Take away the incentives for too many c-sections

Quick, what'ꀙs the most common reason for hospitalization in America? And what'ꀙs the most common surgical procedure? If you answered heart attack, appendicitis, cancer, diabetes, car crashes, and any of their associated surgical remedies, you'ꀙd be wrong, because the most common cause for hospitalization isn'ꀙt a disease or even an injury. It'ꀙs childbirth. And the most common surgical procedure is C-section.

C-section rates have been rising rapidly for several decades, a major contributor to the spiraling cost of childbirth in the U.S. Yet maternal and baby outcomes have been stagnating or worsening. The U.S. ranks dead last among industrialized nations for maternal mortality and second to last for infant mortality.

All of which should make childbirth Exhibit A in the Obama administration'ꀙs insistence on containing American health care costs while providing better care. It also suggests that an obscure measure buried deep in Washington'ꀙs new biennial budget could become an important model for national health reform.

Beginning this month, the state of Washington will pay hospitals the same amount for an uncomplicated C-section as for a complicated vaginal birth when it reimburses them through Medicaid. 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.

'ꀜC-section rates are trending up and there'ꀙs no medical necessity for that trend,'ꀝ says Dr. Jeff Thompson, the state'ꀙs chief medical officer for Medicaid. C-section rates vary wildly between hospitals in the state, from as high as 48 percent down to 14 percent (Thompson won'ꀙt say which hospitals those are). When the Department of Health studied that variation, it found that it remained even when risks that make it more likely for women to need C-sections — such as maternal age, obesity, and diabetes — were factored out. Your chance of having a C-section depends a lot on what hospital you give birth in and where in the state you live.

Currently, the rate of C-sections in Washington is just under 30 percent. Nationwide, the rate is almost 32 percent, more than double what both the World Health Organization and the Centers for Disease Control say it should be. In many cases, C-sections save mothers'ꀙ and babies'ꀙ lives. But, like any surgical procedure, C-section causes harm as well as benefit. When the rate at which they'ꀙre performed rises above 10 to 15 percent, the WHO and CDC have found, the harm outweighs the benefits to mothers and babies.

It comes down to this: at least half of the approximately 22,000 C-sections performed each year in Washington are not only unnecessary, but harmful.

C-sections are major abdominal surgery, explains Dr. Jane Dimer, a Group Health obstetrician who chairs the regional chapter of the American College of Obstetricians and Gynecologists and co-chairs with Thompson the state'ꀙs perinatal advisory committee. C-sections bring with them, for the mother, a longer recovery time and heightened risk of infection and from anesthesia. In a first C-section, these risks are small, she says, but one C-section makes it highly likely a woman will deliver any subsequent babies by C-section. The risks to the mother go up with each surgery, and a woman who has several children by C-section faces heightened danger of placental complications, hemorrhaging, and ruptured uterus.

Babies born by C-section face greater risks of complications, including respiratory issues. 'ꀜCosts for neonates are really what'ꀙs clogging the system,'ꀝ Dr. Dimer says.

This is one clear example of what Atul Gawande has famously described in a recent article in The New Yorker (which President Obama ordered his aides to read and cited in meetings with members of Congress): 'ꀜAmericans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse.'ꀝ Gawande contrasts McAllen County, Texas, which has the nation'ꀙs highest per capita health costs, with Rochester, Minnesota, dominated by the Mayo Clinic, with vastly lower health spending and better health.

After ruling out other explanations for the discrepancy, Gawande concludes that the reason for the difference is the profit motive — doctors and hospitals in McAllen County have too many financial incentives to provide more medical care and none for providing better care. At the Mayo Clinic, the incentives push the opposite direction. Its doctors, for example, are salaried, so they have no incentive to perform more tests or procedures, and pay no financial penalty for spending more time with patients. With per-person Medicare spending (a useful proxy for overall health spending) $1,500 below the national average, Washington state is more a Rochester than a McAllen.

There are many reasons for this. The West Coast generally has somewhat lower costs, in part because of the presence of nonprofit HMOs like Kaiser in California and Group Health in Washington. Group Health, with its salaried doctors and a C-section rate near the lowest in the state, is Washington'ꀙs version of the Mayo Clinic. Group Health, which delivers 10 percent of the babies in the state, recently was featured in a New York Times article on health care reform, as a model for good yet cheap care. (Full disclosure: I gave birth to my first child at Group Health and remain insured by Group Health.)

Washington'ꀙs relatively low medical spending may also owe something to earlier efforts Thompson has led to make state health care better and leaner, including creating a medical technology review board and implementing a preferred drug list, which pushes doctors to prescribe the cheapest drug from among equally effective treatments. All of these steps seek to match the practice of medicine with scientific evidence about what works best.

With childbirth, the incentives all go the other way. On average, Medicaid pays $5,000 more for a C-section than for a vaginal birth, and private insurance pays a far greater premium. You don'ꀙt have to be a cynic to wonder if that could have something to do with the rise in unnecessary C-sections.

Thompson explains that there'ꀙs no good way for the state to pick out which C-sections are unnecessary. 'ꀜMedicaid won'ꀙt pay for an unnecessary C-section, so hospitals have to code every section as necessary,'ꀝ he says. But equalizing the amount hospitals get paid for vaginal and C-section births eliminates a financial incentive to perform C-sections. That should mean that the only reason for a doctor to perform a C-section will be that it is medically necessary, and in fact doctors and hospitals will have every financial reason to avoid C-sections — letting money sort out the necessary from the unnecessary. Policy wonks call this 'ꀜrealigning incentives.'ꀝ

'ꀜWe are choosing to improve quality mostly by using carrots rather than sticks,'ꀝ says Dr. Dimer.

Dr. Elliott Main, chair of obstetrics at California Pacific Medical Center and principal investigator for the California Maternal Quality Care Collaborative, says childbirth care is a great place to start realigning incentives in medicine. 'ꀜIt'ꀙs a pretty good opportunity to put these concepts into action, because it'ꀙs circumscribed, not an all-your-life event like diabetes or hypertension,'ꀝ he explains. 'ꀜIt has a beginning and an end. It'ꀙs packageable.'ꀝ

He considers Washington'ꀙs move very promising. The size of the financial incentive is crucial, he says. That'ꀙs because there are such powerful incentives pushing for C-sections. Dr. Dimer explains that the incentives for C-section go beyond money. 'ꀜIn nature, labor can go on for hours and is highly unpredictable,'ꀝ whereas a C-section delivery is highly predictable and far shorter. 'ꀜIn American culture, where time is money, having something that is finite and predictable is highly desirable,'ꀝ she says.

Dr. Main says that financial incentives for vaginal birth have to be enough to counteract those factors, enough to command attention. He thinks Washington'ꀙs cuts in C-section reimbursement may just be that big. The state has slashed Medicaid reimbursement for uncomplicated C-sections from about $3,600 to around $1,000. Hospitals with high C-section rates are in for a rude awakening. Thompson says that since the change in reimbursements took effect he has already received calls from hospitals asking for help revising the protocols they use to decide when a C-section is called for.

Without any powerful lobby pushing for changing the reimbursement rate, it was the state'ꀙs fiscal crisis that got the measure into the state budget. The equalization of rates is projected to save the state close to $2 million and the federal government another $2 million. That'ꀙs a conservative estimate, which assumes the C-section rate stays flat. If the realignment of incentives works, the C-section rate will fall, saving Washington'ꀙs health care system even more in complications avoided.

And, Thompson, is quick to point out, it will make women and babies in Washington healthier. 'ꀜThis is an opportunity for us to take a leadership role to both improve quality of obstetrical service in the community and actually to spend less money,'ꀝ he says.

Washington has a history of bucking the national tide when it comes to childbirth. It has a rate of out-of-hospital birth double the national average, and the state is one of only nine states in the country where Medicaid will cover out-of-hospital birth attended by a licensed midwife. In 2008 the Department of Health funded a cost-benefit analysis of the practice. It found that paying for home birth resulted in good outcomes for mothers and babies and yielded a net savings to the government of about $250,000 per year from the reduced numbers of C-sections. (Licensed midwives have every incentive for their patients not to have C-sections, including the obvious: Licensed midwives don'ꀙt do C-sections. They get paid next to nothing when their clients transfer to a hospital and have C-sections.)

Currently, midwives from Washington state are lobbying in the other Washington for legislation to push all states to cover out-of-hospital births with licensed midwives through Medicaid. Amber Ulvenes, a lobbyist for the Midwives Association of Washington State, recently used the state'ꀙs cost-benefit analysis to come up with an estimate of how much money this would save nationwide. She says if 1 percent of Medicaid-covered births were attended by certified midwives, at least $71 million would be saved annually.

If the state'ꀙs realignment of C-section incentives were to work and be implemented nationwide, the potential savings would be far bigger. 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'ꀙs goal of getting health coverage to everyone in the country. If Washington'ꀙs realignment of childbirth incentives works, it will be one piece of evidence that Obama'ꀙs rhetoric just might be right: Not only can we afford health care reform, we can'ꀙt afford not to do it.