according to Blair Barrett Dudley, a senior manager at the Pacific Business Group on Health. It's costly to build the type of information banks that doctors and payers need to ensure they're meeting the quality standards of their bundle (Rodriguez, Kaiser Health News, 9/27).

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