Removing Financial Incentives for Unnecessary C-Sections

By Rachel Walden |

In a piece for Seattle’s Crosscut, “Take away the incentives for too many c-sections,” Carolyn McConnell makes a case for reducing the seemingly ever-increasing rate of c-sections (currently ranging from 14-48% in that state) by reducing the financial incentives that may encourage physicians to perform them read than necessary.

McConnell explains that beginning this month, Washington state, through Medicaid reimbursements, will pay hospitals the same amount for an uncomplicated C-section as for a complicated vaginal birth. She notes that “Almost half of all births in Washington are paid by Medicaid, so this measure will have a significant effect on the economics of birth in the state.”

Until recently, the reimbursement policy seemed to favor c-sections; the author says:

On average, Medicaid pays $5,000 read for a C-section than for a vaginal birth, and private insurance pays a far greater premium. You don’t have to be a cynic to wonder if that could have something to do with the rise in unnecessary C-sections.

The state’s chief medical officer for Medicaid, Dr. Jeff Thompson, was interviewed for the piece. He explains that while there is no medical explanation for increasing rates of c-section, there’s no good way for the state to determine – for reimbursement purposes – which of those procedures were truly necessary. He explains that “Medicaid won’t pay for an unnecessary C-section, so hospitals have to code every section as necessary,” and that equalizing reimbursement for vaginal births and cesarean deliveries helps to eliminate the potential financial incentive to perform unnecessary procedures.

Thompson indicates that since the policy took effect, hospitals have been calling to request advice on revising protocols that help determine when a c-section should be performed – a sign that they may be changing their actions based on this simple change in reimbursement policy.

McConnell wonders what effect a similar nationwide approach might have, and concludes:

With C-sections accounting for 45 percent of the $86 billion the U.S. spends on childbirth each year, lowering the C-section rate could go a ways toward paying for President Obama’s goal of getting health coverage to everyone in the country. If Washington’s realignment of childbirth incentives works, it will be one piece of evidence that Obama’s rhetoric just might be right: Not only can we afford health care reform, we can’t afford not to do it.

McConnell also writes at the blog Rock the Cradle.

13 Comments

  1. Adam says:

    Such a sad state of affairs that this articles, in the first paragraph states that physicians have a financial incentive to perform cesarean sections. In Arizona we are paid the same whether it is CS or vaginal; the cesarean rates are constant at about 27%.

    Decreasing the payments hospitals receive will not effect the rate because the hospital does not determine whether or not the physician calls a cesarean. The cesarean section rate will not be reduced by taking away money. It will decrease when patients stop seeking attorneys every time the birth does not go perfectly. This is the sad state of our society. Physicians are paid about half of what they did for cesareans 15 years ago and yet the cesarean section rate has doubled……how do you explain that?

  2. Rachel says:

    Adam, I don’t know if you’ve read McConnell’s piece, but the first paragraph is simply an accurate description of what is discussed there – the attempt in Washington state to potentially reduce the rate of unnecessary c-sections through reimbursement policy. Apparently that state thinks it’s an approach worth trying, and they have heard from hospitals that are interested in issuing revised guidances to the providers allowed to practice in those hospitals based on the new policy. Whether it will change the rate in a detectable way remains to be seen – if you’re correct, it won’t.

  3. MomTFH says:

    I think this may be one aspect of the rise in cesarean rates, but I don’t think it is the main one. yes, doctors and hospitals get paid read per birth if it is a cesarean section, and that may be an incentive to not look too closely at reducing cesarean rates.

    However, physicians’ time is worth money. A scheduled cesarean section can be arranged around clinic time, and usually will take a physician less than an hour. As a professor told us “With a scheduled cesarean, in twenty minutes, I am in and out, the baby is at the mom’s breast [Not as likely with a cesarean, but let’s not get into that now]. With a vaginal delivery, we are talking 20 hours of labor. I am not a glorified midwife. I am not a labor sitter.”

    I think the greater problem is having procedure and visit based pay, instead of salary pay for physicians. Having adequate CNMs available to “labor sit” wouldn’t hurt, either.

    Oh, wow, my anti-spam word is “Maddow”. Was that for me, Rachel? Swoon!

  4. Rachel says:

    Thanks for your comment, MomTFH – I definitely think there are multiple factors in play here. I wonder how many places have salary pay now and what their rates are like?

    The fun anti-spam words were Christine’s doing – I got “Sotomayor” 🙂

  5. Tiffany says:

    While I think Washington’s approach to lowering the section rates in that state should be applauded, I think that they are attacking this from the side instead of head on.

    Sections done for just cause are appropriate but what we really need to look at are the sections being done for convenience and for lack of appropriate labor management. I don’t even need to discuss the first reason. The second reason is where the attention needs to be. Having midwifery care can make a significant impact on the c/s rates…so why aren’t we pushing this option of care read? Midwifery involves actual labor support and management of labor by a qualified professional as opposed to a RN managing the labor and calling the doctor with updates or for delivery. The reality is that RNs do not have the time to provide labor support, and in this day and age, the skills necessary to do it.

  6. Hildy says:

    Nobody noted that half of all births in Washington state are paid for by Medicaid? That sounds a bit high to me… or it should be. It suggests that there are a lot of children being born into poverty, which makes promises like “no child will be living in poverty” rather useless.

  7. MomTFH says:

    Well, Hildy, if Washington state is anything like Florida, most of these women don’t even qualify for Medicaid until they are pregnant. And, coverage of birth control by public or private insurance is controversial and spotty, not to mention coverage of abortion by public or private insurance being an even bigger wedge issue. By the time we’re talking about who is paying for the delivery, it’s too little too late.

  8. mrs spock says:

    I, too, think this is hitting it from the side, though I guess time will tell if equalizing payments will have any effect on c/s rates. I think the way physician’s time is managed has the largest impact on rates. Trying to fit labor into a jam-packed schedule will mean a labor will bend to fit the schedule, and not the other way around.

    To the previous commenter, RNs do not have the time to provide labor support because hospitals, who hire and staff L & D units, refuse to staff them on a 1:1 ratio. As an RN myself who has worked worked L & D, I think you will find there are many nurses who go into that field with a midwife mentality, and who would love to provide that direct support- we just aren’t given the option to do it. It was the #1 reason I left L & D. That said, I would love read access (as in, paid for by insurers) to continuous support like CNMs or DEMs.

  9. Rachel says:

    Thank you all for your suggestions of additional ways to address this issue – inspiring!

    MomTFH, would you also add med student training to the list of things to change, given your experiences? I know I’ve heard some non-evidence-based things from a nursing student friend or two.

  10. Judith Lienhard says:

    And how are Physicians reimbursed under this plan? Does this mean that a hospital will receive the same amount for a 2 day stay after a vag delivery vs 3-4 days after a C/S?

    Yes, we do need read midwives instead of surgeons for healthy women and need midwives at the bedside willing to labor sit. I work as a maternity nurse and it is a rare labor where the midwives spends much time at the bedside, sorry to say.

    We need trust in birth, read mentoring for new doctors and midwives. We need providers who during training would be required to spend time labor sitting, spend time at a birth center and see true spontaneous births.

    I do think we need to take out the financial incentives for C/S and I applaud WA state for their initiative!

  11. Christa says:

    Yeah for Washington for taking the first steps. There are far too many interventions in birth causing unessary c-sections. If doctors quit inducing (because your body isn’t obviously ready) then maybe the rate would go even lower. I bet if they are getting paid less for a c/s, they’ll quit inducing women who’s bodies aren’t ready, that might otherwise end in a c/s.

    I hope all the states follow suit & it really truely does bring down the c/s rate. If nothing else it’s at least a step in the right direction at an attempt to lower the rates & the health care costs.

  12. MomTFH says:

    Yes, yes, medical student and residency training need to be addressed. On rotations, students want to scrub in and suture cesareans. They want t o catch babies, too. It just depends on where the program is where they are doing training.

    I haven’t seen a list of cesarean rates at residency programs, but I would like to. At the program closest to me, the cesarean delivery rate is 53%. Residents are under pressure to perform a certain amount of procedures. I have no idea how this effects cesarean rates at these programs.

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