Better Maternity Care Could Save $5 Billion Annually

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Private businesses and federal and state governments could save billions of dollars if the quality of maternity care in America were improved, based on data in The Cost of Having a Baby in the United States, a new report issued by Childbirth Connection, Catalyst for Payment Reform, and the Center for Healthcare Quality and Payment Reform. The report shows that the high proportion of babies delivered by cesarean section costs commercial insurance plans and state/federal Medicaid programs thousands of dollars more per birth than vaginal births and the difference in costs is growing over time. The significant variation in costs within and across states for each type of birth indicates there are additional opportunities for savings.

The study also found that the cost of maternal care (not including newborn care) increased by over 40 percent between 2004 and 2010 for commercially insured women, and that the cost was nearly 50 percent higher in some states than others.“Four million babies are born in the US every year, and one-third of them are now delivered by cesarean section instead of vaginal birth, a 50 percent increase in the last decade,” said Maureen Corry, Executive Director of Childbirth Connection. “Not only do unwarranted c-sections create greater health risks for women and babies, this study shows that they also dramatically increase costs for employers and, through Medicaid programs, state and federal budgets. For the commercially insured, the average cost of a birth by c-section in 2010 was $27,866, compared to $18,329 for a vaginal birth. Medicaid programs paid nearly $4,000 more for c-sections than vaginal births. If the rate of c-sections were reduced from 33 percent to 15 percent (the World Health Organization recommends a c-section rate of 15 percent or less), national spending on maternity care would decline by more than $5 billion.”

“Maternal and newborn care together represent the largest single category of hospital expenditures for most commercial health plans and state Medicaid programs, so reducing maternity care costs provides a major opportunity to reduce insurance premiums for employers and to make Medicaid coverage more affordable for taxpayers,” said Harold Miller, Executive Director of the Center for Healthcare Quality and Payment Reform (CHQPR). “There are many examples of physicians, midwives, hospitals, and birth centers around the country that are reducing maternity care costs in ways that improve quality and outcomes for both mothers and babies, a win-win for both payers and patients. Similar initiatives need to be implemented in every community.”

“Maternity care is yet another example of how our current healthcare payment systems can actually penalize healthcare providers for delivering higher-value care,” said Suzanne Delbanco, Executive Director of Catalyst for Payment Reform (CPR), a nonprofit employer coalition focused on payment reform. “We need to pay physicians and hospitals in ways that reward them for eliminating early elective deliveries, reducing unnecessary c-sections, and preventing complications of childbirth. And with the cost of this care so high, this is a huge priority for employers and others who purchase care." CPR has developed a toolkit employers can use with their health plans to drive value-oriented payment in maternity care.

The complete report is available at: transform.childbirthconnection.org/reports/cost/