On Reducing Medically Unnecessary Cesarian Deliveries : The Design of Payment Models for Maternity Care

This data-driven study focuses on the design of financial incentives in order to reduce unnecessary C-sections, resulting in enhanced birth quality with alleviated economic burden for health care payers. In this context, we propose an analytical framework to study alternative base reimbursement models as well as complementary payments in maternity care setting. To this end, we first develop a quantitative metric to measure the pregnancy complexity by analyzing approximately 16.2 million individual birth records. This data set also enables us to identify the group of patients for whom CS is medically appropriate based on this metric. Next, we study alternative base payment mechanisms including fee-for-service, blended and bundled models, and evaluate their performance from quality of care and cost perspectives. We also examine a set of complementary incentives and alternative recipients for them. Our analyses conclude that none of the base payment mechanisms is sufficient to perform at the desirable levels in both quality and cost simultaneously. We also show that complementary payments are quite effective to offset some of the disadvantages of the base payment models, if properly designed. Furthermore, we propose an easily implementable and robust two-level payment model, i.e. blended payment and a bonus for natural birth, that results in risk sharing between payer and physicians, and coordination among the group of physicians. We finally present a numerical study based on our data set to empirically verify our analytic results. The numerical analysis concludes that our recommended policy proposes 3\% reduction in average birth related costs and 27% decrease in overall CS rate compared to those under fee-for-service systems